The Cigna Group Reports Strong Fourth Quarter and Full Year 2023 Results, Raises 2024 Adjusted EPS Outlook, and Increases Dividend

Consolidated Financial Results (dollars in millions):

Three Months Ended

Year Ended

December 31,

December 31,

2023

2022³

2023

2022³

Total Revenues

$           51,114

$           45,753

$         195,265

$         180,518

Net Realized Investment Losses (Gains) from Equity Method Investments⁴

35

(8)

57

126

Adjusted Revenues⁴

$           51,149

$           45,745

$         195,322

$         180,644

Consolidated Earnings, net of taxes

Shareholders' Net Income

$             1,029

$             1,193

$             5,164

$             6,704

Net Realized Investment Losses (Gains)¹

58

(17)

114

496

Amortization of Acquired Intangible Assets¹

360

284

1,413

1,345

Special Items¹

552

73

757

(1,232)

Adjusted Income from Operations¹

$             1,999

$             1,533

$             7,448

$             7,313

Shareholders' Net Income, per share 

$               3.49

$               3.91

$             17.39

$             21.41

Adjusted Income from Operations¹, per share 

$               6.79

$               5.02

$             25.09

$             23.36

As of the Periods Ended

December 31,

2023

2022

Total Pharmacy Customers⁶

98,570

93,905

U.S. Healthcare

18,170

16,206

International Health

1,610

1,798

Total Medical Customers⁶

19,780

18,004

Behavioral Care

24,956

44,841

Dental

18,543

18,397

Medicare Part D

2,550

2,874

Total Customer Relationships⁶

164,399

178,021

Financial Results (dollars in millions):

Three Months Ended

Year Ended

December 31,

December 31,

2023

2022

2023

2022

Adjusted Revenues⁴

$           40,519

$           36,188

$          153,499

$          140,335

Adjusted Income from Operations, Pre-Tax¹

$             1,890

$             1,725

$             6,442

$             6,127

Adjusted Margin, Pre-Tax⁷

4.7 %

4.8 %

4.2 %

4.4 %

Financial Results (dollars in millions):

Three Months Ended

Year Ended

December 31,

December 31,

2023

2022³

2023

2022³

Adjusted Revenues^4,8

$            13,005

$            11,132

$            51,205

$            45,037

Adjusted Income from Operations, Pre-Tax¹

$                 969

$                 517

$              4,478

$              4,099

Adjusted Margin, Pre-Tax⁷

7.5 %

4.6 %

8.7 %

9.1 %

Financial Results (dollars in millions):

Three Months Ended

Year Ended

December 31,

December 31,

2023

2022³

2023

2022³

Adjusted (Loss) from Operations, Pre-Tax¹

$              (400)

$              (375)

$           (1,602)

$              (957)

2024 Consolidated Metrics

Projection for Full Year Ending

December 31, 2024

Adjusted Revenues^2,4

at least $235,000

Adjusted Income from Operations^1,2

at least $8,025

Adjusted Income from Operations, per share^1,2

at least $28.25

Adjusted SG&A Expense Ratio^2,5

~6.1%

Adjusted Effective Tax Rate^2,11

20.5% to 21.0%

Cash Flow from Operations²

at least $11,000

Capital Expenditures²

~$1,500

Shareholder Dividends²

~$1,550

Weighted Average Shares Outstanding (millions)²

282 to 286

2024 Evernorth Metrics

Adjusted Income from Operations, Pre-Tax^1,2

at least $7,000

2024 Cigna Healthcare Metrics

Adjusted Income from Operations, Pre-Tax^1,2

at least $4,750

Medical Care Ratio^2,5

81.7% to 82.7%

Total Medical Customers^2,6

~19.3M

Notes:

1.

Adjusted income (loss) from operations is a principal financial measure of profitability used by The Cigna Group's management because it presents the underlying results of operations of the Company's businesses and permits analysis of trends in underlying revenue, expenses and shareholders' net income. Adjusted income from operations is defined as shareholders' net income (or income before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investment results, amortization of acquired intangible assets and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. See Exhibit 1 for a reconciliation of consolidated adjusted income from operations to shareholders' net income.

2.

Management is not able to provide a reconciliation of adjusted income from operations to shareholders' net income (loss), adjusted revenues to total revenues, adjusted SG&A expense ratio to SG&A expense ratio, or adjusted effective tax rate to effective tax rate, on a forward-looking basis because it is unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results (from equity method investments with respect to adjusted revenues) and (ii) future special items. These items are inherently uncertain and depend on various factors, many of which are beyond The Cigna Group's control. As such, any associated estimate and its impact on shareholders' net income and total revenues could vary materially. 

The Company's outlook excludes the potential effects of any other business combinations that may occur after the date of this earnings release. The Company's outlook includes the potential effects of expected future share repurchases and anticipated 2024 dividends.

As announced in January 2021, The Cigna Group currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board of Directors may deem relevant.

The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, including through Rule 10b5-1 trading plans, or privately negotiated transactions. The program may be suspended or discontinued at any time.

3.

Effective January 1, 2023, The Cigna Group adopted ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, and related amendments. Prior year results have been restated to reflect the adoption of the new accounting guidance.

4.

Adjusted revenues is used by The Cigna Group's management because it permits analysis of trends in underlying revenue. The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See Exhibit 1 for a reconciliation of consolidated adjusted revenues to total revenues.

5

Operating ratios are defined as follows:

• The Cigna Healthcare medical care ratio ("MCR") represents medical costs as a percentage of premiums for all Cigna Healthcare risk products provided through guaranteed cost or experience-rated funding arrangements.
• SG&A expense ratio on a GAAP basis for the fourth quarter 2023 represents enterprise selling, general and administrative expenses of $4,062 million as a percentage of total revenue of $51.1 billion at a consolidated level. SG&A expense ratio on a GAAP basis for the fourth quarter 2022 represents enterprise selling, general and administrative expenses of $3,484 million as a percentage of total revenue of $45.8 billion at a consolidated level.
• SG&A expense ratio on a GAAP basis for the full year 2023 represents enterprise selling, general and administrative expenses of $14,822 million as a percentage of total revenue of $195.3 billion at a consolidated level. SG&A expense ratio on a GAAP basis for the full year 2022 represents enterprise selling, general and administrative expenses of $13,174 million as a percentage of total revenue of $180.5 billion at a consolidated level.
• Adjusted SG&A expense ratio for the fourth quarter 2023 represents enterprise selling, general and administrative expenses of $3,785 million excluding special items of $277 million as a percentage of adjusted revenue at a consolidated level. Adjusted SG&A expense ratio for the fourth quarter 2022 represents enterprise selling, general and administrative expenses of $3,461 million excluding special items of $23 million as a percentage of adjusted revenue at a consolidated level.
• Adjusted SG&A expense ratio for the full year 2023 represents enterprise selling, general and administrative expenses of $14,324 million excluding special items of $498 million as a percentage of adjusted revenue at a consolidated level. Adjusted SG&A expense ratio for the full year 2022 represents enterprise selling, general and administrative expenses of $13,045 million excluding special items of $129 million as a percentage of adjusted revenue at a consolidated level.

6.

Customer relationships are defined as follows:

• Total medical customers includes individuals in the Cigna Healthcare segment who meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna Healthcare; have access to Cigna Healthcare's provider network for covered services under their medical plan; or have medical claims that are administered by Cigna Healthcare.
• During the fourth quarter of 2023, the U.S. Commercial and U.S. Government operating segments combined to form the U.S. Healthcare operating segment. Information presented for year ended December 31, 2022 has been restated to conform to the new operating segment presentation.
• International Health medical customers excludes medical customers served by less than 100% owned subsidiaries, as well as certain customers served by our third-party administrator. International Health customers as of December 31, 2023 reflect the transition of certain runoff business to Other Operations beginning January 1, 2023.
• Effective January 1, 2023, total pharmacy customers have been updated to reflect customer filled prescriptions through Inside Rx. Previously these customers had been estimated based on active customers over a period of time. Total pharmacy customers for prior periods have been restated to reflect this change.
• Behavioral care and total customer relationships as of December 31, 2022 excluding the impact of the supplemental behavioral coverage contract with New York Life were 24,696 thousand and 157,876 thousand, respectively.  

7.

Adjusted margin, pre-tax, is calculated by dividing adjusted income (loss) from operations, pre-tax by adjusted revenues for each segment.

8.

The Cigna Group owns noncontrolling interests in certain operating joint ventures. As such, the adjusted revenues for the Cigna Healthcare segment only include the Company's share of the joint ventures' earnings reported in Fees and Other Revenues using the equity method of accounting under GAAP.

9.

Medical costs payable within the Cigna Healthcare segment are presented net of reinsurance and other recoverables. The gross medical costs payable balance was $5.09 billion as of December 31, 2023, $5.32 billion as of September 30, 2023, and $4.18 billion as of December 31, 2022.

10.

On July 1, 2022, the Company completed the sale of its life, accident and supplemental benefits businesses in six countries (Hong Kong, Indonesia, New Zealand, South Korea, Taiwan and Thailand) to Chubb INA Holdings, Inc. ("Chubb") for approximately $5.4 billion in cash (the "Chubb transaction"). In December 2022, the Company divested its ownership interest in a joint venture in Türkiye.

11.

The measure "adjusted effective tax rate" is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, "consolidated effective tax rate". We define adjusted effective tax rate as the consolidated income tax rate applicable to the Company's pre-tax income excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Management is not able to provide a reconciliation to the consolidated effective tax rate on a forward-looking basis because we are unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results and (ii) future special items.

THE CIGNA GROUP

Exhibit 1

COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

(Dollars in millions, except per share amounts)

2023

2022 ⁽¹⁾

2023

2022 ⁽¹⁾

REVENUES

Pharmacy revenues

$ 36,604

$ 33,135

$  137,243

$  128,566

Premiums

11,175

9,548

44,237

39,916

Fees and other revenues

3,045

2,858

12,619

10,881

Net investment income

290

212

1,166

1,155

Total Revenues

51,114

45,753

195,265

180,518

Net realized investment results from certain equity method investments

35

(8)

57

126

Adjusted revenues ⁽²⁾

$ 51,149

$ 45,745

$  195,322

$  180,644

Shareholders' net income

$  1,029

$  1,193

$  5,164

$  6,704

Pre-tax adjusted income (loss) from operations by segment

Evernorth Health Services

$  1,890

$  1,725

$  6,442

$  6,127

Cigna Healthcare

969

517

4,478

4,099

Corporate and Other Operations

(400)

(375)

(1,602)

(957)

Consolidated pre-tax adjusted income from operations

2,459

1,867

9,318

9,269

    Adjusted income tax expense 

(460)

(334)

(1,870)

(1,956)

Consolidated after-tax adjusted income from operations

$  1,999

$  1,533

$  7,448

$  7,313

Weighted average shares (in thousands)

294,565

305,413

296,882

313,065

Common shares outstanding (in thousands)

292,504

298,676

SHAREHOLDERS' EQUITY at December 31,

$ 46,223

$ 44,675

SHAREHOLDERS' EQUITY PER SHARE at December 31,

$ 158.03

$ 149.58

Three Months Ended

Years Ended

December 31,

December 31,

2023

2022 ⁽¹⁾

2023

2022 ⁽¹⁾

(Dollars in millions, except per share amounts)

Pre-tax

After-tax

Pre-tax

After-tax

Pre-tax

After-tax

Pre-tax

After-tax

SHAREHOLDERS' NET INCOME

Shareholders' net income

$  1,029

$  1,193

$  5,164

$  6,704

Adjustments to reconcile adjusted income from operations

Net realized investment losses (gains) ⁽³⁾

$       69

58

$     (14)

(17)

$     135

114

$     613

496

Amortization of acquired intangible assets

451

360

457

284

1,819

1,413

1,876

1,345

Special Items

Loss (gain) on sale of businesses

1,478

1,410

73

56

1,499

1,429

(1,662)

(1,332)

Charge for organizational efficiency plan

252

193

—

—

252

193

22

17

Charges (benefits) associated with litigation matters

—

—

—

—

201

171

(28)

(20)

Integration and transaction-related costs

25

20

23

17

45

35

135

103

Deferred tax (benefits), net

—

(1,071)

—

—

—

(1,071)

—

—

Adjusted income from operations ⁽⁴⁾

$  1,999

$  1,533

$  7,448

$  7,313

DILUTED EARNINGS PER SHARE

Shareholders' net income

$    3.49

$    3.91

$  17.39

$  21.41

Adjustments to reconcile to adjusted income from operations

Net realized investment losses (gains) ⁽³⁾

$    0.23

0.20

$   (0.05)

(0.06)

$    0.45

0.38

$    1.96

1.59

Amortization of acquired intangible assets

1.53

1.22

1.50

0.93

6.13

4.77

5.99

4.30

Special Items

Loss (gain) on sale of businesses

5.02

4.79

0.23

0.18

5.05

4.81

(5.31)

(4.26)

Charge for organizational efficiency plan

0.86

0.66

—

—

0.85

0.65

0.07

0.05

Charges (benefits) associated with litigation matters

—

—

—

—

0.68

0.58

(0.09)

(0.06)

Integration and transaction-related costs

0.08

0.07

0.08

0.06

0.15

0.12

0.43

0.33

Deferred tax (benefits), net

—

(3.64)

—

—

—

(3.61)

—

—

Adjusted income from operations ⁽⁴⁾

$    6.79

$    5.02

$  25.09

$  23.36

(1)

Effective January 1, 2023, The Cigna Group adopted ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, and related amendments. Prior year results have been restated to reflect the adoption of the new accounting guidance. Please refer to the Summary of Significant Accounting Policies footnote in The Cigna Group's Form 10-K for the period ended December 31, 2023, expected to be filed on February 29, 2024, for additional details.

(2)

Adjusted revenues is defined as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. These items are excluded because they are not indicative of past or future underlying performance of our businesses.

(3)

Includes The Cigna Group's share of certain realized investments results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.

(4)

Adjusted income (loss) from operations is defined as shareholders' net income (or income before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding the following adjustments: net realized investment results, amortization of acquired intangible assets and special items. The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded.