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What changed in Cigna's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cigna's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+581 added−609 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in Cigna's 2023 10-K

581 paragraphs added · 609 removed · 428 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

215 edited+70 added−98 removed148 unchanged
Biggest changeHOW WE WIN Evernorth Health Services accelerates delivery of comprehensive, connected solutions to create value and meet the diverse needs of health plans, employers, health care providers and government organizations by: • Partnering in unconventional ways to solve complex problems across a fragmented health care ecosystem, fueled by data and expertise that drives purposeful innovation • Creating flexible solutions tailored to client needs, using Evernorth Health Services' combined strengths and capabilities, as well as strategic partnerships, to deliver: better, more efficient care for patients; better experiences for clients, providers and customers; and enhanced choices for clients and customers through our open architecture model • Evaluating medicines, digital therapeutics and other health solutions for efficacy, adherence, value and price to assist clients in selecting a cost-effective formulary • Offering home delivery, virtual and in-person care, and specialty customer-centric solutions that meet the needs of our clients and customers in ways that unlock greater value and better health services while providing better and specialized clinical care • Delivering more affordable solutions that provide more discounts and drive risk-sharing and value-based care • Promoting the use of generics and lowest-cost, clinically effective brands of medications 4 The following chart depicts a high-level summary of our principal products and services in this segment with definitions on subsequent pages.
Biggest changeHow We Deliver • Deep clinical expertise when evaluating medicines, digital therapeutics and other health solutions for efficacy and value to assist clients in selecting a cost effective formulary. • Affordable solutions that provide more value and drive risk-sharing and value-based care. • Flexible solutions tailored to client needs, using Evernorth Health Services' combined strengths and capabilities, as well as strategic partnerships, to deliver: better, more efficient care for patients; better experiences for clients, providers and customers; and enhanced choices for clients and customers through our open architecture model. • Talented, experienced and caring people who work as consultative partners to solve complex problems across a fragmented health care ecosystem, fueled by data and expertise that drives purposeful innovation. 3 The following chart depicts a high-level summary of our principal products and services in this segment with definitions on subsequent pages.
Together, Evernorth Health Services and Cigna Healthcare provide a strong and diverse foundation that allows us to capitalize on growth opportunities by leading with our strengths – medical and pharmacy solutions – and then expanding those relationships by addressing additional client needs and innovating and delivering new services and solutions.
Together, Evernorth Health Services and Cigna Healthcare provide a strong and diverse foundation that allows us to capitalize on growth opportunities by leading with our strengths – pharmacy and medical solutions – and then expanding those relationships by addressing additional client needs and innovating and delivering new services and solutions.
Patient Protection and the Affordable Care Act The Patient Protection and Affordable Care Act ("ACA") mandated broad changes to the U.S. health care system that affect insured and self-insured health benefit plans and pharmacy benefit managers.
The Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act ("ACA") mandated broad changes to the U.S. health care system that affect insured and self-insured health benefit plans and pharmacy benefit managers.
INVESTMENT MANAGEMENT Our investment operations provide investment management and related services for our various businesses, including the insurance-related invested assets in our General Account ("General Account Invested Assets"). We acquire or originate, directly or through intermediaries, a broad range of investments, including private placement and public securities, commercial mortgage loans, real estate, mezzanine, private equity partnerships and short-term investments.
INVESTMENT MANAGEMENT Our investment operations provide investment management and related services for our various businesses, including the insurance-related invested assets in our General Account ("General Account Invested Assets"). We acquire or originate, directly or through intermediaries, a broad range of investments, including private placement and public securities, commercial mortgage loans, real estate, mezzanine debt, private equity partnerships and short-term investments.
Investment results are affected by the amount and timing of cash available for investment, economic and market conditions and asset allocation decisions. We routinely monitor and evaluate the status of our investments, obtaining and analyzing relevant investment-specific information and assessing current economic conditions, trends in capital markets and other factors such as industry sector, geographic and property-specific information.
Investment results are affected by the amount and timing of cash available for investment, economic and market conditions and asset allocation decisions. We routinely monitor and evaluate the status of our investments, obtaining and analyzing relevant investment- 14 specific information and assessing current economic conditions, trends in capital markets and other factors such as industry sector, geographic and property-specific information.
Criminal statutes similar to the False Claims Act provide that if a corporation is convicted of presenting a claim or making a statement it knows to be false, fictitious or fraudulent to any federal agency, the corporation may be fined. Conviction under these 24 statutes may also result in exclusion from participation in federal and state health care programs.
Criminal statutes similar to the False Claims Act provide that if a corporation is convicted of presenting a claim or making a statement it knows to be false, fictitious or fraudulent to any federal agency, the corporation may be fined. Conviction under these statutes may also result in exclusion from participation in federal and state health care programs.
This includes maintaining an information security program based on ongoing risk assessment, overseeing third-party service providers, investigating data breaches and notifying regulators of a cybersecurity event. As the model law is intended to serve as model legislation only, states will need to enact legislation for the model law to become mandatory and enforceable.
This includes maintaining an information security program based on ongoing risk assessment, overseeing third-party service providers, investigating data breaches 23 and notifying regulators of a cybersecurity event. As the model law is intended to serve as model legislation only, states will need to enact legislation for the model law to become mandatory and enforceable.
Some states have also enacted laws regulating pharmacy pricing and protecting the profitability of pharmacies for dispensing certain MAC-priced drugs. Some states have enacted laws requiring that the customer cost-share for a prescription drug claim not exceed certain price points, such as the pharmacy's usual and customary charge or its contracted reimbursement for the drug.
Some states have also enacted laws regulating pharmacy pricing and protecting the profitability of pharmacies for dispensing certain MAC-priced drugs. Some states have enacted laws requiring that the customer cost-share for a prescription drug claim not exceed certain price points, such as the pharmacy's usual and customary charge or its contracted 26 reimbursement for the drug.
State holding company laws and regulations also subject our insurance companies and certain HMO subsidiaries to additional regulatory scrutiny related to their oversight of affiliates 31 performing regulated services on behalf of the insurance company or HMO and require the Company to file an annual Enterprise Risk Report, which summarizes material risks that could pose enterprise risk to the insurance company subsidiaries.
State holding company laws and regulations also subject our insurance companies and certain HMO subsidiaries to additional regulatory scrutiny related to their oversight of affiliates performing regulated services on behalf of the insurance company or HMO and require the Company to file an annual Enterprise Risk Report, which summarizes material risks that could pose enterprise risk to the insurance company subsidiaries.
Financial strength, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. Our health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, clinical care and health management capabilities along with an array of product funding solutions are competitive 15 advantages.
Financial strength, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. Our health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, clinical care and health management capabilities along with an array of product funding solutions are competitive advantages.
Federal and state statutes and regulations govern the labeling, packaging, repackaging, compounding, storing, holding, disposal, distribution, advertising, misbranding, adulteration, transfer, handling and security of prescription drugs and the dispensing of prescription, over-the-counter, 30 hazardous and controlled substances and certain of our pharmacies must register with the U.S. Drug Enforcement Administration, the U.S.
Federal and state statutes and regulations govern the labeling, packaging, repackaging, compounding, storing, holding, disposal, distribution, advertising, misbranding, adulteration, transfer, handling and security of prescription drugs and the dispensing of prescription, over-the-counter, hazardous and controlled substances and certain of our pharmacies must register with the U.S. Drug Enforcement Administration, the U.S.
The employer mandate requires employers with 50 or more full-time employees to offer affordable health insurance that provides minimum value (each as defined under the ACA) to full-time employees and their dependents, including children up to age 26, or be subject to penalties based on employer size.
The employer mandate requires employers with 50 or more full-time employees to offer affordable health insurance that provides minimum value (each as defined under the ACA) to full-time employees and their dependents, including 19 children up to age 26, or be subject to penalties based on employer size.
Additionally, as a result of the COVID-19 pandemic's impact on 2020 care patterns and utilization, CMS finalized rules applying relief to Medicare Advantage 23 and Part D Plan Star Ratings for payment year 2023 by utilizing the higher of the payment year 2023 or 2022 measure level Star Ratings.
Additionally, as a result of the COVID-19 pandemic's impact on 2020 care patterns and utilization, CMS finalized rules applying relief to Medicare Advantage and Part D Plan Star Ratings for payment year 2023 by utilizing the higher of the payment year 2023 or 2022 measure level Star Ratings.
For example, the Transparency in Coverage rule issued in October 2020 by the HHS, the DOL and the Department of the Treasury now requires most group health plans and health insurance issuers in the individual and group markets to publicly disclose 27 price and cost-sharing information for all items and services to participants and enrollees.
For example, the Transparency in Coverage rule issued in October 2020 by the HHS, the DOL and the Department of the Treasury now requires most group health plans and health insurance issuers in the individual and group markets to publicly disclose price and cost-sharing information for all items and services to participants and enrollees.
Income, gains and losses generally accrue directly to the contractholders. STRATEGIC INVESTMENTS Cigna Ventures. In addition to the portfolio investments in our general and separate accounts discussed in the Investment Management section above that support our insurance operations, we make targeted investments within the health care industry, specifically.
Income, gains and losses generally accrue directly to the contractholders. STRATEGIC INVESTMENTS The Cigna Group Ventures. In addition to the portfolio investments in our general and separate accounts discussed in the Investment Management section above that support our insurance operations, we make targeted investments within the health care industry, specifically.
Licensing and Registration Requirements Our insurance companies and HMO subsidiaries must be licensed by the jurisdictions in which they conduct business. Additionally, certain subsidiaries contract to provide claim administration, utilization management and other related services for the administration of self-insured benefit plans.
Licensing and Registration Requirements Our insurance companies and HMO subsidiaries must be licensed by the jurisdictions in which they conduct business. Additionally, certain subsidiaries contract to provide claim administration, utilization management and other related services for the administration 28 of self-insured benefit plans.
Federal Civil Monetary Penalties Law. The federal civil monetary penalty statute provides for civil monetary penalties against any person who gives something of value to a Medicare or Medicaid program beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular provider for Medicare or Medicaid items or services.
The federal civil monetary penalty statute provides for civil monetary penalties against any person who gives something of value to a Medicare or Medicaid program beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular provider for Medicare or Medicaid items or services.
Employers generally with 500 to 2,999 eligible employees, solutions for third party payers, Taft-Hartley plans, as well as other groups, through ASO and insured funding solutions. ◦ Select. Employers generally with 51 to 499 eligible employees, primarily through ASO with stop-loss insurance coverage and insured funding solutions. ◦ Small Group. Employers generally with 2 to 50 eligible employees.
Employers generally with 500 to 2,999 eligible employees, solutions for third-party payers, Taft-Hartley plans, as well as other groups, through ASO and insured funding solutions. ◦ Select. Employers generally with 51 to 499 eligible employees, primarily through ASO with stop-loss insurance coverage and insured funding solutions. ◦ Small. Employers generally with 2 to 50 eligible employees.
ERISA is a complex set of federal laws and regulations enforced by the IRS and the DOL, as well as the courts. ERISA regulates certain aspects of the relationship between us, the employers that maintain employee welfare benefit plans subject to ERISA and the 25 participants in such plans.
ERISA is a complex set of federal laws and regulations enforced by the IRS and the DOL, as well as the courts. ERISA regulates certain aspects of the relationship between us, the employers that maintain employee welfare benefit plans subject to ERISA and the participants in such plans.
These regulations apply to a variety of entities , including health plans, and generally require significant enhancements to information technology and data governance practices. The regulations impact how industry participants, including us, comply with disclosure requirements and share information with individuals and other health care organizations.
These regulations apply to a variety of entities and generally require significant enhancements to information technology and data governance practices. The regulations impact how industry participants, including us, comply with disclosure requirements and share information with individuals and other health care organizations.
For example, some states, under so-called "freedom of choice" legislation, provide that customers of the plan may not be required to use network providers, but must instead be provided with benefits even if they choose to use non-network providers.
For example, some states, under so-called "freedom of choice" legislation, provide that customers of the plan may not be required to use network providers, but must instead be provided with benefits even if they choose to 25 use non-network providers.
Additionally, 26 the National Association of Insurance Commissioners ("NAIC"), an organization of state insurance regulators, recently established the Innovation, Cybersecurity and Technology Committee to provide a forum for regulators to learn, monitor and confer on emerging technology issues, including, among others, cybersecurity and AI.
Additionally, the National Association of Insurance Commissioners ("NAIC"), an organization of state insurance regulators, recently established the Innovation, Cybersecurity and Technology Committee to provide a forum for regulators to learn, monitor and confer on emerging technology issues, including, among others, cybersecurity and AI.
Evernorth Health Services is our pharmacy, care and benefits solution that is highly attractive to our clients and partners because of the depth of its capabilities and expertise. Evernorth Health Services also enables us to deepen existing relationships across our entire book of business.
Evernorth Health Services is our pharmacy benefits, specialty and care solution that is highly attractive to our clients and partners because of the depth of its capabilities and expertise. Evernorth Health Services also enables us to deepen existing relationships across our entire book of business.
Key Transactions and Business Developments See the "Executive Overview - Key Transactions and Business Developments" section of our MD&A located in Part II, Item 7 of this Form 10-K for discussion of key developments impacting this segment. 10 CIGNA HEALTHCARE Cigna Healthcare includes the U.S. Commercial, U.S.
Key Transactions and Business Developments See the "Executive Overview - Key Transactions and Business Developments" section of our MD&A located in Part II, Item 7 of this Form 10-K for discussion of key developments impacting this segment. CIGNA HEALTHCARE Cigna Healthcare includes the U.S.
The indefinite enforcement deferral of the prescription drug pricing file under the Transparency in Coverage rule is, in part, due to the subsequent enactment of the CAA, which requires plans to report information regarding prescription drug spending to federal regulators beginning in 2022.
The indefinite enforcement deferral of the prescription drug pricing file under the Transparency in Coverage rule is, in part, due to the subsequent 24 enactment of the CAA, which requires plans to report information regarding prescription drug spending to federal regulators beginning in 2022.
Other Information The financial information included in this Form 10-K for the fiscal year ended December 31, 2022 is in conformity with accounting principles generally accepted in the United States of America ("GAAP") unless otherwise indicated. In the segment discussions that follow, we use the terms "adjusted revenues" and "pre-tax adjusted income (loss) from operations" to describe segment results.
Other Information The financial information included in this Form 10-K for the fiscal year ended December 31, 2023 is in conformity with accounting principles generally accepted in the United States of America ("GAAP") unless otherwise indicated. In the segment discussions that follow, we use the terms "adjusted revenues" and "pre-tax adjusted income (loss) from operations" to describe segment results.
In the past few years, five states have adopted their own comprehensive consumer privacy statutes and many more states are considering doing so. Generally, the statutes exempt data and/or entities regulated by GLBA and/or HIPAA but are, in varying respects, applicable to other data we collect, such as PII provided by website visitors, and in California, employees and business partners.
In the past few years, fourteen states have adopted their own comprehensive consumer privacy statutes and many more states are considering doing so. Generally, the statutes exempt data and/or entities regulated by GLBA and/or HIPAA but are, in varying respects, applicable to other data we collect, such as PII provided by website visitors, and in California, employees and business partners.
Our specialty pharmacies also carry biopharmaceutical products to meet the needs of our customers, including pharmaceuticals for the treatment of rare or chronic diseases; if a drug is not in our inventory, we can generally obtain it from a supplier within a reasonable amount of time. We purchase pharmaceuticals either directly from manufacturers or through authorized wholesalers.
Our specialty pharmacies and specialty distributor also carry biopharmaceutical products to meet the needs of our customers, including pharmaceuticals for the treatment of rare or chronic diseases; if a drug is not in our inventory, we can generally obtain it from a supplier within a reasonable amount of time. We purchase pharmaceuticals either directly from manufacturers or through authorized wholesalers.
During 2022, we continued to leverage both internal and external data to identify and address health disparities and better understand the long-term medical and behavioral complications facing our customers. The data-informed approach allows for delivery of solutions with a digital-first entry point that meet our customers where they are to offer physical and behavioral health support. Digital.
During 2023, we continued to leverage both internal and external data to identify and address health disparities and better understand the long-term medical and behavioral complications facing our customers. The data-informed approach allows for delivery of solutions with a digital-first entry point that meet our customers where they are to offer physical and behavioral health support. Digital.
See the "Business - Regulation" section of this Form 10-K for additional information about premiums, MLR requirements, Star Ratings and risk adjustment programs of the ACA. Market Segments • U.S. Commercial comprises the following market segments: ◦ National. Employers with 3,000 or more eligible employees, primarily through ASO funding solutions. ◦ Middle Market.
See the "Business - Regulation" section of this Form 10-K for additional information about premiums, MLR requirements, Star Ratings and risk adjustment programs of the ACA. Market Segments • U.S. Healthcare comprises the following market segments: ◦ National. Employers with 3,000 or more eligible employees, primarily through ASO funding solutions. ◦ Middle Market.
The Inflation Reduction Act, which was signed into law in August 2022, extended the expanded and increased premium tax credits for individuals enrolled in ACA qualified health plans, through December 31, 2025. Medicare and Medicaid Regulations Through our subsidiaries, we offer individual and group Medicare Advantage, Medicare Prescription Drug ("Part D") and Medicare Supplement products.
The Inflation Reduction Act, which was signed into law in August 2022, extended the expanded and increased premium tax credits for individuals enrolled in ACA qualified health plans, through December 31, 2025. Medicare and Medicaid Regulations Through our subsidiaries, we offer individual and group Medicare Advantage, Medicare Prescription Drug and Medicare Supplement products.
To reduce our exposure to large individual losses, we purchase reinsurance from unaffiliated reinsurers. Run-off Businesses Settlement Annuity Business Our settlement annuity business is a closed, run-off block of single premium annuity contracts. These contracts are primarily liability settlements with approximately 15% of the liabilities associated with guaranteed payments not contingent on survivorship.
To reduce our exposure to large individual losses, we purchase reinsurance from unaffiliated reinsurers. 13 Run-off Businesses Settlement Annuity Business Our settlement annuity business is a closed, run-off block of single premium annuity contracts. These contracts are primarily liability settlements with approximately 13% of the liabilities associated with guaranteed payments not contingent on survivorship.
For additional information about invested assets, see the "Investment Assets" section of the MD&A and Notes 11 and 12 to the Consolidated Financial Statements. We manage our investment portfolios to reflect the underlying characteristics of related insurance and contractholder liabilities and capital requirements, as well as regulatory and tax considerations pertaining to those liabilities and state investment laws.
For additional information about invested assets, see the "Investment Assets" section of the MD&A and Notes 12 and 13 to the Consolidated Financial Statements. We manage our investment portfolios to reflect the underlying characteristics of related insurance and contractholder liabilities and capital requirements, as well as regulatory and tax considerations pertaining to those liabilities and state investment laws.
Insurance and contractholder liabilities range from short duration health care products to longer-term obligations associated with life insurance products and the run-off settlement annuity business. Assets supporting these liabilities are managed in segregated investment portfolios to facilitate matching of asset durations and cash flows to those of corresponding liabilities.
Insurance and contractholder liabilities range from short-duration health care products to longer-term obligations associated with corporate-owned life insurance products and the run-off settlement annuity business. Assets supporting these liabilities are managed in segregated investment portfolios to facilitate matching of asset durations and cash flows to those of corresponding liabilities.
Utilization Management Laws State legislatures have begun to propose and enact laws exempting certain providers from pre-authorization requirements of insurers. These exemptions reduce the ability for insurers and medical management entities from reviewing services for medical necessity if the provider meets the law's established thresholds for approval rates in the preceding six months.
Utilization Management Laws State legislatures have begun to propose and enact laws exempting certain providers from pre-authorization requirements of insurers. These exemptions reduce the ability for insurers and medical management entities to review services for medical necessity if the provider meets the law's established thresholds for approval rates in the preceding six months.
In addition to the FTC Act, the FTC also enforces other federal laws relating to consumers' privacy and security. The FTC has also been active with respect to companies' use of big data and artificial intelligence ("AI"), specifically ensuring fair and equitable use of these tools, and the FTC has named AI as an area of enforcement focus.
In addition to the FTC Act, the FTC also enforces other federal laws relating to consumers' privacy and security. The FTC has also been active with respect to companies' use of big data and AI, specifically ensuring fair and equitable use of these tools, and the FTC has named AI as an area of enforcement focus.
A significant portion of our Medicare Advantage customers receive medical care from our value-based models that focus on developing highly engaged physician networks, aligning payment incentives to improve health outcomes and using timely and transparent data sharing. • Medicare Stand-Alone Prescription Drug ("Part D") Products provide a number of prescription drug plan options, as well as service and information support to Medicare-eligible individuals or individuals through a qualified employer group.
A significant portion of our Medicare Advantage customers receive medical care from our value-based models that focus on developing highly-engaged physician networks, aligning payment incentives to improve health outcomes and using timely and transparent data sharing. • Medicare Stand-Alone Prescription Drug ("Part D") Plans provide a number of prescription drug plan options, as well as service and information support to Medicare-eligible individuals or individuals through a qualified employer group waiver plan.
Our differentiated practice of pharmacy, coupled with our advanced automated dispensing technology, results in safer and more accurate pharmacy operations when compared to retail pharmacies, convenient access to maintenance medications and better management of our clients' drug costs through operating efficiencies and generic substitutions.
Our differentiated practice of pharmacy, coupled with our advanced automated dispensing technology, results in safer and more accurate pharmacy operations when compared to retail pharmacies, convenient access to maintenance medications and better coordination with management of our PBM clients' drug costs through operating efficiencies and generic substitutions.
Primary Distribution Channels • Brokers. Sales representatives distribute our products and services to a broad group of insurance brokers and consultants. • Direct. Cigna Healthcare sales representatives distribute our products and services directly to employers, unions and other groups or individuals. Various products may also be sold directly to insurance companies, HMOs and third-party administrators.
Primary Distribution Channels • Brokers. Sales representatives distribute our products and solutions to a broad group of insurance brokers and consultants. • Direct. Cigna Healthcare sales representatives distribute our products and solutions directly to employers, unions and other groups or individuals. Various products may also be sold directly to insurance companies, HMOs and third-party administrators.
We also use patents to protect our proprietary technological advances and to differentiate ourselves in the market. The Cigna Group companies hold over 320 United States patents. We are not substantially dependent on any single patent or group of related patents.
We also use patents to protect our proprietary technological advances and to differentiate ourselves in the market. The Cigna Group companies hold over 400 United States patents. We are not substantially dependent on any single patent or group of related patents.
Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments.
Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and eliminations for products and services sold between segments.
It is a contracted supplier with most major group purchasing organizations and leverages our distribution platform to operate as a third-party logistics provider for several pharmaceutical companies. • Care Delivery and Management Solutions.
It is a contracted supplier with most major group purchasing organizations and leverages its distribution platform to operate as a third-party logistics provider for several pharmaceutical companies. • Care Delivery and Management Solutions.
In 2022, The Cigna Group invested approximately 18% of total payroll in health, well-being and other benefits, including life and disability programs, 401(k) contributions and retirement-related benefits for our employees in the United States.
In 2023, The Cigna Group invested approximately 18% of total payroll in health, well-being and other benefits, including life and disability programs, 401(k) contributions and retirement-related benefits for our employees in the United States.
These include compliance with the Privacy Act of 1974, the Defense Federal Acquisition Regulation Supplement ("DFARS") cybersecurity requirements, the Cybersecurity Maturity Model Certification ("CMMC") (going into effect over the next four years and based on NIST standards), the Federal Information Security Modernization Act ("FISMA"), and the White House's 2021 Executive Order on Improving the Nation's Cybersecurity.
These include compliance with the Privacy Act of 1974, the Defense Federal Acquisition Regulation Supplement ("DFARS") cybersecurity requirements, the Cybersecurity Maturity Model Certification ("CMMC") (going into effect over the next four years and based on the National Institute of Standards and Technology ("NIST") standards), the Federal Information Security Modernization Act ("FISMA") and the White House's 2021 Executive Order on Improving the Nation's Cybersecurity.
CMS has announced that its goal is to subject all Medicare Advantage contracts to either a comprehensive or a targeted RADV audit for each contract year. The DOJ is also currently conducting industry-wide investigations of the risk adjustment data submission practices and business processes of The Cigna Group and a number of other Medicare Advantage organizations.
CMS has announced that its goal is to subject all Medicare Advantage contracts to either a comprehensive or a targeted RADV audit for each contract year. The DOJ is also currently conducting industry-wide investigations of the risk adjustment data submission practices and business processes of a number of Medicare Advantage organizations.
Separate Accounts Our subsidiaries or external advisors manage invested assets of separate accounts on behalf of contractholders, including The Cigna Group Pension Plan, variable universal life products sold through our corporate-owned life insurance business and other life insurance products. These assets are legally segregated from our other businesses and are not included in General Account Invested Assets.
Separate Accounts Our subsidiaries or external advisors manage invested assets of separate accounts on behalf of contractholders, including The Cigna Group Pension Plan, variable universal life products sold through our corporate-owned life insurance products and the run-off businesses. These assets are legally segregated from our other businesses and are not included in General Account Invested Assets.
Our Specialty Pharmacy operations consist of 33 specialty pharmacies. • Distribution. CuraScript SD is a specialty distributor of pharmaceuticals and medical supplies (including injectable and infusible pharmaceuticals and medications to treat specialty and rare or orphan diseases) directly to health care providers, clinics and hospitals in the United States for office or clinic administration.
Our Specialty Pharmacy operations consist of 31 licensed pharmacies. • Specialty Distribution. CuraScript SD is a specialty distributor of pharmaceuticals and medical supplies (including injectable and infusible pharmaceuticals and medications to treat specialty and rare or orphan diseases) directly to health care providers, clinics and hospitals in the United States for office or clinic administration.
We offer a solution platform aimed at therapy classes that pose budgetary threats and clinical challenges to customers. Our solutions are designed to keep our clients ahead of the drug cost curve while providing customers the personalized care and access they need.
We offer a solution platform aimed at therapy classes that pose budgetary threats to clients and clinical challenges to customers. Our solutions are designed to help keep our clients ahead of the drug cost curve while providing customers the personalized services and access they need.
Our Medical Management programs include case, specialty and utilization management and a 24/7 Health Information line which ensures around the clock access to a medical professional. Our Health Advocacy program services include early intervention in the treatment of chronic conditions and an array of health and wellness coaching.
Our Medical Management programs include case, specialty and utilization management and a 24/7 Health Information phone line which ensures around-the-clock access to a medical professional. Our Health Advocacy program includes early intervention in the treatment of chronic conditions and an array of health and wellness coaching.
We offer clinical programs to help our clients drive better whole-person health outcomes through our Care Delivery (virtual care, in-home care, physical primary care) and Care Management (behavioral health services and health coaching capabilities) offerings. ◦ eviCore . eviCore healthcare is a medical benefits management organization that is a leading provider of solutions that ensure customers receive optimal treatment at the right site of care by leveraging our team of medical professionals, evidence-based guidelines and innovative technologies to deliver affordable care. eviCore provides integrated solutions for key clinical diagnostic areas such as advanced imaging, cardiology and gastroenterology, as well as longitudinal areas such as musculoskeletal, oncology and post-acute care. eviCore contracts with health plans to promote the appropriate use of health care services by the customers they serve.
We offer clinical programs to help our clients drive better whole-person health outcomes through our Care Delivery (virtual care, in-home care and physical primary care) and Care Management (eviCore benefits management, behavioral health services and health coaching capabilities) offerings. ◦ eviCore Healthcare . eviCore Healthcare is a medical benefits management organization that promotes customers' optimal treatment at the right site of care by leveraging our team of medical professionals, evidence-based guidelines and innovative technologies to promote affordable care. eviCore Healthcare provides integrated solutions for key clinical diagnostic areas such as advanced imaging, cardiology and gastroenterology, as well as longitudinal areas such as musculoskeletal, oncology and post-acute care. eviCore Healthcare contracts with health plans to promote the appropriate use of health care services by the customers they serve.
The Cigna Group companies hold over 320 United States patents. We use these patents to protect our proprietary technological advances and to differentiate ourselves in the market. 19 HUMAN CAPITAL MANAGEMENT The Cigna Group's mission is to improve the health and vitality of those we serve.
The Cigna Group companies hold over 400 United States patents. We use these patents to protect our proprietary technological advances and to differentiate ourselves in the market. HUMAN CAPITAL MANAGEMENT The Cigna Group's mission is to improve the health and vitality of those we serve.
When considering our broad portfolio of businesses, we have strong foundational businesses that will continue to grow. These businesses often serve as the key entry point for clients with either a 1 pharmacy relationship, a medical relationship or both.
When considering our broad portfolio of businesses, we have strong foundational businesses that we expect to continue to grow. These businesses often serve as the key entry point for clients with either a pharmacy relationship, a medical relationship or both.
We are also subject to the Payment Card Industry Data Security Standard, a set of requirements designed to help ensure that entities that Process credit card information maintain a secure environment. On the federal level we are subject to a number of sector specific regulation.
We are also subject to the Payment Card Industry Data Security Standard, a set of requirements designed to help ensure that entities that Process credit card information maintain a secure environment. 22 On the federal level we are subject to a number of sector specific regulations.
Certain insurance and HMO subsidiaries are required to file an annual report of internal control over financial reporting with most jurisdictions in which they do business. Insurance and HMO subsidiaries' operations and financial statements are subject to examination by such agencies.
Certain insurance and HMO subsidiaries are required to file an annual report of internal control over financial reporting with most jurisdictions in which they do business. Insurance and HMO subsidiaries' operations and financial statements are subject to examination by regulators.
CMS will not apply extrapolation to RADV audits until the 2018 payment year with payment recoveries for those RADV audits expected in 2025. Audits for payment years prior to 2018 are not subject to extrapolation. RADV audits for our contract years 2011 through 2015 are currently in process.
CMS will not apply extrapolation to RADV audits until the 2018 payment year with payment recoveries for those RADV audits expected in 2025. Audits for payment years prior to 2018 are not subject to extrapolation. RADV audits for our contract years 2011 through 2015 are currently awaiting CMS finalization.
Beginning in 2023, we will be required to make available to members personalized cost-sharing information for 500 covered health care items and services. In 2024, this cost-sharing information requirement will expand to all items and services, including prescription drugs.
In 2023, we were required to make available to members personalized cost-sharing information for 500 covered health care items and services. In 2024, this cost-sharing information requirement will expand to all items and services, including prescription drugs.
Our most recent pay equity analysis among our U.S. employees, conducted in 2023, illustrated that female employees of The Cigna Group earn more than 99 cents for every dollar earned by similarly-situated male employees, and employees from underrepresented groups (which includes Black/African American, Hispanic or Latinx, Pacific Islander and American Indian/Alaskan employees) earn more than 99 cents for every dollar earned by similarly-situated white employees.
Our most recent pay equity analysis among our U.S. employees, conducted in 2024, illustrated that female employees of The Cigna Group earn more than 99 cents for every dollar earned by similarly-situated male employees, and employees from underrepresented groups (which includes Black/African American, Hispanic or Latino/a, Pacific Islander and American Indian/Alaskan employees) earn more than 99 cents for every dollar earned by similarly-situated white employees.
If The Cigna Group is determined to have failed to comply with applicable laws or regulations, these examinations, audits, investigations, reviews, subpoenas and demands may: • result in fines, penalties, injunctions, consent orders or loss of licensure; • suspend or exclude us from participation in government programs or limit our ability to sell or market our products; • require changes in business practices; • damage relationships with the agencies that regulate us and affect our ability to secure regulatory approvals necessary for the operation of our business; or • damage our brand and reputation.
If The Cigna Group is determined to have failed to comply with applicable laws or regulations, these examinations, audits, investigations, reviews, subpoenas and demands may: • result in fines, penalties, injunctions, consent orders or other settlement agreements such as corporate integrity agreements or loss of licensure; • suspend or exclude us from participation in government programs or limit our ability to sell or market our products; • require changes in business practices; • damage relationships with the agencies that regulate us and affect our ability to secure regulatory approvals necessary for the operation of our business; or • damage our brand and reputation.
This success is rooted in strategic relationships with diverse student groups at our partner colleges and universities, as well as our commitment to multiple national, regional and local organizations, which provide us focused recruiting opportunities with women, the LGBTQ+ community, military veterans and underrepresented minority groups.
This success is rooted in strategic relationships with student groups at our partner colleges and universities, as well as our engagement with multiple national, regional and local organizations, which provide us focused recruiting opportunities with women, the LGBTQ+ community, military veterans and underrepresented minority groups.
Effective January 1, 2023, also includes IN, SC & TX. (3) AL, AR, AZ, CO, CT, DE, FL, GA, IL, KS, MD, MO, MS, NC, NJ, NM, OH, OK, OR, PA, SC, TN, TX, UT, VA, VT & WA. Effective January 1, 2023, also includes KY & NY.
(2) ( AZ, CO, FL, GA, IL, IN, MS, NC, PA, SC, TN, TX, UT & VA. (3) AL, AR, AZ, CO, CT, DE, FL, GA, IL, KS, KY, MD, MO, MS, NC, NJ, NM, NY, OH, OK, OR, PA, SC, TN, TX, UT, VA, VT & WA. Effective January 1, 2024, also includes NV.
The FTC is also increasingly exercising its enforcement authority in the areas of consumer privacy and data security, with a focus on web-based, mobile data and "big data." Federal consumer protection laws may also apply in some instances to privacy and security practices related to personally identifiable information.
The FTC is also increasingly exercising its enforcement authority in the areas of consumer privacy and data security, with a focus on web-based, mobile data and "big data." Federal consumer protection laws may also apply in some instances to privacy and security practices related to PII.
We believe that when we support our employees' health and well-being, they have fewer absences and are more productive and engaged in driving our mission and business strategy forward, thereby creating shareholder value.
We believe that when we support our employees' health and well-being, they are more productive and engaged in driving our mission and business strategy forward, thereby creating shareholder value.
Private individuals may bring qui tam or "whistleblower" suits under the False Claims Act, which authorizes the payment of a portion of any recovery to the individual bringing suit.
Private individuals have brought and may bring qui tam or "whistleblower" suits under the False Claims Act, which authorizes the payment of a portion of any recovery to the individual bringing suit.
Revenues from CMS are significant to the market segment. • International Health comprises market segments offering international plans to multinational employers and globally mobile individuals, and domestic plans to employers and individuals in specific countries outside of the U.S. Employer plans in the International Health segment may be ASO or fully insured plans.
Revenues from CMS are significant to the market segment. • International Health comprises market segments offering international plans to multinational employers and globally mobile individuals, and domestic plans to employers and individuals in specific countries outside of the United States. Employer plans in the International Health segment may be ASO or fully insured plans.
We believe these strategies and programs contribute to employee engagement and retention. 20 ENVIRONMENTAL, SOCIAL AND GOVERNANCE The Cigna Group's environmental, social and governance ("ESG") framework is structured around four pillars that underscore our mission to improve the health and vitality of those we serve.
We believe these strategies and programs contribute to employee engagement and retention. 17 ENVIRONMENTAL, SOCIAL AND GOVERNANCE The Cigna Group's environmental, social and governance ("ESG") framework is structured around four connected pillars that underscore our enterprise mission to improve the health and vitality of those we serve.
These provisions affect our ultimate payments from CMS. For example, premiums from CMS are subject to risk corridor payments that compare costs targeted in our annual bids with actual prescription costs, limited to actual costs that would have been incurred under the standard coverage as defined by CMS.
For example, premiums from CMS are subject to risk corridor payments that compare costs targeted in our annual bids with actual prescription costs, limited to actual costs that would have been incurred under the standard coverage as defined by CMS.
Our predictive analytics models proactively identify customers who need support so that we can engage them early and provide the appropriate care, leveraging our extensive provider network including in-person providers, virtual providers and digital tools. ◦ inMynd .
Our predictive analytics models proactively identify customers who need support so that we can engage them early and provide the appropriate care, leveraging our extensive provider network including in-person providers, virtual providers and digital tools. ◦ Evernorth Home-Based Care.
Our formulary management services support clients in establishing formularies that assist customers and physicians in choosing clinically-appropriate, cost-effective drugs and prioritize access, safety and affordability. We administer specific formularies on behalf of our clients, including standard formularies developed and offered by Express Scripts and custom formularies in which we play a more limited role.
Our formulary management services support clients in establishing formularies that assist customers and physicians in choosing clinically-appropriate, cost-effective drugs and prioritize access, safety and affordability. ▪ We administer specific formularies for our clients, including standard formularies developed by Express Scripts and custom formularies in which we play a more limited role.
We believe the primary competitive factors in the industry include the ability to: negotiate with retail pharmacies to ensure our retail pharmacy networks meet the needs of our clients and customers; provide home delivery and specialty pharmacy services; negotiate discounts and rebates on prescription drugs with drug manufacturers; navigate the complexities of government-reimbursed business including Medicare, Medicaid and the public exchanges; manage cost and quality of specialty drugs; and use the information we obtain about drug utilization patterns and consumer behavior to reduce costs for our clients and customers and assess the level of service we provide. • Managed Care PBMs.
We believe the primary competitive factors in the industry include the ability to: negotiate with retail pharmacies to ensure our retail pharmacy networks meet the needs of our clients and customers; provide home delivery and specialty pharmacy services; negotiate discounts and rebates on prescription drugs with drug manufacturers; specialize in claim adjudication and benefit administration; navigate the complexities of government-reimbursed business including Medicare, Medicaid and the public exchanges; manage cost and quality of specialty drugs; and use the information we obtain about drug utilization patterns and consumer behavior to reduce costs for our clients and customers and assess the level of service we provide.
Additionally, we anticipate federal and state legislators and regulators will continue to enact legislation related to privacy and cybersecurity, including with respect to ransomware incidents. In addition, international laws, rules and regulations governing the use and disclosure of PII can be more stringent than those in the United States, and they vary from jurisdiction to jurisdiction.
Additionally, we anticipate federal and state legislators and regulators will continue to enact legislation related to privacy and cybersecurity. In addition, international laws, rules and regulations governing the use and disclosure of PII can be more stringent than those in the United States, and they vary from jurisdiction to jurisdiction.
With the exception of ER policies, we generally cannot subsequently adjust premiums to reflect actual claim experience until the next policy period; the policyholder does not participate, or share in, actual claim experience; and we keep any experience surplus or margin if costs are less than the premium charged (subject to minimum medical loss ratio rebate requirements discussed below).
With the exception of ER policies, we generally cannot adjust premium rates to reflect actual claim experience until the next policy period; the policyholder does not participate, or share in, actual claim experience, and we retain any surplus or margin if costs are less than the premium charged (subject to minimum medical loss ratio ("MLR") rebate requirements discussed below).
In addition, we use aggregated and de-identified data for our own research and analysis purposes and, in some cases, provide access to such de-identified data, or analytics created from such data, to third parties. We may also use such information to create analytic models designed to predict, and potentially improve, outcomes and patient care.
In addition, we use aggregated and/or anonymized data for our own research and analysis purposes and, in some cases, when permitted, provide access to such anonymized data, or analytics created from such data, to third parties. We may also use such information to create analytic models designed to predict, and potentially improve, outcomes and patient care.
Our technology team, powered by over 8,500 employees and several thousand external resources working with our partners, supports the various information systems essential to our operations, including the health benefit claims processing systems and specialty and home delivery pharmacy systems. Uninterrupted point-of-sale electronic retail pharmacy claims processing is a significant operational requirement for our business.
Our Technology team, powered by approximately 9,500 employees and several thousand external resources collaborating with our partners, supports the various information systems essential to our operations, including the health benefit claims processing systems and specialty and home delivery pharmacy systems. Uninterrupted point-of-sale electronic retail pharmacy claims processing is a significant operational requirement for our business.
The provisions of the ACA imposed, among other things, certain assessments on health insurers, created health insurance exchanges for individuals and small group employers to purchase insurance coverage and implemented minimum MLRs for our Medicare and commercial businesses. Certain states have adopted MLR requirements applicable to our commercial businesses that are more stringent than those established by the ACA.
The provisions of the ACA imposed, among other things, certain assessments on health insurers, created health insurance exchanges for individuals and small group employers to purchase insurance coverage and implemented minimum MLRs for our Cigna Healthcare business. Certain states have adopted MLR requirements applicable to our employer businesses that are more stringent than those established by the ACA.
The final rule creates two new safe harbors: (i) for price reductions by manufacturers to plan sponsors under Medicare Part D and Medicaid managed care organizations that are reflected at the time of dispense and (ii) for fixed-fee service arrangements between manufacturers and pharmacy benefit managers. The effective date of the final rule has been postponed to 2032.
The final rule creates two new safe harbors: (i) for price reductions by manufacturers to plan sponsors under Medicare Part D and Medicaid managed care organizations that are reflected at the time of dispense and (ii) for fixed-fee service arrangements between manufacturers and pharmacy benefit managers.
Our capabilities include: 1) a broad portfolio of solutions and services, some of which can be offered on a stand-alone basis; 2) integrated behavioral, medical and pharmacy management solutions; 3) leading specialty pharmacy, clinical and care management expertise; and 4) advanced analytics that help us engage more meaningfully with individuals, the plan sponsors we serve and our provider partners.
Our capabilities include: 1) a broad portfolio of solutions and services, some of which can be offered on a stand-alone basis; 2) integrated behavioral, medical and pharmacy management solutions; 3) leading specialty pharmacy, clinical and care management expertise; and 4) advanced analytics that help us engage more meaningfully with those we serve.
See Note 24 to the Consolidated Financial Statements of this Form 10-K for definitions of those terms. Industry rankings and percentages set forth herein are for the year ended December 31, 2022, unless otherwise indicated.
See 2 Note 25 to the Consolidated Financial Statements of this Form 10-K for definitions of those terms. Industry rankings and percentages set forth herein are for the year ended December 31, 2023, unless otherwise indicated.
In certain instances, this occurs through capitated risk arrangements, when we assume the financial obligation for the cost of health care services provided to eligible customers covered by eviCore healthcare management programs. ◦ MDLIVE .
In certain instances, this occurs through capitated risk arrangements, when we assume the financial obligation for the cost of health care services provided to eligible customers covered by eviCore healthcare management solutions. ◦ Evernorth Behavioral Health.
Our Medicare Advantage Plans include HMO and PPO plans marketed to individuals and qualified employer groups.
Our plans include HMO and PPO plans marketed to individuals and qualified employer groups.
MDLIVE virtual care services provide flexibility for the customer to access a network of virtual care providers for preventative and routine primary care and wellness, urgent care, dermatology care, behavioral health care needs and chronic condition management beginning with hypertension. ◦ Behavioral health .
MDLIVE virtual care services provide flexibility for the customer to access a network of virtual care providers for preventative and routine primary care and wellness, urgent care, dermatology care, behavioral health care needs and chronic condition management. ◦ Pharmacy Solutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAn audit resulting in findings or allegations of noncompliance or the implementation of an enforcement action could have an adverse effect on our results of operations, financial position, cash flows and reputation. 44 Noncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized disclosure of protected personal information, whether by us or by one of our third-party service providers, could materially adversely affect our business and reputation, including our results of operations, financial position and cash flows.
Biggest changeNoncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized disclosure of PI, whether by us or by one of our third-party service providers, could materially adversely affect our business and reputation, including our results of operations, financial position and cash flows. 41 Effective prevention, detection and control systems are critical to maintain regulatory compliance and prevent fraud; failure of these systems could adversely affect us.
Financial strength, claims paying ability and debt ratings by recognized rating organizations are each important factors in establishing the competitive position of insurance and health benefits companies. Ratings information by nationally recognized ratings agencies is broadly disseminated and generally used throughout the industry.
Financial strength, claims paying ability and debt ratings by recognized rating organizations are each important factors in establishing the competitive position of insurance and health benefits companies. Ratings information by nationally recognized rating agencies is broadly disseminated and generally used throughout the industry.
For example: • Employers may take action to reduce their operating costs by modifying, delaying or canceling plans to purchase our products or making changes in the mix of products purchased that are unfavorable to us. • Higher unemployment rates, employee attrition (including challenges filling open positions in light of an increasingly competitive job market) and workforce reductions could result in lower enrollment in our employer-based plans (including an increase in the number of employees who opt out of employer-based plans) or our individual plans. • Because of unfavorable economic conditions or the ACA, employers may stop offering health care coverage to employees or elect to offer this coverage on a voluntary, employee-funded basis as a means to reduce their operating costs. • If clients are not successful in generating sufficient funds or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. • Our clients or potential clients may force us to compete more vigorously on factors such as price and service to retain or obtain their business. • Our clients may be acquired, consolidated, or otherwise fail to successfully maintain or grow their business or workforce, which could reduce the number of customers we serve or otherwise result in lower than anticipated utilization of our services. • A prolonged unfavorable economic environment could adversely impact the financial position of hospitals and other health care providers, potentially increasing our medical costs. • Our third-party vendors could significantly and quickly increase their prices or reduce their output to reduce their operating costs.
For example: • Employers may take action to reduce their operating costs by modifying, delaying or canceling plans to purchase our products or making changes in the mix of products purchased that are unfavorable to us. • Higher unemployment rates, employee attrition (including challenges filling open positions in light of a competitive job market) and workforce reductions could result in lower enrollment in our employer-based plans (including an increase in the number of employees who opt out of employer-based plans) or our individual plans. • Because of unfavorable economic conditions or the ACA, employers may stop offering health care coverage to employees or elect to offer this coverage on a voluntary, employee-funded basis as a means to reduce their operating costs. • If clients are not successful in generating sufficient funds or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. • Our clients or potential clients may force us to compete more vigorously on factors such as price and service to retain or obtain their business. • Our clients may be acquired, consolidated, or otherwise fail to successfully maintain or grow their business or workforce, which could reduce the number of customers we serve or otherwise result in lower than anticipated utilization of our services. • A prolonged unfavorable economic environment could adversely impact the financial position of hospitals and other health care providers, potentially increasing our medical costs. • Our third-party vendors could significantly and quickly increase their prices or reduce their output to reduce their operating costs.
These legal matters could include benefit claims, breach of contract actions, tort claims (including claims related to the delivery of health care services, such as medical malpractice by staff at our affiliates' facilities, or by health care practitioners who are employed by us, have contractual relationships with us, or serve as providers to our managed care networks, including as a result of a failure to adhere to applicable clinical, quality and/or patient safety standards), claims arising from consumer protection laws, false claims act laws, claims disputes under federal or state laws and disputes regarding reinsurance arrangements, employment and employment discrimination-related suits, antitrust claims (including as a result of changes in the enforcement of antitrust laws), employee benefit claims, wage and hour claims, tax, privacy, intellectual property and whistleblower claims, shareholder suits and other securities law claims, real estate disputes, claims related to disclosure of certain business practices and claims arising from customer audits and contract performance, including government contracts.
These legal matters could include benefit claims, breach of contract actions, tort claims (including claims related to the delivery of health care services, such as medical malpractice by staff at our affiliates' facilities, or by 39 health care practitioners who are employed by us, have contractual relationships with us, or serve as providers to our managed care networks, including as a result of a failure to adhere to applicable clinical, quality and/or patient safety standards), claims arising from consumer protection laws, false claims act laws, claims disputes under federal or state laws and disputes regarding reinsurance arrangements, employment and employment discrimination-related suits, antitrust claims (including as a result of changes in the enforcement of antitrust laws), employee benefit claims, wage and hour claims, tax, privacy, intellectual property and whistleblower claims, shareholder suits and other securities law claims, real estate disputes, claims related to disclosure of certain business practices and claims arising from customer audits and contract performance, including government contracts.
Successfully executing on these initiatives depends on a number of factors, including our ability to: • differentiate our products, services and solutions from those of our competitors; • develop and bring to market new and innovative products, solutions or programs that focus on improving patient outcomes and experiences and assist in controlling costs or in response to government regulation; • develop and create data and analytic solutions to support and improve outcomes for our products, services and solutions, including creating and developing solutions and services through partnerships with other industry participants; • grow and support our product portfolio, expand our addressable markets and identify and introduce the proper mix, coordination or integration of products that will be accepted by the marketplace; • evaluate drugs for efficacy, value and price to assist clients in selecting a cost-effective formulary; • offer cost-effective home delivery pharmacy and specialty services; • access or continue accessing key drugs and successfully penetrate key treatment categories in our specialty pharmacy business; • attract and retain sufficient numbers of qualified employees, particularly in an increasingly competitive job market; • attract, develop and maintain collaborative relationships with a sufficient number of qualified partners; • attract new and maintain existing customer and client relationships; • leverage purchase volume to deliver discounts to health benefit providers; • transition health care providers from volume-based fee-for-service arrangements to a value-based system; • improve medical cost competitiveness in our targeted markets; • manage our medical, pharmacy, administrative and other operating costs effectively; and • contract with health care providers, pharmacy providers and pharmaceutical manufacturers on market competitive terms.
Successfully executing on these initiatives depends on a number of factors, including our ability to: • differentiate our products, services and solutions from those of our competitors; • develop and bring to market new and innovative products, solutions or programs that focus on improving patient outcomes and experiences and assist in controlling costs or in response to government regulation; • develop and create data and analytic solutions to support and improve outcomes for our products, services and solutions, including creating and developing solutions and services through partnerships with other industry participants; • grow and support our product portfolio, expand our addressable markets and identify and introduce the proper mix, coordination or integration of products that will be accepted by the marketplace; • evaluate drugs for efficacy, value and price to assist clients in selecting a cost-effective formulary; • offer cost-effective home delivery pharmacy and specialty services; • access or continue accessing key drugs and successfully penetrate key treatment categories in our specialty pharmacy business; • attract and retain sufficient numbers of qualified employees, particularly in a competitive job market; • attract, develop and maintain collaborative relationships with a sufficient number of qualified partners; • attract new and maintain existing customer and client relationships; • leverage purchase volume to deliver discounts to health benefit providers; • transition health care providers from volume-based fee-for-service arrangements to a value-based system; • improve medical cost competitiveness in our targeted markets; • manage our medical, pharmacy, administrative and other operating costs effectively; and • contract with health care providers, pharmacy providers and pharmaceutical manufacturers on market competitive terms.
Regulatory audits, investigations, litigation or reviews or actions by other government agencies could result in changes to our business practices, retroactive adjustments to certain premiums, significant fines, penalties, civil liabilities, criminal liabilities or other sanctions, including corporate integrity agreements, restrictions on our ability to participate in government programs or exclusion from such programs, market certain products or engage in business-related activities, that could have a material adverse effect on our business, results of operation, financial condition and liquidity.
Regulatory audits, investigations, litigation or reviews or actions by other government agencies have resulted in and could result in changes to our business practices, retroactive adjustments to certain premiums, significant fines, penalties, civil liabilities, criminal liabilities or other sanctions, including corporate integrity agreements, restrictions on our ability to participate in government programs or exclusion from such programs, market certain products or engage in business-related activities, that could have a material adverse effect on our business, results of operation, financial condition and liquidity.
A plan's Star Rating affects its image in the market and plans that perform well are able to offer enhanced benefits, market more effectively and for longer periods of time than other 42 plans. The Star Rating system is subject to change annually by CMS, which may make it more difficult to achieve four stars or greater.
A plan's Star Rating affects its image in the market and plans that perform well are able to offer enhanced benefits, market more effectively and for longer periods of time than other plans. The Star Rating system is subject to change annually by CMS, which may make it more difficult to achieve four stars or greater.
Legal and Compliance Risks Our business is subject to substantial government regulation, as well as new laws or regulations or changes in existing laws or regulations that could have a material adverse effect on our business, results of operations, financial condition and liquidity. 41 Our business is regulated at the federal, state, local and international levels.
Legal and Compliance Risks Our business is subject to substantial government regulation, as well as new laws or regulations or changes in existing laws or regulations that could have a material adverse effect on our business, results of operations, financial condition and liquidity. Our business is regulated at the federal, state, local and international levels.
If such collaborative arrangements do not result in the lower medical costs that we project or if we fail to attract health care providers to such arrangements, or are less successful at implementing such arrangements than our competitors, our attractiveness to customers may be reduced and our ability to profitably grow our business may be adversely affected.
If such collaborative arrangements do not result in the lower medical costs that we project or if we fail to attract health care providers to such arrangements, or are less successful at implementing such arrangements 32 than our competitors, our attractiveness to customers may be reduced and our ability to profitably grow our business may be adversely affected.
Each of the rating agencies reviews 45 ratings periodically and there can be no assurance that current ratings will be maintained in the future. A downgrade of any of these ratings in the future could make it more difficult to either market our products successfully or raise capital to support business growth.
Each of the rating agencies reviews ratings periodically and there can be no assurance that current ratings will be maintained in the future. A downgrade of any of these ratings in the future could make it more difficult to either market our products successfully or raise capital to support business growth.
If providers refuse to contract with us, use 35 their market position to negotiate more favorable contracts or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially adversely affected. Additionally, certain regulations may impact our ability to obtain competitive prices.
If providers refuse to contract with us, use their market position to negotiate more favorable contracts or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially adversely affected. Additionally, certain regulations may impact our ability to obtain competitive prices.
For example, noncompliance with any privacy or security laws and regulations, 40 any security breach involving one of our third-party vendors or a dispute between us and a third-party vendor related to our arrangement could have a material adverse effect on our business, results of operations, financial condition, liquidity and reputation.
For example, noncompliance with any privacy or security laws and regulations, any security breach involving one of our third-party vendors or a dispute between us and a third-party vendor related to our arrangement could have a material adverse effect on our business, results of operations, financial condition, liquidity and reputation.
Increasingly, our clients seek to negotiate performance guarantees that require us to pay penalties if the guaranteed performance standard is not met. Clients can easily move between our competitors and us. Our clients are well informed and typically have knowledgeable consultants that seek competing bids from our competitors before 34 contract renewal.
Increasingly, our clients seek to negotiate performance guarantees that require us to pay penalties if the guaranteed performance standard is not met. Clients can easily move between our competitors and us. Our clients are well informed and typically have knowledgeable consultants that seek competing bids from our competitors before contract renewal.
In addition, there is a risk that actions taken to respond to climate change could increase the cost of energy, fuel and other commodities, which would increase our operating costs. We are also subject to risk as a result of information technology disruptions.
In addition, there is a risk that actions taken to respond to climate change could increase the cost of energy, fuel and other commodities, which would increase our operating costs. 37 We are also subject to risk as a result of information technology disruptions.
For example, health care reforms or the invalidation, modification, repeal or replacement of the ACA or portions thereof could result in material changes to the way we conduct our business, as well as the loss of subsidies related to our IFP offerings and could impact the market for our products.
For example, health care reforms or the invalidation, modification, repeal or replacement of the ACA or portions thereof could result in material changes to the way we conduct our business, as well as 38 the loss of subsidies related to our IFP offerings and could impact the market for our products.
In addition, the unauthorized access, acquisition, use, disclosure or dissemination of sensitive personal information, proprietary information or confidential information about us, our customers or other third parties could expose our customers' and their private information to the risk of financial or medical identity theft.
In addition, the unauthorized access, acquisition, use, disclosure or dissemination of personal information, proprietary information or confidential information about us, our customers or other third parties could expose our customers' and their private information to the risk of financial or medical identity theft.
The health care data ecosystem is complex and requires data exchange with vendors, business partners, the government and others. If disruptions, disclosures, security incidents or breaches are not detected quickly, their effect could be compounded.
The health care data ecosystem is complex and requires data exchange with vendors, business partners, health care professionals, the government and others. If disruptions, data disclosures, security incidents or breaches are not detected quickly, their effect could be compounded.
If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our clients, customers and health care providers and hinder our ability to provide or establish appropriate pricing for products and services, retain and attract clients and customers, establish reserves and report financial results timely and accurately and maintain regulatory compliance, among other things.
If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party providers or subcontractors that we or they engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our clients, customers and health care providers and hinder our ability to provide or establish appropriate pricing for products and services, retain and attract clients and customers, establish reserves and report financial results timely and accurately and maintain regulatory compliance, among other things.
We are also exposed to interest rate and equity risk associated with our pension obligations. Sustained declines in interest rates could have an adverse impact on the funded status of our pension plans and our reinvestment yield on new investments. See Note 17 to the Consolidated Financial Statements for more information on our obligations under the pension plans.
We are also exposed to interest rate and equity risk associated with our pension obligations. Sustained declines in interest rates could have an adverse impact on the funded status of our pension plans and our reinvestment yield on new investments. See Note 18 to the Consolidated Financial Statements for more information on our obligations under the pension plans.
As we increase the amount of personal information that we store and share digitally, our exposure to unauthorized disclosures, data privacy and related cybersecurity risks increases, including the risk of undetected attacks, damage, loss or unauthorized access or acquisition or misappropriation of proprietary or personal information, and the cost of attempting to protect against these risks also increases.
As we increase the amount of PI that we store and share digitally, our exposure to unauthorized uses and disclosures, and data privacy and related cybersecurity risks increases, including the risk of undetected attacks, damage, loss or unauthorized access or acquisition or misappropriation of proprietary or personal information, and the cost of attempting to protect against these risks also increases.
Strategic transactions involve risks and we may not realize the expected benefits because of integration difficulties, underperformance relative to our expectations and other challenges. As part of our strategy, we regularly consider and enter into strategic transactions, including mergers, acquisitions, joint ventures, licensing arrangements, divestitures and other relationships (collectively referred to as "strategic transactions").
Strategic transactions involve risks and we may not realize the expected benefits because of integration or separation difficulties, underperformance relative to our expectations and other challenges. As part of our strategy, we regularly consider and enter into strategic transactions, including mergers, acquisitions, joint ventures, licensing arrangements, divestitures and other relationships (collectively referred to as "strategic transactions").
We also use aggregated and anonymized data for research and analysis purposes, and in some cases, provide access to such de-identified data, or analytics created from such data, to pharmaceutical manufacturers and third-party data aggregators and analysts. We may also use such information to create analytic models designed to predict, and potentially improve, outcomes and patient care.
We also use aggregated and/or anonymized data for research and analysis purposes, and in some cases, provide access to such anonymized data, or analytics created from such data, to pharmaceutical manufacturers and third-party data aggregators and analysts. We may also use such information to create analytic models designed to predict, and potentially improve, outcomes and patient care.
More than 67,000 pharmacies participated in one or more of our networks as of December 31, 2022. The ten largest retail pharmacy chains represent approximately 60% of the total number of stores in our largest network. In certain geographic areas of the United States, our networks may be comprised of higher concentrations of one or more large pharmacy chains.
More than 67,000 pharmacies participated in one or more of our networks as of December 31, 2023. The ten largest retail pharmacy chains represent approximately 60% of the total number of stores in our largest network. In certain geographic areas of the United States, our networks may be comprised of higher concentrations of one or more large pharmacy chains.
Although a portion of our reinsurance exposures are secured, the inability to collect a material recovery from a reinsurer could have a material adverse effect on our results of operations, financial condition and liquidity. 47 Item 1B. UNRESOLVED STAFF COMMENTS None.
Although a portion of our reinsurance exposures are secured, the inability to collect a material recovery from a reinsurer could have a material adverse effect on our results of operations, financial condition and liquidity. 44 Item 1B. UNRESOLVED STAFF COMMENTS None.
Human or technological error has and could in the future result in, for example, unauthorized access to, acquisition, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems; theft of sensitive, regulated, or confidential data including personal information and intellectual property; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions or denials of service.
Human or technological error has and could in the future result in, for example, unauthorized access to, acquisition, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems; theft of sensitive, regulated, or confidential data including PI and intellectual property; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions or denials of service.
In some instances, these organizations may compete directly with us, potentially affecting the way we price our products and services or causing us to incur increased costs if we change our operations to be more competitive. Out-of-network providers are not limited by any agreement with us in the amounts they bill.
In some instances, these organizations may compete directly with us, potentially affecting the way we price our products and services or causing us to incur increased costs if we change our operations to be more competitive. Out-of-network providers for non-Medicare services are not limited by any agreement with us in the amounts they bill.
Contracts with retail pharmacies are generally nonexclusive and are terminable on relatively short notice by either party. If one or more of the larger pharmacy chains terminates its relationship with us, or is able to renegotiate terms substantially less favorable to us, our customers' access to retail pharmacies or our business could be materially adversely affected.
Contracts with retail pharmacies are generally non-exclusive and are terminable on relatively short notice by either party. If one or more of the larger pharmacy chains terminates its relationship with us, or is able to renegotiate terms substantially less favorable to us, our customers' access to retail pharmacies or our business could be materially adversely affected.
As a result, the outcome of disputes where we do not have a provider contract may cause us to pay higher medical or other benefit costs than we projected. Additionally, certain of our products and services are sold in part through nonexclusive producers and consultants for whose services and allegiance we compete.
As a result, the outcome of disputes where we do not have a provider contract may cause us to pay higher medical or other benefit costs than we projected. Additionally, certain of our products and services are sold in part through non-exclusive producers and consultants for whose services and allegiance we compete.
A description of material pending legal actions and other legal and regulatory matters is included in Note 23 to the Consolidated Financial Statements included in this Form 10-K. The outcome of litigation and other legal or regulatory matters is always uncertain.
A description of material pending legal actions and other legal and regulatory matters is included in Note 24 to the Consolidated Financial Statements included in this Form 10-K. The outcome of litigation and other legal or regulatory matters is always uncertain.
Industry shifts could result (and have resulted) from, among other things: • a large intra- or inter-industry merger or industry consolidation; • strategic alliances; • new or alternative business models or new government options or offerings; 33 • continuing consolidation among physicians, hospitals and other health care providers, as well as changes in the organizational structures chosen by physicians, hospitals and health care providers; • new market entrants, including those not traditionally in the health service industry; • the ability of larger employers and clients to contract directly with providers; • technological changes and rapid shifts in the use of technology, such as telehealth; • the impact or consequences of legislation or regulatory changes; • changes in the United States Postal Service or the consolidation of shipping carriers; • increased drug acquisition cost or unexpected changes to drug pricing trend; • changes in the generic drug market or the failure of new generic drugs to come to market; or • changes in utilization of health care, prescription drugs or other covered services and items, including under risk-based contracts in the health benefit management market and for those businesses that utilize risk adjustment methodology.
Industry shifts could result (and have resulted) from, among other things: • a large intra- or inter-industry merger or industry consolidation; • strategic alliances; • new or alternative business models or new government options or offerings; • continuing consolidation among physicians, hospitals and other health care providers, as well as changes in the organizational structures chosen by physicians, hospitals and health care providers; • new market entrants, including those not traditionally in the health service industry; • the ability of larger employers and clients to contract directly with providers; • technological changes and rapid shifts in the use of technology, such as telehealth and AI; 30 • the impact or consequences of legislation or regulatory changes; • impacts to distribution channels, including changes to the United States Postal Service or the consolidation of shipping carriers; • increased drug acquisition cost or unexpected changes to drug pricing trend; • changes in the generic/biosimilar drug market or the failure of new generic/biosimilar drugs to come to market; or • changes in utilization of health care, prescription drugs or other covered services and items, including under risk-based contracts in the health benefit management market and for those businesses that utilize risk adjustment methodology.
See Note 19 to the Consolidated Financial Statements for more information on goodwill and intangibles. In addition, the trading price of our securities may decline if, among other things, we are unable to achieve our estimates of earnings growth and operational cost savings, or the transaction costs are greater than expected.
See Note 20 to the Consolidated Financial Statements for more information on goodwill and 36 intangibles. In addition, the trading price of our securities may decline if, among other things, we are unable to achieve our estimates of earnings growth and operational cost savings, or the transaction costs are greater than expected.
Our contracts with pharmaceutical manufacturers are typically nonexclusive and terminable on relatively short notice by either party. The consolidation of pharmaceutical manufacturers, the termination or material alteration of our relationships, or our failure to renew contracts on market competitive terms could have a material adverse effect on our business and results of operations.
Our contracts with pharmaceutical manufacturers are typically non-exclusive and terminable on relatively short notice by either party. The consolidation of pharmaceutical manufacturers, the termination or material alteration of our relationships, or our failure to renew contracts on market competitive terms could have a material adverse effect on our business and results of operations.
Government business, we contract with CMS and various state governmental agencies to provide managed health care services including Medicare Advantage plans and Medicare Part D plans.
Healthcare business, we contract with CMS and various state governmental agencies to provide managed health care services including Medicare Advantage plans and Medicare Part D plans.
Any failure, or alleged failure, to comply with various state and federal health care laws and regulations, including those directed at preventing fraud and abuse in government funded programs, has resulted in and could in the future result in investigations or litigation, such as actions under the federal False Claims Act and similar whistleblower statutes under state laws.
Any failure, or alleged failure, to comply with various state and federal health care laws 40 and regulations, including those related to the CIA or otherwise directed at preventing fraud and abuse in government funded programs, has resulted in and could in the future result in investigations or litigation, such as actions under the federal False Claims Act and similar whistleblower statutes under state laws.
For example, there has been an increase in new financial fraud schemes akin to ransomware attacks on large companies whereby a cybercriminal installs a type of malicious software, or malware, that prevents a user or enterprise from accessing computer files, systems or networks and demands payment of a ransom for their return.
For example, there continues to be an increase in new financial fraud schemes akin to ransomware attacks on large companies whereby a cybercriminal installs a type of malicious software, or malware, that prevents a user or enterprise from accessing computer files, systems or networks and demands payment of a ransom for their return.
The collection, dissemination, receipt, maintenance, protection, use, transmission, disclosure, privacy, confidentiality, security, availability, integrity, creation, processing, and disposal of sensitive personal information are regulated at the federal, state, international and industry levels and requirements are imposed on us by contracts with clients.
The collection, dissemination, receipt, maintenance, protection, use, transmission, disclosure, privacy, confidentiality, security, availability, integrity, creation, processing, and disposal of PI are regulated at the federal, state, international and industry levels and requirements are imposed on us by contracts with clients.
Further, we depend on many vendors to support and assist our business, which requires such vendors to generate, store and use sensitive personal information. Cybersecurity threats are rapidly evolving and those threats and the means for obtaining access to our proprietary systems are becoming increasingly sophisticated.
Further, we depend on many vendors to support and assist our business, which requires such vendors to generate, store and use PI. Cybersecurity threats are rapidly evolving and those threats and the means for obtaining access to our proprietary systems are becoming increasingly sophisticated.
We are subject to the credit risk of our reinsurers. We enter into reinsurance arrangements with other insurance companies, primarily in connection with acquisition or divestiture transactions when the underwriting company is not being acquired or sold. Under all reinsurance arrangements, reinsurers assume insured losses, subject to certain limitations or exceptions that may include a loss limit.
We enter into reinsurance arrangements with other insurance companies, primarily in connection with acquisition or divestiture transactions when the underwriting company is not being acquired or sold. Under all reinsurance arrangements, reinsurers assume insured losses, subject to certain limitations or exceptions that may include a loss limit.
Several of our businesses act as business associates to their covered entity customers and, as a result, collect, receive, use, disclose, transmit and maintain sensitive personal information in order to provide services to these customers. HHS administers an audit program to assess HIPAA compliance efforts by covered entities and business associates.
Several of our businesses act as business associates to their covered entity clients and, as a result, collect, receive, use, disclose, transmit and maintain PHI in order to provide services to these customers. HHS administers an audit program to assess HIPAA compliance efforts by covered entities and business associates.
If we fail to comply with applicable privacy, security and data laws, regulations and standards, our business and reputation could be materially adversely affected. Most of our activities involve the receipt, use, storage or transmission of a substantial amount of individuals' PHI and personally identifiable information.
If we fail to comply with applicable privacy, security and data laws, regulations and standards, our business and reputation could be materially adversely affected. Most of our activities involve the receipt, use, storage or transmission of a substantial amount of individuals' PI, including PHI.
The global nature of our business and operations may present challenges including, but not limited to, those arising from: • geopolitical business conditions and demands; • regulation that may discriminate against U.S. companies, favor nationalization or expropriate assets; • price controls or other pricing issues and exchange controls; restrictions that prevent us from transferring funds out of the countries in which we operate; foreign currency exchange rates and fluctuations and restrictions on converting currencies from foreign operations into other currencies; uncertainty with respect to the interpretation of tax positions; • reliance on local employees and interpretations of labor laws in foreign jurisdictions; • managing our partner relationships in countries outside of the United States; • providing data protection on a global basis and sufficient levels of technical support in different locations; • the global trend for companies to enact local data residency requirements; • acts of civil unrest, war and terrorism, as well as other political and economic conflicts such as through imposition of economic or political sanctions; • man-made disasters, natural disasters (including those arising as a result of climate change) and pandemics, such as the COVID-19 pandemic, in locations where we operate; and • general economic and political conditions.
The global nature of our business and operations may present challenges including, but not limited to, those arising from: • geopolitical business conditions and demands; • regulation that may discriminate against U.S. companies, favor nationalization or expropriate assets; • price controls or other pricing issues and exchange controls; restrictions that prevent us from transferring funds out of the countries in which we operate; foreign currency exchange rates and fluctuations and restrictions on converting currencies 35 from foreign operations into other currencies; uncertainty with respect to the adoption of new tax laws and the interpretation of tax positions; • reliance on local employees and interpretations of labor laws in foreign jurisdictions; • managing our partner relationships in countries outside of the United States; • providing data protection on a global basis and sufficient levels of technical support in different locations; • the global trend for companies to enact local data residency requirements; • acts of civil unrest, war and terrorism, including the ongoing conflict in the Middle East as well as other political and economic conflicts such as through imposition of economic or political sanctions; • man-made disasters, natural disasters (including those arising as a result of climate change) and pandemics in locations where we operate; and • general economic and political conditions, including conditions that may become unpredictable during a U.S. presidential election year.
In some cases, such laws, rules, regulations and contractual requirements also apply to our vendors and require us to obtain written assurances of their compliance with such requirements. We are also subject to various other consumer protection laws that regulate our communications with customers.
In some cases, such laws, rules, regulations and contractual requirements also apply to our vendors and require us to obtain written assurances of their compliance with such requirements. We are also subject to various other consumer protection laws that regulate our communications with customers, such as the FTC Act and the Telephone Consumer Protection Act.
We have dedicated significant resources to implement security technologies, processes and procedures to protect consumer identity and provide 37 employee awareness training around phishing, malware and other cyber risks; however, there are no assurances that such measures will be effective against all types of security incidents or breaches.
We have dedicated significant resources to implement privacy and security technologies, processes and procedures to 34 protect PI and provide employee awareness training around phishing, malware and other cyber risks; however, there are no assurances that such measures will be effective against all types of security incidents or breaches.
Although we could attempt to mitigate or cover our exposure from such increased costs through, among other things, increases in premiums, there can be no assurance that we will be able to mitigate or cover all of such costs, which may have a material adverse effect on our business, results of operations, financial condition and liquidity.
Although we could attempt to mitigate or cover our exposure from such increased costs through, among other things, increases in premiums, there can be no assurance that we will be able to mitigate or cover all of such costs, which may have a material adverse effect on our business, results of operations, financial condition and liquidity. 43 We are subject to the credit risk of our reinsurers.
In addition, HHS continues to exercise its enforcement authority to bring enforcement actions resulting from complaints, compliance reviews, audits and investigations brought on by notification to HHS of a breach.
In addition, HHS continues to exercise its enforcement authority to bring enforcement actions resulting from complaints, compliance reviews, audits and investigations brought on by notification to HHS of a breach or other HIPAA violation.
As of December 31, 2022, our goodwill and other intangible assets had a carrying value of approximately $78 billion, representing 54% of our total consolidated assets. The value of our goodwill may be materially and adversely impacted if the businesses we acquire do not perform in a manner consistent with our assumptions.
As of December 31, 2023, our goodwill and other intangible assets had a carrying value of approximately $75 billion, representing 49% of our total consolidated assets. The value of our goodwill may be materially and adversely impacted if the businesses we acquire do not perform in a manner consistent with our assumptions.
Existing or future laws, rules, regulatory interpretations or judgments could force us to change how we conduct our business, affect the products and services we offer and where we offer them, restrict revenue and enrollment growth, increase our costs, including medical, operating, health care technology and administrative costs, and require enhancements to our compliance infrastructure and internal controls environment.
Presidential Executive Orders, regulatory interpretations or judgments could force us to change how we conduct our business, affect the products and services we offer and where we offer them, restrict revenue and enrollment growth, increase our costs, including medical, operating, health care technology and administrative costs, and require enhancements to our compliance infrastructure and internal controls environment.
Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose sensitive information in order to gain access to our data or that of our customers.
Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose or inadvertently provide access to systems in order to gain access to our data or that of our customers.
Our failure to comply with laws and regulations governing our conduct outside of the United States or to establish constructive relations with non-U.S. regulators 39 could have a material adverse effect on our business, results of operations, financial condition, liquidity and long-term growth.
Our failure to comply with laws and regulations governing our conduct outside of the United States or to establish constructive relations with non-U.S. regulators could have a material adverse effect on our business, results of operations, financial condition, liquidity and long-term growth. Please see "—Legal and Compliance Risks" below.
Our business depends on our clients' and customers' willingness to entrust us with their health-related and other sensitive personal information, including information that is subject to privacy, security or data breach notification laws. Computer systems may be vulnerable to physical break-ins, computer viruses or malware, programming errors, attacks by third parties or similar disruptive problems.
Our business depends on our clients' and customers' willingness to entrust us with their health-related and other personal information ("PI"), including Protected Health Information ("PHI") that is subject to privacy, security or data breach notification laws. Computer networks or systems may be vulnerable to intrusion, computer viruses or malware, programming errors, attacks by third parties or similar disruptive problems.
Changes in the overall composition of our pharmacy networks, or reduced pharmacy access under our networks, could have a negative 36 impact on our claims volume or our competitiveness in the marketplace, which could cause us to fall short of certain guarantees in our contracts with clients or otherwise impair our business or results of operations.
Changes in the overall composition of our pharmacy networks, or reduced pharmacy access under our networks, could have a negative impact on our claims volume or our competitiveness in the marketplace, which could cause us to fall short of certain guarantees in our contracts with clients or otherwise impair our business or results of operations. 33 Changes in drug pricing or industry pricing benchmarks could materially impact our financial performance.
Changes in drug pricing or industry pricing benchmarks could materially impact our financial performance. Contracts in the prescription drug industry, including our contracts with retail pharmacy networks and our pharmacy and specialty pharmacy clients, generally use pricing metrics published by third parties as benchmarks to establish pricing for prescription drugs.
Contracts in the prescription drug industry, including our contracts with retail pharmacy networks and our pharmacy and specialty pharmacy clients, generally use pricing metrics published by third parties as benchmarks to establish pricing for prescription drugs.
A disruption, or threat of disruption, in our supply chain, including as a result of the COVID-19 pandemic, or inability to access or deliver products that meet requisite quality safety standards and patient needs in a timely and efficient manner could adversely impact our business.
A disruption, or threat of disruption, in our supply chain, including as a result of future pandemics or public health emergencies, or inability to access or deliver products that meet requisite quality safety standards and patient needs in a timely and efficient manner could adversely impact our business.
Additionally, we are, and may in the future be, subject to qui tam actions in which the government may or may not 43 intervene.
Additionally, we have in the past been, and may in the future be, subject to qui tam actions in which the government may or may not intervene.
Our indebtedness could adversely affect our financial condition, our ability to react to changes in the economy or our industry and could divert our cash flow from operations for debt service costs, leaving us with less cash flow from operations available to fund growth, stock repurchases, dividends and other corporate purposes.
Our indebtedness could adversely affect our financial condition, our ability to react to changes in the economy or our industry and could divert our cash flow from operations for debt service costs, leaving us with less cash flow from operations available to fund growth, stock repurchases, dividends and other corporate purposes. 42 The total indebtedness of The Cigna Group was approximately $30.9 billion as of December 31, 2023.
While benefit plans place limits on the amount of charges that will be considered for reimbursement and regulations seek to prescribe payment levels, establish methodologies and dispute resolution processes, providers are increasingly sophisticated and aggressive.
For Medicare Advantage, out-of-network providers can only receive the same rate that CMS pays for Medicare services. While benefit plans place limits on the amount of charges that will be considered for reimbursement and regulations seek to prescribe payment levels, establish methodologies and dispute resolution processes, providers are increasingly sophisticated and aggressive.
Fraud and abuse prohibitions encompass a wide range of activities including kickbacks for referral of customers, billing for unnecessary medical services, improper marketing and violations of patient privacy rights.
Federal and state governments have made investigating and prosecuting health care and other insurance fraud and abuse a priority. Fraud and abuse prohibitions encompass a wide range of activities including kickbacks for referral of customers, billing for unnecessary medical services, improper marketing and violations of patient privacy rights.
As described in greater detail in the description of our business in Item 1 of this Form 10-K, one of our key clients in the Evernorth Health Services segment is the United States Department of Defense.
As described in greater detail in the description of our business in Item 1 of this Form 10-K, our key clients in the Evernorth Health Services segment include the DoD, Prime and Centene.
As disclosed in Part II, Item 5 of this Form 10-K, we have an active share repurchase program authorized by our board of directors.
As disclosed in Part II, Item 5 of this Form 10-K, we have an active share repurchase program authorized by our board of directors. Regulators, customers, investors, employees and other stakeholders are increasingly focusing on ESG matters and related disclosures.
Any limitation on our ability to maintain or increase our premium or reimbursement levels, or a significant loss of customers or clients resulting from our need to increase or maintain premium or reimbursement levels, could adversely affect our business, cash flows, financial condition and results of operations.
Any limitation on our ability to maintain or increase our premium or reimbursement levels, or a significant loss of customers or clients resulting from our need to increase or maintain premium or reimbursement levels, could adversely affect our business, cash flows, financial condition and results of operations. 31 Premiums in the Cigna Healthcare segment are generally set for one-year periods and are priced well in advance of the date on which the contract commences or renews.
Certain of the foregoing events have occurred and may continue to occur, and the occurrence of these events may, individually or in the aggregate, lead to a decrease in our customer base, revenues or margins or an increase in our operating costs. 46 In addition, during and following a prolonged unfavorable economic environment, federal and state budgets could be materially adversely affected, resulting in reduced or delayed reimbursements or payments in government programs such as Medicare and Social Security or under contracts with government entities.
In addition, during and following a prolonged unfavorable economic environment, federal and state budgets could be materially adversely affected, resulting in reduced or delayed reimbursements or payments in government programs such as Medicare and Social Security or under contracts with government entities.
Premiums in the Cigna Healthcare segment are generally set for one-year periods and are priced well in advance of the date on which the contract commences or renews. Our revenue on Medicare Advantage plans, Individual and Family Plans ("IFP") and Medicare Part D plans is based on rates and bids submitted midyear in the year before the contract year.
Our revenue on Medicare Advantage plans, Individual and Family Plans ("IFP") and Medicare Part D plans is based on rates and bids submitted midyear in the year before the contract year.
We may be unable to complete any such divestiture on terms favorable to us, within the expected timeframes, or at all.
We may be unable to complete any such divestiture on terms favorable to us, within the expected timeframes, or at all. For example, in January 2024 we announced the HCSC transaction, which is subject to regulatory approvals and other closing conditions.
Certain of our contracts are currently subject to RADV audits by CMS and the HHS-OIG. These audits could result in significant adjustments in payments made to our health plans, which could adversely affect our results of operations.
Certain of our contracts currently have RADV audits by CMS and the HHS-OIG that are awaiting CMS finalization. These audits could result in repayments to the government.
In addition, various government agencies have conducted investigations and audits into certain pharmacy benefit management practices. Many of these investigations and audits have resulted in other companies being subject to civil penalties, including the payment of money and entry into corporate integrity agreements.
Many investigations and audits have resulted in companies being subject to civil penalties, including the payment of money and entry into corporate integrity agreements. For example, in September 2023, we resolved certain matters related to our Medicare Advantage Business and risk adjustment practices by entering into the Corporate Integrity Agreement (the “CIA”) with the HHS-OIG.
Removed
The scale, scope and duration of the ongoing COVID-19 pandemic continues to be unknown and the overall impact on our business, operating results, cash flows or financial condition has been and may continue to be material.
Added
Additionally, laws such as the Inflation Reduction Act have granted CMS the ability to negotiate drug prices for certain Part D and Part B drugs, and other federal and state legislative proposals may lead to changes in drug pricing for federal health care programs.
Removed
The COVID-19 pandemic has adversely affected, and is continuing to affect, global economies, financial markets and the overall environment for our business, and the extent to which it may impact our future results of operations and overall financial performance remains uncertain.
Added
Our use of artificial intelligence and machine learning present regulatory and legal challenges that could negatively affect our business and our reputation. Our use of artificial intelligence (“AI”), including machine learning (“ML”) technologies, as well as more recent technological advances in AI/ML, pose risks to us and subject us to new and existing laws and regulations.
Removed
While vaccination rates continue to rise, the COVID-19 pandemic, including vaccination efficacy, the implementation of and reaction to vaccination and testing mandates and the occurrence of new variants, could continue to effect such economies and financial markets as well as the health and availability of our workforce.
Added
While we are committed to responsible use of AI/ML and following applicable laws and regulations, and while we have made progress developing governance as to use of AI/ML by our organization, any failure to use AI/ML responsibly and to adhere to such laws, regulations and governance could have a material unfavorable effect on our business, results of operations, and financial condition.
Removed
As a result, we may experience new disruptions to our business operations and our business could be adversely affected further, directly or indirectly, by the ongoing pandemic.
Added
Depending on how existing laws and regulations are interpreted, and as new laws are passed, we may have to make changes to our business practices to comply with such obligations.
Removed
The COVID-19 pandemic has in some instances, and may continue to, heighten the potential adverse effects on our business, operating results, cash flows or financial condition as described below or in other risk factors within this section of the Form 10-K including, but not limited to, the likelihood of and impact from: • unfavorable economic conditions on our clients and customers (both employers and individuals), health care and pharmacy providers, pharmaceutical manufacturers and third-party vendors, as well as federal and state entities and programs; • changes in medical claims submission and processing patterns or procedures; changes in customer base and product mix; changes in utilization of prescription drugs, medical or other covered items or services, including increased behavioral health services utilization; changes in medical cost trends; changes in our health management practices; and the introduction of new benefits and products causing actual claims to exceed our estimates; • changes in health care utilization patterns, provider billing practices and other external events that we cannot forecast or project and over which we have little or no control impacting our ability to accurately predict, price for and manage health care costs and ultimately our profitability, including impacts from care deferral on, among other things, risk adjustment revenue and acuity of future care; • increased costs or reductions in revenue, including costs for COVID-19-related care, testing and treatment; vaccine and other coverage mandates; inflation; and support for employees, clients, customers and providers; 38 • compliance with substantial government regulation, including privacy and security requirements associated with providing telehealth and remote care options and new laws or regulations or changes in existing laws or regulations, such as vaccine, testing and coverage mandates and premium deferrals, which laws or regulations may vary significantly by jurisdiction; • cyberattacks or other privacy or data security incidents, including as a result of the transition to a hybrid work environment by substantially all of our workforce and the workforces of third parties with whom we contract; • significant shifts in the structure of the industry which could alter dynamics and, if we fail to adapt, negatively impact our business; • risks inherent in foreign operations, including political, legal, operational, regulatory, economic and other risks; • economic and market conditions affecting the value of our financial instruments and the value of particular assets and liabilities; and • fluctuations in equity market prices, interest rates and credit spreads limiting our ability to raise or deploy capital and affecting our overall liquidity.
Added
These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us retrain our AI/ML, or prevent or limit our use of AI/ML. Our use of AI/ML technologies could also result in additional compliance costs, regulatory investigations and actions, and consumer or other lawsuits.
Removed
We believe COVID-19 and its variants' adverse impact on our business, operating results, cash flows or financial condition will be driven primarily by the severity and duration of the pandemic, including the impact of the breadth and timing of implementation and the efficacy and costs of vaccination programs, the pandemic's continued impact on our employees, clients, customers, suppliers and partners, as well as the U.S. and global economies and the continued actions taken by governmental authorities and other third parties in response to the pandemic.
Added
If we are unable to use AI/ML, or if regulators restrict our ability to use AI/ML for certain purposes, it could make our business less efficient, result in competitive disadvantages, and subject us to potential unfavorable business impacts.
Removed
Those primary drivers are largely beyond our knowledge and control, and may be more adverse than our current expectations. Given these uncertainties, we cannot estimate the full impact COVID-19 will have on our business, operating results, cash flows or financial condition, but the adverse impact could be material.
Added
To the extent that we rely on or use the output of AI/ML, any inaccuracies, biases or errors could have unfavorable impacts on us, our business and our results of operations or financial condition. The impact of regulatory and legal risks associated with AI/ML is largely unknown.
Removed
Effective prevention, detection and control systems are critical to maintain regulatory compliance and prevent fraud and failure of these systems could adversely affect us. Federal and state governments have made investigating and prosecuting health care and other insurance fraud and abuse a priority.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur high-volume automated dispensing pharmacies are located in Arizona, Indiana, Missouri and New Jersey. We believe our properties are adequate and suitable for our business as presently conducted. The foregoing does not include information on investment properties. Item 3.
Biggest changeThis initiative includes a reduction in the square footage of leased properties and changes how sites are utilized. See Note 17 to the Consolidated Financial Statements of this Form 10-K for additional information. We believe our properties are adequate and suitable for our business as presently conducted. The foregoing does not include information on investment properties. Item 3.
Our international properties contain approximately 906 thousand square feet located throughout the following countries: Australia, Bahrain, Belgium, Canada, Cayman Islands, China, France, Germany, Hong Kong, India, Kenya, Kuwait, Lebanon, Malaysia, Oman, Singapore, Spain, Switzerland, United Arab Emirates and the United Kingdom.
Our international properties contain approximately 934 thousand square feet located throughout the following countries: Australia, Bahrain, Belgium, Canada, Cayman Islands, China, France, Germany, Hong Kong, India, Kenya, Kuwait, Lebanon, Malaysia, Oman, Saudi Arabia, Singapore, Spain, Switzerland, United Arab Emirates, and the United Kingdom.
LEGAL PROCEEDINGS The information contained under "Litigation Matters" and "Regulatory Matters" in Note 23 to the Consolidated Financial Statements of this Form 10-K is incorporated herein by reference.
LEGAL PROCEEDINGS The information contained under "Legal and Regulatory Matters" in Note 24 to the Consolidated Financial Statements of this Form 10-K is incorporated herein by reference.
Item 2. PROPERTIES At the end of 2022, our global real estate portfolio consisted of approximately 9.8 million square feet of owned and leased properties to support the operations of our reporting segments. Our domestic portfolio had approximately 8.9 million square feet in 42 states, the District of Columbia and the U.S. Virgin Islands.
Item 2. PROPERTIES At the end of 2023, our global real estate portfolio consisted of approximately 9.2 million square feet of owned and leased properties to support the operations of our reporting segments. Our domestic portfolio had approximately 8.3 million square feet in 49 states, the District of Columbia, and the U.S. Virgin Islands.
Our principal domestic office locations include the Wilde Building located at 900 Cottage Grove Road in Bloomfield, Connecticut (our corporate headquarters), Two Liberty Place located at 1601 Chestnut Street in Philadelphia, Pennsylvania and Evernorth Health Services' corporate offices located at and around One Express Way in St. Louis, Missouri. The Wilde Building measures approximately 893,000 square feet and is owned.
Our principal domestic office locations include the Wilde Building located at 900 Cottage Grove Road in Bloomfield, Connecticut (our corporate headquarters), Evernorth Health Services' corporate offices located at and around One Express Way in St. Louis, Missouri and Two Liberty Place located at 1601 Chestnut Street in Philadelphia, Pennsylvania.
Removed
The St. Louis campus measures approximately 986,000 square feet of leased space and Two Liberty Place measures approximately 237,000 square feet of leased space. The pharmacy operations consist of 10 home delivery pharmacies, 33 specialty pharmacies and four high-volume automated dispensing pharmacies located throughout the United States.
Added
The Wilde Building measures approximately 893 thousand square feet and is owned. The St. Louis campus measures approximately 999 thousand square feet of leased space and Two Liberty Place measures approximately 209 thousand square feet of leased space.
Added
The pharmacy operations consist of 13 home delivery pharmacies, 31 specialty pharmacies and four high-volume automated dispensing pharmacies located throughout the United States. Our high-volume automated dispensing pharmacies are located in Arizona, Indiana, Missouri and New Jersey. In the fourth quarter of 2023, we approved a strategic initiative to drive operational improvements and efficiencies.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeBRIAN C. EVANKO, 46, Executive Vice President and Chief Financial Officer of The Cigna Group beginning January 2021; President, Government Business from November 2017 to January 2021; and President, U.S. Individual Business from August 2013 to November 2017. NICOLE S.
Biggest changeBRIAN C. EVANKO, 47, Executive Vice President, Chief Financial Officer of The Cigna Group and President and Chief Executive Officer, Cigna Healthcare beginning January 2024; Executive Vice President and Chief Financial Officer of The Cigna Group from January 2021 to January 2024; President, Government Business from November 2017 to January 2021; and President, U.S.
CORDANI, 57, Chairman of the Board of The Cigna Group beginning January 2022; Chief Executive Officer beginning December 2009; Director since October 2009; President beginning June 2008; and Chief Operating Officer from June 2008 until December 2009. NOELLE K.
CORDANI, 58, Chairman of the Board of The Cigna Group beginning January 2022; Chief Executive Officer beginning December 2009; Director since October 2009; President beginning June 2008; and Chief Operating Officer from June 2008 until December 2009. NOELLE K.
PALMER, 46, President and Chief Executive Officer of Evernorth Health Services beginning January 2022; President and Chief Operating Officer from January 2021 until December 2021; Executive Vice President and Chief Financial Officer of The Cigna Group from June 2017 to January 2021; Deputy Chief Financial Officer from February 2017 until June 2017; Senior Vice President, Chief Business Financial Officer from November 2015 to February 2017; and Vice President, Business Financial Officer, Health Care from April 2012 to November 2015.
PALMER, 47, Executive Vice President, Enterprise Strategy of The Cigna Group and President and Chief Executive Officer, Evernorth Health Services beginning January 2024; President and Chief Executive Officer of Evernorth Health Services beginning January 2022 to January 2024; President and Chief Operating Officer from January 2021 until December 2021; Executive Vice President and Chief Financial Officer of The Cigna Group from June 2017 to January 2021; Deputy Chief Financial Officer from February 2017 until June 2017; Senior Vice President, Chief Business Financial Officer from November 2015 to February 2017; and Vice President, Business Financial Officer, Health Care from April 2012 to November 2015.
EDER, 53, Executive Vice President, Global Chief Information Officer of The Cigna Group beginning September 2020; Executive Vice President, Chief Information and Digital Officer at Hilton Worldwide Holdings from March 2018 until August 2020; Executive Vice President, Chief Card Customer Experience Officer at Capital One Financial Corporation from November 2016 until 2018; and Executive Vice President, Customer Experience and Operations at Capital One Financial Corporation from September 2014 until November 2016.
EDER, 54, Executive Vice President, Global Chief Information Officer of The Cigna Group beginning September 2020, with responsibility for the Company's technology and operations function beginning September 2023; Executive Vice President, Chief Information and Digital Officer at Hilton Worldwide Holdings from March 2018 until August 2020; Executive Vice President, Chief Card Customer Experience Officer at Capital One Financial Corporation from November 2016 until 2018; and Executive Vice President, Customer Experience and Operations at Capital One Financial Corporation from September 2014 until November 2016.
JONES, 52, Executive Vice President and General Counsel of The Cigna Group beginning June 2011; Senior Vice President and General Counsel of Lincoln Financial Group from May 2010 until June 2011; Vice President and Deputy General Counsel of The Cigna Group from April 2008 until May 2010; and Corporate Secretary from September 2006 until April 2010.
JONES, 53, Executive Vice President, Chief Administrative Officer, and General Counsel for The Cigna Group beginning September 2023; Executive Vice President and General Counsel of The Cigna Group beginning June 2011 to September 2023; Senior Vice President and General Counsel of Lincoln Financial Group from May 2010 until June 2011; Vice President and Deputy General Counsel of The Cigna Group from April 2008 until May 2010; and Corporate Secretary from September 2006 until April 2010.
Commercial of Cigna Healthcare beginning February 2017; and Regional Segment Lead from June 2009 to February 2017. 49 PART II
MICHAEL W. TRIPLETT, 62, Special Advisor beginning January 2024; President, U.S. Commercial of Cigna Healthcare beginning February 2017 to January 2024; and Regional Segment Lead from June 2009 to February 2017. 48 PART II
Item 4. MINE SAFETY DISCLOSURES Not applicable. 48 Information about our Executive Officers The principal occupations and employment histories of our executive officers (as of February 23, 2023) are listed below. CHARLES G. BERG, 65, Senior Advisor of The Cigna Group beginning January 2023; President, U.S.
Item 4. MINE SAFETY DISCLOSURES Not applicable. 47 Information about our Executive Officers The principal occupations and employment histories of our executive officers (as of February 29, 2024) are listed below. DAVID BRAILER, 64, Executive Vice President and Chief Health Officer of The Cigna Group beginning September 2022; and Founder and Chairman of Health Evolution beginning in 2011. DAVID M.
Removed
Government Business of Cigna Healthcare from January 2022 until January 2023; Executive Chairman of DaVita Medical Group from November 2016 until December 2017; and Non-Executive Chairman of WellCare Health Plans, Inc. from January 2011 until May 2013.
Added
Individual Business from August 2013 to November 2017. NICOLE S.
Removed
DAVID BRAILER, 63, Executive Vice President and Chief Health Officer of The Cigna Group beginning September 2022; and Founder and Chairman of Health Evolution beginning in 2011. DAVID M.
Removed
EVERETT NEVILLE, 58, Executive Vice President, Solutions and Corporate Development of The Cigna Group beginning September 2022; Executive Vice President, Strategy, Corporate Development & Solutions from October 2021 to September 2022; Executive Vice President, Strategy and Business Development from January 2021 to October 2021; Senior Vice President, Value Creation and Solutions from January 2020 until January 2021; Chief Value Officer from December 2018 until January 2020; Executive Vice President, Strategy, Supply Chain & Specialty, Express Scripts from January 2018 until December 2018; Senior Vice President, Strategy, Supply Chain & Specialty from November 2016 until January 2018; and Senior Vice President, Supply Chain from March 2015 until November 2016.
Removed
CYNTHIA RYAN, 49, Executive Vice President, Chief Human Resources Officer of The Cigna Group beginning August 2021; Senior Vice President, Human Resources from December 2018 to August 2021; Vice President, Human Resources from January 2017 to December 2018; and Vice President, Talent Management from May 2014 to January 2017. JASON D.
Removed
SADLER, 54, President, International Health of Cigna Healthcare beginning June 2014; and President, Global Individual Health, Life and Accident from July 2010 until June 2014.
Removed
PAUL SANFORD, 55, Executive Vice President, Operations of The Cigna Group beginning September 2021; Senior Vice President, Operations and Solutions Delivery from January 2021 to September 2021; Senior Vice President, Solutions Delivery from February 2017 to December 2020; and Vice President, Operating Effectiveness from September 2008 to February 2017. MICHAEL W. TRIPLETT, 61, President, U.S.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+3 added−4 removed2 unchanged
Biggest changeFor information on securities authorized for issuance under our existing equity compensation plans, see Item 12 under the heading "Security Ownership of Certain Beneficial Owners and Management and Rebated Stockholder Matters." Issuer Purchases of Equity Securities The following table provides information about The Cigna Group's share repurchase activity for the quarter ended December 31, 2022: Period Total # of shares purchased (1) Average price paid per share (1) Total # of shares purchased as part of publicly announced program (2) Approximate dollar value of shares that may yet be purchased as part of publicly announced program (3) October 1-31, 2022 833 $ 286.84 — $ 5,323,335,866 November 1-30, 2022 5,499,088 see (1) below 5,497,926 $ 4,165,793,043 December 1-31, 2022 1,803,379 $ 330.62 1,802,418 $ 3,569,880,748 Total 7,303,300 see (1) below 7,300,344 N/A (1) Includes shares tendered by employees under the Company's equity compensation plans as follows: 1) payment of taxes on vesting of restricted stock (grants and units) and strategic performance shares and 2) payment of the exercise price and taxes for certain stock options exercised.
Biggest changeThe stock performance shown in the graph is not intended to forecast or be indicative of future performance. 49 Issuer Purchases of Equity Securities The following table provides information about The Cigna Group's share repurchase activity for the quarter ended December 31, 2023: Period Total # of shares purchased (1) Average price paid per share (1) Total # of shares purchased as part of publicly announced program (2) Approximate dollar value of shares that may yet be purchased as part of publicly announced program (3) (in millions) October 1-31, 2023 1,520,890 $ 300.75 1,520,691 $ 1,346 November 1-30, 2023 131,656 $ 313.82 128,550 $ 1,306 December 1-31, 2023 3,213 $ 287.87 — $ 11,306 Total 1,655,759 $ 301.76 1,649,241 N/A (1) Includes shares tendered by employees under the Company's equity compensation plans as follows: 1) payment of taxes on vesting of restricted stock (grants and units) and strategic performance shares and 2) payment of the exercise price and taxes for certain stock options exercised.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES As of December 31, 2022, the number of shareholders of record was 28,205. The Cigna Group's common stock is listed with, and trades on, the New York Stock Exchange under the symbol "CI".
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES As of December 31, 2023, the number of shareholders of record was 23,435. The Cigna Group's common stock is listed with, and trades on, the New York Stock Exchange under the symbol "CI".
In 2022, The Cigna Group declared and paid quarterly cash dividends of $1.12 per share of The Cigna Group common stock.
In 2023, The Cigna Group declared and paid quarterly cash dividends of $1.23 per share of The Cigna Group common stock. The Cigna Group paid quarterly cash dividends of $1.12 per share in 2022 and $1.00 per share in 2021.
The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant.
The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant. See Note 9 to the Consolidated Financial Statements for further information on dividend payments.
Average price paid per share for the period November 1 to November 30, 2022 for shares not purchased pursuant to the ASR agreements was $315.56. (2) Additionally, the Company maintains a share repurchase program authorized by the Board. Under this program, the Company may repurchase shares from time to time, depending on market conditions and alternate uses of capital.
Employees tendered 199 shares in October, 3,106 shares in November and 3,213 shares in December 2023. (2) Additionally, the Company maintains a share repurchase program authorized by the Board. Under this program, the Company may repurchase shares from time to time, depending on market conditions and alternate uses of capital.
(3) Approximate dollar value of shares is as of the last date of the applicable month. 50 Stock Price Performance Graph The graph below compares the cumulative total shareholder return on our common stock for the five years ended December 31, 2022 with the cumulative total return of the Standard & Poor's ("S&P") 500 Index and the S&P 500 Health Care Index.
For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 under the heading "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Stock Price Performance Graph The graph below compares the cumulative total shareholder return on our common stock for the five years ended December 31, 2023 with the cumulative total return of the Standard & Poor's ("S&P") 500 Index and the S&P 500 Health Care Index.
The program may be suspended or discontinued at any time and does not have an expiration date. From January 1, 2023 through February 22, 2023, the Company repurchased 2.1 million shares for approximately $646 million, leaving repurchase authority at $2.9 billion as of February 22, 2023.
The program may be suspended or discontinued at any time and does not have an expiration date. In December 2023, the Board increased repurchasing authority by an additional $10.0 billion. In February 2024, as part of our existing share repurchase program, we entered into accelerated share repurchase agreements ("2024 ASR agreements") to repurchase $3.2 billion of common stock in aggregate.
Removed
In 2021, The Cigna Group paid quarterly cash dividends of $1.00 per share of The Cigna Group common stock. In 2020, The Cigna Group paid a yearly cash dividend of $0.04 per share. See Note 8 to the Consolidated Financial Statements for further information on dividend payments.
Added
On February 2, 2024, the Board of Directors declared the first quarter cash dividend of $1.40 per share of The Cigna Group common stock to be paid on March 21, 2024 to shareholders of record on March 6, 2024.
Removed
Employees tendered 833 shares in October, 1,162 shares in November and 961 shares in December 2022. Amount purchased in November 2022 also reflects the final settlement of 1.9 million shares pursuant to the Accelerated Share Repurchase ("ASR") agreements.
Added
We received an initial delivery of approximately 7.6 million shares of our common stock representing $2.6 billion of the total $3.2 billion remitted. Including the impact of the 2024 ASR agreements, from January 1, 2024 through February 28, 2024, we repurchased 10.1 million shares for approximately $4.0 billion. Share repurchase authority was $7.3 billion as of February 28, 2024.
Removed
See Note 8 to the Consolidated Financial Statements for further details on the average share price for total shares purchased under the ASR agreements. Such repurchase was made pursuant to the Company's share repurchase program described in note (2), below.
Added
See Note 9 to the Consolidated Financial Statements for further information on our ASR agreements. (3) Approximate dollar value of shares is as of the last date of the applicable month and excludes the impact of excise tax. Item 6. [Reserved] 50
Removed
The stock performance shown in the graph is not intended to forecast or be indicative of future performance. Item 6. [Reserved] 51

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

129 edited+57 added−62 removed47 unchanged
Biggest changeFor further analysis and explanation of each segment's results, see the "Segment Reporting" section of this MD&A. 53 Consolidated Results of Operations (GAAP basis) For the Years Ended December 31, Increase (Decrease) Increase (Decrease) (Dollars in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Pharmacy revenues $ 128,566 $ 121,413 $ 107,769 $ 7,153 6 % $ 13,644 13 % Premiums 39,915 41,154 42,627 (1,239) (3) (1,473) (3) Fees and other revenues 10,880 9,962 8,761 918 9 1,201 14 Net investment income 1,155 1,549 1,244 (394) (25) 305 25 Total revenues 180,516 174,078 160,401 6,438 4 13,677 9 Pharmacy and other service costs 124,834 117,553 103,484 7,281 6 14,069 14 Medical costs and other benefit expenses 32,206 33,562 32,710 (1,356) (4) 852 3 Selling, general and administrative expenses 13,186 13,030 14,072 156 1 (1,042) (7) Amortization of acquired intangible assets 1,876 1,998 1,982 (122) (6) 16 1 Total benefits and expenses 172,102 166,143 152,248 5,959 4 13,895 9 Income from operations 8,414 7,935 8,153 479 6 (218) (3) Interest expense and other (1,228) (1,208) (1,438) (20) (2) 230 16 Debt extinguishment costs — (141) (199) 141 N/M 58 29 Gain on sale of businesses 1,662 — 4,203 1,662 N/M (4,203) N/M Net realized investment (losses) gains (495) 196 149 (691) N/M 47 32 Income before income taxes 8,353 6,782 10,868 1,571 23 (4,086) (38) Total income taxes 1,607 1,367 2,379 240 18 (1,012) (43) Net income 6,746 5,415 8,489 1,331 25 (3,074) (36) Less: Net income attributable to noncontrolling interests 78 50 31 28 56 19 61 Shareholders' net income $ 6,668 $ 5,365 $ 8,458 $ 1,303 24 % $ (3,093) (37) % Consolidated effective tax rate 19.2 % 20.2 % 21.9 % (100) bps (170) bps Medical customers (in thousands) 18,004 17,081 16,650 923 5 % 431 3 % Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2022 2021 2020 (Dollars in millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 6,668 $ 5,365 $ 8,458 Adjustments to reconcile to adjusted income from operations Net realized investment losses (gains) (1) $ 621 503 $ (196) (158) $ (279) (244) Amortization of acquired intangible assets 1,876 1,345 1,998 1,494 1,982 1,431 Special items Integration and transaction-related costs 135 103 169 71 527 404 Charge for organizational efficiency plan 22 17 168 119 31 24 (Benefits) charges associated with litigation matters (28) (20) (27) (21) 25 19 (Gain) on sale of businesses (1,662) (1,332) — — (4,203) (3,217) Debt extinguishment costs — — 141 110 199 151 Risk corridors recovery — — — — (101) (76) Contractual adjustment for a former client — — — — (204) (155) Total special items $ (1,533) (1,232) $ 451 279 $ (3,726) (2,850) Adjusted income from operations $ 7,284 $ 6,980 $ 6,795 (1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. 54 Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2022 2021 2020 (Diluted Earnings Per Share) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 21.30 $ 15.73 $ 22.96 Adjustments to reconcile to adjusted income from operations Net realized investment losses (gains) (1) $ 1.98 1.61 $ (0.57) (0.46) $ (0.76) (0.66) Amortization of acquired intangible assets 5.99 4.30 5.86 4.38 5.38 3.88 Special items Integration and transaction-related costs 0.43 0.33 0.50 0.21 1.43 1.10 Charge for organizational efficiency plan 0.07 0.05 0.49 0.35 0.08 0.07 (Benefits) charges associated with litigation matters (0.09) (0.06) (0.08) (0.06) 0.07 0.05 (Gain) on sale of businesses (5.31) (4.26) — — (11.41) (8.73) Debt extinguishment costs — — 0.41 0.32 0.54 0.41 Risk corridors recovery — — — — (0.27) (0.21) Contractual adjustment for a former client — — — — (0.55) (0.42) Total special items $ (4.90) (3.94) $ 1.32 0.82 $ (10.11) (7.73) Adjusted income from operations $ 23.27 $ 20.47 $ 18.45 (1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.
Biggest changeFor further analysis and explanation of each segment's results, see the "Segment Reporting" section of this MD&A. 52 Consolidated Results of Operations (GAAP basis) For the Years Ended December 31, Increase (Decrease) Increase (Decrease) (Dollars in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Pharmacy revenues $ 137,243 $ 128,566 $ 121,413 $ 8,677 7 % $ 7,153 6 % Premiums 44,237 39,916 41,154 4,321 11 (1,238) (3) Fees and other revenues 12,619 10,881 9,953 1,738 16 928 9 Net investment income 1,166 1,155 1,549 11 1 (394) (25) Total revenues 195,265 180,518 174,069 14,747 8 6,449 4 Pharmacy and other service costs 133,801 124,834 117,553 8,967 7 7,281 6 Medical costs and other benefit expenses 36,287 32,184 33,565 4,103 13 (1,381) (4) Selling, general and administrative expenses 14,822 13,174 13,012 1,648 13 162 1 Amortization of acquired intangible assets 1,819 1,876 1,998 (57) (3) (122) (6) Total benefits and expenses 186,729 172,068 166,128 14,661 9 5,940 4 Income from operations 8,536 8,450 7,941 86 1 509 6 Interest expense and other (1,446) (1,228) (1,208) (218) (18) (20) (2) Debt extinguishment costs — — (141) — N/M 141 N/M (Loss) gain on sale of businesses (1,499) 1,662 — (3,161) N/M 1,662 N/M Net realized investment (losses) gains (78) (487) 198 409 84 (685) N/M Income before income taxes 5,513 8,397 6,790 (2,884) (34) 1,607 24 Total income taxes 141 1,615 1,370 (1,474) (91) 245 18 Net income 5,372 6,782 5,420 (1,410) (21) 1,362 25 Less: Net income attributable to noncontrolling interests 208 78 50 130 167 28 56 Shareholders' net income $ 5,164 $ 6,704 $ 5,370 $ (1,540) (23) % $ 1,334 25 % Consolidated effective tax rate 2.6 % 19.2 % 20.2 % (1,660) bps (100) bps Medical customers (in thousands) 19,780 18,004 17,081 1,776 10 % 923 5 % Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2023 2022 2021 (In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 5,164 $ 6,704 $ 5,370 Adjustments to reconcile to adjusted income from operations Net realized investment losses (gains) (1) $ 135 114 $ 613 496 $ (198) (161) Amortization of acquired intangible assets 1,819 1,413 1,876 1,345 1,998 1,494 Special items Loss (gain) on sale of businesses 1,499 1,429 (1,662) (1,332) — — Charge for organizational efficiency plan 252 193 22 17 168 119 Charges (benefits) associated with litigation matters 201 171 (28) (20) (27) (21) Integration and transaction-related costs 45 35 135 103 169 71 Deferred tax (benefits), net — (1,071) — — — — Debt extinguishment costs — — — — 141 110 Total special items $ 1,997 757 $ (1,533) (1,232) $ 451 279 Adjusted income from operations $ 7,448 $ 7,313 $ 6,982 (1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. 53 Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2023 2022 2021 (Diluted Earnings Per Share) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 17.39 $ 21.41 $ 15.75 Adjustments to reconcile to adjusted income from operations Net realized investment losses (gains) (1) $ 0.45 0.38 $ 1.96 1.59 $ (0.58) (0.47) Amortization of acquired intangible assets 6.13 4.77 5.99 4.30 5.86 4.38 Special items Loss (gain) on sale of businesses 5.05 4.81 (5.31) (4.26) — — Charge for organizational efficiency plan 0.85 0.65 0.07 0.05 0.49 0.35 Charges (benefits) associated with litigation matters 0.68 0.58 (0.09) (0.06) (0.08) (0.06) Integration and transaction-related costs 0.15 0.12 0.43 0.33 0.50 0.21 Deferred tax (benefits), net — (3.61) — — — — Debt extinguishment costs — — — — 0.41 0.32 Total special items $ 6.73 2.55 $ (4.90) (3.94) $ 1.32 0.82 Adjusted income from operations $ 25.09 $ 23.36 $ 20.48 (1) Includes the Company's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting.
The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size.
The Cigna Group's share of certain realized investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size.
As described in the introduction to Segment Reporting, Evernorth Health Services' performance is measured using adjusted revenues and pre-tax adjusted income (loss) from operations. The key factors that impact Evernorth Health Services' Pharmacy revenues and Pharmacy and other service costs are volume, mix of claims and price. These key factors are discussed further below.
As described in the introduction to Segment Reporting, Evernorth Health Services' performance is measured using adjusted revenues and pre-tax adjusted income (loss) from operations. The key factors that impact Evernorth Health Services' Pharmacy revenues, Fees and other revenues and Pharmacy and other service costs are volume, mix of claims and price. These key factors are discussed further below.
We prioritize our use of capital resources to: • invest in capital expenditures, primarily related to technology to support innovative solutions for our customers, provide the capital necessary to maintain or improve the financial strength ratings of subsidiaries and to repay debt and fund pension obligations if necessary; • pay dividends to shareholders; • consider acquisitions that are strategically and economically advantageous; and • return capital to shareholders through share repurchases.
We prioritize our use of capital resources to: • invest in capital expenditures, primarily related to technology to support innovative solutions for our clients and customers, provide the capital necessary to maintain or improve the financial strength ratings of subsidiaries and to repay debt and fund pension obligations if necessary; • pay dividends to shareholders; • consider acquisitions and investments that are strategically and economically advantageous; and • return capital to shareholders through share repurchases.
See Note 9 to the Consolidated Financial Statements for additional information regarding assumptions and methods used to estimate this liability. Based on studies of our claim experience, it is reasonably possible that a 100 basis point change in the medical cost trend and a 50 basis point change in completion factors could occur in the near term.
See Note 10 to the Consolidated Financial Statements for additional information regarding assumptions and methods used to estimate this liability. Based on studies of our claim experience, it is reasonably possible that a 100 basis point change in the medical cost trend and a 50 basis point change in completion factors could occur in the near term.
Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material adverse effect on our financial condition or liquidity.
Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material unfavorable effect on our financial condition or liquidity.
We regularly evaluate items that may impact critical accounting estimates. 63 In addition to the estimates presented in the following tables, the Notes to the Consolidated Financial Statements describe other estimates that management has made in preparation of the financial statements. Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate.
We regularly evaluate items that may impact critical accounting estimates. 61 In addition to the estimates presented in the following tables, the Notes to the Consolidated Financial Statements describe other estimates that management has made in preparation of the financial statements. Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate.
Ratios presented in this segment discussion exclude the same items as adjusted revenues and pre-tax adjusted income (loss) from operations. See Note 24 to the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of Income before income taxes to pre-tax adjusted income from operations, as well as a reconciliation of Total revenues to adjusted revenues.
Ratios presented in this segment discussion exclude the same items as adjusted revenues and pre-tax adjusted income (loss) from operations. See Note 25 to the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of Income before income taxes to pre-tax adjusted income from operations, as well as a reconciliation of Total revenues to adjusted revenues.
Dividends from our insurance, Health Maintenance Organization ("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. See Note 21 to the Consolidated Financial Statements in this Form 10-K for additional information regarding these restrictions.
Dividends from our insurance, Health Maintenance Organization ("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. See Note 22 to the Consolidated Financial Statements in this Form 10-K for additional information regarding these restrictions.
The fair value of intangibles and the amortization method were determined using an income approach that relies on projected future cash flows including key assumptions for customer attrition and discount rates. Management revises amortization periods if it believes there has been a change in the length of time that an intangible asset will continue to have value. Our U.S.
The fair value of intangibles and the amortization method were determined using an income approach that relies on projected future cash flows including key assumptions for customer attrition and discount rates. Management revises amortization periods if it believes there has been a change in the length of time that an intangible asset will continue to have value.
Corporate Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate debt less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and intersegment eliminations for products and services sold between segments.
Corporate Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs and eliminations for products and services sold between segments.
We assess the credit quality of our commercial mortgage loan portfolio annually, generally in the second fiscal quarter by reviewing each holding's most recent financial statements, rent rolls, budgets and relevant market reports. The review performed in the second quarter of 2022 confirmed ongoing strong overall credit quality in line with the previous year's results.
We assess the credit quality of our commercial mortgage loan portfolio annually, generally in the second quarter by reviewing each holding's most recent financial statements, rent rolls, budgets and relevant market reports. The review performed in the second quarter of 2023 confirmed ongoing strong overall credit quality in line with the previous year's results.
We are adequately reserved for such positions. As a result, there is minimal 62 direct risk to earnings should we fail to sustain our positions. We cannot reasonably estimate the timing of such future payments. ◦ See Note 22 to the Consolidated Financial Statements for additional information on uncertain tax positions.
We are adequately reserved for such positions. As a result, there is minimal direct risk to earnings should we fail to sustain our positions. We cannot reasonably estimate the timing of such future payments. ◦ See Note 23 to the Consolidated Financial Statements for additional information on uncertain tax positions.
Inflation also impacts our pricing because most of our contracts provide that we bill clients and pay pharmacies based on a generally recognized price index for pharmaceuticals.
Pharmaceutical manufacturer inflation also impacts our pricing because most of our contracts provide that we bill clients and pay pharmacies based on a generally recognized price index for pharmaceuticals.
Furthermore, our gross profit differs among network, home delivery and specialty distribution methods and can impact our profitability. • Our client contract pricing is impacted by our ongoing ability to negotiate favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing and manufacturer rebates.
Furthermore, our gross profit differs among network, home delivery and specialty distribution methods and can impact our profitability. • Our client contract pricing is impacted by our ongoing ability to negotiate favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing and manufacturer rebates on our clients' behalf.
Our businesses generate significant cash flow from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends from U.S. regulated subsidiaries were $1.9 billion for the year ended December 31, 2022 and $2.8 billion for the year ended December 31, 2021.
Our businesses generate significant cash flow from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends received from U.S. regulated subsidiaries were $1.2 billion for the year ended December 31, 2023 and $1.9 billion for the year ended December 31, 2022.
Consistent with disclosure requirements, the following items have been excluded from this consideration of market risk for financial instruments: • changes in the fair values of insurance-related assets and liabilities because their primary risks are insurance rather than market risk; • changes in the fair values of investments recorded using the equity method of accounting and liabilities for pension and other postretirement and postemployment benefit plans (and related assets); and • changes in the fair values of other significant assets and liabilities, such as goodwill, deferred policy acquisition costs, taxes and various accrued liabilities.
Consistent with disclosure requirements, the following items have been excluded from this consideration of market risk for financial instruments: • changes in the fair values of insurance-related assets and liabilities as disclosed in Note 10 to the Consolidated Financial Statements because their primary risks are insurance rather than market risk; • changes in the fair values of investments recorded using the equity method of accounting and liabilities for pension and other postretirement and postemployment benefit plans (and related assets); and • changes in the fair values of other significant assets and liabilities, such as goodwill, deferred policy acquisition costs, taxes and various accrued liabilities.
Additional information regarding valuation methodologies, key inputs and controls is included in Note 12 to the Consolidated Financial Statements.
Additional information regarding valuation methodologies, key inputs and controls is included in Note 13 to the Consolidated Financial Statements.
CMS will accept comments on the Advance Notice through March 3, 2023, before publishing the final rate announcement by April 3, 2023. The Advance Notice is subject to the required notice and comment period, and we cannot predict when or to what extent CMS will adopt the proposals in the Advance Notice.
CMS will accept comments on the Advance Notice through March 1, 2024, before publishing the final rate announcement by April 1, 2024. The Advance Notice is subject to the required notice and comment period, and we cannot predict when or to what extent CMS will adopt the proposals in the Advance Notice.
Commercial Mortgage Loans As of December 31, 2022, our $1.6 billion commercial mortgage loan portfolio consisted of approximately 50 fixed-rate loans, diversified by property type, location and borrower. These loans are carried in our Consolidated Balance Sheets at their unpaid principal balance, net of an insignificant allowance for expected credit losses.
Commercial Mortgage Loans As of December 31, 2023, our $1.5 billion commercial mortgage loan portfolio consisted of approximately 50 fixed-rate loans, diversified by property type, location and borrower. These loans are carried in our Consolidated Balance Sheets at their unpaid principal balance, net of an allowance for expected credit losses.
Capital expenditures for property, equipment and computer software were $1.3 billion in 2022 compared to $1.2 billion in the year ended December 31, 2021. This increase reflects our continued strategic investment in technology for future growth. We expect to deploy approximately $1.4 billion to capital expenditures in 2023. Anticipated capital expenditures will be funded primarily from operating cash flow.
Capital expenditures for property, equipment and computer software were $1.6 billion in 2023 compared to $1.3 billion in the year ended December 31, 2022. This increase reflects our continued strategic investment in technology for future growth. We expect to deploy approximately $1.5 billion in capital expenditures in 2024. Anticipated capital expenditures will be funded primarily from operating cash flow.
Balances that are included in the Consolidated Balance Sheets within Accrued expenses and other liabilities are as follows (in millions): · 2022 – $1,343 · 2021 – $1,230 See Note 22 to the Consolidated Financial Statements for additional discussion around uncertain tax positions and the Liquidity and Capital Resources section of this MD&A for a discussion of their potential impact on liquidity.
Balances that are included in the Consolidated Balance Sheets within Accrued expenses and other liabilities are as follows (in millions): · 2023 – $1,399 · 2022 – $1,343 See Note 23 to the Consolidated Financial Statements for additional discussion around uncertain tax positions and the Liquidity and Capital Resources section of this MD&A for a discussion of their potential impact on liquidity.
As of December 31, 2022, we had $5.0 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.0 billion of remaining capacity under our commercial paper program and $6.1 billion in cash and short-term investments, approximately $1.2 billion of which was held by the parent company or certain non-regulated subsidiaries.
As of December 31, 2023, we had $5.0 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $3.8 billion of remaining capacity under our commercial paper program and $8.0 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain non-regulated subsidiaries.
As a result of increasing market interest rates since the majority of these loans were made, the carrying value exceeds the market value of these loans as of December 31, 2022. See Note 12 to the Consolidated Financial Statements for further details.
As a result of increasing market interest rates since the majority of these loans were made, the carrying value exceeds the market value of these loans as of December 31, 2023. See Note 13 to the Consolidated Financial Statements for further details.
For further discussion of the results and changes in key loan metrics, see Note 11 to the Consolidated Financial Statements. Loans are secured by high quality commercial properties, located in strong institutional markets and are generally made at less than 65% of the property's value at origination of the loan.
For further discussion of the results and changes in key loan metrics, see Note 12 to the Consolidated Financial Statements. 70 Loans are secured by high quality commercial properties, located in strong institutional markets and are generally made at approximately 65% of the property's value at origination of the loan.
Balances that are included in the Consolidated Balance Sheets within Investments and Long-term investments are as follows, inclusive of amounts held for sale as of December 31, 2021 (in millions): · 2022 - $9,872 · 2021 - $16,958 See Notes 11A. and 12 to the Consolidated Financial Statements for a discussion of our fair value measurements, the procedures performed by management to determine that the amounts represent appropriate estimates and our accounting policy regarding unrealized appreciation on debt securities.
Balances that are included in the Consolidated Balance Sheets within Investments and Long-term investments are as follows, inclusive of amounts held for sale as of December 31, 2023 (in millions): · 2023 - $9,855 · 2022 - $9,872 See Notes 12A. and 13 to the Consolidated Financial Statements for a discussion of our fair value measurements, the procedures performed by management to determine that the amounts represent appropriate estimates and our accounting policy regarding unrealized appreciation on debt securities.
See Note 7 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program. Our debt-to-capitalization ratio was 40.9% at December 31, 2022 and 41.7% at December 31, 2021. We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy. Subsidiary Borrowings.
See Note 8 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program. Our debt-to-capitalization ratio was 40.1% at December 31, 2023 and 41.0% at December 31, 2022. 58 We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy. Subsidiary Borrowings.
See Note 17 to the Consolidated Financial Statements for additional information. 61 Risks to our liquidity and capital resources outlook include cash projections that may not be realized and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the "Risk Factors" section of this Form 10-K.
Risks to Liquidity and Capital Resources Risks to our liquidity and capital resources outlook include cash projections that may not be realized and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the "Risk Factors" section of this Form 10-K.
Other Long-term Investments Other long-term investments of $3.7 billion as of December 31, 2022 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses.
Other Long-term Investments Other long-term investments of $4.2 billion as of December 31, 2023 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses.
Unpaid claims and claim expenses for the Cigna Healthcare segment as of December 31 were as follows (in millions): · 2022 – gross $4,176; net $3,955 · 2021 – gross $4,261; net $4,000 These liabilities are presented above both gross and net of reinsurance and other recoverables.
Unpaid claims and claim expenses for the Cigna Healthcare segment as of December 31 were as follows (in millions): · 2023 – gross $5,092; net $4,856 · 2022 – gross $4,176; net $3,955 These liabilities are presented above both gross and net of reinsurance and other recoverables.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PAGE Executive Overview 53 Liquidity and Capital Resources 58 Critical Accounting Estimates 63 Segment Reporting 66 Evernorth Health Services 67 Cigna Healthcare 69 Other Operations 71 Corporate 71 Investment Assets 72 Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating The Cigna Group's financial condition as of December 31, 2022 compared with December 31, 2021 and our results of operations for 2022 compared with 2021 and 2020 and is intended to help you understand the ongoing trends in our business.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PAGE Executive Overview 52 Liquidity and Capital Resources 56 Critical Accounting Estimates 61 Segment Reporting 65 Evernorth Health Services 65 Cigna Healthcare 67 Other Operations 68 Corporate 69 Investment Assets 69 Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating The Cigna Group's financial condition as of December 31, 2023 compared with December 31, 2022 and our results of operations for 2023 compared with 2022 and 2021 and is intended to help you understand the ongoing trends in our business.
Dividends . For 2022, The Cigna Group declared and paid quarterly cash dividends of $1.12 per share of its common stock, compared to $1.00 per share in 2021. See Note 8 to the Consolidated Financial Statements for further information on our dividend payments.
Dividends . The Cigna Group declared and paid quarterly cash dividends of $1.23 per share of its common stock during 2023, compared to quarterly cash dividends of $1.12 per share during 2022. See Note 9 to the Consolidated Financial Statements for further information on our dividend payments.
For comparisons of our results of operations for 2021 compared with 2020, please refer to the previously filed MD&A included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2021.
Healthcare operating segment within the Cigna Healthcare reportable segment. For comparisons of our results of operations for 2022 compared with 2021, please refer to the previously filed MD&A included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2022.
On February 2, 2023, the Board of Directors declared the first quarter cash dividend of $1.23 per share of The Cigna Group common stock to be paid on March 23, 2023 to shareholders of record on March 8, 2023.
On February 2, 2024, the Board of Directors declared the first quarter cash dividend of $1.40 per share of The Cigna Group common stock to be paid on March 21, 2024 to shareholders of record on March 6, 2024.
As of December 31, 2022, The Cigna Group's revolving credit agreements include: a $3.0 billion five-year revolving credit and letter of credit agreement that expires in April 2027; a $1.0 billion three-year revolving credit agreement that expires in April 2025; and a $1.0 billion 364-day revolving credit agreement that expires in April 2023.
As of December 31, 2023, The Cigna Group's revolving credit agreements include: a $4.0 billion five-year revolving credit and letter of credit agreement that expires in April 2028; and a $1.0 billion 364-day revolving credit agreement that expires in April 2024.
Cash flows were as follows: For the Years Ended December 31, (In millions) 2022 2021 2020 Net cash provided by operating activities $ 8,656 $ 7,191 $ 10,350 Net cash provided by (used in) investing activities: Cash proceeds from sales of businesses, net of cash sold 4,835 (61) 5,592 Acquisitions — (1,833) (139) Net investment (purchases) (272) (660) (1,406) Purchases of property and equipment, net (1,295) (1,154) (1,094) Other, net (170) 97 23 Net investing activities 3,098 (3,611) 2,976 Net cash (used in) financing activities: Debt (repayments) issuances (2,559) 521 (4,736) Stock repurchase (7,607) (7,742) (4,042) Dividend payments (1,384) (1,341) (15) Other, net 310 350 260 Net financing activities (11,240) (8,212) (8,533) Foreign currency effect on cash (86) (65) 41 Change in cash, cash equivalents and restricted cash $ 428 $ (4,697) $ 4,834 The following discussion explains variances in the various categories of cash flows for the year ended December 31, 2022 compared with the same period in 2021.
Cash flows were as follows: For the Years Ended December 31, (In millions) 2023 2022 2021 Net cash provided by operating activities $ 11,813 $ 8,656 $ 7,191 Net cash (used in) provided by investing activities: Cash proceeds from sales of businesses, net of cash sold 13 4,835 (61) Acquisitions (447) — (1,833) Net investment purchases (2,835) (272) (660) Purchases of property and equipment, net (1,573) (1,295) (1,154) Other, net (332) (170) 97 Net investing activities (5,174) 3,098 (3,611) Net cash (used in) financing activities: Debt (repayments) issuances (278) (2,559) 521 Stock repurchase (2,284) (7,607) (7,742) Dividend payments (1,450) (1,384) (1,341) Other, net (282) 310 350 Net financing activities (4,294) (11,240) (8,212) Foreign currency effect on cash 16 (86) (65) Change in cash, cash equivalents and restricted cash $ 2,361 $ 428 $ (4,697) The following discussion explains variances in the various categories of cash flows for the year ended December 31, 2023 compared with the same period in 2022.
According to this analysis, assuming a 100 basis point increase in interest rates, the effect of hypothetical changes in market rates on the fair value of certain financial instruments, subject to the exclusions noted above (particularly insurance liabilities), would have been as follows: Market scenario for certain non-insurance financial instruments Loss in Fair Value (in billions) December 31, 2022 December 31, 2021 100 basis point increase in interest rates (excluding the Company's long-term debt) $ 0.7 $ 1.4 In the event of a hypothetical 100 basis point increase in interest rates, the fair value of the Company's long-term debt would decrease approximately $1.8 billion at December 31, 2022 and $2.9 billion at December 31, 2021.
The effect of these hypothetical changes in market rates or prices on the fair value of certain financial instruments, subject to the exclusions noted above (particularly insurance liabilities), would have been as follows: Market scenario for certain non-insurance financial instruments Loss in Fair Value (in billions) December 31, 2023 December 31, 2022 100 basis point increase in interest rates (excluding the Company's long-term debt) $ 0.7 $ 0.7 10% decrease in market prices for equity securities $ 0.3 $ 0.1 In the event of a hypothetical 100 basis point increase in interest rates, the fair value of the Company's long-term debt would decrease approximately $1.8 billion at both December 31, 2023 and December 31, 2022.
Based upon the current customer mix associated with the announced Star Ratings, we estimate 67% of our MA customers will be in four star or greater plans. See Part 1, "Business - Regulation" section of this Form 10-K for further discussion of Star Ratings.
We estimate 67% of our MA customers to be in four star or greater plans for bonus payments to be received in 2024 and 2025 (based upon the current customer mix associated with the announced Star Ratings). See Part I, Item I, "Business - Regulation" section of this Form 10-K for further discussion of Star Ratings.
As we seek to improve the effectiveness of our integrated solutions for the benefit of our clients, we are continuously innovating and improving affordability. Our gross profit could also increase or decrease as a result of drug purchasing contract initiatives implemented.
Through these affordability services, we seek to improve the effectiveness of our integrated solutions for the benefit of our clients by continuously innovating, improving affordability and implementing drug purchasing contract initiatives. Our revenues, cost of revenues and gross profit could increase or decrease as a result of these affordability services.
Revolving Credit Agreements. Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed above.
The commercial paper program had approximately $1.2 billion outstanding at December 31, 2023. Revolving Credit Agreements. Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed above.
Goodwill and other intangibles as of December 31 were as follows (in millions): · 2022 – Goodwill $45,811; Other intangible assets $32,492 · 2021 – Goodwill $45,811; Other intangible assets $34,102 See Note 19 to the Consolidated Financial Statements for additional discussion of our goodwill and other intangible assets.
Goodwill and other intangibles as of December 31 were as follows (in millions): · 2023 – Goodwill $44,259; Other intangible assets $30,863 · 2022 – Goodwill $45,811; Other intangible assets $32,492 See Note 20 to the Consolidated Financial Statements for additional discussion of our goodwill and other intangible assets.
(5) Generic fill rate is defined as the total number of generic scripts divided by the total overall scripts filled. 2022 versus 2021 Adjusted network revenues slightly decreased, reflecting a decrease in claims volume; partially offset by inflation on branded drugs.
(5) Generic fill rate is defined as the total number of generic scripts divided by the total overall scripts filled. 2023 versus 2022 Adjusted network revenues increased 4%, reflecting inflation on branded drugs and higher claims volume, partially offset by a decrease in claims mix and an increase in the generic fill rate.
There were no investments with a material unrealized loss as of December 31, 2022. MARKET RISK Financial Instruments Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices.
We continuously review the joint venture's investment strategy and its execution. There were no investments with a material unrealized loss as of December 31, 2023. MARKET RISK Financial Instruments Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices.
In segment discussions, we present "adjusted revenues" and "pre-tax adjusted income (loss) from operations," defined as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets and special items.
See Note 1 to the Consolidated Financial Statements for further description of our segments. In segment discussions, we present "adjusted revenues" and "pre-tax adjusted income (loss) from operations," defined as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets and special items.
As described in the introduction to Segment Reporting, performance of the Cigna Healthcare segment is measured using adjusted revenues and pre-tax adjusted income from operations.
Commercial and U.S. Government operating segments were merged to form the U.S. Healthcare operating segment. As described in the introduction to Segment Reporting, performance of the Cigna Healthcare segment is measured using adjusted revenues and pre-tax adjusted income from operations.
We believe that the vast majority of our investments will continue to perform under their contractual terms. We manage the portfolio for long-term economics and therefore we expect to hold a significant portion of these assets for the long term. The following discussion addresses the strategies and risks associated with our various classes of investment assets.
We manage the portfolio for long-term economics and therefore we expect to hold a significant portion of these assets for the long term. The following discussion addresses the strategies and risks associated with our various classes of investment assets.
Changes in the fair value of our long-term debt do not impact our financial position or operating results since long-term debt is not required to be recorded at fair value.
Changes in the fair value of our long-term debt do not impact our financial position or operating results since long-term debt is not required to be recorded at fair value. See Note 8 to the Consolidated Financial Statements for additional information about the Company's debt.
If the derived market rates used to calculate fair value increased by 100 basis points, the fair value of the total debt security portfolio of $9.9 billion would decrease by approximately $0.6 billion, resulting in an after-tax decrease to shareholders' equity of approximately $0.4 billion as of December 31, 2022.
If the derived market rates used to calculate fair value increased by 100 basis points, the fair value of the total debt security portfolio of $9.9 billion would decrease by approximately $0.6 billion, resulting in an after-tax decrease to shareholders' equity of approximately $0.5 billion as of December 31, 2023. 64 SEGMENT REPORTING The following section of this MD&A discusses the results of each of our segments.
Though we believe we have adequate sources of liquidity, significant disruption or volatility in the capital and credit markets could affect our ability to access those markets for additional borrowings or increase costs.
Though we believe we have adequate sources of liquidity, significant disruption or volatility in the capital and credit markets could affect our ability to access those markets for additional borrowings or increase costs. Guarantees and Contractual Obligations We are contingently liable for various contractual obligations and financial and other guarantees entered into in the ordinary course of business.
We completed our normal annual evaluations for impairment of goodwill and intangible assets during the third quarter of 2022. The evaluations indicated that the fair value estimates of our reporting units exceed their carrying values by sufficient margins.
We completed our normal annual evaluations for impairment of goodwill and intangible assets during the third quarter of 2023, as well as additional qualitative and quantitative tests as required by GAAP. The evaluations support that as of December 31, 2023, the fair value estimates of our reporting units exceed their carrying values by sufficient margins.
LIQUIDITY AND CAPITAL RESOURCES Financial Summary For the Years Ended December 31, (In millions) 2022 2021 2020 Short-term investments $ 139 $ 428 $ 359 Cash and cash equivalents $ 5,924 $ 5,081 $ 10,182 Short-term debt $ 2,993 $ 2,545 $ 3,374 Long-term debt $ 28,100 $ 31,125 $ 29,545 Shareholders' equity $ 44,872 $ 47,112 $ 50,321 Liquidity We maintain liquidity at two levels: the subsidiary level and the parent company level.
LIQUIDITY AND CAPITAL RESOURCES Financial Summary For the Years Ended December 31, (In millions) 2023 2022 2021 Short-term investments $ 206 $ 139 $ 428 Cash and cash equivalents $ 7,822 $ 5,924 $ 5,081 Short-term debt $ 2,775 $ 2,993 $ 2,545 Long-term debt $ 28,155 $ 28,100 $ 31,125 Shareholders' equity $ 46,223 $ 44,675 $ 46,958 Liquidity We maintain liquidity at two levels: the subsidiary level and the parent company level.
Our exposure to foreign currency exchange rate risk from financial instruments is no longer significant. Excluding the items noted in the paragraph above, our primary market risk exposure from financial instruments is our interest-rate risk exposure to fixed-rate, medium-term instruments. Changes in market interest rates affect the value of instruments that promise a fixed return.
Because they are not financial instruments, their primary risks are other than market risk. Excluding the items noted in the paragraph above, our primary market risk exposure from financial instruments is our interest-rate risk exposure to fixed-rate, medium-term instruments. Changes in market interest rates affect the value of instruments that promise a fixed 71 return.
Purchase obligations exclude contracts that are cancellable without penalty and those that do not contractually require minimum levels of goods or services to be purchased. ◦ As of December 31, 2022, purchase obligations consisted of a total of $6.5 billion of estimated payments required under contractual arrangements.
Purchase obligations exclude contracts that are cancellable without penalty and those that do not contractually require minimum levels of goods or services to be purchased. ◦ As of December 31, 2023, purchase obligations consisted of a total of $4.3 billion of estimated payments required under contractual arrangements (of which we expect $1.3 billion of purchase obligations to be paid within the next twelve months beginning January 1, 2024).
We continue to monitor the economic environment and its effect on our portfolio and consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 11 to the Consolidated Financial Statements.
To date, most issuers have been successful in managing the cost escalation and product shortages without undue margin pressure. We continue to monitor the economic environment and its effect on our portfolio and consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 12 to the Consolidated Financial Statements.
Medicare Advantage Rates On April 4, 2022, CMS released the final Calendar Year 2023 Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (the "2023 Final Notice"). On February 1, 2023, CMS released the Calendar Year 2024 Advance Notice for Medicare Advantage and Part D Prescription Drug Programs (the "Advance Notice").
Medicare Advantage Rates On March 31, 2023, CMS released the final Calendar Year 2024 Medicare Advantage Program and Part D Payment Policies (the "2024 Final Notice"). On January 31, 2024, CMS released the Calendar Year 2025 Advance Notice for Medicare Advantage and Part D Prescription Drug Programs (the "Advance Notice").
We have not experienced material impacts from inflation on our results of operations or cash flows for the year ended December 31, 2022. For further information regarding risks we encounter in our business due to economic conditions including inflationary pressures, see "Risk Factors" contained in Part I, Item 1A of this Form 10-K.
Our results of operations or cash flows for the year ended December 31, 2023 were not materially impacted by inflation, labor market dynamics, or recent geopolitical events. For further information regarding risks we encounter in our business due to economic conditions, see "Risk Factors" contained in Part I, Item 1A of this Form 10-K.
See Part I, Item 1 of this Form 10-K for further discussion of RADV. Centene Corporation In October 2022, Evernorth Health Services and Centene Corporation ("Centene") announced a multi-year agreement effective January 2024 to manage pharmacy benefit services and make prescription medications more accessible and affordable for Centene's approximately 20 million customers.
See Note 12 to the Consolidated Financial Statements for further discussion of this investment. Centene Corporation Effective January 1, 2024, Evernorth Health Services and Centene Corporation ("Centene") have a multi-year agreement to manage pharmacy benefit services and make prescription medications more accessible and affordable for Centene's approximately 20 million customers.
Office sector fundamentals have been and continue to be weak and values are experiencing stress due to multiple headwinds: expanded work from home flexibility, shorter term leases, elevated tenant improvement allowances and corporate migration to lower cost states.
See Note 12 to the Consolidated Financial Statements for further information regarding our key credit quality indicators for commercial mortgage loans. Office sector fundamentals have been and continue to be weak and values are experiencing stress due to multiple headwinds: expanded work from home flexibility, shorter term leases, elevated tenant improvement allowances and corporate migration to lower cost states.
We have not experienced significant impacts to date on our investment portfolio, financial position or results of operations. For a more complete discussion of the risks we encounter in our business, see "Risk Factors" contained in Part I, Item 1A of this Form 10-K.
For a more complete discussion of the risks we encounter in our business, see "Risk Factors" contained in Part I, Item 1A of this Form 10-K.
Cigna Healthcare Medical Customers As of December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (In thousands) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Insured 4,756 4,757 4,538 (1) — % 219 5 % U.S. Commercial 2,238 2,166 2,141 72 3 25 1 U.S.
Cigna Healthcare Medical Customers As of December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (In thousands) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Insured 5,464 4,756 4,757 708 15 % (1) — % U.S.
There may be a number of alternative inputs to select based on an understanding of the issuer, the structure of the security and overall market conditions. In addition, these factors are inherently variable in nature as they change frequently in response to market conditions. Approximately 60% of our debt securities are public securities and approximately 40% are private placement securities.
In addition, these factors are inherently variable in nature as they change frequently in response to market conditions. Approximately 60% of our debt securities are public securities and approximately 40% are private placement securities.
Our subsidiaries normally meet their liquidity requirements by: • maintaining appropriate levels of cash, cash equivalents and short-term investments; • using cash flows from operating activities; • matching investment durations to those estimated for the related insurance and contractholder liabilities; • selling investments; and • borrowing from affiliates, subject to applicable regulatory limits. 58 Cash requirements at the parent company level generally consist of: • debt service; • payment of declared dividends to shareholders; • lending to subsidiaries as needed; and • pension plan funding.
Cash requirements at the subsidiary level generally consist of: • pharmacy, medical costs and other benefit payments; • expense requirements, primarily for employee compensation and benefits, information technology and facilities costs; • income taxes; and • debt service. 56 Our subsidiaries normally meet their liquidity requirements by: • maintaining appropriate levels of cash, cash equivalents and short-term investments; • using cash flows from operating activities; • matching investment durations to those estimated for the related insurance and contractholder liabilities; • selling investments; and • borrowing from affiliates, subject to applicable regulatory limits.
Unless otherwise indicated, financial information in this MD&A is presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See Note 2 to the Consolidated Financial Statements in this Form 10-K for additional information regarding the Company's significant accounting policies.
Unless otherwise indicated, financial information in this MD&A is presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").
These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 15% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans. We participate in the approval of the joint venture's investment strategy and continuously review its execution.
Our 50% share of the investment portfolio supporting the joint venture's liabilities is approximately $11.7 billion as of December 31, 2023. These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 15% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans.
To mitigate risk, these investments are diversified across approximately 190 separate partnerships and 90 general partners who manage one or more of these partnerships. Also, the underlying investments are diversified by industry sector or property type and geographic region. No single partnership investment exceeded 3% of our securities and real estate limited partnership portfolio.
Also, the underlying investments are diversified by industry sector or property type and geographic region. No single partnership investment exceeded 4% of our securities and real estate limited partnership portfolio.
For the year ended December 31, 2020, we recorded an adjustment related to a former client contract that was excluded from our adjusted metrics. 67 Results of Operations Financial Summary For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Total revenues $ 140,335 $ 131,912 $ 116,334 $ 8,423 6 % $ 15,578 13 % Less: Contractual adjustment for a former client — — (204) — N/M 204 N/M Adjusted revenues (1) $ 140,335 $ 131,912 $ 116,130 $ 8,423 6 % $ 15,782 14 % Pharmacy and other service costs $ 131,284 $ 123,504 $ 108,537 $ 7,780 6 % $ 14,967 14 % Gross profit (2) $ 9,051 $ 8,408 $ 7,797 $ 643 8 % $ 611 8 % Adjusted gross profit (1),(2) $ 9,051 $ 8,408 $ 7,593 $ 643 8 % $ 815 11 % Pre-tax adjusted income from operations $ 6,127 $ 5,818 $ 5,363 $ 309 5 % $ 455 8 % Pre-tax adjusted margin 4.4 % 4.4 % 4.6 % — bps (20) bps Adjusted expense ratio (3) 2.0 % 1.9 % 1.9 % (10) bps — bps Selected Financial Information For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars and adjusted scripts in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Pharmacy revenue by distribution channel Adjusted network revenues (1) $ 64,946 $ 64,992 $ 56,181 — % 16 % Adjusted home delivery and specialty revenues (1) 61,283 54,391 49,886 13 9 Other pharmacy revenues 6,753 6,428 5,403 5 19 Total adjusted pharmacy revenues (1) $ 132,982 $ 125,811 $ 111,470 6 % 13 % Adjusted fees and other revenues (1) 7,267 6,084 4,628 19 31 Net investment income 86 17 32 N/M (47) Adjusted revenues (1) $ 140,335 $ 131,912 $ 116,130 6 % 14 % Pharmacy script volume (4) Adjusted network scripts 1,295 1,355 1,206 (4) % 12 % Adjusted home delivery and specialty scripts 280 283 287 (1) (1) Total adjusted scripts 1,575 1,638 1,493 (4) % 10 % Generic fill rate (5) Network 86.4 % 85.4 % 87.4 % 100 bps (200) bps Home delivery 85.1 % 85.9 % 85.2 % (80) bps 70 bps Overall generic fill rate 86.3 % 85.5 % 87.2 % 80 bps (170) bps (1) Total revenues and gross profit were equal to adjusted revenues and adjusted gross profit for the years ended December 31, 2022 and December 31, 2021 as there were no special items in those periods.
In this MD&A, we present revenues and gross profit, as well as adjusted revenues and adjusted gross profit, consistent with our segment reporting metrics, which exclude special items. 65 Results of Operations Financial Summary For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Total revenues $ 153,499 $ 140,335 $ 131,912 $ 13,164 9 % $ 8,423 6 % Adjusted revenues (1) $ 153,499 $ 140,335 $ 131,912 $ 13,164 9 % $ 8,423 6 % Pharmacy and other service costs $ 143,571 $ 131,284 $ 123,504 $ 12,287 9 % $ 7,780 6 % Gross profit (2) $ 9,928 $ 9,051 $ 8,408 $ 877 10 % $ 643 8 % Adjusted gross profit (1),(2) $ 9,928 $ 9,051 $ 8,408 $ 877 10 % $ 643 8 % Pre-tax adjusted income from operations $ 6,442 $ 6,127 $ 5,818 $ 315 5 % $ 309 5 % Pre-tax adjusted margin 4.2 % 4.4 % 4.4 % (20) bps — bps Adjusted expense ratio (3) 2.2 % 2.0 % 1.9 % (20) bps (10) bps Selected Financial Information For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars and adjusted scripts in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Pharmacy revenue by distribution channel Adjusted network revenues (1) $ 67,514 $ 64,946 $ 64,992 4 % — % Adjusted home delivery and specialty revenues (1) 65,732 61,283 54,391 7 13 Other pharmacy revenues 9,047 6,753 6,428 34 5 Total adjusted pharmacy revenues (1) $ 142,293 $ 132,982 $ 125,811 7 % 6 % Adjusted fees and other revenues (1) 10,965 7,267 6,084 51 19 Net investment income 241 86 17 180 N/M Adjusted revenues (1) $ 153,499 $ 140,335 $ 131,912 9 % 6 % Pharmacy script volume (4) Adjusted network scripts 1,327 1,295 1,355 2 % (4) % Adjusted home delivery and specialty scripts 258 280 283 (8) (1) Total adjusted scripts 1,585 1,575 1,638 1 % (4) % Generic fill rate (5) Network 86.9 % 86.4 % 85.4 % 50 bps 100 bps Home delivery 85.3 % 85.1 % 85.9 % 20 bps (80) bps Overall generic fill rate 86.7 % 86.3 % 85.5 % 40 bps 80 bps (1) Total revenues and gross profit were equal to adjusted revenues and adjusted gross profit as there were no special items in the periods presented.
(In millions) December 31, 2022 December 31, 2021 Debt securities $ 9,872 $ 16,958 Equity securities 622 603 Commercial mortgage loans 1,614 1,566 Policy loans 1,218 1,338 Other long-term investments 3,728 3,574 Short-term investments 139 428 Total 24,467 Investments classified as Assets of businesses held for sale (1) (5,109) Investments per Consolidated Balance Sheets $ 17,193 $ 19,358 (1) Investments related to the divested International businesses that were held for sale.
(In millions) December 31, 2023 December 31, 2022 Debt securities $ 9,855 $ 9,872 Equity securities 3,362 622 Commercial mortgage loans 1,533 1,614 Policy loans 1,211 1,218 Other long-term investments 4,181 3,728 Short-term investments 206 139 Total $ 20,348 $ 17,193 Investments classified as assets of businesses held for sale (1) (1,438) — Investments per Consolidated Balance Sheets $ 18,910 $ 17,193 (1) Investments related to the HCSC transaction that were held for sale as of December 31, 2023.
Effect of Market Fluctuations We determine the sensitivity of our financial instruments, primarily debt securities and commercial mortgage loans, to our primary market risk exposure by estimating the present value of future cash flows using various models, primarily duration modeling.
Effect of Market Fluctuations We determine the sensitivity of market risk for our fixed income financial instruments, including debt securities and commercial mortgage loans, by estimating the present value of future cash flows using duration modeling and applying a 100 basis point increase in interest rates.
Commercial and International Health. 69 Medical Customers A medical customer is defined as a person meeting any one of the following criteria: • is covered under a medical insurance policy, managed care arrangement or service agreement issued by us; • has access to our provider network for covered services under their medical plan; or • has medical claims that are administered by us.
The adjusted expense ratio decreased 190 bps for the three months ended December 31, 2023, primarily due to revenue growth and timing of investments outpacing volume-related expenses. 67 Medical Customers A medical customer is defined as a person meeting any one of the following criteria: • is covered under a medical insurance policy, managed care arrangement or administrative services agreement issued by us; • has access to our provider network for covered services under their medical plan; or • has medical claims that are administered by us.
Most of the Evernorth Health Services segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to The Cigna Group.
Most of the Evernorth Health Services segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to The Cigna Group. With respect to our investment portfolio, we support the liquidity needs of our businesses by managing the duration of assets to be consistent with the duration of liabilities.
Results of Operations Financial Summary For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars in millions) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 Adjusted revenues $ 45,036 $ 44,652 $ 41,135 $ 384 1 % $ 3,517 9 % Pre-tax adjusted income from operations $ 4,072 $ 3,609 $ 4,031 $ 463 13 % $ (422) (10) % Pre-tax adjusted margin 9.0 % 8.1 % 9.8 % 90 bps (170) bps Medical care ratio 81.7 % 84.0 % 78.3 % 230 bps (570) bps Adjusted expense ratio 21.8 % 21.0 % 23.5 % (80) bps 250 bps 2022 versus 2021 Adjusted revenues increased 1%, primarily reflecting increased specialty contributions, higher premium rates due to anticipated underlying medical cost trend and customer growth in International Health and U.S.
Results of Operations Financial Summary For the Years Ended December 31, Change Favorable (Unfavorable) Change Favorable (Unfavorable) (Dollars in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Adjusted revenues $ 51,205 $ 45,037 $ 44,643 $ 6,168 14 % $ 394 1 % Pre-tax adjusted income from operations $ 4,478 $ 4,099 $ 3,601 $ 379 9 % $ 498 14 % Pre-tax adjusted margin 8.7 % 9.1 % 8.1 % (40) bps 100 bps Medical care ratio 81.3 % 81.7 % 84.0 % 40 bps 230 bps Adjusted expense ratio 21.6 % 21.8 % 20.9 % 20 bps (90) bps 2023 versus 2022 Adjusted revenues increased 14%, primarily reflecting customer growth and higher premium rates due to anticipated underlying medical cost trend.
For comparisons of liquidity and capital resources for the year ended December 31, 2021 compared with the year ended December 31, 2020, please refer to the previously filed MD&A included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2021.
For comparisons of liquidity and capital resources for the year ended December 31, 2022 compared with the year ended December 31, 2021, please refer to the previously filed MD&A included in Part II, Item 7 of our 2022 Form 10-K. 57 Operating activities Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums, fees, investment income, taxes, benefit costs and other expenses.
The Cigna Group has a mission of helping those we serve improve their health and vitality. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and related products and services. For further information on our business and strategy, see Item 1, "Business" in this Form 10-K.
Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental and related products and services. For further information on our business and strategy, see Part 1, Item 1, "Business" of this Form 10-K. Financial Highlights See Note 1 to the Consolidated Financial Statements for a description of our segments.
Our Management of Market Risks We predominantly rely on three techniques to manage our exposure to market risk: • Investment/liability matching. We generally select investment assets with characteristics (such as duration, yield, currency and liquidity) that correspond to the underlying characteristics of our related insurance and contractholder liabilities so that we can match the investments to our obligations.
We generally select investment assets with characteristics (such as duration, yield, currency and liquidity) that correspond to the underlying characteristics of our related insurance and contractholder liabilities so that we can match the investments to our obligations. Shorter-term investments generally support shorter-term life and health liabilities. Medium-term, fixed-rate investments support interest-sensitive and health liabilities.
If we consistently do not achieve our earnings and cash flow projections or our cost of capital rises significantly, the assumptions and estimates underlying the goodwill and intangible asset impairment evaluations could be adversely affected and result in future impairment charges that would negatively impact our operating results and financial position. Specific to the U.S.
If we consistently do not achieve our earnings and cash flow projections or our cost of capital rises significantly, the assumptions and estimates underlying the goodwill and intangible asset impairment evaluations could be adversely affected and result in future impairment charges that would negatively impact our operating results and financial position. 62 Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used Income taxes – uncertain tax positions We evaluate tax positions to determine whether the benefits are more likely than not to be sustained on audit based on their technical merits.
The adjusted expense ratio increased 10 bps, reflecting higher revenues and expense discipline, which enabled us to increase strategic investments in expanding our services portfolio and digital capabilities. Cigna Healthcare Segment Cigna Healthcare includes the U.S. Commercial, U.S. Government and International Health businesses, which provide comprehensive medical and coordinated solutions to clients and customers.
The adjusted expense ratio increased 20 bps, reflecting increased strategic investments to support the onboarding of new clients and continued advancement of our digital capabilities and care solutions. Cigna Healthcare Segment Cigna Healthcare includes the U.S. Healthcare and International Health businesses, which provide comprehensive medical and coordinated solutions to clients and customers. During the fourth quarter of 2023, the U.S.
Note 24 to the Consolidated Financial Statements also explains that segment revenues include both external revenues and sales between segments that are eliminated in Corporate.
Note 25 to the Consolidated Financial Statements also explains that segment revenues include both external revenues and sales between segments that are eliminated in Corporate. In these segment discussions, we also present "pre-tax adjusted margin," defined as pre-tax adjusted income (loss) from operations divided by adjusted revenues.
Realized investment results were substantially lower, primarily due to declines in equity securities resulting in unfavorable mark to market adjustments on investments in 2022. See Note 11 to the Consolidated Financial Statements for further discussion. The effective tax rate decreased by 100 basis points, driven largely by the foreign tax rate differential, including the impact of the Chubb transaction.
Realized investment results were substantially improved, primarily due to lower mark-to-market losses on investments. See Note 12 to the Consolidated Financial Statements for further discussion. The effective tax rate decreased substantially driven by foreign deferred tax benefits.
Income from our limited partnership investments is generally reported on a one quarter lag due to the timing of when financial information is received from the general partner or manager of the investments.
Income from our limited partnership investments is generally reported on a one quarter lag due to the timing of when financial information is received from the general partner or manager of the investments. We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions.
Premiums declined 3%, reflecting the impact of the Chubb transaction and the disposition of the Medicaid business in Cigna Healthcare. Partially offsetting these decreases were the favorable impact of increased specialty contributions and higher premium rates in Cigna Healthcare due to anticipated underlying medical cost trend. See the "Cigna Healthcare segment" section of this MD&A for further discussion.
See the "Segment Reporting - Evernorth Health Services Segment" section of this MD&A for further discussion. Premiums increased 11% reflecting insured customer growth and higher premium rates in Cigna Healthcare due to anticipated underlying medical cost trend. See the "Segment Reporting - Cigna Healthcare Segment" section of this MD&A for further discussion.

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