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 Nine Months Ended September 30, 2024 versus Three and Nine Months Ended September 30, 2023

The commentary presented below, and the segment discussions that follow, compare results for the three and nine months ended September 30, 2024 with results for the three and nine months ended September 30, 2023. Unless specified otherwise, commentary applies to both the three and nine month periods. In addition to the below, see the "Segment Reporting" section of this MD&A for further commentary.

Shareholders' net income decreased 48% and 51%, as higher earnings in Evernorth Health Services in both periods, as well as higher earnings in Cigna Healthcare for the nine months ended were more than offset by the impairment of VillageMD equity securities. See Note 11 to the Consolidated Financial Statements for further discussion of the impairment of VillageMD equity securities.

Adjusted income from operations increased 5% and 8%, reflecting higher earnings in Evernorth Health Services in both periods, as well as higher earnings in Cigna Healthcare for the nine months ended.

Medical customers decreased 3%, primarily reflecting a decrease in Individual and Family Plans customers.

Pharmacy revenues increased 40% and 35%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Premiums increased 4% in both periods, primarily reflecting higher premiums in our U.S. Healthcare operating segment to cover expected increases in underlying medical costs.

Fees and other revenues increased 22% and 13%, primarily reflecting growth in affordability services within our Pharmacy Benefit Services operating segment.

Net investment income decreased 74% and 21%, primarily due to establishing a $182 million impairment of dividend receivable in the third quarter of 2024 related to VillageMD accrued dividends.

Pharmacy and other service costs increased 41% and 35%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Medical costs and other benefit expenses increased 7% and 5%, primarily reflecting higher medical costs in our U.S. Healthcare operating segment.

Selling, general and administrative expenses decreased 5% for the three months ended September 30, 2024, primarily driven by the absence of litigation settlements that occurred during the three months ended September 30, 2023 and increased 2% for the nine months ended September 30, 2024, primarily driven by strategic investments to support both business growth and continued advancement of our digital capabilities and solutions.

Realized investment results for the three months and nine months ended September 30, 2024 primarily reflect the impairment of VillageMD equity securities. See Note 11 to the Consolidated Financial Statements for further discussion of the impairment of VillageMD equity securities.

The effective tax rate increased for the three and nine months ended September 30, 2024, primarily driven by a valuation allowance related to the impairment of VillageMD equity securities.

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 the purchase price cash subject to adjustments to align with the final balance sheet of the divested businesses. 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. On October 10, 2024, CMS announced Medicare Star Ratings for bonus payments to be received in 2026. We estimate 69% of our MA customers to be in four star or greater plans for bonus payments to be received in 2025 and 2026. 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.