Cigna Group (CI) Q3 2026 Earnings Call

Ladies and gentlemen, thank you for standing by for the Cigna Group's third quarter 2026 results review.

At this time, all callers are in a listen-only mode. We will conduct a question-and-answer session later during the conference and review procedures on how to enter Q to ask questions at that time. If you should require assistance during the call, please press star zero on your touch-tone phone. As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Ralph Jacoby. Please go ahead.

Great, thanks. Good morning. Thank you for joining today's call. I'm Ralph Jacoby, Senior Vice President of Investor Relations. With me on the line this morning are Brian Imenko, the Cigna Group's President and Chief Executive Officer, and Ann Dennison, Chief Financial Officer.

In our remarks today, Brian and Ann will cover a number of topics, including our third quarter 2026 financial results and our financial outlook for 2026.

Following their prepared remarks, Brian and Ann will be available for Q&A.

As noted in our earnings release, when describing our financial results, we use certain financial measures, including adjusted income from operations and adjusted revenues, which are not determined in accordance with accounting principles generally accepted in the United States, otherwise known as GAAP.

A reconciliation of these measures to the most directly comparable gap measures, shareholders' net income, and total revenues, respectively, is contained in today's earnings release, which is posted in the Investor Relations section of the CignaGroup.com.

We use the term labeled adjusted income from operations and adjusted earnings per share on the same basis as our principal measures of financial performance.

Then Ann will share additional details about our financial results and outlook for the rest of the year, and we'll take your questions. During the quarter, we delivered adjusted revenue of $73.8 billion, adjusted after-tax earnings of $2.1 billion, and adjusted earnings per share of $7.98. The work we've done over several years to deliberately shape our portfolio is delivering results, and we are built for the fastest-growing

The supportability and the healthcare experience for every customer and patient we serve.

Lead to One brings together all of our medical, pharmacy, behavioral health, and specialty care capabilities around the individual.

By responsibly leveraging our data, clinical expertise, and technology, we can identify needs earlier, deliver more personalized support, and improve health outcomes while lowering the total cost of care.

Our Lead to One Vision will benefit all customers.

And we see a particular opportunity with the most clinically complex patient needs, where healthcare costs are increasingly concentrated and represent over 50% of total healthcare spending. Lead to One is underpinned by a clear strategic growth framework comprised of three pillars. First, we will deliver core growth. Second, we will leverage distinct capabilities. And third, we will execute with discipline.

These three pillars taken together give us a clear path to build on the strength of our business today while creating the next chapter of sustainable growth and greater value for those we serve.

Now let me walk through some of our highlights in the quarter across Evernorth Health Services and Cigna Healthcare.

Starting in Evernorth, third quarter earnings were in line with expectations. Our specialty and care services businesses delivered attractive performance, including pre-tax adjusted earnings growth of 15% year-over-year. This was fueled by secular tailwinds and disciplined execution across our specialty pharmacy and distribution capabilities. We also drove continued strong biosimilar and specialty generic utilization.

Today, Revlimid, a widely used oncology drug, is seeing specialty generic adoption rates around 90%. Across our specialty businesses, we are leveraging our distinct capabilities for patients with complex needs who require a higher level of care, support, and coordination to manage their conditions.

For example, in our specialty pharmacy, Acredo, we have industry-leading access with more than 330 highly complex, limited distribution and exclusive products.

This demonstrates the strength of our manufacturer relationships and the trust they place in us to partner in serving some of the most clinically complex patient needs.

That access also positions us to capture growth as new specialty therapies come to market.

I'm also pleased to share that we continue to expand our capacity for these limited distribution products with our network of clean rooms, the fifth of which is now in a build phase.

These highly sterile environments take years to build, license, and operationalize to safely mix and compound some of the most complex medicines.

These clean rooms are just one example of the durable competitive advantage in our specialty

business that we've constructed over the past few decades. Finally, our expanded distribution

channels are unlocking new opportunities. CuraScript SD is a leader in specialty distribution with access

to 40 exclusive distribution drugs, and our recently launched Evernorth Wholesale has begun

fulfilling orders to our distribution centers to be able to serve customers. In our pharmacy benefit services business in Evernorth, we delivered third quarter pre-tax adjusted earnings of $765 million. We continue to see strong momentum for the 2027 sales season, supporting our core growth, along with strong retention rates in the high 90s. Next, I'd like to spend a moment on our signature model transition. We are pioneering this new approach to pharmacy benefits.

I want you to have further context around current status and why we're so confident in our path.

You can think of our signature implementation in three broad phases. Phase one, our design phase, is complete. Announced this time last year, phase one included designing signature, our market-defining innovation, driven by core principles of affordability, simplicity, transparency, and value.

Inherent in the model is our price-assured capability, which is designed to ensure patients pay the lowest available out-of-pocket costs when they fill prescriptions, and will save an average of 30% on high-cost branded drugs. Price-assured is already in market and being leveraged by about 10% of our current clients.

And the signature model is consistent with the direction of regulatory changes, including

the Consolidated Appropriations Act of 2026 and the Department of Labor's recently finalized

PBM fee disclosure rule. Phase two, our build phase, is well underway. Currently, we're working on adoption planning alongside market education. Key stakeholders include brokers, pharmaceutical manufacturers, network pharmacy partners, and clients. The work is largely complete for brokers, and we're actively advancing contracts with pharmaceutical manufacturers and network pharmacies. Phase three, our adoption phase is on track. The next milestone is the

The adoption of signature for our Cigna Healthcare Fully Insured book on 1-1-27.

Early client conversations for the 2028 benefits year have been encouraging and indicate strong

interest in the model for a broader Evernorth book of pharmacy benefits services clients.

In our very strong 2027 selling season, reinforces that clients value innovation and see us as a multi-year partner on their pharmacy benefits journey.

Buy and See value in Signature's focus on patient affordability and transparency and in how it supports their efforts to meet evolving regulatory requirements and their fiduciary responsibilities. They also see a model that can encourage adherence with improved health outcomes and workforce productivity. In summary, we're proud of the progress we're making on Signature. We've completed Phase 1 and are on track to deliver against Phases 2 and 3 with broader client adoption expected to ramp in 2028.

We'll share some further detail on the progress across Phases 2 and 3 during our fourth quarter earnings call.

Finally, we continue to leverage our distinct capabilities in pharmacy benefit services to generate industry-leading affordability outcomes, including our deep supply chain expertise, clinical safety checks, and connectivity in the rapidly evolving pharmaceutical market to meet the needs of clients and customers.

And we're continuing to enhance our technology platforms, better connecting the different components of the pharmacy benefit to create a simpler, more flexible experience for patients and clients.

Turning to Cigna Healthcare, we delivered another quarter of strong growth with results ahead of expectations, with pre-tax adjusted earnings growth of 15% year-over-year.

Our discipline pricing, coupled with advanced analytics and insights, enable our steady medical care ratio performance.

While medical cost trends continue to be elevated, they are consistent with our expectations

and pricing assumptions. This quarter, we also benefited from stronger net investment income

and favorable SG&A performance. We also introduced new capabilities in Cigna Healthcare in September

with the launch of HealthSense, our data and technology-powered customer engagement solution

that will start with oncology but broaden to other conditions over time. By connecting a customer's

health needs, benefits, pharmacy coverage, costs, claims, and prior interactions, our clinical teams have context and a more complete picture enabling earlier interventions. As a reminder, costs are increasingly concentrated in complex conditions, with 8% of patients generating 55% of total healthcare spent. We're excited about the early positive reception to HealthSense from clients and customers and are taking an agile approach to

launching additional components as they are built. As we look to 2027, we remain confident in the

strength of our strategic growth framework and our ability to perform through a dynamic environment.

During our fourth quarter call, we will provide our comprehensive 2027 guidance.

We continue to expect adjusted earnings per share growth of at least 10% in 2027 off our run rate

earnings for our ongoing businesses and remain confident in 2030 adjusted earnings per share of at least $45 that we outlined in our investor day. Today, I'll briefly cover the primary tailwinds and headwinds for 2027. Starting with the tailwinds. First, in our Cigna Healthcare business, we are driving continued improvement in our stop loss margins. Second, we're pleased with a strong 2027 selling season in both Evernorth and Cigna Healthcare.

High client retention and new business wins reinforce the strength of our value proposition

and innovation and will contribute to attractive enterprise revenue growth in 2027.

And third, our Accelerate to One Modernization and Productivity Initiative will drive savings across the enterprise.

Turning to the headwinds we expect in 2027. First, within Evernorth Pharmacy Benefit Services, the compression of industry rebate pools and lower employer coverage of GLP-1s for weight loss, consistent with our commentary from Investor Day.

Second, within Evernorth Specialty and Care Services, a more limited pipeline of biosimilar and specialty generic launches in the coming year. And finally, as you'd expect, the known exit from the ACA exchange business will remove that contribution from Cigna Healthcare.

To ensure our success, we're focused on discipline execution across the enterprise. Part of our DNA is our proven ability to evolve. Throughout our 234-year history, we've continuously adapted to lead through change and innovated to drive what comes next. Across our businesses, we're coupling data and insights with our clinical and analytical expertise, resulting in disciplined pricing, timely patient support, and consultative solutions for clients.

And we're building a future-ready, efficient, and effective workforce while optimizing accountability and decision-making with our Accelerate to One initiative, all while driving run-rate savings of $3 billion by 2030, which you'll hear more about from Ann in a few moments.

Now let me close with a few key takeaways. First, we are generating core growth in each of our three business platforms.

We've deliberately shaped our portfolio with capabilities that are focused on the most attractive sub-sectors of healthcare, where needs and spending are concentrated, with multiple growth engines across specialty and care services and pharmacy benefit services in Evernorth, along with Cigna Healthcare. Second, we are leveraging our distinct capabilities that strengthen our position for the future.

Our expertise in complex care, combined with our clinical capabilities, data, advanced analytics, and AI, enables us to deliver greater personalization at scale, improve affordability, and create more value for the people we serve. You see that strategy coming to life through capabilities like HealthSense, our expanding specialty infrastructure, and continued innovation across our pharmacy businesses. Third, disciplined execution continues to differentiate our company.

This quarter, that showed up in strong client demand, disciplined pricing, stable medical cost trends, continued specialty growth, and our ability to adapt our solutions as the market evolves.

And as we look to 2027, we have clear visibility into the puts and takes ahead and have multiple levers across the enterprise to deliver against our commitments. Importantly, we are not dependent on any one single business, market trend, or innovation to deliver our long-term expectations. Our third quarter performance reinforces our confidence in our lead to one vision and in our long-term strategy, leading to durable, profitable growth and compelling long-term shareholder value creation. With that, I'll turn it over to Ann.

Thanks, Brian, and good morning, everyone. As Brian mentioned, our third quarter results reflect the strength of our enterprise and the consistency of our execution. Through our lead to one vision, we are delivering core growth across a deliberately shaped portfolio of businesses, leveraging our distinct capabilities to deliver greater personalization at scale, particularly for patients with complex conditions, and executing with discipline. That combination of focused strategy,

and execution continues to translate into strong results. During the quarter, we delivered adjusted revenues of $73.8 billion, adjusted after-tax earnings of $2.1 billion, and adjusted earnings per share of $7.98. With our strong third quarter performance, we are raising our full year 2026 adjusted earnings per share outlook to at least $30.60.

Now, turning to our segment results, I'll start with Evernor, where we continue to execute on the strategy Matt Pearlberg and Adam Kautner outlined at Investor Day to strengthen our specialty leadership while evolving pharmacy benefit services to deliver greater affordability and transparency.

Third quarter 2026 revenues grew 6% year-over-year to $63.8 billion, and pre-task adjusted earnings were $1.8 billion.

Specialty and care services delivered strong performance, with pre-tax adjusted earnings growing 15% year-over-year to $1.1 billion, in line with expectations.

This growth reflects our distinct specialty capabilities across Acredo and CurisGraphs, and our clinical expertise and patient support services, which together are driving momentum in our fastest-growing business. Consistent with our Lead to One strategy, we continue to make specialty care more affordable by accelerating access to lower-cost alternatives, which benefit patients and clients while driving growth for the business.

We continue to drive strong adoption of biosimilars, led by our zero-dollar patient out-of-pocket offerings for both biosimilar Umaira and Stellara. Adoption of new specialty generics continue to ramp during the quarter, including generic Revlimid, where penetration is now approximately 90%. And finally, income from our investment in Shields Health Solutions contributed to the growth in the quarter.

Within Pharmacy Benefit Services, pre-tax adjusted earnings were $765 million, in line with expectations.

As we outlined in Investor Day, this business is in a period of transition, and our performance continues to reflect the previously discussed renewals and extensions of large client contracts, as well as investments to support the transition to our new signature model.

Overall, Evernor's third quarter results reflect continued growth in our specialty and care services business, powered by our distinct capabilities across both pharmacy and medical benefits, and disciplined execution as we evolve our pharmacy benefit services business towards signature, delivering greater affordability and transparency for patients and clients. Turning to Cigna Healthcare, where we continue to execute on our

On the strategy Brian Holgerson outlined at Investor Day, deepening client relationships

and expanding share in the employer market through our integrated medical, pharmacy, and behavioral model

with a particular focus on customers with complex care needs. We see significant opportunity to improve

outcomes and affordability for these customers through more personalized care. Third quarter

of 2026, adjusted revenues grew 9% year-over-year to $11.7 billion, and pre-tax adjusted earnings

were $1.2 billion. Cigna Healthcare adjusted earnings were ahead of expectations, primarily

driven by favorable net investment income and ongoing operating efficiencies. The medical

care ratio for the third quarter was 85%, in line with expectations as trend remained elevated

but stable, and costs remained consistent with our pricing assumptions. Total medical customers

We have grown 2% year-to-date to 18.5 million customers. We continue to see strong growth in our select segment, which serves U.S. employers with fewer than 500 employees, with medical customers up 5% year-to-date, reflecting market share gains that we highlighted at Investor Day. Overall, Cigna Healthcare continues to deliver strong growth, driven by our distinct capabilities, along with discipline pricing and expense management.

Now, turning to our updated outlook for 2026. The strength of our third quarter performance gives us the confidence to increase our full-year adjusted earnings per share outlook to at least $30.60. Within Evernorth, we continue to expect full-year pre-tax adjusted earnings of at least $6.9 billion.

Within Cigna Healthcare, we are raising our full-year pre-tax adjusted earnings outlook to at least $4.6 billion, and with greater visibility into full-year performance, we are updating our full-year MCR outlook, maintaining our prior midpoint of 84.2 percent, and tightening our range to plus or minus 25 basis points.

Turning to our 2026 capital management position, the third quarter operating cash flow was $2.6 billion, and we continue to expect strong cash flow from operations in the fourth quarter, consistent with the pattern we observed in the prior two years.

During the quarter, we reduced our debt-to-capitalization ratio by approximately 100 basis points to 41.8% as of September 30th, and we remain on track to achieve our long-term target of approximately 40% by year-end.

Additionally, in the third quarter, we were purchased approximately 900,000 shares of common stock for approximately 250 million dollars.

In our specialty and care services business, despite more limited biosimilar and specialty generic launches in 2027, we still expect adjusted earnings to grow within the 8-12% long-term target range, though towards the low end.

In pharmacy benefit services, as Brian mentioned, and as we discussed at our investor day, we anticipate near-term headwinds, including industry-wide compression and gross rebates, and lower employer coverage of GLP-1s for weight loss, consistent with our prior comments. Taken together, we expect Evernor's earnings to be up low single digits in 2027.

Regarding our capital management in 2027, consistent with the deployment framework we outlined at InvestorDay, we continue to view share repurchase as an attractive use of capital. As I mentioned earlier, we expect to achieve our debt-to-capital target of approximately 40% by year-end 2026, and we expect greater flexibility in capital deployment next year.

In summary, we remain confident in delivering at least 10% adjusted earnings per share growth in 2027 off of our 2026 run rate of approximately $30, which reflects our exit from the ACA Exchange business.

We believe this is a prudent starting point, and we look forward to providing further guidance on our fourth quarter call.

Underpinning our confidence in our ability to deliver in 2027 and through 2030 is accelerated to one. This modernization and productivity initiative, which we announced at our recent Investor Day, will lower our cost to serve and create operating leverage for the enterprise.

We expect this initiative to contribute $3 billion in gross savings by 2030. Notably, we expect to reinvest some of these savings back into the business to fund growth and innovation, while a portion will benefit operating results.

This initiative further reinforces our confidence in our ability to deliver attractive earnings growth in 2027 and over the long term, and we look forward to providing periodic updates on our progress.

Education, educating the market, signing manufacturing and pharmacy agreements. Can you help us to understand, one, what that looks like? Two, what the progression looks like in 2027? And you talked about low single digits overall for Evernor. So it doesn't feel like there's a big progression versus what we're seeing here in 2026 and the PBS segment specifically.

So, if you could just help us to bridge that and talk a little bit about, you know, how you make progress in the contracting.

Good morning, Lisa. I'll start, and if there's anything you want to add, feel free to jump in here.

So, I think a few components to your question there, starting with Signature, and then I believe your reference to the low single digit was the EberNorth aggregate income growth expectation that we outlined there.

But just relative to where we are with Signature, first off, we're proud to lead the industry with our new Signature pharmacy benefits offering.

If you step back, affordability continues to be the number one challenge-facing patients, with the affordability of prescription drugs being a primary pain point. And that's particularly acute for high-cost branded prescriptions, which represent just 10% of all prescriptions in America, but 90% of the total drug spending.

And when you look back, one of the great success stories in American healthcare is the way PBMs have led generic adoption to now reach some 90% of all prescriptions at very affordable price points. So the next frontier is attacking the remaining 10% of prescriptions that are in very high-cost branded drugs and represent some 90% of drug spending.

So our signature model is designed to attack that 10% of high-cost brand drugs and provide a simple, fee-based, transparent solution for clients and customers. So as I talked about earlier, there are three phases of our signature model implementation. Maybe I'll just share a little bit more color on some of those components. Phase one was the design phase, which is now complete, which was the decision we made to move to a simple, future, fee-based, no-rebate model.

And this architecture leverages the same value creators for clients and customers, meaning procuring drugs at the most affordable unit costs, wrapping those with clinical programs that drive adherence and administering complex benefit plan designs.

Phase two is our build phase, and I think your question was pointing at this specifically in terms of where are we with manufacturer or network contracts. This is actively underway. Our team's doing quite a bit of heavy lifting here relative to recontracting as we speak. We'll talk about more details on this on our fourth quarter call, but we're actively negotiating with the largest pharmaceutical manufacturers as we speak to get the signature contracts fully landed.

This phase also includes all the technology enhancements and the implementation readiness

work that's required. Finally, for the upcoming sales season, we've been working hard to educate

brokers, the employer community, current clients, and prospects on what the signature model entails.

And then phase three, as I alluded to earlier, is our adoption phase, and that's well on track. The next

milestone is our Cigna Healthcare Fully Insured Book, which will adopt signature 1127, and then the

broader ramp will transpire throughout 2028. So big picture, strong receptivity from each of those

different stakeholders. We continue to expect 28 will be the year where we see significant adoption

across the broader Evernorth book of business. The second part of your question, as Ann indicated in her comments, we expect Evernorth 27 income to be up low single digits. We expect our specialty and care business to be within our long-term growth algorithm of 8% to 12%, albeit at the lower end, which implies our pharmacy benefit services income will be down single digits in 27 from where we are in 26 due to the industry-wide pressure on gross rebate pools, as well as the

a downtick in the percentage of employers covering GLP-1s for weight management. As we talked about on prior calls, 26 and 27 are transitional years for our pharmacy benefit services business, and we continue to expect at least 4%, up to 4% compounded income growth from 26 to 30 in the PBS business, and continue to expect at least $45 per share of 2030 adjusted EPS. So, a lot in there. Hopefully, you got all the components to your question.

Thank you. And this question comes from Kevin Fischbeck with Bank of America. You may ask your question.

Great. Thanks. I guess just kind of two follow-up questions on the guidance for 2027. I guess first, the $0.60 drag, it sounds like some of it's just core earnings and some of it is kind of stranded costs. Can you quantify how much that $0.60 might be recaptured in 2028 and beyond?

And then as far as the headwind to 2027 regarding the fewer launches on the specialty side, is there any early look on 28? Is that a more normal year in your view, or is that also a little bit lower? Thanks.

Good morning, Kevin. I'll have Anne take the first part of your question in terms of the individual exchange exit and the impact on 2627, how to think about 28, and then I'll take the second piece relative to the specialty and care. Anne.

Great. Good morning, Kevin. So just on the ACA, just to level set, the results for the quarter, this quarter, were largely in line with expectations, and so I mentioned this in my prepared remarks, but as a reminder, we expect the business to be profitable this year, but with margins a little below our 4% to 6% target range. So there's two things to think about as we look at the impact of the ACA exchange exit on our 27 outlook. The first is what the business contributes today.

And then the second is the transfer overhead and other costs that come along with exiting

a business, which is what you'd expect. So when you put those two together, based on our current projections,

we expect an all-in headwind of about $200 million from exiting the exchange market.

As we specifically related to your question on recapture in 28, of course, as we always do,

we'd be looking to get out any of the runoff costs and the stranded overhead that remains once we've

excited the business. Thanks, Ed. And on the second component of your question, Kevin, in terms of the headwind that we flagged relative to the specialty and care business, it's specifically 2027 is a bit of a slower year for new biosimilar and specialty generics. If you get to step back and look over a longer period of time, new introduction of biosimilars and specialty generics has been a great success story for American healthcare. And over the past three years, Humira having biosimilar competition in 24,

Stellara having biosimilar competition in 25, generic Revlimid having supply constraints

eased in 26. Each of those provided tailwinds for 24, 25, and 26. And when you look back

at our specialty and care business, between 2023 and 26, we've compounded income growth of 13%,

which is above our long-term growth algorithm for specialty and care. Now, from year to year,

there'll be some added flow on the timing and magnitude of drugs that will see new biosimilar

and specially generic competition. So for 27 specifically, again, the pipeline indicates less material new biosimilars or specially generics being introduced, but I would view that as a temporary slowdown. As we look ahead to 28, 29, and 30, there are several biosimilars coming to market for drugs often covered under the medical benefit. So think oncology drugs, MS drugs, and we're preparing for these introductions. Now, stepping back from all of this, we're actively encouraging the approval and adoption of the

These low-cost alternatives, it's a great means to improve affordability.

And finally, the continued momentum across our broader specialty and care portfolio allows

us to overcome this headwind to specialty growth.

And as Ann noted, we do expect on 2027 specialty care earnings growth near the low end of our long-term income growth algorithm 8% to 12% per year, which speaks to the strength of our broad suite of specialty capabilities, as well as our expertise in serving patients with the most complex health care needs. Hopefully that helps.

Thank you. Our next question comes from AJ Rice with UBS. You may ask your question.

Thanks. Hi, everybody. Just to make sure I understand, so as you deploy the new signature model next year to your fully insured book, you didn't mention that as a headwind-tailwind for either side of the business.

Is there any short-term pressure, either on the insurance side or on the Evernor side, that then abates over time as it gets more mature?

And just also on the signature model, you did reference various regulatory things, the PBM reform legislation from January, the Department of Labor announcement.

Are you naturally going to comply with all of the provisions there as you move to the signature model, or is there anything incrementally from an investment perspective you need to do to comply with those as they phase in by 28 and so forth?

Good morning, AJ. A few different components in there. Relative to the first piece of your question, the signature model implementation for our fully insured business for 1-1-27 within Cigna Healthcare, as I mentioned earlier in Lisa's question, fully on track to implement that effective January 1st. To your point, that is not a headwind relative to 27. The reason for that is, since it's fully insured business, any change in economics is essentially in the price.

It's in the price that we've implemented through our standard underwriting process as we go through case-by-case, client-by-client, and put the appropriate price in place.

So, the 27 headwinds we talked about specifically for PBS are limited to the GLP-1 weight management coverage ticking down in our employer book, and secondarily, the compression on industry-wide rebates. So, again, 26-27, think of those as transitional years for PBS. 28-29-30, we'll see income growth over that time period.

On the second piece of your question, relative to some of the PBM rules, regulations, and reform changes that have gone through, most recently, the Department of Labor PBM transparency rule was issued just a few weeks ago, and really, this issue or this rule speaks to the primary challenge of our healthcare system, which, again, is affordability.

And we support the underlying spirit implied by this rule, specifically the use of objective, data-driven, transparent information in order to drive more educated purchasing and utilization.

That said, we think it's very unlikely that this rule will result in lower prescription drug spending.

There's some redundancy in the DOL rule and the Consolidated Appropriations Act, and there's some areas where the two are actually contradictory.

Our team is actively engaging to drive clarity on these issues for the benefit of our clients and customers. As it relates to the DOL rule itself, we will, of course, comply with the requirements. This will add some administrative cost and burden to the system, but you should not think of that as a material amount of new spending, something that I would view as normal course for our PBS business.

But again, coming back to our signature model, that is our one bold way that we're taking action ourselves to drive change in the system with a focus on affordability and a focus on actionable transparency. This model also provides that patient guarantee of the lowest possible out-of-pocket cost when they fill a prescription. Finally, the signature model is designed to comply with evolving regulations, including both the CAA and the DOL Transparency Rule while reducing fiduciary risk for employers who adopt this.

So, we're very excited about the signature model. Looking forward to its scaling across the EverNorth book starting in 28. Thanks for the question.

Thank you. And this question comes from Justin Lake with Wolf Research. Your line is helping me ask your question.

Thanks. Good morning. On the three headwinds to Evernorth next year, are all three about similar size, or maybe you can rank order them for us in terms of impact? And then you didn't mention investment gains in 2026 as a headwind for the healthcare business next year. By my math, it looks like it could be north of $100 million. How should we think about that? Thanks.

Thanks. Good morning, Justin. I'll start, and if you could pick up on how to think about the quant on the three headwinds as well as the question Justin asked about the investment income. We're going to wait until the fourth quarter to get into our detailed guidance relative to sub-segment and segment guides for 27. What we're trying to do today was give you a little bit of texture in terms of how to think about the 27 versus 26 income trajectory for each of our businesses.

But as I said earlier to the question that Kevin asked on specialty, we will still be within our 8% to 12% income growth algorithm, albeit at the lower end. So that headwind in the big picture is more than offset by the underlying strong secular growth that we see in specialty by the continued expansion of our distribution capabilities, by the improvement in our cost to fill through initiatives like our pharmacy forward.

So big picture, you should not think of that as a substantial headwind in a dollars and cents standpoint.

And then the PBS headwind that we made reference to contributes to the total income being down single digits 27 relative to 26.

So that gives you a bit of just ballpark dimensioning of how to think about the magnitude.

And can you pick up anything else on the headwinds and then the investment income component?

Sure. Just to Brian's point around pharmacy benefit services and the headwinds there,

We look forward to quantifying, you know, the specific numbers coming out of the fourth

quarter. You can think about those, the two headwinds referenced as, you know, relatively equal. On the investment gains in Cigna Healthcare for this year, I would not characterize that as a headwind going into 2027.

Thank you. And this question comes from Scott Fidel with Goldman Sachs. Let me ask your question.

Hi, thanks, and good morning. I wanted to just ask about the new initiative, the lead to one that you discussed at the Investor Day, and I know it sounds like, you know, already there's sort of execution on that that's going on within the company, and Brian and Ann, maybe just, you know, in particular, if you can give us any visibility into a level of run rate savings,

that you expect to potentially be accrued into the 27 outlook that you're contemplating and the potential, you know, sort of key drivers of that, and then also just any one-time costs that we may anticipate may hit the, you know, the gap in P&L just in the back half of this year or into next year as you implement workforce rationalization and other elements of the lead to one strategy. Thanks.

Good morning, Scott. I'll start and then end if you could pick up. So Scott referenced lead to one. I think he was bridging over to our accelerate to one initiative as well in his question relative to the $3 billion of run rate saved that we expect to see by 2030. So step back, lead to one is our vision for the future, which is essentially driving personalization at scale. We see the emergence of data, modern technologies, advanced analytics, AI, allowing us to drive personalization in ways that we couldn't.

Even three, five years ago, and we're excited to do that across all the customers and patients

we serve with a particular emphasis on those who have the most clinically complex healthcare needs, which, as I said in my earlier comments, that now represents 55% of total spending, even though it's just 8% of patients.

Our Accelerate to One initiative specifically is using a combination of technology, workforce effectiveness, vendor rationalization in order to drive that $3 billion of run rate saved by 2030,

$3 billion of gross run rate savings by 2030. Ann, can you pick up a little bit in terms of how to think about the timing, the emergence investment spend at that part in Scott's question?

Another sort of one-time cost in order to execute some of the savings that we're doing this year that will carry into next year.

Thank you. Our next question comes from Jason Casola with Guggenheim Securities. You may ask your question.

Great. Thanks. Good morning. I wanted to ask a little bit more on Evernorth for 2027.

One of the headwinds for PBS segment this year was lower customer script growth due to declines in client plan membership. I guess I'm just curious how you're thinking about that paradigm for 2027. If you're assuming some level of headwind there, that's perhaps more than offset by the strong 2027 selling season. Just any color around that would be helpful. Thanks.

Good morning, Jason. Appreciate the question there. And you're right, relative to 26, we've seen some decline in the pharmacy benefit services business, both in terms of scripts and overall customer counts. I just would remind everyone, script counts are not really a great indicator of the financial health or success of this business anymore, particularly as specialty drugs have proliferated, representing a small percentage of prescriptions, but over half of total drug spending.

Another reminder is we serve many health plan clients, and our customer and script volumes are partially dependent upon their own membership growth or decline.

So year-to-date, we did see some reduction in volumes from our EverNorth health plan clients, specifically partially driven by how some approach their Medicare and Medicaid product and pricing strategies. All that was broadly in line with expectations, and as we indicated, our overall EverNorth business delivered solid financial performance through third quarter of 26, and we're pleased to reaffirm the full-year outlook for EverNorth, incorporating all of those dynamics.

As it relates to 27 and how to think about this dynamic relative to the selling season, we're tracking toward retention in the high 90s, as I indicated earlier, similar to what we saw in 26, consistent with historical norms. Additionally, our 27 new business performance is very strong. We're tracking to at least 2 million new PBS customers in 2027 with that new business written and targeted profit levels.

And that's been generated from a combination of traditional PBM competitors as well as some smaller alternate PBMs.

And as I indicated earlier, our new signature model is generating considerable interest both from existing clients as well as prospects as we look to scale and in 20 and beyond.

All this is evidence that our clients see us as a multi-year thought partner as they prepare for future changes in their pharmacy benefit programs.

So, taken all together, these factors have been incorporated into the outlook that Ann introduced this morning. And as I mentioned in one of my earlier comments, enterprise revenue for the entire Cigna Group is on track for an attractive rate of growth here in 27. Thanks for the question.

Thank you. Our next question comes from Charles Rhee with TD Cowan. You may ask your question.

Yeah, thanks for taking the question.

You know, as you kind of talked about 340B here, it's not including the headwinds for

specialty care and services.

Can you help us understand a little bit why this might be a little bit of impact for you guys here versus maybe some of your peers?

Good morning, Charles. I appreciate the question. Maybe I'll start with a little bit of background on the program and how we participate and the core of your question on the 27 implications.

The 340B program has been in place since the early 90s, as you know, designed to support access to care for vulnerable patients by allowing those hospitals who serve them to purchase drugs essentially at a lower cost. And this remains a critical lifeline for many rural and safety net hospitals. Over the years, we've seen the program experience changes around eligibility, contract pharmacy access, manufacturer participation, but it has endured given the criticality of the program's underlying

purpose to support those rural and safety net hospitals. The way we participate in the 340B program is multifaceted. The most direct way is through ACREDO, where we serve as a contract pharmacy in the 340B program. Now, importantly, our total number of 340B contract pharmacies is far below that of the large retail pharmacy chains. So, our exposure as a result is a small fraction of what those competitors would have or what those pharmacy

chains would have. Overall, you should think of Acredo's participation as a 340B contract pharmacy as being a relatively small contributor to overall Evernorth earnings. I'd also note that the contribution of 340B is reflected within the specialty and care portion of Evernorth specifically. Now, as it relates to 27, there will be some modest downward pressure on our 27 results from the evolved 340B program requirements, but it's just not significant enough for us to call it out as a substantial headway.

And the continued momentum across our broader specialty and care portfolio, as I described earlier, strong secular growth, distribution expansion, cost-to-fill improvements, allows us to generate income growth that will be near the low end of our long-term growth algorithm for specialty and care of 8% to 12% per year, so we'll be toward the lower end of that. Again, all that speaks to the strength of the broad suite of capabilities we have across specialty and our expertise in serving those individuals with the most complex healthcare needs.

So, modest headwind, but more than overcome by those other factors.

Can I follow up with the OPPS cuts for Part B sort of infusion services? Does that have any impact? I know it doesn't really get consolidated into your results, but just thinking about SHIELDS and sort of the work they do, would that have an impact for SHIELDS at all, or is that maybe an opportunity for SHIELDS in helping hospitals?

Yeah, I appreciate that question as well. So, to your point, we have an investment position in SHIELDS, so it doesn't, the underlying performance of the SHIELDS business does not consolidate into our income. We have essentially a preferred investment, so there's some income from that, but the underlying performance of the asset does not consolidate into our results.

Thank you. Good morning, Elizabeth. I'll start and then hand it over to Anne to get into more of the specifics in terms of current performance and 27 implications.

Big picture, our stop loss book is performing well, and in line with what we talked about before in terms of 26 and 27 being the years where we are increasing the margin profile in that book of business back to target levels,

Most of that has been accomplished here in 26 with the price actions we were able to secure,

and I've been really pleased with the strong retention on that book of business,

which speaks to the strong consultation, the sales and client management teams within Cigna Healthcare,

doing great work to ensure that we continue with those long-term relationships.

But the overall stop-loss book continues to perform well, and as we indicated earlier,

that's one of the three enterprise tailwinds for 27 as we step into the new year.

Anne, can you pick up a bit in terms of current year performance and the 27 price increases?

Sure. So, as Brian said, tracking in line with what we expected.

As we talked about before, we built out our analytics and clinical data so we can price at the right levels and also see early performance. And so, those indicators are tracking well. I'll give you an example. Year-to-date, we've seen relatively stable frequency trends and high-cost claimants across multiple attachment point levels. And that's played out consistent with our expectations, but also consistent with what we observed last year.

So when we put it all together, along with the other indicators we watch, we're feeling good about the stop loss book and where we expect to finish this year. Performance is in line with our pricing and planning and our margin recapture targets. And as Brian just mentioned, our plan is to recapture a portion of the margin over this year and a portion of next year.

So, with our visibility into the performance this year, our expectations from next year, our pricing, you know, it captures this objective, and we're executing well against the plan.

So, we remain confident in our NCR range for this year, including stop-laws, and also executing on the remainder of our margin recapture plan as we go through 27.

Great. Thank you very much.

Thank you. And this question comes from Witt Mayo with Lea Ring Partners. You may ask your question.

Hi, good morning. This is Dean Rizal. It's on for Witt. After some noise surrounding Arkansas last year, you reemphasized the value of integrating PBM and pharmacy capabilities. With Tennessee moving in a similar direction, being a bit of a different story considering Acredo's Memphis footprint, has that at all changed how you think about Evernor's operating model and the general flexibility you might need going forward? Thank you.

Good morning, Stephen. I'll take that one. So, stepping back, I think your question is about some of the state-level activity relative to, I'll call it vertical integration, for lack of a better term, just to put an umbrella term over it. As we talked about some of the prior questions here this morning, it's clear that our current healthcare system is on an unsustainable trajectory with affordability, fragmented patient experiences being common pain points. We're seeing some policymakers, legislators focusing on vertical integration.

as a potential root cause of these challenges in the healthcare system.

Now, for us, we do not pursue integration for its own sake. Rather, we see tremendous benefits to patients through connecting data with individual contexts, along with coordinating care across providers, plan designs, et cetera. And our Lead to One vision is designed to drive personalization at scale. And as I said earlier, a particular emphasis on those with the most clinically complex healthcare needs. And our integrated capabilities allow us to do this even better and more effectively.

And we have strong evidence of improved affordability results and greater patient satisfaction when care is integrated and coordinated, for example, in our HealthSense Oncology patient solution.

We provided a few examples of this during the investor day.

For example, the evidence showing that a cancer patient's integrated journey saves $28,000 per person per year or $2,000 per person per year of savings for an integrated customer who has cardio-diabesity.

And it's not just affordability. It's also better health outcomes. For Cigna Healthcare, integrated customers show 12% lower A1C for people with diabetes.

So these are all examples of our integrated model playing itself out in the form of improved affordability, better patient experiences, and improved health outcomes. So we believe the current composition of the Cigna Group and our three growth platforms, Cigna Healthcare, Specialty in Care, Pharmacy Benefit Services, is optimal. And we believe we're creating real value for customers in the market and value for shareholders with the current composition of the Cigna Group.

Thank you. Our last question comes from Erin Wright with Morgan Stanley. You may ask your question.

Great, thanks. At Investor Day, you talked about the next leg of growth in specialty, including greater opportunity across medical benefits side, as well as on the distribution side, too.

Are these drivers we think about for 27, or are these drivers that we're thinking about more longer term, or anything you can quantify on that front? Thanks.

Good morning, Erin. Appreciate the question. You're right. Those are two specific areas that will continue to drive attractive growth in the specialty and care portfolio over time. And to the core of your question, distribution as well as the medical benefit are areas where we're comparatively underrepresented relative to the overall specialty space today. So, if you think about our distribution capabilities, CureScript, today's a $25 billion business.

So, already sizable, and it's been growing double digits for many years in a row. Yeah, we see substantial opportunity to grow that even more rapidly in the future. So, the introduction of our Evernor wholesale capability that we talked about at the Investor Day is one example of expanding our reach in the distribution space. And you heard from Matt Pearlberg at Investor Day, we expect $20 billion of net new revenue in distribution and specialty by 2030. So, $25 billion from today.

We'll go to $45 billion by 2030, reflecting that distribution expansion.

$27 will not see an outside benefit, per se, from that.

You should think of it as more a gradual build in that space over the course of the next three to four years.

And on the medical benefit, to your point, when you step back, the specialty market in aggregate is, call it, a $480 billion addressable market.

Roughly 60% of that is direct to patient. That's where we have particularly strong capabilities, strong market share. Our credo specialty pharmacy is pointed there. We have attractive market share. We continue to win business in the market, but we're already strong in that space. The medical benefit, the other 40%, it's often provider-administered specialty medications. We have comparatively small share in that space with just 6% or 7%. Similar to the distribution question, 27%

will not see outsized growth in our specialty medical business. In the later years in the decade, when some of those biosimilars under the medical benefits start to hit, that's when we'll see an uptick in the growth rate there. So again, think of biosimilars for oncology, biosimilars for MS. We'll start to see more of an uptick later in the decade. So neither one of those are a specific outsized contributor to 27, but they're both exciting opportunities for our specialty and care portfolio to continue to perpetuate its growth.

Thank you. I will turn the call back over to Brian Ivanko for closing remarks.

Thank you very much, and thanks for all of those questions. Let me just close with this. It's an exciting time here at the Cigna Group as our company unifies around a single vision, lead to one, and begins to compound the distinctive capabilities we've developed to capture the opportunity set in front of us. We have a clear strategic growth framework for creating long-term value, and we'll continue to execute with discipline across the enterprise.

As we wrap up 2026 and look ahead to 2027, we're energized by our strategy and execution momentum.

We have a proven ability to lead and navigate change, and it's a privilege to do so while serving our customers, patients, and shareholders.

With that, I want to thank our team around the world for their commitment to our customers, for their partnership and collaboration, and for their adaptability. Thank you for your time today and your interest in the Cigna Group.

Ladies and gentlemen, this concludes the Cigna Group's third quarter 2026 results review.

Cigna Investor Relations will be available to respond to additional questions shortly.

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