Cigna Group

The Cigna Group is a global health company operating in the health services industry, which includes pharmacy benefit management, health benefits, and specialty and care services. The filing describes an industry that is highly competitive, evolving, and rapidly changing, with shifts resulting from intra- or inter-industry mergers, strategic alliances, new business models, new market entrants, technological changes including AI, and legislative or regulatory changes. The Company plays an important role in the health care system, with approximately 1.7 million relationships with health care providers, clinics and facilities ¹ and more than 185 million customer relationships in more than 30 markets and jurisdictions as of December 31, 2025 ².

The Company's primary competitors include independent and managed care pharmacy benefit managers; retail, home delivery and specialty pharmacies; specialty drug distributors; health plans; third-party benefit administrators; group purchasing organizations; clinical solutions companies; health care data analytics companies; and care services providers. In the Cigna Healthcare segment, primary competitors include national insurers, local health plans, TPAs, dental insurers, independent and managed care pharmacy benefit managers, global insurers, and local non-U.S. insurers. The Company's competitive advantages include its health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, clinical care and health management capabilities, and an array of product funding solutions. The Company's Evernorth Health Services segment has three clients that each drive significant revenues: Centene Corporation, Prime Therapeutics LLC, and the Department of War TRICARE program. Revenues from a single pharmacy benefit client were approximately 19% and 16% of total revenue from external customers for the years ended December 31, 2025 and 2024, respectively ³.

The Company generates revenue through a mix of pharmacy revenues, premiums, fees and other revenues, and net investment income. Pharmacy revenues are primarily derived from providing pharmacy benefit management services, including drug claim adjudication, retail pharmacy network administration, and home delivery and specialty pharmacy dispensing. Premiums are earned from insured health, accident, and life insurance products. Fees are earned from administrative services only (ASO) arrangements, clinical solutions, and other service contracts. The Company serves clients including employers, managed care organizations, health insurers, third-party administrators, union-sponsored benefit plans, government health programs, and individuals. The Company operates through two primary segments: Evernorth Health Services and Cigna Healthcare, with the combination of pharmacy and medical capabilities creating integrated solutions.

The Evernorth Health Services segment includes Pharmacy Benefit Services and Specialty and Care Services operating segments. Pharmacy Benefit Services provides drug claim adjudication, retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management, home delivery pharmacy, and other services. The Express Scripts Pharmacy operations consist of 11 licensed pharmacies, inclusive of four fulfillment pharmacies located in Arizona, Indiana, Missouri and New Jersey ⁴. The EnGuide Pharmacy operations consist of two licensed pharmacies, inclusive of one fulfillment pharmacy located in Ohio ⁵. Specialty and Care Services includes Accredo Specialty Pharmacy with 35 licensed pharmacies ⁶, CuraScript SD by Evernorth which operates four distribution centers ⁷, and Care Services including MD Live virtual care and EviCore benefits management. In 2025, for clients covered under its pharmacy benefit contracts, Express Scripts shared over 95% of the drug formulary management rebates it received with its integrated clients, and more than two-thirds of clients received 100% of rebates ⁸. The Cigna Healthcare segment includes U.S. Healthcare and International Health operating segments. U.S. Healthcare provides employer medical plans, consumer-driven products, individual and family plans, behavioral health solutions, consumer health engagement solutions, cost containment programs, dental solutions, pharmacy management solutions, and stop-loss insurance. International Health provides global health care and local health care offerings. ASO arrangements represent approximately 32% of 2025 segment revenues and 79% of Cigna Healthcare medical customers as of December 31, 2025 ⁹. GC and ER insured arrangements represent approximately 68% of 2025 segment revenues and 21% of Cigna Healthcare medical customers as of December 31, 2025 ¹⁰. The U.S. network had approximately 1.7 million physicians, including specialists, and over 6,000 hospitals as of December 31, 2025 ¹¹. The Company has more than 200 arrangements with primary care groups and approximately 100 arrangements with specialist groups as of December 31, 2025 ¹². The Company also had contracts with more than 200 hospital systems, involving more than 750 hospitals, with reimbursements tied to quality metrics ¹³.

The Cigna Healthcare segment's U.S. Healthcare operating segment includes medical plans offered in various funding options including ASO, insured guaranteed cost, and insured experience rated. Individual and Family Plans are ACA-compliant EPOs or HMO plans currently offered in 11 states with a GC funding solution ¹⁴. International Health provides products and services worldwide except as limited by applicable law. The Company's Other Operations includes the corporate-owned life insurance business, which sells permanent insurance contracts to corporations, and run-off businesses including the settlement annuity business, reinsurance operations, and individual life insurance and annuity and retirement benefits businesses. The Company holds over 540 U.S. patents ¹⁵.

On March 19, 2025, the Company completed the sale of its Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses to Health Care Service Corporation (HCSC) for total cash proceeds of $4.9 billion ¹⁶. In the first quarter of 2025, the Company commenced a Strategic Optimization Program, reporting total costs of $749 million pre-tax ($565 million after-tax) associated with this initiative in 2025 ¹⁷. The Company expects this initiative to generate annualized after-tax savings of at least $500 million, a portion of which was realized in 2025 ¹⁸. In September 2025, the Company issued $4.5 billion of new senior notes ¹⁹. The Company repurchased 11.9 million shares for approximately $3.6 billion during the year ended December 31, 2025 ²⁰. The Company declared and paid quarterly cash dividends of $1.51 per share in 2025 ²¹. On February 5, 2026, the Board of Directors declared the first quarter 2026 cash dividend of $1.56 per share ²². The Company entered into a $6.5 billion, five-year revolving credit and letter of credit agreement in April 2025 that will mature in April 2030 ²³. The Company also completed an investment in Shields Health Solutions, a leading specialty pharmacy management company, partially funded by a $2.0 billion Term Loan Facility ²⁴.

Total revenues for the year ended December 31, 2025 were $274,900 million ²⁵, compared to $247,121 million ²⁶ in 2024 and $195,265 million ²⁷ in 2023. Shareholders' net income was $5,957 million ²⁸ for 2025, compared to $3,434 million ²⁹ in 2024 and $5,164 million ³⁰ in 2023. Diluted earnings per share was $22.18 ³¹ for 2025, compared to $12.12 ³² in 2024 and $17.39 ³³ in 2023. Adjusted income from operations was $8,014 million ³⁴ for 2025, compared to $7,741 million ³⁵ in 2024 and $7,448 million ³⁶ in 2023. Adjusted diluted earnings per share was $29.84 ³⁷ for 2025, compared to $27.33 ³⁸ in 2024 and $25.09 ³⁹ in 2023. Net cash provided by operating activities was $9,601 million ⁴⁰ for 2025, compared to $10,363 million ⁴¹ in 2024 and $11,813 million ⁴² in 2023.

Management states that the Company expects the Strategic Optimization Program to generate annualized after-tax savings of at least $500 million, a portion of which was realized in 2025 ⁴³. The Company expects to deploy approximately $1.3 billion in capital expenditures in 2026, which will be funded primarily from operating cash flows ⁴⁴.

A key growth vector is the Company's announced transformative new pharmacy benefits model, a rebate-free model designed to make discounts negotiated with drug companies available upfront to customers buying their medications, lowering their costs at the counter. Cigna Healthcare will adopt this new model for its fully insured customers beginning in 2027, and it will become the standard model available for Evernorth Health Services pharmacy benefit clients beginning in 2028. The Company states it will incur investment and transition costs to support this rebate-free model, which are expected to impact pre-tax adjusted income from operations for Evernorth Health Services over the short term. Another growth vector is the Company's focus on innovation and digital, data, and technology investments, including the use of artificial intelligence to support health care transformation. The Company has an AI Center of Enablement and an Enterprise Model Governance structure to oversee AI model development and deployment. The Company also highlights its Commitments to Better, a multiyear chapter to accelerate its ongoing evolution and industry leadership, with five key areas of focus: easier access to care, better support, better value, accountability, and transparency.

The Company's Evernorth Health Services segment has renewed or extended contracts with the business's three largest clients through the end of the decade. The Company expects the Strategic Optimization Program to generate annualized after-tax savings of at least $500 million ⁴⁵. The Company also expects to incur investment and transition costs to support its rebate-free model for pharmacy benefits, which will impact pre-tax adjusted income from operations for Evernorth Health Services over the short term.

The Company expects to deploy approximately $1.3 billion in capital expenditures in 2026, which will be funded primarily from operating cash flows ⁴⁶. The Company's capital expenditures for property, equipment and computer software were $1.2 billion in the year ended December 31, 2025 ⁴⁷ compared with $1.4 billion in the year ended December 31, 2024 ⁴⁸. The Company's global workforce was approximately 67,700 employees worldwide as of the end of 2025 ⁴⁹, with about 88% of employees based in the United States ⁵⁰ and roughly 97% of the workforce full-time ⁵¹. At year-end 2025, the global workforce was approximately 69% women and 31% men ⁵², and about 40% of U.S. employees identified as ethnic minorities ⁵³. In 2025, the voluntary turnover rate was approximately 9% for all employees ⁵⁴. The Company invested approximately 20% of total payroll in health, well-being and other benefits in 2025 ⁵⁵.

The Company maintains a share repurchase program authorized by the Board of Directors. The Company repurchased 11.9 million shares for approximately $3.6 billion during the year ended December 31, 2025 ⁵⁶. As of December 31, 2025, the approximate dollar value of shares that may yet be purchased as part of the publicly announced program was $6,730 million ⁵⁷. The Company declared and paid quarterly cash dividends of $1.51 per share in 2025 ⁵⁸, $1.40 per share in 2024 ⁵⁹, and $1.23 per share in 2023 ⁶⁰. On February 5, 2026, the Board of Directors declared the first quarter 2026 cash dividend of $1.56 per share ⁶¹. Capital expenditures for property, equipment and computer software were $1.2 billion in the year ended December 31, 2025 ⁶² compared with $1.4 billion in the year ended December 31, 2024 ⁶³.

The filing identifies several headwinds and constraints. The Company must predict, price for and manage health care costs appropriately, and faces price competition and other pressures that could compress margins. Strong competition within the pharmacy benefit business has generated greater demand for lower product and service pricing, increased revenue sharing, and enhanced product and service offerings, which have historically applied pressure on operating margins. Legislative reforms and regulatory or executive actions related to rebates, reporting, owned pharmacies and other activities may adversely affect the Company's ability to price its pharmacy products and services appropriately. The Company's participation in government-sponsored programs involves uncertainties, and funding for these programs is dependent on many factors outside the Company's control, including general economic conditions, budgetary constraints, and general political issues and priorities. The Company also faces risks related to changes in drug pricing or industry pricing benchmarks, the loss of relationships with key pharmaceutical manufacturers, and changes in the pharmacy provider marketplace.

The filing identifies several structural headwinds and execution risks. The Company's profitability depends on its ability to accurately predict, price for and effectively manage future health care costs, and relatively small differences between predicted and actual medical costs or utilization rates can result in significant changes in financial results. The Company's client contracts are subject to negotiation, and clients can easily move between competitors. The Company's Express Scripts client contracts generally have three-year terms and may be subject to periodic renegotiation of pricing terms based on market factors. The Company faces risks related to the integration or separation of strategic transactions, including the HCSC transaction, and may not realize the expected benefits. The carrying value of goodwill or other intangible assets was approximately $73.5 billion as of December 31, 2025, representing 47% of total consolidated assets ⁶⁴, and may be materially and adversely impacted if acquired businesses do not perform as expected.

The Company faces material risks related to its ability to accurately predict, price for, and manage health care costs, as relatively small differences between predicted and actual medical costs or utilization rates can result in significant changes in financial results. The Company operates in a highly competitive and evolving industry, and strong competition within the pharmacy benefit business has historically applied pressure on operating margins. The Company is subject to substantial government regulation, and new laws or regulations or changes in existing laws or regulations could have a material adverse effect on its business. The Company faces risks related to strategic transactions, including the HCSC transaction, and the carrying value of goodwill and other intangible assets was approximately $73.5 billion as of December 31, 2025, representing 47% of total consolidated assets ⁶⁵, which could be materially and adversely impacted if acquired businesses do not perform as expected. The Company maintains significant indebtedness of approximately $31.5 billion as of December 31, 2025 ⁶⁶, which could adversely affect its financial condition and ability to react to economic or industry changes. The Company is also subject to the credit risk of its reinsurers, and the inability to collect a material recovery from a reinsurer could have a material adverse effect on its results of operations, financial condition and liquidity.

Management's message emphasizes the Company's mission to improve the health and vitality of those it serves and its Commitments to Better, a new multiyear chapter to accelerate ongoing evolution and industry leadership. Key themes include driving a more efficient and improved experience for patients, providers, and customers through the Strategic Optimization Program, which is expected to generate annualized after-tax savings of at least $500 million ⁶⁷. Management also highlights the transformative new rebate-free pharmacy benefits model, which Cigna Healthcare will adopt for its fully insured customers beginning in 2027 and which will become the standard model for Evernorth Health Services clients beginning in 2028. The Company emphasizes its focus on innovation, digital-first capabilities, and the use of artificial intelligence to support health care transformation. Management states that the Company has renewed or extended contracts with Evernorth Health Services' three largest clients through the end of the decade. The Company's strategic priorities include evolving its business to deliver a more efficient and improved experience, building a more sustainable model for health care through the rebate-free model, and continuing to invest in technology and innovation to differentiate its products and services.