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Fortune Global 500

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Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

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The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Cigna Group

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G500 2022-30-Cigna

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This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Cigna

Global health services company Cigna had an up-and-down year. Despite bringing on an additional 8.4 million customers in its pharmacy division in 2021 and an 8.5% rise in sales, Cigna’s profits plummeted by 36% from 2020, to $5.37 billion. After years of litigation, an appeals court rejected Cigna’s attempt to claim a $1.85 billion breakup fee from Anthem in the wake of a merger agreement that fell apart a few years ago.

This year’s group delivered stellar revenue and profit growth, but it underperformed the broader stock market.

100 Fastest-Growing Companies

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

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.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-013-Cigna

Collectively, the ranked companies produced a three-year average shareholder return of 33%, vs. 19% for the S&P 500.

FGC 2021-Cigna

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-032-Cigna

Health insurer Cigna is enjoying a meteoric rise on the Global 500 this year, climbing 197 spots thanks to its merger with pharmacy benefits giant Express Scripts—yet another example 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 billion to $133 billion originally forecast.

This year's Fortune 500 marks the 66th running of the list.

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.

Collectively, the ranked companies produced a three-year average shareholder return of 19%, vs. 11% for the S&P 500.

Fastest-Growing-Companies-2020-59-Cigna

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This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

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

legacy

Cigna Group

cigna group

Ladies and gentlemen, thank you for standing by for The Cigna Group's third quarter 2025 results review. At this time, all 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 the queue to ask questions at that time. If you should require assistance during the call, please press star zero on your touchtone phone. As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Ralph Giacobbe. Please go ahead.

Great, thanks. Good morning everyone. Thank you for joining today's call. I'm Ralph Giacobbe, Senior Vice President of Investor Relations. With me on the line this morning are David Cordani, The Cigna Group's Chairman and Chief Executive Officer, Brian Evanko, 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 third quarter 2025 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 thecignagroup.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 third quarter, we recorded a net after-tax special item benefit of $61 million or $0.23 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. With that, I'll turn the call over to David.

Thanks, Ralph. Good morning, everyone, and thank you for joining our call. In a highly disruptive market at The Cigna Group, we continue our track record of sustained growth in 2025, and I'm pleased to report that in the third quarter The Cigna Group delivered strong results and continued in a continued dynamic environment. Today I'll briefly walk through how we will sustain our growth by accelerating innovation to meet the needs of our customers and clients. We're also introducing new solutions to create meaningful value and impact, including our announcement earlier this week of a new rebate-free model for pharmacy benefits. Brian will provide an update on our performance on our growth platforms as well as provide some perspective on 2026. Ann will share some more details on our financial results for the quarter. We'll open up for your questions. Now let's get started.

During the quarter, we delivered revenue of $69.7 billion and adjusted earnings of $7.83 per share, all while continuing to strategically invest in our business to drive growth and innovation. We've also taken further strategic actions to expand our addressable markets and position the company for future growth. One example is our recent investment in Shields Health Solutions, completed earlier in September. Brian will share more details on this shortly. Our performance this quarter also underscores that we continue to deliver for those we serve, consistently navigating through dynamic and challenging environments. For example, this year alone, we publicly committed in February to a series of actions to further ease access to care in a coordinated way for patients and their physicians.

We stepped forward to partner with HHS Secretary Kennedy and CMS Administrator Oz, along with others, on a broad set of initiatives that will create a more seamless access to care environment and care continuity for Americans, for example, when they switch health plans. Additionally, earlier this month, Evernorth Fertility Pharmacies worked with the Trump administration and EMD Serrano to make fertility treatments more accessible for Americans struggling to start or expand their families. Just this week, we announced our transformative new rebate-free, delinked model. Our pharmacy benefit services here are designed to improve healthcare affordability and the experience for tens of millions of Americans. Our durable business model is designed to evolve, flex, and thrive through a variety of changes, whether economic, regulatory, legislative, or evolving technologies.

Today, the powerful forces of change across healthcare are accelerating and converging around long-standing challenges, particularly balancing access and affordability for consumers and patients. Drug pricing continues to create a significant affordability challenge and has become an even more intense part of the public dialogue in 2025. One area where we've helped address affordability relates to generic drugs, with Americans today enjoying the lowest prices in the world for these medications. In fact, generic drugs now account for 90% of all prescriptions, and on average they are one third cheaper in the United States than in other countries. Pharmacy benefit managers and the industry as a whole have played a key role in contributing to these lower costs by leveraging a competitive environment for clinically equivalent drugs.

On the other hand, prices for brand name medications continue to skyrocket, with those drugs that do not have a generic equivalent costing four times as much as the same drug in European markets. In 2025, it's estimated that the median price set by drug companies for new FDA-approved drugs is projected to be approximately $390,000 for a treatment course. As a result of these marketplace dynamics, even though brand name drug medications comprise only 10% of overall pharmaceutical volumes in the United States, they account for 88% of the spend. In recent weeks, President Trump announced a series of initiatives aimed at lowering the cost of brand name medications, bringing the U.S. prices in line with those paid in other developed countries.

We are aligned with these efforts and seek to expand access for all our clients, from employers to health plans and governmental plans, so that even more Americans can benefit from fair pricing on their prescriptions. Additionally, similar to our work to reduce pricing in generics, we continue to advocate for necessary changes to accelerate and broaden access to biosimilars, which boosts competition and lowers prices further. For example, the list price of Humira is approximately $7,000 a month. That approaches $85,000 a year for this single medication. Thanks to our innovative offering, we provide customers with Humira at a biosimilar level at no cost to the individual consumer. From a consumer point of view, that's real value and that's innovation that matters. Even with these efforts, we continue to advance change for the benefit of our customers, clients, and patients.

We've deliberately shaped our well-balanced portfolio of businesses across two growth platforms at The Cigna Group, Cigna Healthcare, and Evernorth Health Services. As a reminder, Cigna Healthcare is approximately 40% of our enterprise earnings, and in Evernorth, specialty and care and pharmacy benefit services are approximately 30% each. 70% of our portfolio, Cigna Healthcare and specialty and care services, remain well positioned for growth in 2026 and beyond. To future proof our company within our pharmacy benefit services, we continue to take significant actions. First, we proactively secured a number of long-term large client renewals and extensions, including the U.S. Department of Defense, Prime Therapeutics, and Centene. We're pleased to be able to serve them and their customers and patients now and through the end of the decade and beyond.

Second, we've stepped forward with our new simple and transparent model for pharmacy benefit services, which will replace the complex post-purchase rebate process with a simple upfront discount, which will enable customers and patients to automatically pay the lowest price at the counter, whether through their benefit or on a cash pay basis, and apply their payments toward the deductible, and importantly, continue to provide approximately 18,000 clinical safety checks as well as care coordination programs, which are essential for Americans who are taking multiple prescription medications that may have dangerous interactions. To make the benefits of this model even more evident, consider this: For Americans in health plans where they pay the full cost of medications, including, for example, high deductible plans, our new model will reduce the cost for a brand name drug prescription on average 30%.

This will be real savings for the consumers, and they'll see it right at the counter. Cigna Healthcare will adopt this model 100% for fully insured lives beginning in 2027, and it will become our standard offering broadly for The Cigna Group to the marketplace starting in January of 2028, and we expect to transition at least 50% of our book of business into this new model by the end of 2028. Consistent with this direction, we are also creating a more sustainable economic model for independent pharmacists we contract with. We understand the critical role these clinicians play in healthcare, particularly in rural at-risk communities, and commit to continuing to support them with fair, competitive pricing reimbursements for dispensing medications as well as clinical services they provide for customers and patients.

Further, the combination of market forces and our capabilities position us to proactively drive these long-term strategic renewals, extensions, and program transformations to positively impact the marketplace for years to come. Over the next two years, we will invest to support these renewals, extensions, and innovations. These investments will support recontracting efforts across many clients and supply chain partners, technology improvements, process reengineering, as well as building and further enhancing data and analytical capabilities. Additionally, given the significant financial and affordability pressures for partners operating heavily in government programs, we have proactively improved the economic terms of the contracts for the benefit of these long-term strategic clients. As a result of these factors, we expect margin pressure within our pharmacy benefit services segment over the next two years. To be clear, we expect a sustained and durable growth trajectory over the long term for the business.

I also want to be clear, even with these significant investments, we expect to grow EPS in 2026. Brian will discuss this further in a few minutes when he addresses our tailwinds and headwinds. All these actions demonstrate the commitment and resolve from The Cigna Group to build a better future and sustain our growth and impact. To wrap up, against the backdrop of a dynamic and challenging environment, our third quarter results and our reaffirmed EPS outlook of at least $29.60 underscore the strength of our diverse portfolio of businesses and sustained, disciplined execution and focus. With that, I'll turn the call over to Brian.

Thank you, David. Good morning everyone. I'll start by emphasizing our continued performance and delivery through a dynamic operating environment. Our strong fundamentals, disciplined focus on execution, and innovative mindset position us to continue demonstrating leadership for the benefit of those we serve and to build a more sustainable model for healthcare. Our continued success is rooted in the reasons our clients choose to partner with us, our breadth of capabilities, our clinical excellence, and our benefit plan administration. Taken together, our expertise in these areas enables us to provide access to quality health services and prescription drugs at lower unit costs than clients could achieve on their own, helping them meet their affordability goals, programs, and services that deliver personalized care and prioritize patient safety and efficient and effective management of their complex benefit plans. Today I'm going to cover two things.

First, I will go through our third quarter performance across our businesses, and then I'll touch briefly on the tailwinds and headwinds we see for 2026. Let's begin with our performance in Evernorth and Cigna Healthcare. Evernorth Health Services delivered earnings in line with expectations. In the third quarter, our specialty and care services businesses had another strong quarter where we delivered 11% adjusted earnings growth, reflecting our ability to deliver meaningful value to those we serve. Already this year, our specialty pharmacies have delivered approximately seven million prescriptions, growing at a double-digit rate from last year, and we are continuing to see a strong shift to biosimilars for Humira and Stelara, saving patients millions of dollars in out-of-pocket costs. This quarter, we also completed a strategic investment in Shields Health Solutions, further expanding our existing specialty capabilities to serve health systems, hospitals, and other providers.

We're excited about the multiple future opportunities in the over $400 billion specialty market. With our investment in Shields, we are enhancing our ability to serve the provider-administered portion of the specialty market, which today represents approximately 40% of the specialty space. This addressable market has strong secular growth, and our investment in Shields will enable us to accelerate our strategy in the hospital and health systems segment that Shields serves.

We're also pleased to be part of an effort by the Trump administration to make fertility treatments more affordable for Americans. As David noted earlier this month, we announced that in conjunction with the launch of TrumpRx, we will expand our successful partnership with EMD Serono to deliver fertility treatments from our Evernorth fertility pharmacies in 2026, providing lower costs and differentiated clinical capabilities for the benefit of patients. All in, we see a number of growth opportunities in our specialty and care services businesses. With our combined suite of capabilities across Accredo, CuraScript SD, and CarepathRx, we have opportunities to enhance and expand the ways we support specialty for all stakeholders. Now I'll turn to our second major platform within Evernorth, our pharmacy benefit services business. We are proactively transforming our pharmacy benefits model to meet the demands of the market and improve affordability and experiences for our customers and patients.

We're also seeing strong client retention and demand for our services, and as the 2026 selling season comes to a close, we expect approximately 97% retention in our pharmacy benefit services business. During 2025, we proactively executed renewals and extensions with our largest clients including Prime Therapeutics and Centene. Building on our previous extension with the U.S. Department of Defense, we recognize there are significant financial and affordability pressures for partners operating heavily in the government programs market. We have proactively improved the economic terms of the contracts for the benefit of these long-term strategic clients. We're pleased to have these partnerships secured through the end of the decade given their attractive long-term economics. Separately, we're also continuing to see positive impact from our suite of GLP-1 offerings, EncircleRx and ReachRx, and the new Guide Pharmacy. These offerings are anchored around affordability, access, clinical support, and patient safety.

This includes access to FDA-approved medicines, prioritizing adherence, proper dosing, and a focus on diet and exercise to ensure durable, lasting results for our patients. Across Evernorth, we had a solid quarter as we continue to grow our specialty and care capabilities and invest in our pharmacy benefit services model, strengthening our leadership position and delivering solutions for the future. In Cigna Healthcare, we delivered financial results that were in line with expectations, underscoring.

The resilience of our portfolio and business mix even in an environment of persistently elevated medical costs. This performance reflects our ability to navigate dynamic market conditions while delivering on our commitments to those we serve, along with targeted customer growth, including an 8% increase in our under 500 Select segment and continued strong performance in international health as it relates to the medical care ratio. We were pleased with solid performance in the quarter from our U.S. employer business, including Stop-Loss which performed in line with expectations. Our overall Cigna Healthcare segment wide medical care ratio was 84.8% for the quarter, driven by an updated view of risk adjustment in our individual exchange business.

Across all of our Cigna Healthcare customers and clients, bending the cost curve and delivering affordability is more critical than ever. As I noted, our clinical expertise and support programs are key reasons why our clients choose to partner with us. We're investing in predictive capabilities that allow us to engage our customers at the right time to support their care needs more effectively. We also enable clients and customers to access high-performing providers through value-based reimbursement models that align incentives and drive better outcomes. In Cigna Healthcare, we're proud to have delivered another solid quarter fueled by the strength and diversity of our portfolios and our operational focus. Next, I'll share a view of some of the tailwinds and headwinds we anticipate for 2026. Notable tailwinds include continued strong growth of our specialty and care businesses, including our investment in partnership with Shields Health Solutions in Cigna Healthcare.

Consistent with prior commentary, we took corrective action to reprice the stop-loss business beginning early this year and expect to benefit from margin expansion within that business in 2026. Turning to headwinds in Evernorth, the aforementioned renewals and extensions will generate a modified margin profile going forward for these large clients, and our new rebate-free pharmacy benefits model will incur short-term investment and transition costs, including for technology and operational reconfiguration as we accelerate transformative change. Within Cigna Healthcare, the absence of non-recurring benefits in 2025 specifically related to our divested Medicare businesses as well as our individual exchange business. Taking these factors all together, overall we expect EPS growth in 2026. In Evernorth, we expect operating income to be slightly down in 2026. Our specialty and care services business will grow income towards the higher end of its long-term growth target, offset by a decline in pharmacy benefit services.

In Cigna Healthcare, we expect operating income to grow towards the higher end of its long-term growth target. As I wrap up, I'd like to reiterate some bright spots for the quarter. We continue to deliver strong business performance and operational execution even in a dynamic environment. Evernorth continues to see strong growth in specialty, and we delivered 11% adjusted earnings growth within specialty and care services, reflecting the strength of our capabilities and clinical expertise. We're proactively bringing market-leading innovations such as our new rebate-free, delinked, fee-based pharmacy benefits model that will deliver more value to customers and clients and simplify our economic model.

We've also extended our relationships with our three largest Evernorth clients through the end of the decade, providing further multi-year predictability, and Cigna Healthcare is successfully navigating a dynamic environment and delivering on our financial commitments with notable strong medical customer growth in our Select segment. Overall, we remain confident in the growth opportunities ahead, supported by strong fundamentals and secular tailwinds that position us to deliver even greater value for our customers, clients, and shareholders. Now I'll turn it over to Ann.

Thank you, Brian, and good morning, everyone. Today I will review The Cigna Group's third quarter 2025 results and discuss our outlook for the full year, which we reaffirmed this morning. As David and Brian mentioned, our strong third quarter results demonstrate our ability to execute and deliver on our financial commitments in a dynamic environment. Key consolidated financial highlights for the third quarter include revenues of $69.7 billion and adjusted earnings per share of $7.83. Our performance through the first three quarters gives us the confidence to deliver on our full year 2025 adjusted earnings per share outlook of at least $29.60. Now turning to our segment results, I will start with Evernorth. Third quarter 2025 revenues grew to $60.4 billion, while pre-tax adjusted earnings grew to $1.9 billion, in line with expectations.

Specialty and care services continues to deliver strong growth, with revenues up 10% to $26.3 billion and pre-tax adjusted earnings up 11% to $928 million. Consistent with expectations, this performance reflects strong specialty volume growth and increased biosimilar adoption. We continue to see drugs used to treat inflammatory conditions, advanced pulmonary conditions, rare diseases, and infertility as some of the drug classes that have seen the largest increases in utilization. As these trends continue, we remain well positioned to build on this momentum, leveraging our expertise in specialty to drive affordability and strong clinical outcomes for our clients and patients. In our pharmacy benefit services business, revenues were $34.1 billion and pre-tax adjusted earnings were $1 billion, in line with expectations.

Pharmacy benefit services results in the third quarter reflect the rate and pace of investments, including initiatives to improve the patient experience and accelerated biosimilar adoption, consistent with our prior commentary. Taken together, we are pleased with the performance of Evernorth in the third quarter. Turning to Cigna Healthcare, third quarter 2025 revenues were $10.9 billion and pre-tax adjusted earnings were $1 billion. Cigna Healthcare pre-tax adjusted earnings were in line with expectations. Overall results in our U.S. Employer business, including Stop-Loss, and our international business were consistent with expectations, while our individual business had an impact on our medical care ratio of 84.8%. Reflecting an updated view of risk adjustment revenue, the higher medical care ratio in the quarter was offset by operating cost efficiencies.

Now turning to our outlook for full year 2025, given the strength of our results through the first three quarters, we have the confidence to reaffirm our full year 2025 expectation for consolidated adjusted EPS of at least $29.60. Our full year 2025 outlook for pre-tax adjusted earnings for each of our reporting segments remains unchanged in Cigna Healthcare. We now expect our full year medical care ratio to be at the high end of our full year guidance range of 83.2%-84.2%. This is driven by a higher expected MCR in our individual business. Turning to our 2025 capital management position, third quarter operating cash flow was $3.4 billion and we continue to expect strong cash flow from operations in the fourth quarter. Similar to the pattern we observed last year, our debt to capitalization ratio was 44.9% as of September 30th, 2025.

The increase primarily reflects the impact of debt issuance associated with our investment in Shields Health Solutions. We continue to target a long-term debt to capitalization ratio of approximately 40% and we expect to progress towards this target in the fourth quarter. Looking ahead to 2026, we expect another year of strong growth in Cigna Healthcare and specialty and care services both at the higher end of our respective long-term growth targets. As David and Brian mentioned, we are proud to lead the industry with the proactive transformation of our new rebate-free, delinked pharmacy benefits model which positions us for durable and sustainable long-term growth. Due to the deliberate investments we anticipate making to implement this new model and the renewals and extensions of our largest clients, we expect adjusted operating income in pharmacy benefit services to decline in 2026.

Regarding our capital management position, we expect cash flow from operations in 2026 to be back half weighted consistent with the 2025 pattern. Taken together, we expect EPS to grow in 2026. We look forward to providing further details on our 2026 outlook on our fourth quarter earnings call and with that we'll turn it over to the operator for the Q&A portion of the call.

Ladies and gentlemen, at this time, if you do have a question, please press star one on your touchtone phone. If someone asks your question ahead of you, you can remove yourself from the queue by pressing star 2. Also, if you're using a speakerphone, please pick up the handset before pressing the buttons. One moment please for our first question. Our first question comes from Lisa Gill with JPMorgan. Your line is open, you may ask your question.

Thanks very much and good morning. Obviously, a lot to unpack on the pharmacy side of the business. First, I just want to make sure I understand a few things. One, we've heard from a competitor around rebate guarantees. From my memory, I don't recall Express Scripts ever having specific guarantees around rebates. I want to clarify that that's the case. Secondly, when we think about the renewal pricing going into next year.

The shift over to the new rebate-free, delinked pharmacy benefits model. Free model, I really want to understand the economics. Is it that as we move into next year, there's an incremental element to the renewal pricing, and then longer term, how do we think about those economics? When we put this all together, I think your long term growth rate for Evernorth was 5%-8% EBIT growth. Are you saying we're going to take a step back from that in 2026, but the plan is to get there in this new model longer term? I know that's a lot, but I'm just trying to unpack all this.

Lisa, good morning, it's David. It is a lot and clearly there's a lot going on in the space. Let me come to a couple headlines for you. First and foremost, the new model that we just walked through is a model that we're extremely excited about. I'm personally proud of our team's ability to step back and architect the new model of the future that is fee based, delinked, transparent, and has the mechanism to have lowest available price for the consumer at the counter on each transaction. It's highly aligned with the regulatory priorities of the day. That's frame one to the core of your question. There's a few pieces in there. Our long-term algorithm for the Evernorth portfolio stays intact. Number one, two, for 2026, Evernorth will not be on that long-term growth algorithm.

Specialty and care will be, and it will be at the high end of its growth algorithm. The segment as a whole, Evernorth as a whole, will not be, specifically focused on the pharmacy benefit services segment of our portfolio for the two reasons we talked about. Significant investments in building these new sets of capabilities and the proactive actions we've taken around renewals and strategic extension of contracts, acknowledging the significant challenges of those that are serving the government-sponsored marketplace. We believe that the combination of those two actions materially future-proof that business for many years to come and are highly responsive to where the market needs to go. To the last part of your question, I'll ask Brian to add any go-to-market comments specifically around value propositions to some of our stakeholders. The initial part of your question was around guarantees.

Yes, there are instances where different dimensions of offerings have guarantees. We've not spent time with you all talking about guarantee volatility because by and large the aggregate relationships we've had with our clients over many years and the value we've delivered for our clients has performed in a dynamic and volatile environment. It's never been a headline that we've needed to bring to you on a regular basis. Importantly, ending where I started, the new model that we're building takes all that out of the equation. Rebates no longer exist. Reimbursements are no longer linked. They are transparent and fee based, and they're highly aligned to the consumer. Low cost at the counter, which is why we're so passionate about it. Brian, maybe I'll ask you to just highlight a few more of the benefits for our stakeholders in the new model.

Yeah, sure David. Good morning, Lisa. Maybe just to before I get to that, I'll touch on your question about how to model the medium and longer term because I think it's important as you step back and reflect on what David just went through. So far in 2025, our pharmacy benefit services business is tracking to expectations even in a challenging environment. We're not seeing variability from expectations due to rebate guarantees or those sorts of drivers. Importantly, for 2026, we do expect margin compression within our pharmacy benefit services business driven by the two headwinds that we outlined earlier. Specifically, headwind one being the large client renewals and extensions that we secured through the end of the decade and headwind two being the transitional investment spend associated with this transformative new rebate-free model, and that will result in meaningful cost across 2026 and 2027.

When you think about modeling this business in the future, I would encourage you to think of it in three categories. Category one is represented by the three large clients that we referenced earlier. This represents roughly $90 billion of annual revenue, and the 2026 margin profile should run right through the end of the decade. We're thrilled to have these clients through the end of the decade. Category two is the transitional and investment spend associated with our new rebate-free model. This will result in margin pressure across 2026 and 2027, but it'll largely dissipate thereafter. Category three is the fundamental earnings profile on the balance of the pharmacy benefit services book.

You should think of this as not meaningfully changing from today in terms of client level earnings contributions, meaning that we would expect comparable earnings contributions from our rebate-free model as we have today in our existing solutions. You put that all together, all these actions strengthen the long-term durability of our pharmacy benefit services business. David asked me to touch briefly on what's in it for some of the stakeholders in terms of our new rebate-free model. Let me just do a very brief run through some of the key stakeholders. For patients, this model will insulate them from the high list prices set by drug manufacturers, even if they're in a high deductible health plan. Our price assured technology will ensure that they always pay the lowest possible out-of-pocket price, even in those rare instances where an alternative cash pay option is less expensive than our negotiated price.

If the patient does pay out of pocket, we will ensure that it applies to their deductible. Our breakthrough new model also supports independent pharmacists by reimbursing them based upon their drug procurement cost plus a dynamic dispensing fee that varies based upon the clinical intensity of the prescriptions they're filling. Critical access rural pharmacies will receive a higher dispensing fee in acknowledgement of the crucial role these pharmacies play in their communities and for our clients. I'll just use an employer to illustrate this quickly. It's a simple fee-based, delinked payment structure that covers all administration and clinical programs. This offers the employer more budget certainty versus today's model, which is a post-utilization reimbursement approach. It also should result in greater employee satisfaction with their benefits. Today, often there's sticker shock when a patient is faced with the out-of-pocket cost or expensive brand drugs.

This is a solution to that problem for employers, and we would expect stronger adherence to treatment protocols resulting in improved employee productivity and presenteeism over time. From a shareholder perspective, we expect that this model will simplify the analysis of our company and provide you with more visibility, transparency, and predictability of our performance. Long question, long answer. Hopefully that helps.

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'll stay on the PBM here. First, just any color you can share with us in terms of the magnitude of that 2026 decline. Is it low single digits, mid single digits? Not depending down on the number, but just maybe a range you could help us with. We could think about the magnitude of the pharmacy benefit pressure there next year. It sounds like you're saying the renewals will play themselves out next year and it's really that transition and investment spend that'll be the pressure in 2027. Maybe you could give us some color on how much of that, how big that investment spend bucket is maybe relative to the overall pressure and how much of that we should see in 2027. We can understand how much of a do we get back to typical earnings in 2027 growth minus whatever this investment spend is.

Is that the right framework and maybe give us some numbers on that.

Good morning Justin, it's Brian. In terms of the second part of your question, your framework is right in terms of the large client extensions and proactive renewals that'll become a new run rate starting in 2026 through the end of the decade plus, and the investment spending is the component that will continue into 2027. You've got the right frame of reference there as it relates to sizing the impact on the pharmacy benefit services operating segment for 2026. I'll walk through a few of the components within Evernorth to help give you some color here. Just note we're not giving explicit guidance today. This is meant to be more of a directional outline to help you understand what we see for 2026.

If we start with our 2025 Evernorth income guidance of at least $7.2 billion, you can think of this as round numbers split approximately equally between specialty and care services and pharmacy benefit services. That would be about $3.6 billion of income at each. As I noted earlier, we expect the specialty and care services business to grow toward the higher end of its long-term income growth algorithm inclusive of the contributions from our investment in Shields. We expect the aggregate 2026 Evernorth segment income to decline slightly from the 2025 level. The delta between those two items represents the expected decline in pharmacy benefit services in 2026. The expected decline in pharmacy benefit services income is attributable to the two headwinds that I made reference to earlier. One being the proactive extensions and renewals of our three largest clients, including both Prime Therapeutics and Centene during 2025.

All of that results in a new margin profile on these clients going forward. You can think of that as that headwind being more than half of the overall pharmacy benefit services decline in income that we expect in 2026. The second headwind for the 2026 pharmacy benefit services income is the investment in transitional costs associated with our transformative new rebate-free model. This is less than half of the 2026 headwind for the pharmacy benefit services business. While these are 2026 headwinds, both of them serve to extend the long-term value and the durability of our pharmacy benefit services platform for the future. Hopefully that helps with some of the components.

Thank you. Our next question comes from A.J. Rice with UBS. Your line is open, you may ask your question.

Thanks. Hi everybody. Just to maybe keep on trying to drill down that point. If you're looking at the pharmacy services business sort of at the higher end, the healthcare business at the higher end of long term targets, and then the PBM pretty much offsetting the growth in pharmacy services to the point where Evernorth is slightly negative a couple percentage points. I'm getting back of the envelope that that probably generates EPS growth of roughly mid single digits, 5 to 6%. I would just so people get off this call understanding in some framework what you're describing, is that generally in the ballpark and are you making any assumptions about capital deployment, share repurchases, et cetera, and how they may contribute to growth in the next two years in this model? I'm finally going to just ask a fundamental question on the new program.

A lot of employers have had the opportunity to do pass through rebates and so forth. You're going a step further in eliminating rebates. A lot of employers push back and say hey, they like that pool of rebates. Have you got any early indications of how likely they are to want to adopt this model as you go out with it?

Hey Jay, good morning, it's David. Two different questions. Let me give you some color on the first. First is you walk through it. The big box cars. I would ask you to think about in terms of the earnings profile. My comments will separate the EPS profile here in a moment. You have the big boxcars. CHC 40% of the company on algorithm toward the higher end of the range. Specialty and care on algorithm toward the higher end of the range offset by the PBS downturn in 2026 driven by the two items that we drove ourselves relative to the strategic positioning of the franchise on a go forward basis. We're not guiding EPS for 2026. I appreciate the desire relative to that. We gave you the components on how to think about the earnings.

The last piece I would encourage you to think about, in Ann's prepared comments she profiled our cash flow profile for 2025 as largely being back half weighted. The capital profile for 2026 will follow a similar pattern to be back end loaded. You may want to think about that in the context of how you're considering your own buildup and projections. Additionally, we've noted that we will balance share repurchase and deleveraging priorities over the near term. I just would give you those components. The last part of your question, which is a very important part of the question in terms of framing in terms of go to market. Yes, pass through has been available for a long period of time, by the way, as have point of service rebates in the marketplace and we offer both.

This goes beyond it and just to reiterate your points, no rebates, delinked economics and importantly a capability that validates for the consumer lowest available price at the counter regardless of the mechanism that generates that. In 95+% of the situation it's the benefits program that yields it, but in low single digit percentage, which is meaningful given the number of scripts in America, it could be an alternative mechanism. We have the ability to facilitate it. We indicated this will be our standard offering as we look to the future. We will carry Cigna Healthcare's guaranteed cost portfolio across to it on January 1, 2027. It'll be our standard offering out of Evernorth for the 2028 cycle.

Employers, let's say for example as you infer, maybe a collective bargaining union, employer, state employer, if they still want a different program or they want to transition over a multi-year period of time, we have the broad suite of capabilities. We have a broad suite of capabilities, and lastly and importantly, we have the consultative approach to work one employer, one buyer at a time to come up with the transitional strategies that work best for them based on how they designed their program. Ending with, we believe this is the future of where the market is going. We're proud to lead it, and we need to have the capabilities to be able to serve the consumer, the employer, and the independent pharmacist with the model. A.J., thanks for the question.

Thank you. Our next question comes from Andrew Mok with Barclays. Your line is open, you may ask your question.

Hi, good morning. Wanted to follow up on the Evernorth comments. My understanding was that some of those.

Large contracts were only modestly profitable.

Now you're talking about lower profitability on those contracts. Is it fair to think that some of them might be operating at?

How should we think about the progression of profitability over a multi-year period?

Thanks, Andrew. I'll start. We don't comment on individual contract profitability. Number one, two, I think if you take the bigger picture, typically in business of all shapes and sizes, very large relationships have lower earnings profiles than a portfolio as a whole. Directional comment going with you, I'd ask you to consider we proactively extended, we proactively worked to restructure, and we engaged in energized renewals for these contracts. Said otherwise, we're pleased to have these relationships.

We're proud to be able to support service the U.S. Department of Defense, be a differentiated partner for Prime Therapeutics, and be a strategic partner for Centene, we proactively collaborated to generate this. I'm not answering your numbers. I'm coming back to lower margin profile. Yes, on $90 billion. As you would expect, you should assume we would not have proactively engaged in these relationships if we didn't deem them to be strategically important. Maybe, Brian, comment a little bit relative to the relationship and the evolved relationship we have with the parties as well.

Good morning, Andrew. Just a couple comments I pile onto David's start there. One, we don't write business at a loss consciously. You should not expect that these contracts are running at a loss on a sustained basis. To David's point, they do run at a lower margin profile on balance compared to the overall portfolio. It's also important to note that across the pharmacy benefit services client relationships that we have, many of them deepen over time. Sometimes that's our strong specialty capabilities or home delivery pharmacies or some of our care services capabilities such as our virtual care platform MD Live. Oftentimes the relationships deepen and expand over time. We're not banking on that happening with any of our three large clients here, but it is an opportunity for further value creation in the future.

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

Maybe. David, obviously you're making this choice to strategically move the business model going forward.

I appreciate all the comments that you had here.

You're kind of going it alone at the moment. You talked about sort of the examples with prior audits earlier this year.

Like in Washington between yourselves and others.

It does seem like the work that you're doing with administration, IVF, and some.

The environment is better in terms of coming to some type of bigger resolution and trying to see do you.

See room to find more common ground either with regulators or the administration to maybe come to some more broader resolution that could perhaps lift this regulatory overhang that's kind of been on the industry for years.

Charles, thank you for the question. I guess I'll come at it through a few frames as you paint the picture. One, we've long as a company believed that sustained public-private partnership collaboration is critical in the United States. If you step back and look at the way in which programs are designed in the United States, having good alignment of public-private partnership is quite important, and the interdependencies of the programs, be they employer, Medicaid, Medicare Exchange, or otherwise, there are interdependencies between the way the programs function. Point two is if you paint the last year and you reference some of the components, you can think about actions we've driven in a few categories. One, further extending public-private partnership.

An example of that I cited in my prepared remarks, and pleased to see the industry more broadly stepping forward with Secretary Kennedy and Administrator Oz relative to changing and transforming the way prior authorizations work and changing and transforming continuity of care between health plans for an individual that no action of their own results in a pre-approved event in December, their health plan changes over in January. Today they have to go through a new event. We took that off the table. That's a good example. As you referenced, the fertility outcome on an expedited basis, taking our capabilities, understanding the need statement, and through public-private partnership evolving a capability with EMD Serrano, ourself, the administration going forward, that falls into public-private partnership. Bucket two is sustained relentless innovation, and you use the go it alone phraseology. I won't put it uniquely in the go it alone.

If you just look back at the GLP-1 space over the recent past, we led the industry with our Encircle program that acknowledged and recognized the need to have broader programs wrapped around GLP-1s for employers around lifestyle management, behavior modification, titration of medication programs on an individual by individual basis. We're pleased to have over 10 million individuals benefiting from that program today, or an expansion of a program that didn't have one drug, had both leading drugs with a different program for employers that capped the out of pocket up to $200. Those are examples of continued innovation like our PathWell programs or otherwise. The third category are step function transformations. This is the step function transformation. We should be very blunt about it. It is a reframing of the marketplace to where the marketplace needs to go.

Whether you look at it through the consumer's lens, the consumer, even on 5% of the pharmaceuticals in America, if there's $6 billion, 6 billion prescriptions, if 5% or 3% of them have some dislocation at the counter, that's too many. That's too many for Americans. While benefit programs have been designed comprehensively and responsibly by employers, by health plans, by governmental agencies, there is increasing friction for the consumer. This takes that out of the equation. There is increasing complexity for the employer, as Brian referenced, this takes that out of the equation. There is more support for the independent pharmacist. All of that is to say that we are driving public-private partnership, we're driving innovation, and we're driving step function growth. There is good collaborative engagement in Washington relative to the direction, the importance, and the need.

We will continue to lean into a nonpartisan, fact-based, patient and customer-centric engagement in Washington going forward. This is an important moment for us and I appreciate your question. Good progress through all fronts of the three categories I referenced. Thanks for your question.

Thank you. Our next question comes from Scott Fidel with Goldman Sachs. Your line is open, you may ask your question.

Hi, thanks and good morning. I guess one of us should.

Cigna Group (CI) Q3 2025 Earnings Call Transcript

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