Form 8-K Cigna Corp For: May 02
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8‑K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 2, 2019
Cigna Corporation
(Exact name of registrant as
specified in its charter)
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Delaware
(State or other jurisdiction of incorporation)
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001-38769
(Commission File Number)
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82-4991898
(IRS Employer
Identification No.)
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900 Cottage Grove Road
Bloomfield, Connecticut 06002
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(860) 226‑6000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common
Stock, Par Value $0.01
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CI
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New York
Stock Exchange, Inc.
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Item 2.02 Results
of Operations and Financial Condition.
On May 2, 2019, Cigna Corporation issued a press release announcing results for the three months ended March 31, 2019. The press release is
furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this Current Report on Form 8-K, except as shall be expressly set forth by specific reference in
such a filing.
Item 9.01 Financial
Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit No.
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Description
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99.1
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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Cigna Corporation
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Date: May 2, 2019
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By:
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/s/ Eric P. Palmer
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Eric P. Palmer
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Executive Vice President and
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Chief Financial Officer
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Exhibit 99.1
Press Release
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INVESTOR RELATIONS CONTACT:
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Will McDowell
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215-761-4198
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MEDIA CONTACT:
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Ellie Polack
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860-902-4906
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Cigna Delivers Strong First Quarter 2019 Results, Raises Outlook
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Total revenues in the first quarter were $37.9 billion. Adjusted revenues1 were
$33.4 billion.
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Shareholders’ net income for the first quarter was $1.37 billion, or $3.56 per share
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Adjusted income from operations2 for the first quarter was $1.5 billion, or
$3.90 per share
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Adjusted income from operations2,3,4 is now projected to be in the range of
$6.24 billion to $6.4 billion in 2019, or $16.25 to $16.65 per share3, which represents per share growth of 14% to 17% over 2018
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BLOOMFIELD, CT, May 2,
2019 – Global health service company Cigna Corporation (NYSE: CI) today reported strong first quarter 2019 results led by the Health Services and Integrated Medical segments.
“Cigna's first quarter performance reflects focused execution of our proven growth strategy and positions us well to achieve our increased
outlook for 2019,” said David M. Cordani, President and Chief Executive Officer. “Our combination with Express Scripts is fueling additional innovative programs for the benefit of our customers and patients, as we accelerate our efforts to improve
the affordability of health care.”
Total revenues for first quarter 2019 were $37.9 billion. Adjusted revenues1 were $33.4 billion and reflect strong
contributions from each of Cigna's ongoing businesses.
Shareholders’ net income for first quarter 2019 was $1.37 billion, or $3.56 per share, compared with $0.9 billion, or
$3.72 per share, for first quarter 2018.
Cigna's adjusted income from operations2 for first quarter 2019 was $1.5 billion, or $3.90 per share,
compared with $1.0 billion, or $4.11 per share, for 2018. This reflects strong earnings contributions led by the Health Services and Integrated Medical segments.
Reconciliations of total revenues to adjusted revenues1 and of shareholders’ net income to adjusted income from
operations2 are provided on the following page, and on Exhibit 1 of this earnings release.
2
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations of total revenues to adjusted revenues1 and shareholders’ net income to adjusted income from operations2:
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Consolidated Financial Results (dollars in millions):
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||||||||||||
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||||||||||||
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Three Months Ended
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|||||||||||
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March 31,
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December 31,
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||||||||||
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2019
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2018
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2018
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|||||||||
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||||||||||||
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Total Revenues
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$
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37,946
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$
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11,413
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$
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14,300
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||||||
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Net Realized Investment Losses (Gains) from Equity Method Investments1
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(28
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)
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2
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20
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||||||||
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Special Items and Transitioning Client Contributions1
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(4,489
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)
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-
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(569
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)
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|||||||
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Adjusted Revenues1
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$
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33,429
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$
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11,415
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$
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13,751
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||||||
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Consolidated Earnings, net of taxes
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||||||||||||
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Shareholders’ Net Income
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$
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1,368
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$
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915
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$
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144
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||||||
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Net Realized Investment Losses (Gains)2
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(38
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)
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25
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58
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Amortization of Other Acquired Intangible Assets2
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564
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20
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103
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Special Items and Transitioning Client Contributions1,2
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(396
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)
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50
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342
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Adjusted Income from Operations2
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$
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1,498
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$
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1,010
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$
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647
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Shareholders’ Net Income, per share
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$
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3.56
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$
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3.72
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$
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0.55
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||||||
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Adjusted Income from Operations2, per share
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$
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3.90
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$
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4.11
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$
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2.46
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||||||
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Year to date through May 1, 2019, the Company repurchased 3.1 million shares of common stock for approximately $556 million.
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The debt to capitalization ratio improved to 48.8% at March 31, 2019 from 50.9% at December 31, 2018.
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The SG&A expense ratio5 was 9.3% for first quarter 2019, a significant decrease from 23.5% for first quarter 2018
driven by business mix changes resulting from the Express Scripts combination, and the health insurance tax suspension.
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3
CUSTOMER RELATIONSHIPS
The following table summarizes our medical customers and overall customer relationships:
Customer Relationships (in thousands):
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As of the Periods Ended
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||||||||||||
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March 31,
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December 31,
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||||||||||
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2019
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2018
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2018
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||||||||||
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Commercial
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14,016
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13,825
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13,982
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Government
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1,405
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1,389
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1,407
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International Markets
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1,572
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1,555
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1,572
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Total Medical Customers6
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16,993
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16,769
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16,961
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Pharmacy6
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74,935
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8,796
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73,230
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Behavioral Care6
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28,046
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26,998
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27,215
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Dental
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17,122
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16,521
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16,544
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Medicare Part D
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3,302
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784
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3,295
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International Markets Supplemental Policies6,7
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12,576
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12,061
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12,569
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Group Disability and Life Covered Lives6
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15,200
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15,300
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14,800
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Total Customer Relationships
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168,174
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97,229
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164,614
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The total medical customer base6 at first quarter 2019 was 17 million, an organic increase of 32,000 customers year to
date and 224,000 over first quarter 2018 driven by growth in the Select and Middle Market segments, partially offset by a decline in National Accounts.
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The pharmacy customer base6 at first quarter 2019 was 75 million, an organic increase of 1.7 million customers year to
date, driven by strong new commercial sales.
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Pharmacy6 and Medicare Part D customers in the first quarter 2019 and fourth quarter 2018 include customers gained
through the completion of the Express Scripts combination on December 20, 2018.
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4
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations2 to shareholders’ net income.
Health Services
This segment includes a broad range of pharmacy services, including benefits management, specialty pharmacy services,
clinical solutions, home delivery, and health management services.
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Financial Results (dollars in millions):
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Three Months Ended
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|||||||||||
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March
31,
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December 31,
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||||||||||
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2019
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2018
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2018
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Adjusted Revenues1
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$
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22,460
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$
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1,071
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$
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3,313
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||||||
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Adjusted Income from Operations, Pre-Tax2
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$
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994
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$
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83
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$
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153
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||||||
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Adjusted Margin, Pre-Tax8
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4.4
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%
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7.7
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%
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4.6
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%
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||||||
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Cigna completed the combination with Express Scripts on December 20, 2018. Accordingly, contributions from the Express Scripts
business are reflected in the Health Services segment results for the entire first quarter 2019, a portion of fourth quarter 2018, and are not reflected in first quarter 2018 results.
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Growth in first quarter 2019 adjusted revenues1 and adjusted income from
operations, pre-tax2 were driven by the combination with Express Scripts.
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Health Services fulfilled 292 million adjusted pharmacy scripts9 in first quarter 2019, consistent with the company’s
expectations.
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Health Services delivered solid results in first quarter 2019, driven by organic growth in pharmacy customers since the start of
the year, and strong adjusted pharmacy script volumes and performance in specialty pharmacy care.
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5
Integrated
Medical
This segment includes Cigna’s U.S. Commercial and Government businesses that provide comprehensive medical solutions to
clients and customers. U.S. Commercial products and services include medical, pharmacy, behavioral health, dental, vision, health advocacy programs and other products and services to insured and self-insured customers. Government solutions
include Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, Medicaid plans, and individual health insurance coverage both on and off the public exchanges.
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Financial Results (dollars in millions):
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||||||||||||
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Three Months Ended
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|||||||||||
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March
31,
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December 31,
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||||||||||
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2019
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2018
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2018
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|||||||||
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Adjusted Revenues1
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$
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9,195
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$
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8,150
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$
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8,297
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||||||
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Adjusted Income from Operations, Pre-Tax2
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$
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1,170
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$
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1,012
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$
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643
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||||||
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Adjusted Margin, Pre-Tax8
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12.7
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%
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12.4
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%
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7.7
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%
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||||||
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Integrated Medical delivered strong results in first quarter 2019, led by organic growth and strong margins in our Commercial and
Government businesses.
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First quarter 2019 adjusted revenues1 increased 13% relative to first quarter 2018,
driven by Commercial customer growth and expansion of specialty relationships, as well as premium increases consistent with underlying cost trends.
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First quarter 2019 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax8 reflect strong
medical and specialty contributions and continued effective medical cost performance.
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Adjusted income from operations, pre-tax2 for first quarter 2019 and first quarter 2018 included favorable net prior
year reserve development on a pre-tax basis of $50 million and $51 million, respectively.
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The medical care ratio5 (“MCR”) of 78.9% for first quarter 2019 reflects strong performance and execution in our
commercial and government businesses and favorable prior year development, partially offset by the addition of the Express Scripts Medicare Part D business and the pricing effect of the health insurance tax suspension.
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| ● |
Integrated Medical net medical costs payable10 was approximately $2.72 billion at March 31, 2019, $2.41 billion at March
31, 2018 and $2.43 billion at December 31, 2018.
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6
International Markets
This segment includes supplemental
health, life and accident insurance products and health care coverage in our international markets, as well as health care benefits for globally mobile employees of multinational organizations.
Financial Results (dollars in millions, policies and customers in thousands):
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Three Months Ended
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|||||||||||
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March 31,
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December 31,
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||||||||||
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2019
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2018
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2018
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|||||||||
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||||||||||||
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Adjusted Revenues1,7
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$
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1,394
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$
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1,341
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$
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1,355
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||||||
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Adjusted Income from Operations, Pre-Tax2
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$
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206
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$
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217
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$
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120
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||||||
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Adjusted Margin, Pre-Tax8
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14.8
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%
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16.2
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%
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8.9
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%
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||||||
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||||||||||||
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As of the Periods Ended
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|||||||||||
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March 31,
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December 31,
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||||||||||
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2019
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2018
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2018
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||||||||||
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International Markets Supplemental Policies6,7
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12,576
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12,061
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12,569
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|||||||||
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International Markets Medical Customers6
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1,572
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1,555
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1,572
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|||||||||
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First quarter 2019 adjusted revenues1,7 grew 4% over first quarter 2018, reflecting
continued business growth, partially offset by some impact from unfavorable foreign currency movements.
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First quarter 2019 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax8 reflect business
growth, offset by unfavorable foreign currency impacts and spending to strengthen our capabilities to further long-term growth.
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7
Group Disability and Other Operations
This segment includes Cigna’s Group Disability and Life business which offers group long-term and short-term disability,
and group life, accident, voluntary and specialty insurance products and services. Additionally, this segment includes Corporate Owned Life Insurance (“COLI”) and the Company’s run-off operations.
Financial Results (dollars in millions):
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Three Months Ended
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|||||||||||
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March 31,
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December 31,
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||||||||||
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2019
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2018
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2018
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|||||||||
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||||||||||||
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Adjusted Revenues1
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$
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1,296
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$
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1,271
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$
|
1,246
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||||||
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Adjusted Income from Operations, Pre-Tax2
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$
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84
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$
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116
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$
|
109
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||||||
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Adjusted Margin, Pre-Tax8
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6.5
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%
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9.1
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%
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8.7
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%
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||||||
| ● |
First quarter 2019 adjusted income from operations, pre-tax2 and adjusted margin, pre-tax8 reflect
unfavorable disability claims partially offset by strong life results.
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Corporate
Corporate reflects interest expense, as well as amounts not allocated to operating segments and includes intersegment
eliminations.
Financial Results (dollars in millions):
| Three Months Ended | ||||||||||||
| March 31, |
December 31, | |||||||||||
|
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2019
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2018
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2018
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|||||||||
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||||||||||||
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Adjusted (Loss) from Operations, Pre-Tax2
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$
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(490
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)
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$
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(92
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)
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$
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(148
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)
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|||
| ● |
The first quarter 2019 adjusted loss from operations, pre-tax2 increased as a result of higher interest expense associated
with the financing of the combination with Express Scripts.
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8
2019 OUTLOOK
Cigna's outlook for full year 2019 consolidated adjusted income from operations2,3,4 is
in the range of $6.24 billion to $6.4 billion, or $16.25 to $16.65 per share. Cigna’s outlook excludes the impact of additional prior year reserve development of medical costs and potential effects of any future share repurchase4.
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(dollars in millions, except where noted and per share amounts)
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Projection for Full-Year Ending
|
Change
from Prior
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|||
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|
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December 31, 2019
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Projection
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||
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2019 Consolidated
Operating Metrics
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||
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Adjusted Income from
Operations2,3,4
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$
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6,240 to 6,400
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$
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+ 0 to 40
|
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Adjusted Income from
Operations, per share2,3,4
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$
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16.25 to 16.65
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$
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+ 0.15 to + 0.25
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Adjusted Revenues1,3
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$
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132,500 to 134,500
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$
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+ 1,000
|
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SG&A Expense Ratio5
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10.0% to 10.5%
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Adjusted Tax Rate11
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23.5% to 24.5%
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2019 Segment-Level
Operating Metrics
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|||||
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Adjusted Income from
Operations, Pre-Tax2,3,4
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|||||
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Health Services
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$
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5,050 to 5,200
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Integrated Medical
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$
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3,700 to 3,800
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$
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+ 0 to 50
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Adjusted Pharmacy
Scripts – Health Services9
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1.17 to 1.19 billion
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||||
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Medical Customer Growth6
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300,000 to 400,000 customers | ||||
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Medical Care Ratio5
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80.5% to 81.5%
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||||
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Medical Cost Trend12
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3.5% to 4.5%
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|||
2020 OUTLOOK
Health Services' projected 2020 retention rate for the 2019 selling season for pharmacy services is in the range of 96% to 98%.
9
The foregoing statements represent the Company’s current estimates of Cigna's 2019 consolidated and segment adjusted
income from operations2,3,4 and other key metrics as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Regarding Forward-Looking
Statements included in this release. Management does not assume any obligation to update these estimates.
This quarterly earnings release and the Quarterly Financial Supplement are available on Cigna’s website in the Investor Relations section
(http://www.cigna.com/aboutcigna/investors). Management will be hosting a conference call to review first quarter 2019 results and discuss full year 2019 outlook beginning today at 8:30 a.m. ET. A link to the conference call is available in the
Investor Relations section of Cigna's website located at https://www.cigna.com/aboutcigna/investors/events/index.page.
The call-in numbers for the conference call are as follows:
Live Call
(888) 324-7575
(Domestic)
(210) 234-0013
(International)
Passcode: 5022019
Replay
(800) 839-5571
(Domestic)
(402) 220-2073
(International)
It is strongly suggested you dial in to the conference call by 8:15 a.m. ET.
About Cigna
Cigna Corporation (NYSE: CI) is a global health service company dedicated to improving the health, well-being and peace of mind of those we
serve. Cigna delivers choice, predictability, affordability and access to quality care through integrated capabilities and connected, personalized solutions that advance whole person health. All products and services are provided exclusively by
or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company, Cigna Life Insurance Company of New York, Connecticut General Life Insurance Company, Express Scripts companies or their affiliates, and
Life Insurance Company of North America. Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and other related products including group
life, accident and disability insurance.
Cigna maintains sales capability in over 30 countries and jurisdictions, and has more than 160 million customer relationships throughout the
world. To learn more about Cigna®, including links to follow us on Facebook or Twitter, visit www.cigna.com.
Notes:
|
1.
|
At the consolidated level, the measure “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.” We define adjusted revenues as total revenues excluding revenue contributions from transitioning pharmacy benefit management clients, Anthem
Inc. and Coventry Health Care, Inc. (the “transitioning clients”), net realized investment results from equity method investments, and special items. We exclude these items from this measure because they are not indicative of past or
future underlying performance of the business. See Exhibit 1 for a reconciliation of consolidated adjusted revenues to total revenues.
|
|
2.
|
Adjusted income (loss) from operations is defined as shareholders’ net income (loss) excluding the following
adjustments: earnings contributions from transitioning clients, net realized investment results, amortization of acquired intangible assets, and special items. Special items are identified in Exhibit 1 of this earnings release. Adjusted
income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.
|
10
Adjusted income (loss) from operations is a measure of profitability used by
Cigna’s management because it presents the underlying results of operations of Cigna’s businesses and permits analysis of trends in underlying revenue, expenses and shareholders’ net income. This consolidated measure is not determined in
accordance with accounting principles generally accepted in the United States (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 adjusted
income from operations to shareholders’ net income.
Effective in the fourth quarter of 2018, Cigna updated its segments. Refer to our
Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2019 and our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information and prior period results on the historic and new
segment bases.
|
3.
|
Management is not able to provide a reconciliation of adjusted income from operations to shareholders’ net
income (loss) or adjusted revenues to total revenues on a forward-looking basis because we are 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 our control. As such, any associated estimate and its
impact on shareholders’ net income could vary materially.
|
|
4.
|
The Company’s outlook excludes the potential effects of any share repurchases or business combinations that may
occur after the date of this earnings release.
|
|
5.
|
Operating ratios are defined as follows:
|
| ● |
Medical care ratio represents medical costs as a percentage of premiums for all U.S. commercial risk products,
including medical, pharmacy, dental, stop loss and behavioral products provided through guaranteed cost or experience-rated funding arrangements, as well as Medicare Advantage, Medicare Part D, Medicare Supplement, Medicaid, and
individual on and off-exchange products, within our Integrated Medical segment.
|
| ● |
SG&A expense ratio represents enterprise selling, general and administrative expenses excluding special
items and expenses from transitioning clients, as a percentage of adjusted revenue at a consolidated level.
|
|
6.
|
Customer relationships are defined as follows:
|
| ● |
Total medical customers includes individuals in our Integrated Medical and International Markets segments who
meet any one of the following criteria: are covered under a medical insurance policy, managed care arrangement, or service agreement issued by Cigna; have access to Cigna's provider network for covered services under their medical plan;
or have medical claims and services that are administered by Cigna.
|
| ● |
Pharmacy customer relationships excludes transitioning clients.
|
| ● |
International Markets policies exclude International Markets medical customers included in total medical
customers.
|
| ● |
Group Disability and Life covered lives are estimated.
|
|
7.
|
Cigna owns a 50% noncontrolling interest in its China joint venture. Cigna's 50% share of the joint venture’s
earnings is reported in Fees and Other Revenues using the equity method of accounting under GAAP. As such, the adjusted revenues and policy counts for the International Markets segment do not include the China joint venture.
|
|
8.
|
Adjusted margin, pre-tax, is calculated by dividing adjusted income (loss) from operations, pre-tax by adjusted
revenues for each segment.
|
|
9.
|
For Health Services adjusted pharmacy scripts, non-specialty network scripts filled through 90-day programs and
home delivery scripts are multiplied by three. All other network and specialty scripts are counted as one script. Adjusted pharmacy scripts guidance does not include script volumes associated with transitioning clients, nor volumes
expected to be insourced from OptumRx under the terms of the transition services agreement.
|
11
|
10.
|
Medical costs payable within the Integrated Medical segment are presented net of reinsurance and other
recoverables. The gross medical costs payable balance was $2.96 billion as of March 31, 2019, $2.70 billion as of December 31, 2018, and $2.64 billion as of March 31, 2018. The Integrated Medical days claims payable was 40.9 days at
March 31, 2019, 40.7 days at December 31, 2018 and 41.9 days at March 31, 2018.
|
|
11.
|
The measure “adjusted 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 tax rate as the consolidated income tax rate applicable to the Company’s pre-tax income excluding net realized investment
results, amortization of acquired intangible assets, special items, and transitioning clients. 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.
|
|
12.
|
Medical cost trend includes all U.S. commercial employer funding arrangements.
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made with respect to information contained in this release, may
contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on Cigna'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 our projected adjusted income (loss) from operations outlook for 2019, on both a consolidated and segment basis; projected adjusted
revenue outlook for 2019; projected global medical customer growth over year end 2018; projected growth beyond 2019; statements concerning our long-term projected adjusted income (loss) from operations outlook; projected medical care and SG&A
expense ratios and medical cost trends; projected adjusted pharmacy scripts; our projected consolidated adjusted tax rate; future financial or operating performance, including our ability to deliver affordable, personalized and innovative solutions
for our customers and clients; future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital
deployment plans and amounts available for future deployment; our prospects for growth in the coming years; the merger (the “Merger”) with Express Scripts Holding Company (“Express Scripts”) and other statements regarding Cigna's future beliefs,
expectations, plans, intentions, financial condition or performance. You may identify forward-looking statements by the use of words such as “believe,” “expect,” “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.
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results
to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our financial, strategic and operational plans or initiatives; our ability to
predict and manage medical and pharmacy costs and price effectively; our ability to adapt to changes or trends in an evolving and rapidly changing industry; our ability to effectively differentiate our products and services from those of our
competitors and maintain or increase market share; our ability to develop and maintain good relationships with physicians, hospitals, other health care providers and pharmaceutical manufacturers; changes in drug pricing; the impact of modifications
to our operations and processes; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits (including anticipated synergies) of such transactions in full or within the anticipated time frame,
including with respect to the Merger, as well as our ability to integrate operations, resources and systems; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in
existing laws or regulations; the outcome of litigation, regulatory audits, investigations, actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and
security of our information technology and other business systems; the impact of our debt service obligations on the availability of funds for other business purposes; unfavorable industry, economic or political conditions, including foreign
currency movements; acts of war, terrorism, natural disasters or pandemics; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor
Relations section of www.cigna.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
12
|
CIGNA CORPORATION
|
Exhibit 1
|
|||||||||||
|
COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited)
|
||||||||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||||
|
Three Months
Ended
|
Three Months Ended
|
|||||||||||
|
March 31,
|
December 31,
|
|||||||||||
|
2019
|
2018
|
2018
|
||||||||||
|
REVENUES
|
||||||||||||
|
Pharmacy revenues
|
$
|
25,179
|
$
|
717
|
$
|
3,257
|
||||||
|
Premiums
|
9,971
|
8,999
|
9,108
|
|||||||||
|
Fees and other revenues
|
2,450
|
1,368
|
1,491
|
|||||||||
|
Net investment income including special items
|
346
|
329
|
444
|
|||||||||
|
Total revenues
|
37,946
|
11,413
|
14,300
|
|||||||||
|
Revenue contributions from transitioning clients
|
(4,489
|
)
|
-
|
(459
|
)
|
|||||||
|
Net realized investment (gains) losses from equity method subsidiaries
|
(28
|
)
|
2
|
20
|
||||||||
|
Special items reported in integration and transaction-related costs
|
-
|
-
|
(110
|
)
|
||||||||
|
Adjusted revenues (1)
|
$
|
33,429
|
$
|
11,415
|
$
|
13,751
|
||||||
|
SHAREHOLDERS' NET INCOME
|
||||||||||||
|
Shareholders' net income
|
$
|
1,368
|
$
|
915
|
$
|
144
|
||||||
|
After-tax adjustments to reconcile to adjusted income from operations:
|
||||||||||||
|
Adjustment for transitioning clients
|
(504
|
)
|
-
|
(47
|
)
|
|||||||
|
Net realized investment (gains) losses
|
(38
|
)
|
25
|
58
|
||||||||
|
Amortization of acquired intangible assets
|
564
|
20
|
103
|
|||||||||
|
Special items
|
||||||||||||
|
Integration and transaction-related costs
|
108
|
50
|
402
|
|||||||||
|
Charges associated with litigation matters
|
-
|
-
|
(16
|
)
|
||||||||
|
U.S. tax reform
|
-
|
-
|
3
|
|||||||||
|
Adjusted income from operations (2)
|
$
|
1,498
|
$
|
1,010
|
$
|
647
|
||||||
|
Pre-tax adjusted income (loss) from
operations by segment
|
||||||||||||
|
Health Services
|
$
|
994
|
$
|
83
|
$
|
153
|
||||||
|
Integrated Medical
|
1,170
|
1,012
|
643
|
|||||||||
|
International Markets
|
206
|
217
|
120
|
|||||||||
|
Group Disability and Other
|
84
|
116
|
109
|
|||||||||
|
Corporate
|
(490
|
)
|
(92
|
)
|
(148
|
)
|
||||||
|
Consolidated pre-tax adjusted income from operations (2)
|
1,964
|
1,336
|
877
|
|||||||||
|
Adjusted income tax expense
|
(466
|
)
|
(326
|
)
|
(230
|
)
|
||||||
|
Consolidated after-tax adjusted income from operations (2)
|
$
|
1,498
|
$
|
1,010
|
$
|
647
|
||||||
|
DILUTED EARNINGS PER SHARE
|
||||||||||||
|
Shareholders' net income
|
$
|
3.56
|
$
|
3.72
|
$
|
0.55
|
||||||
|
After-tax adjustments to reconcile to adjusted income from operations:
|
||||||||||||
|
Adjustment for transitioning clients
|
(1.31
|
)
|
-
|
(0.18
|
)
|
|||||||
|
Net realized investment (gains) losses
|
(0.10
|
)
|
0.10
|
0.22
|
||||||||
|
Amortization of other acquired intangible assets
|
1.47
|
0.08
|
0.39
|
|||||||||
|
Special items
|
||||||||||||
|
Integration and transaction-related costs
|
0.28
|
0.21
|
1.53
|
|||||||||
|
Charges associated with litigation matters
|
-
|
-
|
(0.06
|
)
|
||||||||
|
U.S. tax reform
|
-
|
-
|
0.01
|
|||||||||
|
Adjusted income from operations (2)
|
$
|
3.90
|
$
|
4.11
|
$
|
2.46
|
||||||
|
Weighted average shares (in thousands)
|
384,024
|
245,788
|
263,521
|
|||||||||
|
Common shares outstanding (in thousands)
|
380,270
|
243,250
|
380,924
|
|||||||||
|
SHAREHOLDERS' EQUITY at March 31,
|
$
|
42,408
|
$
|
14,195
|
||||||||
|
SHAREHOLDERS' EQUITY PER SHARE at March 31,
|
$
|
111.52
|
$
|
58.36
|
||||||||
|
(1) Adjusted revenues is defined as total revenues excluding the following adjustments: revenue
contributions from transitioning clients, special items and Cigna's share of certain realized investment results of its joint ventures reported using the equity method. These items are excluded because they are not indicative of past or
future underlying performance of our businesses.
|
||||||||||||
|
(2) Adjusted income (loss) from operations is defined as shareholders' net income (loss)
excluding the following after-tax adjustments: realized investment results, amortization of acquired intangible assets, special items and earnings contributions from transitioning clients.
|
||||||||||||