8-K
Cigna Group (CI)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August1, 2024
The Cigna Group
(Exact name of registrant as specified in its charter)
| Delaware<br><br> <br>(State or other jurisdiction of<br><br> <br><br><br> <br>incorporation) | 001-38769<br><br>(Commission File Number) | 82-4991898<br><br>(IRS Employer<br><br>Identification No.) |
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900 Cottage Grove Road
Bloomfield, Connecticut 06002
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(860) 226-6000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, Par Value $0.01 | CI | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
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On August 1, 2024, The Cigna Group issued a press release announcing results for the three months ended June 30, 2024. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this Current Report on Form 8-K, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
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(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated August 1, 2024. |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE CIGNA GROUP | ||
|---|---|---|
| Date: August 1, 2024 | By: | /s/ Brian C. Evanko |
| Brian C. Evanko | ||
| Executive Vice President, Chief Financial Officer, The Cigna Group, and President and Chief Executive Officer, Cigna Healthcare |
Exhibit 99.1
| Press Release |
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INVESTOR RELATIONS CONTACT:
Ralph Giacobbe
860-787-7968
Ralph.Giacobbe@TheCignaGroup.com
MEDIA CONTACT:
Justine Sessions
860-810-6523
Justine.Sessions@Evernorth.com
The Cigna Group Reports Strong Second Quarter2024 Results
| • | Total revenues for the second quarter 2024 increased 25% to $60.5 billion |
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| • | Shareholders’ net income for the second quarter 2024 was $1.5 billion,or $5.45 per share |
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| • | Adjusted income fromoperations^1^ for the second quarter 2024 was $1.9 billion, or $6.72 per share |
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| • | 2024 outlook^2^for adjusted income from operations^1,2^ is at least $28.40 per share |
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^^
BLOOMFIELD, CT, August 1, 2024 – Global health company The Cigna Group (NYSE: CI) today reported strong second quarter 2024 results reflecting broad-based revenue and earnings growth across its businesses.
“Our second quarter results underscore the strength of our diversified portfolio. We continue to deliver innovative solutions to meet the evolving needs of those we serve,” said David M. Cordani, chairman and CEO of The Cigna Group. “We remain disciplined in our approach to executing our strategy, enabling us to consistently deliver value and sustain our growth in a dynamic environment.”
Shareholders’ net income for second quarter 2024 was $1.5 billion, or $5.45 per share, compared with $1.5 billion, or $4.92 per share, for second quarter 2023.
The Cigna Group's adjusted income from operations^1^ for second quarter 2024 was $1.9 billion, or $6.72 per share, compared with $1.8 billion, or $6.13 per share, for second quarter 2023, reflecting strong contributions from both Evernorth Health Services and Cigna Healthcare.
A reconciliation of shareholders’ net income to adjusted income from operations^1^ is provided on the following page and on Exhibit 1 of this earnings release.
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CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations of total revenues to adjusted revenues^3^ and shareholders’ net income (loss) to adjusted income from operations^1^:
| Consolidated Financial Results (dollars in millions): | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, | March 31, | June 30, | |||||||||
| 2024 | 2023 | 2024 | 2024 | ||||||||
| Total Revenues | $ | 60,523 | $ | 48,586 | $ | 57,255 | 117,778 | ||||
| Net Realized Investment Results from Equity Method Investments^3^ | (53 | ) | 30 | (8 | ) | (61 | ) | ||||
| Adjusted Revenues^3^ | $ | 60,470 | $ | 48,616 | $ | 57,247 | $ | 117,717 | |||
| Consolidated Earnings, net of taxes | |||||||||||
| Shareholders’ Net Income (Loss) | $ | 1,548 | $ | 1,460 | $ | (277 | ) | $ | 1,271 | ||
| Net Realized Investment (Gains) Losses^1^ | (20 | ) | 9 | 1,827 | 1,807 | ||||||
| Amortization of Acquired Intangible Assets^1^ | 317 | 346 | 322 | 639 | |||||||
| Special Items^1^ | 64 | 5 | 3 | 67 | |||||||
| Adjusted Income from Operations^1^ | $ | 1,909 | $ | 1,820 | $ | 1,875 | $ | 3,784 | |||
| Shareholders’ Net Income (Loss), per share^^ | $ | 5.45 | $ | 4.92 | $ | (0.97 | ) | $ | 4.43 | ||
| Adjusted Income from Operations^1^, per share | $ | 6.72 | $ | 6.13 | $ | 6.47 | $ | 13.19 | |||
| • | Total revenues for second quarter 2024 increased 25% from second quarter 2023,<br>primarily driven by significant growth in Evernorth Health Services, reflecting large client wins. | ||||||||||
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| • | Adjusted income from operations^1^ for second quarter 2024 increased 5%<br>from second quarter 2023, reflecting strong contributions from Evernorth Health Services and Cigna Healthcare. | ||||||||||
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| • | The SG&A expense ratio^4^ and adjusted SG&A expense ratio^4^<br>were 6.1% and 6.0%, respectively, for second quarter 2024, compared to 7.1% for both ratios in second quarter 2023, reflecting business<br>mix shift and continued operating efficiency. | ||||||||||
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| • | The debt-to-capitalization ratio was 43.6% at June 30, 2024 compared to 44.3%<br>at March 31, 2024. | ||||||||||
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| • | Year to date through July 31, 2024, the company purchased 14.7 million shares of common stock for<br>approximately $5.0 billion. This includes the purchase of 9.3 million shares of common stock for $3.2 billion in accordance with the previously<br>disclosed Accelerated Share Repurchase (ASR) Agreements. | ||||||||||
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CUSTOMER RELATIONSHIPS
The following table summarizes The Cigna Group’s medical customers and overall customer relationships:
Customer Relationships (in thousands):
| As of the Periods Ended | ||||
|---|---|---|---|---|
| June 30, | March 31, | December 31, | ||
| 2024 | 2023 | 2024 | 2023 | |
| Total Pharmacy Customers^5^ | 122,470 | 98,638 | 122,767 | 98,570 |
| U.S. Healthcare | 17,404 | 17,882 | 17,562 | 18,170 |
| International Health | 1,639 | 1,624 | 1,622 | 1,610 |
| Total Medical Customers^5^ | 19,043 | 19,506 | 19,184 | 19,780 |
| Behavioral Care | 23,816 | 26,383 | 23,801 | 24,956 |
| Dental | 18,339 | 18,634 | 18,443 | 18,543 |
| Medicare Part D | 2,564 | 2,542 | 2,558 | 2,550 |
| Total Customer Relationships^5^ | 186,232 | 165,703 | 186,753 | 164,399 |
| • | Total customer relationships^5^ at June 30, 2024 increased 13% from December 31, 2023<br>to 186.2 million. | |||
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| • | Total pharmacy customers^5^ at June 30, 2024 increased 24% from December 31, 2023 to<br>122.5 million due to new sales and the continued expansion of relationships. | |||
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| • | Total medical customers^5^ at June 30,<br>2024 were 19.0 million, primarily reflecting a year-to-date decrease in Individual and Family Plans customers, driven by targeted pricing<br>actions in certain geographies. | |||
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| • | Behavioral Care customers^5^ at June 30, 2024 were 23.8 million. The year-over-year decrease<br>was primarily due to known non-renewal of supplemental behavioral coverage contracts, which were insignificant to total revenues and adjusted<br>income from operations. | |||
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HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income from operations^1^ to shareholders’ net income.
Evernorth Health Services
This segment includes the Pharmacy Benefit Services and the Specialty and Care Services operating segments, which partner with health plans, employers, governmental organizations and health care providers to solve challenges in the areas of pharmacy benefits, home delivery pharmacy, specialty pharmacy, specialty distribution, and care delivery and management solutions.
Pharmacy Benefit Services drives high-quality, cost-effective pharmacy care through various services such as drug claim adjudication, retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and access to our home delivery pharmacy. Specialty and Care Services provides specialty drugs for the treatment of complex and rare diseases, specialty distribution of pharmaceuticals and medical supplies, as well as clinical programs to help our clients drive better whole-person health outcomes through care delivery and management solutions.
| Financial Results (dollars in millions): | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2024 | 2023 | 2024 | 2024 | |||||||||
| Total adjusted revenues | ||||||||||||
| Pharmacy Benefit Services | $ | 26,612 | $ | 18,819 | $ | 26,095 | $ | 52,707 | ||||
| Specialty and Care Services | $ | 22,871 | $ | 19,324 | $ | 20,072 | $ | 42,943 | ||||
| Net investment income | $ | 65 | $ | 62 | $ | 59 | $ | 124 | ||||
| Adjusted Revenues^3^ | $ | 49,548 | $ | 38,205 | $ | 46,226 | $ | 95,774 | ||||
| Adjusted Income from Operations, Pre-Tax | ||||||||||||
| Pharmacy Benefit Services | $ | 798 | $ | 777 | $ | 513 | $ | 1,311 | ||||
| Specialty and Care Services | $ | 756 | $ | 677 | $ | 788 | $ | 1,544 | ||||
| Net investment income | $ | 65 | $ | 62 | $ | 59 | $ | 124 | ||||
| Adjusted Income from Operations, Pre-Tax^1^ | $ | 1,619 | $ | 1,516 | $ | 1,360 | $ | 2,979 | ||||
| Adjusted Margin, Pre-Tax^6^ | 3.3 | % | 4.0 | % | 2.9 | % | 3.1 | % | ||||
| • | Evernorth Health Services second quarter 2024 adjusted revenues^3^ and<br>adjusted income from operations, pre-tax^1^, increased 30% and 7%, respectively, relative to second quarter 2023. | |||||||||||
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| • | For Pharmacy Benefit Services second quarter 2024 relative to second quarter 2023: | |||||||||||
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| ◦ | Adjusted revenues^3^ increased 41%, reflecting client wins and organic<br>growth. | |||||||||||
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| ◦ | Adjusted income from operations, pre-tax^1^, increased 3%, reflecting<br>continued affordability improvements, partially offset by planned investments to support new and existing client growth. | |||||||||||
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| • | For Specialty and Care Services second quarter 2024 relative to second quarter<br>2023: | |||||||||||
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| ◦ | Adjusted revenues^3^ increased 18%, reflecting client wins and organic<br>growth in specialty businesses. | |||||||||||
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| ◦ | Adjusted income from operations, pre-tax^1^, increased 12%, reflecting<br>organic growth in specialty businesses and clinical care services, partially offset by increased investments to support business growth<br>and the continued advancement of our digital capabilities and solutions. | |||||||||||
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Cigna Healthcare
This segment includes the U.S. Healthcare and International Health operating segments, which provide comprehensive medical and coordinated solutions to clients and customers. U.S. Healthcare provides commercial medical plans and specialty benefits and solutions for insured and self-insured clients, Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors and individual health insurance plans. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.
| Financial Results (dollars in millions): | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2024 | 2023 | 2024 | 2024 | |||||||||
| Adjusted Revenues^3,7^ | $ | 13,143 | $ | 12,714 | $ | 13,277 | $ | 26,420 | ||||
| Adjusted Income from Operations, Pre-Tax^1^ | $ | 1,204 | $ | 1,172 | $ | 1,340 | $ | 2,544 | ||||
| Adjusted Margin, Pre-Tax^6^ | 9.2 | % | 9.2 | % | 10.1 | % | 9.6 | % | ||||
| • | Second quarter 2024 adjusted revenues^3,7^ increased 3% relative to second quarter 2023, reflecting<br>premium rate increases to cover expected increases in underlying medical costs, partially offset by business mix. | |||||||||||
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| • | Second quarter 2024 adjusted income from operations, pre-tax^1^, increased 3% relative to second<br>quarter 2023, primarily driven by continued operating efficiency and higher net investment income, partially offset by a higher MCR^4^. | |||||||||||
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| • | The Cigna Healthcare MCR^4^ was 82.3% for second quarter 2024 and includes approximately $50<br>million of unfavorable prior year revenue impacts, or 40 bps, primarily related to Medicare Advantage risk adjustment. The second quarter<br>2024 MCR^4^ compares to 81.2% for second quarter 2023, reflecting business mix and the aforementioned prior year revenue adjustments,<br>partially offset by effective pricing execution and affordability initiatives. | |||||||||||
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| • | Cigna Healthcare net medical costs payable^8^was $5.04 billion at June 30,<br>2024, $5.66 billion at March 31, 2024, and $5.12 billion at June 30, 2023. The current net medical costs payable reflects more normalized<br>levels after first quarter was elevated due to claims submission and payment process disruptions related to a third-party cyber incident.<br>Favorable prior year reserve development on a gross pre-tax basis was $284 million and $202 million for the six months ended June 30,<br>2024 and 2023, respectively. | |||||||||||
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Corporate and Other Operations
Corporate reflects interest expense, amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations, which is comprised of Corporate Owned Life Insurance (“COLI”), the Company’s run-off operations and other non-strategic businesses.
| Financial Results (dollars in millions): | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2024 | 2023 | 2024 | 2024 | |||||||||
| Adjusted (Loss) from Operations, Pre-Tax^1^ | $ | (451 | ) | $ | (394 | ) | $ | (391 | ) | $ | (842 | ) |
| • | Second quarter 2024 adjusted loss from operations, pre-tax^1^, was $451 million compared to $394<br>million for second quarter 2023, primarily reflecting the impact of higher interest expense. | |||||||||||
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2024 OUTLOOK^2^
The Cigna Group's outlook^2^ for full year 2024 adjusted revenues^2,3^ is at least $235.0 billion. The Cigna Group’s outlook^2^ for full year 2024 consolidated adjusted income from operations^1,2^ is at least $8.065 billion, or at least $28.40 per share^2^. Additionally, this outlook includes the impact of expected future share repurchases and anticipated 2024 dividends.
| (dollars in millions, except where noted and per share amounts) | |
|---|---|
| 2024 Consolidated Metrics | Projection for Full Year Ending<br><br> <br>December 31, 2024 |
| Adjusted Revenues^2,3^ | at least $235,000 |
| Adjusted Income from Operations^1,2^ | at least $8,065 |
| Adjusted Income from Operations, per share^1,2^ | at least $28.40 |
| Adjusted SG&A Expense Ratio^2,4^ | ~6.1% |
| Adjusted Effective Tax Rate^2,9^ | 20.5% to 21.0% |
| Cash Flow from Operations^2^ | at least $11,000 |
| Weighted Average Shares Outstanding (millions)^2^ | 282 to 286 |
| 2024 Evernorth Metrics | |
| Adjusted Income from Operations, Pre-Tax^1,2^ | at least $7,000 |
| 2024 Cigna Healthcare Metrics | |
| Adjusted Income from Operations, Pre-Tax^1,2^ | at least $4,775 |
| Medical Care Ratio^2,4^ | 81.7% to 82.5% |
| Total Medical Customers^2,5^ | ~19.3M |
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The foregoing statements represent the Company’s current estimates of The Cigna Group's 2024 consolidated and segment adjusted income from operations^1,2^ and other key metrics as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking Statements included in this release. Management does not assume any obligation to update these estimates.
This quarterly earnings release and the Quarterly Financial Supplement are available on The Cigna Group’s website in the Investor Relations section (https://investors.thecignagroup.com/overview/default.aspx). Management will be hosting a conference call to review second quarter 2024 results and discuss full year 2024 outlook beginning today at 8:30 a.m. ET. A link to the conference call is available in the Investor Relations section of The Cigna Group's website located at https://investors.thecignagroup.com/events-and-presentations/default.aspx.
The call-in numbers for the conference call are as follows:
Live Call
(888) 566-1889 (Domestic)
(773) 799-3989(International)
Passcode: 8028932
Replay
(800)839-1190 (Domestic)
(203) 369-3031(International)
It is strongly suggested you dial in to the conference call by 8:15 a.m. ET.
About The Cigna Group
The Cigna Group (NYSE: CI) is a global health company committed to creating a better future built on the vitality of every individual and every community. We relentlessly challenge ourselves to partner and innovate solutions for better health. The Cigna Group includes products and services marketed under Evernorth Health Services, Cigna Healthcare, or its subsidiaries. The Cigna Group maintains sales capabilities in more than 30 markets and jurisdictions, and has approximately 186 million customer relationships around the world. Learn more at thecignagroup.com.
Notes:
- Adjusted income (loss) from operationsis a principal financial measure of profitability used by The Cigna Group’s management because it presents the underlying resultsof operations of the Company’s businesses and permits analysis of trends in underlying revenue, expenses and shareholders’net income (loss). Adjusted income (loss) from operations is defined as shareholders’ net income (loss) (or income (loss) beforeincome taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investmentresults, amortization of acquired intangible assets and special items. The Cigna Group’s share of certain realized investment resultsof its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special itemsare matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjustedincome (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidatedadjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the mostdirectly comparable GAAP measure, shareholders’ net income (loss). See Exhibit 1 for a reconciliation of consolidated adjusted incomefrom operations to shareholders’ net income (loss).
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Management is not able to providea reconciliation of adjusted income from operations to shareholders’ net income (loss), adjusted revenues to total revenues, adjustedSG&A expense ratio to SG&A expense ratio, or adjusted effective tax rate to effective tax rate, on a forward-looking basis becauseit is unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results(from equity method investments with respect to adjusted revenues) and (ii) future special items. These items are inherently uncertainand depend on various factors, many of which are beyond The Cigna Group’s control. As such, any associated estimate and its impacton shareholders’ net income and total revenues could vary materially. The Company’s outlookexcludes the potential effects of any other business combinations that may occur after the date of this earnings release. The Company’soutlook includes the potential effects of expected future share repurchases and anticipated 2024 dividends.
The timing and actual numberof shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate usesof capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the SecuritiesExchange Act of 1934, as amended, including through Rule 10b5-1 trading plans, or privately negotiated transactions. The program may besuspended or discontinued at any time.
Adjusted revenues is used by TheCigna Group’s management because it permits analysis of trends in underlying revenue. The Company defines adjusted revenues as totalrevenues excluding the following adjustments: special items and The Cigna Group's share of certain realized investment results of itsjoint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that managementbelieves are not representative of the underlying results of operations due to their nature or size. We exclude these items from thismeasure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenuesis not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, totalrevenues. See Exhibit 1 for a reconciliation of consolidated adjusted revenues to total revenues.
- Operating ratios are defined asfollows:
| • | The Cigna Healthcare medical care ratio (“MCR”) represents medicalcosts as a percentage of premiums for all Cigna Healthcare risk products provided through guaranteed cost or experience-rated fundingarrangements. Changes in percentages may be expressed in basis points ("bps"). |
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| • | SG&A expense ratio on a GAAP basis for the second quarter 2024 representsenterprise selling, general and administrative expenses of $3,684 million as a percentage of total revenue of $60.5 billion at a consolidatedlevel. SG&A expense ratio on a GAAP basis for the second quarter 2023 represents enterprise selling, general and administrative expensesof $3,434 million as a percentage of total revenue of $48.6 billion at a consolidated level. |
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| • | Adjusted SG&A expense ratio for the second quarter 2024 represents enterpriseselling, general and administrative expenses of $3,621 million excluding special items of $63 million as a percentage of adjusted revenueat a consolidated level. Adjusted SG&A expense ratio for the second quarter 2023 represents enterprise selling, general and administrativeexpenses of $3,428 million excluding special items of $6 million as a percentage of adjusted revenue at a consolidated level. |
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- Customer relationships are definedas follows:
| • | Total medical customers includes individuals who meet any one of the followingcriteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna Healthcare; haveaccess to Cigna Healthcare's provider network for covered services under their medical plan; or have medical claims that are administeredby Cigna Healthcare. |
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| • | During the fourth quarter of 2023, the U.S. Commercial and U.S. Government operating segments combined to form the U.S. Healthcareoperating segment. Information presented for three months ended June 30, 2023 has been restated to conform to the new operating segmentpresentation. |
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- Adjusted margin, pre-tax, is calculatedby dividing adjusted income (loss) from operations, pre-tax by adjusted revenues for each segment.
- The Cigna Group owns noncontrollinginterests in certain operating joint ventures. As such, the adjusted revenues for the Cigna Healthcare segment only include the Company’sshare of the joint ventures’ earnings reported in Fees and Other Revenues using the equity method of accounting under GAAP.
- Medical costs payable within theCigna Healthcare segment are presented net of reinsurance and other recoverables. The gross medical costs payable balance was $5.20 billionas of June 30, 2024, $5.86 billion as of March 31, 2024, and $5.34 billion as of June 30, 2023.
- The measure “adjusted effectivetax rate” is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAPmeasure, “consolidated effective tax rate”. We define adjusted effective tax rate as the consolidated income tax rate applicableto the Company’s pre-tax income excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investmentresults, amortization of acquired intangible assets, and special items. The Cigna Group's share of certain realized investment resultsof its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Management isnot able to provide a reconciliation to the consolidated effective tax rate on a forward-looking basis because we are unable to predict,without unreasonable effort, certain components thereof including (i) future net realized investment results and (ii) future special items.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made in connection with this release, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on The Cigna Group's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning our projected adjusted income from operations outlook for 2024 on a consolidated, per share, and segment basis; projected adjusted revenue outlook for 2024; projected total medical customers for year end 2024; projected medical care and adjusted SG&A expense ratios; projected consolidated adjusted effective tax rate; projected cash flow from operations; future dividends, including projected shareholder dividends for 2024; projected weighted average shares outstanding; future financial or operating performance, including our ability to improve the health and vitality of those we serve; future growth, business strategy and strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of the developing inflationary and interest rate pressures; capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; and other statements regarding The Cigna Group’s future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of words such as “believe,” “expect,” “project,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “may,” “should,” “will” or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; our ability to compete effectively, differentiate our products and services from those of our competitors and maintain or increase market share; price competition, inflation and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain satisfactory relationships with physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of potential cyberattack or other privacy or data security incidents; risks related to our use of artificial intelligence and machine learning; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations; dependence on success of relationships with third parties; risk of significant disruption within our operations or among key suppliers or third parties; potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; uncertainties surrounding participation in government-sponsored programs such as Medicare; the outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates and risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available through the Investor Relations section of www.thecignagroup.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. The Cigna Group undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
| THE CIGNA GROUP | Exhibit 1 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||||||||||
| June<br> 30, | June<br> 30, | March<br> 31, | ||||||||||||||||||||||||
| (Dollars in millions, except per share<br> amounts) | 2024 | 2023 | 2024 | 2023 | 2024 | |||||||||||||||||||||
| REVENUES | ||||||||||||||||||||||||||
| Pharmacy revenues | $ | 45,101 | $ | 33,964 | $ | 87,137 | $ | 66,108 | $ | 42,036 | ||||||||||||||||
| Premiums | 11,454 | 11,039 | 23,057 | 22,064 | 11,603 | |||||||||||||||||||||
| Fees and other revenues | 3,647 | 3,305 | 6,973 | 6,376 | 3,326 | |||||||||||||||||||||
| Net investment income | 321 | 278 | 611 | 555 | 290 | |||||||||||||||||||||
| Total revenues | 60,523 | 48,586 | 117,778 | 95,103 | 57,255 | |||||||||||||||||||||
| Net realized investment<br> results from certain equity method investments | (53 | ) | 30 | (61 | ) | (8 | ) | (8 | ) | |||||||||||||||||
| Adjusted<br> revenues ^(1)^ | $ | 60,470 | $ | 48,616 | $ | 117,717 | $ | 95,095 | $ | 57,247 | ||||||||||||||||
| Shareholders' net income (loss) | $ | 1,548 | $ | 1,460 | $ | 1,271 | $ | 2,727 | $ | (277 | ) | |||||||||||||||
| Pre-tax adjusted income (loss) from operations<br> by segment | ||||||||||||||||||||||||||
| Evernorth Health Services | $ | 1,619 | $ | 1,516 | $ | 2,979 | $ | 2,836 | $ | 1,360 | ||||||||||||||||
| Cigna Healthcare | 1,204 | 1,172 | 2,544 | 2,287 | 1,340 | |||||||||||||||||||||
| Corporate and Other<br> Operations | (451 | ) | (394 | ) | (842 | ) | (793 | ) | (391 | ) | ||||||||||||||||
| Consolidated pre-tax<br> adjusted income from operations | 2,372 | 2,294 | 4,681 | 4,330 | 2,309 | |||||||||||||||||||||
| Adjusted income<br> tax expense | (463 | ) | (474 | ) | (897 | ) | (892 | ) | (434 | ) | ||||||||||||||||
| Consolidated after-tax<br> adjusted income from operations | $ | 1,909 | $ | 1,820 | $ | 3,784 | $ | 3,438 | $ | 1,875 | ||||||||||||||||
| Weighted average shares (in thousands) ^(2)^ | 284,052 | 296,879 | 286,884 | 297,936 | 289,717 | |||||||||||||||||||||
| Common shares outstanding (in thousands) | 279,520 | 295,830 | 284,014 | |||||||||||||||||||||||
| SHAREHOLDERS' EQUITY at June 30, | $ | 41,332 | $ | 45,445 | ||||||||||||||||||||||
| SHAREHOLDERS' EQUITY PER SHARE at June<br> 30, | $ | 147.87 | $ | 153.62 | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Three Months Ended | ||||||||||||||||||||||||
| June 30, | June 30, | March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | ||||||||||||||||||||||
| (Dollars in millions,<br> except per share amounts) | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | ||||||||||||||||
| SHAREHOLDERS' NET INCOME (LOSS) | ||||||||||||||||||||||||||
| Shareholders' net income (loss) | $ | 1,548 | $ | 1,460 | $ | 1,271 | $ | 2,727 | $ | (277 | ) | |||||||||||||||
| Adjustments to reconcile adjusted income from operations | ||||||||||||||||||||||||||
| Net realized<br> investment (gains) losses ^(3)^ | $ | (5 | ) | (20 | ) | $ | 4 | 9 | $ | 1,823 | 1,807 | $ | 22 | 15 | $ | 1,828 | 1,827 | |||||||||
| Amortization of acquired intangible assets | 420 | 317 | 455 | 346 | 843 | 639 | 914 | 690 | 423 | 322 | ||||||||||||||||
| Special Items | ||||||||||||||||||||||||||
| Integration and transaction-related costs | 63 | 47 | 6 | 5 | 100 | 76 | 7 | 6 | 37 | 29 | ||||||||||||||||
| Loss (gain) on sale of businesses | — | — | — | — | 19 | (43 | ) | — | — | 19 | (43 | ) | ||||||||||||||
| Deferred tax expenses,<br> net | — | 17 | — | — | — | 34 | — | — | — | 17 | ||||||||||||||||
| Adjusted<br> income from operations ^(4)^ | $ | 1,909 | $ | 1,820 | $ | 3,784 | $ | 3,438 | $ | 1,875 | ||||||||||||||||
| DILUTED EARNINGS PER SHARE | ||||||||||||||||||||||||||
| Shareholders' net income (loss) ^(5)^ | $ | 5.45 | $ | 4.92 | $ | 4.43 | $ | 9.15 | $ | (0.97 | ) | |||||||||||||||
| Adjustments to reconcile to adjusted income from operations | ||||||||||||||||||||||||||
| Net realized<br> investment (gains) losses ^(3)^ | $ | (0.02 | ) | (0.07 | ) | $ | 0.01 | 0.03 | $ | 6.36 | 6.30 | $ | 0.07 | 0.05 | $ | 6.31 | 6.31 | |||||||||
| Amortization of acquired intangible assets | 1.48 | 1.11 | 1.53 | 1.17 | 2.94 | 2.23 | 3.07 | 2.32 | 1.46 | 1.10 | ||||||||||||||||
| Special Items | ||||||||||||||||||||||||||
| Integration and transaction-related costs | 0.22 | 0.17 | 0.02 | 0.01 | 0.34 | 0.26 | 0.02 | 0.02 | 0.12 | 0.10 | ||||||||||||||||
| Loss (gain) on sale of businesses | — | — | — | — | 0.07 | (0.15 | ) | — | — | 0.07 | (0.15 | ) | ||||||||||||||
| Deferred tax expenses,<br> net | — | 0.06 | — | — | — | 0.12 | — | — | — | 0.06 | ||||||||||||||||
| Adjusted<br> income from operations ^(2) (5)^ | $ | 6.72 | $ | 6.13 | $ | 13.19 | $ | 11.54 | $ | 6.47 |
(1) Adjusted revenues is definedas total revenues excluding the following adjustments: special items and The Cigna Group’s share of certain realized investmentresults of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. These items are excludedbecause they are not indicative of past or future underlying performance of our businesses.
(2) The calculation of weightedaverage shares includes the impact of potentially dilutive securities for the calculation of Adjusted income from operations per share.
(3) Includes Net realized investmentlosses/gains as presented in our Consolidated Statements of Income, as well as the Company's share of certain realized investment resultsof its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Feesand other revenues in our Consolidated Statements of Income.
(4) Adjusted income (loss)from operations is defined as shareholders’ net income (loss) (or income (loss) before income taxes less pre-tax income (loss)attributable to noncontrolling interests for the segment metric) excluding the following adjustments: net realized investment results,amortization of acquired intangible assets and special items. The Cigna Group’s share of certain realized investment results ofits joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded.
(5) For the three months endedMarch 31, 2024, due to the anti-dilutive effect resulting from the Shareholders' net loss for the period, the impact of potentially dilutivesecurities has been excluded from the calculation of weighted average shares for the calculation of diluted Shareholders’ net lossper share. Weighted average shares used to calculate diluted Shareholders’ net loss per share for the three months ended March31, 2024 were 286,465 thousand. For the three months and six months ended June 30, 2024 and 2023, the calculation of weighted averageshares includes the impact of potentially dilutive securities for the calculation of Shareholders net income.