Cigna Group

The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our") is a global health company with a mission of helping those we serve improve their health and vitality. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and related products and services. For further information on our business and strategy, see Part 1, Item 1, "Business" of our 2023 Form 10-K.

Financial Highlights

See Note 1 to the Consolidated Financial Statements for a description of our segments.

Summarized below are certain key measures of our performance by segment:

(1)Includes Net realized investment losses/gains as presented in our Consolidated Statements of Income, as well as the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.

For further analysis and explanation of each segment's results, see the "Segment Reporting" section of this MD&A.

(1)Includes Net realized investment losses/gains as presented in our Consolidated Statements of Income, as well as the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.

(2)Represents amortization of a foreign tax attribute. See Note 23 to the Consolidated Financial Statements in our 2023 Form 10-K for additional details.

(1)Includes Net realized investment losses/gains as presented in our Consolidated Statements of Income, as well as the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.

(2)Represents amortization of a foreign tax attribute. See Note 23 to the Consolidated Financial Statements in our 2023 Form 10-K for additional details.

Commentary: Three and Six Months Ended June 30, 2024 versus Three and Six Months Ended June 30, 2023

The commentary presented below, and the segment discussions that follow, compare results for the three and six months ended June 30, 2024 with results for the three and six months ended June 30, 2023. Unless specified otherwise, commentary applies to both the three and six month periods.

Shareholders' net income increased 6% for the three months ended June 30, 2024, primarily due to higher adjusted income from operations. For the six months ended June 30, 2024, shareholders' net income decreased 53%, primarily driven by the impairment of equity securities reported in the quarter ended March 31, 2024 (see Note 11 to the Consolidated Financial Statements for further discussion), partially offset by higher adjusted income from operations.

Adjusted income from operations increased 5% and 10% primarily driven by higher earnings in our Evernorth Health Services and Cigna Healthcare segments.

Medical customers decreased 2% primarily reflecting a decline in Individual and Family Plans customers. See the "Segment Reporting - Cigna Healthcare Segment" section of this MD&A for further discussion.

Pharmacy revenues increased 33% and 32% reflecting higher claims volume, primarily due to new clients, including Centene Corporation ("Centene") and organic growth. See the "Segment Reporting - Evernorth Health Services Segment" section of this MD&A for further discussion.

Premiums increased 4% and 5%, reflecting higher premium rates in Cigna Healthcare due to expected increases in underlying medical costs, partially offset by business mix. See the "Segment Reporting - Cigna Healthcare Segment" section of this MD&A for further discussion.

Fees and other revenues increased 10% and 9%, primarily reflecting continued affordability improvements and business growth within Evernorth Health Services.

Net investment income increased 15% and 10%, primarily due to growth in average assets. See the "Investment Assets" section of this MD&A for further discussion.

Pharmacy and other service costs increased 33% and 32%, reflecting higher claims volume, primarily due to new clients, including Centene, and organic growth.

Medical costs and other benefit expenses increased 5% for both the three and six months ended June 30, 2024 primarily reflecting medical cost trend in Cigna Healthcare, partially offset by business mix.

Selling, general and administrative expenses increased 7% and 6%, primarily driven by strategic investments to support business growth and continued advancement of our digital capabilities and solutions.

Realized investment results decreased for the three months ended June 30, 2024, primarily due to expected credit loss charges on debt securities. For the six months ended June 30, 2024, realized investment results decreased primarily reflecting the impairment of equity securities reported in the first quarter of 2024. See Note 11 to the Consolidated Financial Statements for further discussion.

The effective tax rate decreased for the three months ended June 30, 2024, primarily as a result of decreases in state taxes following a favorable state audit resolution. For the six months ended June 30, 2024, the effective tax rate increased substantially driven by a valuation allowance relative to the impairment of equity securities, partially offset by decreases in state taxes and a decrease relative to the businesses held for sale.

Developments

Sale of Medicare Advantage and Related Businesses

In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits and CareAllies businesses within the U.S. Healthcare operating segment to Health Care Service Corporation ("HCSC"), subject to applicable regulatory approvals and other customary closing conditions. The transaction is expected to close in the first quarter of 2025 and provide approximately $3.7 billion in transaction value, which consists primarily of cash. See Note 5 to the Consolidated Financial Statements for further information.

Medicare Star Quality Ratings ("Star Ratings")

The Centers for Medicare and Medicaid Services ("CMS") uses a Star Rating system to measure how well Medicare Advantage ("MA") plans perform. Categories of measurement include quality of care and customer service. Star Ratings range from one to five stars. CMS recognizes plans with Star Ratings of four stars or greater with quality bonus payments and the ability to offer enhanced benefits. We expect 67% of our MA customers to be in four star or greater plans for bonus payments to be received in 2024. On July 2, 2024, CMS published an update to the original Star Ratings (announced on October 13, 2023) for bonus payments to be received in 2025. Based upon the updated Star Ratings, we estimate 69% of our MA customers to be in four star or greater plans for bonus payments to be received in 2025. See Part I, Item I, "Business - Regulation" section of our 2023 Form 10-K for further discussion of Star Ratings.

Medicare Advantage Rates

On April 1, 2024, CMS released the final Calendar Year 2025 Medicare Advantage Program and Part D Payment Policies (the "2025 Final Notice"). The Final Notice reflects no change from the January 31, 2024 advance notice. We do not expect the final rates to have a material impact on our consolidated results of operations in 2025.