Cigna Corp. CI

• Total revenues for the second quarter 2024 increased 25% to $60.5 billion
• Shareholders' net income for the second quarter 2024 was $1.5 billion, or $5.45 per share
• Adjusted income from operations¹ for the second quarter 2024 was $1.9 billion, or $6.72 per share
• 2024 outlook² for adjusted income from operations^1,2 is at least $28.40 per share

BLOOMFIELD, Conn., Aug. 1, 2024 /PRNewswire/ -- 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 operations¹ 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 operations¹ is provided on the following page and on Exhibit 1 of this earnings release.

CONSOLIDATED HIGHLIGHTS

The following table includes highlights of results and reconciliations of total revenues to adjusted revenues³ and shareholders' net income (loss) to adjusted income from operations¹:

• Total revenues for second quarter 2024 increased 25% from second quarter 2023, primarily driven by significant growth in Evernorth Health Services, reflecting large client wins.
  
  
• Adjusted income from operations¹ for second quarter 2024 increased 5% from second quarter 2023, reflecting strong contributions from Evernorth Health Services and Cigna Healthcare.
  
  
• The SG&A expense ratio⁴ and adjusted SG&A expense ratio⁴ were 6.1% and 6.0%, respectively, for second quarter 2024, compared to 7.1% for both ratios in second quarter 2023, reflecting business mix shift and continued operating efficiency.
  
  
• The debt-to-capitalization ratio was 43.6% at June 30, 2024 compared to 44.3% at March 31, 2024.
  
  
• Year to date through July 31, 2024, the company purchased 14.7 million shares of common stock for 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 disclosed Accelerated Share Repurchase (ASR) Agreements.

CUSTOMER RELATIONSHIPS

The following table summarizes The Cigna Group's medical customers and overall customer relationships:

• Total customer relationships⁵ at June 30, 2024 increased 13% from December 31, 2023 to 186.2 million.
  
  
• Total pharmacy customers⁵ at June 30, 2024 increased 24% from December 31, 2023 to 122.5 million due to new sales and the continued expansion of relationships.
  
  
• Total medical customers⁵ at June 30, 2024 were 19.0 million, primarily reflecting a year-to-date decrease in Individual and Family Plans customers, driven by targeted pricing actions in certain geographies.
  
  
• Behavioral Care customers⁵ at June 30, 2024 were 23.8 million. The year-over-year decrease was primarily due to known non-renewal of supplemental behavioral coverage contracts, which were insignificant to total revenues and adjusted income from operations.

HIGHLIGHTS OF SEGMENT RESULTS

See Exhibit 1 for a reconciliation of adjusted income from operations¹ 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.

• Evernorth Health Services second quarter 2024 adjusted revenues³ and adjusted income from operations, pre-tax¹, increased 30% and 7%, respectively, relative to second quarter 2023.
  
  
• For Pharmacy Benefit Services second quarter 2024 relative to second quarter 2023:
  • Adjusted revenues³ increased 41%, reflecting client wins and organic growth.
  • Adjusted income from operations, pre-tax¹, increased 3%, reflecting continued affordability improvements, partially offset by planned investments to support new and existing client growth.
    
    
• For Specialty and Care Services second quarter 2024 relative to second quarter 2023:
  • Adjusted revenues³ increased 18%, reflecting client wins and organic growth in specialty businesses.
  • Adjusted income from operations, pre-tax¹, increased 12%, reflecting organic growth in specialty businesses and clinical care services, partially offset by increased investments to support business growth and the continued advancement of our digital capabilities and solutions.

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.

• Second quarter 2024 adjusted revenues^3,7 increased 3% relative to second quarter 2023, reflecting premium rate increases to cover expected increases in underlying medical costs, partially offset by business mix.
  
  
• Second quarter 2024 adjusted income from operations, pre-tax¹, increased 3% relative to second quarter 2023, primarily driven by continued operating efficiency and higher net investment income, partially offset by a higher MCR⁴.
  
  
• The Cigna Healthcare MCR⁴ was 82.3% for second quarter 2024 and includes approximately $50 million of unfavorable prior year revenue impacts, or 40 bps, primarily related to Medicare Advantage risk adjustment. The second quarter 2024 MCR⁴ compares to 81.2% for second quarter 2023, reflecting business mix and the aforementioned prior year revenue adjustments, partially offset by effective pricing execution and affordability initiatives.
  
  
• Cigna Healthcare net medical costs payable⁸ was $5.04 billion at June 30, 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 levels after first quarter was elevated due to claims submission and payment process disruptions related to a third-party cyber incident. Favorable prior year reserve development on a gross pre-tax basis was $284 million and $202 million for the six months ended June 30, 2024 and 2023, respectively.

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.

• Second quarter 2024 adjusted loss from operations, pre-tax¹, was $451 million compared to $394 million for second quarter 2023, primarily reflecting the impact of higher interest expense.

2024 OUTLOOK²

The Cigna Group's outlook² for full year 2024 adjusted revenues^2,3 is at least $235.0 billion. The Cigna Group's outlook² for full year 2024 consolidated adjusted income from operations^1,2 is at least $8.065 billion, or at least $28.40 per share². Additionally, this outlook includes the impact of expected future share repurchases and anticipated 2024 dividends.

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:

1.  Adjusted income (loss) from operations is a principal financial measure of profitability used by The Cigna Group's management because it presents the underlying results of 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) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investment results, amortization of acquired intangible assets and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income (loss). See Exhibit 1 for a reconciliation of consolidated adjusted income from operations to shareholders' net income (loss).

2.  Management is not able to provide a reconciliation of adjusted income from operations to shareholders' net income (loss), adjusted revenues to total revenues, adjusted SG&A expense ratio to SG&A expense ratio, or adjusted effective tax rate to effective tax rate, on a forward-looking basis because it 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 uncertain and depend on various factors, many of which are beyond The Cigna Group's control. As such, any associated estimate and its impact on shareholders' net income and total revenues could vary materially. 

The Company's outlook excludes the potential effects of any other business combinations that may occur after the date of this earnings release. The Company's outlook includes the potential effects of expected future share repurchases and anticipated 2024 dividends.

The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, including through Rule 10b5-1 trading plans, or privately negotiated transactions. The program may be suspended or discontinued at any time.

3.  Adjusted revenues is used by The Cigna Group's management because it permits analysis of trends in underlying revenue. The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See Exhibit 1 for a reconciliation of consolidated adjusted revenues to total revenues.

4.  Operating ratios are defined as follows:

• The Cigna Healthcare medical care ratio ("MCR") represents medical costs as a percentage of premiums for all Cigna Healthcare risk products provided through guaranteed cost or experience-rated funding arrangements. Changes in percentages may be expressed in basis points ("bps").
• SG&A expense ratio on a GAAP basis for the second quarter 2024 represents enterprise selling, general and administrative expenses of $3,684 million as a percentage of total revenue of $60.5 billion at a consolidated level. SG&A expense ratio on a GAAP basis for the second quarter 2023 represents enterprise selling, general and administrative expenses of $3,434 million as a percentage of total revenue of $48.6 billion at a consolidated level.
• Adjusted SG&A expense ratio for the second quarter 2024 represents enterprise selling, general and administrative expenses of $3,621 million excluding special items of $63 million as a percentage of adjusted revenue at a consolidated level. Adjusted SG&A expense ratio for the second quarter 2023 represents enterprise selling, general and administrative expenses of $3,428 million excluding special items of $6 million as a percentage of adjusted revenue at a consolidated level.

5.  Customer relationships are defined as follows:

• Total medical customers includes individuals who meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna Healthcare; have access to Cigna Healthcare's provider network for covered services under their medical plan; or have medical claims that are administered by Cigna Healthcare.
• During the fourth quarter of 2023, the U.S. Commercial and U.S. Government operating segments combined to form the U.S. Healthcare operating segment. Information presented for three months ended June 30, 2023 has been restated to conform to the new operating segment presentation.

6.  Adjusted margin, pre-tax, is calculated by dividing adjusted income (loss) from operations, pre-tax by adjusted revenues for each segment.

7.  The Cigna Group owns noncontrolling interests in certain operating joint ventures. As such, the adjusted revenues for the Cigna Healthcare segment only include the Company's share of the joint ventures' earnings reported in Fees and Other Revenues using the equity method of accounting under GAAP.

8.  Medical costs payable within the Cigna Healthcare segment are presented net of reinsurance and other recoverables. The gross medical costs payable balance was $5.20 billion as of June 30, 2024, $5.86 billion as of March 31, 2024, and $5.34 billion as of June 30, 2023.

9.  The measure "adjusted effective tax rate" is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, "consolidated effective tax rate". We define adjusted effective tax rate as the consolidated income tax rate applicable to the Company's pre-tax income excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Management is not 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.

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.

INVESTOR RELATIONS CONTACT:
Ralph Giacobbe
860-787-7968
Ralph.Giacobbe@TheCignaGroup.com 

MEDIA CONTACT:
Justine Sessions
860-810-6523
Justine.Sessions@Evernorth.com

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SOURCE The Cigna Group