Core Viewpoint - The healthcare sector is showing initial signs of recovery after reaching a 30-year high in valuation discount relative to the S&P 500 index [1][2] Group 1: Market Performance - Since reaching a historical high on September 3, 2024, healthcare stocks have been in a "persistent downtrend," underperforming both in absolute terms and relative to the S&P 500 [1] - August is identified as a turning point for the sector, with healthcare stocks beginning to reverse their previous weak performance [1] Group 2: Economic Environment - The recovery is driven by a historically significant valuation gap and an economic backdrop characterized by GDP growth slowing to 1.5% or lower while inflation remains at 3% or higher, which historically favors the healthcare sector [1] - The dual effect of valuation discount and improved sentiment provides strong justification for including healthcare stocks in investment portfolios under the current economic conditions [2] Group 3: Investment Recommendations - Evercore ISI highlights several healthcare stocks with attractive valuations and sentiment, including Cencora (COR.US), BioMarin Pharmaceutical (BMRN.US), Cigna (CI.US), Cardinal Health (CAH.US), Humana (HUM.US), Incyte (INCY.US), LabCorp (LH.US), Pfizer (PFE.US), Quest Diagnostics (DGX.US), Teleflex (TFX.US), Tenet Healthcare (THC.US), Universal Health Services (UHS.US), and Viatris (VTRS.US) [2]

Group 1 - The healthcare sector is showing initial signs of recovery after reaching a 30-year high in valuation discount relative to the S&P 500 index [1][2] - Healthcare stocks have been in a "persistent downtrend" since reaching historical highs on September 3, 2024, missing out on market rebounds [1] - The recovery is driven by a historical valuation gap and a macroeconomic environment characterized by GDP growth slowing to 1.5% or lower while inflation remains at 3% or higher, which historically favors healthcare sector performance [1] Group 2 - The current price-to-earnings ratio of the overall market is 25.5 times, while healthcare stocks still present attractive investment options [2] - The potential recovery of healthcare stocks is described as part of "the fastest bear market rebound in history," indicating a larger bull market may extend until 2026 [2] - Evercore ISI recommends healthcare stocks with both valuation and sentiment appeal, including Cencora, BioMarin Pharmaceutical, Cigna, Cardinal Health, Humana, Incyte, Labcorp, Pfizer, Quest Diagnostics, Teleflex, Tenet Healthcare, Universal Health Services, and Viatris [2]

Core Viewpoint - The healthcare and pharmaceutical sectors experienced gains on Monday, driven by notable stock movements following Warren Buffett's disclosure of holding shares in UnitedHealth [1] Group 1: Stock Performance - UnitedHealth (UNH.US) rose over 2.5% following the news of Buffett's investment [1] - Molina Health (MOH.US) increased by more than 2% [1] - Cigna (CI.US) saw a rise of over 1.5% [1] - Novo Nordisk (NVO.US) surged by 4.7% [1] - Johnson & Johnson (JNJ.US) experienced a slight increase of 0.22% [1] - Eli Lilly (LLY.US) rose by 0.4% [1]

Group 1 - The market reacted sharply to Cigna's second quarter 2025 report, but the reaction is considered excessive [1] - Cigna is currently trading at a price that may not reflect its underlying value [1] Group 2 - The article emphasizes the importance of thorough analysis in uncovering hidden value in companies [1]

Group 1 - The healthcare sector is experiencing significant selling pressure this year due to rising medical costs, particularly within the Medicare/Medicaid system [1] - The current administration is focused on reducing costs and spending in the healthcare sector, which has turned it into a political issue [1] Group 2 - Cigna is mentioned in the context of the healthcare sector's challenges, although specific details about the company are not provided [1]

Core Insights - Cigna Group reported strong second-quarter earnings for 2025, with revenue reaching $67.2 billion and adjusted diluted EPS at $7.20, surpassing analyst expectations [1][2] - The company experienced broad-based revenue growth driven by its Evernorth Health Services platform, although profit margins moderated due to shifts in customer mix following the divestiture of Medicare-related businesses [1][5] Financial Performance - Adjusted diluted EPS increased by 7.1% year-over-year from $6.72 to $7.20, while revenue grew by 11.1% from $60.5 billion to $67.2 billion [2] - Net income (GAAP) for the quarter was reported at $1.53 billion [5] - The adjusted SG&A expense ratio improved to 4.9% from 6.0%, reflecting enhanced cost efficiency [9] Business Segments - Evernorth Health Services was the primary growth driver, with adjusted revenues increasing by 17% to $57.8 billion and pre-tax adjusted income rising by 5% to $1.70 billion [6] - Cigna Healthcare saw an 18% decline in adjusted revenues year-over-year due to the divestiture of Medicare businesses, but adjusted revenue excluding divestitures rose by 7% [7] Customer Base and Trends - Total customer relationships stood at 182.2 million, with a 2% increase excluding the impact of the HCSC transaction [8] - Pharmacy customer counts grew by 3% to 121.9 million, while the medical customer base declined to 18.0 million [8] Strategic Focus and Innovation - Cigna is focused on digital innovation and operational efficiency, investing in AI and customer experience [4] - The company expanded digital engagement initiatives aimed at managing costs and improving patient outcomes, particularly for high-cost drugs [10] Future Guidance - Cigna reaffirmed its guidance for FY2025, projecting adjusted income from operations of at least $29.60 per share, with segment expectations for Evernorth and Cigna Healthcare set at $7.2 billion and $4.125 billion in pre-tax adjusted income, respectively [12] - The company anticipates a medical care ratio in Cigna Healthcare of 83.2% to 84.2% for FY2025 [12]

Company Overview - Cigna (CI) is a health insurer headquartered in Bloomfield, operating in the Medical sector with a year-to-date stock price change of -3.17% [3] Dividend Information - Cigna currently pays a dividend of $1.51 per share, resulting in a dividend yield of 2.26%, which is significantly higher than the Medical - HMOs industry's yield of 0.74% and the S&P 500's yield of 1.48% [3] - The company's annualized dividend of $6.04 has increased by 7.9% from the previous year, with a total of five dividend increases over the last five years, averaging an annual increase of 81.54% [4] Earnings Growth - The Zacks Consensus Estimate for Cigna's earnings in 2025 is projected at $29.68 per share, indicating a year-over-year earnings growth rate of 8.60% [5] Investment Considerations - Cigna is positioned as a compelling investment opportunity due to its strong dividend profile and a Zacks Rank of 3 (Hold), making it attractive for income investors [6]

Core Viewpoint - Cigna Group reported strong second-quarter 2025 results with adjusted EPS of $7.20, exceeding estimates and showing a year-over-year increase of 7.1% alongside adjusted revenues of $67.1 billion, which rose 11% year over year [1][10]. Financial Performance - Adjusted revenues of $67.1 billion surpassed the consensus estimate by 7.1% [1] - Total benefits and expenses increased 12% year over year to $64.9 billion, driven by higher pharmacy and service costs [4] - Adjusted income from operations was $1.9 billion, a 1% increase year over year [4] Segment Performance - Evernorth Health Services segment achieved adjusted revenues of $57.8 billion, up 17% year over year, benefiting from new business and improved specialty volumes [5] - Cigna Healthcare segment's adjusted revenues fell 18% year over year to $10.8 billion, impacted by divestitures, but still slightly beat estimates [7] - Medical customer base decreased by 5.2% year over year to 18 million, although it exceeded the consensus estimate [3][10] Expense and Margin Analysis - Adjusted SG&A expense ratio improved by 110 basis points year over year to 4.9% due to a favorable business mix [4] - Adjusted pre-tax operating income for Evernorth rose 5% year over year to $1.7 billion, while the adjusted pre-tax margin declined by 40 basis points to 2.9% [6] Financial Position - Cash and cash equivalents decreased by 42.7% from the end of 2024 to $4.3 billion [11] - Total assets fell 2.7% to $151.7 billion, while long-term debt decreased by 8.5% to $26.5 billion [11] Capital Deployment - Cigna repurchased shares worth approximately $2.6 billion in the first half of 2025 [13] 2025 Outlook - Adjusted EPS is projected to be a minimum of $29.60, indicating at least 8.3% growth from 2024 [14] - Adjusted revenues are expected to reach a minimum of $252 billion, reflecting at least a 2% increase from 2024 [15]

PART I. [FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis of the company's financial performance and condition [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of The Cigna Group, including statements of income, comprehensive income, balance sheets, changes in total equity, and cash flows for the periods ended June 30, 2025, and December 31, 2024, along with detailed notes explaining significant accounting policies, accounts receivable, debt, equity, insurance liabilities, investments, and segment information [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the consolidated statements of income, detailing revenues, net income, and earnings per share for the specified periods Consolidated Statements of Income Highlights (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $67,178 | $60,523 | +11% | | Shareholders' Net Income | $1,532 | $1,548 | -1% | | Diluted EPS | $5.71 | $5.45 | +5% | | **Metric** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2024** | **Change (%)** | | Total Revenues | $132,680 | $117,778 | +13% | | Shareholders' Net Income | $2,855 | $1,271 | +125% | | Diluted EPS | $10.55 | $4.43 | +138% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the consolidated statements of comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $1,632 | $1,629 | | Total comprehensive income | $1,406 | $1,511 | | Shareholders' comprehensive income | $1,306 | $1,430 | | **Metric** | **Six Months Ended June 30, 2025** | **Six Months Ended June 30, 2024** | | Net income | $3,041 | $1,417 | | Total comprehensive income | $2,566 | $839 | | Shareholders' comprehensive income | $2,380 | $693 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, including assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights (in millions) | Metric | As of June 30, 2025 | As of December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $151,651 | $155,881 | -2.7% | | Total Liabilities | $111,221 | $114,638 | -3.0% | | Total Equity | $40,430 | $41,243 | -2.0% | | Cash and cash equivalents | $4,329 | $7,550 | -42.7% | | Accounts receivable, net | $31,148 | $24,227 | +28.6% | [Consolidated Statements of Changes in Total Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Total%20Equity) This section details the changes in total equity, including net income, dividends, and stock repurchases, over the reporting period Shareholders' Equity Changes (Six Months Ended June 30, 2025, in millions) | Item | Amount | | :--- | :--- | | Balance at December 31, 2024 | $41,033 | | Net income | $2,855 | | Common dividends declared | $(810) | | Repurchase of common stock | $(2,581) | | Balance at June 30, 2025 | $40,214 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the cash inflows and outflows from operating, investing, and financing activities for the specified periods Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, in millions) | Cash Flow Activity | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $34 | $5,105 | -99.3% | | Net Cash Provided by (Used In) Investing Activities | $400 | $(1,135) | N/M | | Net Cash Used in Financing Activities | $(5,014) | $(4,838) | +3.6% | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(4,545) | $(880) | N/M | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, including accounting policies and specific account breakdowns [Note 1 – Description of Business](index=11&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business) This note describes the company's primary business activities, organizational structure, and key operating segments - The Cigna Group is a global health company offering pharmacy, medical, behavioral, dental, and related products and services primarily through employers and other entities. It operates through Evernorth Health Services (Pharmacy Benefit Services, Specialty and Care Services), Cigna Healthcare (U.S. Healthcare, International Health), and Other Operations (run-off and non-strategic businesses)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles, methods, and estimates used in preparing the financial statements - The consolidated financial statements are prepared in conformity with GAAP, relying on management's estimates and assumptions. No significant updates on accounting pronouncements have occurred since the **2024** Form **10-K** filing[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 3 – Accounts Receivable, Net](index=12&type=section&id=Note%203%20%E2%80%93%20Accounts%20Receivable,%20Net) This note provides a detailed breakdown of accounts receivable and related allowances, including factoring activities Accounts Receivable, Net (in millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninsurance customer receivables | $14,690 | $11,879 | | Pharmaceutical manufacturers receivables | $14,094 | $10,914 | | Insurance customer receivables | $1,606 | $3,199 | | Other receivables | $758 | $162 | | Total Accounts receivable, net | $31,148 | $24,227 | - The Company's allowance for current expected credit losses increased significantly to **$388 million** as of June 30, 2025, from **$84 million** as of December 31, 2024[33](index=33&type=chunk) - The Company sold **$1.3 billion** of manufacturer accounts receivable under its factoring facility for the three months ended June 30, 2025, and **$2.7 billion** for the six months ended June 30, 2025. As of June 30, 2025, **$1.0 billion** of sold receivables had not yet been collected from manufacturers[35](index=35&type=chunk) [Note 4 – Supplier Finance Program](index=12&type=section&id=Note%204%20%E2%80%93%20Supplier%20Finance%20Program) This note describes the company's supplier finance program and the associated payment obligations - As of June 30, 2025, **$1.7 billion** of the Company's payment obligations were confirmed within the supplier finance program, with **$763 million** voluntarily elected by suppliers to be sold to the financial institution[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 5 – Divestiture](index=13&type=section&id=Note%205%20%E2%80%93%20Divestiture) This note details the sale of the Medicare Advantage and related businesses, including financial impacts and transaction costs - On March 19, 2025, the Company completed the sale of its Medicare Advantage and related businesses to HCSC for an increased purchase price of **$4.8 billion** (up from **$3.3 billion**), recognizing a pre-tax gain of **$37 million**. **$4.2 billion** cash proceeds were received at closing, with the remaining **$0.6 billion** expected in Q4 2025[39](index=39&type=chunk) Assets and Liabilities of Businesses Held for Sale (as of December 31, 2024, in millions) | (In millions) | December 31, 2024 | | :--- | :--- | | Total assets of businesses held for sale | $7,004 | | Total liabilities of businesses held for sale | $2,410 | - Transaction-related costs for the HCSC divestiture were **$74 million** pre-tax for Q2 2025 and **$290 million** pre-tax for the six months ended June 30, 2025, significantly higher than the **$63 million** and **$100 million** incurred in the respective 2024 periods[41](index=41&type=chunk) [Note 6 – Earnings Per Share](index=13&type=section&id=Note%206%20%E2%80%93%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share, including share repurchase information Diluted Earnings Per Share (EPS) | Period | 2025 (Diluted EPS) | 2024 (Diluted EPS) | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $5.71 | $5.45 | +4.8% | | Six Months Ended June 30 | $10.55 | $4.43 | +138.1% | - The Company held approximately **137.4 million shares** of common stock in treasury as of June 30, 2025, an increase from **128.7 million shares** as of December 31, 2024, and **122.5 million shares** as of June 30, 2024[43](index=43&type=chunk) [Note 7 – Debt](index=14&type=section&id=Note%207%20%E2%80%93%20Debt) This note provides information on the company's debt instruments, redemptions, credit agreements, and interest expense - During the six months ended June 30, 2025, the Company redeemed **$700 million** of **5.685%** senior notes and repaid **$900 million** of **3.250%** senior notes at maturity[44](index=44&type=chunk) - In April 2025, the Company replaced its previous revolving credit agreements with a new **$6.5 billion**, five-year revolving credit and letter of credit agreement maturing in April 2030, with an option to increase commitments up to **$8.0 billion**. The Company was in compliance with its debt covenants as of June 30, 2025[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[50](index=50&type=chunk) Interest Expense (in millions) | Period | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $338 | $378 | -10.6% | | Six Months Ended June 30 | $700 | $747 | -6.3% | [Note 8 – Common and Preferred Stock](index=15&type=section&id=Note%208%20%E2%80%93%20Common%20and%20Preferred%20Stock) This note details information regarding common and preferred stock, including dividends declared and share repurchase programs Common Dividends Declared (per share) | Record Date | Payment Date | Amount per Share (2025) | Amount per Share (2024) | | :--- | :--- | :--- | :--- | | March 5 | March 20 | $1.51 | $1.40 | | June 3 | June 18 | $1.51 | $1.40 | | July 22 | Sep 18 | $1.51 | N/A | - The Board of Directors declared a third-quarter cash dividend of **$1.51** per share, payable September 18, 2025, to shareholders of record on September 4, 2025. Future dividends are subject to Board approval and financial conditions[52](index=52&type=chunk) [Note 9 – Insurance and Contractholder Liabilities](index=15&type=section&id=Note%209%20%E2%80%93%20Insurance%20and%20Contractholder%20Liabilities) This note provides a breakdown of insurance and contractholder liabilities, including unpaid claims and market risk benefits Total Insurance and Contractholder Liabilities (in millions) | (In millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total | $16,172 | $15,642 | $16,065 | | Current | $6,015 | $5,388 | N/A | | Non-current | $10,157 | $10,254 | N/A | - Unpaid claims and claim expenses for Cigna Healthcare decreased to **$4.6 billion** as of June 30, 2025, from **$5.2 billion** as of June 30, 2024, primarily due to the HCSC transaction, partially offset by changes in stop loss reserves[55](index=55&type=chunk) - Favorable prior year development in unpaid claims for Cigna Healthcare was **$297 million** for the six months ended June 30, 2025, and **$284 million** for the same period in 2024, primarily reflecting lower than expected utilization of medical services[56](index=56&type=chunk) - Contractholder deposit fund liabilities within Other Operations decreased to **$6.2 billion** as of June 30, 2025, from **$6.4 billion** as of June 30, 2024. Approximately **38%** of this balance is reinsured externally[60](index=60&type=chunk) - Market risk benefits (variable annuity reinsurance contracts) decreased to **$767 million** as of June 30, 2025, from **$865 million** as of June 30, 2024. The net amount at risk for these contracts was **$1,236 million** as of June 30, 2025[63](index=63&type=chunk)[64](index=64&type=chunk) [Note 10 – Reinsurance](index=18&type=section&id=Note%2010%20%E2%80%93%20Reinsurance) This note describes the company's reinsurance arrangements and the associated recoverables Total Reinsurance Recoverables (in millions) | (In millions) | June 30, 2025 | | :--- | :--- | | Total reinsurance recoverables before market risk benefits | $3,647 | | Allowance for uncollectible reinsurance | $(30) | | Market risk benefits | $822 | | Total reinsurance recoverables | $4,439 | - The majority of market risk benefits are reinsured by Berkshire Hathaway, with approximately **$3.0 billion** remaining under the overall limit as of June 30, 2025. Approximately **100%** of the Berkshire recoverable is secured by assets in a trust[67](index=67&type=chunk) [Note 11 – Investments](index=19&type=section&id=Note%2011%20%E2%80%93%20Investments) This note details the composition and fair value of the company's investment portfolio, including debt and equity securities Investments per Consolidated Balance Sheets (in millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | $16,475 | $15,793 | | Current | $813 | $665 | | Long-Term | $15,662 | $15,128 | - The debt securities portfolio decreased from **$9.4 billion** (Dec 31, 2024) to **$8.4 billion** (June 30, 2025), primarily due to the HCSC transaction. The portfolio remains in a net unrealized depreciation position due to increasing interest rates[69](index=69&type=chunk)[70](index=70&type=chunk)[214](index=214&type=chunk) - As of June 30, 2025, **87%** (**$7.3 billion**) of debt securities were investment grade, and **13%** (**$1.1 billion**) were below investment grade, consistent with the prior year's investment strategy[215](index=215&type=chunk) - Net investment gains (losses) significantly improved to **$52 million** for Q2 2025 and **$50 million** for the six months ended June 30, 2025, compared to losses of **$(48) million** and **$(1,884) million** in the respective 2024 periods, reflecting gains on equity securities and the absence of prior year impairment[81](index=81&type=chunk) [Note 12 – Fair Value Measurements](index=22&type=section&id=Note%2012%20%E2%80%93%20Fair%20Value%20Measurements) This note explains the methodologies and inputs used to determine the fair value of financial instruments Financial Assets at Fair Value (in millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total debt securities | $8,389 | $9,423 | | Equity securities | $118 | $37 | | Short-term investments | $250 | $170 | | Derivative assets | $64 | $168 | | Total Financial Assets at Fair Value | $8,821 | $9,798 | - Level **3** debt securities (corporate, mortgage, and other asset-backed) are valued using unobservable inputs, primarily a liquidity adjustment. The weighted average liquidity spread adjustment for corporate debt securities was **360 bps** as of June 30, 2025[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - For the six months ended June 30, 2024, the Company recorded a **$1.8 billion** impairment loss on its investment in VillageMD equity securities, which was absent in the 2025 period[97](index=97&type=chunk) [Note 13 – Accumulated Other Comprehensive Income (Loss)](index=25&type=section&id=Note%2013%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note provides a breakdown of the components of accumulated other comprehensive income (loss) and changes therein Accumulated Other Comprehensive Loss (AOCI) (in millions) | (In millions) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Beginning balance (Six Months) | $(2,341) | $(1,864) | | Shareholders' other comprehensive loss, net of tax | $(475) | $(578) | | Ending balance (Six Months) | $(2,816) | $(2,442) | - Shareholders' other comprehensive loss for both periods is primarily due to changes in discount rates for long-duration liabilities and unrealized changes in market values of securities and derivatives[101](index=101&type=chunk) [Note 14 – Strategic Optimization Program](index=26&type=section&id=Note%2014%20%E2%80%93%20Strategic%20Optimization%20Program) This note describes the company's strategic optimization program, including incurred costs and accrued liabilities - The Company initiated an enterprise-wide Strategic Optimization Program in Q1 2025 to improve efficiency, incurring **$129 million** pre-tax (**$98 million** after-tax) for Q2 2025 and **$344 million** pre-tax (**$261 million** after-tax) for the six months ended June 30, 2025. These costs primarily include asset impairments and employee severance[104](index=104&type=chunk)[105](index=105&type=chunk) Accrued Liability for Strategic Optimization Program (in millions) | (In millions) | Amount | | :--- | :--- | | Balance, December 31, 2024 | $0 | | 2025 charges | $194 | | 2025 payments | $(78) | | Balance, June 30, 2025 | $116 | [Note 15 – Income Taxes](index=27&type=section&id=Note%2015%20%E2%80%93%20Income%20Taxes) This note provides information on the company's income tax expense, effective tax rates, and deferred tax assets and liabilities Consolidated Effective Tax Rate | Period | 2025 | 2024 | Change (bps) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | 19.2% | 18.1% | +110 | | Six Months Ended June 30 | 17.1% | 31.5% | -1,440 | - The effective tax rate for the six months ended June 30, 2025, decreased significantly due to the absence of a valuation allowance related to the impairment of equity securities recorded in 2024[107](index=107&type=chunk)[108](index=108&type=chunk) [Note 16 – Contingencies and Other Matters](index=27&type=section&id=Note%2016%20%E2%80%93%20Contingencies%20and%20Other%20Matters) This note discloses information regarding the company's contingent liabilities, guarantees, and legal and regulatory matters - The Company is contingently liable for various guarantees, including those for retiree and life insurance benefits, where employers maintain assets generally exceeding benefit obligations. No material additional liabilities were required for these guarantees as of June 30, 2025[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - The Company has indemnification obligations related to acquisition and disposition transactions, with no recorded liabilities as of June 30, 2025. It is also routinely involved in numerous legal and regulatory matters, including claims, lawsuits, and government investigations[112](index=112&type=chunk)[114](index=114&type=chunk) [Note 17 – Segment Information](index=28&type=section&id=Note%2017%20%E2%80%93%20Segment%20Information) This note provides detailed financial and operational results for each of the company's reportable business segments - The Company reports segment operating performance using 'pre-tax adjusted income (loss) from operations' and 'adjusted revenues,' which exclude net investment gains/losses, amortization of acquired intangible assets, and special items, as these metrics reflect underlying business results and facilitate trend analysis[116](index=116&type=chunk)[117](index=117&type=chunk)[180](index=180&type=chunk) Total Revenues by Segment (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Evernorth Health Services | $111,506 | $95,774 | +16% | | Cigna Healthcare | $25,330 | $26,481 | -4% | | Other Operations | $359 | $393 | -9% | | Corporate and Eliminations | $(4,515) | $(4,870) | -7% | | Total Revenues | $132,680 | $117,778 | +13% | Pre-tax Adjusted Income (Loss) from Operations by Segment (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Evernorth Health Services | $3,130 | $2,979 | +5% | | Cigna Healthcare | $2,381 | $2,544 | -6% | | Other Operations | $25 | $2 | N/M | | Corporate and Eliminations | $(793) | $(844) | -6% | | Consolidated Pre-tax Adjusted Income from Operations | $4,743 | $4,681 | +1% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and operating results for the three and six months ended June 30, 2025, compared to the prior year. It highlights key financial performance metrics, the impact of the HCSC divestiture, liquidity and capital resources, critical accounting estimates, and detailed segment reporting for Evernorth Health Services, Cigna Healthcare, Other Operations, and Corporate [Executive Overview](index=36&type=section&id=EXECUTIVE%20OVERVIEW) This section provides a high-level summary of the company's financial performance and key operational highlights for the reporting period Consolidated Financial Highlights (GAAP Basis, Six Months Ended June 30, in millions) | (Dollars in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenues | $132,680 | $117,778 | +13% | | Shareholders' net income | $2,855 | $1,271 | +125% | | Diluted EPS | $10.55 | $4.43 | +138% | | Adjusted income from operations | $3,770 | $3,784 | 0% | | Adjusted diluted EPS | $13.94 | $13.19 | +6% | - Shareholders' net income for the six months ended June 30, 2025, increased by **125%**, primarily due to the absence of the VillageMD equity securities impairment recorded in Q1 2024[142](index=142&type=chunk) - Medical customers decreased by **5%** for the six months ended June 30, 2025, primarily due to the closing of the HCSC transaction[143](index=143&type=chunk) - Pharmacy revenues increased by **19%** (three months) and **17%** (six months), driven by higher prescription drug utilization and customer growth in Evernorth Health Services. Premiums decreased by **20%** (three months) and **5%** (six months), primarily due to the HCSC transaction, partially offset by growth in ongoing U.S. Healthcare businesses[143](index=143&type=chunk)[144](index=144&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's ability to generate and manage cash, its capital structure, and available financial resources - Operating cash flows decreased significantly for the six months ended June 30, 2025, primarily due to the absence of favorable net cash flow impacts from new client onboarding in 2024 and unfavorable pharmacy and services cost payments[159](index=159&type=chunk) - Cash provided by investing activities increased, reflecting net proceeds on the HCSC transaction, partially offset by higher investment purchases. Cash used in financing activities increased due to net debt repayments in 2025 compared with net debt issuances in 2024, offset by lower share repurchases[160](index=160&type=chunk) - As of June 30, 2025, the Company had **$6.5 billion** of undrawn committed capacity under its revolving credit agreement, **$5.3 billion** of remaining capacity under its commercial paper program, and **$4.6 billion** in cash and short-term investments[165](index=165&type=chunk) - The debt-to-capitalization ratio was **43.3%** as of June 30, 2025. The Company repurchased **8.2 million shares** for approximately **$2.6 billion** during the six months ended June 30, 2025, a decrease from **14.7 million shares** for **$5.0 billion** in the prior year[166](index=166&type=chunk)[171](index=171&type=chunk) [Critical Accounting Estimates](index=43&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section describes the significant accounting estimates and judgments that are crucial to the company's financial reporting - Management considers an accounting estimate to be critical if it involves uncertain assumptions and changes could materially affect financial results. As of June 30, 2025, there were no significant changes to the critical accounting estimates reported in the **2024** Form **10-K**[177](index=177&type=chunk)[178](index=178&type=chunk) [Segment Reporting](index=43&type=section&id=SEGMENT%20REPORTING) This section provides financial and operational information broken down by the company's distinct business segments - Segment performance is measured using 'adjusted revenues' and 'pre-tax adjusted income (loss) from operations,' which exclude net investment gains/losses, amortization of acquired intangible assets, and special items to reflect underlying business results[180](index=180&type=chunk) [Evernorth Health Services Segment](index=43&type=section&id=Evernorth%20Health%20Services%20Segment) This section details the financial performance and key operational metrics of the Evernorth Health Services segment Evernorth Health Services Financial Summary (Six Months Ended June 30, in millions) | (Dollars in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted revenues | $111,506 | $95,774 | +16% | | Pre-tax adjusted income from operations | $3,130 | $2,979 | +5% | | Pre-tax margin | 2.8% | 3.1% | -30 bps | | Pharmacy claim volume (in millions) | 1,087 | 1,046 | +4% | - Adjusted revenues increased by **17%** (three months) and **16%** (six months), driven by higher prescription drug utilization from customer growth in Pharmacy Benefit Services (**+7%** and **+7%**) and Specialty and Care Services (**+6%** and **+7%**) and claims composition changes in Pharmacy Benefit Services (**+4%** and **+2%**)[191](index=191&type=chunk) - Pre-tax adjusted income from operations increased by **5%** for both periods, primarily due to specialty pharmacy growth in Specialty and Care Services (**+8%** and **+6%**) and contract affordability improvements and customer growth in Pharmacy Benefit Services (**+3%** and **+3%**)[192](index=192&type=chunk) [Cigna Healthcare Segment](index=45&type=section&id=Cigna%20Healthcare%20Segment) This section details the financial performance and key operational metrics of the Cigna Healthcare segment Cigna Healthcare Financial Summary (Six Months Ended June 30, in millions) | (Dollars in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted revenues | $25,236 | $26,420 | -4% | | Pre-tax adjusted income from operations | $2,381 | $2,544 | -6% | | Pre-tax margin | 9.4% | 9.6% | -20 bps | | Medical care ratio | 82.6% | 81.1% | +150 bps | | SG&A expense ratio | 19.8% | 20.2% | -40 bps | - Adjusted revenues decreased by **18%** (three months) and **4%** (six months), primarily due to the HCSC transaction (**-$3,137 million** and **-$2,527 million**, respectively), partially offset by higher premiums in employer insured and stop loss businesses[199](index=199&type=chunk) - Pre-tax adjusted income from operations decreased by **9%** (three months) and **6%** (six months), mainly due to a higher Medical Care Ratio (MCR), which increased by **90 bps** and **150 bps**, respectively, driven by higher stop loss medical costs[200](index=200&type=chunk) Cigna Healthcare Medical Customers (as of June 30, in thousands) | (In thousands) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | U.S. Healthcare (Insured) | 2,574 | 3,845 | -33% | | International Health (Insured) | 1,250 | 1,206 | +4% | | U.S. Healthcare (Administrative services only) | 13,781 | 13,559 | +2% | | International Health (Administrative services only) | 441 | 433 | +2% | | Total Medical Customers | 18,046 | 19,043 | -5% | [Other Operations](index=47&type=section&id=Other%20Operations) This section provides financial results for the company's run-off and non-strategic businesses Other Operations Financial Summary (Six Months Ended June 30, in millions) | (Dollars in millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Adjusted revenues | $359 | $393 | -9% | | Pre-tax adjusted income from operations | $25 | $2 | N/M | | Pre-tax margin | 7.0% | 0.5% | +650 bps | - Pre-tax adjusted income from operations increased significantly for both the three and six months ended June 30, 2025, primarily driven by the decision to discontinue certain small non-strategic businesses[207](index=207&type=chunk) [Corporate](index=47&type=section&id=Corporate) This section presents the financial results and adjustments attributable to corporate-level activities and eliminations Corporate Pre-tax Adjusted Loss from Operations (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Pre-tax adjusted loss from operations | $(793) | $(844) | -6% | - Pre-tax adjusted loss from operations decreased for both periods, primarily due to lower interest expense[210](index=210&type=chunk) [Investment Assets](index=47&type=section&id=INVESTMENT%20ASSETS) This section details the composition, valuation, and performance of the company's investment portfolio - The carrying value of the debt securities portfolio decreased from **$9.4 billion** (Dec 31, 2024) to **$8.4 billion** (June 30, 2025), primarily due to the HCSC transaction. The portfolio remains in a net unrealized depreciation position due to increasing interest rates[214](index=214&type=chunk) - As of June 30, 2025, **87%** (**$7.3 billion**) of debt securities were investment grade, and the remaining **$1.1 billion** were below investment grade, consistent with the Company's investment strategy[215](index=215&type=chunk) - The **$1.3 billion** commercial mortgage loan portfolio, diversified by property type and location, maintains strong overall credit quality. It has no exposure to regional shopping malls and less than **25%** exposure to office properties, mitigating risks from weak office sector fundamentals[217](index=217&type=chunk)[218](index=218&type=chunk) - Other long-term investments of **$4.8 billion** as of June 30, 2025, included investments in securities and real estate limited partnerships, diversified to mitigate risk. Less than **4%** of these investments are exposed to the office sector real estate[219](index=219&type=chunk)[220](index=220&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk exposure is interest rate risk, and as of June 30, 2025, there was no material change in this risk exposure compared to the prior year's report - The Company's primary market risk exposure is interest rate risk. As of June 30, 2025, there was no material change in the risk exposure compared to the **2024** Form **10-K**[223](index=223&type=chunk)[224](index=224&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) The Cigna Group's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025. There have been no material changes in internal control over financial reporting during the quarter - The Cigna Group's disclosure controls and procedures were deemed effective as of June 30, 2025, by the CEO and CFO[226](index=226&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[227](index=227&type=chunk) PART II. [OTHER INFORMATION](index=46&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional disclosures including legal proceedings, risk factors, equity sales, and executive trading plans [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from the 'Legal and Regulatory Matters' section in Note 16 to the Consolidated Financial Statements, indicating the Company is routinely involved in various claims, lawsuits, and regulatory inquiries - Information on legal proceedings is incorporated by reference from Note **16**, which details the Company's routine involvement in claims, lawsuits, regulatory inquiries, and government investigations[228](index=228&type=chunk)[114](index=114&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) For a comprehensive understanding of factors that could impact the Company's operations, financial condition, and liquidity, readers are directed to the 'Risk Factors' section in the Annual Report on Form 10-K for the year ended December 31, 2024 - Readers are referred to the 'Risk Factors' section in the **2024** Form **10-K** for information on factors affecting the Company's results, financial condition, and liquidity[229](index=229&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company repurchased **3.19 million shares** of common stock for approximately **$1.06 billion** during the quarter ended June 30, 2025, under its Board-authorized share repurchase program. This program allows for repurchases based on market conditions and capital allocation priorities Issuer Purchases of Equity Securities (Quarter Ended June 30, 2025) | Period | Total of shares purchased | Average price paid per share | | :--- | :--- | :--- | | April 1 - 30, 2025 | 3,166,395 | $332.60 | | May 1 - 31, 2025 | 20,482 | $339.80 | | June 1 - 30, 2025 | 2,048 | $321.73 | | Total | 3,188,925 | $332.64 | - The Company's share repurchase program is authorized by the Board and allows for repurchases based on market conditions and alternate uses of capital, with no expiration date[230](index=230&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, several key executives, including the Chairman and CEO, President and COO, Chief Administrative Officer, and EVP of Strategy, adopted or modified Rule 10b5-1 trading plans for the sale of common stock and exercise of vested stock options - Chairman and CEO David Cordani adopted a **10b5-1** plan on May 6, 2025, for the sale of shares from performance awards and exercise of vested stock options (up to **212,543 shares**) through May 5, 2026[232](index=232&type=chunk) - President and COO Brian Evanko adopted a **10b5-1** plan on May 7, 2025, for the exercise of vested stock options and sale of up to **18,429 shares** through May 8, 2026[232](index=232&type=chunk) - Executive Vice President, Chief Administrative Officer and General Counsel Nicole Jones adopted a **10b5-1** plan on May 8, 2025, for the sale of up to **3,773 shares**, shares from performance awards, and exercise of vested stock options (up to **27,430 shares**) through May 8, 2026[232](index=232&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, Amended and Restated By-laws, a new Revolving Credit and Letter of Credit Agreement dated April 24, 2025, and certifications from the CEO and CFO - Key exhibits include the Restated Certificate of Incorporation, Amended and Restated By-laws, and a new **$6.5 billion** Revolving Credit and Letter of Credit Agreement dated April 24, 2025[233](index=233&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Rule **13a-14(a)** and **13a-14(b)** are filed/furnished herewith[233](index=233&type=chunk) [SIGNATURE](index=49&type=section&id=SIGNATURE) This section contains the official signature confirming the accuracy and completeness of the report - The report was duly signed on July 31, 2025, by Ann M. Dennison, Executive Vice President and Chief Financial Officer of The Cigna Group[239](index=239&type=chunk)

Core Insights - Cigna reported $67.13 billion in revenue for Q2 2025, an 11% year-over-year increase, with an EPS of $7.20 compared to $6.72 a year ago, exceeding Zacks Consensus Estimates [1] - The revenue surprise was +7.09% over the consensus estimate of $62.69 billion, while the EPS surprise was +0.84% over the consensus estimate of $7.14 [1] Financial Performance Metrics - Medical Care Ratio was 83.2%, matching the average estimate by analysts [4] - Total Medical Customers reached 18.05 million, surpassing the average estimate of 17.92 million [4] - U.S. Healthcare Medical Customers were 16.36 million, slightly above the estimate of 16.23 million [4] - International Health Medical Customers were 1.69 million, in line with the estimate [4] - Net investment income was $236 million, exceeding the average estimate of $219.84 million, but representing a year-over-year decline of 26.5% [4] - Pharmacy revenues were $53.65 billion, significantly above the estimate of $49.16 billion, reflecting a 19% year-over-year increase [4] - Revenues from Evernorth Health Services were $57.83 billion, exceeding the estimate of $54.43 billion, with a year-over-year increase of 16.7% [4] - Evernorth Health Services Pharmacy revenues were $53.99 billion, surpassing the estimate of $51.33 billion, with a year-over-year increase of 16.9% [4] - Cigna Healthcare Premiums revenues were $8.99 billion, slightly above the estimate of $8.87 billion, but showing a year-over-year decline of 21.5% [4] - Total Premiums revenues were $9.16 billion, exceeding the estimate of $8.7 billion, with a year-over-year decline of 20.1% [4] - Fees and Other revenues were $4.14 billion, above the estimate of $4.05 billion, reflecting a year-over-year increase of 13.4% [4] - Cigna Healthcare revenues were $10.8 billion, slightly above the estimate of $10.78 billion, but showing a year-over-year decline of 18.2% [4] Stock Performance - Cigna's shares have returned -7% over the past month, contrasting with the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]