CI - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by for Cigna's Second Quarter 2022 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. Ralph Giacobbe. Please go ahead, Mr. Giacobbe.

Ralph Giacobbe

morning everyone. Senior for Relations. Officer; Vice for on Cigna's line morning, Officer. well I'm our today's With quarter and Good Cigna's the Giacobbe, Cordani, Ralph President second XXXX this remarks Brian Thanks. Evanko, results as In Thank Chief year. joining you call. me Chairman Great. and David Executive today, are on and Brian are the Cigna's of Chief to topics, cover outlook including an Financial as financial update going a our David number of financial Investor

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

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

special results, per integration item company's in million our after-tax $X.XX further $XX strategic we the and to of ongoing to recorded or and $X.XX for drive growth related charges Regarding transaction-related operational to costs leverage plan $XX million the or second share per a efficiency. quarter, share

also benefit or We special an per after-tax litigation $XX associated item million matters. recorded with $X.XX of share

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

we the a year repurchases that we today. make performance, Additionally, any excludes or regarding potential prospective impact includes full of XXXX may occur outlook, our please dividends including of basis XXXX that future impact when the on and divestitures business so combinations do note that anticipated share financial comments after will and

a businesses X, Chubb call David. over we is prospective in reminder, July of With our statements. completed our contemplated supplemental on and to As to accident international the I’ll life sale that, which turn the

David Cordani

for peace Thanks, strong quarter. patients our the morning, and and our call on as we of well-being you of Ralph. and posted to for continued serve. health, mission quarter, for the partners our mind And from first the build we company In joining delivering clients, value Good everyone, today. thank differentiated customers, second execute and our the to we results momentum our improve those on continue quarter

then position. review Now quarter, during our additional of performance as of increased I'll results outlook as well then capital the questions. rest your the about strategic quarterly take growth, today, strong and discuss drivers financial briefly XXXX key our the our our and we'll our for details will Brian

of get and In of $X.XX share. Let's quarter, million the we EPS started. second $XX.X total revenues delivered adjusted per

season customers continuing more with the care professionals. and on progress levels. for high individual and achieved to have selling our the progress million we across gain our driving Evernorth, Today, with performance Cigna market, XXXX, solutions with also are In execution In our access growth customer systems of innovative and XXX of for and track another our to quarter sustained approaches resonating pleased plans, encouraged health another growth capabilities are medical Evernorth agencies, year large solutions. platforms. are strong governmental commercial than differentiated disciplined expanding is client the a during balance employers, in traction continued of delivery we're we We're retention and margins. Healthcare, by way health Our our

ratio the a year. we from we guidance medical last Similar of at a expected quarter, the pricing quarter better place affordability and least during the put in continue impact was results than care XXXX last performance including of the give in confidence our to of year in XX.X%, see first targeted Overall early which year, and actions increased and delivering EPS XXXX. to the improvement strength us our during half full last ongoing period year positive Our substantial same was over the $XX.XX.

delivered least $X to we are our XXXX, the of supplemental XXXX. our of of completed strong life, with in track accident increased as benefits completed year. recently we repurchase we revenue, positioned a growth for outlook an use When attractive billion half we and repurchase activity, to our businesses remain billion divestiture previously to on our $X.X share on Asia a accelerated At this we view this and EPS program. capital. first and for across of we markets customer shares X levels, launched deliver and Additionally, combined in Chubb, our Overall, Pacific at current

capabilities to remains first needs pressing and Our performance most focused need for we all our of is this, we for the on those serve. our to direct Affordability our commitment to of Advantage a a in and result top foremost, a support capabilities continue post-acute example, leverage our response at innovations, target innovation, solution of Medicare leverages care to stakeholders. for that ability all June to In including, patients. ongoing drive Cigna launched new expertise, eviCore

pharmaceutical savings number launched Evernorth's address program relief assurance with and for In capping of programs We've environments. Cigna healthy able to support of At provides XXX,XXX June, outcomes also rising to extend determine and specialty controlling extensive program of Pathwell to chronic well Building this new Investor plan success services to sustained to as a patient's satisfaction. as the most strength cost patient and team meaningful patient health consistently upon expertise broaden able impact continued Evernorth which the than for analytics to As for million outcomes, prepares discharge also attractive the Specialty, to how diabetes. appropriate have XXXX a $XX an expanding growth our program, of enhanced other in recovery, of a as guidelines improves our we our and the site this of approximately it rising last we're leverages specialty the specialty that innovation patients. medications. relationships industry-first introduced better Day talked year. additional provided insulin. clients to Healthcare our the we approach providers We've We economic patients on financial drives our provides Specialty is that and alone, a a about later closely with care experience patients this costs. while by conditions well with costs Cigna groups more to in of U.S. to care. this and the to from month, business challenging patient draws out-of-pocket support costs better on work and vital evidence-based result manufacturers. as in we're hospital, The Pathwell even our deliver commercial drawing Cigna capabilities of we offering is

and value a ways. in economic variety expand including company markets X slowdowns. specific our to that growth of addressable Our us built to framework market starts perform in with It is conditions, positions our capture

revenue growth. U.S. that predictable are our health and and currently XX% our contribute and of our about company. to our foundational These businesses include First, Scripts, Express international scaled contribute mature, commercial for business. businesses results steady annual

growth Healthcare. with expect is by momentum our specialty addressable creating secular within These attractive our businesses we differentiated capture pharmacy bottom represent revenues, and line on our and create road. one Evernorth our Second aided Cigna together, to achieve very in businesses care the this and And cross-enterprise XX% Evernorth. top third, together where and services could work business and growth to accelerated trends grow value about from company's contributions them all markets. of businesses it any businesses of strong government Putting than value more continued U.S. these further framework from for with capabilities leverage, into translates

our pharmacy recognition and while continued services, forces growing solutions health continues expand and out the building bringing address including clients in Care and also demand the for strengthens resulted, to facing support between a our the This behavioral growing Our health. health of ability and capabilities Evernorth connection example, Evernorth shift, to traditional care to and delivery. demand today, health to physical providing coaching platform customers mental with significant has industry-leading services, for widespread the societal and we've network. for rising care service our reshaping

services we For Recently, than the time. the doubled launched improve virtual X to setting over right right at in past guide we years. the has example, the size Navigator supporting people providing also right Health care Evernorth network to by behavioral more Confide We're way enhanced care. behavioral at Behavioral the

MDLive We an both including and digital extensive of first platform. supporting portfolio solutions, virtual our growing and also solutions, have

as for for markets affords we on health delivering and growth, over for in level and performance driven are financial site driver plans, International we revenue a differentiated of sustainable individual accident capital of that by win to translates right customer For programs. health improve under our in in and and us Medicare for continue intensifying Cigna Healthcare, approach focus growth This the clear even and attractive we Cigna accelerating with through strategic term. our And a commercial of diversified offerings. service a of scenarios. positions geographies, Solutions, and a Healthcare's while divestiture for the significant government, key we're strong adoption long where framework variety in of together to our and our Evernorth. path supplemental we Advantage we care investing value including flexibility substantial our Evernorth growth sustained, strong portfolio, value both to creates ongoing Life care value-based and growth U.S. benefits growth our clients greater Also and Health, serve balance advancing into growth as those following for U.S. sustained are of which family see service customers International In affordability generation us

We in half up. client Now wrap to year. on commitments of our the delivered customer the first

drive and by power the we positioned of assets, Cigna healthy attractive Healthcare ahead, across accelerated of well by and cross-enterprise portfolio to our leveraging platforms growth fueled continued foundational are our our businesses Looking Evernorth growth leverage.

business $XX.XX which are new result, the growth wins growth outlook by track year the retention a represents are which to increasing remain of target our our We adjusted within a of we start delivery We XXXX is long-term at full commitments. for as of for as average per continued EPS on as our for XX%. of XX% to least encouraged start annual strong our of the And rate EPS, well XX%, outlook year.

significant as in XXXX least continuing to continue for and at our a expect through pay deliver $X We’re to value dividend. repurchase to deliver well billion as shareholders, meaningful we share

We it to foundational broaden I’ll investments and both growth turn strategic that, Brian. our reach businesses. our accelerated With to to in and also strengthen capabilities continue make over our

Brian Evanko

updated year. second and aspects full outlook our of everyone. key review Cigna's and morning, good David, Today, discuss the for quarter I'll XXXX results Thanks,

We adjusted the our momentum from we growth earnings earnings with $XX.XX least increasing of of are EPS. XXXX have per Evernorth year the second Continuing strong reported and at XX% cross our XXXX. leverage customer Healthcare. quarter, With accelerated quarter delivered year revenue half per again exceeding of with adjusted foundational first This expectations. share, that, earnings updated in our reflects full growth coupled growth off our the first between share enterprise to outlook XXXX and our Cigna outlook representing of full strength and businesses,

strong of growth quarter medical specifically, include of our total quarter After-tax some performance per $X.XX. results $XX.X over share the within key XXXX a highlights of of billion, financial $X earnings billion, at adjusted ratio XX% Evernorth portfolio. revenues earnings Healthcare Cigna representing care in continued second reflect adjusted and consolidated These and Looking better-than-expected

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

in quarter and billion our $XX.X X% growth accelerated our clients quarter as focus adjusted solutions specialty of expansion high-performing the as delivering quarter in by lowest adjusted over were our customers. pretax Second affordability to led well on $X.X continued by revenues expectations. second and a net businesses, by for pharmacy cost XXXX results grew earnings driven billion, were the Evernorth's line with XXXX our

continue business. which also deliver client sustain in with enhanced and expand expectations. to meaningful deepen sources results, and solutions investments of develop Care capabilities relationships, continues Evernorth digital make to Evernorth to These serve Overall, We investments create strategic new our our new differentiation. services consistent to include the strong our to both

Turning to Cigna Healthcare.

costs XXXX the care The to the Cigna categories XX.X%. and taken The and also costs $XX.X $X.X months, Second billion, within quarter better MCR the actions exceeding medical were surgeries inpatient, results of driven our by and lower of a were projected. combination XX over initiatives ratio the past adjusted cost medical the clients Healthcare's for better-than-expected COVID in by continued lower-than-expected revenues across Pre-tax the levels our care expectations. lower pricing emergency quarter was than billion, direct driven than our room were service ratio earnings was earnings driver most utilization in strength were Non-COVID and was our adjusted in primary lower affordability quarter. in care strong expectations quarter,

our we utilization Importantly, seeing and exams, preventive model, colonoscopies engagement care mammograms. in leveraging are annual with such levels, items customer including as pre-pandemic line

medical total customers, million XXX,XXX XX.X medical to customers. year-to-date. quarter customers ended approximately X% of or with Turning the We growth

customer within track customers end customers market of the X% we've commercial in segment the year. medical grown for already high growth strong were seen as Total retention year-to-date on remains single-digit and Overall, Our has growth U.S. the actions above select the quarter expectations continued profit our and and by commitment reflect for the year. over execution our initiatives international both margins in The increasing Cigna to commercial affordability results improvement taken U.S. pricing of health in and our our relationships and against margin XXXX. Healthcare businesses. reflects continued past course

operations, momentum diversified our For our our Corporate was exceeded that across portfolio. financial we with second continuing quarter second loss quarter XXXX delivered the Overall, pre-tax $XXX other strong and adjusted results expectations, contributions million.

revenue our per growth, for future. driving we execution outlook earnings in full with outlook innovation year investing strong Now XXXX, and we line and year respect bottom full Evernorth, share. the top In to for while continued adjusted for our increasing are adjusted attractive expect all

to full an pleased raising first In are are with XXXX updating $X.XXX the of our to medical now are Cigna our XXXX, performance approximately range. Healthcare, and adjusted ratio to XX.X% from year billion. now half our We Evernorth our we we XX.X%, improvement earnings in outlook care prior

XXXX to and we which at are also raising international We And U.S. approximately includes strong medical customer and adjusted our retention $X.XXX foundational outlook are outlook our growth business billion. expected growth businesses. year raising earnings levels in full to health of our attractive customers, least new commercial XXX,XXX

revenue. both and adjusted $XXX now deepening client Enabled enterprise least customer of expect XXXX of consolidated Cigna to growth and year in billion. Turning relationships at full revenues Evernorth by continued Healthcare. and We

in Our increase strategic is investments full the ratio an to make as business. our expected in we year XXXX continue X.X%, SG&A to be of compared now our prior guidance X.X% to to range

raising Taken share, growth least XXXX per XX% earnings guidance year over representing share at as $XX.XX EPS. a reported adjusted our full per whole, to we be of adjusted are

to moving and our capital management Now outlook. XXXX position

returns Our XX, and repurchased billion. cash businesses continue million shares strong as flows X.X of on capital. XXXX, we June to generate have for Year-to-date, approximately $X.X attractive

June. in Additionally, we accelerated of in in delivery stock the an share repurchase XX.X our with announced of received common initial accordance shares July, million we

for deploy the We continue also $X share billion full to least to at expect to XXXX. repurchases year

we the of also year full yield. cash We now million to being than average least due to of at flow our cash from X originally accident expect prior increase for from life, a our international $X.X anticipated. an midpoint full primarily increased later the benefits of at weighted XXX billion, XXX very our generating slightly have to million supplemental guidance, and completed representing shares year shares, businesses operations sale flow shares outlook attractive And million had we

margins on strategic and that remains returns from balance drives cash framework capital. our attractive sheet flexibility, Our benefiting outlook strong asset-light flow efficient strong, and

we risks carries but opportunities. macroeconomic would Now acknowledge we didn't environment, remiss which the if potential be also

first markets. a strength our dynamic with resiliency in a results a And environment. portfolio execution strong spanning of our and demonstrate of addressable broad diverse We have framework, our half service-based and resilient enterprise the

a and We confident we tools evolving to strong variety and and and of to value conditions our continue continue to to remain in proactively deliver prepare customers, clients ability to respond actions economic with to grow our shareholders.

to adjusted giving Now at second performance expand attractive the it strong to to quarter XXXX grow fundamentals the Cigna expectations, for and recap. on of both diversified to continues with guidance portfolio, Healthcare. Q&A across the increased we'll in customer operator the and with the us while were Evernorth confidence over our our least Healthcare Cigna particularly Results And to EPS turn above of results, call. reflecting strong deliver margins, in deliver our relationships $XX.XX. that, portion continues

Operator

Our Matthew Capital first Markets. Mr. Borsch Instructions] [Operator question comes from with BMO

Matthew Borsch

Yes.

a was you wondering maybe retention. that with PBM high U.S. you I group the also or So Is large alluded just along if the bit both that could to the season and sales strong new outlook? employer selling on elaborate covering medical

David Cordani

David. It's

yes, the simple answer. is So

business. employer, So the both In the relative the commercial Evernorth side plan house, comments on to business. -- side a more of focused large in national the of the side, the the side account my on large specifically season, selling health of the the

headline the is of there So piece on the Evernorth equation.

as for of overall year portfolio attractive as business Another new retention well wins. the strong client

leverage. see think importantly traction enterprise to as underscore what continue I of we well, call to we

deepen opportunities expand and to relationships. So

with Cigna by Healthcare. of relationships win best and the presented Evernorth Evernorth opportunity specialty then the broadening traditional key health clients and also beyond And services. to that, secure exclusive within of First, leveraging portfolio, the the the renewal we’re deepening DoD plan the and successful

to year be side, commercial new strong we On national up business some really adds. and very looking a retention the see attractive account XXXX,

So both performance good, equation. the sides good of on

As the performance Brian segment. continued also the his of in noted just in side prepared strong remarks, Select commercial

Operator

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

Kevin Fischbeck

really is to margins. the from as Are you XXXX just want you thinking a COVID about of outperformance relates of I guys target understand guys margin are expectations? is to getting cost kind to fluctuations far this and outperformance sustainable to about how this side new it base? how of hasn’t viewing thought on pricing the moving Or XXXX you kind kind year of medical the so back changed

Brian Evanko

Brian. it's Kevin,

So thanks for the question on Healthcare trajectory. Cigna margin the

rewind bit. to clock Just the a little maybe

part the our actions which we generated our of business we decided well increased back below actions margin in XX in you Cigna series margin part in when at that to margin goal stood X% resulted have quarter we're of as strong pricing a 'XX, to in intensify that to back performance XXXX, relative here in margin of of the affordability saw year If our second XXXX XXXX. XX%. X% stepped in goal a XX%. middle last to long-term profit And and Healthcare south X% about the our the just the X%, for projecting now high the of look With we outlook, where long-term and thought X.X% was months as to of of the we of run

would our continued jump for given Cigna overall we executing goals long-term at should ago. little a we the into quarter expect, place as the also in that You increases the margin have margin Healthcare, margin but stronger-than-expected a our to to that comparison be margin a performance for range of stood that where end as we’ve while And within in X% view of bit we in targeted reducing off as our to we'll range, deliver opportunity expansion seen further 'XX the such growth lower Advantage. XX% likely step to year-over-year the sustainable opportunities able against we XXXX of But platforms accelerated confidence opportunity Medicare of.

Operator

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

JoshRaskin

to a bit attrition wanted just I Advantage, continued year. Medicare seeing focus of little this on

network year? of you directly Do the steps submitted. care action losses? grow market development changes with are any And specifically, now your and in you reverse value-based with bids capitation? so more in or thoughts those What next can the some for to on think line XXXX And

David Cordani

it's Josh, David.

Advantage view Medicare business as from for conversation, focus key one we our platforms. our a So Day point remains of it Investor you accelerate And recall of us. our as

for So a where we growth term. long opportunity over platform the outsized have the

core the the expansion. make aspects that to business as investments of continue in as both We in business, well in geographic the

would I are Our of indicative of network upon did put us XXXX results touched in term. a to the we of think markets expect a the position in not to long what reconfiguration in see for you Medicare importantly, insightfully Shifting to for we would bit we one And positions, the where growth which not pieces, over some question, business. to standpoint. a from but longer-term reaccelerate attractive key we expect 'XX, that outlook ourselves had growth, of growth Advantage network in your year

conversions. more out PDP where we rate, and today, terms beginning As inside opportunities. leverage terms to investments Targeted well med in what harness we in our commercial and we that and distribution had by as that growth geographies that are XXXX yield think discussed, was or before, more about sup conversions agents date or in conversion to in in 'XX existing a beginning geography of as hard in of a done Those geographic our low work about we’ve the talked captive marketing further expansion. of

reconfiguration, a that harnessing of So headline, I harnessing the yes, to. some current benefit expect expansion be made that growth and was we the to this benefits XXXX then the see reference in was for of expect of year to a addressed of us. out done some lot Therefore, work would that year, network we geographic channels

Operator

Mr. Our with next question comes Windley Jefferies. from Dave

Dave Windley

next how if impactful not? benefits calculation if remind us those years over for David, expect if, to MA Wondered the up do couple the in your would margin? Cigna expectations to growth to of were then MA or in relief with progress at in to to could And expect margin all? stimulate Or maintaining back follow-up Star while the A you scores that growth, – you disaster and for will there. MA Josh you

David Cordani

Brian Kevin's as point to margins He reference So referred the our think to was answer, to margin. it Medicare relative in the to target margins. Healthcare made as prior I being below Cigna Advantage

run So of to business to see at portfolio the results forward. overall to in below yet growth below We able margin our run variety investments and margins. is improvement grow target business. very But target margin including looking growth grow although a will we business, we in for XXXX, specific be off reasons, initiatives of portfolio running growing in continue expect of we as That below margins expect specifically, target our will that in our the that expansion and as invest to would some that margin in XXXX's it be portfolio.

data it indicate dislocation provide. seems with you’re a phenomenon look first present. the industry configuration, disaster that think you prolonged as we changes have really that to strong of the that of for disaster the that I articulated. for value our the the Stars release comes and the the to COVID, reasons feel will XXXX identifying release question, of the good relates for and some second program. part To that, your across Star the XXXX within that transfer whole about the We reinforces impact The configuration As Stars, off and present

ourselves. the part as latter for to transpires industry adjustment well this at our And year to of a expect clear would some towards for whole as obviously, have for industry large. consistent with the as what will that we Stars the become So

Operator

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

Unidentified Analyst

for growth just about positive receptivity Clearly, to on This overall some efforts? curious just your which your is commercial is you're your from in comments suggests performance here thoughts targeted more Ricky. peers healthy, I'm stickiness, wanted Michael where on get pricing. MLR efforts. doing Cigna repricing year-to-date. I improved Membership on repricing

David Cordani

it's David. Michael,

it Let and to me hand just briefly Brian. over start

results. to the quite pleased we're First, underscore, with

Our underscored Brian his will but remarks pricing, well. X come the in across the prepared It's executing as well, dimensions working teams quite together. affordability. are And he

solutions employers by segments, middle a select give within What account were consultatively in right employer able right value the they're -- is first So knows employer affordability all executing be then foremost, and and our executing the national to the the and to getting right of then place, market segment initiatives standpoint. from it's employers pricing it's deliver -- market whether employers.

growth, want coming to to business together with. margins it’s the coupled with create pleased both Brian, those both I attractive So and to speak we’re sustainability underlying the you retention towards bit quite little I’ll underscore, our a pricing dimension. of the ask pieces and new more

Brian Evanko

David. Sure,

and driven As in the XXXX for commercial performance to by care it of Cigna margin relates higher business, this of a profile commercial book in has medical year's pricing ratio resulted book Healthcare, business. that's largely our employer

less anticipated. So a more a bit is news needed in originally margin that’s XXXX recaptured we’ve there’s than good means we that correction The on prospective basis.

a that pressure continued our XXXX. talked did our in in in we it XXXX. have employer into about The as the nuance in be we the margin certainly has profile. level we’ll we trend expected as stop-loss is some change relates quarter we commercial So fourth cost XXXX, need step pricing but to one meaningful our results at don’t pressure look portfolio as forward head to That at

there were a as some had a on of of So book into be reprice ‘XX business. the ‘XX, able of step clients will employer in than we again, bit but commercial anticipated those recapture little more to here margin in we we get,

Operator

comes question from with this Rice And Mr. Suisse. Credit A.J.

A.J. Rice

wondered of maybe Would year. postpone and are peers just any you innovative a products that other currents pretty questions. that you selling challenges resonating. seeing activity And on characterize Obviously, on are with I their following questions out what and there. inflationary How cross and those are of faced I wanting they given about it seeing own that’s people delaying said that? everything costs. are for discussions? macroeconomic up employers were going the seeing full-blown playing about providers lot as you're are products some their your Maybe selling the guess a – the RFPs issues, what just Or labor labor into one season of talking relief on particularly also, is wood normal?

David Cordani

It's David.

first the seen see So pipeline. I the an a piece, second question dimension we We've think very active active pipeline. your to on

previously, underscoring noted commented made 'XX, I As to rate relative that reference the even our and been start. importantly, have in execution XX retention But even strong with in XXXX, results Brian results to. retention are strong our

an retention business. good active portfolio, various quite pipeline aspects our our within across of So

part conversation. the it's your question, of long On really first a

engagement Let of me One, the attract, call levels dealing from retain, There's I are be employer prolonged more disrupted, nomadic dynamic, the it, in their point. environment, phenomenons to the their to doubt that no of environment of employers boil employees. it have underscore standpoint to with, A would your an remains couple lifestyle the down. able coworkers. pandemic challenging for

first opposed for their and locations of are the percentage the seamless side, the various in truly a traditional commercial So employees consuming centralized commercial coworkers care higher to because as geographically. having locations foremost, or on network more

of and my Secondly, advance health remains aggressively as health those health behavioral That possible, seeking center. as and services to highlighted connection services front the behavioral of several remarks. And I in physical prepared with services.

whether of open-mindedness cost more optimization Third, side and to push the care on they’re the programs. affordability site even the equation, of aggressively adopt

patient been strategy dealing well of that And quality for individual more care, closer virtual better those with both get as of site nomadic are individual, closer you have to care high So services how existing or an the areas us. do digital-first, even on bringing by affordability the improve optimizing site intimacy. lifestyle with as for

today, is coordinated Cigna network, dynamism solution able optimization the of of now. multimodal being that consultative terms mission-critical So site services the suite right I lot the care Healthcare right national care mission-critical right virtual then A.J., together, the having you’re putting marketplace to helps. now that of mission-critical, Evernorth in and of hope between our and being portfolio the kind correct. There’s a optimize in

Operator

question next Mr. Our from comes

with Justin Lake Wolfe Research.

Justin Lake

I wanted about this to year. talk $XX.XX the

for You've answered think commercial specifically. jump-off or of may in the business some terms kind XX% And in thinking point of may next of the any not growth? this in into about want XX% headwind target terms that earnings, year? just that But be of questions XXXX XX% of XX% we then consider when point versus target should anything us whether the reasonable tailwinds about digging starting a to to you terms to

Brian Evanko

and then, unfavorable tailwinds of nonrecurring Brian. component. you performance. it's level, massive At favorable there chime macro XXXX we'll in Justin, a in maybe should the I'll headwinds, items being think David, I not the or think amounts start on of

So view is $XX.XX you the point. reasonable jump-off a should

we year it strength the amount development, quite seeing years, quarter, fundamental As of business book look of which Cigna activity in back at in prior with the been is second we're calendar as relates has line prior high. Healthcare to largely

a speaking, that not at are So with about be any off broadly jump the David, specific meaning on think you of purposes things jump those and that could want out we’d you to point adjustments unfolds. substantial, But doing XXXX as change call do I time. would tailwind, this for there’s in do meaningful year That that, in to please? $XX.XX.

David Cordani

under Thanks. talk And your seldom framework, maybe a point. Brian, Therefore, we Brian. Sure, Justin. rebasing about through

and may detail Investor more typically the through fourth opportunities would Day, you relates on recall few call that we a go it back talked as a but call, the in step then to guidance from headwind for tailwinds, detailed in of quarter XXXX. macro As maybe third to, the more quarter we about

fundamental foundational and foremost, growth first about across and businesses. think our So

we both the Healthcare side as we of of equation for Evernorth the as equation. well would another growth expect year today, As the commented of Cigna on the organization, side

which well to but value XXXX, clients, for of we XXXX, customers for benefit trend, deliver would our contribution will biosimilar positioned the topic which to begin in have further configured shareholders. on as contributions to previously and here, patients are discussed at our as expect a and well accelerate we but we Investor of Day some trend, accelerate Secondly, biosimilar from discussed further we see not the

and we side, headwind gestation large to strong clients, then for highlighted another headwind pace year to a client give the But we in renewals environment our bit or And strategic of year investments XXXX, shaping year-over-year, that what On set what may whether we off in the more XXXX. be create relative just to rapid very of they’re illustrations, we’ve set given lastly, of call expansions. a large costs we up There’s that. a very little choose the would rate net-net, cycle a would highlight. the to for positive for very is setup make which changes costs – up expect

Operator

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

Gary Taylor

Just loss so want a more which little to favorable. about medical ratio, ask was

the to if a pressure ago, XQ. a I know be year could. had XQ, that that. care through is believing just talked highlighted that's But sequentially different you I and XQ? would still we on One, health way more if all with a congrats the wondered So of international having contributes all? effect then I'm that different now, about few questions, at and in view ‘XX also wondering had initiatives if books just is on pretty have any I unusual pressure a changed stop-loss, of just just in pricing in XQ sequential on decline abuse behavioral And you lot for ‘XX. from putting seasonality there seasonality. Also your substance

strong with bit lower-than-expected still inside just a stop-loss So wondering, this are on being of you it? a the MLR of producing utilization headwind

Brian Evanko

Brian. of your best there. it's question. take of started to the with do I'll I each lead-in appreciated components Gary, those that you And my

the quarter. pleased ratio care We really are with the second medical in the in strength

fundamental a COVID-related being the it and in the mentioned in costs employer So both primary U.S. comments, the commercial our strength in was favorability across of and with as really we saw And non-COVID the portfolio my book in driver I quarter. strength. earlier really

which as So of both lesser well a that affordability portfolio, again, as parts utilization strength we been reflects than forecasting. our in had initiatives

cost the favorable adding expectations, that. you a experience a As not driver the should decline, by relative of prior opposed our in material as book of quarter to health international anything This to think nuanced business unique to it we there. or was relates as really had sequential international the

right, we That's the as relates the moderated saw health, than getting we're trends of XXXX, bit typical standpoint good from year, cost business, our care it the thing higher meaning people behavioral of here As cost in health last we viewed actually a to which in needed. a trends behavioral book you're that seeing your point the a quarter-over-quarter, behavioral asked, performance stop-loss, with little is earlier XXXX. of about our finally, were are in on MCR favorability. provided result expectations. I Michael in And year-over-year stop-loss a then mentioned lower the line that, question XXXX on as on they that's that bit than largely of And as they

at the be So pick book the of to of of reprice just when we not the pressure would MCR XXXX given 'XX year, the that emerged. the we saw, when we most reset we timing given able had said end the

that's so the That's our expectation. seeing And what in we're actual.

XXXX. repricing the similar outlook So the 'XX outlook which to in gives us and for a MCR MCR very stop off opportunity for 'XX,

loss So largely you seeing and all stop first kind we're step coverages back of on from the in COVID-related insured It's businesses. and the dollar is non-COVID risk largely to related favorability our cost this not fully and other and commercial of related. the

Operator

question next from JPMorgan. Gill comes with Ms. Our Lisa

Lisa Gill

I just with PBM. the couple of wanted follow a to around up questions

range? very that, So, about Would in the one. talked that's very David, the be retention. When XX% we strong season, assume high you selling first. about I Should think

see some on of more then -- didn’t 'XX biosimilars as you design and been had manufacturing headwind. in if headwinds business? in XXXX, Express you the XXXX? you the book the talked are side that a I’m be XXXB Or formulary And will out just that Second, about changes think this put curious Scripts as it plan XXXB. we about lastly, impact for just I about to biosimilars, hear 'XX? a you of on we starting really We'll pertains for to opportunity? call think there’s as any

David Cordani

it's Lisa, David.

lot a packed You in there.

through let So them. try run me to

We for standpoint, strong prior And a as comment, portfolio. in with noted have First, I to the the that, in given diversity retention mid-XXs think addition think plus the business the result we services. a of us relationships that believe broadening to XX-plus. anything from continuing deepen is about on quite about of our

leveraging that it's whether deeper relationships capabilities as as have are as or otherwise we or vice the view well retention, noted, something Evernorth I attractive. for But we As enterprise that adding think with some legacy exclusive XX-plus relationships versa. Healthcare becoming is specialty leverages, quite Cigna

as finalization we relates it that your place the biosimilars, As fourth typically takes the question quarter. approach to on specific formulary

as So by relative background would dynamic the acceleration. being dynamism timing and previously, finalization discussed I more We to know, with relates the through. the choice client current formulary And that the we about to And about approaching preferred national managed to time your fourth biosimilar think lot the frame. our to well. in there's as quarter opportunity, specific the a think it you dynamism as versus relative of space, the of as client

active obviously, in XXXX to That begin movement, in year going 'XX is some and much and there's the XXXX, ramp HUMIRA will focus transition. and on While fixation XXXX, begin obviously will to in contributions in ramp with but further 'XX to 'XX. and accelerate

XXXB. to relative Lastly,

to been that. dislocation and populations XXXB of stop right a health lately know, tension folks get a lot you them delivery systems of in have serve participation As from manufacturers important or some help benefit as level program in to program systems affordability. disadvantaged is that really underserved health the they and delivery care decrease pharmaceutical decided There's care some for that or create

here them we that pharmaceutical not not work material As volume the of help We’ve in get to XXXX us through challenging thus driver call care our we of deliver. in it little activities there’s results in a some or didn’t second delivery relates bit results, beginning trough deceleration of the far, improvement specifically driver disruption, or hence, some as activity, systems that driver change that quarter grown. a not third Any the XXXX standpoint, emergence those some as out. try that across health a the material see for Cigna in data is data although quarter, with and has manufacturers material it’s we to to to to transfer of them a But from and Evernorth it and again, been seen the some seen we’ve portfolio, are acceleration tension Lisa.

Operator

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

Kevin Caliendo

Congress. I’d guess potential it time I sort may like to pass legislation. like of That price drug this ask in about looks actually

on could So Evernorth, if potential from what the positively and proposed? look it what’s be impact or I you’ve at a either being was negatively wondering taken

David Cordani

Kevin, David. it's

change. orientation there's our well of the the big portfolio correct, legislation, to You're see financing the day. breadth there's of a continue we and that's from well currently that to the proposed Evernorth standpoint, picture, pricing. the services, if commitment positions unique mechanisms, of there's services, to we the the look a core clinical able the some of choices. once pharmacy evolution both at the our There as -- to with we business. a that dislocation environment view bring proposed services evolution pharmacy have, specialty our best and choice of the we back, manifesting. That clinical cetera, not see even doesn't But clients clients, affording Stepping an portfolio, that innovation, to to programs, commercial and as in of breadth shape the services, is our as And of mean relative emergence continued you the in been our legislation the again, health our significant track no significant variety back we as clients, item the diversification or pharmaceutical funding of legislation the have to market, that the we of plan managing of of the us have, any to we transparency proposed innovation amount to with on we've programs day et builders,

Operator

from comes Rich question Nathan Sachs. with next Our Goldman

Nathan Rich

environment I how utilization of does influence sort the we’re have that pent-up the demand? a just in, the of of back your that outlook to guess, of over the indications specifically seen does And might with And of to in macro Or view MLR the any half of year? balance the does the sort in from any any call. the outlook half? commentary earlier wanted of embed I guess, MLR year, seemingly on favorability the of the guess, you of follow-up some I ask kind trend for I the back raise regards

Brian Evanko

Brian. It's

combined it MLR when of look again we earnings as the favorable if quarter felt performance you our that cost expectations. lot recall assume cost. the medical to look saw would a that the half So to so first the we our of second relative result release, prudent back relates like XXXX XXXX effect in to stepping prior non-COVID at you for and COVID from it was all-in the a year, quarter, back very outlook And

So you use if recall, time would we the would above the be terminology, baseline.

through with half purposes we planning will have we extend be rate the the largely assumptions, meaning favorability the year, consistent back quarter or previous the back run For second of year. assumed will our not that medical of half the performance cost have of assumed the

what more the half MCR be So if the from will we the to quarters in second the were and of with the line X run obviously, second favorability results saw in the the in remaining quarter, standpoint outlook. as of year there income such,

building meaningful pent-up the your business. not second of book acuity seeing demand on part of the question, any of We’re or yet signs in

per in at cancers we was and are in blood much consistent colonoscopies, preventive that So look were with when earlier, to see are we very XXXX. I percentage present line it mentioned of is in metastatic screenings, where continue where XXXX, they very exams, capita like a basis when all with on the those as things mammograms,

the a in being to don’t favorability seeing the needs of to be. that consumed so amount attribute we we’re not And results, meaningful care

Operator

Wells Baxter comes from Mr. Stephen with Our Fargo. next question

Stephen Baxter

the appreciate And a you’re potentially reprices I your thinking be the about cycle as by the consistent guess, driven quarter, in much quickly through think progression the how your Just how that of upside with we follow us MLR balance utilization. you prior intra-year When provide wanted And was think see sense just commentary any a on we book year? for favorable development I to from midyear? above accruals? also planning wouldn’t about Should the provided that then, about that you your versus up year, commentary can expecting of on the there. much current necessarily you of renewals period the midyear MLR tailwind we remind employer in baseline typical

Brian Evanko

Stephen, it's Brian again.

U.S. the primary of to earlier, what in So we MCR, mentioned the relative quarter I driver as second saw commercial favorability. the was

within largely second in was some business, have also Our the is did we again, driver expectations. primary our lower the of initiatives the of experience. ran book which, of the service projections, both from -- commercial but or affordability in expected, quarter to than line that our but development, we function were holding quarter. running And utilization of the hold quarter the favorable really a government first taking favorability with in minority products favorability employer reserve The dates

the to such and strong So care we to saw quarter. the helping contribute that, things quarter of other optimization results in in a favorable site the as

As business, X/X. national have schedule segment for year, of smaller compared business, to tends it accounts repricing date balance the even heavy part to our to to as the relates select a our the of very be more tends which renewal

you on clients select about have should segment, effective dates X/X have of effective X/X of X/X dates other and think So later the the year. in the the

of opportunity the that intend for balance of is for in So us into rate some actions reprice secured or business secure there to the we either already have the year. that’s outlook been factored our to terms

pleased So with that’s our really been commercial the team. U.S. factored into we’ve outlook strong execution and of the been

customer challenging margins and improved in year. both net a delivering growth We’re

Operator

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

Steven Valiquette

deceleration bottom in in line, line in slight Evernorth So with versus a our XQ slowing line results you mentioned were guess, -- And growth bit I expectations. some the within little the both showing year-over-year with XQ. growth the top and year-over-year Evernorth, really the

give in expansion investments strategic to were wanted a some make last I the talked about far of continuing color expectations. you Just in relationships. client meaningful how as baked as to Evernorth around little quarter, you what more know that the was

impacted So have just guess the I’m for in quarter and Evernorth. may I curious progressed those investments results how the

David Cordani

David. it's Steven,

level, to overall you give macro pattern. in point, performance remain One, the the terms one and any we performance Just Two, quarterly the Evernorth of pleased your to X within sustained Evernorth. of I points. triangulating with quite caution

pace correct, the and rate You're of the investments making. we're

and Q-over-Q revenue the the trajectory manifests But the terms growth, a overall earnings relative for the quite lumpiness reference of itself, to QX the overall is and a trajectory last the year. in made revenue little helpful. in example, You way QX bit of revenue of

of the make Investor pharmaceutical the pivoting our into showcased some accelerated through continue specialty continue CuraScripts, relative targeted that. investment Care specifically to ramp our expect your to towards both Lastly, see Accredo to Evernorth, X we Day investments to but heavily down and within within piece, should those kind accelerate us business growing of of and to We platforms, that and the of at piece. you Evernorth direction continue are

care spending any up pattern beyond or making we’re if that strategic of the there’s client or outside part So investments our within it’s manifest itself Evernorth large the costs, today. really equation investments set the

Brian Evanko

for to. reference the driving which In of made specialty the for by driven revenue. it terms quarterly on steep of specific the little bit revenue sequential pattern growth programs. our of A we pattern of relationship, one the XXXX, Just was as clients to with modeling you, XXXX associated relates Steven, less line lot had Evernorth Therapeutics the add relatively side. in the that onboarding Prime you the is steep, top deceleration is a of

of and growth from for However, we’ll and range line track our bottom see Evernorth. year strong the on in for year standpoint this quarter top each sequential we’re in a goals long-term being a

Operator

Lance Mr. with Our comes Wilkes question next from Bernstein.

Lance Wilkes

that And sort then wanted updates to I in care value-based initiative? care, and as And interested in capital priority strategic you’re ask delivery of just at allocation. you of about particular, the on looking as a something Healthcare sorts businesses? is that look for that that of could of through be also something your Medicare enablement be more Cigna at that Evernorth. and an driver Or could cross-sold Advantage,

David Cordani

and to a delivery just to, specifically want value-based care. for care parse care and moment, capital allocation value-based It's ownership. David. to the coming Relative And I

we be fee-for-service to aligning us, track medical for commitment and record value with in be to have higher, starters, very a And through to that capabilities care, outcomes and for value-based able relates care. to it hand deliver than As sustainable value-based relationship. more otherwise leveraging relative means working to done can incentives, and a proven longstanding professionals clinical glove

little less or in overall So with of in today, Advantage. reward-based a value-based variety have conversely than a equation approaching a XX% being configuration, care Medicare XX% programs commercial in the underway we of

that As to of medical to the we that, the call. made contributing to relates performance reference that times as several see it during cost the great contribution Brian

delivery to. health allocation systems capital to our to orientation ownership is just and be your our way partner the to Now I preferred care for with configuration enable reference made continues approach and

in key However, geographies, in we of believe in approaches the deliver and outcome own to the sustained care. addition delivery that, to if way which to physical

for of not physical Medicare are will marketplace What We employers, those clients. integrated a long of be Added to from and as ownership. in own Evernorth commercial line to stand-alone were that, delivery point differentiated configuration needs the are to that part last or the the customized to highly but leverageable delivery that but believe also services health to that offered than I same will own, of nationally. term open and over care broad behavioral delivery examples more going your systems terms capabilities multi-geographic of mean well Specialty by Cigna that. consistent, Lance, Advantage, seek capabilities are And care question, care in Healthcare likely that or be assets that? the large do offered care, health geographic clinical we great as virtual we pharmaceutical, to

as addressable So those we Healthcare to have but through programs outside to programs also Evernorth. be speaking, of care Evernorth the market you to broad Cigna Healthcare, offer expect broadly offered continue will grow, Cigna should they

Lance Wilkes

Group you Evernorth? could would something just are sorts your And Or Are with capabilities? focused those these of kind those on be in those integrated else? and And of efforts? on Cigna Medical comment CareAllies in

David Cordani

credit sneak and to It's a great there. follow-on Yes.

on intensely Evernorth only. are is Group, CareAllies that it's Medical Care. support the So relationships piece, within portion the actions take Cigna now Medicare the it's Medicare standpoint. value-based portion from Cigna in the second as care focused so Evernorth currently rebranded in our and words Healthcare the currently up of an remains MA Advantage It's Group Evernorth, part the and the Advantage of Medical line your

Group the gestation given functioning Cigna those So the programs, platform Co. care postures fully different of but the today. X Evernorth is part of as

Operator

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

George Hill

pharmacy seem while. there would have answered. a pharmacy I Evernorth or to us for stability guess noting it of kind I I network it had David, guess or Yes. I on questions relationships like value? pressure my looking your points any segment pharmacy So and to anything and the to back for come pressure I there ask, as is been relationships. to the worth focus most would we’ve network under just guess in generate always As be value? seems partners pharmacy are relates – clinical services of

there’s wondering talk about. Just if there to anything

David Cordani

-- There's That David. out. doesn't it's nothing is I George, would happening. it's call nothing unique mean

As and the to and there's right access, patients affordability a balance or But get would to accessibility, formation nothing our for call unique out. you dynamic But referenced, our quality or no point sure work continues we out, team it's and partners environment. of make clients with I obviously, would pharmacy and tension I our servicing call our customers. clinical unique pattern

Operator

Ben RBC Capital with Mr. comes question Hendrix Markets. last Our from

Ben Hendrix

within the your to year I’m your also development wondering commercial degree you MLR favorability book? the that helping what I the unique of degree? to guess realized And ASO extent I what that’s favorability customers was same to is ex-prior being wondering noted if by drivers are that retention? insured

Brian Evanko

Brian. It's

So our as I in the the year development results think I in mentioned to question, not prior a prior material quarter. was

utilized of extensibility that in to of So affordability Healthcare point, also products. risk entire by should in the of which, the the the the there the segment care in programs is would that risk-oriented the and the the your business, the of was are here self-funded self-funded commercial our majority many the because David, and want of you book employer to clients same kind in Cigna and place for -- do with in off marketplace? traction span To in ratio on of be terms the medical initiatives pick of our course, quarter definition, considerations ASO instances. book many our are up list clients take you strength by

David Cordani

lower as linkage you contributor to is our for affordability retention get well therefore, It's the and to Just as increases. created, and also responsible cost positive that we our to it able from clients medical a favorability, better both reinforce yields, the trend rate ability importantly relationships, that were not we're value correct. to retention, to us contributor to the puts validate linkage to But services absolutely the to deepen only position so was created standpoint. deliver when able a in broaden you a

Operator

I call turn remarks. over David closing to for the now back will Cordani

David Cordani

therefore, of thanks at good as $XX.XX for pieces, reiterate joining our few revenue confident least ability through quarter and our today. built increased we customer the first And in we're outlook growth and outlook. deliver and our the XXXX our a increased as to we EPS to into First, for second just for carried everybody call momentum quarter, well

continued serve appreciation we our and Additionally, demonstrate you, want more our to the and We Thanks, predictable serve continue you support than again make mission who great a to to my partners patients, to that affordable, our and ultimately, to our to look ability clients, their to solutions of advance XX,XXX about those we shareholders. I our before those improving services our dedication soon simple. close, day. mind express forward of and care peace our health, talking coworkers how recognize our to for customers, through and health to our approach of well-being and and for and convert focus we have have continued just more deliver privilege personal and I and pause for all

Operator

gentlemen, additional this will following Cigna's XX for Investor Quarter concludes XXXX available to this this and available business shortly. respond Relations be of Ladies conference Review. call. Results questions Cigna Second recording days A will be to

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

disconnect. now will You

Cigna (CI) 4 Aug 222022 Q2 Earnings call transcript