Cigna Group

Previous wording

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of June 30, 2026 compared with December 31, 2025 and our results of operations for the three and six months ended June 30, 2026 compared with the same periods last year, and is intended to help you understand the ongoing trends in our business. We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). In particular, we encourage you to refer to the "Risk Factors" contained in Part I, Item 1A in our 2025 Form 10-K.

Current wording

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of September 30, 2026 compared with December 31, 2025 and our results of operations for the three and nine months ended September 30, 2026 compared with the same periods last year, and is intended to help you understand the ongoing trends in our business. We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Form 10-K"). In particular, we encourage you to refer to the "Risk Factors" contained in Part I, Item 1A in our 2025 Form 10-K.

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on The Cigna Group's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning future financial or operating performance, including our ability to improve the health and vitality of those we serve; future growth, business strategy, and strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of developing inflationary and interest rate pressures; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; strategic transactions and their expected benefits; and other statements regarding The Cigna Group's future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of words such as "believe," "expect," "project," "plan," "intend," "anticipate," "estimate," "predict," "potential," "may," "should," "will" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on The Cigna Group's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning future financial or operating performance, including our ability to improve the health and vitality of those we serve; future growth, business strategy, and strategic or operational initiatives, including our modernization and productivity initiatives; our ability to successfully implement actions across our business to strengthen our platform and build a more sustainable model for healthcare; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of developing inflationary and interest rate pressures; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; strategic transactions and their expected benefits; and other statements regarding The Cigna Group's future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of words such as "believe," "expect," "project," "plan," "intend," "anticipate," "estimate," "predict," "potential," "may," "should," "will" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.

Previous wording

The commentary presented below, and the segment commentaries that follow, compare results for the three and six months ended June 30, 2026 with results for the three and six months ended June 30, 2025. Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.

Current wording

The commentary presented below, and the segment commentaries that follow, compare results for the three and nine months ended September 30, 2026 with results for the three and nine months ended September 30, 2025. Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.

Previous wording

Pharmacy revenues increased 7% and 9% for the three and six months ended, respectively, primarily reflecting changes in claims composition (defined in the "Segment Reporting" section) within our Pharmacy Benefit Services operating segment.

Current wording

Pharmacy revenues increased 5% and 7% for the three and nine months ended, respectively, primarily reflecting changes in claims composition (defined in the "Segment Reporting" section) within our Pharmacy Benefit Services operating segment.

Previous wording

Premiums increased 8% for the three months ended, primarily driven by higher premium rates within Cigna Healthcare, and decreased 10% for the six months ended, primarily driven by the impact of the HCSC transaction (defined in the "Segment Reporting" section) (-17%), offset primarily by higher premium rates within Cigna Healthcare.

Current wording

Premiums increased 9% for the three months ended, primarily driven by premium rate increases within Cigna Healthcare, and decreased 5% for the nine months ended, primarily driven by the impact of the HCSC transaction (defined in the "Segment Reporting" section) (-12%), offset primarily by premium rate increases within Cigna Healthcare.

Previous wording

Fees and other revenues increased 6% for the three months ended, primarily reflecting growth in fee-based services within Cigna Healthcare, and increased 10% for the six months ended, primarily reflecting growth in fee-based services within Evernorth Health Services.

Current wording

Fees and other revenues increased 3% and 7% for the three and nine months ended, respectively, primarily reflecting growth in fee-based services within Evernorth Health Services.

Previous wording

Pharmacy and other service costs increased 6% and 9% for the three and six months ended, respectively, primarily reflecting changes in claims composition within our Pharmacy Benefit Services operating segment.

Current wording

Pharmacy and other service costs increased 6% and 8% for the three and nine months ended, respectively, primarily reflecting changes in claims composition within our Pharmacy Benefit Services operating segment.

Previous wording

Medical costs and other benefit expenses increased 9% for the three months ended, primarily reflecting higher medical costs within Cigna Healthcare, and decreased 10% for the six months ended, primarily driven by the impact of the HCSC transaction (-18%), offset primarily by higher medical costs within Cigna Healthcare.

Current wording

Medical costs and other benefit expenses increased 8% for the three months ended, primarily reflecting medical cost increases within Cigna Healthcare, and decreased 5% for the nine months ended, primarily driven by the impact of the HCSC transaction (-13%), offset primarily by medical cost increases within Cigna Healthcare.

Previous wording

Investment resultsfor the three and six months ended were primarily impacted by fair value changes of derivative instruments associated with certain equity securities.

Current wording

Investment resultsfor the three and nine months ended were primarily impacted by fair value changes of derivative instruments associated with certain equity securities.

Previous wording

The effective tax rate decreased 2% for the three months ended, primarily driven equally by tax benefits related to equity investments and the absence of prior-period charges related to state tax audits. The effective tax rate increased less than 1% for the six months ended, primarily due to the absence of a prior-period benefit related to the HCSC transaction (+2%), partially offset by the absence of prior-period charges related to state tax audits (-1%).

Current wording

The effective tax rate increased 5% for the three months ended, primarily driven by the absence of a benefit recognized in the third quarter of 2025 related to the HCSC transaction (+3%), the absence of benefits recognized in the third quarter of 2025 related to federal and state tax audits (+1%), and an increase related to the Company's equity method earnings (+1%). The effective tax rate increased 2% for the nine months ended, driven in roughly equal parts by the absence of a benefit recognized in 2025 related to the HCSC transaction and an increase related to the Company's equity method earnings.

Previous wording

•The business continues to evolve amid changing legislative, regulatory, and client dynamics, including our business model plans announced in October 2025. The Company has undertaken certain client- and customer-focused initiatives, which include proactive renewals or extensions of large client contracts, investments to support the recently announced rebate-free model, and multi-stakeholder recontracting efforts (including affordability-related contract changes and responses to government programs such as the Inflation Reduction Act). These initiatives are intended to support long-term growth, reduce medication costs and enhance transparency, and are expected to impact income from operations.

Current wording

•The business continues to evolve amid changing legislative, regulatory, and client dynamics, including our business model plans announced in October 2025. The Company has undertaken certain client- and customer-focused initiatives, which include proactive renewals or extensions of large client contracts, investments to support the rebate-free model, and multi-stakeholder recontracting efforts (including affordability-related contract changes and responses to government programs such as the Inflation Reduction Act). These initiatives are intended to support long-term growth, reduce medication costs and enhance transparency, and are expected to impact income from operations.

Previous wording

Adjusted revenues increased 6% and 8% for the three and six months ended, respectively, primarily reflecting an increase due to claims composition in Pharmacy Benefit Services (+7% and +8%, respectively) and higher claims volume from customer growth in Specialty and Care Services (+1% and +2%, respectively), partially offset by lower claims volume in Pharmacy Benefit Services (-2% for both periods).

Current wording

Adjusted revenues increased 6% and 7% for the three and nine months ended, respectively, primarily reflecting an increase due to claims composition in Pharmacy Benefit Services (+6% and +7%, respectively) and higher claims volume from customers in Specialty and Care Services (+1% for both periods), partially offset by lower claims volume in Pharmacy Benefit Services (-1% for both periods).

Previous wording

Pre-tax adjusted income from operations decreased 2% and was flat for the three and six months ended, respectively, primarily reflecting client- and customer-focused initiatives in Pharmacy Benefits Services (-11% and -9%, respectively) and a decrease in claims volume in Pharmacy Benefit Services (-2% for both periods), partially offset by growth in Specialty and Care Services (+7% and +9%, respectively) and operating efficiencies in Specialty and Care Services (+4% and +2%, respectively).

Current wording

Pre-tax adjusted income from operations decreased 4% and 1% for the three and nine months ended, respectively, primarily reflecting client- and customer-focused initiatives in Pharmacy Benefits Services (-13% and -14%, respectively) and Specialty and Care Services (-3% and -1%, respectively), partially offset by growth in Specialty and Care Services (+6% and +8%, respectively) and operating efficiencies in Pharmacy Benefit Services (3% for both periods) and Specialty and Care Services (3% for both periods).

Previous wording

Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment (the "HCSC transaction").

Current wording

On March 19, 2025, the Company completed the sale of our Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment (the "HCSC transaction").

Previous wording

Adjusted revenues increased 9%, or $974 million, for the three months ended, driven by higher premiums (+$664 million), mostly within employer insured (+$305 million) and stop loss (+$259 million), primarily reflecting premium rate increases. Adjusted revenues decreased 8%, or $2,031 million, for the six months ended, primarily due to the impact of the HCSC transaction (-$3,850 million), partially offset by higher premiums (+$1,419 million), mostly within employer insured (+$613 million) and stop loss (+$507 million), primarily reflecting premium rate increases.

Current wording

Adjusted revenues increased 9%, or $953 million, for the three months ended, driven by higher premiums (+$748 million), mostly within employer insured (+$313 million) and stop loss (+$283 million), primarily reflecting premium rate increases. Adjusted revenues decreased 3%, or $1,078 million, for the nine months ended, primarily due to the impact of the HCSC transaction (-$3,850 million), partially offset by higher premiums (+$2,167 million), mostly within employer insured (+$926 million) and stop loss (+$790 million), primarily reflecting premium rate increases.

Previous wording

Pre-tax adjusted income from operations increased 17% for both the three and six months ended, primarily due to an improved margin within our U.S. Employer business.

Current wording

Pre-tax adjusted income from operations increased 15% for the three months ended, primarily due to higher net investment income (+6%) and a lower SG&A expense ratio (+4%). Pre-tax adjusted income from operations increased 16% for the nine months ended, primarily due to an improved margin within our U.S. Employer business.

Previous wording

Themedical care ratio increased 130 bps for the three months ended, primarily reflecting higher prior year risk adjustment benefits within our Individual and Family Plans business recognized in second quarter 2025. Themedical care ratio decreased 40 bps for the six months ended, primarily due to the impact of the HCSC transaction (-120 bps) and a lower MCR within our Individual and Family Plans business (-60 bps), partially offset by a higher MCR within our U.S. Employer business (+100 bps), primarily due to mix of business.

Current wording

Themedical care ratio increased 20 bps for the three months ended, primarily due to a higher MCR within our U.S. Employer business (+80 bps), driven by mix of business, partially offset by a lower MCR within our Individual and Family Plans business (-70 bps). Themedical care ratio decreased 20 bps for the nine months ended, largely driven by the impact of the HCSC transaction (-70 bps) and a lower MCR within our Individual and Family Plans business (-30 bps), offset by a higher MCR within our U.S. Employer business (+100 bps), primarily due to mix of business.

Previous wording

The SG&A expense ratio decreased 70 bps for the three months ended, primarily due to operating efficiencies (-110 bps) and revenue growth outpacing volume-related expenses (-90 bps), partially offset by higher spend on investments to support growth (+90 bps). The SG&A expense ratiowas flat for the six months ended, primarily due to operating efficiencies (-90 bps) and revenue growth outpacing volume-related expenses (-70 bps), mostly offset by the impact of the HCSC transaction (+110 bps) and higher spend on investments to support growth (+40 bps).

Current wording

The SG&A expense ratio decreased 30 bps for the three months ended, primarily due to operating efficiencies (-110 bps) and revenue growth outpacing volume-related expenses (-60 bps), partially offset by higher spend on investments and initiatives to support growth (+80 bps). The SG&A expense ratio decreased 10 bps for the nine months ended, primarily due to operating efficiencies (-90 bps) and revenue growth outpacing volume-related expenses (-80 bps), partially offset by the impact of the HCSC transaction (+70 bps) and higher spend on investments and initiatives to support growth (+60 bps).

Previous wording

Our unpaid claims and claim expenses liability increased to $5,228 million as of June 30, 2026 from $4,241 million as of December 31, 2025, primarily due to stop loss seasonality.

Current wording

Our unpaid claims and claim expenses liability increased to $4,988 million as of September 30, 2026 from $4,241 million as of December 31, 2025, primarily due to stop loss seasonality.

Previous wording

Pre-tax adjusted income from operations decreased for the three months ended, primarily driven by unfavorable COLI claims experience, and increased for the six months ended, primarily driven by the discontinuation of certain small non-strategic businesses.

Current wording

Pre-tax adjusted income from operations decreased for the three months ended, primarily driven by higher benefit expenses in certain run-off operations, and increased for the nine months ended, primarily driven by the discontinuation of certain small non-strategic businesses.

Previous wording

Cash flows for the six months ended June 30 were as follows:

Current wording

Cash flows for the nine months ended September 30 were as follows:

Previous wording

The following discussion explains variances in the various categories of cash flows for the six months ended June 30, 2026 compared with the same period in 2025.

Current wording

The following discussion explains variances in the various categories of cash flows for the nine months ended September 30, 2026 compared with the same period in 2025.

Previous wording

Operating cash flows increased for the six months ended June 30, 2026, primarily driven by impact of accounts receivable, in part due to timing, and factoring facilities settlements. These increases are largely offset by unfavorable net cash flow impact related to the Inflation Reduction Act and lower insurance liabilities.

Current wording

Operating cash flows decreased for the nine months ended September 30, 2026, primarily driven by unfavorable net cash flow impact related to the Inflation Reduction Act and lower insurance liabilities. These decreases are largely offset by impact of accounts receivable, in part due to timing, and lower inventory purchases.

Previous wording

Investing Activities. The increase in cash used in investing activities primarily reflects the absence of the net proceeds from the HCSC transaction.

Current wording

Investing Activities. The decrease in cash used in investing activities primarily reflects lower investment purchases, partially offset by the absence of the net proceeds from the HCSC transaction.

Previous wording

Financing Activities. The decrease in net cash used in financing activities in 2026 is primarily driven by lower share repurchases and net debt financing activities.

Current wording

Financing Activities. Net cash used in financing activities in 2026 was flat when compared to 2025, primarily driven by lower share repurchases, offset by net debt financing activities.

Previous wording

Our capital resources consist primarily of cash, cash equivalents and investments maintained at regulated subsidiaries required to underwrite insurance risks, cash flows from operating activities, our commercial paper program, revolving credit facility, and the issuance of long-term debt and equity securities. Our businesses generate significant cash flows from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends received from U.S.-regulated subsidiaries were $0.8 billion and $0.5 billion, respectively, for the six months ended June 30, 2026 and 2025. Non-regulated subsidiaries also generate significant cash flows from operating activities, which are typically available immediately to the parent company for general corporate purposes.

Current wording

Our capital resources consist primarily of cash, cash equivalents and investments maintained at regulated subsidiaries required to underwrite insurance risks, cash flows from operating activities, our commercial paper program, revolving credit facility, and the issuance of long-term debt and equity securities. Our businesses generate significant cash flows from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends received from U.S.-regulated subsidiaries were $1.0 billion and $0.6 billion for the nine months ended September 30, 2026 and 2025, respectively. Non-regulated subsidiaries also generate significant cash flows from operating activities, which are typically available immediately to the parent company for general corporate purposes.

Previous wording

Commercial Paper Program. The commercial paper program had an outstanding balance of $1.0 billion as of June 30, 2026.

Current wording

Commercial Paper Program. The commercial paper program had an outstanding balance of $0.5 billion as of September 30, 2026.

Previous wording

As of June 30, 2026, we had $6.5 billion of undrawn committed capacity under our revolving credit agreement (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.5 billion of remaining capacity under our commercial paper program, and $6.6 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain non-regulated subsidiaries.

Current wording

As of September 30, 2026, we had $6.5 billion of undrawn committed capacity under our revolving credit agreement (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $6.0 billion of remaining capacity under our commercial paper program, and $6.5 billion in cash and short-term investments, approximately $1.2 billion of which was held by the parent company or certain non-regulated subsidiaries.

Previous wording

Our debt-to-capitalization ratio (calculated as Short-term debt and Long-term debt ("Total debt") as a percentage of Total shareholders' equity and Total debt ("Total capitalization")) was 42.8% and 43.0% as of June 30, 2026 and December 31, 2025, respectively.

Current wording

Our debt-to-capitalization ratio (calculated as Short-term debt and Long-term debt ("Total debt") as a percentage of Total shareholders' equity and Total debt ("Total capitalization")) was 41.8% and 43.0% as of September 30, 2026 and December 31, 2025, respectively.

Previous wording

Subsidiary Borrowings. In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.2 billion from its subsidiaries without further approvals as of June 30, 2026.

Current wording

Subsidiary Borrowings. In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.0 billion from its subsidiaries without further approvals as of September 30, 2026.

Previous wording

Capital Expenditures. Capital expenditures for property, equipment and computer software were $0.6 billion in both the six months ended June 30, 2026 and 2025.

Current wording

Capital Expenditures. Capital expenditures for property, equipment and computer software were $0.8 billion in the nine months ended September 30, 2026 and $0.9 billion in the nine months ended September 30, 2025.

Previous wording

Share Repurchases. The Company maintains a share repurchase program authorized by our Board, under which it may repurchase shares of its common stock from time to time. We repurchased 0.9 million shares for approximately $250 million during the six months ended June 30, 2026, compared with repurchases of 8.2 million shares for approximately $2.6 billion during the six months ended June 30, 2025.

Current wording

Share Repurchases. The Company maintains a share repurchase program authorized by our Board, under which it may repurchase shares of its common stock from time to time. We repurchased 1.8 million shares for approximately $500 million during the nine months ended September 30, 2026, compared with repurchases of 8.2 million shares for approximately $2.6 billion during the nine months ended September 30, 2025.

Previous wording

During the six months ended June 30, 2026, there were no material changes to the guarantees and contractual obligations set forth in our 2025 Form 10-K.

Current wording

During the nine months ended September 30, 2026, there were no material changes to the guarantees and contractual obligations set forth in our 2025 Form 10-K.

Previous wording

The carrying value of our debt securities portfolio increased from $8.4 billion as of December 31, 2025 to $8.5 billion as of June 30, 2026. Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the past few years.

Current wording

The carrying value of our debt securities portfolio remained flat at $8.4 billion as of both September 30, 2026 and December 31, 2025. Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the past few years.

Previous wording

As of June 30, 2026, $7.5 billion, or 88%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.0 billion were below investment grade. The majority of the bonds that are below investment grade were rated at the higher end of the non-investment-grade spectrum. These quality characteristics have not materially changed since the prior year and remain consistent with our investment strategy.

Current wording

As of September 30, 2026, $7.5 billion, or 89%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $0.9 billion were below investment grade. The majority of the bonds that are below investment grade were rated at the higher end of the non-investment-grade spectrum. These quality characteristics have not materially changed since the prior year and remain consistent with our investment strategy.

Previous wording

Other long-term investments of $5.2 billion as of June 30, 2026 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures, and other deposit activity that is required to support various insurance and health services businesses. These limited partnership entities typically invest in mezzanine debt or equity of privately held companies and equity real estate. Given our subordinate position in the capital structure of these underlying entities, we assume a higher level of risk for higher expected returns. To mitigate risk, these investments are diversified by industry sector or property type and geographic region.

Current wording

Other long-term investments of $5.4 billion as of September 30, 2026 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures, and other deposit activity that is required to support various insurance and health services businesses. These limited partnership entities typically invest in mezzanine debt or equity of privately held companies and equity real estate. Given our subordinate position in the capital structure of these underlying entities, we assume a higher level of risk for higher expected returns. To mitigate risk, these investments are diversified by industry sector or property type and geographic region.

Previous wording

We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions. Less than 3% of our other long-term investments are exposed to real estate in the office sector.

Current wording

We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions. Less than 2% of our other long-term investments are exposed to real estate in the office sector.

Previous wording

We participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture under the equity method of accounting. Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $20.9 billion as of June 30, 2026. These investments were comprised of approximately 70% debt securities, including government and corporate debt diversified by issuer, industry and geography; 20% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans. We continuously review the joint venture's investment strategy and its execution. There were no investments with a material unrealized loss as of June 30, 2026. See Note 14 to the Consolidated Financial Statements in our 2025 Form 10-K for additional information regarding unconsolidated subsidiaries.

Current wording

We participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture under the equity method of accounting. Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $21.9 billion as of September 30, 2026. These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 20% equities, including mutual funds, equity securities and private equity partnerships; and 5% long-term deposits and policy loans. We continuously review the joint venture's investment strategy and its execution. There were no investments with a material unrealized loss as of September 30, 2026. See Note 14 to the Consolidated Financial Statements in our 2025 Form 10-K for additional information regarding unconsolidated subsidiaries.