The Cigna Group

Company Overview

Business Model: The Cigna Group is a global health company operating through two primary growth platforms: Evernorth Health Services and Cigna Healthcare. Evernorth Health Services provides independent and coordinated health solutions, including pharmacy benefit management, home delivery pharmacy, specialty pharmacy, specialty distribution, and care services. Cigna Healthcare is the health benefits segment, offering comprehensive medical plan services and coordinated solutions to U.S. Healthcare and International Health customers.

Market Position: The Cigna Group serves approximately 182 million customer and patient relationships across more than 30 countries and jurisdictions. The company leverages competitive advantages such as health advocacy, holistic consumer engagement, a broad product portfolio, clinical care, health management capabilities, and diverse product funding solutions to maintain its market standing.

Recent Strategic Developments:

• Divestiture of Medicare Businesses: In January 2024, The Cigna Group agreed to sell its Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare segment to Health Care Service Corporation for an initial purchase price of $3.3 billion, with closing expected in Q1 2025. This transaction resulted in an estimated pre-tax loss of $472 million in 2024, primarily due to a goodwill impairment of $302 million.
• VillageMD Investment Impairment: The company fully impaired its investment in VillageMD, recording a $2.7 billion loss in 2024.
• Strategic Investments: The Cigna Group has committed $700 million in aggregate to The Cigna Group Ventures, investing in data and technology, digital health, and care delivery startups.
• Operating Joint Venture Sale: In the fourth quarter of 2024, a portion of an operating joint venture was sold, resulting in a $496 million gain.

Geographic Footprint: The Cigna Group serves customers in more than 30 countries and jurisdictions. Approximately 90% of its 73,500 employees are based in the United States. International Health services are offered in China, Singapore, Hong Kong, Spain, India, and various countries in the Middle East.

Financial Performance

Revenue Analysis

Profitability Metrics (2024):

• Operating Margin: 3.8%
• Net Margin: 1.5%

Investment in Growth:

• Capital Expenditures: $1.4 billion (2024), $1.6 billion (2023). Approximately $1.4 billion is expected in 2025.
• Strategic Investments: $700 million committed to The Cigna Group Ventures for investments in data and technology, digital health, and care delivery startups.

Business Segment Analysis

Evernorth Health Services

Financial Performance:

• Revenue: $202,155 million (+32% YoY)
• Pre-tax Adjusted Income: $7,001 million (+9% YoY)
• Pre-tax Margin: 3.5%
• Key Growth Drivers: Pharmacy claim volume increased by 34% to 2,120 million in 2024.

Product Portfolio:

• Pharmacy Benefit Services (retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management).
• Home Delivery Pharmacy (Express Scripts Pharmacy by Evernorth) with 13 licensed pharmacies, including 4 fulfillment pharmacies.
• Specialty Pharmacy (Accredo by Evernorth) with 35 licensed pharmacies.
• Specialty Distribution (CuraScript SD by Evernorth) operating three distribution centers.
• Care Services (Care Delivery including MD Live by Evernorth virtual care, in-home care, physical primary care; Care Management including EviCore by Evernorth, benefits management, behavioral health services).

Market Dynamics:

• Competitive positioning within segment: Offers independent and coordinated health solutions.
• Key customer types and market trends: Key clients include Centene Corporation, Prime Therapeutics LLC, and the Department of Defense TRICARE. Over 67,000 pharmacies participated in networks as of December 31, 2024.
• Customer Concentration: Revenues from a single pharmacy benefit client were approximately 16% of consolidated revenues for 2024.
• Supply Chain: Uses one wholesaler for approximately half of its pharmaceutical purchases.

Sub-segment Breakdown:

• Pharmacy Benefit Services: $111,822 million revenue in 2024 (+46% YoY).
• Specialty and Care Services: $90,333 million revenue in 2024 (+18% YoY).

Cigna Healthcare

Financial Performance:

• Revenue: $52,914 million (+3% YoY)
• Pre-tax Adjusted Income: $4,229 million (-6% YoY)
• Pre-tax Margin: 8.0%
• Medical Care Ratio: 83.2% (2024), 81.3% (2023)
• SG&A Expense Ratio: 20.4% (2024), 21.6% (2023)

Product Portfolio:

• U.S. Healthcare Medical Plans: HMOs, LocalPlus, Network, Open Access Plus, PPOs, Individual and Family Plans (IFPs) in 11 states, Medicare Advantage plans in 29 states and D.C., Medicare Supplement Plans in 48 states and D.C., and Medicare Part D plans nationwide.
• International Health: Global Health Care and Local Health Care (offered in China, Singapore, Hong Kong, Spain, India, and various countries in the Middle East).

Market Dynamics:

• Competitive positioning within segment: Provides comprehensive medical plan services and coordinated solutions.
• Key customer types and market trends: As of December 31, 2024, had 19,147 thousand medical customers (a 3% decrease from 2023).
• Funding Solutions: ASO arrangements represent approximately 26% of segment revenues and 74% of Cigna Healthcare medical customers. Insured guaranteed cost (GC) and experience rated (ER) arrangements represent approximately 74% of segment revenues and 26% of Cigna Healthcare medical customers.
• Network Size: The U.S. network has approximately 1.8 million physicians and over 6,000 hospitals.
• Value-Based Care: Over 200 value-based arrangements with primary care groups, approximately 100 with specialist groups, and contracts with over 200 hospital systems tied to quality metrics.

Other Operations

Financial Performance:

• Revenue: $828 million (2024), $596 million (2023)
• Pre-tax Adjusted Loss: $9 million (2024), compared to income of $96 million (2023)

Product Portfolio:

• Includes corporate-owned life insurance (COLI) and run-off businesses (settlement annuity, variable annuity reinsurance, individual life insurance and annuity, and retirement benefits).

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $7.0 billion (20.9 million shares) in 2024; $2.3 billion (7.8 million shares) in 2023.
• Future Capital Return Commitments: The Board authorized an additional $6.0 billion for repurchases in December 2024, bringing total authority to $10.3 billion as of December 31, 2024. From January 1, 2025, through February 26, 2025, an additional $901 million (3.0 million shares) were repurchased, leaving $9.4 billion in authority.
• Dividend Payments: $1.40 per share in 2024; $1.23 per share in 2023. A Q1 2025 cash dividend of $1.51 per share was declared, payable March 20, 2025.

Balance Sheet Position:

• Cash and Equivalents (Consolidated): $7,550 million (2024), $7,822 million (2023).
• Cash and Equivalents (Parent Company): $164 million (2024), $303 million (2023).
• Total Debt: Approximately $32.0 billion (2024).
• Net Cash Position: -$24.45 billion (Cash and Equivalents - Total Debt).
• Debt Maturity Profile: Total scheduled payments on long-term debt are $48.5 billion, with $3.5 billion due in 2025. Specific maturities include $1,973 million in 2025, $2,301 million in 2026, $2,056 million in 2027, $3,800 million in 2028, $1,000 million in 2029, and $19,292 million after 2029.
• Commercial Paper: $0.9 billion outstanding at December 31, 2024, with a weighted average interest rate of 4.65%. Program size increased to $6.5 billion in July 2024.
• Revolving Credit: $6.5 billion undrawn committed capacity as of December 31, 2024.

Cash Flow Generation:

• Operating Cash Flow (Consolidated): $10,363 million (2024), $11,813 million (2023).
• Operating Cash Flow (Parent Company): $2,133 million (2024), $1,839 million (2023).

Operational Excellence

Production & Service Model: The Cigna Group operates a diverse service model encompassing pharmacy operations and care delivery. Pharmacy operations include 9 home delivery pharmacies, 35 specialty pharmacies, and 4 high-volume automated dispensing pharmacies located in Arizona, Indiana, Missouri, and New Jersey. Care services integrate virtual care (MD Live by Evernorth), in-home care, and physical primary care. The pharmacy technology platform adjudicates over two billion adjusted prescriptions annually.

Supply Chain Architecture: Key Suppliers & Partners:

• Pharmaceutical Wholesaler: One wholesaler accounts for approximately half of The Cigna Group's pharmaceutical purchases.

Facility Network:

• Manufacturing: Not explicitly detailed as manufacturing, but pharmacy operations include 4 high-volume automated dispensing pharmacies.
• Research & Development: Not explicitly detailed as dedicated R&D facilities, but the company focuses on digital-first capabilities, AI, ML, and deep learning.
• Distribution: Specialty Distribution (CuraScript SD by Evernorth) operates three distribution centers. The global real estate portfolio is approximately 9.2 million square feet, with 7.8 million in the U.S. and 1.4 million across 22 international countries. Principal domestic offices include Bloomfield, CT (corporate headquarters), St. Louis, MO (Evernorth Health Services), and Philadelphia, PA.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Utilizes direct sales forces for enterprise and other customer relationships.
• Channel Partners: Engages with Brokers and Consultants.
• Digital Platforms: Leverages Private Exchanges and Public Exchanges for customer access.

Customer Portfolio: Enterprise Customers:

• Strategic Partnerships: Key clients include Centene Corporation (multi-year agreement began January 1, 2024), Prime Therapeutics LLC, and the Department of Defense TRICARE.
• Customer Concentration: Revenues from a single pharmacy benefit client were approximately 16% of consolidated revenues for 2024. Revenues from U.S. Federal Government agencies were approximately 11% of consolidated revenues in 2024.

Geographic Revenue Distribution:

• U.S. Revenues: $241,563 million (2024), representing the vast majority of total revenue.
• Foreign Revenues: $4,585 million (2024).

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The Cigna Group operates in highly competitive health services and health benefits markets. Key competitive factors include health advocacy, holistic consumer engagement, breadth of product offerings, clinical care, health management capabilities, and product funding solutions.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Pharmacy Benefit Managers: Independent and managed care PBMs.
• Pharmacy Services: Retail, home delivery, and specialty pharmacies; specialty drug distributors.
• Health Plans: National insurers, local health plans, global insurers, and local non-U.S. insurers.
• Other Health Services: Third-party benefit administrators, group purchasing organizations, clinical solutions companies, health care data analytics companies, and care services providers.

Competitive Response Strategy: The Cigna Group maintains its competitive advantage through health advocacy, holistic consumer engagement, a broad portfolio of product offerings, advanced clinical care, comprehensive health management capabilities, and diverse product funding solutions.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Ability to Execute Initiatives: Risks related to executing strategic initiatives and adapting to industry changes.
• Competitive Environment: Risks from intense competition and price competition.
• Medical Claims Estimation: Risks associated with accurately estimating medical claims.
• Relationships: Risks related to maintaining provider and pharmaceutical manufacturer relationships.
• Pharmacy Marketplace: Risks from changes in the pharmacy provider marketplace and drug pricing.
• Strategic Transactions: Risks associated with managing strategic transactions (e.g., divestitures, acquisitions).
• Third-Party Dependence: Dependence on third parties for services.
• AI/ML Risks: Risks associated with the development and deployment of AI/ML technologies.
• Geopolitical Risks: General geopolitical risks impacting operations.
• Economic Conditions: Impact of broader economic conditions.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Dependence on key suppliers, including one wholesaler for approximately half of pharmaceutical purchases.
• IT System Disruptions: Risks from IT system disruptions and cyberattacks (e.g., Change Healthcare ransomware attack in February 2024).
• Liability: Liability from managing medical practices.

Financial & Regulatory Risks

Market & Financial Risks:

• Government Programs: Risks related to participation in government-sponsored programs.
• Litigation/Audits: Risks from litigation and regulatory audits.
• Financial Strength Ratings: Risks from financial strength rating downgrades.
• Pension Obligations: Risks related to pension obligations.
• Demand Volatility: Not explicitly mentioned as a risk, but implied by market dynamics.
• Foreign Exchange: Not explicitly mentioned as a risk.
• Credit & Liquidity: Compliance with debt covenants and access to credit facilities.

Regulatory & Compliance Risks:

• Government Regulation: Broad government regulation across health care.
• Privacy/Security/Data Laws: Compliance with privacy, security, and data laws (e.g., HIPAA, voluntary audit request from HHS's Office for Civil Rights in December 2024).
• Control System Failures: Risks from failures in control systems.
• Fraud and Abuse Laws: Compliance with False Claims Act, anti-kickback laws.
• Government Procurement: Compliance with FAR, DoD FAR Supplement.
• ERISA: Compliance with ERISA.
• Corporate Practice of Medicine: Compliance with corporate practice of medicine laws.
• Pharmacy Benefit Plan Design: Compliance with pharmacy benefit plan design laws and PBM/drug pricing regulation (e.g., MAC Transparency Laws, FTC complaint against Express Scripts in September 2024).
• Pharmacy Regulation: General pharmacy regulation.
• Financial Reporting/Internal Control/Corporate Governance: Compliance with related regulations.
• Guaranty Associations: Obligations related to guaranty associations.
• Solvency/Capital Requirements: Compliance with NAIC RBC rules.
• Marketing/Advertising/Products: Compliance with CMS final rules.
• Licensing/Registration/Utilization Management: Compliance with licensing and registration requirements.
• International Regulations: Compliance with FCPA, UK Bribery Act 2010.
• OFAC/AML: Compliance with OFAC and AML regulations.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: General geopolitical risks are identified as a factor impacting operations.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Digital-First Capabilities: Strategic importance in enhancing customer experience and operational efficiency.
• Artificial Intelligence (AI) & Machine Learning (ML): Significant investment and focus, guided by Responsible AI Principles and overseen by Enterprise Model Governance (EMG) and AI Center of Enablement (AI COE).
• Deep Learning: Advanced analytical capabilities for various applications.

Intellectual Property Portfolio:

• Patent Strategy: The Cigna Group holds over 480 U.S. patents, establishing competitive moats in key technology areas.

Technology Partnerships:

• Strategic Alliances: The Cigna Group Ventures has committed $700 million to invest in data and technology, digital health, and care delivery startups, fostering strategic collaborations.

Leadership & Governance

Executive Leadership Team (as of February 27, 2025)

Board Composition: The Board of Directors oversees privacy and cybersecurity programs, with certain members holding cybersecurity certifications, indicating a focus on these critical areas.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 73,500 colleagues globally as of December 31, 2024.
• Geographic Distribution: Approximately 90% of employees are based in the United States.
• Skill Mix: 97% of employees are full-time.
• Diversity Metrics: The global workforce is approximately 70% women and 30% men. In the U.S., approximately 41% of employees are ethnic minorities.
• Pay Equity: A 2025 pay equity analysis showed female employees earn over 99 cents for every dollar earned by similarly situated male employees, and ethnic minority employees earn over 99 cents for every dollar earned by similarly situated white employees.

Talent Management: Acquisition & Retention:

• Retention Metrics: The voluntary turnover rate was approximately 9% for all employees in 2024.
• Employee Value Proposition: In 2024, the company invested approximately 19% of total payroll in health, well-being, and other benefits.

Diversity & Development:

• Development Programs: Employees engaged in an average of 37 hours of learning in 2024.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Renewable Energy: Investments in renewable energy projects provided $1,057 million in tax credits in 2024, $453 million in 2023, and $129 million in 2022.

Supply Chain Sustainability:

• Supplier Engagement: The Cigna Group is committed to increasing its annual diverse supplier spend.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• DOJ Risk Adjustment Investigation: The Department of Justice is investigating industry-wide risk adjustment data submission practices. The Cigna Group settled a related investigation in Q3 2023 and is subject to a Corporate Integrity Agreement (CIA).
• FTC PBM Complaint: In September 2024, the FTC filed a complaint against Express Scripts and two other PBMs regarding alleged anticompetitive rebate practices related to insulin drug pricing.
• HIPAA Compliance: In December 2024, the company received a voluntary audit request from HHS's Office for Civil Rights (OCR) regarding HIPAA security rules compliance.
• EU Pillar Two Directive: The company is evaluating the impact of the EU's Pillar Two Directive, adopted December 15, 2022, which provides for a minimum effective tax rate of 15% with effective dates of January 1, 2024, and January 1, 2025.

Trade & Export Controls:

• Sanctions Compliance: Compliance with OFAC and AML regulations.

Legal Proceedings:

• Elevance Health, Inc. Litigation: Express Scripts was involved in a lawsuit with Elevance Health, Inc. regarding alleged breach of contract. The Second Circuit affirmed summary judgment for Express Scripts on pricing-related claims on October 31, 2024, and denied Elevance's petition for rehearing on December 19, 2024. Service-related claims were settled on November 1, 2023.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 28.3% (2024), 2.6% (2023), 19.2% (2022).
• Geographic Tax Planning: Consolidated pre-tax income from foreign operations was approximately 62% (2024), 48% (2023), and 46% (2022) of total pre-tax income.
• Tax Reform Impact: The company is evaluating the impact of the EU's Pillar Two Directive.
• Unrecognized Tax Benefits: $1,477 million (2024), $1,399 million (2023). Interest expense on uncertain tax positions was $228 million (2024).

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The company utilizes reinsurance to manage risk, though it remains liable to policyholders if a reinsurer defaults.
• Risk Transfer Mechanisms: In 2013, The Cigna Group entered an agreement with Berkshire Hathaway Life Insurance Company of Nebraska to exit the variable annuity reinsurance business, with approximately $3.0 billion remaining on the overall limit as of December 31, 2024.
• Statutory Financials: Statutory net income for insurance and HMO subsidiaries was $3.9 billion (2024), and statutory surplus was $16.0 billion (2024).
• Regulatory Limits: Maximum dividend distributions permitted from subsidiaries in 2025 without regulatory approval are $3.9 billion. Maximum loans to the parent company permitted without regulatory approval are $1.4 billion.