Condensed Consolidating Financial Information | Note 17 – Condensed Consolidating Financial I nformation Effective with the Merger that closed on December 20, 2018 (see Note 4 for further information) t he senior notes issued by Cigna, Old Cigna, E SI , Medco, and Express Scripts became jointly and severally and fully and unconditionally (subject to certain customary release provisions, including sale, exchange, transfer or liquidation of the guarantor subsidiary) guaranteed by Cigna, Old Cigna, ESI, Medco and Express Scripts , as applica ble. Details of these debt obligations are presented in Note 6 . The following condensed consolidating financial information has been prepared in accordance with the requirements as prescribed by the SEC in Regulation S -X . The condensed consolidati ng financial information presented below is not indicative of what the financial position, results of operations or cash flows would have been had each of the entities operated as an independent company during the periods for various reasons, including, bu t not limited to, intercompany transactions and integration of systems. The condensed consolidating financial information is presented separately for: (i) Cigna (the Parent Company), guarantor, the issuer of additional guaranteed obligations; (ii) Old Cigna (former Parent Company), guarantor, the issuer of additional guaranteed obligations; (iii) Express Scripts, guarantor, the issuer of additional guaranteed obligations; (iv) ESI, guarantor, the issuer of additional guaranteed obligations; (v) Medco, guarantor, the issuer of additional guaranteed obligations; (vi) Non-guarantor subsidiaries, on a combined basis; (vii) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompan y transactions between or among Cig na, Old Cigna, Express Scripts, ESI, Medco and the non-guarantor subsidiaries, (b) eliminate the investments in our subsidiaries and (c) record consolidating entries; and (viii) Cigna and subsidiaries on a consolidated basis. Condensed Consolidating Statements of Income For the three months ended March 31, 2019 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Revenues Pharmacy revenues $ - $ - $ - $ 17,622 $ 3,763 $ 14,142 $ (10,348) $ 25,179 Premiums - - - - - 9,971 - 9,971 Fees and other revenues - - - 190 84 3,101 (925) 2,450 Net investment income (loss) (9) - 15 3 2 335 - 346 Total revenues (9) - 15 17,815 3,849 27,549 (11,273) 37,946 Benefits and expenses Pharmacy and other service costs - - - 16,363 3,689 14,346 (10,348) 24,050 Medical costs and other benefit expenses - - - - - 7,620 - 7,620 Selling, general and administrative expenses (99) 73 13 835 87 3,319 (925) 3,303 Amortization of acquired intangible assets - - - 577 83 83 - 743 Total benefits and expenses (99) 73 13 17,775 3,859 25,368 (11,273) 35,716 Income (loss) from operations 90 (73) 2 40 (10) 2,181 - 2,230 Interest and other income (expense) (237) (87) (124) (4) (9) 9 - (452) Intercompany interest income (expense) (31) (3) 124 (62) (39) 11 - - Net realized investment gains - - - - - 10 - 10 Income (loss) before income taxes (178) (163) 2 (26) (58) 2,211 - 1,788 Total income tax (benefit) expense (37) (31) 1 (17) (17) 517 - 416 Income (loss) before equity in earnings of subsidiaries (141) (132) 1 (9) (41) 1,694 - 1,372 Equity in earnings of subsidiaries 1,509 1,152 488 432 84 - (3,665) - Net income 1,368 1,020 489 423 43 1,694 (3,665) 1,372 Less: Net income attributable to noncontrolling interests - - - - - 4 - 4 Shareholders’ net income $ 1,368 $ 1,020 $ 489 $ 423 $ 43 $ 1,690 $ (3,665) $ 1,368 Other comprehensive income, net of tax 429 429 1 1 - 412 (843) 429 Shareholders’ comprehensive income $ 1,797 $ 1,449 $ 490 $ 424 $ 43 $ 2,102 $ (4,508) $ 1,797 Condensed Consolidating Statements of Income For the three months ended March 31, 2018 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Revenues Premiums $ - $ - $ - $ - $ - $ 8,999 $ - $ 8,999 Fees and other revenues - - - - - 1,368 - 1,368 Pharmacy revenues - - - - - 717 - 717 Net investment income - - - - - 329 - 329 Total revenues - - - - - 11,413 - 11,413 Benefits and expenses Medical costs and other benefit expenses - - - - - 6,772 - 6,772 Pharmacy and other service costs - - - - - 561 - 561 Selling, general and administrative expenses - 64 - - - 2,681 - 2,745 Amortization of acquired intangible assets - - - - - 27 - 27 Total benefits and expenses - 64 - - - 10,041 - 10,105 Income (loss) from operations - (64) - - - 1,372 - 1,308 Interest and other (expense) - (85) - - - 28 - (57) Intercompany interest income (expense) - (16) - - - 16 - - Net realized investment (losses) - - - - - (33) - (33) Income (loss) before income taxes - (165) - - - 1,383 - 1,218 Total income tax (benefit) expense - (39) - - - 340 - 301 Income (loss) before equity in earnings of subsidiaries - (126) - - - 1,043 - 917 Equity in earnings of subsidiaries 915 1,041 - - - - (1,956) - Net income 915 915 - - - 1,043 (1,956) 917 Less: net income attributable to noncontrolling interests - - - - - 2 - 2 Shareholders’ net income $ 915 $ 915 $ - $ - $ - $ 1,041 $ (1,956) $ 915 Other comprehensive (loss), net of tax (226) (226) - - - (237) 463 (226) Shareholders’ comprehensive income $ 689 $ 689 $ - $ - $ - $ 804 $ (1,493) $ 689 Condensed Consolidating Balance Sheets As of March 31, 2019 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Assets Cash and cash equivalents $ - $ - $ 1,596 $ 44 $ - $ 3,336 $ - $ 4,976 Investments 417 6 - - - 1,239 - 1,662 Accounts receivable, net - 2 - 4,670 626 5,643 - 10,941 Inventories - - - - - 2,382 - 2,382 Other current assets - 131 - 282 3 1,042 (283) 1,175 Total current assets 417 139 1,596 4,996 629 13,642 (283) 21,136 Long-term investments - 10 - - - 27,247 - 27,257 Reinsurance recoverables - - - - - 5,385 - 5,385 Deferred policy acquisition costs - - - - - 2,817 - 2,817 Property and equipment - - - 2,386 - 2,137 - 4,523 Investments in subsidiaries 70,036 28,174 52,560 17,551 8,205 - (176,526) - Intercompany receivables, net - 3,054 - 8,371 2,222 26,839 (40,486) - Goodwill - - 31,049 - - 13,488 - 44,537 Other intangible assets - - 8,400 18,489 6,958 4,491 - 38,338 Other assets 27 227 - 152 78 2,001 (209) 2,276 Separate account assets - - - - - 8,079 - 8,079 TOTAL ASSETS $ 70,480 $ 31,604 $ 93,605 $ 51,945 $ 18,092 $ 106,126 $ (217,504) $ 154,348 Liabilities Current insurance and contractholder liabilities $ - $ - $ - $ - $ - $ 7,060 $ - $ 7,060 Pharmacy and service costs payable - - - 9,245 1,291 609 - 11,145 Accounts payable 22 - 2 833 4 3,627 - 4,488 Accrued expenses and other liabilities 719 288 92 1,522 276 4,747 (283) 7,361 Short-term debt 1,556 - 998 352 - 9 - 2,915 Total current liabilities 2,297 288 1,092 11,952 1,571 16,052 (283) 32,969 Non-current insurance and contractholder liabilities - - - - - 20,043 - 20,043 Deferred tax liabilities, net - - 1,999 4,898 1,664 1,051 (209) 9,403 Other non-current liabilities - 715 - 577 241 2,299 - 3,832 Intercompany payables, net 4,904 4,477 30,552 - - 553 (40,486) - Long-term debt 20,871 5,112 10,938 41 505 104 - 37,571 Separate account liabilities - - - - - 8,079 - 8,079 TOTAL LIABILITIES 28,072 10,592 44,581 17,468 3,981 48,181 (40,978) 111,897 Redeemable noncontrolling interests - - - - - 38 - 38 TOTAL SHAREHOLDERS’ EQUITY 42,408 21,012 49,024 34,477 14,111 57,902 (176,526) 42,408 Noncontrolling interests - - - - - 5 - 5 TOTAL EQUITY 42,408 21,012 49,024 34,477 14,111 57,907 (176,526) 42,413 TOTAL LIABILITIES AND EQUITY $ 70,480 $ 31,604 $ 93,605 $ 51,945 $ 18,092 $ 106,126 $ (217,504) $ 154,348 Condensed Consolidating Balance Sheets As of December 31, 2018 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Assets Cash and cash equivalents $ 243 $ - $ 633 $ 43 $ - $ 2,936 $ - $ 3,855 Investments - - - - - 2,045 - 2,045 Accounts receivable, net - - - 4,206 748 5,519 - 10,473 Inventories - - - - - 2,821 - 2,821 Other current assets 14 59 - 310 - 1,063 (210) 1,236 Total current assets 257 59 633 4,559 748 14,384 (210) 20,430 Long-term investments - 10 - - - 26,919 - 26,929 Reinsurance recoverables - - - - - 5,507 - 5,507 Deferred policy acquisition costs - - - - - 2,821 - 2,821 Property and equipment - - - 2,432 - 2,130 - 4,562 Investments in subsidiaries 68,969 27,544 52,035 17,115 8,117 - (173,780) - Intercompany receivables, net - 4,505 - 7,425 2,335 24,882 (39,147) - Goodwill - - 31,049 - - 13,456 - 44,505 Other intangible assets - - 8,400 18,962 7,040 4,601 - 39,003 Other assets 48 198 - 68 74 1,488 (246) 1,630 Separate account assets - - - - - 7,839 - 7,839 TOTAL ASSETS $ 69,274 $ 32,316 $ 92,117 $ 50,561 $ 18,314 $ 104,027 $ (213,383) $ 153,226 Liabilities Current insurance and contractholder liabilities $ - $ - $ - $ - $ - $ 6,801 $ - $ 6,801 Pharmacy and service costs payable - - - 8,422 1,579 701 - 10,702 Accounts payable 22 - - 834 4 3,506 - 4,366 Accrued expenses and other liabilities 396 182 129 1,387 189 4,998 (210) 7,071 Short-term debt - 1,500 995 353 - 107 - 2,955 Total current liabilities 418 1,682 1,124 10,996 1,772 16,113 (210) 31,895 Non-current insurance and contractholder liabilities - - - - - 19,974 - 19,974 Deferred tax liabilities, net - - 2,001 5,012 1,685 1,001 (246) 9,453 Other non-current liabilities - 685 - 497 290 1,998 - 3,470 Intercompany payables, net 4,965 4,361 29,569 - - 252 (39,147) - Long-term debt 22,863 5,110 10,932 24 506 88 - 39,523 Separate account liabilities - - - - - 7,839 - 7,839 TOTAL LIABILITIES 28,246 11,838 43,626 16,529 4,253 47,265 (39,603) 112,154 Redeemable noncontrolling interests - - - - - 37 - 37 TOTAL SHAREHOLDERS’ EQUITY 41,028 20,478 48,491 34,032 14,061 56,718 (173,780) 41,028 Noncontrolling interest - - - - - 7 - 7 TOTAL EQUITY 41,028 20,478 48,491 34,032 14,061 56,725 (173,780) 41,035 TOTAL LIABILITIES AND EQUITY $ 69,274 $ 32,316 $ 92,117 $ 50,561 $ 18,314 $ 104,027 $ (213,383) $ 153,226 Condensed Consolidating Cash Flow Statements For the Three Months Ended March 31, 2019 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Net cash (used in) provided by operating activities $ 1,102 $ 947 $ (6) $ 1,802 $ (110) $ 1,295 $ (1,838) $ 3,192 Cash Flows from Investing Activities Net change in loans due (from) affiliates - 1,600 (1,700) - - 141 (41) - Proceeds from investments sold: Debt securities and equity securities - - - - - 1,471 - 1,471 Investment maturities and repayments: Debt securities and equity securities - - - - - 319 - 319 Commercial mortgage loans - - - - - 89 - 89 Other sales, maturities and repayments (primarily short-term and other long-term investments) - - - - - 367 - 367 Investments purchased or originated: Debt securities and equity securities - - - - - (1,088) - (1,088) Commercial mortgage loans - - - - - (95) - (95) Other sales, maturities and repayments (primarily short-term and other long-term investments) (417) (6) - - - 35 - (388) Property and equipment purchases, net - - - (55) - (139) - (194) Acquisitions, net of cash acquired - - - - - (6) - (6) NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (417) 1,594 (1,700) (55) - 1,094 (41) 475 Cash Flows from Financing Activities Net change in amounts due to (from) affiliates, net - (141) 2,669 (1,744) 110 (935) 41 - Intercompany dividends paid - (900) - - - (922) 1,822 - Deposits and interest credited to contractholder deposit funds - - - - - 247 - 247 Withdrawals and benefit payments from contractholder deposit funds - - - - - (251) - (251) Net change in short-term debt 558 (1,500) - - - (106) - (1,048) Repayment of long-term debt (1,000) - - - - - - (1,000) Repurchase of common stock (462) - - - - - - (462) Issuance of common stock 53 - - - - - - 53 Other, net (77) - - (2) - (10) 16 (73) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (928) (2,541) 2,669 (1,746) 110 (1,977) 1,879 (2,534) Effect of foreign currency rate changes on cash and cash equivalents - - - - - (12) - (12) Net (decrease) increase in cash and cash equivalents (243) - 963 1 - 400 - 1,121 Cash and cash equivalents, January 1, 243 - 633 43 - 2,936 - 3,855 Cash and cash equivalents, March 31, $ - $ - $ 1,596 $ 44 $ - $ 3,336 $ - $ 4,976 Condensed Consolidating Cash Flow Statements For the Three Months Ended March 31, 2018 (In millions) Cigna Old Cigna Express Scripts Holding Company Express Scripts, Inc. Medco Health Solutions, Inc. Non-Guarantors Eliminations and Consolidation Adjustments Consolidated Net cash provided by operating activities $ - $ 641 $ - $ - $ - $ 1,833 $ (449) $ 2,025 Cash Flows from Investing Activities Net change in loans due to affiliates - - - - - 102 (102) - Proceeds from investments sold: Debt securities and equity securities - - - - - 499 - 499 Investment maturities and repayments: Debt securities and equity securities - - - - - 297 - 297 Commercial mortgage loans - - - - - 28 - 28 Other sales, maturities and repayments (primarily short-term and other long-term investments) - - - - - 112 - 112 Investments purchased or originated: Debt securities and equity securities - - - - - (2,259) - (2,259) Commercial mortgage loans - - - - - (68) - (68) Other sales, maturities and repayments (primarily short-term and other long-term investments) - (2) - - - (204) - (206) Property and equipment purchases, net - - - - - (103) - (103) NET CASH (USED IN) INVESTING ACTIVITIES - (2) - - - (1,596) (102) (1,700) Cash Flows from Financing Activities Net change in amounts due (from) affiliates, net - (102) - - - - 102 - Intercompany dividends paid - - - - - (449) 449 - Deposits and interest credited to contractholder deposit funds - - - - - 292 - 292 Withdrawals and benefit payments from contractholder deposit funds - - - - - (306) - (306) Net change in short-term debt - - - - - (3) - (3) Repayment of long-term debt - (131) - - - - - (131) Repurchase of common stock - (310) - - - - - (310) Issuance of common stock - 20 - - - - - 20 Other, net - (125) - - - 33 - (92) NET CASH (USED IN) FINANCING ACTIVITIES - (648) - - - (433) 551 (530) Effect of foreign currency rate changes on cash and cash equivalents - - - - - 4 - 4 Net (decrease) in cash and cash equivalents - (9) - - - (192) - (201) Cash and cash equivalents, January 1, - 9 - - - 2,963 - 2,972 Cash and cash equivalents, March 31, $ - $ - $ - $ - $ - $ 2,771 $ - $ 2,771 |