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G500-2023-Cigna

The insurer and health services company had a relatively slow year for revenue growth, but profits, at $6.7 billion, were up 24.3%. 
<ul> 
 	<li>Cigna has been working to expand “value-based” care models, which are designed to emphasize primary care and preventive medicine. To strengthen such care, Cigna entered into a strategic partnership with Walgreens-owned primary care provider VillageMD.</li> 
 	<li>Evernorth, Cigna’s service-provider arm, which also oversees the new VillageMD investment, has brought the company growth over recent years, and focuses on value-based care.</li> 
 	<li>Cigna Healthcare, the health-insurance benefits arm of the business, also expanded its margins and customer base.</li> 
</ul>

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F500 2023-Cigna Group

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G500 2022-30-Cigna

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F500 2022 Cigna

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G500-2021-028-Cigna

If there’s one element you need to home in on to understand health insurer Cigna’s 2020 success, Evernorth is a pretty good place to start. The company climbed more than 50 spots on the Fortune 500 after completing its merger with pharmacy benefits manager Express Scripts. That sent its revenues skyrocketing—and then the pandemic hit. How did Cigna manage to deal with that buzz saw? The Evernorth subsidiary, which encompasses Express Scripts, brought in $30.6 billion in the first quarter of 2021 and moved to expand its plan memberships in five more states and 67 new counties. It doesn’t hurt that Evernorth acquired the virtual care platform MDLive at the beginning of 2021—at a time when telehealth demand is soaring.

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F500-2021-013-Cigna

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FGC 2021-Cigna

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G500-2020-032-Cigna

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F500-2020-013-Cigna

Health insurer Cigna ranked 65th on the Fortune 500 last year. This year? A meteoric rise to 13th, the result of its merger with pharmacy benefits giant Express Scripts—and another instance of the trend toward vertical integration among large health care companies. The Express Scripts integration, completed in December 2018, fueled revenue growth that exceeded even Cigna’s own pre-merger expectations: Adjusted revenues for 2019 soared to $140 billion, compared with the $131 to $133 billion originally forecast.

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Fastest-Growing-Companies-2020-59-Cigna

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Fastest-growing Companies

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With roots dating back to 1792, the Cigna Group is an insurance and related services company serving millions of clients in the United States. Its Evernorth Health Services branch offers pharmacy benefits, home delivery, distribution, management solutions for plans, and health care providers. Meanwhile, the company’s Cigna Healthcare segment provides medical, behavioral health, dental, and other products to customers. In 2023, the business underwent a rebrand; Cigna Corp. changed its name to the Cigna Group, and its two segments became the primary business units.

Q2 2026

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Q4 2024

Cigna Group (CI): Company Profile, Stock Price, News, Rankings

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Cigna Group

cigna group

Ladies and gentlemen, thank you for standing by for the Cigna Group Second Quarter twenty twenty five Results Review. At this time, callers are in a listen only mode. We will conduct a question and answer session later during the conference and review procedures on how to enter Q to ask questions at that time. If you should require assistance during the call, please press 0 on your touchtone phone. As a reminder, ladies and gentlemen, this conference, including the Q and A session, is being recorded.

We'll begin by turning the conference over to Ralph Jacoby. Please go ahead.

Thanks. Good morning, everyone. Thanks for joining today's call. I'm Ralph Jacoby, Senior Vice President of Investor Relations. With me on the line this morning are David Cordani, Pitcina Group's Chairman and Chief Executive Officer Brian Ivankoe, President and Chief Operating Officer and Ann Dennison, Chief Financial Officer.

In our remarks today, David, Brian and Ann will cover a number of topics, including our second quarter twenty twenty five financial results and our financial outlook for 2025. Following their prepared remarks, David, Brian and Ann will be available for Q and A. As noted in our earnings release, when describing our financial results, we use certain financial measures, including adjusted income from operations and adjusted revenues, which are not determined in accordance with accounting principles generally accepted in The United States, otherwise known as GAAP. A reconciliation of these measures to the most directly comparable GAAP measures, shareholders' net income, and total revenues, respectively, is contained in today's earnings release, which is posted in the Investor Relations section of thesignagroup.com. We use the term labeled adjusted income from operations and adjusted earnings per share on the same basis as our principal measures of financial performance.

In our remarks today, we will be making some forward looking statements, including statements regarding our outlook for 2025 and future performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. A description of these risks and uncertainties is contained in the cautionary note to today's earnings release and in our most recent reports filed with the SEC. Regarding our results in the second quarter, we recorded net after tax special item charges of $171,000,000 or $0.64 per share. Additional details of the special items are included in our quarterly financial supplement.

Additionally, please note that when we make prospective comments regarding financial performance, including our full year 2025 outlook, we will do so on a basis that includes the potential impact of future share repurchases and anticipated 2025 dividends. And with that, I'll turn the call over to David.

Thanks, Ralph. Good morning, everyone, and thank you for joining our call. We entered the second quarter with momentum, and I'm pleased to report that Cigna Group delivered another quarter of differentiated financial results. And recognizing the meaningful disruption in the industry, we're also pleased to reaffirm our guidance for full year 2025. At the Cigna Group, we continue to meet our financial commitments by delivering innovative new solutions to improve access and affordability for customers and patients, and working to build a better, more sustainable healthcare model.

At the same time, we also remain laser focused on delivering every day for the benefit of those we serve. Today for a discussion, briefly I'll discuss how the strength and durable nature of our model enabled us to continue to grow. Then Brian will discuss the performance of our growth platforms and how we continue to expand our total addressable market. After that, Anne will provide details on our financial performance in the quarter, and we'll take your questions. So let's get started.

In the second quarter, we delivered 67,200,000,000 in total revenue and grew adjusted earnings per share to $7.2 This builds on our long track record of sustained attractive results, where over the average of each of the last three, five, and ten years, we've achieved our growth algorithm of 10% to 14% compounded adjusted EPS growth. Our results are a direct reflection of our clear and deliberate strategy to position the Cigna Group with differentiated services and integrated benefit capabilities, coupled with strong execution and led by the most tenured and capable leadership team in the industry. At a macro level, we continue to operate with the assumption that the environment will remain dynamic. We see eroding health status, affordability, and access challenges as key forces of change in the healthcare system in The U. S.

And around the globe. In addition, we have operated in and will continue to operate in this space with elevated regulatory and legislative activity, as well as significant technological, clinical, and pharmacological advances. We have a number of differentiators which enable us to lead through these dynamic markets. The first is our orientation toward anticipating, and in some instances, creating constructive disruption, which better positions us to identify opportunities. This is a foundational part of our strategy.

For us, it means listening to our customers, patients, and clients, and leveraging their feedback to continue to evolve, innovate, and deliver even more value. For example, as we stepped into 2025, the forces of change in healthcare further accelerated our efforts to help shape a more sustainable healthcare system, and in part fueled our customer focused commitments and actions we announced earlier this year. These commitments, which we refer to as our commitment to better, call on us to deliver easier access to care, better support to help customers and patients navigate the healthcare system, increase value, greater accountability, and greater transparency. This quarter, we took another step forward, with Cigna Healthcare introducing a new AI powered virtual assistant to improve our customers' experience during common interactions, such as checking benefits, estimated costs, and finding care. As it relates to regulatory and legislative activity, we continue to proactively lean in with a partnership orientation.

We continue to believe in and embrace public private partnerships, which are essential for the healthcare system to continue to be responsive to all stakeholder needs. And we are proactively working to bring forward new solutions with the current administration, Congress, and within states. The recent industry announcement to further streamline and simplify prior authorizations for the benefit of patients and physicians is a good example of this, and we partnered closely with HHS on this advancement. Each of these actions represent a commitment from the Sigma Group to build a better future, and I'm pleased that we continue to make good progress. Our second differentiator is our diverse portfolio of businesses, which provides us with the strategic flexibility to pursue multiple avenues for delivering and capturing value.

This is made possible by our service based model, which provides us with significant amount of agility and nimbleness. We've deliberately shaped our services based model over years, and today, they are configured in three strong platforms that together provide us with a diversified position and multiple pathways for growth, serving employers, health plans, governmental agencies, and healthcare delivery systems. In Evernorth, that includes specialty care services and our pharmacy benefit services business. In our Cigna Healthcare portfolio, our integrated benefits offerings both in The United States and globally. Our proven approach leverages the combined strength and capabilities of these platforms to create even more value for the benefit of those we serve.

Over the long term, the way we've architected our company, coupled with our strategic choices, including a capital light model, has given us both the resilient model and the ability to pivot and evolve as the marketplace changes. Now, a third key differentiator for us is our relentless execution fueled by our tenured and talented team. Ultimately, our results are made possible by our coworkers, including the most experienced enterprise leadership team in the industry. And along with the great depth and continuity of our leadership, we also continue to strategically infuse talent into our company in areas such as technology and clinical. The strength of our team continues to be a key differentiator in our ability to consistently execute on our strategy and deliver on our core fundamentals.

Our team's deep expertise in the healthcare industry and strong understanding of the competitive landscape enables us to adapt quickly. This strategic agility helps us navigate challenging environments, as well as to identify and seize new opportunities for growth. We have drawn upon each of these differentiators time and time again to continue to grow in times of uncertainty, from the launch of the ACA to leading through the global pandemic. And during each of these events, we have sought to innovate through and deliver sustainable value for our customers, patients, clients, and shareholders. As a result, we've delivered 13% compounded adjusted EPS CAGR over the last decade.

Now to wrap up my comments. Against the backdrop of a dynamic environment, we continue to deliver and are well positioned for the remainder of 2025. Our second quarter results underscore the strength of our diverse portfolio of businesses and our disciplined focus on innovation and partnership. We are confident in our ability to sustainably deliver 10% to 14% compounded adjusted EPS growth over the strategic horizon, along with an attractive dividend. And with that, I'll turn the call over to Brian.

Thank you, David. Good morning, everyone. To underscore David's comments, we continue to execute well and deliver against our customer and shareholder commitments through a dynamic operating environment. Our capabilities across our three platforms, Cigna Healthcare, Evernorth Pharmacy Benefit Services, and Evernorth Specialty and Care Services uniquely positions us in the market with strong assets and expertise. Across our portfolio, we are leaders in serving employers, health plans, and government entities, and we are increasingly entrusted to service health systems, hospitals, and other providers with our Evernorth Specialty and Care Services capabilities.

Now, let me go a bit deeper on our second quarter business performance. Beginning with Cigna Healthcare. Cigna Healthcare delivered financial results that were in line with expectations, even as we've seen persistently elevated medical costs throughout the year. Importantly, our flagship U. S.

Employer business continues to grow, particularly in our Select segment through a consultative approach with clients. Overall, our performance reflects a medical care ratio of 83 two percent in the second quarter. This is in line with expectations, driven by our sustained disciplined execution against our commitments. And we have intentionally positioned our Cigna Healthcare portfolio with a product mix that has proven favorable in the current environment, as we have no exposure to Medicaid or Medicare, instead choosing to serve these customers through our EverNorth services portfolio. Our planning assumption within Cigna Healthcare for 2025 is that we will continue to experience elevated medical costs throughout the year.

Within the second quarter, we experienced pressures in our individual exchange business that we were able to overcome due to the strength of our broader Cigna Healthcare portfolio and the relatively small scale of our individual exchange business within that portfolio as a result of strategic choices we've made to reposition this product offering. Turning to Evernorth, earnings were slightly ahead of expectations. This reflects our strong momentum within the specialty and care services platform, coupled with continued good execution within pharmacy benefit services. In our pharmacy benefit services business, we continue to see strong client retention with demand across diverse buyer groups, from employers to health plans and other PBMs. And today, we are proud to serve more than 120,000,000 Americans.

This includes long standing client and partner relationships, many of them being the largest and most sophisticated purchasers in The U. S, who come to us for solutions that help them best serve their needs. This demand for our services has resulted in a number of multiyear renewals and other ongoing agreements with large clients. For example, we recently finalized a multiyear contract extension with Prime Therapeutics. Our clients also look to us for partnership around innovation.

This quarter, Evernorth launched another first of its kind benefit option that will save patients money on their GLP-one weight loss prescriptions with greater choice and predictability. Building on our Encircle and EnReach offerings, this new benefit negotiated directly with two drug manufacturers limits a patient's out of pocket cost to no more than $200 per month and applies to their annual deductible. This benefit offers our clients flexibility to cover these medicines in multiple ways to best serve customers. As always, we continuously explore new approaches and models to drive greater access, affordability, and transparency. And in our EverNorth specialty and care services businesses, we delivered another quarter of strong growth led by Accredo, our industry leading specialty pharmacy, which provides specialty medications for the treatment of complex and rare diseases.

Across the Specialty and Care Services portfolio, adjusted earnings increased 12% in the quarter when normalizing for the absence of the VillageMD dividend. This was driven by increased specialty prescription volume and ongoing biosimilar adoption, further powered by the strong secular tailwinds that we've discussed on prior calls. Finally, our specialty distribution business serving health systems, hospitals and other providers delivered significant growth in the quarter. And our ability to serve these buyers with both distribution and our unique set of broader enablement capabilities drives future expansion opportunities. I'm going to spend a few minutes unpacking this theme further.

David talked earlier about our ability to find opportunities in a challenging environment to expand our addressable markets. Previously, we've highlighted how our specialty pharmacy business uniquely supports patients through Accredo and our other pharmacies with our clinical expertise and services such as our in home nurses. Today, I want to share a bit more about the important addressable market expansion opportunity we see serving health systems, hospitals, and other providers with our specialty services across the Cigna Group. As a reminder, the specialty space is more than a $400,000,000,000 market today and is growing at high single digits annually. In 2024, approximately 70% of new drugs approved by the U.

S. Food and Drug Administration were specialty medications. These medicines flow through both the pharmacy and medical benefit, with the medical benefit segment representing about 40% of the specialty space. Specialty represents one of the highest growth areas in healthcare and within the Cigna Group, and we continue to expect long term average annual income growth of 8% to 11% across our specialty portfolio. Increasingly, health systems and other providers are seeking to manage their in house pharmacy capabilities and inventory, most specifically within specialty drugs, as this provides an important source of revenue that can help to counterbalance pressures in other aspects of their business.

Let me outline a few of the unique capabilities within Evernorth that position us to provide innovative solutions and support health systems, hospitals, and other providers as they seek to optimize their specialty pharmacy management. First, across the supply chain, we can help health systems and providers procure specialty medicines, including highly complex and limited distribution therapies. Our specialty distribution serves more than 12,000 providers today, distributing some of the most complex and critical medications to physician offices, health systems, and infusion centers. We do this through Cura Script SD, which has seen double digit average revenue growth over the past three years and is now a $25,000,000,000 business. Second, our technology suite of services can support providers and hospitals as they navigate this complex specialty market.

And finally, bringing our exceptional range of clinical services to these buyers provides them with peace of mind and the assurance that best practices are being drawn from across our client base. We offer specialty pharmacy and infusion services on behalf of more than 700 hospitals, health systems, and physician groups across the country, helping them expand their ability to offer coordinated access and continuity of care. Whether at home, at the pharmacy, or in a physician office or hospital, we are built to serve the needs of patients in any setting, delivering greater affordability and better clinical care. Overall, we see the opportunity to serve health systems and other providers holistically as a meaningful growth opportunity. As I wrap up, I want to reiterate some notable bright spots for the quarter that underscore our strong business performance and operational execution.

Cigna Healthcare earnings were solid and reflect the strength of our diverse portfolio and intentional choices around product offerings. We continued our strong track record of client retention with large strategic client renewals in our EverNorth Pharmacy Benefit Services segment. We delivered 12% growth in normalized earnings within our EverNorth Specialty and Care Services operating segment, which has attractive growth exposure over the long term, particularly with health systems, hospitals and other providers. We continue to drive net growth in The U. S.

Employer select segment with Insignia Healthcare, and our ongoing innovation for clients includes new enhancements in the quarter associated with GLP-1s in Evernorth and an AI powered virtual assistant within Cigna Healthcare. Across our businesses, I'm excited about the ongoing growth opportunities we have. Now I'll turn it over to Ann.

Thank you, Brian, and good morning, everyone. Today, I will review Cigna's second quarter twenty twenty five results and discuss our outlook for the full year, which we reaffirmed this morning. As David and Brian mentioned, our second quarter results underscore the strength of our diversified portfolio of businesses in a dynamic environment and demonstrate continued execution against our operating and financial commitments. Key consolidated financial highlights for the second quarter include Revenue of $67,200,000,000 and adjusted earnings per share of $7.2 Our solid performance and disciplined execution in the first half of the year reinforce our confidence in delivering our full year 2025 adjusted earnings per share outlook of at least $29.6 Now turning to our segment results. I will start by commenting on EverNorth, our services chassis, which now contributes over 60% of our enterprise earnings.

EverNorth's results reflect sustained strength across our pharmacy benefit services business and specialty care services business. Second quarter twenty twenty five revenues grew to $57,800,000,000 while pretax adjusted earnings grew to 1,700,000,000 slightly ahead of expectation. Specialty and Care Services demonstrated strong growth, with revenue up 13% to $25,900,000,000 Normalizing for the impact of lower net investment income due to the absence of the Village Empty Dividend, pretax adjusted earnings increased 12% year over year. This performance showcases the power of our robust and unique specialty capabilities as we delivered broad based growth across both Accredo and Cura Script. Pharmacy benefit services delivered another quarter of solid growth.

Pretax adjusted earnings increased to $833,000,000 as we continued to drive affordability for our patients, customers, and clients through innovative product offerings, while continuing to invest to drive long term growth. Turning to Cigna Healthcare. Second quarter twenty twenty five revenues were $10,800,000,000 Pretax adjusted earnings were $1,100,000,000 and the medical care ratio was 83.2%. These results were broadly in line with expectations and reinforced the strength and stability of our portfolio of businesses, which as David mentioned, was strategically constructed for sustainable long term growth in a dynamic environment. Cost trends for our commercial business, including stop loss, remained elevated in the quarter, consistent with expectations. For our individual business, utilization was higher than expected, reflecting an increase in medical costs across the ACA marketplace. However, this pressure was manageable due to the smaller relative size of our ACA book, aided by our disciplined pricing actions over the past two years. Overall, Cigna Healthcare delivered consistent results, underscoring the strength of our execution in an environment that continues to present challenges across the industry. Now turning to our outlook for the full year 2025.

Recognizing the overall disruption in the industry, we are pleased to reaffirm our full year 2025 expectation for consolidated adjusted income from operations of at least $29.6 per share. Regarding the cadence of earnings, we expect the third quarter adjusted earnings per share to be slightly above 25% of the full year outlook. Now turning to our 2025 outlook for each of our growth platforms. In Evra North, we continue to expect full year 2025 pretax adjusted earnings of at least $7,200,000,000 and we expect the third quarter adjusted earnings for Evra North to be slightly above 25% of the full year outlook. For Cigna Healthcare, our outlook continues to assume elevated cost trends to persist throughout the year.

We continue to expect full year 2025 pre tax adjusted earnings of at least $4,125,000,000 and we expect the third quarter adjusted earnings for Cigna Healthcare to be slightly below 25% of the full year outlook. We continue to expect the full year medical care ratio within the range of 83.2% to 84.2%. Additionally, we expect the third quarter medical care ratio to be toward the upper end of the full year range, reflecting typical seasonality. Turning to our 2025 capital management position. It's important to note that our operating cash flow can vary from quarter to quarter, influenced by timing specific factors such as the payment of supply chain receivables and payables, as well as changes in inventory levels, particularly within Accredo and CureScript.

Second quarter operating cash flow was impacted by working capital timing within EverNorth. We expect the timing related impact to reverse and continue to anticipate strong cash flow generation in the second half. Now to recap. Our first half twenty twenty five results reflect disciplined execution across both EverNorth and Cigna Healthcare. Our 2025 outlook reflects the sustained momentum and strong fundamentals of our growth platforms, which gives us the confidence to reaffirm our full year twenty twenty five adjusted earnings per share outlook of at least $29.6 And with that, we'll turn it over to the operator for the Q and A portion of the call.

Ladies and gentlemen, at this time if you do have a question, please press star one on your touch tone phone. If someone asks your question ahead of you, you can remove yourself in the queue by pressing star two. Also, you're using a speakerphone, please pick up your handset before pressing the buttons. Our first question comes from AJ Rice with UBS. Your line is open. You may ask your question.

Hi, everybody. I appreciate the comments about the innovative products that Evernor has brought to the market, particularly around GLP ones. It makes me think even a little more broadly about your positioning in the commercial market, ASO insurance, and how you use potentially Evernore's PBM and pharmacy services business. You have insight on what's happening into the those markets, and that's probably the biggest pressure point for commercial trends these days. And that insight is not something that's say, for example, your big Blue Cross competitors have.

Just maybe try to flush out a little bit more how you're using that, how much of an advantage do you think that is? Any thoughts on any of that?

AJ, good morning. It's David. Maybe just a couple of macro comments and I'll hand it over to Brian. First, I appreciate your broad framing. Two, contextually, as we step back, you go back a decade or so ago, aggregate pharmacy services was low double digit percentage of the total medical cost equation.

Fast forward to today, the pie is both larger and aggregate pharmacy services, including specialty, is mid-20s, growing, staring at potentially a 30% slice of the pie in short order. So one, to reinforce your point, it's a more significant part of the overall care equation. Two is the interdependency between medical pharmacy, both traditional pharmacy and specialty pharmacy, and how we simply add mental health further consolidates in terms of a lot of our capabilities to be able to look at the whole person, both the predictive nature of more complex medical issues based on pharmaceutical consumption, as well as the interdependency between the mental health aspect, which includes pharmacy, as well as medical. So I'll turn it across to Brian, but I just wanted to amplify the interdependencies of those three areas, not just the two. Secondly, the size of the overall health care equation of what pharmacy is today, 25 plus percent of the overall pie, on its way to 30 on a larger pie versus ten twelve percent just a decade ago or so. Brian?

Morning, A. J. So I certainly agree with the thesis underneath your question here that our three growth platforms Cigna Healthcare, pharmacy benefit services in EverNorth and our specialty and care services platform in EverNorth are mutually reinforcing and create value for one another. So that's indisputable. And to your point, specialty pharmacy continues to be one of the highest trend categories across the healthcare system that and, mental health services in particular, were large contributors to the overall cost trend environment that we've seen year to date.

As Ann mentioned in her comments, overall though, cost trends have been elevated, but in line with our expectations. So having the ever north insight certainly has been helpful for our Cigna Healthcare team. And it's the way we're able to manage the health plan MCR to the levels that we've committed. As David was just making reference to, 20% of an average employer's total cost of care is specialty drugs today. Now that's not all in the drug benefit, a portion of that's in the medical benefit.

So one of the things we really like about the way we've constructed the company is we can see a specific patient have their care journey started the medical benefit and transitioned over into the pharmacy benefit. So patient may have a specialty injectable that starts medical benefit that moves to a self injectable under the drug benefit. We're able to manage that longitudinally given our suite of services across the Cigna group. So all things considered to the core of your question, we're really pleased with the way we've constructed the company and it's helped us, to manage the Cigna Healthcare financial performance.

Thank you. Our next question comes from Lisa Gill with JPMorgan. Your line is open. You may ask your question.

Thanks very much and good morning. Can you maybe comment on the 2026 selling season? I heard you talk about specifically the renewal of Prime Therapeutic, but really a couple of components to this. One, what do you have up for renewal on the pharmacy benefit side? Two, what do you see as opportunities and what are people looking for?

And then if I could just also add on to that, we saw the Arkansas ruling and the injunction. Can you maybe just comment, as to how you're thinking about that and as to how you're thinking about legislation generally speaking on the PBM side? Thanks so much.

Good morning Lisa, it's Brian. I'll start with some of the selling season themes and then I'll turn it over to David. He could talk a little bit about what's happening with the legislative and regulatory dynamics. So maybe to kind of round out the first picture, I'll give you a sense for each of our growth platforms, some of the dynamics that we're seeing, and then I'll get into some of the themes. So within our Express Scripts pharmacy benefit services business, we're currently tracking toward mid-90s or better retention for 2026, which overall is a strong retention level consistent with prior years.

And as I noted earlier, the largest and most sophisticated buyers of pharmacy benefit services continue to trust us and appreciate our value creation, with an example of that being the multi year renewal of Prime Therapeutics that was recently completed. Within the Cigna Healthcare portfolio, it's still pretty early in the season for small employers, but we do have some good insights on the larger end of the market. And we continue to view the national account space as one that will be a flat to shrinking market over time. And our strategy in the national account space is to maintain our share in Cigna Healthcare. And at this point, we're not seeing anything unique for 2026 that would cause us to deviate from that multi year expectation.

Within Cigna Healthcare, we do continue to be a net share winner in the under 500 select segment, which is a function of our affordability improvements that we've driven coupled with our consultative employer engagement model. And finally, the EverNorth specialty and care services platform, we do continue to benefit from secular tailwinds there, which leads to more patients utilizing specialty drugs along with our Accredo specialty pharmacy being included as a network option in more unaffiliated PBM offerings. In terms of some of the market dynamics or themes that apply more holistically across our businesses, first off, I'd characterize this as a pretty active sales season, both as we compete for twenty twenty six new business, both amongst our existing client base, but also, new business opportunities for us. Affordability continues to be the number one area of focus for employers, particularly with the persistently high cost trend environment that the industry has been experiencing. And part of that's driven by the question that AJ asked around specialty injectables, as well as GLP-1s and the continued growth we're seeing in mental health spending.

Amongst larger employers, we're seeing some elongated decision making timeframes, particularly as employers are seeking reassurance that their benefit decisions are appropriate given the continued pressures on affordability. The second theme is personalization. This we're seeing across our buyer groups, which can take the form of network solutions, product offerings, clinical programs and service experiences. During the quarter, we announced our new AI powered virtual for our Cigna Healthcare customers to help them navigate the complexity of the healthcare system with the most modern digital capabilities and the feedback there has been very positive. And finally, we're hearing more of our larger employers seeking to reduce the number of point solutions.

In some cases, finding that the ROI is in there or in other cases finding that there are gaps in integrating these point solutions, which drives a level of fragmentation in the individual's healthcare journey. So a lot that I just covered there in few minutes, but taken altogether, we're well positioned to meet all these market needs and we expect 2026 to be a year of attractive results. David, maybe you can comment on Arkansas and the associated PBM dynamics.

Good morning, Lisa. So yes, macro and specific to Arkansas. So at a more macro level, as I noted even in my prepared remarks, we believe that the industry will continue to operate in an active legislative and regulatory environment, and we believe the sustained environment requires a very strong and collaborative private partnership and relationship. And highlighting back to the industry leading in on evolving prior authorization more broadly, with 50 health plans coordinating a direction and a solution and collaborating with HHS. That's not declaration of success.

That's a positive indication of public private partnerships and collaborating to drive sustained improvement. And I would say just broadly underlying mostly all the legislative and regulatory activity, there's an orientation around the affordability challenge that everybody's confronting, federal government, state government, employers and individuals. So desiring improvements in affordability, while balancing access and quality. They have to actually get squared together. When you overarchitect on one, you potentially push too hard on the other.

Specific to Arkansas, to be very clear, we're quite pleased with the expeditious and clear decision of the courts thus far to put a TRO in place. Because the legislation, while potentially well intended, is contrary to what we believe society needs. And if you look at the legislation, the legislation essentially arbitrarily constrains access. The legislation would, as it configured, break continuity of care. The legislation would restrict choice, and the legislation would have an undoubtable positive impact or upward impact in a negative way on affordability.

So we are pleased with the outcome and the temporary restraining order to look at the facts relative to that. We will continue to stay engaged both at a state level and federal level, and I come back to the imperative. The imperative is sustainable improvements to overall affordability that harness choice and innovation, don't architect it away arbitrarily. They have to harness choice and innovation, and then balance appropriate access and drive sustained quality. And we're confident, as Brian noted, our capabilities are well positioned to be able to drive that. Thanks for your questions.

Thank you. Our next question comes from Josh Raskin with Nephron Research. Your line is open. May ask your question.

Hi, thanks. Good morning. Could you provide an update, related to the exchange business on your risk adjustment accruals? It just looked like revenue jumped in 2Q on a PMPM basis by decent amount. And so I'm just curious if there was any specific adjustment for 2024 final settlement or as you're thinking about mortality for this year.

And then can you provide maybe broader commentary on expectations for that book in 2026 and how you're pricing how you're approaching the pricing environment?

Good morning, Josh. It's Brian. I'll start with maybe a little bit of context for the individual exchange market and then ask Anne to take the question you asked more specifically about risk adjustment accruals and such. I think it's important to step back and rewind the clock a couple of years to 2023. At that point in time, we served nearly 1,000,000 customers in the individual exchanges, albeit with mixed financial performance.

Based upon our performance, as well as our forward view of the market, we made the strategic choice to prioritize margin over growth, which included adjustments to product and network strategies, refinements to our geographic footprint and increased prices where necessary. And this decision to margin over growth in the individual exchanges has helped us to navigate some of the industry wide pressures that have emerged here in 2025, and we now serve fewer than 400,000 customers in this business, down materially from the nearly 1,000,000 we served in 2023. Additionally, across both the 2024 and 2025 pricing cycles, our nationwide price increases were roughly double the industry average in each of those years. So as a result of those actions, some of our competitors showed meaningful growth in their individual exchange businesses while we chose to reposition our portfolio, which resulted in fewer individual exchange customers for Cigna Healthcare. So again, just to summarize what's transpired over the past two years in the individual exchanges, we made the choice to prioritize margin over growth, which resulted in a reduction of our customer base from nearly 1,000,000 customers in 2023 to fewer than 400,000 customers today.

Meanwhile, across the industry, individual exchange enrollment is up nearly 50% over that same time period. As it relates to 2026, we expect to take further price increases. We're in the process of working through the refiling of that, as we speak. And again, we'll prioritize margin over growth for the 2026 year in the individual exchanges. Anne, maybe you can pick up on the risk adjustment component of this question.

Sure. So specifically, on your question related to risk adjustments, there's a couple of things to note. Reflected in our results this quarter is a 2023 RADV adjustment, which we had visibility into coming into building our expectations for the year. So that was built already built into our expectations. Beyond that, we had a very modest positive adjustment to the 2024 risk adjustment that helped offset some of the pressure we saw, related to utilization that I mentioned, in my prepared remarks.

Thank you. Our next question comes from Justin Lake with Wolfe Research. Your line is open. You may ask your question.

Thanks. Good morning. I wanted to ask about your views on the impact of more sophisticated hospital billing and coding to commercial trend, right? We're hearing about this all over. Curious what you're seeing here and do you think this might have an above average impact on stop loss?

And then lastly, just with rate increases running double digits for employers, David, love to hear what you're hearing from employers on their ability to absorb it and what they're taking here. Thanks.

Justin, good morning. Let me take a portion of the question and ask Brian to give you some insights in terms of what we're experiencing specifically in terms of our stop loss actions from a marketplace standpoint. So we have several questions here. First, are we seeing elevated billing sophistication harnessing AI or other capabilities? Broadly speaking, we think the answer to that is yes.

I'm gonna part on the side, there's a significant number of AI related activities that we are driving as an organization in terms of driving efficiency and effectiveness and productivity, driving accelerated speed, precision and personalization, and working to design new capabilities. There's a series of bright spots within that. Some of those capabilities help us to counteract, address, and proactively engage very differently in terms of some of the forces we're seeing. But to your first part of your question, we believe the answer to that is indisputably yes. We engage in that in terms of hospital contracting and provider contracting engagement modifications, our own AI and technology capabilities, and seeking to get a balanced net outcome.

On the backside of your question, before I hand it back to Brian to talk more specifically about the marketplace and stop loss, there's no doubt that affordability is pressuring everybody. And before we come to the employers, it's important to articulate it's impacting the federal government as a payer. It's impacting state governments as a payer. It's impacting employers as payers, and it's impacting individuals, which is why we always come back and articulate the impact of affordability as the number one issue to be able to drive forward. The precision, the personalization, new program designs, and in many cases, integration of point solutions are opportunities to mitigate some of that.

And what I would say from an employer standpoint, what this is doing is it's raising the decision criteria in the C suite even higher. It's potentially increasing openness to what may have been deemed to be more disruptive solutions, so more precise network solutions, or more aggressive adoption of some of our new innovations like our Pathwell programs, our Pathwell Specialty program, which is an example to A. J. Question of significantly more precision of network configuration around specialty infusions that deliver exponentially more value and affordability. So there is pressure there, no doubt.

We see it as actually opening the door for more innovative conversations and bringing more precision to the solution. Brian, can I ask you to talk about the stop loss traction we're seeing in the marketplace and some of the fibers there?

Sure, David. Good morning, Justin. So I know you asked a very specific question on stop loss. I'm just going to zoom out for a bit and kind of remind of the big picture in terms of where we are with, that product line. Our stop loss offerings are a very important part of our U.

Employer portfolio within Cigna Healthcare and working complement with our other products and solutions for employers who choose to self fund their health benefits. And importantly, they provide employers with budgetary protection against unexpected large claim and activity or aggregate cost levels being higher than projected. For us, all of the stop loss business that we write is through an integrated offering with the employer where we also administer their overall medical benefits. And we continue to see very strong market demand for these solutions as evidenced by the 13% growth in stop loss premiums in the second quarter. As we've talked about on prior calls, we're working to improve the margin profile on this business over the course of the next two renewal cycles, and we're confident in our ability to deliver against this.

And over the past few months, we have been able to make progress on this plan with the revised cost structure being reflected in our later 2025 client renewals. And we've been able to execute this while preserving typical client retention levels. And in fact, our sold rate increases for 2025 coverage effective dates after January are higher than our January 2025 sold increases underscoring that our recovery plan is in motion. And it's important to keep in mind that about two thirds of our stop loss portfolio renews on January 1. So the pricing work for that cohort will be completed in the fall and that will inform our 2026 outlook.

But thus far through the first six months of the year, the stop loss portfolio is performing broadly in line with expectations The more sophisticated or intensive billing that you made reference to, while it is impacting our U. S. Employer book, does not have an outsized impact on the stop loss portfolio. So thanks for the question.

Thank you. The next question comes from Charles Rhyee with TD Cowen. Your line is open. You may ask your question.

Yes. Thanks for taking the question. Maybe I'd like to ask Brian if you could expand a little bit more. Talked about a lot on CuraScript, and just curious, what does this market look like when you're selling into health systems in particular? Do you have to go through the GPOs like Novation?

What does the contracting cycle there look like? And who are the incumbents? Are we talking about maybe some of the more traditional drug distributors like McKesson or Senkura in this market? And added to that, you talked about biosimilars in the press release. Just curious sort of what the experience you've had so far with maybe something like biosimilars STELARA through Qualant?

Is this something you're also selling to health systems through Qualant? Thanks.

Good morning, Charles. There's a lot in there, so I'll try to hit each of those components as best as I can. So, I appreciate you asking about Cura Script in that part of our company because many people are not familiar with that. And we decided to spend a few minutes in my prepared comments on this opportunity that we see in further expanding the addressable market to serve more health systems, hospitals and provider groups with their specialty pharmacy capabilities. And this is one of the most exciting growth opportunities that we have across the Cigna groups going forward.

Cigna Group (CI) Q2 2025 Earnings Call Transcript

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