(Bloomberg) -- Cigna Group beat expectations for first-quarter earnings and raised its outlook for the year on lower medical costs and a fast-growing pharmacy benefits business.

Adjusted profit for the year will be at least $28.40 a share, a 15-cent boost from the health giant’s prior forecast, according to a statement Thursday. Adjusted income from operations in the quarter was $6.47 a share, exceeding analysts’ estimates.

Cigna’s medical costs have been lower than some of its rivals, in part because the company focuses on serving employers rather than government programs like Medicare. Other insurers that are tilted toward selling private versions of the US Medicare program have faced surprise cost increases, a dynamic that sank CVS Health Corp. shares this week. Cigna, meanwhile, is exiting the Medicare business.

The company’s medical-loss ratio, a closely watched gauge of how much premiums go to pay for care, was 79.9% in the quarter, more favorable than analysts had expected. Profit margins in Affordable Care Act exchange markets improved, Cigna said, but still on track to lag its target range of 4% to 6% in 2024.

Cigna’s shares fell 1.9% as of 10:47 a.m. in New York. They gained 19% this year through Wednesday’s close, while the S&P 500 Index increased by 5.2%. 

Cigna’s results were free of “utilization grenades” that hit other insurers with unexpected medical costs, Jefferies analyst David Windley wrote. He noted that the company posted the best medical-loss ratio of the sector.

Revenue rose 23% from a year ago, driven by the Evernorth Health Services segment. The company’s new contract to provide pharmacy services to insurer Centene Corp. started in January, helping add about 24 million new pharmacy customers to Cigna’s accounts. 

Cigna took a $1.8 billion non-cash charge on an impairment of its stake in the VillageMD clinic chain that’s majority-owned by the Walgreens Boots Alliance Inc. drugstore company. The loss was excluded from its adjusted results.

Cigna said it has repurchased $3.4 billion worth of stock so far this year. Its shares have been a rare bright spot in a managed care sector battered by fears about medical costs and lower government payments. 

More than 1 million people have enrolled in Cigna’s program designed to manage employers’ costs for diabetes and obesity drugs, executives said on a call with analysts.

(Updates with analyst comment in sixth paragraph)

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