Cigna : First Quarter 2023 Press Release

Press Release

INVESTOR RELATIONS CONTACT: Ralph Giacobbe

860-787-7968 [e-mail]

MEDIA CONTACT:

Justine Sessions 860-810-6523 [e-mail]

The Cigna Group Reports Strong First Quarter 2023 Results, Raises 2023 Outlook

• Total revenues in the first quarter were $46.5 billion
• Shareholders' net income for the first quarter was $1.3 billion, or $4.24 per share
• Adjusted income from operations1 for the first quarter was $1.6 billion, or $5.41 per share
• 2023 outlook2 for adjusted income from operations1,2 increased to at least $24.70 per share2

BLOOMFIELD, CT, May 5, 2023 - Global health company The Cigna Group (NYSE: CI) today reported strong first quarter 2023 results reflecting growth and focused execution across our diversified portfolio of businesses.

"Our strong results in the first quarter demonstrate how our company continues to execute well, while also introducing innovative, market-leading solutions that improve clinical outcomes, affordability and transparency for the benefit of those we serve," said David M. Cordani, chairman and chief executive officer.

Shareholders' net income for first quarter 2023 was $1.3 billion, or $4.24 per share, and compares with $1.2 billion, or $3.73 per share, for first quarter 20223.

The Cigna Group's adjusted income from operations1 for first quarter 2023 was $1.6 billion, or $5.41 per share, compared with $1.9 billion, or $6.06 per share, for first quarter 20223, primarily reflecting the absence of income from divested businesses4 as well as lower net investment income, as anticipated.

A reconciliation of shareholders' net income to adjusted income from operations1 is provided on the following page and on Exhibit 1 of this earnings release.

2

CONSOLIDATED HIGHLIGHTS

The following table includes highlights of results and reconciliations of total revenues to adjusted revenues5 and shareholders' net income to adjusted income from operations1:

Consolidated Financial Results (dollars in millions):

			Three Months Ended
			March 31,		December 31,
			2023		20223		20223
Total Revenues	$	46,517	$	44,006	$	45,753
Net Realized Investment Losses (Gains) from		(38)		103		(8)
Equity Method Investments5
Adjusted Revenues5	$	46,479	$	44,109	$	45,745
Consolidated Earnings, net of taxes
Shareholders' Net Income	$	1,267	$	1,197	$	1,193
Net Realized Investment Losses (Gains)1		6		358		(17)
Amortization of Acquired Intangible Assets1		344		356		284
Special Items1		1		37		73
Adjusted Income from Operations1	$	1,618	$	1,948	$	1,533
Shareholders' Net Income, per share	$	4.24	$	3.73	$	3.91
Adjusted Income from Operations1, per share		$	5.41	$	6.06	$	5.02

• Total revenues for first quarter 2023 increased 6% from first quarter 2022. Adjusted revenues5 for first quarter 2023 increased 5% from first quarter 2022, reflecting strong contributions from Evernorth Health Services and Cigna Healthcare, partially offset by the absence of revenues from divested businesses4.
• Shareholders' Net Income for first quarter 2023 increased 6% from first quarter 2022 reflecting improved realized investment results, partially offset by lower adjusted income from operations1.
• Adjusted income from operations1 for first quarter 2023 decreased 17% from first quarter 2022, reflecting the absence of income from divested businesses4 and lower net investment income, as anticipated.
• The SG&A expense ratio6 on a GAAP basis was 7.6% for first quarter 2023 compared to 7.4% for first quarter 2022. The adjusted SG&A expense ratio6 was 7.6% for first quarter 2023 compared to 7.3% for first quarter 2022, reflecting increased expenses to support business growth and expand our capabilities, partially offset by the absence of divested businesses4.
• The debt-to-capitalization ratio was 42.2% at March 31, 2023, elevated from fourth quarter 2022, reflecting bond offerings in the first quarter of 2023, the proceeds of which will be used to repay debt securities, including bonds maturing later in 2023.
• Year to date through May 4, 2023, the Company repurchased 3.7 million shares of common stock for approximately $1.1 billion.

3

CUSTOMER RELATIONSHIPS

The following table summarizes The Cigna Group's medical customers and overall customer relationships:

Customer Relationships (in thousands):
	As of the Periods Ended
	March 31,		December 31,
	2023	2022	2022
Total Pharmacy Customers8	98,749	94,388	93,905
U.S. Commercial	16,026	14,621	14,852
U.S. Government	1,843	1,402	1,354
International Health	1,604	1,756	1,798
Total Medical Customers8	19,473	17,779	18,004
Behavioral Care	26,890	44,078	44,841
Dental	18,731	18,169	18,397
Medicare Part D	2,541	2,904	2,874
Total Customer Relationships8	166,384	177,318	178,021

• Total pharmacy customer base8 at first quarter 2023 increased by 5% from December 31, 2022 to 98.7 million due to new sales and the continued expansion of relationships.
• The total medical customer base8 at first quarter 2023 grew 8% to 19.5 million, an increase of 1.5 million customers from December 31, 2022, primarily driven by growth in fee-based customers as well as growth in Individual and Medicare Advantage customers.
• Customer relationships8 were impacted by the non-renewal of a supplemental behavioral coverage contract with New York Life that was not significant to total revenues or adjusted income from operations1. Excluding the impact of this contract8, behavioral care and total customer relationships8 at first quarter 2023 increased 9% and 5%, respectively from December 31, 2022.

4

HIGHLIGHTS OF SEGMENT RESULTS

See Exhibit 1 for a reconciliation of adjusted income (loss) from operations1 to shareholders' net income.

Evernorth Health Services

This segment includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in Pharmacy Benefits, Home Delivery Pharmacy, Specialty Pharmacy, Distribution and Care Delivery and Management Solutions to health plans, employers, government organizations and health care providers. Express Scripts, the pharmacy benefits management business of Evernorth, is launching a new microsite at: ExpressScriptsFacts.com. The site has information about the Express Scripts model and additional disclosures.

Financial Results (dollars in millions):
		Three Months Ended
		March 31,			December 31,
		2023		2022		2022
Adjusted Revenues5	$	36,179	$	33,586	$	36,188
Adjusted Income from Operations, Pre-Tax1	$	1,320	$	1,302	$	1,725
Adjusted Margin, Pre-Tax9		3.6%		3.9%		4.8%

• First quarter 2023 adjusted revenues5 increased 8% relative to first quarter 2022, reflecting strong organic growth in specialty pharmacy services as well as care delivery and management solutions.
• First quarter 2023 adjusted income from operations, pre-tax1, increased 1% relative to first quarter 2022 reflecting growth in specialty pharmacy, partially offset by increased strategic investments to support business growth and continued advancement of our capabilities.

5

Cigna Healthcare

This segment includes U.S. Commercial, U.S. Government and International Health businesses, which provide comprehensive medical benefits and coordinated solutions to clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, and other products and services for insured and self- insured clients. U.S. Government solutions include Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors, and individual health insurance plans. International Health solutions include health care coverage in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations.

Financial Results (dollars in millions):
		Three Months Ended
		March 31,			December 31,
		2023		20223		20223
Adjusted Revenues5,10	$	12,718	$	11,393	$	11,132
Adjusted Income from Operations, Pre-Tax1	$	1,115	$	1,297	$	517
Adjusted Margin, Pre-Tax9		8.8%		11.4%		4.6%

• First quarter 2023 adjusted revenues5,10 grew 12% over first quarter 2022, reflecting customer growth in U.S. Government and U.S. Commercial, increased specialty contributions, including stop loss, and premium increases to cover underlying medical cost trends, partially offset by lower net investment income.
• First quarter 2023 adjusted income from operations, pre-tax1 decreased 14% relative to first quarter 2022, reflecting a higher adjusted expense ratio, including increased investments, and lower net investment income, partially offset by a lower medical care ratio.
• The Cigna Healthcare MCR6 of 81.3% for first quarter 2023 compares to 81.5% for first quarter 2022, reflecting effective pricing execution and favorable cost trends, inclusive of lower COVID-19 costs.
• Cigna Healthcare net medical costs payable11 was $4.74 billion at March 31, 2023, $4.29 billion at March 31, 2022, and $3.96 billion at December 31, 2022. Favorable prior year reserve development on a gross pre-tax basis was $144 million and $276 million for the first quarter 2023 and 2022, respectively.

Corporate and Other Operations

Corporate reflects interest expense, as well as amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations which is comprised of Corporate Owned Life Insurance ("COLI") and the Company's run-off operations.

Financial Results (dollars in millions):
		Three Months Ended
		March 31,		December 31,
	2023	20223			20223
Adjusted (Loss) from Operations, Pre-Tax1	$	(399) $	(114)	$	(375)

• First quarter 2023 adjusted loss from operations, pre-tax1 of $399 million was greater than first quarter 2022 primarily due to the absence of income from divested businesses4.