The paragraph is an introduction to The Sector Group's First Quarter 2025 Results Review conference call. The operator informs participants that the call is in listen-only mode and outlines how the Q&A session will work. Ralph Giacobbe, Senior Vice President of Investor Relations, then speaks, introducing the Cigna Corporation executives present: David Cordani, Brian Evanko, and Ann Dennison. They will discuss the company's first quarter financial results and outlook for 2025. Giacobbe notes that certain non-GAAP financial measures, such as adjusted income from operations and adjusted revenues, will be referenced, and their reconciliation to GAAP measures is available on Cigna's website.

In the paragraph, the company discusses making forward-looking statements about their 2025 outlook, highlighting associated risks and uncertainties. It notes first-quarter results, including special item charges of $229 million due to a strategic optimization program. Future financial performance comments will consider share repurchases and 2025 dividends. David Cordani, addressing the current call, mentions Cigna Corporation's strong start in 2025 and their commitment to a sustainable healthcare model. He introduces Brian Evanko and Ann Dennison in their new roles, stating a new format for the call will be followed.

The paragraph outlines Cigna Corporation's financial success, reporting $65.5 billion in revenue and an increase in adjusted earnings per share to $6.74 for the quarter, with a full-year EPS guidance of at least $29.60. Despite challenges such as tariffs, geopolitical issues, and social impacts, the company has maintained consistent growth by leveraging its market-leading capabilities and flexible model. Cigna is well-positioned to address the unsustainable trajectory of the U.S. healthcare system, which now exceeds $4.5 trillion in annual expenditures. The company aims to meet the growing demand for strategic partners by offering innovative solutions through its two main growth platforms, EverNorth and Cigna Healthcare, catering to the diverse needs of individuals, employers, and healthcare systems.

The paragraph discusses Cigna Corporation's strategic efforts to enhance its healthcare services and business operations. The company emphasizes leveraging its core strengths through strategic acquisitions, partnerships, and divestitures, such as the sale of its Medicare business, HCSE. As it moves into 2025, Cigna highlights its commitment to addressing key healthcare challenges by focusing on five areas: improving access to care, providing better support and resources, lowering costs, ensuring accountability through leadership compensation tied to customer satisfaction, and increasing transparency by publicly sharing progress. The paragraph concludes by stating that these initiatives are positioning Cigna for a strong performance in 2025, as reflected in its first-quarter results demonstrating growth and resilience.

The paragraph discusses Cigna Corporation's strategic goals and recent leadership changes, highlighting the company's aim for a 10% to 14% compound EPS growth and commitment to dividends. Brian Evanko, the newly appointed President and COO, emphasizes a focus on profitable growth and improved healthcare delivery. He praises Ann, the new head of the finance function, and shares insights from client interactions that affirm Cigna's comprehensive healthcare services, especially through EverNorth Health Services. The paragraph highlights the growth potential in EverNorth's specialty and care services, noting their unique capabilities and the high-growth opportunity in specialty drugs.

The paragraph highlights the success and efforts of Cigna Corporation, emphasizing high patient satisfaction rates with Accredo nurses and significant savings in prescription drug costs through their pharmacy benefit services. Express Scripts processes a large volume of prescriptions, primarily cost-effective generics, contributing notably to the company's income. Cigna Healthcare also generates substantial income by improving customer outcomes and maintaining high growth rates. The paragraph underscores the company's commitment to improving healthcare and mentions optimism about future growth opportunities while focusing on sustainability.

In the article's seventh paragraph, it is reported that EverNorth's earnings met expectations, with notable revenue growth led by its pharmacy benefit and specialty pharmacy services. Cigna Healthcare also experienced robust revenue performance, particularly in U.S. employer and international health sectors, attributed to growth among select segment customers. The company is optimistic about its strategy to enhance stop-loss product margins, with promising early indicators for 2025 performance. Specialty and care services showed significant first-quarter growth, driven by the expanding specialty pharmacy market and increased adoption of biosimilars. EverNorth's pharmacy benefit services achieved 14% revenue growth, focusing on investments for long-term success. There is strong client demand for these services, prompting further investments to improve transparency, savings, and customer experience through digital tools.

Cigna Healthcare reported better-than-expected earnings and 9% revenue growth, driven by strong rate execution and growth in its under-500 select segment. Despite having only a 7% market share in this segment, Cigna sees potential for further growth and is focused on improving customer experience. A key innovation is its approach to the GLP-1 drug class, which is rapidly becoming a major cost driver for healthcare plans due to its expanded use beyond diabetes to conditions like obesity and sleep apnea. The GLP-1 market is expected to exceed $100 billion by 2030 with significant challenges in affordability, access, and clinical coordination. Cigna is addressing these challenges by helping clients manage costs while ensuring patients receive affordable medication and the necessary clinical support.

The paragraph discusses the success and expansion of EncircleRx and the launch of new solutions like inReachRx and InGuide to enhance GLP-1 access and affordability. It highlights the company's growth, noting a strong start to the year for both EverNorth and Cigna Healthcare, with better-than-expected earnings and customer growth. EverNorth reported double-digit growth in revenue and earnings, particularly in its Specialty and Care Services, and the pharmacy benefit services business also saw substantial revenue growth. The paragraph emphasizes strategic investments made for long-term growth and improvements in the healthcare system. The speaker concludes by passing the discussion to Ann for a detailed financial outlook.

Ann Dennison, the CFO of Cigna Corporation, expressed enthusiasm for her first earnings call. She highlighted Cigna's strong first-quarter performance, with revenue of $65.5 billion and adjusted earnings per share of $6.74, prompting an increase in the 2025 outlook to at least $29.60 per share. The EverNorth segment showed robust growth, with first-quarter revenues rising to $53.7 billion and pretax adjusted earnings increasing by 5% to $1.4 billion. Specialty and Care Services revenues were up 19%, driven by high demand for specialty drugs and biosimilars. Additionally, pharmacy benefit services experienced solid growth due to strong client retention and new business wins. Overall, EverNorth's performance supports a positive long-term growth outlook.

In the first quarter of 2025, Cigna Healthcare reported revenues of $14.5 billion and pretax adjusted earnings of $1.3 billion, with a medical care ratio (MCR) of 82.2%. The divestiture of its Medicare businesses to HCS was completed later than planned, slightly benefiting earnings but impacting the MCR as Medicare typically has a higher MCR. Excluding this divestiture's timing, Cigna's earnings and MCR were better than expected. While medical cost trends in 2025 remain elevated, trends in surgical activity and OB services were favorable. The company's stop-loss performance is on track, and an elevated full-year MCR is anticipated. Cigna also launched a strategic optimization program to enhance efficiency, positioning the company for future growth. As a result, Cigna increased its full-year 2025 projected consolidated adjusted income from operations to at least $29.60 per share.

The paragraph discusses the financial outlook and performance expectations for the company's Medicare businesses and growth platforms, EverNorth and Cigna Healthcare, through 2025. An increase in earnings is linked to the timing of divestitures, with specific forecasts provided for the second quarter and full year. EverNorth's full-year 2025 pretax adjusted earnings are expected to be at least $7.2 billion, while Cigna Healthcare's estimate has been raised to at least $4.125 billion. The company expects its medical care ratio to fall within 83.2% to 84.2%, with the second-quarter ratio towards the low end of that range. A reduction in the debt-to-capitalization ratio is anticipated by year-end due to capital management strategies, such as debt repayment and share repurchases. The company's disciplined capital approach is aimed at long-term sustainable growth. First-quarter 2025 results are deemed strong, and the overall earnings outlook for 2025 has been increased to at least $29.60 per share. The paragraph concludes by transitioning to a Q&A session.

In the article paragraph, an operator informs participants in a call that they can queue for questions by pressing certain numbers and that the first question comes from Lisa Gill of JP Morgan. Lisa asks about negotiating better prices with GLP-1 drug manufacturers, program enrollment and employer coverage, and a specific piece of legislation in Arkansas where there's a significant pharmacy benefit relationship. David Cordani responds by directing Brian Evanko to address questions about the GLP-1 market, focusing on innovation, access, and affordability. He also mentions he will address the Arkansas legislation question afterward. Brian expresses pride in their comprehensive approach to the GLP-1 market.

The paragraph discusses the company's strategic approach to managing GLP-1 programs, focusing on access, affordability, clinical safety, and long-term lifestyle changes. It highlights the use of various programs like EncircleRx, inReachRx, and InGuide to address market needs. The company's principles include fostering competition to improve affordability, ensuring choice in drug options, and maintaining a resilient supply chain. These strategies are designed to adapt to the evolving drug landscape and enhance the societal impact of GLP-1s. The company takes pride in its comprehensive, dynamic management of these programs across its EverNorth platform.

The paragraph discusses the coverage levels for weight management in EverNorth and Cigna Healthcare books of business. Over 50% of employers in EverNorth offer such coverage, while only 15-20% do in Cigna Healthcare, mainly due to smaller average employers. These percentages are stable from 2024 to 2025, but may improve as prices decrease. David Cordani highlights the difference in coverage for weight management between the US and other OECD countries, noting America's distinct approach. He also mentions Arkansas, explaining it's a smaller market for them but emphasizes the company's engagement in legislative and regulatory matters.

The paragraph articulates Cigna Corporation's opposition to an Arkansas bill, stating that it contradicts goals of transparency, value, affordability, and choice. The bill is criticized for limiting choice and commerce through inappropriate use of licensure, which Cigna believes will lead to decreased access, reduced choice, and higher costs for citizens. Nonetheless, they note that Arkansas is a small market for them. The conversation then shifts to A.J. Rice from UBS, who inquires about the impact of an unsettled economic environment on discussions related to pharmacy benefit management (PBM) and healthcare coverage, particularly in relation to selling season and benefit design. Brian Evanko responds, indicating he will address the selling season and its dynamics, especially regarding smaller employers.

The paragraph discusses the expected outcomes for 2026 within Cigna's businesses, focusing on retention and market dynamics. The Express Scripts pharmacy benefits services is experiencing strong mid-nineties retention rates, consistent with previous years. In Cigna Healthcare, the market for national accounts is expected to be flat or shrinking, with a strategy to maintain the current market share. The current selling season is active, with a focus on affordability due to high-cost trends, driven by drug innovation and mental health spending. Cigna's improvements in unit costs are allowing them to compete effectively, particularly in the under 500 select segment.

The paragraph discusses Express Scripts' pharmacy benefit services, emphasizing its success in delivering cost-effective outcomes for clients, including employers, health plans, and government entities. It highlights the growing role of specialty drugs in healthcare costs and describes how the Accredo specialty pharmacy is well-equipped to meet these needs. The paragraph also touches on the demand for personalized healthcare solutions and network configurations, mentioning specific offerings like the Pathwell specialty program and the inReach GLP-1 support program. Additionally, the growth of Accredo’s patient base is noted, driven by network inclusion and Express Scripts' expansion. Lastly, it addresses the company's successful customer growth in the smaller employer segment, emphasizing a flexible, funding-agnostic market approach.

The paragraph discusses a company's approach to offering self-funded or level-funded insurance options with stop-loss coverage to employers. The speaker emphasizes that their consultative model and go-to-market strategy have been successful, independent of economic conditions. In response to a question from Justin Lake regarding cost trends in their stop-loss business, the speaker, David Cordani, directs Brian to address marketplace and pricing strategies, while Ann is tasked with discussing performance and profit recovery plans. The company aims to restore lost margins in their stop-loss business by 2025-2026, with improvements expected in the second half of the current year.

In the paragraph, Brian Evanko discusses Cigna Healthcare's progress in improving their stop-loss margin as part of their broader US employer portfolio. He highlights the importance of these offerings in providing budgetary protection for employers using self-funding or ASO models. The company has successfully integrated their stop-loss products with medical benefits administration, maintaining strong market demand and leadership in the industry. Progress has been made on their margin improvement plan by incorporating a revised cost structure for 2025 client renewals without affecting client retention. Overall performance is aligning with expectations outlined in a previous call. Ann Dennison is expected to elaborate on the first-quarter financials and outlook, focusing on trend utilization and the specifics of the stop-loss business.

The paragraph discusses expectations and performance trends for the year 2025, particularly in the specialty and behavioral categories, as well as a noted moderation in surgical activities and obstetrics services. It emphasizes maintaining consistent Medical Cost Ratio (MCR) assumptions, particularly for stop-loss insurance, highlighting that the first-quarter performance aligns with expectations. Additionally, there are concerns about potential conflicts of interest and transparency issues for companies like Cigna that operate both pharmacy benefit managers (PBMs) and pharmacies. There are ongoing discussions and legislative proposals at various levels to address these issues. Charles Rhyee from TD Cowen asks about the potential recourse for such companies, emphasizing the importance of transparency.

David Cordani addresses concerns about potential conflicts of interest and discusses steps to alleviate these concerns without adopting the measures seen in Arkansas. He disagrees with a particular bill, arguing that the current system supports significant value creation, citing the successful launch of biosimilars and their ability to provide savings and zero out-of-pocket costs for consumers. Cordani emphasizes the importance of fact-based engagement to address problems, maintaining client choice, and embracing transparency to ensure ongoing innovation and effective market function.

The paragraph discusses the competitive and regulatory landscape of pharmacy services, emphasizing the need for innovation in products and services. It expresses concerns about regulatory actions that limit choice and affect market dynamics. The conversation shifts to the topic of Stelara biosimilars, highlighting their growing momentum in the US, driven by the success of Humira biosimilars. There's an optimistic outlook on the upcoming wave of US-based biosimilars through 2030, presenting significant opportunities for reducing costs. The paragraph also notes a $0 patient out-of-pocket biosimilar option for Stelara, drawing on experiences from the previous Humira biosimilar launch. Adoption rates for biosimilars will vary based on factors like interchangeability and dosage levels.

The paragraph discusses the company's capital deployment strategy, emphasizing that their primary focus remains on supporting business growth, followed by investing in capital expenditures and innovation. Returning excess capital to shareholders and pursuing attractive mergers and acquisitions (M&A) are also highlighted as priorities. The company has been actively returning capital to shareholders via share repurchases and increased dividends. Regarding M&A, their strategy focuses on finding opportunities that are strategically and financially attractive, with durable synergies and the ability to be successfully closed. They particularly pursue bolt-on acquisitions, typically involving transactions up to single-digit billions of dollars.

The speaker discusses the company's business portfolio, highlighting their satisfaction with its current size, scale, and positioning, without needing to add new capabilities. They emphasize a well-planned approach, including a high-performing modular services portfolio through EverNorth and an integrated benefits portfolio via Cigna Healthcare, catering to various markets. They focus on consistent capital deployment and strategic M&A efforts. The paragraph concludes with the operator introducing a new question from Andrew Mok of Barclays, inquiring about the evolving Part D market and its effects on EverNorth, specifically regarding manufacturer or member behavior and specialty or high-cost prescriptions. Brian Evanko responds to address Andrew's questions.

The paragraph discusses the growth and trends in the specialty drug market, highlighting its current $400 billion size and high single-digit growth prospects. The speaker notes their company's leadership in this sector and its positive impact on their Specialty and Care Services business, which saw 19% growth in the first quarter. There was notable growth in Medicare-related specialty prescriptions, which might be influenced by changes in out-of-pocket costs or increased marketing efforts. The paragraph emphasizes a structural shift in U.S. healthcare towards complex specialty medications, benefiting the company's EverNorth specialty and care services. The company expects continued growth in this high-growth segment, with long-term income growth projections of 8% to 12%.

In the paragraph, Brian Evanko discusses Cigna's approach to managing the impact of GLP-1 drugs on their customer base. Cigna aims to lead in enhancing value in the GLP-1 space by focusing on access, affordability, clinical safety, and long-term lifestyle changes. They noticed employer clients want to offer GLP-1 coverage for weight management but are concerned about the cost and safety of unrestricted access. Additionally, adherence to GLP-1s was inconsistent, leading to issues like stockpiling and microdosing, which can affect drug efficacy. Cigna's initiatives, including their Encircle, inReach, and InGuide suite, aim to address these challenges.

The paragraph discusses the introduction of EncircleRx in early 2024 as a solution to address challenges in drug access and pharmacy economics. EncircleRx provides budget certainty for employers and improves patient safety. The program has strong demand, with 9 million eligible participants. Additionally, an inReach solution offers enhanced clinical support and reimbursement stability for pharmacies. This includes a network for high-touch clinical support, dose optimization, patient education, and monitoring for fraud or waste. InGuide is a specialized home delivery pharmacy option for patients preferring delivery. These initiatives aim to improve access, affordability, safety, and support long-term lifestyle changes, contributing to the company's overall financial outlook. Josh Raskin from Nephron Research then asks a question about the percentage of the select segment that takes stop-loss with ASO versus a full-risk solution.

The paragraph discusses two executives, Brian Evanko and David Cordani, addressing questions about the Medicare Advantage (MA) segment and the company's perspective after exiting the market. Brian Evanko explains their business model flexibility, allowing employers to choose between fully insured and self-funded (ASO) plans, with some opting for stop-loss protection. David Cordani acknowledges their recent exit from the Medicare Advantage space but emphasizes the importance and value of MA offerings due to their growth, appeal to price-sensitive, lower-income seniors, and enhanced clinical coordination.

The paragraph discusses the challenges in the current rating environment, emphasizing the strain caused by the V28 phase-in on benefit offerings and pricing. The company serves a significant number of Medicare Advantage customers through various services and highlights the importance of value and affordability in the marketplace. The speaker notes that their innovations support health plan clients by offering clinical continuity and affordability. The transition to another speaker involves addressing housekeeping questions from George Hill regarding the financial impact of the Medicare Advantage business on earnings and assumptions about a recession in future guidance. Ann Dennison responds to the Medicare Advantage question, while David will address the question about recession assumptions.

The paragraph discusses the impact of an extra month in the Medicare business on the Medical Care Ratio (MCR) and earnings, resulting in a marginal financial effect, less than $20 million. Favorable outcomes were seen in ongoing Cigna Healthcare businesses, with the overall MCR at around 80, excluding Medicare Advantage. Despite economic uncertainties, Cigna's broader client portfolio remains stable with consistent enrollment and employment levels. The company remains cautious yet optimistic, maintaining planning assumptions for the year while acknowledging market dynamics. They emphasize the importance of considering economic conditions in their full-year outlook.

In the closing remarks of Cigna Corporation's first quarter 2025 results review, David Cordani expressed confidence in meeting the company's increased outlook for the year by focusing on customer service, disciplined execution, and ongoing innovation. He highlighted the company's commitment to healthcare improvement and acknowledged the dedication of Cigna's global workforce as the driving force behind their achievements and future opportunities. The call concluded with the announcement of the availability of a recorded conference for ten business days, with contact information provided for accessing the replay.

This summary was generated with AI and may contain some inaccuracies.