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What changed in Cigna's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Cigna's 2023 and 2024 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 2024 report.

+585 added−803 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Cigna's 2024 10-K

585 paragraphs added · 803 removed · 464 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

198 edited+52 added−208 removed27 unchanged
Biggest changeHealthcare Specialty Benefits and Solutions • Behavioral Health solutions consist of a broad national network of behavioral health providers that includes one of the largest virtual networks in the United States, behavioral health specialty case and utilization management, a crisis intervention phone line accessible anytime, employee assistance programs and work/life programs.
Biggest changeHealthcare Benefits and Solutions The following benefits and solutions are offered nationwide with various funding solutions to enhance the benefits from our health care medical plans. • Behavioral Health solutions consist of a broad national network of providers, including one of the largest virtual networks in the United States, specialty case and utilization management, a 24/7-accessible crisis intervention phone line, employee assistance programs, and work/life programs. • Consumer Health Engagement solutions include an array of health management, disease management and wellness programs to improve customers' health and well-being. • Cost Containment Programs are designed to reduce the cost of covered health care services and supplies by reducing out-of-network costs, protecting customers from balance billing and educating customers regarding the availability of lower cost in-network services.
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.
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, and clinical care and health management capabilities along with an array of product funding solutions are competitive advantages.
In addition, certain of our clients participate as contracting carriers in the Federal Employees Health Benefits Program administered by the OPM, which includes various pharmacy benefit management standards. Employee Retirement Income Security Act Our domestic subsidiaries sell most of their products and services to sponsors of employee benefit plans that are governed by ERISA.
In addition, certain of our clients participate as contracting carriers in the Federal Employees Health Benefits Program administered by the OPM, which includes various pharmacy benefit management standards. Employee Retirement Income Security Act Our domestic subsidiaries sell most of their products and services to sponsors of employee benefit plans that are governed by the Employee Retirement Income Security Act ("ERISA").
These medications broadly include those with frequent dosing adjustments, intensive clinical monitoring, the need for customer training, specialized product administration requirements or medications limited to certain specialty pharmacy networks by manufacturers. The front-end of our pharmacy, anchored by Accredo, is organized into Therapeutic Resource Centers, where pharmacists focus their practice of pharmacy by condition.
These medications broadly include those with frequent dosing adjustments, intensive clinical monitoring, the need for customer training, specialized product administration requirements or medications limited to certain specialty pharmacy networks by manufacturers. The front-end of our pharmacy, anchored by Accredo by Evernorth ® ("Accredo"), is organized into Therapeutic Resource Centers, where pharmacists focus their practice of pharmacy by condition.
As a result, we routinely receive subpoenas and other demands or requests for information from various state insurance and HMO regulatory agencies, state attorneys general, the HHS Office of Inspector General ("HHS-OIG"), the DOJ, the DOL and other state, federal and international authorities. We may also be called upon by members of the U.S.
As a result, we routinely receive subpoenas and other demands or requests for information from various state insurance and HMO regulatory agencies, state attorneys general, the HHS Office of Inspector General ("HHS-OIG"), the DOJ, the FTC, the DOL, and other state, federal and international authorities. We may also be called upon by members of the U.S.
The federal Gramm-Leach-Bliley Act ("GLBA") and its implementing regulations generally place restrictions on the disclosure of nonpublic information to nonaffiliated third parties, and requires financial institutions, including insurers, to provide customers with notice regarding how their nonpublic personal information is used, including an opportunity to "opt out" of certain disclosures.
The federal Gramm-Leach-Bliley Act and its implementing regulations generally place restrictions on the disclosure of nonpublic information to nonaffiliated third parties and requires financial institutions, including insurers, to provide customers with notice regarding how their nonpublic personal information is used, including an opportunity to "opt out" of certain disclosures.
Certain states continue to require health insurers and HMOs to participate in assigned risk plans, joint underwriting authorities, pools or other residual market mechanisms to cover risks not acceptable under normal underwriting standards, although some states have eliminated these requirements as a result of the ACA.
Additionally, certain states continue to require health insurers and HMOs to participate in assigned risk plans, joint underwriting authorities, pools or other residual market mechanisms to cover risks not acceptable under normal underwriting standards, although some states have eliminated these requirements as a result of the ACA.
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.
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 by Evernorth ® ("Express Scripts") and custom formularies in which we play a more limited role.
Through this business, we provide distribution services primarily to health care providers who treat customers with chronic diseases and regularly order costly specialty pharmaceuticals. This business operates three distribution centers and ships most products overnight within the United States.
We provide distribution services primarily to health care providers who treat customers with chronic diseases and regularly order costly specialty pharmaceuticals. This business operates three distribution centers and ships most products overnight within the United States.
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.
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 about, monitor and confer on emerging technology issues, including, among others, cybersecurity and AI.
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.
Certain insurance and HMO subsidiaries are required to file an annual report of internal control over financial reporting with 17 most jurisdictions in which they do business. Insurance and HMO subsidiaries' operations and financial statements are subject to examination by regulators.
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.
Additionally, 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.
Our operations in countries outside of the United States: • are subject to local regulations of the jurisdictions where we operate; • in some cases, are subject to regulations in the jurisdictions where customers reside; and • in all cases, are subject to the Foreign Corrupt Practices Act ("FCPA").
Our operations in countries outside of the United States are subject to local regulations of the jurisdictions where we operate; in some cases, they are subject to regulations in the jurisdictions where customers reside; and in all cases, they are subject to the Foreign Corrupt Practices Act ("FCPA").
Financial Reporting, Internal Control and Corporate Governance Regulators closely monitor the financial condition of licensed insurance companies and HMOs. States regulate the form and content of statutory financial statements, the type and concentration of permitted investments and corporate governance over financial reporting.
Financial Reporting, Internal Control and Corporate Governance State regulators closely monitor the financial condition of licensed insurance companies and HMOs. States regulate the form and content of statutory financial statements, the type and concentration of permitted investments, and corporate governance over financial reporting.
Departments of Labor ("DOL") and Treasury, the Office of Personnel Management ("OPM"), the Federal Trade Commission ("FTC"), the SEC, the Office of the National Coordinator for Health Information Technology ("ONC"), state departments of insurance and state boards of pharmacy.
Departments of Labor ("DOL") and Treasury, the Office of Personnel Management ("OPM"), the Federal Trade Commission ("FTC"), the SEC, the Office of the National Coordinator for Health Information Technology, state departments of insurance and state boards of pharmacy.
There can be no assurance that we will not be the subject of an investigation, audit or compliance review regarding our compliance with HIPAA.
There can be no assurance that we will not be the subject of an investigation, 14 audit or compliance review regarding our compliance with HIPAA.
Our business practices may also be shaped by enforcement actions of federal agencies, such as the Department of Justice ("DOJ"), state agencies, as well as judicial decisions. In addition, aspects of our business are subject to indirect regulation. The self-funded benefit plans sponsored by our U.S. employer clients are regulated under federal law.
Our business practices may also be shaped by enforcement actions of federal agencies, such as the Department of Justice ("DOJ"), state agencies and judicial decisions. In addition, aspects of our business are subject to indirect regulation. The self-funded benefit plans sponsored by our U.S. employer clients are regulated under federal law.
Even where we believe that we are in compliance with the various laws and regulations, any enforcement actions by federal, state or international government officials alleging non-compliance with these rules and regulations could subject us to penalties or restructuring or reorganization of our business.
Even where we believe that we are in compliance with the various laws and regulations, any enforcement actions by federal, state or international government officials alleging noncompliance with these rules and regulations could subject us to penalties or restructuring or reorganization of our business.
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.
For example, the Transparency in Coverage rule issued 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.
We consult with our clients on how best to structure and leverage the pharmacy benefit to meet plan objectives for affordable access to the prescription medications customers need to stay healthy and to ensure the safe and effective use of those medications. ◦ Drug Utilization Review Program.
We consult with our clients on how best to structure and leverage the pharmacy benefit to meet plan objectives for affordable and sustainable access to the prescription medications customers need to stay healthy and to ensure the safe and effective use of those medications. ◦ Drug Utilization Review.
Stop-loss insurance provides reimbursement for claims in excess of a predetermined amount for individuals, the entire group, or both. International Health • Global Health Care offerings include insurance and administrative services for medical, dental, pharmacy, vision and life, accidental death and dismemberment and disability risks.
Stop-loss insurance provides reimbursement for claims in excess of a predetermined amount for individuals, the entire group or both. International Health • Global Health Care offerings include medical, dental, pharmacy, vision, life, accidental death and dismemberment, and disability risks.
For additional information regarding this reinsurance transaction and the arrangements that secure our reinsurance recoverables, see Note 11 to the Consolidated Financial Statements. Individual Life Insurance and Annuity and Retirement Benefits Businesses The individual life insurance and annuity business and the retirement benefits business were sold through reinsurance agreements in 1998 and 2004, respectively.
For additional information regarding this reinsurance transaction and the arrangements that secure our reinsurance recoverables, see Note 10 to the Consolidated Financial Statements. Individual Life Insurance and Annuity and Retirement Benefits Businesses. The individual life insurance and annuity business and the retirement benefits business were sold through reinsurance agreements in 1998 and 2004, respectively.
Our ability to obtain payment (and the determination of the amount of such payments), market to, enroll and retain customers and expand into new service areas is subject to compliance with CMS' numerous and complex regulations and requirements that are frequently modified and subject to administrative discretion, review and enforcement.
Our ability to obtain payment (and the determination of the amount of such payments), market to, enroll and retain customers, and expand into new service areas is subject to compliance with CMS' numerous and complex regulations and requirements that are subject to administrative discretion, review and enforcement.
Laws and Legislation Affecting Pharmacy Benefit Plan Design, Administration and Pharmacy Network Access Some states have enacted laws that prohibit managed care plan sponsors from implementing certain restrictive benefit plan design features, and many states have laws or have introduced legislation to regulate various aspects of managed care plans, including provisions relating to the pharmacy benefit.
Laws and Legislation Affecting Pharmacy Benefit Plan Design, Administration and Pharmacy Network Access Some states have enacted laws that prohibit plan sponsors from implementing certain restrictive benefit plan design features, and many states have laws or have introduced legislation to regulate various aspects of plans, including provisions relating to the pharmacy benefit.
As part of our Medicare Advantage and Medicare Part D business, we contract with CMS to provide services to Medicare beneficiaries. We offer dual-eligible products and participate in state Medicaid programs directly or indirectly through our clients who are Medicaid managed care contractors.
As part of our Medicare Advantage and Medicare Part D business, we contract with CMS to provide services to Medicare beneficiaries. We offer dual-eligible products and participate in state Medicaid programs directly or indirectly through our clients that are Medicaid managed care contractors.
State legislatures and regulators are similarly interested in the use of AI, particularly as it is used in modeling, and a handful of states have either passed legislation or issued regulatory guidance concerning AI.
U.S. state legislatures and regulators are similarly interested in the use of AI, particularly as it is used in modeling, and a handful of states have either passed legislation or issued regulatory guidance concerning AI.
We drive action through this framework to deliver on our ESG vision: to transform the ecosystem of health into one that is well-functioning, sustainable, accessible and equitable - advancing better health for all. Our commitment to this vision guides us in our multidimensional value-creation strategy as we strive to meet the needs of our many stakeholders.
We drive action through this framework to deliver on our purpose and performance vision: to transform the ecosystem of health into one that is well-functioning, sustainable, accessible and equitable - advancing better health for all. Our commitment to this vision guides us in our multidimensional value-creation strategy as we strive to meet the needs of our many stakeholders.
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.
These include compliance with the Privacy Act of 1974, the Defense Federal Acquisition Regulation Supplement cybersecurity requirements, the Cybersecurity Maturity Model Certification (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 and the White House's 2021 Executive Order on Improving the Nation's Cybersecurity.
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.
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 (a) result in fines, penalties, injunctions, consent orders or other settlement agreements (such as corporate integrity agreements or loss of licensure); (b) suspend or exclude us from participation in government programs or limit our ability to sell or market our products; (c) require changes in business practices; (d) damage relationships with the agencies that regulate us and affect our ability to secure regulatory approvals necessary for the operation of our business; or (e) damage our brand and reputation.
We contract with retail pharmacies to provide prescription drugs to customers of the pharmacy benefit plans our clients offer. We negotiate with pharmacies throughout the United States to discount drug prices and offer national and regional network options responsive to client preferences related to cost containment, convenience of access for customers and network performance.
We contract with retail pharmacies to provide prescription drugs to customers of the pharmacy benefit plans our clients offer. We negotiate with pharmacies throughout the United States to discount drug prices and offer national and regional network options responsive to client preferences related to cost containment, convenience of access for customers and network performance. ◦ Benefits Design Consultation.
Our operations are also subject to non-routine examinations, audits and investigations by various state and federal regulatory agencies, generally as the result of a complaint. In addition, we may be implicated in investigations of our clients whose group benefit plans we administer on their behalf.
Our operations are also subject to nonroutine examinations, audits and investigations by various state and federal regulatory agencies, generally as the result of a complaint. In addition, we may be implicated in investigations of our clients whose group benefit plans we administer on their behalf.
With respect to our clients' rebate arrangements, most chose to receive the greater of a minimum rebate guarantee or a contractually agreed-upon percentage of rebates. In some rebate arrangements, Express Scripts PBM takes on the risk of securing the rebate value necessary to meet the value guaranteed to its client.
With respect to our clients' rebate arrangements, most choose to receive the greater of a minimum rebate guarantee or a contractually agreed-upon percentage of rebates. In some rebate arrangements, Express Scripts takes on the risk of securing the rebate value necessary to meet the value guaranteed to its client.
We expect federal and state governments to continue to prioritize means of addressing out-of-pocket costs for consumers, particularly related to prescription drug costs.
We expect federal and state governments to continue to prioritize means of addressing vertical integration and out-of-pocket costs for consumers, particularly related to prescription drug costs.
Our compensation practices, rooted in our pay-for-performance philosophy, promote equity in pay through measures such as benchmarking compensation by role, eliminating inquiries regarding applicants' compensation history from the hiring process and monitoring for potential disparities.
Our compensation practices, rooted in our pay-for-performance philosophy, promote fair and competitive pay through measures such as benchmarking compensation by role, eliminating inquiries regarding applicants' compensation history from the hiring process and monitoring for potential disparities.
Among other things, the final rule requires enrollees to be notified of their ability to opt out of phone calls regarding Medicare Advantage and Part D marketing, requires agents to explain the effect of an enrollee’s enrollment choice on their current coverage, simplifies plan comparisons by requiring medical benefits to be listed in a specific order at the top of a plan’s Summary of Benefits, requires Medicare Advantage organizations and Part D sponsors to have an oversight plan that monitors activities of agents and brokers and to report noncompliance to CMS, and limits the time a potential enrollee may be contacted about Medicare plan options to 12 months after the enrollee first asked for information.
In April 2023, CMS issued a final rule revising regulations governing marketing by Medicare Advantage and Medicare Part D plans, which requires, among other things, enrollees to be notified of their ability to opt out of phone calls regarding Medicare Advantage and Part D marketing, requires agents to explain the effect of an enrollee's enrollment choice on their current coverage, simplifies plan comparisons by requiring medical benefits to be listed in a specific order at the top of a plan's Summary of Benefits, requires Medicare Advantage organizations and Part D sponsors to have an oversight plan that monitors activities of agents and brokers and to report noncompliance to CMS, and limits the time a potential enrollee may be contacted about Medicare plan options to 12 months after the enrollee first asked for information.
Our Express Scripts Pharmacy offers free standard shipping of medications nationwide, usually in a 90-day supply, directly to the customer's home and allows for automatic refills on eligible medications and unrestricted telephone access to customer care advocates and specially trained pharmacists to answer customer questions.
Our Express Scripts Pharmacy by Evernorth ® ("Express Scripts Pharmacy") offers free standard shipping of medications nationwide, usually in a 90-day supply, directly to the customer's home and allows for automatic refills on eligible medications and unrestricted telephone access to customer care advocates and specially trained pharmacists.
The Home Delivery Pharmacy operations consist of thirteen licensed pharmacies, including four fulfillment pharmacies. Our fulfillment pharmacies are located in Arizona, Indiana, Missouri and New Jersey. Specialty and Care Services • Specialty Pharmacy. Specialty medications are primarily characterized as high-cost medications for the treatment of complex and rare diseases.
The Home Delivery Pharmacy operations consist of 13 licensed pharmacies, including 4 fulfillment pharmacies. Our fulfillment pharmacies are located in Arizona, Indiana, Missouri and New Jersey. Specialty and Care Services • Specialty Pharmacy. Specialty medications are primarily characterized as high-cost medications for the treatment of complex and rare diseases.
Our online learning platform and career development tools, including a career portal and career planning tool, offer a broad range of training, education and development resources to all employees. In 2023, based on internal data, employees on average engaged in 30 hours of learning through these resources.
Our online learning platform and career development tools, including a career portal and career planning tool, offer a broad range of training, education and development resources to all employees. In 2024, based on internal data, employees on average engaged in 37 hours of learning through these resources.
CMS evaluates Medicare Advantage plans and Part D plans under its "Star Rating" system. The Star Rating system considers various measures adopted by CMS, including, for example, quality of care, preventive services, chronic illness management, coverage determinations and appeals and customer satisfaction.
CMS evaluates Medicare Advantage plans and Part D plans under its "Star Rating" system, which considers various measures adopted by CMS, including quality of care, preventive services, chronic illness management, coverage determinations and appeals, and customer satisfaction.
We also have a variety of accelerated growth businesses, both scaled and emerging, which build upon our foundational relationships or provide exposure to adjacent high-growth areas.
We also have accelerated growth businesses, both scaled and emerging, which build upon our foundational relationships or provide exposure to adjacent high-growth areas.
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.
In 2024, The Cigna Group invested approximately 19% 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.
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.
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 Services.
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.
Our most recent pay equity analysis among our U.S. employees, conducted in 2025, illustrated that female employees of The Cigna Group earn more than 99 cents for every dollar earned by similarly situated male employees, and ethnic minority employees (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.
Cybersecurity protections continue to be a top priority across The Cigna Group's digital offerings to further strengthen our security posture and grow the trust of those we serve. See Part 1. Item C - Cybersecurity of this Form 10-K for additional information regarding our cybersecurity practices and governance. Technology Operations.
Cybersecurity protections continue to be a top priority across The Cigna Group digital offerings to further strengthen our security posture and grow the trust of those we serve. See Part I. Item 1C - "Cybersecurity" of this Form 10-K for additional information regarding our cybersecurity practices and governance. Technology Operations.
These laws and regulations govern, and proposed legislation and regulations may govern, critical practices, including: disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers; certain pharmacy contracting practices including disclosure of cost information to customers; the receipt and retention of transmission fees from contracted pharmacies; performance-based price concessions; pharmacy price concessions to drug prices at the point of sale; audits of contracted pharmacies; use of, administration of, or changes to drug formularies, the use and disclosure of maximum allowable cost ("MAC") pricing, or clinical programs; "most favored nation" pricing, which provides that a pharmacy participating in a specific government program must give the program the best price the pharmacy makes available to any third-party plan; disclosure of data to third parties; drug utilization management practices; the level of duty a pharmacy benefit manager owes its clients or customers; configuration of pharmacy networks; the operations of our subsidiary pharmacies; referrals to affiliated pharmacies; disclosure of negotiated provider reimbursement rates; disclosure of negotiated drug rebates, calculation of certain customer cost-share for prescription drug claims; pricing that includes differential or spread (i.e., a difference between the drug price charged to the plan sponsor by a pharmacy benefit manager and the price paid by the manager to the dispensing provider); disclosure of fees associated with administrative service agreements and patient care programs that are attributable to customers' drug utilization; utilization management; and registration or licensing of pharmacy benefit managers.
An increase in the number of prescriptions filled at retail pharmacies may have a negative impact on the number of prescriptions filled through home delivery. 16 Pharmacy Benefit Manager and Drug Pricing Regulation Our pharmacy benefit management services are subject to numerous laws and regulations that govern, and proposed legislation and regulations that may govern, critical practices, including disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers; certain pharmacy contracting practices, including disclosure of cost information to customers; pharmacy reimbursement mandates; the receipt and retention of transmission fees from contracted pharmacies; performance-based price concessions; pharmacy price concessions to drug prices at the point of sale; audits of contracted pharmacies; use of, administration of or changes to drug formularies, the use and disclosure of maximum allowable cost ("MAC") pricing, or clinical programs; "most favored nation" pricing, which provides that a pharmacy participating in a specific government program must give the program the best price the pharmacy makes available to any third-party plan; disclosure of data to third parties; drug utilization management practices; the level of duty a pharmacy benefit manager owes its clients or customers; configuration of pharmacy networks; the operations of our subsidiary pharmacies; referrals to affiliated pharmacies; disclosure of negotiated provider reimbursement rates; disclosure of negotiated drug rebates; calculation of certain customer cost-share for prescription drug claims; pricing that includes differential or spread (i.e., a difference between the drug price charged to the plan sponsor by a pharmacy benefit manager and the price paid by the manager to the dispensing provider); disclosure of fees associated with administrative service agreements and patient care programs that are attributable to customers' drug utilization; utilization management; and registration or licensing of pharmacy benefit managers.
Item 1. BUSINESS OVERVIEW The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us," or "our"), is a global health company. Our Purpose and Mission The Cigna Group is a global health company committed to creating a better future built on the vitality of every individual and every community.
Item 1. BUSINESS OVERVIEW The Cigna Group SM , together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company. Our Purpose and Mission The Cigna Group is a global health company committed to creating a better future for every individual and every community.
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.
The Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act and amendments to the law (collectively, "ACA") mandated broad changes to the U.S. health care system that affect insured and self-insured health benefit plans and pharmacy benefit managers ("PBMs").
Ongoing Businesses Continuing Business Corporate-Owned Life Insurance The principal products of the COLI business are permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. Permanent life insurance provides coverage that, when adequately funded, does not expire after a term of years.
The principal products of the corporate-owned life insurance ("COLI") business are permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. Permanent life insurance provides coverage that, when adequately funded, does not expire after a term of years. The contracts are primarily nonparticipating universal life policies.
Competition The primary competitive factors affecting our business are quality of care and cost effectiveness of service and provider networks, effectiveness of medical care management, products that meet the needs of employers and their employees, total cost management, technology and effectiveness of marketing and sales.
Competition The primary competitive factors affecting our business are quality of care and cost-effectiveness of service and provider networks, effectiveness of medical care management, products that meet the needs of our clients and customers, total cost management, technology, and effectiveness of marketing and sales.
DoD, which subjects us to applicable Federal Acquisition Regulations ("FAR") and the DoD FAR Supplement, which govern federal government contracts. Further, there are other federal and state laws applicable to our DoD arrangement and our arrangements with other clients that may be subject to government procurement regulations.
Government Procurement Regulations We have a contract with the U.S. DoD that subjects us to applicable Federal Acquisition Regulations ("FAR") and the DoD FAR Supplement, which govern federal government contracts. Further, there are other federal and state laws applicable to our DoD arrangement and our arrangements with other clients that may be subject to government procurement regulations.
We drive high-quality, cost-effective pharmacy care through a range of services. We adjudicate drug claims from Express Scripts Pharmacy, Accredo and retail network participants, and provide retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and other services. ◦ Retail Pharmacy Network Administration.
Principal Products and Services Pharmacy Benefit Services • Pharmacy Benefits. We drive high-quality, cost-effective pharmacy care through a range of services. We adjudicate drug claims from retail network participants and provide retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and other services. ◦ Retail Pharmacy Network Administration.
When pharmacies submit claims for prescription drugs to us, we review them electronically in real time for health and safety. We then alert the dispensing pharmacy of any detected issues.
When pharmacies submit claims for prescription drugs to us, we review them in real time for health and safety. If issues are detected, we then alert the dispensing pharmacy.
We are regulated by federal, state and international legislative bodies and agencies, which generally have discretion to issue regulations and interpret and enforce laws and rules. These regulations can vary significantly from jurisdiction to jurisdiction, and the interpretation of existing laws and rules also may change periodically.
REGULATION We are regulated by federal, state and international legislative and executive bodies and agencies, which generally have discretion to issue regulations and interpret and enforce laws and rules. These regulations can vary significantly from jurisdiction to jurisdiction, and the regulations and interpretations thereof may also change periodically.
Evernorth Wholesale Marketplace offers a suite of flexible, private label PBM solutions including but not limited to a Pharmacy Rebate Program, a Retail Network Program, Value-Based Solutions, a Medical Rebate Program and Utilization Management Policies. These offerings are captured under either our drug formulary administrative service arrangements or our formulary processing arrangements. ◦ Value-Based Programs. ▪ Express Scripts SafeGuardRx.
Evernorth Wholesale Marketplace ® offers a suite of flexible, private label pharmacy benefit manager solutions including but not limited to a pharmacy rebate program, a retail network program, value-based solutions, a medical rebate program and utilization management policies. These offerings are captured under either our drug formulary administrative service arrangements or our formulary processing arrangements. • Home Delivery Pharmacy.
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.
The Inflation Reduction Act of 2022 extended the 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.
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 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. The ACA allows states to adopt MLR requirements that are more stringent than those established by the ACA.
We believe our focus on improving the health and vitality of those we serve will allow us to further differentiate ourselves from our primary competitors shown in the chart above.
Our focus on improving the health and vitality of those we serve will allow us to further differentiate ourselves from our primary competitors.
Other federal and state laws that restrict the use and protect the privacy and security of PII exempt data and/or entities subject to HIPAA, but several states, such as, Nevada, and Connecticut, have recently enacted privacy laws to protect consumer data and require consent for the collection, use, and sharing of consumer health data.
Other U.S. federal and state consumer privacy laws typically exempt data and/or entities subject to HIPAA, but several states, such as Washington, Nevada and Connecticut, have recently enacted privacy laws to protect consumer health data and require consent for the collection, use and sharing of consumer health data.
Our business model is impacted by the ACA, including our relationships with current and future producers and health care providers, products, service providers and technologies.
Our business model is impacted by the ACA and may be impacted by additional, future changes to the ACA, including our relationships with current and future producers and health care providers, products, service providers and technologies.
Healthcare Plans • Employer Medical Plans include Health Maintenance Organizations ("HMOs"), LocalPlus®, Network and Open Access Plus, and are offered through our insurance companies, HMOs and TPAs. These plans use cost-sharing incentives to encourage the use of "in-network" rather than "out-of-network" health care providers.
Principal Products and Services U.S. Healthcare Medical Plans • Employer Medical Plans include health maintenance organizations ("HMOs"), LocalPlus ® , Network and Open Access Plus offered through our insurance companies, and third-party administrators ("TPAs"). These plans use cost-sharing incentives to encourage the use of "in-network" rather than "out-of-network" health care providers.
These products, consisting of health savings accounts, health reimbursement accounts and flexible spending accounts, encourage customers to play an active role in managing their health and health care costs. • Individual and Family Plans are Patient Protection and Affordable Care Act ("ACA") compliant exclusive provider organizations ("EPO") or HMO plans marketed to individuals under age 65 who do not have access to health care coverage through an employer or government program such as Medicare or Medicaid.
Health savings accounts, health reimbursement accounts and flexible spending accounts encourage customers to play an active role in managing their health and health care costs. 5 • Individual and Family Plans ("IFPs") are Patient Protection and Affordable Care Act ("ACA") compliant exclusive provider organizations ("EPOs") or HMO plans marketed to individuals under age 65 without access to health care coverage through an employer or government program such as Medicare or Medicaid.
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.
CuraScript SD by Evernorth ® 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.
Corporate Practice of Medicine and Other Laws Many states in which our subsidiaries operate limit the practice of medicine to licensed individuals or professional organizations comprised of licensed individuals, and business corporations generally may not exercise control over the medical decisions of physicians.
In addition, we are subject to similar regulations in non-U.S. jurisdictions in which we operate. Corporate Practice of Medicine and Other Laws Many states in which our subsidiaries operate limit the practice of medicine to licensed individuals or professional organizations comprised of licensed individuals, and business corporations generally may not exercise control over the medical decisions of physicians.
Certain of our domestic subsidiaries are also subject to requirements imposed by ERISA affecting claim payment and appeals procedures for individual health insurance and insured and self-insured group health plans and for the insured plans we administer. Certain of our domestic subsidiaries also may contractually agree to comply with these requirements on behalf of the self-insured plans they administer.
Certain of our domestic subsidiaries are also subject to requirements imposed by ERISA affecting claim payment and appeals procedures for individual health insurance and insured and self-insured group health plans and for the insured plans we administer.
A plan's Star Rating affects its image in the market and plans that perform very well are able to offer enhanced benefits and market more effectively and for longer periods of time than other plans. Medicare Advantage plans' quality-bonus payments are determined by the Star Rating, with plans receiving a rating of four or more stars eligible for such payments.
Plans that perform very well are able to offer enhanced benefits, market more effectively and for longer periods of time than other plans, and obtain quality-bonus payments, with Medicare Advantage plans receiving a rating of four or more stars eligible for such payments.
Noncompliance with these laws and regulations may result in significant consequences, including fines and penalties, enrollment sanctions, exclusion from the Medicare and Medicaid programs, limitations on expansion and criminal penalties.
Noncompliance with these laws and regulations may result in significant consequences, including fines and penalties, enrollment sanctions, exclusion from the Medicare and Medicaid programs, limitations on expansion, restrictions on marketing our plans, corrections of improper payments and criminal penalties.
Other provisions of the ACA in effect include reduced Medicare Advantage payment rates, the requirement to cover preventive services with no enrollee cost-sharing, banning the use of lifetime and annual limits on the dollar amount of essential health benefits, increasing restrictions on rescinding coverage, extending coverage of dependents up to age 26, restrictions on differential pricing, enforcement mechanisms and rules related to health care fraud and abuse enforcement activities and certain pharmacy benefit transparency requirements.
Other provisions of the ACA in effect include reduced Medicare Advantage payment rates, the requirement to cover preventive services with no enrollee cost-sharing, a ban on the use of lifetime and annual limits on the dollar amount of essential health benefits, increased restrictions on rescinding coverage, extended coverage of dependents up to age 26, restrictions on differential pricing, and certain pharmacy benefit transparency requirements.
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.
We believe these strategies and programs contribute to employee engagement and retention and prepare our employees to meet our needs now and in the future. ENVIRONMENTAL, SOCIAL AND GOVERNANCE The Cigna Group environmental, social and governance framework is structured around four connected pillars that underscore our enterprise mission to improve the health and vitality of those we serve.
You can access our website at http://www.thecignagroup.com to learn more about our company. We make annual, quarterly and current reports and proxy statements and amendments to those reports available, free of charge through our website as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission ("SEC").
We make annual, quarterly and current reports and proxy statements and amendments to those reports available, free of charge, through our website as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission ("SEC").
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.
We use these patents to protect our proprietary technological advances and to differentiate ourselves in the market. We are not substantially dependent on any single patent or group of related patents.
Some states have also enacted legislation that can negatively impact the use of cost-saving network configurations for plan sponsors, such as limiting the implementation of pharmacy benefit designs and reimbursement structures that leverage affiliate pharmacies to reduce costs. Other states have enacted legislation purporting to prohibit health plans from offering customers financial incentives for use of home delivery pharmacies.
Some states have also enacted legislation that can negatively impact the use of cost-saving network configurations for plan sponsors, such as limiting the implementation of pharmacy benefit designs and reimbursement structures that leverage affiliate pharmacies to reduce costs.
The CAA also included the No Surprises Act, which prohibits health care providers, in certain situations, from balance billing the patient and requires that they work directly with insurers to agree on out-of-network reimbursement, including utilizing an independent dispute resolution ("IDR") process outlined in the act.
Congress also passed the No Surprises Act, which prohibits health care providers, in certain situations, from balance billing the patient and requires that they work directly with insurers to agree on out-of-network reimbursement, including utilizing an independent dispute resolution process outlined in the act. Many states already have addressed balance billing or surprise medical bills.
Additionally, under Section 5 of the Federal Trade Commission Act ("FTC Act"), the FTC has jurisdiction over certain privacy and security practices deemed unfair and deceptive acts and practices in or affecting commerce.
Additionally, under Section 5 of the Federal Trade Commission Act ("FTC Act"), the FTC has jurisdiction over certain privacy and security practices deemed unfair and deceptive acts and practices in or affecting commerce, which includes unfair and deceptive practices with respect to consumer privacy rights and safeguarding of PHI and PII.
In February 2013, we effectively exited the variable annuity reinsurance business (formerly referred to as GMDB and GMIB business) by reinsuring 100% of our future exposures, net of retrocessional arrangements in place at that time, up to a specified limit.
Our reinsurance operations are an inactive business in run-off. In February 2013, we effectively exited the variable annuity reinsurance business by reinsuring 100% of our future exposures, net of retrocessional arrangements in place at that time, up to a specified limit.
Other countries in which we do business also have anti-corruption laws to which we are subject. As international regulators often share information, any voluntary disclosures of violations may be shared with authorities in other countries, thus potentially exposing companies to liability and potential penalties in multiple jurisdictions. 29
As international regulators often share information, any voluntary disclosures of violations may be shared with authorities in other countries, thus potentially exposing companies to liability and potential penalties in multiple jurisdictions.
Fraud, waste and abuse prohibitions encompass a wide range of activities, including kickbacks in return for customer referrals, billing for unnecessary medical services, upcoding and improper marketing. The regulations and contractual requirements in this area are complex, frequently modified and subject to administrative discretion and judicial interpretation. False Claims Act and Related Criminal Provisions.
These laws and related regulations prohibit a wide range of activities, including kickbacks in return for customer referrals, billing for unnecessary medical services, beneficiary inducement, upcoding and improper marketing. The regulations and contractual requirements in this area are complex, frequently modified, and subject to administrative discretion and judicial interpretation.
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.
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.
These laws may impact our businesses and practices where data collected is outside the reach of HIPAA. The federal government has also enacted final regulations on interoperability and information blocking to support the seamless and secure access, exchange and use of electronic health information by and between patients, enrollees and entities such as payors and health care providers.
The federal government has also enacted final regulations on interoperability and information blocking to support the seamless and secure access, exchange and use of electronic health information by and between patients, enrollees and entities, such as payors and health care providers.
Additionally, Medicare Part D and a majority of states now have laws, regulations or some form of legislation affecting our ability, or our clients' ability, to limit access to a pharmacy provider network or remove a provider from a network.
Food and Drug Administration ("FDA")-approved drugs and to restrict certain therapeutic interventions. Additionally, Medicare Part D and most states now have laws, regulations or some form of legislation affecting our ability, or our clients' ability, to limit access to a pharmacy provider network or remove a provider from a network.
See also "Code of Ethics and Other Corporate Governance Disclosures" in Part III, Item 10 of this Form 10-K for additional information regarding the availability of our Codes of Ethics on our website. Intellectual Property Rights We hold a variety of trademarks and service marks used throughout our businesses.
See also "Code of Ethics and Other Corporate Governance Disclosures" in Part III, Item 10 of this Form 10-K for additional information regarding the availability of our Codes of Ethics on our website.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+15 added−12 removed126 unchanged
Biggest changeMany 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.
Biggest changeAlthough we strongly disagree with the claims made by the FTC and intend to respond to them vigorously, there can be no assurance that the outcome of these matters will be resolved to our satisfactions. Many investigations and audits have resulted in companies being subject to civil penalties, including the payment of money and entry into corporate integrity agreements.
You should carefully consider each of the risks and uncertainties discussed below, together with other information contained in this Form 10-K, including MD&A. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect us.
You should carefully consider each of the risks and uncertainties discussed below, together with other information contained in this Form 10-K, including the MD&A. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect us.
Our failure to compete effectively, to differentiate our products and services from those of our competitors and maintain or increase market share, including maintaining or increasing enrollments in businesses providing health benefits, could materially adversely affect our results of operations, financial position and cash flows.
Our failure to compete effectively, to differentiate our products and services from those of our competitors, and to maintain or increase market share, including maintaining or increasing enrollments in businesses providing health benefits, could materially adversely affect our results of operations, financial position and cash flows.
Our health care costs also are affected by external events that we cannot forecast or project and over which we have little or no control, including changes in laws and regulations, as well as pandemics, costly new treatments, new treatment guidelines, provider billing practices, inflation and changes in customers' health care utilization patterns, which may, among other things, impact our ability to appropriately document their health conditions.
Our health care costs are also affected by external events that we cannot forecast or project and over which we have little or no control, including changes in laws and regulations, as well as pandemics, costly new treatments, new treatment guidelines, provider billing practices, inflation and changes in customers' health care utilization patterns, which may, among other things, impact our ability to appropriately document their health conditions.
We have been, and will likely continue to be, the target of computer viruses or other malicious codes, unauthorized access, cyberattacks or other computer-related penetrations. There have been, and will likely continue to be, large scale cyberattacks within the health service industry.
We have been, and will likely continue to be, the target of computer viruses or other malicious codes, unauthorized access, cyberattacks or other computer-related penetrations. There have been, and will continue to be, large-scale cyberattacks within the health service industry.
These events would negatively affect our ability to compete, our reputation, customer base and revenues and expose us to mandatory disclosure requirements, government investigations, litigation and other enforcement proceedings, material fines, penalties or remediation costs and compensatory, special, punitive and statutory damages, consent orders and other adverse actions, any of which could adversely affect our business, results of operations, financial condition or liquidity.
These events would negatively affect our ability to compete, our reputation, our customer base and our revenues and expose us to mandatory disclosure requirements, government investigations, litigation, and other enforcement proceedings, material fines, penalties, or remediation costs and compensatory, special, punitive and statutory damages, consent orders, and other adverse actions, any of which could adversely affect our business, results of operations, financial condition or 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 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 and 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.
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.
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, and our ability to 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.
The covenants in our debt instruments may have the effect, among other things, of restricting our financial and operating flexibility to respond to significant changes in business and economic conditions. We may incur or assume significantly more debt in the future which may subject us to additional restrictive covenants and increase the risks described above.
The covenants in our debt instruments may have the effect of restricting our financial and operating flexibility to respond to significant changes in business and economic conditions, among other things. We may incur or assume significantly more debt in the future, which may subject us to additional restrictive covenants and increase the risks described above.
Additionally, if we fail to comply with CMS' contractual requirements, including data submission, enrollment and marketing, provider network adequacy, provider directory accuracy, quality measures, claims payment, continuity of care, timely and accurate processing of appeals and grievances, adverse findings under RADV audits, oversight of first tier downstream and related entities and call center performance, we may be subject to administrative actions, including enrollment sanctions or contract termination, fines or other penalties or enforcement actions that could materially impact our profitability.
Additionally, if we fail to comply with CMS' regulatory or contractual requirements, including data submission, enrollment and marketing, provider network adequacy, provider directory accuracy, quality measures, claims payment, continuity of care, timely and accurate processing of appeals and grievances, adverse findings under RADV audits, oversight of first-tier downstream and related entities, and call center performance, we may be subject to administrative actions, including enrollment sanctions or contract termination, fines or other penalties or enforcement actions that could materially impact our profitability.
If there are delays or difficulties in changing business processes or our third-party vendors do not perform as expected, we may not realize, or not realize on a timely basis, the anticipated economic and other benefits of these relationships. This could result in additional costs or regulatory compliance issues or create other operational or financial problems for us.
If there are delays or difficulties in changing business processes or our third-party vendors do not perform as expected, we may not realize, or not realize on a timely 26 basis, the anticipated economic and other benefits of these relationships. This could result in additional costs or regulatory compliance issues or create other operational or financial problems for us.
The laws and rules governing our business and related interpretations are increasing in number and complexity, are subject to frequent change and can be inconsistent or in conflict with each other. Noncompliance with applicable regulations by us or our third-party vendors could have material adverse effects on our business, results of operations, financial condition, liquidity and reputation.
The laws and rules governing our business and related interpretations are increasing in number and complexity, are subject to frequent change, and can be inconsistent or in conflict with 27 each other. Noncompliance with applicable regulations by us or our third-party vendors could have material adverse effects on our business, results of operations, financial condition, liquidity and reputation.
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.
Any failure, or alleged failure, to comply with various state and federal health care laws 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.
Our ability to develop and maintain satisfactory relationships with providers may also be negatively impacted by other factors not associated with us, such as changes in Medicare or Medicaid reimbursement levels, increasing pressure on revenue and other pressures on health care providers and increasing consolidation activity among hospitals, physician groups and providers.
Our ability to develop and maintain satisfactory relationships with providers may also be negatively impacted by other factors not associated with us, such as changes in Medicare or Medicaid reimbursement levels or programmatic changes, increasing pressure on revenue and other pressures on health care providers, and increasing consolidation activity among hospitals, physician groups and providers.
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.
If such collaborative arrangements do not result in the lower medical costs that we project, if we fail to attract health care providers to such arrangements or if we 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.
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.
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 who seek competing bids from our competitors before contract renewal.
International laws, rules and regulations governing the use and disclosure of such information, such as the GDPR, can be more stringent than similar laws in the United States, and they vary across jurisdictions. In addition, more jurisdictions are regulating the transfer of data across borders and domestic privacy and data protection laws are generally becoming more onerous.
International laws, rules and regulations governing the use and disclosure of such information, such as the GDPR, can be more stringent than similar laws in the United States, 30 and they vary across jurisdictions. In addition, more jurisdictions are regulating the transfer of data across borders, and domestic privacy and data protection laws are generally becoming more onerous.
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.
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.
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.
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.
Delays in obtaining or failure to obtain or maintain these approvals could reduce our revenue or increase our costs. Additionally, we must maintain licenses and registrations in the jurisdictions in which we conduct business, and the suspension, material adverse modification or termination of such license and registrations could adversely affect our operations.
Delays in obtaining or failure to obtain or maintain these approvals could reduce our revenue or increase our costs. Additionally, we must maintain licenses and registrations in the jurisdictions in which we conduct business, and the suspension, material adverse modification or termination of such licenses and registrations could adversely affect our operations.
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.
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; • the impact or consequences of legislation, executive actions 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.
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.
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. Item 1B. UNRESOLVED STAFF COMMENTS None.
If we are not able to accurately and promptly anticipate and detect medical cost trends, our ability to take timely corrective actions to limit future costs and reflect our current benefit cost experience in our pricing process may be limited.
If we are not able to accurately and 21 promptly anticipate and detect medical cost trends, our ability to take timely corrective actions to limit future costs and reflect our current benefit cost experience in our pricing process may be limited.
Additionally, joint ventures and equity investments present risks that are different from acquisitions, including risks related to: specific operations and finances of the businesses we invest in; selection of appropriate parties; differing objectives of the various parties; competition between and among parties; compliance activities (including compliance with applicable CMS requirements); growing the business in a manner acceptable to all the parties; maintaining positive relationships among the parties, clients and customers; initial and ongoing governance of joint ventures and customer and business disruption that may occur upon a joint venture termination.
Additionally, joint ventures and equity investments present risks that are different from acquisitions, including risks related to specific operations and finances of the businesses we invest in; selection of appropriate parties; differing objectives of the various parties; competition between and among parties; compliance activities (including compliance with applicable CMS requirements); growing of the business in a manner acceptable to all the parties; the maintenance of positive relationships among the parties, clients and customers; and initial and ongoing governance of joint ventures and customer and business disruption that may occur upon a joint venture termination.
Responses to such scenarios have and may include, among other things, making temporary policy changes, such as waiving various medical requirements, assisting with replacement medications, transferring prescriptions and expanding our help line.
Responses to such scenarios have included and may include, among other things, making temporary policy changes, such as waiving various medical requirements, assisting with replacement medications, transferring prescriptions and expanding our help line.
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.
Human or technological error has and could in the future result in, for example, unauthorized access to and 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 PII 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.
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.
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 16 to the Consolidated Financial Statements for more information on our obligations under the pension plans.
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.
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 accurately and in a timely manner and maintain regulatory compliance, among other things.
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.
As we increase the amount of PII 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. The cost of attempting to protect against these risks also increases.
We also provide in-home care through health care providers that we employ, as well as through third-party contractors. As such, we may be subject to liability for certain acts, omissions, or injuries caused by our employees or agents, or occurring at one of these practices, pharmacies or clinics.
We also provide in-home care through health care providers that we employ, as well as through third-party contractors. As such, we may be subject to liability for certain acts, omissions or injuries caused by our employees or agents, or that occur at one of these practices, pharmacies or clinics.
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.
More than 67,000 pharmacies participated in one or more of our networks as of December 31, 2024. 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.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information that could negatively impact the trading price of our securities and our access to capital. We are dependent on the success of our relationships with third parties for various services and functions.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could negatively impact the trading price of our securities and our access to capital. We are dependent on the success of our relationships with third parties for various services and functions.
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.
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' PII, including PHI.
We contract with or employ physicians, hospitals and other health service providers and facilities to provide health services to our customers, as well as health care payers (as a service provider to those payers). Our results of operations are substantially dependent on our ability to contract for these services at competitive prices.
We contract with or employ physicians, hospitals and other health service providers and facilities to provide health services to our customers, as well as health care payors (as a service provider to those payors). Our results of operations are substantially dependent on our ability to contract for these services at competitive prices.
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.
The collection, dissemination, receipt, maintenance, protection, use, transmission, disclosure, privacy, confidentiality, security, availability, integrity, creation, processing and disposal of PII are regulated at the federal, state, international and industry levels, and requirements are imposed on us by contracts with clients.
Unauthorized access, acquisition, use, disclosure or dissemination of confidential and proprietary information about our business and strategy could also negatively affect the achievement of our strategic initiatives. Such events could cause us to breach our contractual obligations and violate applicable laws.
Unauthorized access to and the acquisition, use, disclosure or dissemination of information about our business and strategy could also negatively affect the achievement of our strategic initiatives. Such events could cause us to breach our contractual obligations and violate applicable laws.
We are frequently the subject of regulatory market conduct and other reviews, audits and investigations by state insurance and health and welfare and pharmacy departments, attorneys general, DOJ, CMS, DOL and the HHS-OIG and comparable authorities in foreign jurisdictions.
We are frequently the subject of regulatory market conduct and other reviews, audits and investigations by state insurance and health and welfare and pharmacy departments, attorneys general, DOJ, FTC, CMS, DOL and the HHS-OIG and comparable authorities in 29 foreign jurisdictions.
While we compete on the basis of many service and quality-related factors, we expect that price will continue to be a significant basis of competition and we may face pressure to contain premium rates. Our client contracts are subject to negotiation as clients seek to contain their costs, including by reducing benefits offered.
While we compete on the basis of many service- and quality-related factors, we expect that price will continue to be a significant basis of competition and we may face pressure to contain premium rates or administrative fees. Our client contracts are subject to negotiation as clients seek to contain their costs, including by reducing benefits offered.
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.
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.
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.
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.
Further, failure to effectively implement or adjust our strategic and operational initiatives, such as by reducing operating costs, adjusting premium pricing or benefit design or transforming our business model in response to regulatory changes may have a material adverse effect on our results of operations, financial condition and cash flows.
Further, failure to effectively implement or adjust our strategic and operational initiatives, such as by reducing operating costs, adjusting premium pricing or benefit design, or transforming our business model in response to laws, regulatory changes or executive actions may have a material adverse effect on our results of operations, financial condition and cash flows.
Additionally, we must estimate the amount of rebates payable by us under the ACA's and CMS' minimum loss ratio rules and the amounts payable by us to, and receivable by us from, the United States federal government under the ACA's remaining premium stabilization program.
Additionally, we must estimate the amount of rebates payable by us under the ACA's and CMS' minimum loss ratio rules and the amounts payable by us to, and receivable by us from, the federal government under the ACA's remaining premium stabilization program.
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.
A description of material pending legal actions and other legal and regulatory matters is included in Note 21 to the Consolidated Financial Statements included in this Form 10-K. The outcome of litigation and other legal or regulatory matters is always uncertain.
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.
See Note 18 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.
If we fail to develop and maintain satisfactory relationships with health care payers, physicians, hospitals and other health service providers and with producers and consultants, our business and results of operations may be adversely affected.
If we fail to develop and maintain satisfactory relationships with health care payors, physicians, hospitals and other health service providers and with producers and consultants, our business and results of operations may be adversely affected.
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.
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, assist in controlling costs, respond to government regulation or respond to challenges within the health care system; • develop and create responsible 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 the marketplace will accept; • 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; 19 • 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.
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.
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.
Certain of our businesses are also subject to the Payment Card Industry Data Security Standard, which is designed to protect credit card account data as mandated by payment card industry entities.
Certain of our businesses are also subject to the Payment Card Industry Data Security Standard ("PCI DSS"), which is designed to protect credit card account data as mandated by payment card industry entities.
In addition, as brokers and benefit consultants seek to enhance their revenue streams, they look to take on services that we typically provide. Each of these events could negatively impact our financial results. Federal and state regulatory agencies may restrict or prevent entirely our ability to implement changes in premium rates.
In addition, as brokers and benefit consultants seek to enhance their revenue streams, they look to take on services that we typically provide. Each of these events could negatively impact our financial results. Federal and state regulatory agencies may restrict or prevent entirely our ability to implement changes in premium rates or collect certain administrative fees.
Our business is highly dependent upon our ability to perform, in an efficient and uninterrupted fashion, necessary business functions, such as claims processing and payment, internet support and customer call centers, data centers and corporate facilities, processing new and renewal business, maintaining appropriate shipment and storage conditions for prescriptions (such as temperature and protection from contamination) and home delivery processing.
Our business is highly dependent upon our ability to perform, in an efficient and uninterrupted fashion, necessary business functions, such as claims processing and payment, internet support and customer call centers, data centers and corporate facilities, the processing of new and renewal business, the maintenance of appropriate shipment and storage conditions for prescriptions (such as temperature and protection from contamination) and home delivery processing.
Our failure to meet these obligations could result in monetary penalties and our exclusion from participation in federal healthcare programs (such as Medicare and Medicaid), which could adversely impact our business, cash flows, financial condition, results of operations and reputation.
Our failure to meet these obligations could result in monetary penalties and our exclusion from participation in federal health care programs (such as Medicare and Medicaid), which could adversely impact our business, cash flows, financial condition, results of operations and reputation.
Although we base the premiums we charge and our Medicare Advantage, IFP and Medicare Part D rates and bids on our estimate of future health care costs over the contract period, actual costs may exceed what we estimate in setting premiums.
Although we have based the premiums we charge and our Medicare Advantage, IFP and Medicare Part D rates and bids on our estimate of future health care costs over the contract period, actual costs may exceed what we estimate in setting premiums.
Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service and loss of existing or potential customers.
Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service and loss of customers.
For example, the European Union's ("EU’s") Corporate Sustainability Reporting Directive (“CSRD”) will require expansive disclosures on various sustainability topics such as climate change, biodiversity, workforce, supply chain, and business ethics by in-scope EU entities and certain non-EU entities with significant cross-border business in EU markets.
For example, the EU's Corporate Sustainability Reporting Directive ("CSRD") will require expansive disclosures on various sustainability topics such as climate change, biodiversity, workforce, supply chain and business ethics by in-scope EU entities and certain non-EU entities with significant cross-border business in EU markets.
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.
Our business depends on our clients' and customers' willingness to entrust us with their health-related and other PII, including 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.
Our failure to effectively invest in, implement improvements to and properly maintain the uninterrupted operation, availability and data integrity of our systems could adversely affect our results of operations, financial position and cash flow. As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents.
Our failure to effectively invest in, implement improvements to and properly maintain the uninterrupted operation, availability and data integrity of our systems could adversely affect our results of operations, financial position, cash flow and internal controls over financial reporting. 23 As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents.
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 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.
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.
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. • Significant disruption or volatility in the capital and credit markets could affect our ability to access those markets for additional borrowings or increase costs. • Because of unfavorable economic conditions or legislation and regulation affecting employer-sponsored coverage, 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. 32 • 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.
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.
We have dedicated significant resources to implement privacy and security technologies, processes and procedures to protect PII 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.
Continuing consolidation among physicians, hospitals and other providers, the emergence of accountable care organizations, vertical integration of providers and other entities, changes in the organizational structures chosen by physicians, hospitals and providers, new market entrants, including those not traditionally in the health care industry, and the increased use of virtual care services (including telehealth) may affect the way providers interact with us and may change the competitive landscape in which we operate.
Continuing consolidation among physicians, hospitals and other providers; the growth of accountable care organizations; vertical integration of providers and other entities; changes in the organizational structures chosen by physicians, hospitals and providers; new market entrants, including those not traditionally in the health care industry; and the use of new modes of health delivery, including virtual care services, may affect the way providers interact with us and may change the competitive landscape in which we operate.
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.
In addition, the unauthorized access to and the acquisition, use, disclosure or dissemination of 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, legislative reforms related to rebates, reporting, and other activities may adversely affect our competitive position, cash flows, financial condition and results of operations. The reserves we hold for expected medical claims are based on estimates that involve an extensive degree of judgment and are inherently variable.
In addition, legislative reforms and regulatory or executive actions related to rebates, reporting, owned pharmacies and other activities may adversely affect our competitive position, cash flows, financial condition and results of operations. The reserves we hold for expected medical claims are based on estimates that involve an extensive degree of judgment and are inherently variable.
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.
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.
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.
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, including tariffs; • 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 adoption of new tax laws and the interpretation of tax positions, such as the European Union's ("EU’s") recent adoption of the Pillar Two directive; • reliance on local employees and interpretations of labor laws in foreign jurisdictions; • the management of our partner relationships in countries outside of the United States; • the provision of 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.
With respect to our Medicare Advantage and Medicare Part D businesses, CMS and HHS-OIG perform audits to determine a health plan's compliance with federal regulations and contractual obligations, including compliance with proper coding practices and fraud and abuse enforcement practices through audits designed to detect and correct improper payments.
With respect to our Medicare Advantage and Medicare Part D businesses, which are subject to the HCSC transaction, CMS and HHS-OIG perform audits to determine a health plan's compliance with federal regulations and contractual obligations, including compliance with proper coding practices and fraud and abuse enforcement practices through audits designed to detect and correct improper payments.
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.
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 AI, including ML technologies, as well as more recent technological advances in AI/ML, poses risks to us and subjects us to new and existing laws and regulations.
We must identify, assess and respond to new trends in the legislative and regulatory environment, as well as comply with the various existing regulations applicable to our business.
We must identify, assess and respond to new trends in the legislative and regulatory environment, as well as comply with the various existing regulations applicable to our business and respond to policymakers and enforcement agencies accordingly.
In addition, California’s recently-enacted Climate Corporate Data Accountability Act will require annual disclosures of covered companies’ Scope 1, 2 and 3 greenhouse gas emissions. We are assessing our obligations under CSRD and other enhanced reporting requirements, and expect that compliance could require substantial effort in the future.
In addition, California's enacted Climate Corporate Data Accountability Act will require annual disclosures of covered companies' Scope 1, 2 and 3 greenhouse gas emissions. We are assessing our obligations under CSRD and other enhanced reporting requirements based on policymaker direction and expect that compliance could require substantial efforts in the future.
Increasing natural disasters in connection with climate change could also be a direct threat to us and our third-party vendors, service providers or other stakeholders. Natural disasters, such as wildfires, hurricanes and snow and ice storms, have impacted and may continue to impact our customers and pose a risk to our employees and facilities located in the impacted region.
Increasing natural disasters in connection with climate change could also be a direct threat to us and our third-party vendors, service providers or other stakeholders. Natural disasters have impacted and may continue to impact our customers and pose a risk to our employees and facilities located in the impacted region.
We will be unable to rapidly respond to competitive, economic and regulatory changes if we do not make important strategic and operational decisions quickly, define our appetite for risk, implement new governance, managerial and organizational processes smoothly and communicate roles and responsibilities clearly.
If our strategic initiatives fail, our business may be unable to grow as planned and we will be unable to rapidly respond to competitive, economic and regulatory changes if we do not make important strategic and operational decisions quickly; define our appetite for risk, implement new governance, managerial and organizational processes smoothly; and communicate roles and responsibilities clearly.
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.
As of December 31, 2024, our goodwill and other intangible assets had a carrying value of approximately $73.8 billion, representing 47% 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.
We may have continued financial exposure to divested businesses following the completion of any such transaction, including increased costs due to potential litigation, contingent liabilities and indemnification of the buyer related to, among other things, lawsuits, regulatory matters or tax liabilities.
We may fail to receive the anticipated benefits from the transaction. We may have continued financial exposure to divested businesses, including the businesses subject to the HCSC transaction, following the completion of any such transaction, including increased costs due to potential litigation, contingent liabilities and indemnification of the buyer related to, among other things, lawsuits, regulatory matters or tax liabilities.
For more information on regulations affecting our business, see "Business – Regulation" in Part I, Item 1 of this Form 10-K. There are various risks associated with participating in government-sponsored programs, such as Medicare, including dependence upon government funding, compliance with government contracts and increased regulatory oversight and enforcement. Through our U.S.
For more information on regulations affecting our business, see "Business – Regulation" in Part I, Item 1 of this Form 10-K. There are various risks associated with participating in government-sponsored programs and providing services to payors who participate in government-sponsored programs, including dependence upon government funding, compliance with government contracts and increased regulatory oversight and enforcement. Through our U.S.
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.
Depending on how existing laws and regulations are interpreted, and as new laws go into 24 effect, we may have to make changes to our business practices to comply with such obligations.
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.
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.
A significant decline in the value of the plans' equity and fixed income investments or unfavorable changes in applicable laws or regulations could materially increase our expenses and change the timing and amount of required plan funding. This could reduce the cash available to us, including our subsidiaries.
We currently have overfunded obligations in our frozen pension plan. A significant decline in the value of the plan's equity and fixed income investments or unfavorable changes in applicable laws or regulations could materially increase our expenses and change the timing and amount of required plan funding. This could reduce the cash available to us, including our subsidiaries.
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.
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 (the "Board"). Regulators, customers, investors, employees and other stakeholders have focused on environmental, social and governance matters and related disclosures.
These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with such regulations or meeting such expectations.
These changing rules, regulations and stakeholder expectations have previously resulted in increased general and administrative expenses and increased management time and attention spent complying with such regulations or meeting such expectations.
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.
A disruption, or threat of disruption, in our supply chain 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.
Carrying indebtedness: • requires us to dedicate a portion of our cash flow from operations to debt payments, thereby reducing the availability of cash flow to fund our operations and growth strategy, including investments, acquisitions and capital expenditures, make stock repurchases, pay dividends and for general corporate purposes; • increases our vulnerability to general adverse economic and industry conditions, which may require us to dedicate an even greater percentage of our cash flow from operations to the payment of principal and interest on our debt and limit our access to capital markets such that additional capital may not be available or may be available only on unfavorable terms; • exposes us to increases in interest rates to the extent increased interest expense is not offset by increased income from our investment assets; and • limits our flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry.
Carrying indebtedness: • requires us to dedicate a portion of our cash flow from operations to debt payments, thereby reducing the availability of cash flow to fund our operations and growth strategy; • increases our vulnerability to general adverse economic and industry conditions, which may require us to dedicate an even greater percentage of our cash to the payment of principal and interest on our debt and limit our access to capital markets; • exposes us to increases in interest rates to the extent increased interest expense is not offset by increased income from our investment assets; and • limits our flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese events are designed to exercise and engage some of the most critical areas of cybersecurity incident response and preparedness through an interactive/evolving, simulated scenario. This exercise provides an opportunity for us to test our response procedures, escalation and communication protocols, roles and responsibilities, legal/privacy considerations and key decision-making processes, in a safe and controlled environment.
Biggest changeTo enhance our preparedness and practice our collective cybersecurity response capabilities, we conduct tabletop exercises with leaders, stakeholders, subject matter experts and certain executives that are developed in partnership with external security experts. These events are designed to exercise and engage some of the most critical areas of cybersecurity incident response and preparedness through an interactive/evolving, simulated scenario.
If we are unable to prevent or contain the effects of any such attacks, or fail to ensure vendors do the same, we may suffer exposure to substantial liability, reputational harm, loss of revenue or other damages," the sophistication of cybersecurity threats continues to increase, and the preventative actions we take to reduce the risk of cybersecurity incidents and protect our systems and information may become insufficient.
If we are unable to prevent or contain the effects of any such attacks, or fail to ensure vendors do the same, we may suffer exposure to substantial liability, reputational harm, loss of revenue or other damages," the sophistication of cybersecurity threats continues to increase, and the preventive actions we take to reduce the risk of cybersecurity incidents and protect our systems and information may become insufficient.
Item 1C. CYBERSECURITY Cybersecurity Strategy and Risk Management The Cigna Group’s comprehensive cybersecurity program is supported by policies and procedures designed to protect our systems and operations as well as the sensitive personal information and data of our clients and customers from foreseeable cybersecurity threats. This program is an integral component of our enterprise risk management program.
Item 1C. CYBERSECURITY Cybersecurity Strategy and Risk Management Our comprehensive cybersecurity program is supported by policies and procedures designed to protect our systems and operations as well as the sensitive personal information and data of our clients and customers from foreseeable cybersecurity threats. This program is an integral component of our enterprise risk management program.
These briefings are designed to provide visibility about the identification, assessment, and management of critical risks, audit findings, and management’s risk mitigation strategies. Additionally, these briefings include information about current trends in the environment, incident preparedness, artificial intelligence and various components of the Company’s cybersecurity and privacy programs.
These briefings are designed to provide visibility about the identification, assessment and management of critical risks, audit findings, and management's risk mitigation strategies. Additionally, these briefings include information about current trends in the environment, incident preparedness, artificial intelligence and various components of our cybersecurity and privacy programs.
Certain members of the Board have cybersecurity expertise, including certifications. The Board executes this oversight directly and through both the Audit Committee, for cybersecurity purposes, and the Compliance Committee, for privacy purposes. In these capacities, these committees are regularly briefed by the Global Chief Information Security Officer ("GCISO") and Chief Privacy Officer on cybersecurity and privacy matters.
Certain members of the Board have cybersecurity certifications. The Board executes this oversight directly and through both the Audit Committee, for cybersecurity purposes, and the Compliance Committee, for privacy purposes. In these capacities, these committees are regularly briefed by the Global Chief Information Security Officer ("GCISO") and Chief Privacy Officer on cybersecurity and privacy matters.
Prior to joining the team at The Cigna Group, our GCISO held senior information security roles at other global organizations where this individual defined information security strategies, built global information security programs, implemented cybersecurity capabilities that protect consumers, wholesale partners and brand, and oversaw the security of a global payment network, a corporate network and digital assets.
Prior to joining the team, our GCISO held senior information security roles at other global organizations where this individual defined information security strategies, built global information security programs, implemented cybersecurity capabilities that protect consumers, wholesale partners and brands, and oversaw the security of a global payment network, a corporate network and digital assets.
Accordingly, no matter how well designed or implemented our controls are, we will not be able to anticipate all attacks of these types, and we may not be able to implement effective preventive measures against such security breaches in a timely manner. 46 Cybersecurity Governance The Cigna Group’s Board has ultimate oversight over the Company’s privacy and cybersecurity programs and strategy and is responsible for ensuring that the Company has risk management policies and processes in place to meet and mitigate evolving risks and threats.
Accordingly, no matter how well designed or implemented our controls are, we will not be able to anticipate all attacks of these types, and we may not be able to implement effective preventive measures against such security breaches in a timely manner. 34 Cybersecurity Governance Our Board has ultimate oversight over our privacy and cybersecurity programs and strategy and is responsible for ensuring that we have risk management policies and processes in place to meet and mitigate evolving risks and threats.
Cigna Information Protection ("CIP") maintains a risk register that is used to manage cybersecurity risks associated with its business activities, technology assets, and its interaction with business, Information Technology ("IT"), and security parties; internal and external. Cybersecurity risks are also periodically reviewed by Enterprise Risk Management ("ERM") to ensure appropriate oversight of cybersecurity risk management activities.
Our information protection department maintains a risk register that is used to manage cybersecurity risks associated with its business activities, technology assets and its interaction with business, information technology and security parties, internal and external. Cybersecurity risks are also periodically reviewed by Enterprise Risk Management to ensure appropriate oversight of cybersecurity risk management activities.
As of the date of this report, we do not believe that any risks from any cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. That said, as discussed more fully under Part 1, Item 1A.
As of the date of this report, we do not believe that any risks from any cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Annually, the full Board reviews the Company’s cybersecurity program, including the threat landscape and related controls and periodically conducts cybersecurity tabletop exercises. The Cigna Group’s dedicated cybersecurity team is led by our GCISO. Our current GCISO joined Cigna in October 2023 and works closely with senior management to develop and innovate the cybersecurity strategy and risk management.
On an annual basis, the Board reviews our cybersecurity program, including the threat landscape and related controls, and periodically conducts cybersecurity tabletop exercises. Our dedicated cybersecurity team is led by our GCISO. Our current GCISO joined the Company in October 2023 and works closely with senior management to develop and innovate the cybersecurity strategy and risk management.
"Risk Factors – Strategic and Operational Risks – As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents.
That said, as discussed more fully under Part I, Item 1A "Risk Factors – Strategic and Operational Risks – As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents.
Additionally, suppliers may be subject to periodic security audits or risk assessments, which include security questionnaires, security capabilities and maturity assessments, controls evidence reviews, application vulnerability assessments, public internet presence monitoring, and alignment reviews with service-specific industry standards (e.g., NIST, ISO, HIPAA, and Payment Card Industry standards).
Suppliers that have access to, host or transmit our data are contractually required to comply with our Security Policies and Standards. Additionally, suppliers may be subject to periodic security audits or risk assessments, which include security questionnaires, security capabilities and maturity assessments, controls evidence reviews, application vulnerability assessments, public internet presence monitoring, and alignment reviews with service-specific industry standards.
Follow-up activities are performed as needed to discuss observations, track issues and ensure remediation plans are completed to maintain compliance. Contracts with suppliers also include critical security requirements including right to audit, technology requirements, key performance metrics and service levels, and hiring practices including background checks for those who have access to The Cigna Group's network.
Follow-up activities are performed as needed. Contracts with suppliers also include critical security requirements, such as right to audit, technology requirements and hiring practices, including background checks for those who have access to our network.
Cybersecurity risk assessment results are used by senior management to make informed decisions about where to allocate resources to reduce cybersecurity risks and improve overall security posture.
We routinely manage cybersecurity risks through a defined framework that includes activities aimed at the identification, assessment, treatment and monitoring of risks. Cybersecurity risk assessment results are used by senior management to make informed decisions about where to allocate resources to reduce cybersecurity risks and improve overall security posture.
Our cybersecurity policies and standards are reviewed annually and are mainly guided by the NIST 800-53 Cybersecurity Framework. In addition to the NIST framework, we leverage the International Organization 45 for Standardization ("ISO") 27001 and 27002 standards. NIST and ISO standards are internationally accepted and provide best practice recommendations for initiating, implementing, and maintaining information security management systems.
Our cybersecurity policies and standards are reviewed annually and are mainly guided by the NIST 800-53 Cybersecurity Framework. In addition to the NIST framework, we leverage the International Organization for Standardization 27001 and 27002 standards. Our information protection policies and standards are informed by NIST 800-53b, moderate-level security control baseline requirements.
The GIRP is reviewed quarterly at a minimum but may be updated as needed based on lessons learned, changes in key teams or processes, or other circumstances as warranted. Within the GIRP, incident handling procedures dictate actions during each phase, which include communications, actions to be performed, methods of operation and contingencies for unanticipated outcomes.
The GIRP is reviewed quarterly at a minimum but may be updated as needed based on lessons learned, changes in key teams or processes or other circumstances as warranted, and the procedures therein are tested annually.
These strategies act to proactively intercept and neutralize cyber threats to help ensure data remains secure within our environment. Event monitoring technologies run continuously, detecting suspected intrusion attempts and alerting our Cybersecurity Incident Response team.
Event monitoring technologies run continuously, detecting suspected intrusion attempts and alerting our Cybersecurity Incident Response Team.
We also perform an annual maturity assessment and benchmark our security controls to identify opportunities to strengthen our cybersecurity program.
These include Health Information Trust Alliance for health care data security, PCI DSS for payment security and System Organization Controls 2 for information security and related controls for specific business lines and core processes. We also perform an annual maturity assessment and benchmark our security controls to identify opportunities to strengthen our cybersecurity program.
The participants in these exercises include leaders, stakeholders, subject matter experts and certain executives. In addition to these internal measures, the effectiveness of components of our overall cybersecurity program is frequently evaluated by external third parties, exclusive to our independent registered public accounting firm and scope of internal control over financial reporting.
In addition to these internal measures, the effectiveness of components of our overall cybersecurity program is frequently evaluated by external third parties, which includes work performed over various levels of control assessments for specific business lines and core processes.
Removed
The Cigna Group undertakes a number of critical security processes to mitigate and protect against cybersecurity risks, which include but are not limited to: • Identity and Access Management . Employees are provided with the minimum amount of access required to perform their jobs using role-based access control methodology, which defines access to our information systems based on job function.
Added
We undertake a number of critical security processes to mitigate and protect against cybersecurity risks, which include but are not limited to (i) identity and access management; (ii) security awareness and training; (iii) security operations and monitoring; (iv) change 33 management; (v) disaster recovery/business continuity; (vi) intelligence feeds; (vii) physical security; (viii) third-party vendor security reviews; (ix) vulnerability management/patching; and (x) cybersecurity incident reporting.
Removed
Privileged or elevated access to our systems is subject to supplemental approval requirements, increased authentication processes, and additional logging and monitoring. • Security Awareness and Training . Events and education activities are hosted throughout the year, such as the Cybersecurity Awareness Month, expos, videos, training programs and frequent phishing simulations.
Added
The GIRP's incident handling procedures dictate our actions during each phase of an incident, including the assembly of a broad, cross-functional Computer Security Incident Response Team, the formulation of a response, and post-incident reviews and corrective actions.
Removed
The Cigna Group continuously trains workforce members on the importance of preserving the confidentiality and integrity of customer data. All new hires have mandatory information protection and privacy training as part of their onboarding, and all workforce members complete an annual cybersecurity refresh training. • Security Operations and Monitoring.
Added
To further ensure supplier resilience and continuity, we regularly evaluate and assess our critical supplier relationships and business continuity plans, enabling us to quickly adapt and maintain operations in the event of prolonged disruption.
Removed
Our operational monitoring processes provide valuable insight into the effectiveness of our security program. A centralized system collects security logs and performs event correlation that creates an alert if a trigger occurs. We review any deviations from our established targets and implement corrective actions. • Change Management .
Removed
Changes to hardware, software, network components, and/or processes introduced into any production environments are managed by a formal change control process. These requests include the submission of required documentation as well as the business justification for the change. • Disaster Recovery / Business Continuity .
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These processes are designed to maintain service to our customers, providers and members through a wide range of adverse circumstances. Methods of recovery include rerouting business functions, relocating to an alternative site, independent “hot sites”, mobile recovery and work at home. • Intelligence Feeds .
Removed
These are used to monitor the security industry for the latest global security threats, exposures and patches to help keep company servers current with the latest security service packs, patches and hot fixes. • Physical Security.
Removed
Our physical security system is utilized in an effort to properly identify appropriate individuals, authorize entry and define the working areas to which they have access. Additional controls at our data centers includes a combination of guard service, access keys and magnetic card systems. • Third-Party Vendor Security Reviews .
Removed
Suppliers that have access to, host, or pass sensitive data are subject to a rigorous vendor security review which includes questionnaires, security controls and maturity assessments, inspection of evidence of compliance and remediation or acceptance of items identified during a Risk Assessment. • Vulnerability Management / Patching .
Removed
Any discovered vulnerability is rated by severity and assigned a timeline for remediation. Patching activities are centrally managed with a focus on the identification, remediation, and analysis and closure of vulnerabilities throughout the vulnerability management lifecycle. • Cybersecurity Incident Reporting . Our incident reporting protocol assists prompt and efficient response to cybersecurity threats.
Removed
This includes links on our internal site listing globally accessible contact numbers for immediate incident reporting, a user-friendly phishing reporting tool in Outlook, and group email boxes that are monitored 24/7 for incident submissions. We routinely manage cybersecurity risks through a defined framework that includes activities aimed at the identification, assessment, treatment and monitoring of risks.
Removed
Cigna's Information Protection policies and standards are informed by NIST 800-53b, moderate level security control baseline requirements. This includes a myriad of NIST controls/control enhancements which are mapped to Cigna Information Protection policies, standards and control library. To enhance our preparedness and practice our collective cybersecurity response capabilities, we conduct tabletop exercises developed in partnership with external security experts.
Removed
This includes work performed over various levels of controls assessments for specific business lines and core processes. These include Health Information Trust Alliance ("HITRUST") for health care data security, Payment Card Industry Data Security Standard (PCI DSS) for payment security, and System Organization Controls (SOC) 2 for information security and related controls.
Removed
Using industry best practices and continuous improvement principles, we validate strategies, document business recovery plans, and test these procedures enterprise-wide annually.
Removed
Upon the discovery of an incident, a broad cross-functional Computer Security Incident Response Team is assembled, which may include but is not limited to experts from key business, technology, legal, privacy and finance sectors, to collaboratively assess the impact and materiality in order to execute a comprehensive and informed response.
Removed
After an incident is contained, a thorough review is performed to determine if any existing detective or preventative controls were bypassed, or if there was a delay in detection or response.
Removed
This review, which includes members from our internal audit team, drives the implementation of corrective actions to enhance and strengthen the effectiveness of our prevention, detection, and incident response controls, as applicable.
Removed
Suppliers that have access to, host, or transmit The Cigna Group data are contractually required to comply with our Security Policies and Standards.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−4 removed0 unchanged
Biggest changeOur 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.
Biggest changeOur international properties contain approximately 1.4 million square feet located throughout 22 countries. Our principal domestic office locations include the Wilde Building, located at 900 Cottage Grove Road in Bloomfield, Connecticut (our corporate headquarters, which we own), the Evernorth Health Services leased corporate offices located at and around One Express Way in St.
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.
Item 2. PROPERTIES At the end of 2024, 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 7.8 million square feet in 50 states, the District of Columbia and the U.S. Virgin Islands.
This 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 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.
Removed
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.
Added
Louis, Missouri, and leased office space at Two Liberty Place located at 1601 Chestnut Street in Philadelphia, Pennsylvania. These principal domestic office locations total approximately 2 million square feet. The pharmacy operations consist of 9 home delivery pharmacies, 35 specialty pharmacies and 4 high-volume automated dispensing pharmacies located throughout the United States.
Removed
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.
Removed
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.
Removed
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 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

6 edited+1 added−1 removed1 unchanged
Biggest changeItem 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.
Biggest changeItem 4. MINE SAFETY DISCLOSURES Not applicable. Information about Our Executive Officers The principal occupations, ages and employment histories of our executive officers (as of February 27, 2025) are listed below.
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.
JONES, 54, 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 from 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.
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.
EDER, 55, Executive Vice President and 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, 35 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.
BRIAN 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.
BRIAN C. EVANKO, 48, Executive Vice President and Chief Financial Officer of The Cigna Group and President and Chief Executive Officer of 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.
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.
PALMER, 48, Executive Vice President for Enterprise Strategy of The Cigna Group and President and Chief Executive Officer of Evernorth Health Services beginning January 2024; President and Chief Executive Officer of Evernorth Health Services from 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.
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.
CORDANI, 59, Chairman of the Board of The Cigna Group beginning January 2022; Chief Executive Officer beginning December 2009; Director beginning October 2009; President beginning June 2008; and Chief Operating Officer from June 2008 until December 2009. NOELLE K.
Removed
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
Added
DAVID BRAILER, 65, Executive Vice President, Chief Health Officer and Chief Transformation Officer of The Cigna Group beginning January 2025; Executive Vice President and Chief Health Officer of The Cigna Group from September 2022 to January 2025; Founder of Health Evolution Partners in 2007; and Chairman of Health Evolution beginning in 2011. DAVID M.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−2 removed1 unchanged
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.
Biggest changeIssuer Purchases of Equity Securities The following table provides information about The Cigna Group share repurchase activity for the quarter ended December 31, 2024: 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, 2024 2,282,397 $ 331.72 2,281,772 $ 5,543 November 1-30, 2024 2,604,182 $ 328.12 2,600,639 $ 4,698 December 1-31, 2024 1,281,606 $ 321.93 1,281,010 $ 10,289 Total 6,168,185 $ 328.17 6,163,421 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.
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.
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." 36 Stock Price Performance Graph The graph below compares the cumulative total shareholder return on our common stock for the five years ended December 31, 2024 with the cumulative total return of the Standard & Poor's ("S&P") 500 Index and the S&P 500 Health Care Index.
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.
Employees tendered 625 shares in October, 3,543 shares in November and 596 shares in December 2024. (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.
The Cigna Group currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders.
The Cigna Group currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. See Note 8 to the Consolidated Financial Statements for further information on dividend payments.
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.
On January 30, 2025, the Board of Directors declared the first quarter cash dividend of $1.51 per share of The Cigna Group common stock to be paid on March 20, 2025 to shareholders of record on March 5, 2025.
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
(3) Approximate dollar value of shares is as of the last date of the applicable month and excludes the impact of excise tax. 37 Item 6. [Reserved]
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 Cigna Group's common stock is listed with, and trades on, the New York Stock Exchange under the symbol "CI." In 2024, 2023 and 2022, The Cigna Group declared and paid quarterly cash dividends of $1.40, $1.23 and $1.12 per share of The Cigna Group common stock, respectively.
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".
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES As of December 31, 2024, the number of shareholders of record was 21,974.
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.
The program may be suspended or discontinued at any time and does not have an expiration date. In December 2024, the Board increased repurchasing authority by an additional $6.0 billion. From January 1, 2025 through February 26, 2025, the Company repurchased 3.0 million shares for approximately $901 million, leaving repurchase authority at $9.4 billion as of February 26, 2025.
Removed
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.
Added
The stock performance shown in the graph is not intended to forecast or be indicative of future performance. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 The Cigna Group $ 100 $ 102 $ 114 $ 168 $ 154 $ 145 S&P 500 $ 100 $ 118 $ 152 $ 125 $ 158 $ 197 S&P 500 Health Care Index $ 100 $ 113 $ 143 $ 140 $ 143 $ 147 * Assumes that the value of the investment in The Cigna Group common stock and each index was $100 on December 31, 2019 and that all dividends were reinvested.
Removed
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.

Item 7. Management's Discussion & Analysis

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

112 edited+48 added−94 removed27 unchanged
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.
Biggest changeFor further information on our business and strategy, see Part I, Item 1 "Business" of this Form 10-K. 38 Financial Highlights Consolidated Results of Operations (GAAP basis) For the Years Ended December 31, Change Change (Dollars in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Pharmacy revenues $ 185,362 $ 137,243 $ 128,566 $ 48,119 35 % $ 8,677 7 % Premiums 45,996 44,237 39,916 1,759 4 4,321 11 Fees and other revenues 14,790 12,619 10,881 2,171 17 1,738 16 Net investment income 973 1,166 1,155 (193) (17) 11 1 Total revenues 247,121 195,265 180,518 51,856 27 14,747 8 Pharmacy and other service costs 182,509 133,801 124,834 48,708 36 8,967 7 Medical costs and other benefit expenses 38,648 36,287 32,184 2,361 7 4,103 13 Selling, general and administrative expenses 14,844 14,822 13,174 22 — 1,648 13 Amortization of acquired intangible assets 1,703 1,819 1,876 (116) (6) (57) (3) Total benefits and expenses 237,704 186,729 172,068 50,975 27 14,661 9 Income from operations 9,417 8,536 8,450 881 10 86 1 Interest expense and other (1,435) (1,446) (1,228) 11 (1) (218) 18 Net gain (loss) on sale of businesses 24 (1,499) 1,662 1,523 N/M (3,161) N/M Net investment losses (2,737) (78) (487) (2,659) N/M 409 (84) Income before income taxes 5,269 5,513 8,397 (244) (4) (2,884) (34) Total income taxes 1,491 141 1,615 1,350 N/M (1,474) (91) Net income 3,778 5,372 6,782 (1,594) (30) (1,410) (21) Less: Net income attributable to noncontrolling interests 344 208 78 136 65 130 167 Shareholders' net income $ 3,434 $ 5,164 $ 6,704 $ (1,730) (34) % $ (1,540) (23) % Consolidated effective tax rate 28.3 % 2.6 % 19.2 % 2,570 bps (1,660) bps Medical customers (in thousands) 19,147 19,780 18,004 (633) (3) % 1,776 10 % 39 Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2024 2023 2022 (In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 3,434 $ 5,164 $ 6,704 Adjustments to reconcile to adjusted income from operations Net investment losses (1) $ 2,533 2,529 $ 135 114 $ 613 496 Amortization of acquired intangible assets 1,703 1,347 1,819 1,413 1,876 1,345 Special items Integration and transaction-related costs 275 211 45 35 135 103 Impairment of dividend receivable 182 138 — — — — Deferred tax expenses (benefits), net — 84 — (1,071) — — Net (gain) loss on sale of businesses (24) (2) 1,499 1,429 (1,662) (1,332) Charge for organizational efficiency plan — — 252 193 22 17 Charges (benefits) associated with litigation matters — — 201 171 (28) (20) Total special items $ 433 431 $ 1,997 757 $ (1,533) (1,232) Adjusted income from operations $ 7,741 $ 7,448 $ 7,313 (1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
The Cigna Group currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of the Company and its shareholders.
The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders.
See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income. The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and 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.
See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income. The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain 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 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.
Future realized and unrealized investment results will be driven largely by market conditions and these future conditions are not reasonably predictable. We believe that the vast majority of our investments will continue to perform under their contractual terms.
Investment Outlook Future realized and unrealized investment results will be driven largely by market conditions, and these future conditions are not reasonably predictable. We believe that the vast majority of our investments will continue to perform under their contractual terms.
Future cash flows for Evernorth Health Services are primarily driven by the forecasted gross margins of the business, as well as operating expenses and long-term growth rates. Future cash flows for our other reporting units are primarily driven by forecasted revenues, benefit expenses, operating expenses and long-term growth rates.
Future cash flows for the Evernorth Health Services reporting units are primarily driven by the forecasted gross margins of the business, as well as operating expenses and long-term growth rates. Future cash flows for our other reporting units are primarily driven by forecasted revenues, benefit expenses, operating expenses and long- 45 term growth rates.
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.
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. Investment Portfolio. We support the liquidity needs of our businesses by managing the duration of invested assets to be consistent with the duration of liabilities.
The parent company normally meets its liquidity requirements by: • maintaining appropriate levels of cash and various types of marketable investments; • collecting dividends from its subsidiaries; • using proceeds from issuing debt and common stock; and • borrowing from its subsidiaries, subject to applicable regulatory limits.
The parent company normally meets its liquidity requirements by maintaining appropriate levels of cash and various types of marketable investments; collecting dividends from its subsidiaries; using proceeds from issuing debt and common stock; and borrowing from its subsidiaries, subject to applicable regulatory limits. 42 Regulatory Restrictions.
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.
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 7 to the Consolidated Financial Statements for additional information about the Company's debt.
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.
Dividends from our insurance, Health Maintenance Organization ("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. See Note 19 to the Consolidated Financial Statements in this Form 10-K for additional information regarding these restrictions.
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.
We prioritize our use of capital resources to (i) 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; (ii) pay dividends to shareholders; (iii) consider acquisitions and investments that are strategically and economically advantageous; and (iv) return capital to shareholders through share repurchases.
The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability.
The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability.
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.
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 investment gains/losses, amortization of acquired intangible assets and special items.
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.
Note 22 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 margin," calculated as pre-tax adjusted income (loss) from operations divided by adjusted revenues.
Although future losses remain possible due to further credit deterioration, we do not expect these losses to have a material unfavorable effect on our financial condition or liquidity.
Although future losses remain possible due to further credit deterioration, we do not expect these losses to have a material unfavorable effect on our results of operations, financial condition or liquidity.
We define adjusted income from operations as shareholders' net income (or income before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net realized investment results, amortization of acquired intangible assets, and special items.
We define adjusted income (loss) from operations as shareholders' net income (or income (loss) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net investment gains/losses, amortization of acquired intangible assets and special items.
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.
Other Long-Term Investments Other long-term investments of $4.6 billion as of December 31, 2024 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.
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.
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 $9.4 billion would decrease by approximately $0.5 billion, resulting in an after-tax decrease to shareholders' equity of approximately $0.4 billion as of December 31, 2024. 47 SEGMENT REPORTING The following section of this MD&A discusses the results of each of our segments.
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.
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 9 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, taxes and various accrued liabilities (because they are not financial instruments, their primary risks are other than market risks).
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.
Commercial Mortgage Loans As of December 31, 2024, our $1.4 billion commercial mortgage loan portfolio consisted of approximately 45 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.
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.
Our businesses generate significant cash flows 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 $2.4 billion for the year ended December 31, 2024 and $1.2 billion for the year ended December 31, 2023.
Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital intensive assets (e.g., offices and regional shopping malls). Our commercial mortgage loan portfolio has no exposure to regional shopping malls and less than 30% exposure to office properties.
Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital-intensive assets (e.g., offices and regional shopping malls). Our commercial mortgage loan portfolio has no exposure to regional shopping malls and approximately 25% exposure to office properties.
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 of December 31, 2024, we had $6.5 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), $5.6 billion of 43 remaining capacity under our commercial paper program and $7.6 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain nonregulated subsidiaries.
Income taxes - valuation allowance Deferred income taxes are reflected in the Consolidated Balance Sheets for differences between the financial and income tax reporting bases of the Company's underlying assets and liabilities, and are established based upon enacted tax rates and laws.
Deferred income taxes in the Consolidated Balance Sheets reflect differences between the financial and income tax reporting bases of the Company's underlying assets and liabilities, and are established based upon enacted tax rates and laws.
It is possible that the realization of deferred tax assets may change due to changes in forecasted future earnings in various foreign jurisdictions or the Company's ability to generate future capital gains.
It is possible that the realization of deferred tax assets may be impacted by changes in forecasted future earnings in various foreign jurisdictions or the Company's ability to generate future capital gains.
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.
Funds Available Commercial Paper Program . The commercial paper program had approximately $0.9 billion outstanding at December 31, 2024. 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 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 share of certain 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, including the chief operating decision maker, believes are not representative of the underlying results of operations due to their nature or size.
This includes: ▪ $2.8 billion of investment commitments (of which we expect $0.7 billion of the committed amounts to be disbursed in 2024). ▪ $1.5 billion of future service commitments (of which we expect $0.6 billion of the committed amounts to be disbursed in 2024), primarily comprised of contracts for certain outsourced business processes and information technology maintenance and support. ◦ See Note 12 of the Consolidated Financial Statements for additional information on investment commitments.
See Note 11 of the Consolidated Financial Statements for additional information on investment commitments. • $1.5 billion of future service commitments (of which we expect $0.7 billion of the committed amounts to be disbursed in 2025), primarily comprised of contracts for certain outsourced business processes and information technology maintenance and support.
Management has discussed how critical accounting estimates are developed and selected with the Audit Committee of our Board of Directors and the Audit Committee has reviewed the disclosures presented in this Form 10-K.
Management has discussed how critical accounting estimates are developed and selected with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the disclosures presented in this Form 10-K. We regularly evaluate items that may impact critical accounting estimates.
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.
For comparisons of our results of operations for 2023 compared with 2022, 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, 2023.
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.
For further discussion of the results and changes in key credit quality indicators, see Note 11 to the Consolidated Financial Statements. 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.
A 100 basis point increase in the medical cost trend rate would increase this liability by approximately $90 million, resulting in a decrease in net income of approximately $70 million after-tax, and a 50 basis point decrease in completion factors would increase this liability by approximately $180 million, resulting in a decrease in net income of approximately $140 million after-tax.
A 100 basis point increase in the medical cost trend rate would increase this liability by approximately $110 million, resulting in a decrease in net income of approximately $85 million after-tax, and a 50 basis point decrease in completion factors would increase this liability by approximately $185 million, resulting in a decrease in net income of approximately $145 million after-tax.
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.
We completed our normal annual evaluations for impairment of goodwill and intangible assets during the third quarter of 2024. The evaluations support that as of December 31, 2024, the fair value estimates of our reporting units exceed their carrying values by substantial margins.
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.
The effect of these hypothetical changes in market rates or prices on the fair value of certain noninsurance financial instruments would have been as follows: Market scenario for certain noninsurance financial instruments Loss in Fair Value (in billions) December 31, 2024 December 31, 2023 100 basis point increase in interest rates (excluding the Company's long-term debt) $ 0.6 $ 0.7 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, 2024 and December 31, 2023.
Key Transactions and Business Developments Sale of Medicare Advantage and Related Businesses In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits and CareAllies businesses within the U.S.
See Note 20 to the Consolidated Financial Statements for further discussion of these matters. Key Transactions and Business Developments Sale of Medicare Advantage and Related Businesses In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S.
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.
See Note 22 to the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of income (loss) before income taxes to pre-tax adjusted income (loss) from operations, as well as a reconciliation of Total revenues to adjusted revenues.
Longer-term investments generally support products with longer payout periods such as annuities. • Use of derivatives. We use derivative financial instruments to reduce our primary market risks. See Note 12 to the Consolidated Financial Statements for additional information about derivative financial instruments.
Shorter-term investments generally support shorter-term life and health liabilities. Medium-term, fixed-rate investments support interest-sensitive and medium-term health liabilities. Longer-term investments generally support products with longer payout periods such as annuities. • Use of derivatives. We use derivative financial instruments to reduce our primary market risks. See Note 11 to the Consolidated Financial Statements for additional information about derivative financial instruments.
The tables below present the adverse impacts of certain possible changes in assumptions. The effect of assumption changes in the opposite direction would be a positive impact to our consolidated results of operations, liquidity or financial condition, except for assessing impairment of goodwill.
The information below presents the adverse impacts of certain possible changes in assumptions. The effect of assumption changes in the opposite direction would be a positive impact to our consolidated results of operations, liquidity or financial condition, except for assessing impairment of goodwill. Goodwill and Other Intangible Assets Nature of Critical Accounting Estimate.
Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues.
Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See the below Financial Highlights section for a reconciliation of consolidated adjusted revenues to total revenues.
Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used Goodwill and other intangible assets Goodwill represents the excess of the cost of businesses acquired over the fair value of their net assets at the acquisition date. Intangible assets primarily reflect the value of customer relationships and other intangibles acquired in business combinations.
Goodwill represents the excess of the cost of businesses acquired over the fair value of their net assets at the acquisition date. Intangible assets primarily reflect the value of customer relationships and other intangibles acquired in business combinations.
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.
In addition to the estimates described below, 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.
The factors that could impact our estimates of valuation allowances include changes in forecasted future earnings in foreign jurisdictions and the Company's future ability to generate capital gains.
The factors that could impact our estimates of valuation allowances include changes in forecasted future earnings in foreign jurisdictions, potential international tax reform as a result of Organization for Economic Cooperation and Development initiatives, and the Company's future ability to generate capital gains.
The factors that could impact our estimates of uncertain tax positions include the likelihood of being sustained upon audit based on the technical merits of the tax position and related assumed interest and penalties. If our positions are upheld upon audit, our net income would increase.
The factors that could impact our estimates of uncertain tax positions include the likelihood of sustaining our tax position (and related assumed interest and penalties) under audit. If our positions are upheld upon audit, our net income would increase. Income Taxes - Valuation Allowance Nature of Critical Accounting Estimate.
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.
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.
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.
We continue to monitor the economic environment and its effect on our portfolio; we also continue to 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.
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.
Through these affordability services, we seek to improve the effectiveness of our integrated and fee-for-service solutions, for the benefit of our new and existing clients, by continuously innovating, improving affordability and implementing drug purchasing contract initiatives.
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.
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.
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.
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.
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.
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 continuously review the joint venture's investment strategy and its execution.
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.
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.
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, 2024.
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.
Unpaid claims and claim expenses for the Cigna Healthcare segment, both gross and net of reinsurance and other recoverables, as of December 31, 2024 were $5,018 million gross and $4,859 million net and as of December 31, 2023 were $5,092 million gross and $4,856 million net.
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.
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.
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.
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 durations of investments to estimated durations for the related insurance and contractholder liabilities; selling investments; and borrowing from affiliates, subject to applicable regulatory limits. Parent Level.
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.
As described in the introduction of Segment Reporting, performance of Other Operations is measured using adjusted revenues and pre-tax adjusted income from operations.
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").
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.
On an aggregate basis, the debt securities portfolio continues to perform according to original expectations, which includes a long-term economic investment strategy. Elevated global inflation, higher interest rates, continuing supply chain disruptions and potential fallout from the stress in the banking system are the primary risks that many of the issuers in our portfolio are facing.
On an aggregate basis, the debt securities portfolio continues to perform according to original expectations, which includes a long-term economic investment strategy. Primary risks facing many of the issuers in our portfolio include ongoing geopolitical events and economic conditions, including expectations for a longer period of higher inflation and interest rates.
Healthcare 13,890 12,619 11,688 1,271 10 931 8 International Health (1) 426 629 636 (203) (32) (7) (1) Total 19,780 18,004 17,081 1,776 10 % 923 5 % (1) International Health excludes medical customers served by less than 100% owned subsidiaries, as well as certain customers served by our third-party administrator.
Healthcare 13,649 13,890 12,619 (241) (2) 1,271 10 International Health (1) 434 426 629 8 2 (203) (32) Administrative services only 14,083 14,316 13,248 (233) (2) 1,068 8 Total 19,147 19,780 18,004 (633) (3) % 1,776 10 % (1) International Health excludes medical customers served by less than 100%-owned subsidiaries, as well as certain customers served by our third-party administrator.
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.
There were no investments with a material unrealized loss as of December 31, 2024. See Note 14 to the Consolidated Financial Statements for additional information regarding unconsolidated subsidiaries. 53 MARKET RISK Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices.
Decreases in our valuation allowance would increase net income, while increases in our valuation allowance would decrease net income. 63 Balance Sheet Caption / Nature of Critical Accounting Estimate Effect if Different Assumptions Used Unpaid claims and claim expenses – Cigna Healthcare Unpaid claims and claim expenses reflects estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.
Unpaid claims and claim expenses reflect estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.
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.
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.
Valuation allowances that are included in the Consolidated Balance Sheets within deferred tax liabilities, net are as follows (in millions): · 2023 – $1,498 · 2022 – $208 See Note 23 to the Consolidated Financial Statements for additional discussion around valuation allowances.
Valuation allowances that are included in the Consolidated Balance Sheets within Deferred tax liabilities, net were $2,332 million and $1,498 million as of December 31, 2024 and December 31, 2023, respectively. See Note 20 to the Consolidated Financial Statements for additional discussion around valuation allowances. Effect if Different Assumptions Used.
Valuation of debt security investments Most debt securities are classified as available for sale and are carried at fair value with changes in fair value recorded in Accumulated other comprehensive loss within Shareholders' equity. Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date.
Valuation of Debt Security Investments Nature of Critical Accounting Estimate. Most debt securities are classified as available for sale and are carried at fair value with changes in fair value recorded in Accumulated other comprehensive loss within Shareholders' equity.
The Company establishes a liability if the probability that the position will be sustained is 50% or less. For uncertain positions that management believes are more likely than not to be sustained, the Company recognizes a liability based upon management's estimate of the most likely settlement outcome with the taxing authority.
For uncertain positions that management believes are more likely than not to be sustained, the Company recognizes a liability based upon management's estimate of the most likely settlement outcome with the taxing authority. These amounts primarily relate to federal and state uncertain positions of the value and timing of deductions and uncertain positions of attributing taxable income to states.
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.
Our Management of Market Risks We predominantly rely on two 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 maintain a share repurchase program authorized by our Board of Directors, under which we may repurchase shares of our common stock from time to time. The timing and actual number of shares repurchased will depend on a variety of factors including price, general business and market conditions and alternate uses of capital.
The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital.
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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 financial condition of The Cigna Group as of December 31, 2024 compared with December 31, 2023 and our results of operations for 2024 compared with 2023 and 2022 and is intended to help you understand the ongoing trends in our business.
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.
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.
Summarized below are certain key measures of our performance by segment: Financial highlights by segment For the Years Ended December 31, Increase (Decrease) Increase (Decrease) (Dollars in millions, except per share amounts) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Revenues Adjusted revenues by segment Evernorth Health Services $ 153,499 $ 140,335 $ 131,912 9 % 6 % Cigna Healthcare 51,205 45,037 44,643 14 1 Other Operations 596 2,263 3,989 (74) (43) Corporate, net of eliminations (9,978) (6,991) (6,475) (43) (8) Adjusted revenues 195,322 180,644 174,069 8 4 Net realized investment results from certain equity method investments (57) (126) — 55 N/M Total revenues $ 195,265 $ 180,518 $ 174,069 8 % 4 % Shareholders' net income $ 5,164 $ 6,704 $ 5,370 (23) % 25 % Adjusted income from operations $ 7,448 $ 7,313 $ 6,982 2 % 5 % Earnings per share (diluted) Shareholders' net income $ 17.39 $ 21.41 $ 15.75 (19) % 36 % Adjusted income from operations $ 25.09 $ 23.36 $ 20.48 7 % 14 % Pre-tax adjusted income (loss) from operations by segment Evernorth Health Services $ 6,442 $ 6,127 $ 5,818 5 % 5 % Cigna Healthcare 4,478 4,099 3,601 9 14 Other Operations 96 509 903 (81) (44) Corporate, net of eliminations (1,698) (1,466) (1,339) (16) (9) Consolidated pre-tax adjusted income from operations 9,318 9,269 8,983 1 3 Income attributable to noncontrolling interests 146 84 58 74 45 Net realized investment (losses) gains (1) (135) (613) 198 78 N/M Amortization of acquired intangible assets (1,819) (1,876) (1,998) 3 6 Special items (1,997) 1,533 (451) N/M N/M Income before income taxes $ 5,513 $ 8,397 $ 6,790 (34) % 24 % (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.
Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations For the Years Ended December 31, 2024 2023 2022 (Diluted earnings per share) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Shareholders' net income $ 12.12 $ 17.39 $ 21.41 Adjustments to reconcile to adjusted income from operations Net investment losses (1) $ 8.95 8.93 $ 0.45 0.38 $ 1.96 1.59 Amortization of acquired intangible assets 6.01 4.76 6.13 4.77 5.99 4.30 Special items Integration and transaction-related costs 0.97 0.75 0.15 0.12 0.43 0.33 Impairment of dividend receivable 0.64 0.49 — — — — Deferred tax expenses (benefits), net — 0.30 — (3.61) — — Net (gain) loss on sale of businesses (0.08) (0.02) 5.05 4.81 (5.31) (4.26) Charge for organizational efficiency plan — — 0.85 0.65 0.07 0.05 Charges (benefits) associated with litigation matters — — 0.68 0.58 (0.09) (0.06) Total special items $ 1.53 1.52 $ 6.73 2.55 $ (4.90) (3.94) Adjusted income from operations $ 27.33 $ 25.09 $ 23.36 (1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income. 40 Financial highlights by segment For the Years Ended December 31, Change Change (Dollars in millions, except per share amounts) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Revenues Adjusted revenues by segment Evernorth Health Services $ 202,155 $ 153,499 $ 140,335 32 % 9 % Cigna Healthcare 52,914 51,205 45,037 3 14 Other Operations 828 596 2,263 39 (74) Corporate, net of eliminations (8,798) (9,978) (6,991) (12) 43 Adjusted revenues 247,099 195,322 180,644 27 8 Net investment results from certain equity method investments 204 (57) (126) N/M (55) Special item related to impairment of dividend receivable (182) — — N/M N/M Total revenues $ 247,121 $ 195,265 $ 180,518 27 % 8 % Shareholders' net income $ 3,434 $ 5,164 $ 6,704 (34) % (23) % Adjusted income from operations $ 7,741 $ 7,448 $ 7,313 4 % 2 % Earnings per share (diluted) Shareholders' net income $ 12.12 $ 17.39 $ 21.41 (30) % (19) % Adjusted income from operations $ 27.33 $ 25.09 $ 23.36 9 % 7 % Pre-tax adjusted income (loss) from operations by segment Evernorth Health Services $ 7,001 $ 6,442 $ 6,127 9 % 5 % Cigna Healthcare 4,229 4,478 4,099 (6) 9 Other Operations (9) 96 509 N/M (81) Corporate, net of eliminations (1,688) (1,698) (1,466) (1) 16 Consolidated pre-tax adjusted income from operations 9,533 9,318 9,269 2 1 Income attributable to noncontrolling interests 405 146 84 177 74 Net investment (losses) (1) (2,533) (135) (613) N/M (78) Amortization of acquired intangible assets (1,703) (1,819) (1,876) (6) (3) Special items (433) (1,997) 1,533 (78) N/M Income before income taxes $ 5,269 $ 5,513 $ 8,397 (4) % (34) % (1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
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).
As of December 31, 2024, purchase obligations consisted of a total of $4.2 billion of estimated payments required under contractual arrangements (of which we expect $1.6 billion of purchase obligations to be paid within the next 12 months beginning January 1, 2025).
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.
In the event we are unable to sustain all of our $1.5 billion of uncertain tax positions, it could result in future tax payments of approximately $1.0 billion. We are adequately reserved for such positions. As a result, there is minimal direct risk to earnings should we fail to sustain our positions.
In addition to the sources of liquidity discussed above, the parent company can borrow an additional $2.2 billion from its subsidiaries without further approvals as of December 31, 2023. Use of Capital Resources Long-term debt. In July 2023, we repaid $2.9 billion of senior notes at maturity. Capital expenditures .
In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.8 billion from its subsidiaries without further approvals as of December 31, 2024. Use of Capital Resources Capital Expenditures . Capital expenditures for property, equipment and computer software were $1.4 billion in 2024 compared to $1.6 billion in the year ended December 31, 2023.
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.
Results of Operations Financial Summary For the Years Ended December 31, Change Change (Dollars in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Adjusted revenues (1) $ 52,914 $ 51,205 $ 45,037 $ 1,709 3 % $ 6,168 14 % Pre-tax adjusted income from operations (1) $ 4,229 $ 4,478 $ 4,099 $ (249) (6) % $ 379 9 % Pre-tax margin (1)(2) 8.0 % 8.7 % 9.1 % (70) bps (40) bps Medical care ratio 83.2 % 81.3 % 81.7 % 190 bps (40) bps SG&A expense ratio (3) 20.4 % 21.6 % 21.8 % (120) bps (20) bps (1) See Note 22 to the Consolidated Financial Statements for reconciliation of adjusted revenues and pre-tax adjusted income from operations to Total revenues and Income before income taxes, respectively.
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.
Generally, a higher mix of generic and biosimilar drugs reduces revenues and increases income from operations, as generic and biosimilar drugs are typically priced lower than the branded drugs they replace, providing positive impacts or our clients, our customers and us. • 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.
In January 2024, we entered into a definitive agreement to sell the Medicare Advantage, Medicare Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits and CareAllies businesses within the U.S. Healthcare operating segment to HCSC, subject to applicable regulatory approvals and other customary closing conditions.
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. In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment.
See Part I, Item 1 of this Form 10-K for definitions of Cigna Healthcare's market segments.
Total medical customers decreased 3%, primarily due to a decline in IFP customers. See Part I, Item 1 of this Form 10-K for definitions of Cigna Healthcare market segments.
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 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. Effect if Different Assumptions Used.
Commentary: 2023 versus 2022 The commentary presented below, and in the segment discussions that follow, compare results for the year ended December 31, 2023 with results for the year ended December 31, 2022.
For further analysis and explanation of each segment's results, see the "Segment Reporting" section of this MD&A. Commentary: 2024 versus 2023 The commentary presented below, and the segment commentaries that follow, compare results for the year ended December 31, 2024 with results for the year ended December 31, 2023.
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.
Cigna Healthcare Medical Customers As of December 31, Change Change (In thousands) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 U.S. Healthcare 3,853 4,280 3,587 (427) (10) 693 19 International Health (1) 1,211 1,184 1,169 27 2 15 1 Insured 5,064 5,464 4,756 (400) (7) % 708 15 % U.S.
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.
Excluding amounts classified as held for sale, Goodwill and other intangibles as of December 31, 2024 were $44,370 million and $29,417 million, respectively, and as of December 31, 2023, were $44,259 million and $30,863 million, respectively. See Note 18 to the Consolidated Financial Statements for additional discussion of our goodwill and other intangible assets. Effect if Different Assumptions Used.

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