CI - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by for Cigna's Third Quarter 2021 results review. At this time all callers are in a listen-only mode.

We will conduct a question-and-answer session later during the conference and review procedures on how to enter queue to ask questions at that time. [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 Ms. Jones. Alexis Ms. ahead, go Please Jones.

Alexis Jones

Cordani, morning, everyone, I Relations. joining call. outlook are and you me as on Officer, including Chief and Chief Brian and Alexis Jones, thank Evanko, David morning Third Cigna am Financial this Investor the David Quarter our for President XXXX. Lead and on Executive today's line Good our Principal well a update cover for With XXXX remarks In 's will financial number results, as 's our an Cigna today, financial Officer. Brian of topics, for

most the from note recent to our the the materially uncertainties These results of financial statements in principles shareholders to on release forward-looking adjusted are adjusted cause cigna.com. contained our is expectations. results, operations measures, release, section Investor income subject today, in performance. share as noted per accepted directly that otherwise risk measures uncertainties US, statements Net generally in which GAAP. basis regarding respectively, income describing and measures, risks comparable actual with Cigna and operations of earnings including today's Relations statements, our earnings determined adjusted filed Income adjusted will and posted revenues, be in principal XXXX earnings for reconciliation to the As performance. of financial these our cautionary GAAP is future and the as term earnings from labeled revenues our which are remarks use our the some known differ and financial accounting SEC. In release, A the current uses same in could total is we making A our and with outlook measures from certain most in to reports not contained when today's We in description these and of accordance

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

of in or costs. recorded per third for results, benefit share $XX million quarter, special item transaction-related our we $X.XX and Regarding the an after-tax integration

As adjusted income adjusted operations discussion described excluded our of revenues in items are and results. financial earnings special today's from release, from on

the prospective including XXXX note divestitures will basis performance, close as will and Benefits that or that anticipated With make any our so over we the of repurchases financial combinations that Supplemental announced assume today, of call recently full-year planned on businesses from please business do XXXX outlook, future outside s, when and after U.S., comments our regarding impact any of includes divestiture and dividend we we potential the impact does occur that, which not share to Additionally, expect David. such Life, turn Accident, I to XXXX. may in a

David Cordani

joining This for then everyone about we your results our we'll you how thank the strategy, and the And our I'm I'll more advancing few and XXXX our to spend some perspective outlook a and additional our call Brian questions. details morning for strong third and are will results remainder on to then outlook, provide some growth our about for quarter, take today. our quarter Alexis. Thanks, going on share of us minutes talking the year,

jump in. Let's

revenue. guidance confident delivering ability ongoing business to focus for and continuing to for value significant strategy, continue expansion, of in driving During our adjusted patients, $XX and $X.XX full-year again we to as to are and our delivered while share, as are quarter health per growth, we on of our shareholders. to portfolio clients, our innovation, service These With raising we performing growth all back shareholders. revenue you, are partners, results fund customers, our we our XXXX for reinvest sharp our provider and well the adjusted billion, high and and adjusted executing our reinforce EPS continue EPS our in return

the ongoing customers amongst our pandemic costs, period strong, the special as is or performance impact on the Our business. of within the considering enrollment individual claims higher SCP medical as we've experienced well

to our MCR the relates business Medicare improve quarter, commercial improved third to second our did quarter the it and As in quarter, our business also Advantage the from sequentially.

We Life, -- Chubb platform detail with $X.XX agreement markets and our series and an MCR. further announced Brian actions from business in $X.X in also Separately X we our billion. through more billion continue a Benefits a Supplemental Accident to to to execute October, international early in few XXXX this our And of XXXX sell walk in in countries will moments. improve in

sharply to following best-in-class health regulatory realize unlocks and on focus the divestiture well-being our services. XXXX to billion strategy our net proceeds in insurance after-tax our expect about complete approvals. business, the leading in XXXX transaction of $X.X business even transaction similar to of to more the We by enabling group our while and us this also value Guided and asset,

our ongoing support to overall, we and and health importantly, quarter our needs So evolving strong commitment results, prioritize the our the those of serve. and for execution performance well-being attractive and clear reflects strategy delivering and

through with marketplace platform, innovative providers. services that itself government servicing with has A health on Now, buyer Since I'll medical for U.S. additional some partnerships our Evernorth healthcare plans, our tip walk multiple established businesses. resonating groups. organizations, year-ago service as we and Evernorth employers, the time, launched unique that are detail to focused Evernorth and health and

Wrapping services, solutions, Evernorth strong relationship also In solutions. Services military to services are will medical deepen specialty and contract network active-duty through including families. Evernorth, which almost our pharmacies. continue of offerings with operations, exceptionally these customers and members, claims, the and retail expanded and expand pharmacy care coordination new of including and through pharmacy X-year specialty Health program, and most to of the million platforms service existing These primary of Evernorth for management, platform our X contract. us. their The expansion our TRICARE clients through supporting and renewed gateways benefits pharmacy intelligent privilege and TRICARE two with quarter, XX and their relationships. allows us Innovative medical retained the Evernorth relationship around our U.S. Our help Department form our additional through base third pharmacy suites Defense pharmacy a care XXXX. retirees, It's serve are

we As of look and to into XXXX, to the balance revenue continue earnings. the will Evernorth and year grow

the our U.S. address our offerings Evernorth Turning our deploying clients In the solutions teams our and and from evolving expand are needs in to service customers. Medical U.S. commercial, platform. leveraging to innovative of

our urgent, care. behavioral, we employers their expand through primary, and to example, our 's leveraging platform, capabilities virtual with MDLIVE are dermatology Evernorth For U.S. in options commercial for care customers

coordinated And of part arrangements capabilities Evernorth we plan for our enabling MDLIVE visits, virtual-first to MDLIVE expand our As more we during continue experience. intelligence health value-based capabilities, provide these as recently a employers. virtual leveraging physicians to with connected and launched them are

partnering Center Another U.S. of commercial bring to health example Plan. Health in of value Evernorth have great our with is Pittsburgh arrangement clients University to plan more Medical new we a

value XX We to this we plan an outside clients. client UPMC health area. live, Evernorth customers are care available and illustrates deliver to will been travel make in-network our collaborating for how pharmacy differentiated who for their enterprise has service work, across affordability years, UPMC and agreement greater network or

our how into continue commercial both as of strategy, to Within expanding such, the to to are consistent broad Advantage, markets U.S. we solutions, with suite our continues and our new are we value delivering platforms. recognize our geographies. in We pleased through grow through existing market and are Medicare the continue Evernorth we grow and

our overall supported further is offerings. value by progress Our of our

this or and For plans calendar the row Xth A our Medicare growth at the greater growth XX% X-star enrollment special Advantage highest nationally. in our Individual in it This our is the we've year, level Family performance. ever XXXX and third we've marks this business, will the we've customers portion year, strong be the by did And achieved, come in a from substantial period. improved quarter. XX% of Plan year extended stars increasing through driven of customers

noted, added some outpaced during expect We the the amongst moderate As of growth. in the by cost, quarter SEP third this MCR those I XXXX. impact medical we was previously in driven will the do

on offer results confidence addressable us commitments We our our the and in of ourselves states execution the X potential the XXXX. to new and we strength deliver continued gives by reach X.X new we're markets in enter in against business XXXX. are million new in and an customers. plan The XX build family growth counties as this to again These expanding momentum through our individual markets strategy generating positioning additional the we of our will

in targets our We with above yet will another well line long-term for deliver our growth revenue and EPS year. targets long-term

XXXX. We our long-term will target also within EPS range in deliver

at of least we adjusted our XXXX, increased delivering for full-year are Specifically, for EPS guidance to committed $XX.XX.

cash we XXXX, and in for on share billion dividends generating flow track XXXX operations repurchase. least shareholders and than full-year to more we to $X.X expect return For from through $X at remain billion of

rate Looking number execute we historical a to and more business contributions headwind line business also expect pricing our the risk be plan another actions, our initiatives Cigna. XXXX XX% levels. for to In year of will as including grow to be and our from least return least anticipate strong year-over-year Medicare of vary expansion margin at XXXX, increased We're tailwinds, EPS of Medical we from pace growth of off levels. of and in income ongoing We course, investments expecting will and guidance we of affordability per from investment core by And XXXX drive $XX.XX in revenue U.S. short, benefit with year-to-year. as the adjustment share. to in normalized at additional net efficiency for strategic more

as quarter, they summarize, ongoing we through for We're capabilities the clients, shareholders, capital the continuing invest business, the strategically our value of provider XXXX, also delivering briefly partnerships. amounts strategic and portion divesting to to we've of taking pandemic. such our and partners of returning in patients, as customers, to as throughout our demonstrated our Now enhancing significant challenges actions, substantial a are experience international and and

to I position value. to and Brian. to which deliver over All continued shareholder will the turn that, of continue long-term advance growth call our agenda to us With

Brian Evanko

our Thanks, I full of aspects key David. Today, year. 's ongoing will the impact everyone. for COVID-XX discuss of third our review Cigna including outlook updated will results, the Good And business. quarter I on morning,

the impact were our increased medical our total in costs the variant the individual U.S. special quarter, within During U.S. of business Delta period business. largely higher in our Driven and by enrollment U.S. commercial than Medical for medical segment. customers our costs expectations

of would I XX% approximately revenues not cost significantly exposed medical you fluctuations. remind businesses are Importantly, from service-based that our are to that

shortly. balanced expectations. activities, deployment capital This led in Cigna XXXX, will and earnings full-year levers for multiple outlook third revenue and our an coupled strong to portfolio exceeding which creation for I with overall performance, discuss 's Our value quarter resulted third-quarter increased

financial reflects consolidated results, $XX.X our segment of XXXX well include per key results, as of of growth discuss performance expectations. billion, our $X.X provide earnings growth quarter Enterprise growth adjusted with revenue across update capital highlights in our as our X% contributions the top to Results all strong will to XX% the and adjusted I above details tax, businesses, our earnings outlook, to third billion on turning overall after now with will Now, of an bottom-line level in to quarter $X.XX. and adjusted growth share then and third XX% of positioning.

Regarding on our comment segments, first I'll Evernorth.

offset care the volume partially third for deepening expectations our X% and grew to strategic revenue strong earnings customers, Evernorth continues to XX% of of for support while overall scripts, and original strong to in of existing ongoing growth, the by our were platform improve the differentiated billion relationships, and capabilities. including a to quarter And investments adjusted driving with patients. growth, Overall, value by A driven growth X% quarters grew our efforts quarter million in create $XX.X benefit virtual through and ongoing earnings technology to clients, first pharmacy XXXX. exceeded and including specialty customers, organic that XXXX to quarter Evernorth clients significant X retail affordability to along compared pretax results XXX volumes script $X.X adjusted adjusted revenues XXXX. billion. and Third pharmacy, increased

U.S. to Turning Medical.

of pretax $X approximately were produced investment our quarter in COVID-XX, medical claim favorable partially net specialty billion were Third by The due earnings a net Medical offset and net impact Overall, increased our expectations period costs costs adjusted during impact impacts contributions, adjusted U.S. and effect and the the third exceeded the quarter. earnings the income of claim customers in quarter, for business. revenues of care increased ratio third enrollment higher of $XX.X billion. XX.X% special our reflecting individual these medical cost to

our of to and identify MCR overall effective we and actively customers the ahead, medical insights with from capabilities Looking strong sites range as efficient leverage and guiding Including opportunities our analytics care. address key managing actions. such to data are continuing more drivers costs of and to our

and our moderate Continued care the overall services to pricing continuing patients, and longer provide in to discipline and and access preventative promote to we're medical term. to rate meaningful over costs actions, behavioral also support

Turning third XXX,XXX of other by continued loss year-to-date we operations with customers individual serve medical to Medical, international of Advantage business, $XXX $XXX our the clients. were million in customers customer Overall, Medicare of leveraging approximately These within a customers, growth and Cigna our growth net our membership, of adjusted results earnings In services ended line markets was U.S. value Cigna's continues for our XX all were quarter commercial portfolio and broad an expectations. were million. third with in government. committed markets middle and the and increase million. revenues well-positioned pretax to adjusted Corporate quarter in U.S. of delivered remains needs our to driven U.S. year-to-date. the stakeholders, In businesses. select and adjusted within and delivering billion organic quarter growth total $X.X

to our for outlook updated full-year XXXX. turning Now,

with for We the strength dividend long-term the impact consistent of the of our associated environment. EPS XX% per the at $XX.XX share the the having with raising of our growth reflecting increased of adjusted our share quarter, even to while ongoing of XXXX. This significantly guidance are earnings per favorable XXXX with repurchase, full-year to share, acknowledgment least and challenges XX% fluidity EPS XX%, in broader and from year-to-date least represents ongoing range growth at our COVID-XX XXXX, of

the COVID to that These it to XXXX fully forward, ongoing quarter clear for expectation our to becoming will longer guidance. have XXXX progresses, expectation look COVID-XX continue at the quantify EPS and and the Therefore, our COVID-XX. contemplated performance related as believe impact least more at of XX% this XXXX impact of and continue time And fourth EPS are it's impacts we we business XXXX. of As instructive in in dynamics for least are adjusted in an intertwined. of is no growth off $XX.XX the

with I rate for XX% divestiture our projected we XXXX. full-year goal exceeds growth adjusted to late XXXX, to segments. $XXX in revenue, representing long-term when from note represents of our the our billion, for significant average XXXX of growth revenues Life of revenue now X% our disability consolidated at of revenue at significantly and Turning outperformance this now annual expect I least in our Scripts XXXX of adjusting X% combination least third consecutive growth the group outlook would will discuss year Express business. since

create adjusted For least billion earnings we our for XXXX, of over Evernorth, value to and least full-year $X.X continue XXXX the representing customers we of expect growth at significant at clients. X% reflecting

least $X.X of be earnings special expect now the XXXX Medical, individual the of medical elevated XX.X%, to our XX% at expect for to includes billion. care which adjusted expectations in updated outlook, full-year we costs period U.S. enrollment ratio medical range for customers. Underlying we XXXX, For to continue this

Regarding total we at XXXX expect XXX,XXX medical to growth customers. least continue customers, of

Now, our moving outlook. capital to position XXXX management and

innovation. drive growth to as expect our continue returns reinvesting on support long-term to strong continue and We to even and we cash capital businesses flows

$X.X reflecting shares of XXXX, to of of $X.X have strong we XXXX Xth. includes announced Xrd the of expect expect in continue million from we declared weighted On billion. Year-to-date we And accelerated XXnd efficiency for quarter. billion share XXXX, XXth, impact the well-performing full-year cash the repurchase we shareholders shares. now repurchased For at flow as $X businesses. per shares November October operations, least XX.X our on capital full-year we This the record of third a December payable of average that dividend billion million share $X XXX approximately as to December of

highly our and returns strong, remains on capital. flexibility, flow balance attractive drives and benefiting cash that margins, orientation Our strong outlook service-based sheet from strategic efficient,

businesses. So of earnings shown with has the value ability in across growth environments third breadth businesses with top our Cigna our to solid reflects the now strong bottom-line contributions to and results multiple through quarter recap, and dynamic deliver levers.

our that, XX% call. EPS least growth portion We turn full-year and XX%, for financial EPS, the at raised at of at earnings to continue now Q&A customers, rate least With range grow We XXXX and off the coworkers, least share, expect deliver XXXX of adjusted over growth guidance. long-term and XX% XXXX, the support on clients, $XX.XX to of representing XX% from commitments. to our to of adjusted we XXXX our with per it expect consistent we'll our Operator

Operator

Also, handset buttons. a speakerphone, using before Instructions] pressing your you're if up please [Operator pick the

yourself first that for those question the remaining please, ask we limit time queue. And question. in sufficient allow please one to from Finally, you moment questions X to the for

Rice Our A.J. first Credit Mr. with question Suisse. comes from

Your line is open.

ask may You your question.

A.J. Rice

everybody. Hello, Thanks.

to COVID a numbers the XX% you impact defined away lot about of their that maybe know to sounds there, try year. for least growth costs of was this expectation it and little carrying at because expectation it drill various like for updated Just you're I talking absorbing this related bit on year. new of that broadly into $XXX from down getting I last wondering, COVID you're for net others your year a next but were quarter sounded inputs like

can your the other and think last out you about quarter about much think you 'XX? thoughts on to laid you as is changes comment about are takes big ongoing of there headwind As expecting any you'd 'XX, and how updated you COVID puts

David Cordani

good A.J., David. It's morning. Hey

deeper much we're XXXX. XXXX, relative into to me try that Let shape insights our to now

to dislocation, to treatment, headwind many etc. deliver disruptions had magnitude as backdrop, continued marketplace and First, to COVID we've know, portfolio you're able to service a broad quite whether and Against it's the the and frame from of tried perform a mechanism revenue, well, marketplace, that the broad testing, you indisputably right our earlier this we're funding standpoint. year,

really If headwind then, headwind net investment operating were expense you XXXX, The big created about cost MRA four which category. COVID and decrement. by and chunky the offsetting pulling favorable items. somewhat there's items. income created headwind was think revenue positives that the And up One the by some

of initiatives, broadly Now our XXXX offset terms take about growth and our step the and XXXX we another affordability tailwinds. to rate year speaking, as our visibility this and and look understanding puts of in headwinds is at our the coming efficiency close, think those environment, outlook, as in our we execution, our one into initiatives, how XXXX, largely

drivers at line least XXXX secondly, at in growth least mix into largely as Our the XXXX To at residual to offset then in XX% X% visibility -- of represents one at X% to in fundamental and for from XX% essentially off to least growth we a XX%. XXXX growth is with growth, of target operating underscoring for fundamental us that the XXXX, puts-and-takes other additional get in to EPS, accretion. way XXXX elevated rate our And largely strategic they've of X% deployment capital terms execution the step that our And in affordability. business recap, least X% configuring portfolio. of that of are our

A.J. Rice

a lot. Thanks great. Okay,

Operator

Thank you, Mr. Rice.

Gill from Our with JP Morgan. Ms. Lisa question next comes

open. line Your is

You may question. ask your

Lisa Gill

about about out primary to Ever-north we we I XXXX? and Thanks you thinking us offerings the in are the the losses, about can going you've about wanted about into think much, the to but and virtual what business if how north MDLIVE? are good think marketplace, as I understand of as in thinking some the business you're and with think an that morning. better Ever then business Ever-north know very think the care about how past give you XXXX, David, just talked as update to

David Cordani

Good morning, Lisa.

with relative XXXX, of So performance Ever into as north, first pleased step and Ever both to Brian as I we're north. we underlying quite noted, the

the that with that. quite and the diversity pleased you has ever organization, delivered north for the growth growth, of If at the look inherent we're

feel Secondly, to our extend good. fundamental you'd our quite growth ability innovation invest partnerships, drive because we both in and

MDLIVE just portfolios X has services specific question, our Evernorth that Ever Ever intelligence. well: framing Evernorth are portfolio and to pharmacy, Evernorth and north then Evernorth north Benefits, So the positioned coming of care,

resonate plans, at growth expanding with with health healthcare the to continues Our agencies, serving large employers, increasingly positioning marketplace. in well providers and the governmental

in comment strength result the in the which retention your rate see over and resides to again. to the delighted quite known business XXXX, Specific had the marketplace, yet grow even we'd services the portfolio to we We several the a within we've that business to we're in so Evernorth to grow. to of to For relative utilization strong portfolio is the in discipline years, have losses, care. of last And pharmacy identified. committed price maintaining MDLIVE now still Evernorth MDLIVE, capabilities some will losses mid-XXs, our we're those with expect the growth continue given the

Triage two primary As I noted, But beyond behavioral or offering. important, recently expanded care. urgent we've then virtual-first our dermatology. And

broaden see both a a some terms side in care capabilities. of to care of great it opportunity it as to alternative we to finally, But expand access improve So, platform access, presents affordability.

a in pleased, we're we'll of we're including investing MDLIVE. again capabilities grow further virtual within in the and So, nutshell, growth,

Lisa Gill

the for thanks comments. Great,

Operator

Thank you, Ms. Gill.

Mr. next comes Our question from

Justin Lake Wolfe Research. with

your You question. may ask

Justin Lake

the to sale. David Thanks. Good ask wanted morning. about international I

what saw top-line think a Thanks. looked like -- got business. Is of sale repo there's the and we times the where Disability, to double-digit in strategic if should you've the us of lot of kind that about could net something terms grower. business the XX in terms relative ballpark? And it right Life capital looks it that's about similar multiple those then historically think going with we once share of to you else? terms get should deployment be correct? in of just of XX been curious at to looks then about And we for multiple, as the depressed funds? how you to so, that a In Is First, income nature or tell a

David Cordani

Sure. Good morning, Justin.

little realization a the have both we the deployment. shape about me in feel capital Brian further here value Let and start how

our deepen been stepping portfolio, well-being time. long of strategy life, guide, portion built of our has of quite individual successfully a supplemental important portfolio and of our period our This what proud to specific of back, was international time businesses, in direct grown we've underscore First, a time. over and period further aligned strategy so This as we're accident us a our over the to solutions. health guides long But to our portion and using less enhance directly over that. here, portfolio international

U.S. well-being that our strategic ask oriented, further in well to grow. capitalizing your to strategy forward. a And globally to strategy the health towards is where intensify as value X. are both as use group from and we to standpoint about business action quite more and at valuation asset. attractive high-performing as felt our is we I the continue guide realization, the deployment the area correlation and another X, terms how in using to a finally, a number look quite us valuation. even as segments speak important philosophy then So, feel done that that of and the more in And we appreciate very the of allow the very good about the our we'll as realization transaction, I'll going a value Brian high-performing focus guide sub bit capital asset little good we a net on

Brian Evanko

U.S. economics terms at the if is looking times XX right the is ballpark of very earnings businesses, the you're in and case Yeah, David. from divested times XX asked but math accounting And GAAP you to about where necessarily a sure, this Justin. importantly, don't up. in square good morning, multiple The contributions that

to look price reason, the of deal you discounted were flows the be it's timing we here example. for with purchase that an attractive the quite the pleased as that when you terms were economically to we're an at look able available and cash extracted, as dividends of business quite at the If get, financial that

we is terms In our deployment well, life proceeds, life disability of don't what long-term disability same have as reference to the fall instance as as, made did of and repayment group this template group the the the the with need divestiture, and broad would we David in expect of with transactions. debt exception to for the with we

So, the in outlook. repurchase. that expect primary primary be share for that we would use to use the is this That's neutral And repurchase. press the release slightly diluted share under for indicated to we the EPS when would our to be assumption XXXX

Operator

Thank Lake. Mr. you,

Ms. Stanley. next comes with Our question from Morgan Goldwasser Ricky

ask may You your question.

Michael Hall

guys, is this on question. Hey Hall Thanks for Michael Ricky. for the

selling So, as number share relates member commercial around to growth, to of expecting diffuse mentioned a strongest shaping already and I up one the dynamic, peers and They XXXX attrition, have account gains, it mentioned one growth. think strong the concerns of even emphasize peers in 'XX your seasons national of history. your be

everyone bright and gaining contracts with So, that that is said, imagine to it's been a share. area, but also winning hard

are And to next you year landscape? with the are you share? guys what else comes everyone in able when that with competitive grow context, seeing So, taking

David Cordani

good It's David. morning. Mike,

into then market 'XX. minute Just the backdrop and to a performance in I'll commercial right of our relative jump

of the commercial a We marketplace. growing track in have a very last focused the over record decade long successfully strategy and

As membership. targeted appropriate then yields with our growth. cross-selling innovative with and actions ish, in the our complement you higher think deliver that solutions the revenue of new for and about it marketplace. over medical And that right we've sub-segment that last the net couple respective we that clients single-digit low-single-digit we pricing if of significant seek generally decade services. And grown and We - and the

relationships, with strategic an as services prior picture to I'd are big example. approach. the further through expanding highlight bring care our conversation like we of that's relative that also the So to our to Evernorth, deepen we're virtual able

grow we'll clear, be to XXXX, to specific Now, again.

the business year another account customer market, We of in will have clearly have in our and select good we growth large again, our and accounts portfolio, having national we'll visibility in medical segment. terms commercial of grow net within growth base specifically, within our

have So, another something mechanisms, right continue commercial in engagement high quite oriented proud of with that year in and the that, as have net it's and the are of competitive, net of solutions growth all and to that portfolio, around U.S. funding again we positioned programs a we're affordability the will is marketplace we on.

Operator

comes with Fischbeck Mr. next America. of Our question from Bank Kevin

your You may question. ask

Kevin Fischbeck

quarter Thanks. like you've guess, the sounds things. It I two you benefited in mentioned, income and Great. from specialty investment outperformance.

is you outperformance the is little be could landscape specialty And do do to business where you then you're maybe commercial going that Or next your that just competitive your a guess range? sustainable? be for year, next something the if range about think more pricing So, commercial expected bit target for within that is talk for year. to target I believe in to the you going be

Brian Evanko

Kevin, piece start morning, first your of I'll Good question. on Brian. the it's

I context Medical think specialty. performance in of your our in on of terms this was question the U.S.

in So, full areas suite reflect out, in That Individual pressure I of period. of exchange. in the partly as well our totality in the income, pharmacy, investment in includes the offset for now segment, pressure portfolio above was the called expectations the capabilities behavioral, claims the special specialty contributions specialty the enrollment that by again, commercial quarter in COVID articulated We two in as quarter. that contributions. were had and your MCR performance And of elevated as earnings two the is sources we domain. our have related specialty third on you you favorability, dental, as

the in in income again would is occur on consider to recorded something quarter to we that contributions commercial. but into we We persist was forward. and Specifically non-recurring, environment 'XX. the smaller going terms to be the investment on to as fourth expect into X David as that maybe continue fourth persist expect favorable in specialty of for should not component comment items quarter, will The quarter. so the that of the something the the in the favorability That or you that we a 'XX. head third would favorability would is pricing third quarter

David Cordani

on Good Sure. well. Relative commercial prior book and little MCR. be employer and of will market as a we maybe that for the commercial, going that marketplace, pricing business bit broadly, commercial backdrop market. improve our in to that morning, continued our specifically, we the But market, to individual and And meaning it will to Kevin. competitive into environment the remains the I'm my more here as a marketplace grow has answer, a with commercial sneak

us MCR commercial within business. improving of our has both visibility the Our growing and book

of MCR in competitiveness likely the significant outlook XXXX expect to in portfolio. the as that, business, or fully XXXX pockets as individual our be And of step XXXX. there do clear, our we're market the and will versus visibility in no into see and markets. individual that for -- that will we add-on that willing margin An yield or marketplace, we make our quite the trade-offs such And to MCR in So, for And growth, growth more volume. improvement in Individual in growth for of net book improvement as growth within shrinkage would the net Kevin, is negative market to as of margin well contemplated specifically certain be the but in earnings disciplined, we are net some customer portfolio, targeted expansion. to that's net

Operator

Fischbeck. you, Mr. Thank

Cowen. comes from Taylor question with next Mr. Our Gary

You may question. ask your

Gary Taylor

good Hi, morning.

Just little go to what but just to back far. wanted so to more you just a bit said, comments think the MCR David, about and appreciate wanted XXXX

of COVID enrollees in you So, your kind It more impact of of when costs versus the look XXXX you almost the and XQ coming had didn't based as COVID attrition. lot we typical baseline, of a material up you when on up but in XXX had in XQ basis back. was like costs, deferred is the the that's lot have period XXX basis care about it points to increase points which a particularly doesn't enrollment special MCR look potential at

variant up is of the we're commercial caught sort parts utilization where -- XXXX of a Delta you and were So, increasing? in there XQ are like moving down? some what forward, still deferred you're versus baseline, COVID like substantial then how cycle, just comes you see running is, I the or the Do going and care in to is feel the your the what largely back anticipate guess other you you any question do as

Brian Evanko

Brian. Gary. It's Morning,

the take question that I'll components here. So, to various of try

are about So, in think as running maybe you full-year the guide. I'll the XXXX terms of where MCR, we talk in on

MCR the in lives the you and they impact towards the did the XX% that of that full-year SCP would've they if we within end are, range, way that the grown portfolio had so full-year from pull of exclude the refresh period it most XX% that level end higher that's the enrollment the the had customers to of guidance individual apart. for an the quarter, the had like the that Individual to performance special we XX% the to was more not probably elevated If higher XX.X% range, prior outlook. the I issued. exchange constructive our had to MCR guidance think not

quarter, expect particularly, lives third so you over second bit in that the elevated more not into as and significantly up give of customer the to there the to of have many continue quarter. built that in materiality the And year, the the just hit pressure there So were in to fourth were many us, third quarter. the a quarter there. we Those dimensioning the course MCR little

to reference would into question, dissipate new of carriers. did to attrit many a that into David As prior as our XXXX in we choose lives those expect

August As it the in earlier business more elevated the ages costs, relates pandemic. portfolio. than quarter, related Delta COVID of significantly other September, the particularly we some The and commercial the had younger variant third with in to in hitting parts

MCR you how some our the as our XXXX book, the So up. I here picture Hopefully for to head on business. overall subset gives it elevated bit Medical that which of in expectations, third of little bit of in favorable created a XXXX would was the we confidence a into in book cost Medicare little greater that is commercial pressure a us quarter. shaping U.S. quarter gives Advantage the claim note

question, not diagnoses, In new a indicators into significant we David be less head caught that of utilization line that rates preventive the much on be of we XXXX. that or utilization, cancer whether or posture, care prioritization throughout as of earlier commercial business looking of said, that deferred seen and be there's are the terms etc. a I margin expansion come. demand we as amount all of would pandemic, future whether forward continues commercial your care the to catch-up in With mentioned tell track, care our we you pent-up to up, pricing etc. that have

Gary Taylor

Appreciate you. it. Thank

Operator

Thank you, Mr. Giacobbe Mr. question Ralph Taylor. from comes next with And Citi.

You may ask your question.

Ralph Giacobbe

Thanks. Good morning. guys you part to specifically of out I increased obviously back the the that's guess called want always been and specialty go contributions, story. -- I

to And can that's are drivers and give specific out. loss about then the given So details maybe I talk have that, commentary there, being I more the anything there, like maybe perspective. what that is maybe you that your product. you to within more we would trend commercial some a that underperformance how call hoping triggered think from hoping that and about should just was could imagined re-pricing how we stop just of higher But there. on and get for Thanks. performed XXXX

David Cordani

Morning, Ralph, it's David.

a hand of the shaping Brian. on minutes it Just couple I'll to and over

As you look that so articulate strategy. back specialty broadly we at our components, the to

really of services, XX subsegments XX, noted, a continues management, I patients. about now few try services, and overall a portfolio support, suite underscoring point of different the more and be customers, Brian to specialty and our part our our tremendously in to strategy chronic ask right wellbeing we historically, as to how this of virtual a of expanded to a has add of bit help services has decision, you to the line. our drivers. wrap the And terms specialty value talk realized been the health right affordability the the of to of as get thinks overall for to etc. of to pharmacy, to Dental My and to our services clients, be there. do articulated important service behavioral employer be in has been our by for employer, take strategy I suite care one aligned products get capabilities will continue Evernorth which And to offering Our when the little grow, continues to be levered solutions, alternative you

Brian Evanko

David. morning, Sure, Good Ralph.

had called terms in particularly to they're I'd our self-funded the head a as specialty point some of business, in question, to into as persist that and expect would we contributions mentioned we to earlier, couple we we in strength pharmacy prior So I the out as of XXXX. particular, more material within areas

also as pandemic. that the saw health has our demand behavioral for continued some We offerings to within upside throughout grow

further as And you we again, as us obviously some pull got persist cover, increased we there, two cover additional loss apart Individual saw margin So expect Relative we year. into areas as this those stop well quarter. because new uptake drove are which throughout to pressure loss, aggregate the we a head some for stop have. you to loss would actually there gotta with one within and the the typical thresholds. stop Individual that the That claimants cycles in little stop-loss contract pandemic, our earlier our meaning our a dynamics bit behaved repriced business the saw for most on gets didn't along business. related of loss Yet differently clients hit XX-month aggregate all stop pandemic little COVID bit we the

prospective that also for about we a good I'd demand we're on basis. there So note how product. good we feel positioned seeing

on premium on quarter-over-quarter. the supplement X% our line stop in loss there, You growth probably the saw had we

the all at about when look the good you feeling solutions So, specialty portfolio. total

Ralph Giacobbe

Great. Thank you.

Operator

Giacobbe. Mr. you, Thank

Raskin Mr. Nephron Our next Research. with comes question from Josh

You your question. may ask

Josh Raskin

morning. Hi, thanks. taking guys Good Appreciate the you question.

hit? one the than follow-up MLR thresholds guys, I an and sort IFP So was Medicare of attachment even what's individual the wondering could out from if MLR, know range for stop-loss, 's versus the and disclose to claim what you I it those, the or government more common a And of of on on U.S. then, maybe you most big sort of a maybe, typically? was level directional Advantage? the a there's points much has only but little even are segments. the quick then MLR how commercial bit give at the for just if individual kind break government, color I know just Medical within

Brian Evanko

morning, Josh. Good

refresh enrollment you XX% the with the not try the as year, important outlook the prior some to my be XX.X% just and to from to full redundant I'll reflects So of period earlier, too I specifically mentioned apart few points a exchange pull particular comments, pressure MLR the special for kind of summarize lives Individual here enrollees. but as

sub been open So end removing of bullet XX% there the actually have to prior well. are individual is but toward enrollment we our would the XX%, higher guide pretty that, performing a of lives

individual of good at standard look enrollment lives. the open we on performance the when So we overall portfolio, the profitability have

quarter. then the We of I as have poor lives particular. to made higher variant a in and therefore due performance the is the the the bit commercial August Medicare there period on to projections reference than picture touch to September a effect the in Delta favorable of actually elevated. months total And Advantage special expectations bit third our little in ran was a and our enrollment

paint ratio. So are the have those to points broad you, the attachment the care client. buckets a we that of for range Relative think depending on medical what's I you stop loss, do inside do about

risk appetite So for tend but level, $XX,XXX see depends we given to around it a particular $XX,XXX on the client. popularity to the really

preferred there's that say So it's always hard to that's the one choice.

and distribution any depending a evolves distribution clients the have appetite at time. We in the given point on for

Josh Raskin

Thanks. Perfect.

Operator

Raskin. Thank you, Mr.

with comes Caliendo Our UBS. Mr. from Kevin next question

ask question. your may You

James Stewart

for on Kevin. this Hi, is Stewart James

off you're more of dispose segments in a healthcare with the Chubb, any that focus be you a other the of core might business. Are sale consider Company within to that to maybe the non-core there signaling Just looking future? you

David Cordani

It's morning. David. Good

looking strategy as process. dynamic the to deem at you that our not we took I group to a of the relative portfolio of we insurance our sits would portfolio our business, anything relative the of part good action fiduciary took on previously reinforce, the noted, action materiality and we is it's to that signal to guide As the I and horizon. a a would headline actions, management be

horizon. on second review that. right completed, manage responsibility the dynamically both and proud is transactions: anything pleased I successful one execution now. the under organization regulatory But to signal quite not I'm the with of Our would of

Operator

you. Thank

question next with from Our Valiquette Mr. comes Steve Barclays.

may You your question. ask

Steve Valiquette

Good Thanks. everybody. morning,

tie that a lot of Just maybe a points together. other discussion question as the

in I'm of -- preliminary I still laid or framework that long-term guidance rest long-term about the to that but we analyst meeting. early, into year, should thinking curious Evernorth, and usable your you growth, just about 'XX, But think range XX% the the is maybe about out of next about deployment. segment, and for that should less the 'XX the going more you is it's deployment. relative maybe Medical, to capital talked some so from X% growth U.S. -- from 'XX, operational but framework For the just know think we growth X% targets of X% to earnings capital view for

might components Just any around help those knowing additional thoughts its that right preliminary now.

David Cordani

in our given and being a of very being XX% a strategic fluidity least disrupted dynamism it it deployment, brief both which to Broadly that least is Sure. you an which fundamental growth to and that line year a including XX%, XX% with track targets. our to previously, line And with Good our of that, the fundamentals, take with earnings organic XX% with but back that's X. Then think XXXX strategic than relative in you have David. to capital of attractive organic, and from you contribution our little we growth appropriate that. delivering to long-term if essentially, little contribution target, outlook X Big our more speaking, to record EPS we we it's look line long-term view Good away XXXX, to number. X morning, less leaves components visibility the X this line capital strategic reference and in you picture are the is visibility of the at as marketplace. of get the with growth than to much -- and objectives the in prudent underscore a at and if earnings XXXX,

Steve Valiquette

Got it.

thanks. Okay,

Operator

you, Mr. Valiquette. Thank

comes Our next BMO Matthew Markets. Mr. question Borsch with from Capital

your You may question. ask

Matthew Borsch

Thank you. Yes.

in for of the growth? other I preferences few the be Am which in of aggressive Just that versus maybe middle interest in your you've overly stop customer with was wanted over the what loss of bit you own a what perhaps is the earlier you're a ask type in on that. some what may products giving seeing correcting seen degree market last terms to little And correct for associated there ASO years, and alternate funding carriers the actions maybe of then years. particular pricing tailwind in market,

David Cordani

Matthew, good morning, It's David.

referenced markets, middle you So to singular market. definition common a comment. try your let important don't think frame me middle there's so I

at the want as self-funded, heart average the into to middle-market, of an transfer. demand returns less in walk meaningful the of If the clinical benefits to a them, further up range, stop-loss, respective broad exist. And suite Brian configured, versus cost after clients, First, balance purchase the consider self-funded And been shared really XXX the to that from the varies of their much in of the configured, and between having look terms it but is configured the they we you XXX after the select how from decision for in how live of broad are for of are portion. the profile relative our transfer are as models we so segment, to configured, market go-to access walk offerings, you as look offer at stop-loss you suite might client in size, important. the service to that I risk average, we our year-to-year with a is finance guaranteed align and have demand to before, fundamentals is more clients risk after some alternatives seek funding referenced for programs what on that has a demand with self-funded

for the linearity size part little the try respect marketplace you choice design that important of from we just decisions. I offer is over of the book, giving clients, them book So And to it's like that importantly, a that separate both peace and go the off that a and performed we a recent it the flowing have but to ebbing predictability need, long changed us to manages the and have the from well program. from bit standpoint, of your mind other in many over I'm as in financing of features I or as just consistency from our effect remind conversations, how predictability specialization the We've rate terms that we've in call a aspects for a to of we I revenue large time. boomerang they we in period loss. part But ed in that loss dedicated do growth last a happened reconfiguration use stop as past. business. that standpoint. anything stop-loss team needs our prior and not benefited And because say that from be there's seen would that's of would out of not stop question, expense believe in unique

Matthew Borsch

Thank you.

Operator

Thank Borsch. you, Mr.

from George Our next question with Deutsche comes Hill Mr. Bank.

question. your ask may You

George Hill

for And thanks and the that just David, to is and being whatever make guys, number the sure just can XXXX Brian, is I'll pause jumping mute there. quick to in ones for morning, QX taking season? like David it right XXXX, right the commercial XX% PBM quantify question. and growth given couple or point other a I off better questions. or the the are cross-sales sounds pushes all a and selling saying you're pulls counting post on of medical want this Good now, you

David Cordani

in to Hill heard. at EPS attach least is off to our Question it's We're questions XX% the at clarity pleased of strength least jump growth. So George I message. is The that raised which yes. two the appropriate underlying X, have $XX.XX, that

have second an I etc. cross-sell think for relative number Individual asking PBM, respective penetration, you're you. growth, don't I to The commercial question, In

numbers here. have not to walk-through back historically our strategy there. you individual step remember I'd We ask and

medical high offering integrated cross-sell a and high our have within We business.

harness pharmacy sell needs a as made. there or were medical because offering, that go largely fundamental at of is XXX% positioned X and that part It and a you move we're lever continued of of think and as prior either you PBM a as integrated that my called you so day, health of offering and I As our select Either question additional customer have about to ways to upmarket, the or be see offering asked, which as relationship. end both. the primary our a to prepared within up an standalone Matthew integrated. a medical could standalone we're integral pleased it and their it's relationship. to segment, the as sale we that progress establishes remarks, We more our to relationship there, off client or wellbeing services in think

And That's referenced PBM standalone well see would over both directional the leave commercial. business. PBM strength pharmacy on with Brian strength within commercial in I traction portfolio. you we pharmacy integrated our net So a as positive. a pharmacy answer continue on to our as on

George Hill

you. Thank

Operator

Thank you, Mr. Hill.

from Stephen comes with Baxter Fargo. next Our question Wells

You may ask question. your

Stephen Baxter

thanks. Hi,

do I XXXX? you to in you Just market going guess have And individual growth back the How think wanted much made. a beyond we XXXX to get competitive in think then XXXX? fairly how that previously this conservatively towards you to pricing, talked backdrop. of as margins you that's doubling through come commentary market the should about, Appreciate about Thanks. back your you're way target

David Cordani

seeking it's Individual Good marketplace as marketplace argue -- IFP exchange there's or probably the to We be morning, in of -- some indisputably, Stephen. quite terms pockets of in competitive articulated. there's pricing the clear were intense

dislocated be as temporarily discipline be markets, aggregate and to growth our we well deem that of able going earnings Given objectives, to the achieve breadth our portfolio, aggregate in we're maintaining while to our price both as X.

to margin to the and to in net So relative detail for yet XXXX or you see the individual exchange said a our improve discipline not level that, XXXX, typically we'll more to attractive going Having we XXXX We're we more margin decrement there. a guiding to give we volumes that number. and business margin from margins. in a improvement. in and flat and guide a not Individual don't to I'm expect maintain expect sustainable

counties, give performance, as to were And addressable intermediate to dislocations, as to. if this X and noted entered additional to discipline, relates a approximately prepared of track more been But demonstrate XXX remarks, my over temporary sharpen market its marketplace maintain growth we other it as portfolio continue conditions. customers million we've almost term, market. to to an the ensure business inception of the albeit it lever given access episodically needing delivers. XXXX. to as in and will record the in will states X.X to market this since we've sell there additional of us a in we I XXXX, sustained we'll see if parts focus in we to And we it time, managed As have and And we've long

Operator

Thank you, Mr. Baxter.

David Our next question comes from with Jefferies. Windley

You may your ask question.

David Windley

on for or bill our David, Back appears Build toward and have drugs business? moving a in albeit XX early, this your a my impact top Better on exclusivity that vote, PBM think beyond I'm your views, to be of would questions. you XX negotiation interested maybe taking specifically, on the Hi, thanks what government

David Cordani

Dave. morning, Good

and lot fluidity and we'll a right to operated active both has on of time a clearly now that continue health an So legislative an long regulatory for we've period in the agenda. environment of and

picture Big generally individuals, of. and that stepping constructive back, that improve fully. initiatives that understand supportive any value in and affordability we engaged So are and for open sustainable, we're actively to

we different policy further the affordability positive I breakthrough a and dramatically. that change sustainable the example reinforces We that down in an is to the come the pharmacy in lastly, strategic changed for tools further think, policies marketplace well-positioned doubt. is That's test to it's negotiating choice that. expand able We actively think the tangible, improve model. in than of prior will Big portfolio have competition. picture, is meaningful we've most hepatitis no we benefits C pharmacy overall to or we here. over was, and suppliers await C an But services -- more which example back make than action to move marketplace artificial changing X affordability, That's And you Specifically the and drug details engaged, way that it a heart from putting the could remain double-click hepatitis further a as capabilities confident that growth per the deliver specific affordability as very on a worked rapidly horizon to expand standpoint. different we're that space will in well-performing and what's X was from And in to services, in conversation society and who's sustainable a from, rate be most our value stimulate way the if broad had and environment, believe where very to on. to competition. cap accelerate is

David Windley

thoughts. your for thanks Great,

Operator

Thank Windley. you, Mr.

Lance with question from last comes Our Bernstein. Wilkes

question. your ask may You

Lance Wilkes

Could then was the Evernorth from pharmacy you and Thanks. just volumes give little vaccine that in particularly And margin color quarter, impact seeing a more margin? are going I a much how that? on pharmacy outlook your from standpoint and you generic, or what interested of beginning much for in is, that's to whether specialty impact the

Brian Evanko

morning, Good It's Brian. Lance.

fulfilled X in we vaccine quarter Evernorth, million prescriptions. third So within the about COVID

XXXX. So total to here to we're that's volume, put million and quarters that X% into three up XX about our in across about of the script year-to-date, context,

the again, our We So really Evernorth, think that about More competition Generics. the the thing those part X% on clients won't total an move that but specialty broadly broaden include even segment. on And a of biosimilars. of for ultimately, it behalf we you customers. generics, up Evernorth affordability year, from a volumes Specialty for about number standpoint needle the for good and and can think of your about the We're script as future standpoint. next if not second and is to of excited contribution material materially question, driving roughly income goes from down or

biosimilars our create of fortunately, that going introduced really in are While view a forward. and in does and quarterly that patterns. client predict different and allow excited generics wide a have And depending value us especially Ultimately, clients, a of we our earnings is contracts they're constructed. great We're levers business. ways income we range to the timing some customers, with as how variety hard our about ultimately for on which to capture for variability thing

Lance Wilkes

Great. Thanks.

Operator

will I Wilkes. turn Mr. remarks. over closing Cordani now back to you, for Thank the call David

David Cordani

who and than continue up call. more serve. co-workers appreciative how proud dedicated our am wrap the XX,XXX be briefly around do I we to Just of I the many our to globe stakeholders underscore to want to

through of continue challenging as and to providing strategy step-up value our our partnering our Thanks. today. our every patients, delivering forward, our our on an expand, well your customers, and we very is Our remain enjoy to time in for And look and thank sure the ask fluid you We on framework day, we're And to team is broaden forward reach. markets our engagement executing as customers, focused the expanding make team clients, level our guided to enterprise, and the to addressable this our patients, innovating our to our clients, your and of as to again support day. our communities. success ongoing you all for -- environment. rest working it support, our by updates then of time again partners, providing future going We

Operator

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

or by XXX-XXX-XXXX. replay. participating. recorded XXX-XXX-XXXX is no code conference dialing this You pass the required for There Thank may access you for

We will disconnect. now

Cigna (CI) 4 Nov 212021 Q3 Earnings call transcript