CI - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by for Cigna's First Quarter 2019 Results Review. [Operator Instructions] As a reminder, ladies and gentlemen this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Mr. Will McDowell. Please go ahead, Mr. McDowell.

William McDowell

our thank Vice joining With President morning Officer. as Financial today, remarks David update and outlook am call. me everyone, our well Executive a as our will first quarter for David are; McDowell, Chief including financial Will of an of Cordani, morning, you topics Eric today's In for Cigna's I this Eric XXXX. Officer; XXXX Good and cover and Palmer, President Investor Chief Cigna's and number financial results, on Relations.

regarding these uncertainties contained risks will earnings I will note be from making most disclosed, our clients filed otherwise from As expectations. performance. noted the actual outlook not our to release of reconciliation the release we our operations today cautionary measures, when most adjusted financial the and operations, is recent In with from XXXX our results in our are and to the Adjusted to Per current known subject cause financial and statements this measures is remarks our certain describing these to of and for States performance. Earnings description respectively is and Generally you as in differ from net contributions SEC. adjusted and These release some uncertainties same determined and Relations Share uses financial as in use in on of from from our Principles total Operations with the measures GAAP. term statements, Investor today's income are posted We section revenues that could income, earnings results, in as Accounting that which statements directly previously today's Cigna income cigna.com. remind A which the reports accordance earnings adjusted in A and exclude materially principle basis risks revenues Accepted we measures, transitioning adjusted including GAAP future contained in Income shareholders comparable revenue. forward-looking labeled United of

call Before a and over cover will disclosures. items turning to I financial the pertaining to results our David, few

Regarding we $X.XX primarily totaling the and $XXX share quarter to of first items impact in our recorded charge transaction a or per of to reflect million costs. results, related the integration special

described revenues As a today's our in that additional earnings costs. are financial of and development year excluded income any when financial basis regarding future XXXX make prospective of outlook, do operations full share in results. adjusted practice impact release, discussion adjusted performance excludes repurchases that, the note so items our of special comments Please with including from best we consistent we or medical on will year prior from

that New And remind on that, call will turn City. Cigna the to over Investor you I'll Finally, XX, York be our I upcoming Day in May hosting David. with

David Cordani

I’ll in Health few overview levels, then Thanks the client year-over-year our expansion Within examples Eric ever for by joining I'm the growth, I'll Scripts of we today. that Cigna's our our update and just strong In begin the call in deepened approximately innovation Will. performance results. clients, added the provide quarter to highlight differentiated segment our our portfolio as more Cigna customer, first the address Services combined which I'll also you of Express customer's, start $X.X businesses. organic included adding customers growth first morning in on Good with everyone and exceptional execution and of patient million as across I'll customer select the momentum. medical turning business, attractive new financial and service in we is and pharmacy strong team XXXX an X% innovation approximately we customer to over delivery patients on drove relationships changing behavioral our our and a our Today, our call retention across relationships, driven our path landscape deliver results beyond. bring focused our going and growth advancing how of priorities our integrated to financial growth of deepening our further quarter year. to thanks the remain businesses. differentiated and with a and value marketplace. We dental. fully by we reflecting medical of since integrated integration creating solutions a detailed strong in company XXX,XXX XXX,XXX for before value is how to

to delivered government great commercial, helped a start cost In consolidated Cigna's and billion deliver continues earnings. by addition, and was $X.X after and grew and XXXX. to increase XX% significant both medical pharmacy and revenue businesses. in health tax in segments, This strong service to earnings Within a fuel earnings our revenue business to delivered Services Integrated our XX% outstanding we Cigna growth has billion. revenue of adjusted trend growth $XX.X XX%, very Medical Health across momentum with

as while in confidence will to achieve segments EPS very repayment our and debt both momentum flows and significant solid for in strong repurchase. share deploying strong increased Cigna's we outlook performance and cash and we earnings quarter business give our demonstrate the revenue, capital contributions, other made Our results Collectively, also XXXX. generated us first first quarter,

beyond recognize quarter care greater and health first even strong from value need our we environment that dynamic company operates in and system. customers the results, Looking patients our that a

improve engaging regulatory sustainability, As more client our to seek provider with partners. we and community stakeholders continue

choice depth that path and accelerate strengthened by accelerating sustainability innovation. is all we Our of leveraging our implement This broad in solutions improve to Express our value while innovation Scripts combination serve. for with better goal services, healthcare the to and doing this all partnerships identify affordability, and those and predictability, informatics is to proven

Cigna leveraged our provide for me of patients combination how examples and additional recent to innovations already Let clients. two has customers, our deliver

dependent. million these of struggle XX individuals, diagnosed diabetes. them million are with Americans To diabetes are many X to who their about relates insulin. to Approximately first and The insulin afford of

of a their because the for found use decided that on given the launched the insulin importance diabetes to customers some issue, major strength four was for unacceptable the yield insulin cut of and that affordability more can't last study view people back with is ensuring to a of fact eligible $XX for pay of of In than a to they no addresses By our XX cost. harnessed supply innovation We and one This Together, program new supply. greater need day we as for XX diabetes, We of diabetes. customers and people dependent tackle have recent solution with for whom introduction in this insulin. month, immediately. dollars which patient our accelerated for afford the and of when it assurance increases individuals patients. we our day insulin our access hundreds combined pay

deliver created us to solution marketplace than combination for the the opportunity achieved Our faster independently. or could Cigna this either to Scripts have Express

address improving health health to integrating The today. care Health uncoordinated how fragmented our better marked Connect innovating full too or for co-workers, duplication platforms, value customers, which highly revolves launched XXXX. expand pilot in otherwise our and programs it. is system, flexibility this, care by as by able patient the healthcare. help Scripts positioned XXX, to flow to strong to and those strategic depth significant around actionable highlight this health works effective second confusion. progress. using needs, lead to engaged of our cash clients value the health result comprehensive the benefiting who patients. in recently successful The Health today's and personalized XXX,XXX professionals pressing how provides value strategic example optionality. based clear of more Express our Scripts data address approximately are is Connect integration XXX understand creating we're Health Fueled address episodic These financial they most and care. insights our Express an we're customers customer us clients, delivering implementation and making frequently To that tools for our which challenges to by is Connect data want maximize to patients need plans, XXXXX and and ensure when With gets of examples most for coordination holistically interest clients growth good our create rolled clinical We're affordability based the very our breadth outcome into care connects meaningful programs and capabilities to and year The our highly activities, care the care our comprehensively each well platform we're how to Cigna we and Relative the capability patients. dramatically they and us give later patients, approach four care gives partners and other unconnected support out clinical the well and patients our person customers, clinical already covering hub breadth and which receiving programs The which support We've analytics client without direction providers, clients. for greater pharmacists and XXX, personalized

outlook of clients our we score each our outstanding promoter to our year-over-year. business the patients as In Specifically our In earn service first our saw commitments by significant in continue provide for XXXX. and our we're include the health commercial improvement XX% to we of introduced five to to integration this net and XX% executing retention morning look and XXXX. well specifically, which business first foremost, customers, across customer the trust against on priorities XXXX, service validated clients as quarter, our to for delivering

maintaining is The of second retention. priority talent engagement high level

retention our strong early by levels. engagement progress pre We combination levels are above our encouraged which with are already

Third shareholder and is efficiencies. from costs administrative synergies realizing other

with delivering pharmacy track our Fourth, and cost savings. on are medical targets. We

are mind in, insights on drive are Investor to-date keeping progress look into upcoming on pleased top accelerate you providing additional our innovation. Day. and our at we we to to our we program vision forward is as meaningful All We and are fifth, well our of progress with deliver with And we collaborate integration our savings. track to

quarter cash business capital health first across results as company generated customer, growth to debt first strong integrated medical significant including deepening medical which and services, deployed reflect quarter results. repayment and we and and repurchase. both relationships as conclude, Cigna flows well costs businesses to share continued delivered a In strong of the and quarter pharmacy combined Now financial our and our in momentum strong full as

results us earnings for quarter Cigna's an first XXXX. give increased our Our in confidence performance EPS momentum achieve strong we reflect will outlook revenue, and

our I Looking about very per I'll path confident our $XX achieve to the call target Eric. XXXX share. am on that, $XX forward of excited ahead, With we to remain turn and and over to EPS track

Eric Palmer

for review discuss the adjusted first of quarter In to quarter outlook and first Cigna's remarks of continued morning These value $XX.X of earnings aspects and full everyone. earnings Thanks highlights David. per for consolidated Good share year. underlying of billion results Key $X.XX my updated key include our $X.X of results I after XXXX our today, the financial revenues will cash we reflect business deliver flow. tax, billion, operating strength and and customers clients. strong the our

comment I’ll health on services. first our Regarding our segments,

were First expectations the volumes reflect the in with first pharmacy results $XX.X $XXX million Express our XXX quarter million adjusted execution million. following health with fulfilled pharmacy. first and good focused quarter our in of reflecting for addition services growth year-to-date the with X.X Results Scripts. strong pre-tax quarter continued full and quarter and revenues organic earnings Overall, scripts performance strong delivered billion pharmacy quarter customers combination specialty with in and consistent were first the and

the $X.X our trends, driven and the customer specialty and segments. Integrated segment, to quarter market of by growth customers business. Medicare reflecting premium ended and expansion our D with XX% increase select lives in inclusion of Scripts medical to growth an quarter by lives first billion first XX,XXX growth million of sequentially Turning revenues Part underlying driven grew XXX,XXX and We by global Medical Express organic quarter-over-quarter cost XX the led relationships, middle

continued grew medical XX% First medical billion $X.XX management. cost and contributions specialty quarter effective to and earnings reflecting strong

and effect performance in suspension medical MCR pricing XX.X% ratio of continued total our strong our MCR, businesses commercial medical the care Turning the the and government health both our cost reflects quarter first of or insurance to tax. of

year Medical Integrated earnings in start prior had of reserve with XXXX. XXXX nets million $XX from Overall, strong pre-tax Cigna's to quarter $XX First benefited first pre-tax Integrated development quarter million Medical segment a the year. compared dollars very the of favorable

were unfavorable $XXX our to $X.X to movements our term by business, business international markets foreign growth partially earnings growth. and increased spending to revenues billion and currency reflecting to Turning quarter strengthen first further offset million long capabilities

were revenues and disability quarter first group operations segment, our $X.X For other billion.

with million disability our earnings life were segment strong performance claims unfavorable quarter for partially this $XX First by from business. offset

segment, by our our primarily and loss Cigna's Overall, For XXXX discuss million million quarter results I and driven earnings, quarter will customer businesses. interest was Medical strong our costs. Health now XXXX. revenue $XXX reflect of growth Services by $XXX outlook corporate for the led first Integrated

As our proud we for results are full we and combined organization, focus clients. completed a our we've and first quarter of as customers have the delivered

Looking to of to our deliver predictability and considerable innovate ahead, and businesses. our as clients have for we portfolio we customers, continue momentum across affordability

share. For contributions. full This consolidated specialty our year represents $X.XX represents to expect expectations per now the be $X growth operations from to we to and billion $XXX.X represents to XXXX. full $XXX.X billion pharmacy over range per XX% in now prior in to prior the customers of in our of $XX.XX adjusted range revenues outlook income share in consolidated billion. of growth $X.X adjusted or year to to reflecting an increase expect an our XX% $X.XX XXXX, billion increase over $X.XX This We of $XX.XX

Regarding million this the the quarter earnings now share $XX prior year cadence reserve original year. our the favorable first contemplated in earnings outlook. year, not of half to we XX% our of development expect recognized This XX% in of of first the now includes is which the in per

expense million continue expense range over in that contemplates with the ratio higher of planned result project previous XXXX, an in which to our of efficiencies $XXX ratio due For to reflects and of of to the expectation year line ongoing a pre-tax. expense XX% we our XX.X% synergies administrative than estimate XXXX ratio spending. I quarter would balance the timing the first note also full

tax consolidated XX.X% the range For in medical our XX.X%. for health the outlook XXXX, now integrated I'll we adjusted of segments. and project a services continue XXXX to rate discuss to

the earnings billion business, to in pre-tax expect health billion. we of continue range For $X.X services full $X.XX to year

billion and range specialty We would operations. continue X.XX all of to order X.XX range associated scripts. to Cigna's note expect adjusted that billion with pharmacy scripts includes in this volumes the script May pharmacy I

In addition Scripts to Express scripts associated acquired with business. the

range Our previous pharmacy core X% in Express Scripts scripts. XXXX expectation X% is guidance to adjusted growth consistent of with

not OptumRx. pharmacy script associated Integrated volumes XXX,XXX continued customer of of pharmacy include XXXX does with customers, the transitioning from expect medical script outlook growth of reflects from in Cigna performance Our this $X.X $X.X strength growth guidance billion now range does and expect in include deepening our our earnings for key businesses the growth, assumptions organic to of not we to and strong range to range consistent customers. volumes clients. following; outlook metrics with And expect This for Medical global our Medical transition earnings we segment, include year all cost Fee the XXXX by benefits in guidance We full regarding XXX,XXX medical in Integrated relationships, driven performance. billion. the to customer reflected continue

to the employer book of be U.S. medical the for costs, to medical in continue range our XXXX range in of And expect of XX.X% to commercial to XX.X%. business, cost year we trend expect X.X%. XXXX ratio to to care be to medical full the Turning X.X% we continue

updated adjusted for for those also contributions All full or in, and from reflects international platforms solutions billion combination strong of remind outlook four impact our deliver of development. to share. any the repurchases we group we XXXX. as future continue per outlook billion expect This consolidated to fundamentals more Overall, benefit strong growth continues our XXXX, our you affordable other and We income prior to I'd represents over and by expect our share of the operations to businesses personalized markets, disability year $XX.XX of serve. differentiated XX% accelerated that reserved Scripts. additional $X.XX growth growth XX% now also the $XX.XX our they with and to exclude $X.X Express year from

confidence expectations per XXXX of reinforces achieve $XX and to per share. Our and target XXXX multi-year growth our consistent share outlook, is our ability to our with earnings also $XX our

capital Now management outlook. our moving to XXXX and position

to free well long-term subsidiaries and returns to flow them exceptional expect and as reinvesting and with capitalized we growth cash support continue Our even capital to continue drive we remain strong innovation.

is upper our to our priority XXXX. the ratio capital top debt deployment repayment previously the As returning debt capitalization of objective with of XXs accelerating end communicated, to the by

we while expect leverage reduce years, Additionally, next additional over we for capacity the capital have two deployment. to also

to growth. capital drive continuing further into priorities first, reinvest back Our and our are businesses as follows; innovation to

we repay shares basis. to quarter, first million. $XXX $X.X targeted M&A returning third, to million priorities with share capital the deployed in on shareholders, stock strategic Consistent and debt billion a we Second, repurchased for primarily And these through of repurchase. X.X

in XXX,XXX repurchased for April approximately of Additionally $XX XXXX, we million.

Our XX.X% of XXXX. December from was ratio of March debt to XX, as of as capitalization XX XX.X% down

continue year, deployment expect we XXXX, to and debt to to $X.X $X.X of approximately billion. we repayment available project expenditures. For capital to to $XXX for million approximately the capital In deploy billion continue approximately

balance and benefiting orientation capital. Our and from flow outlook on efficient flexibility, strong returns cash drive highly margins our service free remain based sheet strong strategic

the consolidated throughout Now strong to our and results delivery us momentum reflect of we year. execution portfolio attractive quarter as we've recap, give well-positioned XXXX. established results the to and XXXX business and The we across focused and our global our first are are of financial sustainable fundamentals strong diversified continue of targets to businesses achieve for

call. $XX target we'll to our toward And operator good to in the of over our continue our have for the the We that portion to XXXX. earnings are line full to confident with of XXXX year it share earnings $XX for a Q&A turn sight achieve ability outlook and per

Operator

of question with from first Kevin America. Bank comes Our Instructions] [Operator Fischbeck

your may question. ask You

Kevin Fischbeck

on the it by like Healthcare guidance development guidance quarter. behind you've business, a want I in color raised range. the Integrated looks the favorable to the more on drivers Medical little get the just bit Because essentially

favorite In fact little if to sure underneath full there's that to else kind EPS versus, numbers more versus the though by development raised X bit number. XX anything XX number. XX favorable million then a the the Wasn't X for -- year on And a going than of development.

to just other are or a that parts understand any that? kind underneath repo moving -- So that's of there share try

Eric Palmer

low the the On Medical we the the there. first you've of amount think Raising the quarter end got through development I I reported at earlier call the year start Integrated the good no the metrics enterprise. to of the other noticed Really our the for year range. that pieces headlines That prior the segment translates in our into essentially year. in about by right feel but raise, have to

just terms it the the full the share In of as strength then count. results number of well the as reflects year updated

Operator

Our with Rice next from A.J. comes question Suisse. Credit

may your ask question. You

A.J. Rice

to the I how you business are I try reporting, guess a we about just that's as Express to want way get ask and D moving of got Part the you've to transitioning? used you're parts, there number think of division out over the transition Health Services that this time XXX declines. costs costs over, million as you you to moved stranded were the year of over the talked absorb and about going last I

internal I your the about How performing on any can the up was you're a next is high that the into selling relative number. accounts some your year? seeing Can covered obviously relative talk press season to think you XX%, more comment year. new lives EBITDA expectations? pick to comments rate maybe That's you on show and Express makes growth the legacy -- chance about release, in and what how a then just XX% next the and retention -- and you heading to expectations little business

David Cordani

about framing cetera. a little earnings ask transition et metrics with and then bit marketplace. a Eric talk the results specific start the how going color the on me in little to the Let just is And

macro First and performance. expectations at the line strong. pleased it's level, we're quite It’s with the in really our with

The Secondly, relationships service are our execution as the and noted just Most we're of the not the together. teams that, customer performance in I my quite there's the there's there proud focus importantly from well we've into terms standpoint. some bring integration well to and patience strong ensuring working to been elevation center innovations comments. prepared client within plan that of front the putting And plan. We're and of already continued then disruption marketplace. in able only no targeted integration

outlook with We'll within is ask but background talk new able XXXX on value of hand the expectations retention, kind a moment. We're another the pleased of as to delighted winning to with then health strong, with relates of it's the current a from year plan proposition to retention combination in service standpoint business hopping a performance, well client redefinition about a I'll to to clients, talk back delighted very new little I'll coming the that. beyond resonating pharmacy and XX% Day medical outstanding traction are but our results, that in and commercial segment strong and of business delivery takes comprehensive the to that the Eric and to line strong, with in the a there. well. bear so and cost outstanding over for cost, XX% puts we're As Investor bit Eric with more we're results be the in performance, terms we're again, Eric? clinical look obviously providing retention within performance the forward demonstrating the about it's is update

Eric Palmer

to Express when was The with Scripts dynamics. the impacts major couple consistent The of is a headlines result here, moving had compared overall the we've expectations. resegmentation pieces headline prior our

Integrated D Cigna is As Medical the operations of now you versus are the Services segment, primary as noted, prior Part of the moving the Health period. some delivery part the pieces of part home segment business legacy

with the be items particularly were and expectation. specialty our the as right overall. are pleased Services just but in it with there Accredo Additionally, such the in the conformed and organizations line headlines And businesses the I'd we've again strength practices performed Health know business across different minor would the actually

Operator

question next Our Research. from comes Lake Justin with Wolfe

your You may ask question.

Justin Lake

very its color I little - PBM you you on on the give on the had follow to A.J’s when can on looks the on I integrated what a it up year-over-year wanted like medical Cigna strong is did Scripts the it growth do the to clear more probably side down and but great was the mail year but order. all mean, Express look PBM I quarter into was PBM. year-over-year side. actually first, look I us up Can it on the the when a match Just at resegmentation question last add

just So wondering you us to back more or Services help year-over-year? I give model the maybe some are of Scripts going stated between this am forward business was what terms growth moving if parts the color businesses in transition and two thing at us another forth that there way, those you might Health actually have know Express

Eric Palmer

at to further Two, in things expense resegmentation The just lines. little accounting just level EVI We of of that number about my along those metric of the in prior terms on. items a there's perspective of through answer talked from but at of costs it also the any those normal had we've are policies an the one items. couple been different Express operating a question. ongoing including there's in terms would Express lines we’re minor that segment the A the note initiatives and that this items along and that difference line Scripts move expenses other versus a quarter biggest on and things of of just were timing to prior terms Scripts timing things such launches in the and We A.J’s have of Scripts of that And bit so looked drill part than. little bit had expenses, in in driving announced. previously of generic the below kind previously different as Express differences there

when growth the that to So all a consistent kind as and pull for we and on again well. be for quarter you our of look business at overall for expectations those out the track pieces with year nice again, guidance, of full continue

Justin Lake

up line. then just a And a quick on follow membership

through I where you're should I are sequentially is I that year-over-year flat you history you on was covering the Your side, -- give come say color or little the know expecting the from that guys the year to know a loss of us hadn't growth double-digit membership stop you loss year-over-year. quarter growth. fairly in on premium going Can still first company. stop specifically the a and my was it growth still seen

talking terms market. call more about in the you similar was of to there curious stable premium in of products impact these product, them. these So I you're competition everyone with the want if I'm curious whatever Thanks. what just seeing you're seeing

David Cordani

the of retention from a Stepping pleased services have we XXXX specific we're performance pendency book priority to the well the macro health in trajectory we're look we the to noting combination and as here at in business, our $X question, pleased of exceptional with really to growth we as growth had discussed. our medical the across elevated totality a as the we our XXXX the First focus into by and integrated a as standpoint the billion our outlook XXXX, critical level, as on ability quarter. previously retention of of with the performance stepping increase business revenue back and first core your

deepening significant the remarks success the million further in in Secondly, there relative XXX,XXX to and additional relationships intensified focus to my relationships. addition that XXX,XXX I additional prepared terms relationships noted pharmacy additional in behavior dental of X.X relationships,

the half XXXX, power we strong in as second additional the performance strong year. the throughout course to the business, remainder especially and continue, retention we as underlying the business of of in perform the importantly very further the the well year integrated medical look new Select expect as Segment of deepening to see market As continue, middle

our and intense we to taken a result, start with integrated So to whole, a outlook the deepening relative as see on and good paid we're the pleased growth. off retention focus

to pass. traction in change relates loss, stop As no or

see about number approaching our high the integrated nature or just we think on maybe having highlight, of not is having a just single-digit continued performing the well nature our XX% I XXXX. it's nature And traction. the we shelf outlook we're I that product would a Not to X% resonating. very pivoted and excited programs are that integrated and product and for coordinated

Operator

comes from Scott Fidel with Our next question Stephens.

open. line is Your

ask may You your question.

Scott Fidel

I'm came expectations then pacing in you returning also just can about how to and the us year? in on in context the of final relative your next MA how of MA and expansion just interested if the geographic half thinking update at rates this XXXX point you're

Eric Palmer

are about next the walk over thinking we do. how start you consistent been typically that which market-by-market us, weeks through I'll we'll as it. the of a here in on and few we about results X.XX% it'll bids We're be with rates our the for that is is estimate basis finalizing we've course

expansion Let path. the David comment on

David Cordani

the growth XXXX to of Specific to the to very to of continue see year. pleased expansion that it To very macro XXXX individual with throughout fuel as expect begin focused HMO and to market a growth growth to MA, attractive portfolio in course look to marketplace. beyond, your we question back our growing We're by point. local see expect and we the core in we accelerated be the see your market as to

new well that work have meaningful market our with amount underway. for We a collaborative is expansion of demand and partners

to expanding focused offerings very offerings. in-market third, and of continued our portfolio HMO off individual of our I'm PPO of Secondly, solutions individual growth portfolio

businesses net-net, our the outlook on So portfolio medical without performance. the movement fundamentals the growth of about for of cost that excited we're or with half core

growth a relates we're and the stars Star four entrée for to in programs. lives corporate signal having relationships rating excited access Plus collaborative Our accountable an market having star to new our XX% PPO about half marketplace, outlook and Having the individual of there. care a as the four whitespace of

Operator

Windley Dave Jefferies. from comes question with next Our

You may question. ask your

David Styblo

Stybloin side. for of couple It's questions pharmacy the a on David Windley,

on retention color market, know rise the at describing next In is we upside XXXX to I'm how about you of that can year. you to with are there that market be second that’s the of much XX% of book years guys as And Scripts? selling figure. Express season how within evolved market messaging addition David, the this the for wondering the going the I'm all in XX% might number you of move curious, do First, how appreciate throughout up, point. or words, other the to as

David Cordani

way and portfolios think plan about Service to commercial think essentially the The client that that the would the XXXX And the about portion Health business complete. about portion it I portfolios portfolio, completing. health as of relates think

be the XX% XX%, terms of there the variability performance really delivery proud service our number`. promise. organization's feel good about We of in in So could of and some the

So that a I to putting the burden readiness of intact, to one phone their understanding very based call bit incentive solution the to for to value their their standpoint. add The market suite did collaborative portfolio. and to the strategy, break But relative the significant breath book with in help population, drive a market best to us as which change of our solutions to out solution opportunity clients, A the foremost, specialty conversation nutshell, relative from first programs about at it proposition. could our and than their client-oriented the as through staying time aspect programs on we think that a tremendous have proposition value them. flexibility culture, for is to and together further approach message core pharmacy is works and each that a way consultative relates defining pharmacy and and strengthened longer in

go same could value set who to offered proposition proposition, that with a clients, rate forward. well of the relates that Health services commercial the as tools the want clients expanded we it is plan and ramped programs exists, broaden to pace of as up being health Services As and and be broader core that as to

over at engagement-oriented, focus, creation a we we come which very enhancements So customized one be as of core modular the same, time on designing basis But to the customers for and advantage capabilities significant pushing strategic client our as forward. client on with deem oriented a evolving is and across value around benefit we a that clients solutions it opposed to the those time portfolio. product them

our You feel of more to can expect Day. at Investor that

not we it capabilities behind demonstrations only words the with to but As our some some bring of life, in programs. of

David Styblo

how for of you persist how can of a much drag it's you that to the And business that or improving disability, And visibility quick not to know spike on drag do was, that really that the rest going some part the much pressure was. huge the of at year? but have that real I

Eric Palmer

insurance some on but we in disability piece, pressure line That the there March. quarter actually the that life continued in has On and the January, at the back business. is February flagged fourth disability normalized in and favorability

mention want targeted not and of it of context in we the what in to And small performance. So, as levels call February and here think back of but enterprise certainly. March we’re normal to

Operator

from Raskin with comes Instructions] Our Nephron question [Operator Research. Josh next

ask your question. may You

Josh Raskin

thoughts Medicaid ones appetite your you get you operating and a versus to capabilities the in Medicaid now the need more maybe specifically, and bigger today inventory would created wanted maybe integrated develop? of and think you of I entity sort Cigna space for an guys then to on size have as what has your

David Cordani

stepping I'm back. first So

As segments the our of to we've outside growth prioritize know, targeted marketplace. segments traditional Medicaid you as in continued

priorities of that look highly risk state You'll population we to them programs or the portfolio see serve based going also portions health correlate based attractive providers based. that and take innovation at we performance in see past our note we're to state as we and have within We at the clinical as time. inorganic our risk service the that Two performance that around are believe that reference, highlighted one level offerings you serve and of is well. we today, based Medicaid a over integrated accelerated is

for a over the lastly, over using franchise collective specialty In then and both, of a growth opportunity fact, the time pharmacy, best services. see expanding recent specialty servicing the And meaningful Evercore of them again the wins to terms as in of pharmacy time. space this in platform the relative from of Medicaid we

physician's coordinate could the we're orientation the of have obviously terms highly services through part long capabilities engaged and One, part the the population the we today question. the Medicare of core that quite programs like. the office And from successful take today our of your social today. care We the base two, charity home or we continuity through value Some through that the to physician the whole servicing the dual and to and of person healthcare out coordination enter point of in eligible drives the that dimension. last proposition term care

essentially within is a quite clinician have for capability capability prior an credo the are pharmacy specialty of about we Americans. conversations is as he fulfillment all through drive you of hour's think XX% at credo a Secondly new powerful. home And

is So of the from ability to go beyond into the standpoint. services home services with quite that important specialty expanded

platforms over a So just opportunity and see as a as we as capabilities in on potential basis it evolves. growth time additional those of marketplace Net-net today platform some it growth we illustrations are today. we the have see targeted both a the of

Operator

Our from Steven next question comes Valiquette Barclays. of

You your may ask question.

Steven Valiquette

deflation. mail of a just to want the in deeper business trend discuss drill you're PBM little with overall? in the impacting so also profitability Scripts Express far maybe that business. particularly But order contrast that. on generic that able affecting be may to So for XXXX in may just Thanks. profitability this if Curious compare moderating be bit Cigna the How the how and

David Cordani

David. it's Steven

Just big in past. picture we've the discussed as

manufacturers to And and were as as to with well that. clients continue pharmacy to Express evolving at deflationary sure well the as environment services to call Cigna. identify Scripts it recognition products those Looking Scripts that as Express early programs to broadly, make and relative they the the as more

total balancing a low We’re early quality. proposition to committed cost and appropriate deeply obviously clinical

long the you're little revenue is as a although may for traditional it aligned partners, positive sometimes pressure across your with put decelerating the corporation. on a a environment so board actually net of measures And the

a our taken accelerating a we and health be see trend broad So the commercial approach environment. decelerating clients. with funding moderate actually accelerated mechanisms strength the services, of a both our alignment well broad or our Is client or having of as portfolio manufacturing portfolio to to they partners as as that able via clients to whole relative

obviously on tremendous total that clinical As we by fueled outcome, low a is quality. delivering cost service and focus

Operator

with question Capital next Markets. comes Our from BMO Borsch Matt

You ask question. your may

Matt Borsch

integration Yes, hoping terms milestones I could, have that the touch just was in what that just on major you left. of you are of Express the

anything through top As to harvesting opportunity there's in on that? this also you next and year of work that year realizing that, goes

David Cordani

our the we’re priorities whole. Within successful we of clear days those. the In after specific remarks my that as a five comment prepared our that on we for combination on – closure I focused remain and have organization

the that and outlook perception outlook back getting in you importantly sustained or retention our customers there that we're So delivering of to outstanding way service of no MPS guide terms is our to clients what reality our accomplish. of promise. ensure reinforced to in on phenomenal delivery our and seeking Most disruption that. And

our up next the year transition have assets the our course XXXX. core targets leverage and completed place the of the expectations into and takes into place leverage for of this on legacy assets the this clients. milestones And in and Cigna that benefit we're PBM for the taking end by phenomenal continuing capability internally Prior Early throughout and the step be course of of year. comments of as to will further line with then year specialty throughout XXXX of XXXX and of Secondly clients. the we that's Express Express benefit throughout

that. at clinical approach note Partners about less work to talked programs So final and something accelerating, with relative of services. a is products teams Evercore our are and targeted On a very our innovation planned deep full

of just benefit is tremendous there's service and clients the plan excitement in-house for and Now programs for for called just commercial integrated and so additional based portfolio, our but products that services clients. not capability our health

five well program capability the priorities of be XXXX, specialty remain, pharmacy well right Evercore the leverage track, development broader by So we're Express Script the on underway. completed will well and specialty of the end pharmacy being accelerated underway, and of now is

Matt Borsch

event dear consolidation and within up. to where Is that operational that pay ask might some follow there stuff particular type risk. near all to know attention is I or a some to there just you of of I that, system me one had there is you? mean be Let

David Cordani

Matthew very it. appreciate important and

in owning operating PBM. context history well of the to in have long a marketplace you are as put innovating very back and So stepping know we

same customers. managing those and our of That approach terms this of relationships and In benefit partner clients our time being growing modularly to service for partners book successfully outstanding with and is history and period of integration service Cigna activity. of over the while of a delivering taken results the business long coordination successfully

disciplined to transitioning will great Scripts our Secondly, with we're planned disciplined XXXX like work I'm and paced from XXXX. a timeframe very Express between approach. and some approach hurried today a that service to taking partners over last Optum very not a full and

last in not in there fashion transition. no a dozen is our years. managing very moment one for orderly platform and proven half record that modular time we'll the leverage It's of or track way So one and

Operator

next Our Tanal with Sachs. Goldman Steve question from comes

ask your question. may You

Stephen Tanal

making a re-segmentation in the given bit I with challenging sort of everything commentary line around compare but expectations. seems guess of tracking helpful the it's results to underlying like kind

of pattern the to how kind double-digit of accretive different of understand better clearly So I as is to And and synergy cadence seasonal in couple that level deal is earnings still expected points be ramping. you one. express high just accretion a wanted frame the a your would year

the of sense of quarter? sort growth on Medical the in for balance the over So upper year. cadence just the increase in full maybe as and did to earnings amount get segment I'm pre-tax the And trying PPD we the not of well make that guidance by why your of the of thoughts medical sure the dynamic Integrated customer the bound understand the process

Eric Palmer

start Steve it's commentary have so add David just then Eric, some I'll and well back. additional stepping as

announced in we ago, when over now be our year just of the the talked the color there. would the about that full expectation to teams year we operation first give combination So transaction a accretive

be such didn't of We're individual particular, we in strong We terms Now in our that our off the up so than in step with components things, where into targets that of Scripts being year a the the quite them from terms course are broadly of of had services plus. performance point. but for Express from stronger with various time. in our those results When a well. for lot's expectations, most line were line One, we in XXXX the and noted a and generated that health Two, you last business XXXX the the finishing we in we've guidance Integrated sustainable. anticipated which for in at in still Steve some the year pieces happened jump believe business and issuance of raise over with year. XXXX the are book to we initial as a ended bit that's and adjust the be such expectations of and expected to income down as Medical performing factor

year just that development, from question so the the range bottom And of those really last are by so then prior the in end of on acquisition range perspective note are prior why terms amount a your again have development. again Again of the the in of And year the up pulled that's case outcome it's the balance part on the the we over the our early variability the of pieces. we of year and year. brought

David Cordani

from you efficient five that picture just to six And of Steve questions and your to I or one recap kudos think the core pieces. standpoint question. quite couple into of Big to fit, foremost first a to

Our commitment to to to that $XX on EPS we're results XXXX. demonstrate of our deliver in $XX track

the the lastly so results feel plus all mid early teens of cash we and about XXXX. this for free And the along EPS has the just results Second, first quality Eric the tremendous quarter the which the off post of reinforcing the that kind raise we're as the in way raise flow production with but year underlies XXXX able outstanding great to here. our year, growth in in reference

Operator

Ralph Giacobbe Our Citigroup. from with next comes question

You ask question. your may

Ralph Giacobbe

XX.XX And wanted that like that employer we also ASO to of the I was segments the the up. down. needed flat figures was this slightly to consider there to Just know risk there's go but enrolment looks

Express. better And So so you maybe any when that's that happening in maybe either And national anything account show to the and Thanks. out the base employer there. mentioned market start call you of the larger then think could see with now the and just to you with losses growth? perhaps positioning kind your or opportunity details

David Cordani

our set indicated the with the revenue that. we're early growth. again health with in first trajectory the billion stage ability growth $X relative year quite with pleased outlook points, revenue the into pleased this A increase couple to by previously as And really the to XXXX to we're stepping

XXXX had results. we XXXX an potential further perceived as our eye of acknowledging the the intensified well in retention and toward transaction on with disruption Secondly, focus deepening as dependency

more of deepened than although look attractively. as our at relationships a come we to further we license So quite singular And important I'll grew a growth that growth specialty quite customer measure medical measure. is holistically which noted

year. Medical good Integrated the to the about growth we for relates customer our full it As outlook feel

an again looking continued portfolio to services combination specifically, expanded the the July to be As second an in whether of relationship performance to we're larger of those more portfolio half the bit and the this a within market see middle again specialty of so is a portfolio September or little combined But There's accounts a of retention have had at trajectory strong or residual your had I will for the We important a positioned important X/X/XXXX. noted final that of an important that that July portfolio perform those relationships clients of for month stronger the is lighter X context lighter. we or national had in part that. best note relationships deciding year we'll an the corporation, not we with deepened a way an well. as month the and will rate and we account X be tends select throughout year. little Last both. year expect relationship year a integrated with On portfolio. in for sowing we holistically further

segments the go segment the see a on a revenue feel result be contributed again whole growth just really for good taken again one as So not about you'll both we basis XXXX. through forward

Operator

comes Our next with from question Leerink. SVB Ana Gupte

you your ask question. is open line Your may

Ana Gupte

again segments on for and is of this against to stop Just following needs and it days whole look house because down is early or question [indiscernible] because those single. we of is is your slightly at obviously it transition exit goal [indiscernible]? you X% up again fully broader and this evenly perhaps stated XX% Express the and be self-insured overlapping insured is or of convergence you don't that Ralph in here new a from [indiscernible] When exits have because competitors the man that’s there can on some like difference

David Cordani

but do the think We background Ana was The competitive the with to be bit answer landscape. a is not the I We to in got need simple competitive a has the question see it's relative David question. last been, no. your noise to it of core hear to It environment. change you to a of I and is, continue to we your part will continue hard value outstanding performance deliver need to innovate. and

as to from segment integrated outstanding full very zone and XXX go as opposed my Stop remind a guarantee and another had offer we’re the and us Select both this performance our year we costs XXX in integrated selling in Loss as marketplace as remarks bundled that our I quarter to offering XX that Specifically, I we ASO in offering as of have for year this choice offering in core that expanded well prepared you an continues a well resonate as full first to portfolio the forward. strong we'll strike XX but noted is successfully to to year.

ourselves competitors signals defined. the that for see growth as marketplace Specifically zone those to the that essentially the traction portfolio lastly definition with. employees multi-state. relationships. we seek go It's services pleased us And deepen as marketplace one and our in where marketplace and selectively a that see a basis smaller forward national on we deepen of will we're is enable portfolio, XXXX we larger not relationships whole a but commercial And strike organic right that more either that as our differentiate account of many a an to early we now than then and or just to

with position net-net for and XXXX the So in we integrated second the that we we're result the especially with the have happy pleased half offerings we're marketplace. have

Operator

with from comes Zach question next Morgan Stanley. Sopcak Our

your question. may ask You

Zach Sopcak

which the And it's on like be savings going seeing the then pharmaceutical the a any but clients response either want insulin forward. looks XX,XXX to would expect patients I the program pretty categories use was Thank about XXX%. to early states I Assurance manufacturers. diabetes that like uptake benefit models is a the disease close feedback or know from that or to by ask early Program. translatable funded other would being you. other are It patient I

David Cordani

as specific couldn't disease and positive that an appreciate. front can is that extremely which that's meaningfully states client as over to early accelerate ramp or expect well innovations predictability. our patient noted is then now. customer of other example their level We're the and front the and question of customer of team burden provide with we affordability as looks patient needs center and of And at would core the the So, that adoption right and power on your or essentially time. combination puts to feedback and and go pleased to alignment focused again be There aggressively for there rapidly more and partners on details. To that we platform competitive through of able to reengineer time I well center very within all a a We're that able a on we pretty relationships pharmaceutical don’t is health manufacturer about that just we as differentiator. predictability. the put It's importantly and with

affordability into size the peace a opportunities more to marketplace set population stepped be address of exciting to could the be needs and we the and customer of and that leveraged of view give and specifically to further. to this. patient But of mind, platform diabetes the insulin derived So able predictability because

Operator

from Costa comes Peter Your with next Fargo Wells question Securities.

Your line is up.

question. ask your may You

Peter Costa

margins. we bit see look growth about ask, know proposed services a combined that little pricing pressure based what new and like combined commercial and Medicare you you way potential spread - the A.J. We pricing narrower when have drug in and with to in rebates, with could pricing to Justin worry strong member giving may in the that the we area. health area and margin benefit based pricing mean worry know legislation maybe rebate and that Related retention pharmacy transparent rule spread on is

my move if we Services pricing. you Health So fully think where to going transparent that were you to here? is is see question margins, we're where And would

David Cordani

a Let me this couple put in blocks. of

a phenomenal to that the them day-out. is commercial the back view exists our our a programs and trend First client is our they're and of It's expectations. prove accelerate you been puts as the customers, to right of something direct drive more the not need aligned from costs view as with And us deal see We fair of able that allows foremost, patients portfolio, a result, to expectations, when Regrown we delivering are basis Health today forward us transparency with what day-in, and affordability phenomenal clients, will you go a see total to of proven as margin they're a forward. us with the and for. we're on innovation opportunity takes that's that as more well to type our to we with our higher get transparency embrace, lower organization what and alignment to innovations allows drive that enables strategic question, but track your with X.X%, value and alignment and we've sustainable of and Services and quality for in because perfection in margin strong, go to value they're that alignment. as XXXX of to levels expectations. basis. the pharmacy and they're get delivering an and allows on we our an line passionate shareholder all and forward alignment the to shareholder puts This we our margin strong that results advantage. with service retention. terms clients we retention go return delivery and That's deliver aligned the our be products as a of in additional correlation balance levers are takes a There total Two, was friendly

The to fair make about ability value components in opposed are able is those it So to we've a rebates whether the the be in cost, portfolio. sub posture ability total proven work in otherwise, or of and pricing, on a we total proposition movements change spread margin get to the it. excited return changing shareholder marketplace we're resist that innovate sustainable to we're sure to lead have that as through and because to

Operator

comes question with from Sanford next Wilkes Our Lance Bernstein.

open. line Your is

ask your You question. may

Lance Wilkes

at at at at on you're XXXX a margin up models a the to coming maybe had moving so PBM.As will business that in really life it I guess the sort is of I gets then wanted And for you average average that margin XXXX new you're to a that point? that looking question total margin than your something client coming have business kind the outlook that, contract. lower it target this are in you're risk and over doesn't does guys costs. guaranteeing something move pharmacy to kind of PBM or or piloting of Is looking how interests a new related full is slope a and at that of where things or

David Cordani

questions. the appreciate I

reinforces of pleased big client-by-client expect with slope As approach in performance, picture to back, of you pleased the going what decisions the of the and with results, that client tell marketplace pricing stepping or we deepening the strategic alignment because the innovation retention business time, though company everything we're new the of the a coexistence forward in financial curve oriented at around positioning is, going we're one and that. pleased and the do are our their relationships the is with the made outstanding not our with growth might sustained you

the to continues So we're pleased a you have positioning expect new from organization. with would in standpoint discipline the and the us business

in again portfolio we the client-by-client there's portfolio but perform to for we then we're and time. or making guarantee we of Again we and forward. capabilities with marketplace, is dimensions or financing the have to both size to otherwise that. putting see And we of the as embrace it's As have a we're programs as us of services guarantees doubt alignments in we track deepening comes place all driving as performance knock the advantage it that's go one alignment, all client for do no a change it to examples for well on Again and the the your program relationships fits within something in. that able side at be sure relates point, in appetite the that there back record a one in as of portfolio partner, not and or and alignment put an we your otherwise integrated the and the and a second wood

Operator

with Our Charles Rhyee last comes question from Cowen.

ask may You your question.

Charles Rhyee

we cadence clarification on question about health wanted first then how here think just -- to the and sort in services. of one probably I the

we question look because earlier look it at last your this transitioning is perspective. believe at a is the know way look clients to year for -- the compare the at it think included results taking Scripts, the the right you I before about to ago I was Anthem, existing You when best now to so compatibility results out best asked former way is do year Express how

go though that's our for know you end about guess a on traded on in terms of results costs. that year us Can into services you loaded is front some million the You clarification kind give but I impact talked question my And $XXX the the Express as should in then that of terms thinking know, anything have and a sense else model through it as we related you of be of cadence lastly should to then is in that we taper the we terms about rest Thank there off we of out. you. year.

Eric Palmer

our there. foremost you with one dimensions couple that of growth different deliver wouldn't line have of first quarter a a we'll to on want my timing several But prior in as you'd difficult. moving in conformance and then encourage dimensions number and just year-over-year, different in there. expectations policies the adjustment different mentioned answer line pieces, of between on items performing of that is punch full quarter-over-quarter there that year The comparability make I'd the and quarter-to-quarter to just resegmentation are expect which There particular the various though and So of so I to there. normal, a you touch and well types question

costs part function stranded a a identified, in second the The of couple million things. question $XXX we that your of of of that's terms

of of the to end course have the the that I Medical the as the the year lines. throughout Integrated And working deductibles the the just tends earnings front customers see down migration, year got offset think base additional higher expense to those not volumes works and tends this come We will to across those in things of in effect the costs haven't interest the Think of half the quarter-by-quarter builds we the year. to income items effect have dynamic But segments to synergies the least of terms so over we'll part of continue our loaded specific XX% services deleveraging enterprise's other a build the we've clients think of XX% will working but that where throughout of top other will Scripts over beginning On but work Anthem each the the business over in in of along so as and and of first as more the year last provided the income the the again through rightsize of their the the be with will that year increase remarks income in year be transition as course guidance. - then you'll result. Health terms expect the tapers and be year. balance things other their the in throughout and out. in the about year decline year. the reach historic my of Express note sequencing the of prepared the to That will as

half normal income So that equal. probably the back to an all year” towards year even “a of be further the the than puts

Operator

this to At for over I’ll David turn time the back closing call Cordani remarks.

David Cordani

Thank you.

target and Express execution Collectively against financial and like integration term quarter our quarter from results $XX, Express discussions. deeper with per to we Day growth, forward well driven this Scripts key will call demonstrate achieve of remain up businesses good relative strong outlook we results first our five as highlight first today. our confidence as achieve well strong our wrap executing in integration XXXX. look for at EPS by of priorities. a growth combined share us with We and activities, to each momentum today's I'd gives look Just track Scripts, our revenue, our some Investor and focus Cigna’s delivered $XX we we're on future and in company for Cigna increased to progress our our and our points into EPA to earnings innovation joining discussion. call. as this making month. across performance going you our you very our long strategy our And to Thank later forward XXXX

Operator

results days XXXX Ladies available Cigna’s be following additional this respond shortly. be Relations review. to of gentlemen, this will XX concludes Cigna’s Investor recording conference this quarter to and questions A business first available call. will for

You dialingXXX-XXX-XXXX.No may you is for pass the Thank required access for the participating. recorded replay. code conference by

now We disconnect. will

Cigna (CI) 2 May 192019 Q1 Earnings call transcript