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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-05-02 · 150 added, 147 removed, 391 unchanged (43% of the section changed)

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 our financial condition as of March 31, 2025, compared with December 31, 2024 and our results of operations for the three months ended March 31, 2025, compared with the same period last year 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 ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of June 30, 2025 compared with December 31, 2024 and our results of operations for the three and six months ended June 30, 2025 compared with the same periods last year, and is intended to help you understand the ongoing trends in our business.

We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K").

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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 our 2024 Form 10-K for additional information regarding the Company's significant accounting policies and see Note 2 to the Consolidated Financial

Statements in this Form 10-Q for updates to those policies resulting from adopting new accounting guidance, if any.

See Note 2 to the Consolidated Financial Statements in our 2024 Form 10-K for

additional information regarding the Company's significant accounting policies and see Note 2 to the Consolidated Financial Statements in this Form 10-Q for updates to those policies resulting from adopting new accounting guidance, if any.

The preparation of interim consolidated financial statements necessarily relies heavily on estimates.

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Changes in percentages are expressed in basis points ("bps").

In this MD&A, our consolidated measures "adjusted income from operations," earnings per share on that same basis and "adjusted revenues" are not determined in accordance with GAAP and should not be viewed as substitutes for the most directly comparable GAAP measures of "shareholders' net income (loss)," "earnings per share" and "total revenues." We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.

In this MD&A, our consolidated measures "adjusted income from operations," earnings per share on that same basis and "adjusted revenues" are not determined in accordance with GAAP and should not be viewed as substitutes for the most directly comparable GAAP measures of "shareholders' net income," "earnings per share" and "total revenues." We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.

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.

We define adjusted income (loss) from operations as shareholders' net income (loss) (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.

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.

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.

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Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.

Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income (loss).

See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income (loss).

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:

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political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates;

risks related to strategic transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations, which could lead to an impairment charge;

risks related to strategic

transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations, which could lead to an impairment charge;

dependence on success of relationships with third parties;

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Consolidated Results of Operations (GAAP basis)

Three Months Ended March 31,

(Dollars in millions) 2025 2024 Change

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2025 2024 Change 2025 2024 Change

Pharmacy revenues $ 53,649 $ 45,101 19 % $ 102,282 $ 87,137 17 %

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Gain (loss) on sale of businesses

Net investment losses

(2) (1,836) (100)

— — N/M 41 (19) N/M

Net investment gains (losses)

52 (48) N/M 50 (1,884) N/M

Income before income taxes

2,021 1,989 2 3,669 2,068 77

Total income taxes 389 360 8 628 651 (4)

Net income (loss)

1,409 (212) N/M

1,632 1,629 — 3,041 1,417 115

Net income attributable to noncontrolling interests

Shareholders' net income (loss)

$ 1,323 $ (277) N/M %

Consolidated effective tax rate 14.5 % 368.4 % N/M bps

100 81 23 186 146 27

Shareholders' net income

$ 1,532 $ 1,548 (1) % $ 2,855 $ 1,271 125 %

Consolidated effective tax rate 19.2 % 18.1 % 110 bps 17.1 % 31.5 % (1,440) bps

Medical customers (in thousands) 18,046 19,043 (5) %

Reconciliation of Shareholders' Net Income (Loss) (GAAP) to Adjusted Income from Operations

Three Months Ended March 31,

(In millions) Pre-tax After-tax Pre-tax After-tax

Shareholders' net income (loss)

Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(In millions) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax

Shareholders' net income

$ 1,532 $ 1,548 $ 2,855 $ 1,271

Adjustments to reconcile to adjusted income from operations

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Special items

Strategic optimization program

129 98 — — 344 261 — —

Integration and transaction-related costs

74 56 63 47 290 220 100 76

Strategic optimization program

Deferred tax expenses, net (2)

(Gain) loss on sale of businesses

— — — — (41) (115) 19 (43)

Deferred tax expenses, net (2)

— 17 — 17 — 34 — 34

Total special items $ 203 171 $ 63 64 $ 593 400 $ 119 67

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See Note 20 to the Consolidated Financial Statements in our 2024 Form 10-K for additional details.

Reconciliation of Shareholders' Net Income (Loss) (GAAP) to Adjusted Income from Operations

Three Months Ended March 31,

(Diluted earnings per share) Pre-tax After-tax Pre-tax After-tax

Shareholders' net income (loss) (1)

Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(Diluted earnings per share) Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax

Shareholders' net income

$ 5.71 $ 5.45 $ 10.55 $ 4.43

Adjustments to reconcile to adjusted income from operations

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Special items

Integration and transaction-related costs

0.79 0.60 0.12 0.10

Strategic optimization program

0.48 0.37 — — 1.27 0.97 — —

Deferred tax expenses, net (3)

Integration and transaction-related costs

0.28 0.21 0.22 0.17 1.07 0.81 0.34 0.26

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— — — — (0.15) (0.43) 0.07 (0.15)

Deferred tax expenses, net (2)

— 0.06 — 0.06 — 0.13 — 0.12

Total special items $ 0.76 0.64 $ 0.22 0.23 $ 2.19 1.48 $ 0.41 0.23

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$ 7.20 $ 6.72 $ 13.94 $ 13.19

(1) For the three months ended March 31, 2024, due to the anti-dilutive effect resulting from the Shareholders' net loss for the period, the impact of potentially dilutive securities has been excluded from the calculation of weighted average shares for the calculation of diluted Shareholders’ net loss per share.

Weighted average common shares outstanding used to calculate diluted Shareholders’ net loss per share for the three months ended March 31, 2024 were 286,465 thousand.

(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.

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See Note 20 to the Consolidated Financial Statements in our 2024 Form 10-K for additional details.

(4) For the three months ended March 31, 2024, due to the adjusted income from operations, the number of weighted average shares used to calculate Adjusted income from operations per share reflects the dilution caused by outstanding stock options, unvested restricted stock grants and units, and strategic performance shares.

Weighted average common shares outstanding used to calculate Adjusted income from operations per share for the three months ended March 31, 2024 were 289,717 thousand.

Financial highlights by segment

Three Months Ended March 31,

(Dollars in millions, except per share amounts) 2025 2024 Change

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions, except per share amounts) 2025 2024 Change 2025 2024 Change

Adjusted revenues by segment

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Adjusted revenues 67,134 60,470 11 132,586 117,717 13

Net investment results from certain equity method investments 50 8 N/M

Net investment results from certain equity method investments 44 53 (17) 94 61 54

Total revenues $ 67,178 $ 60,523 11 % $ 132,680 $ 117,778 13 %

Shareholders' net income (loss)

$ 1,323 $ (277) N/M %

Shareholders' net income

$ 1,532 $ 1,548 (1) % $ 2,855 $ 1,271 125 %

Adjusted income from operations

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Earnings per share (diluted)

Shareholders' net income (loss)

$ 4.85 $ (0.97) N/M %

Shareholders' net income

$ 5.71 $ 5.45 5 % $ 10.55 $ 4.43 138 %

Adjusted income from operations

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Cigna Healthcare 1,094 1,204 (9) 2,381 2,544 (6)

Other Operations — 18 N/M

Other Operations 25 (16) N/M 25 2 N/M

Corporate, net of eliminations (382) (435) (12) (793) (844) (6)

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Income attributable to noncontrolling interests

117 95 23 219 172 27

Net investment income (losses) (1)

48 (1,828) N/M

96 5 N/M 144 (1,823) N/M

Amortization of acquired intangible assets (422) (420) — (844) (843) —

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Income before income taxes

$ 1,648 $ 79 N/M %

$ 2,021 $ 1,989 2 % $ 3,669 $ 2,068 77 %

For further analysis and explanation of each segment's results, see the "Segment Reporting" section in this MD&A.

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

The commentary presented below, and the segment commentaries that follow, compare results for the three months ended March 31, 2025 with results for the three months ended March 31, 2024.

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

The commentary presented below, and the segment commentaries that follow, compare results for the three and six months ended June 30, 2025 with results for the three and six months ended June 30, 2024.

Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.

Shareholders' net income (loss) increased $1,600 million, primarily reflecting the absence of net investment losses recorded in 2024 ($1,875 million, after tax) driven by the impairment of equity securities.

Adjusted income from operations decreased 2%, primarily reflecting the absence of state tax benefits recorded in 2024 (-2%) and lower earnings in Cigna Healthcare (-3%), partially offset by higher earnings in Evernorth Health Services (+4%).

Medical customers decreased 6%, primarily reflecting the HCSC transaction (defined below).

Pharmacy revenues increased 16%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Premiums increased 10%, primarily reflecting higher premium rates in our U.S.

Healthcare operating segment.

Fees and other revenues increased 17%, primarily reflecting growth in affordability services within our Pharmacy Benefit Services operating segment.

Net investment income decreased 18%, primarily due to lower average assets.

Pharmacy and other service costs increased 17%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Medical costs and other benefit expenses increased 11%, primarily reflecting higher medical costs in our U.S.

Healthcare operating segment.

Selling, general and administrative ("SG&A") expenses increased 14%, primarily reflecting costs associated with the Strategic Optimization Program (+5%) and the HCSC transaction costs (+5%).

Gain (loss) on sale of businesses primarily reflects the HCSC transaction.

Shareholders' net income for the six months ended increased 125%, primarily reflecting the absence of the impairment of VillageMD equity securities that was recorded in the first quarter of 2024.

Adjusted income from operations.

See discussion of segment results in the "Segment Reporting" section.

Medical customers decreased 5%, primarily reflecting the closing of the HCSC transaction (defined below) in the three months ended March 31, 2025.

Pharmacy revenues increased 19% and 17%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Premiums decreased 20% and 5%, primarily driven by the impact of the HCSC transaction (-26% and -10%, respectively), partially offset by higher premiums within our ongoing U.S.

Healthcare businesses (+5% and +4%, respectively).

Fees and other revenues increased 13% and 15%, primarily reflecting growth in affordability services (defined below) within our Pharmacy Benefit Services operating segment.

Net investment income decreased 26% and 22%, primarily due to lower average assets, due in part to the impact of the HCSC transaction.

Pharmacy and other service costs increased 20% and 18%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Medical costs and other benefit expenses decreased 19% and 4%, primarily driven by the impact of the HCSC transaction (-27% and -11%, respectively), partially offset by higher medical costs in our ongoing U.S.

Healthcare businesses (+9% and +8%, respectively).

Selling, general and administrative ("SG&A") expenses decreased 7% for the three months ended and increased 3% for the six months ended.

Both periods were primarily impacted by the HCSC transaction (-12% and -4%, respectively), the strategic optimization program (+2% and +4%, respectively), and supporting business growth (+2% and +3%, respectively).

Gain (loss) on sale of businesses primarily reflects the HCSC transaction for the six months ended.

See the "Divestiture of Medicare Advantage and Related Businesses" section below and Note 5 to the Consolidated Financial Statements for further discussion of the HCSC transaction.

Investment results primarily reflect the absence of the impairment of VillageMD equity securities that was recorded in 2024.

The effective tax rate decreased, primarily driven by the absence of a valuation allowance related to the impairment of equity securities recorded in 2024 (-540%), partially offset by the absence of state tax benefits recorded in 2024 (+88%) and the impact related to the HCSC transaction (+69%).

Investment results for the three and six months ended increased, reflecting investment gains related to the change in fair value of certain equity securities in the second quarter of 2025 and the absence of the impairment of VillageMD equity securities that was recorded in the first quarter of 2024.

The effective tax rate increased for the three months ended, primarily driven by the absence of tax benefits recorded in 2024 related to favorable state audit resolutions (+2%), partially offset by the favorable impact of foreign operations (-1%).

For the six months ended, the effective tax rate decreased, primarily driven by the absence of a valuation allowance related to the impairment of equity securities recorded in 2024 (-21%), partially offset by the absence of state tax benefits recorded in 2024 (+6%) and the impact related to the HCSC transaction (+1%).

See Note 15 to the Consolidated Financial Statements for further discussion of these matters.

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and borrowing from affiliates, subject to applicable regulatory limits.

Parent Level.

Cash requirements at the parent company level generally consist of debt service;

payment of declared dividends to shareholders;

lending to subsidiaries as needed;

and pension plan funding.

Parent Company Level.

Cash requirements at the parent company level generally consist of debt service, payment of declared dividends to shareholders, lending to subsidiaries as needed and pension plan funding.

The parent company normally meets its liquidity requirements by maintaining appropriate levels of cash and various types of marketable investments;

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We manage the portfolio to both optimize returns in the current economic environment and meet our liquidity needs.

Cash flows for the three months ended March 31 were as follows:

Three Months Ended March 31,

Cash flows for the six months ended June 30 were as follows:

Six Months Ended June 30,

(In millions) 2025 2024

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Financing activities $ (5,014) $ (4,838)

The following discussion explains variances in the various categories of cash flows for the three months ended March 31, 2025 compared with the same period in 2024.

The following discussion explains variances in the various categories of cash flows for the six months ended June 30, 2025 compared with the same period in 2024.

Operating Activities.

Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums, fees, investment income, taxes, benefit costs, and other expenses.

Operating cash flows decreased for the three months ended March 31, 2025 primarily driven by the timing of settlements related to the accounts receivable facility as well as the absence of favorable net cash flow impacts from onboarding significant new clients in 2024.

Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums and medical costs, fees, investment income, taxes, and other expenses.

Operating cash flows decreased for the six months ended June 30, 2025 primarily due to the absence of the favorable net cash flow impacts from onboarding significant new clients in 2024 as well as the unfavorable impact of pharmacy and services costs payments, due in part to timing.

Investing Activities.

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Financing Activities.

The increase in cash used in financing activities in 2025 is driven by the absence of debt issuances that occurred in 2024, partially offset by lower share repurchases and lower debt repayments.

The increase in cash used in financing activities in 2025 is driven by net debt repayments in 2025 compared with net debt issuances in 2024, offset by lower share repurchases.

Capital Resources

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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 $0.5 billion for the three months ended March 31, 2025 and $0.6 billion for the three months ended March 31, 2024.

Dividends received from U.S.-regulated subsidiaries were $0.5 billion for the six months ended June 30, 2025 and $1.1 billion for the six months ended June 30, 2024.

Non-regulated subsidiaries also generate significant cash flows from operating activities, which is typically available immediately to the parent company for general corporate purposes.

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Commercial Paper Program .

There was no commercial paper outstanding balance as of March 31, 2025.

Revolving Credit Agreements.

Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed above.

The commercial paper program had an approximately $1.2 billion outstanding balance as of June 30, 2025.

Revolving Credit Agreement.

Our revolving credit agreement provides 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.

In April 2025, the Company replaced its previous revolving credit agreements and entered into a $6.5 billion, five-year revolving credit and letter of credit agreement that will mature in April 2030.

See Note 7 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program.

As of March 31, 2025, 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), $6.5 billion of remaining capacity under our commercial paper program, and $8.5 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain nonregulated subsidiaries.

Our debt-to-capitalization ratio (calculated as Short-term debt and Long-term debt ("Total debt") as a percentage of Total shareholders' equity and Total debt ("Total capitalization")) was 43.1% and 43.8% at March 31, 2025 and December 31, 2024, respectively.

See Note 7 to the Consolidated Financial Statements for further information on our credit agreement and commercial paper program.

As of June 30, 2025, we had $6.5 billion of undrawn committed capacity under our revolving credit agreement (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.3 billion of remaining capacity under our commercial paper program, and $4.6 billion in cash and short-term investments, approximately $1.0 billion of which was held by the parent company or certain nonregulated subsidiaries.

Our debt-to-capitalization ratio (calculated as Short-term debt and Long-term debt ("Total debt") as a percentage of Total shareholders' equity and Total debt ("Total capitalization")) was 43.3% and 43.1% as of June 30, 2025 and March 31, 2025, respectively.

We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy.

Subsidiary Borrowings.

In addition to the sources of liquidity discussed above, the parent company can borrow an additional $3.6 billion from its subsidiaries without further approvals as of March 31, 2025.

In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.1 billion from its subsidiaries without further approvals as of June 30, 2025.

Use of Capital Resources

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During the three months ended March 31, 2025, the Company redeemed at par its $700 million 5.685% senior notes that were due March 2026.

In April 2025, $900 million of 3.250% senior notes due April 2025 were repaid at maturity.

In April 2025, $900 million of 3.250% senior notes were repaid at maturity.

Capital Expenditures .

Capital expenditures for property, equipment and computer software were $0.3 billion in the three months ended March 31, 2025 compared to $0.3 billion in the three months ended March 31, 2024.

Capital expenditures for property, equipment and computer software were $0.6 billion in the six months ended June 30, 2025 compared with $0.7 billion in the six months ended June 30, 2024.

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.

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The program may be suspended or discontinued at any time.

We repurchased 5.0 million shares for approximately $1.5 billion during the three months ended March 31, 2025, compared to 10.1 million shares for approximately $3.4 billion during the three months ended March 31, 2024.

From April 1, 2025 through May 1, 2025, we repurchased 3.2 million shares for approximately $1.1 billion.

Share repurchase authority was $7.7 billion as of May 1, 2025.

We repurchased 8.2 million shares for approximately $2.6 billion during the six months ended June 30, 2025, compared with 14.7 million shares for approximately $5.0 billion during the six months ended June 30, 2024.

Other Sources of Funds and Uses of Capital Resources

As discussed in the "Developments" section above, the HCSC transaction was completed on March 19, 2025.

We anticipate using the proceeds in alignment with our capital deployment priorities, with the majority allocated to share repurchases.

We used the proceeds in alignment with our capital deployment priorities, with the majority allocated to share repurchases.

Risks to Liquidity and Capital Resources

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See Note 16 to the Consolidated Financial Statements for discussion of various guarantees.

Due to the redemption of senior notes in the three months ended March 31, 2025, our long-term debt obligations as of March 31, 2025 have been updated compared to those previously provided in our 2024 Form 10-K.

Due to the redemption and maturity of senior notes in the six months ended June 30, 2025, our long-term debt obligations as of June 30, 2025 have been updated compared to those previously provided in our 2024 Form 10-K.

See Note 7 to the Consolidated Financial Statements for further discussion.

Except for the item listed below, there have been no material changes to other information presented in our guarantees and contractual obligations set forth in our 2024 Form 10-K.

On balance sheet :

Ex cept for the item listed below, there have been no material changes to other information presented in our guarantees and contractual obligations set forth in our 2024 Form 10-K.

Long-Term Debt.

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Our most critical accounting estimates, as well as the effect of hypothetical changes in material assumptions used to develop each estimate, are described in our 2024 Form 10-K.

As of March 31, 2025, there were no significant changes to the critical accounting estimates from what was reported in our 2024 Form 10-K.

As of June 30, 2025, there were no significant changes to the critical accounting estimates from what was reported in our 2024 Form 10-K.

SEGMENT REPORTING

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Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities within our Pharmacy Benefit Services and Specialty and Care Services operating segments.

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.

As described in the introduction to Segment Reporting, the performance of Evernorth Health Services is measured using adjusted revenues and pre-tax adjusted income (loss) from operations.

Key Factors Affecting Segment Performance

The key factors that impact the segment's revenues and income from operations are claims volume, mix of claims, price and contract affordability services.

The key factors that impact the segment's revenues and income from operations are claims utilization, claims composition and contract affordability services.

Specialty and Care Services revenues are also impacted by customer and client growth.

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• Pharmacy claim volume (also referred to as "utilization") relates to processing prescription claims filled by retail pharmacies in our network and dispensing prescription claims from our home delivery and specialty pharmacies, along with other claims.

Pharmacy claim volume (utilization) is impacted by new clients or organic customer growth through the expansion of existing clients or through the loss of customers and business.

• The mix of claims generally considers the type of drug and distribution channel method.

In addition to the types of drugs, the mix of generic or biosimilar claims also impacts our results.

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 drug counterparts, providing positive impacts on 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.

Therefore, the rate of inflation for prescription drugs and our efforts to manage this inflation for our clients continue to be significant drivers of our revenues and cost of revenues in the current environment.

• Our client contract pricing is impacted by our ongoing ability to negotiate favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing, and manufacturer rebates (also referred to as affordability improvements).

Through these affordability services, we seek to improve the effectiveness of our combined and standalone solutions, for our clients, by continuously innovating, improving affordability and implementing drug purchasing contract initiatives.

Pharmacy claim volume is impacted by new clients or organic customer growth through the expansion of existing clients or through the loss of customers and business.

• The composition of claims generally considers the types of drugs, including the mix of claims among branded and higher priced specialty drugs compared to generic or biosimilar alternatives.

We manage pharmaceutical manufacturer increase in prices through programs designed to reduce drug spend, providing positive impacts on our clients, our customers and us.

Changes to claims mix, including types of drugs, distribution methods, pharmaceutical manufacturer prices, and alternative uses of drugs within our formularies continue to be a significant driver of organic growth for our revenues and income from operations in the current environment.

Through these affordability improvements, we seek to improve the effectiveness of our combined and standalone solutions for our clients by continuously innovating, improving affordability and implementing drug purchasing contract initiatives.

Our continued affordability improvements further reduce drug costs for our customers and clients, and we share in the value delivered, which generally results in a favorable impact on our income from operations.

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Three Months Ended

(Dollars in millions) 2025 2024 Change

June 30, Six Months Ended

(Dollars in millions) 2025 2024 Change 2025 2024 Change

Adjusted revenues (1)

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Pre-tax margin (1)(2)

2.7 % 2.9 % (20) bps

2.9 % 3.3 % (40) bps 2.8 % 3.1 % (30) bps

SG&A expense ratio (3)

1.9 % 2.1 % (20) bps

1.9 % 2.0 % (10) bps 1.9 % 2.0 % (10) bps

(1) See Note 17 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.

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(Dollars and adjusted scripts in millions) 2025 2024 2025 2024

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Pharmacy claim volume (1)

548 533 3 % 1,087 1,046 4 %

(1) Non-specialty network prescriptions filled through 90-day programs and home delivery prescriptions are counted as three claims.

All other network and specialty prescriptions are counted as one claim.

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

Commentary in parentheses regarding percentage changes represents the driver's impact on the overall category.

Adjusted revenues increased 16%, primarily reflecting higher utilization of prescription drugs from customer growth in both Specialty and Care Services (+7%) and Pharmacy Benefit Services (+5%), an increase due to claims mix in Pharmacy Benefit Services (+2%), and inflation on branded drugs in both Pharmacy Benefit Services (+1%) and Specialty and Care Services (+1%).

Pre-tax adjusted income from operations increased 5%, primarily reflecting specialty pharmacy growth in Specialty and Care Services (+7%) and continued affordability improvements in Pharmacy Benefit Services (+6%).

These increases were partially offset by strategic investments and initiatives to support business growth (-4% in Specialty and Care Services and -2% in Pharmacy Benefit Services).

The SG&A expense ratio decreased 20 bps, primarily reflecting higher adjusted revenues as discussed above.

Adjusted revenues increased 17% and 16% for the three and six months ended, respectively, primarily reflecting higher utilization of prescription drugs from customer growth in Pharmacy Benefit Services (+7% and +7%, respectively) and Specialty and Care Services (+6% and +7%, respectively) and an increase due to claims composition in Pharmacy Benefit Services (+4% and +2%, respectively).

Pre-tax adjusted income from operations increased 5% and 5% for the three and six months ended, respectively, primarily reflecting specialty pharmacy growth in Specialty and Care Services (+8% and +6%, respectively), and contract affordability improvements and customer growth in Pharmacy Benefit Services (+3% and +3%, respectively), partially offset by strategic investments and initiatives to support business growth in Specialty and Care Services (-3% and -2%, respectively) and Pharmacy Benefit Services (-1% and -2%, respectively).

The SG&A expense ratio decreased 10 bps for both the three and six months ended, primarily reflecting higher adjusted revenues as discussed above.

Cigna Healthcare Segment

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Three Months Ended

March 31, Change

June 30, Change Six Months Ended

June 30, Change

(Dollars in millions) 2025 2024 2025 2024

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Pre-tax margin (1)(2)

8.9 % 10.1 % (120) bps

Medical care ratio 82.2 % 79.9 % 230 bps

10.2 % 9.2 % 100 bps 9.4 % 9.6 % (20) bps

Medical care ratio 83.2 % 82.3 % 90 bps 82.6 % 81.1 % 150 bps

SG&A expense ratio (3)

19.4 % 20.5 % (110) bps

20.3 % 20.0 % 30 bps 19.8 % 20.2 % (40) bps

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See Note 17 to the Consolidated Financial Statements for further details.

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.

Adjusted revenues increased 9%, or $1,205 million, primarily due to higher premiums within Medicare Part D (+$573 million), employer insured (+$295 million) and stop loss (+$200 million), reflecting premium rate increases to cover expected increases in underlying medical costs across those businesses.

Pre-tax adjusted income from operations decreased 4%, or $53 million, primarily due to a higher MCR (-$285 million), partially offset by a lower SG&A expense ratio (+$160 million).

The medical care ratio increased 230 bps, primarily due to higher medical costs, driven primarily by stop loss.

The SG&A expense ratio decreased 110 bps, primarily due to revenue growth outpacing volume-related expenses.

Adjusted revenues decreased 18%, or $2,389 million, and 4%, or $1,184 million, primarily due to the impact of the HCSC transaction (-$3,137 million and -$2,527 million, respectively), partially offset by higher premiums within employer insured (+$334 million and +$629 million, respectively) and stop loss (+$214 million and +$414 million, respectively), primarily reflecting premium rate increases to cover expected increases in underlying medical costs across those businesses.

Pre-tax adjusted income from operations decreased 9%, or $110 million, and 6%, or $163 million, primarily due to a higher MCR.

The medical care ratio increased 90 bps and 150 bps, primarily due to higher stop loss medical costs.

The SG&A expense ratio increased 30 bps for the three months ended June 30, 2025, primarily due to the impact of the HCSC transaction (+120 bps), partially offset by revenue growth outpacing volume-related expenses within the ongoing businesses (-90 bps).

The SG&A expense ratio decreased 40 bps for the six months ended June 30, 2025, primarily due to revenue growth outpacing volume-related expenses within the ongoing businesses.

Medical Customers

Medical customers include individuals who meet any of the following criteria:

are covered under a medical insurance policy, managed care arrangement, or administrative services agreement issued by Cigna Healthcare;

have access to Cigna Healthcare's provider network for covered services under their medical plan;

or have medical claims that are administered by Cigna Healthcare.

(i) are covered under a medical insurance policy, managed care arrangement or administrative services agreement issued by Cigna Healthcare;

(ii) have access to the Cigna Healthcare provider network for covered services under their medical plan;

or (iii) have medical claims that are administered by Cigna Healthcare.

Cigna Healthcare Medical Customers

As of March 31,

As of June 30,

(In thousands) 2025 2024 Change

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Unpaid Claims and Claim Expenses

March 31, As of

June 30, As of

(In millions) 2025 2024 Change

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Financial Summary

Three Months Ended

March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(Dollars in millions) 2025 2024 2025 2024

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Pre-tax adjusted income from operations

$ — $ 18 N/M %

Pre-tax margin — % 10.8 % (1,080) bps

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Adjusted revenues primarily reflects premiums and net investment income associated with COLI and our run-off operations and revenues from other non-strategic businesses.

Pre-tax adjusted income from operations decreased, primarily driven by less favorable COLI claims experience and unfavorable margins in our non-strategic businesses.

$ 25 $ (16) N/M % $ 25 $ 2 N/M %

Pre-tax margin 13.6 % (7.0) % 2,060 bps 7.0 % 0.5 % 650 bps

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

Adjusted revenues primarily reflects premiums and net investment income associated with COLI and our run-off operations, as well as revenues from other non-strategic businesses.

Pre-tax adjusted income from operations increased for both periods, primarily driven by the decision to discontinue certain small non-strategic businesses.

Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs, and eliminations for products and services sold between segments.

Financial Summary

Three Months Ended

March 31, Change

Three Months Ended June 30, Change Six Months Ended

June 30, Change

(In millions) 2025 2024 2025 2024

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$ (382) $ (435) (12) % $ (793) $ (844) (6) %

Three Months Ended March 31, 2025 versus Three Months Ended March 31, 2024

Pre-tax adjusted loss from operations was consistent with prior year.

Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024

Pre-tax adjusted loss from operations decreased for both periods, primarily due to lower interest expense.

INVESTMENT ASSETS

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The below discussion addresses the strategies and risks associated with our various classes of investment assets.

See Part I, Item 1A - "Risk Factors" in our 2024 Form 10-K for the year ended December 31, 2024 for additional information regarding risks associated with our investment portfolio.

See Part I, Item 1A - "Risk Factors" in our 2024 Form 10-K for additional information regarding risks associated with our investment portfolio.

Debt Securities

The carrying value of our debt securities portfolio decreased from $9.4 billion as of December 31, 2024 to $8.2 billion as of March 31, 2025, primarily reflecting the HCSC transaction.

The carrying value of our debt securities portfolio decreased from $9.4 billion as of December 31, 2024 to $8.4 billion as of June 30, 2025, primarily reflecting the HCSC transaction.

See Note 5 to the Consolidated Financial Statements for further information.

Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the past few years.

As of March 31, 2025, $6.9 billion, or 84%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.3 billion were below investment grade.

As of June 30, 2025, $7.3 billion, or 87%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.1 billion were below investment grade.

The majority of the bonds that are below investment grade were rated at the higher end of the non-investment-grade spectrum.

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Commercial Mortgage Loans

As of March 31, 2025, our $1.3 billion commercial mortgage loan portfolio consisted of approximately 40 fixed-rate loans, diversified by property type, location and borrower.

As of June 30, 2025, our $1.3 billion commercial mortgage loan portfolio consisted of approximately 40 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.

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 March 31, 2025.

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 June 30, 2025.

Given the quality and diversity of the underlying real estate, positive debt service coverage, and significant borrower cash invested in the property generally ranging between 30% and 40%, we remain confident that the vast majority of borrowers will continue to perform as expected under their contract terms.

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Office sector fundamentals are weak but have begun to stabilize for higher-quality assets.

Lower-quality assets will continue to experience value erosion due to weak tenant demand and low investor interest.

Lower-quality assets will likely continue to experience value erosion due to weak tenant demand and low investor interest.

Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital-intensive assets (e.g., offices and regional shopping malls).

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Other Long-Term Investments

Other long-term investments of $4.7 billion as of March 31, 2025 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 of $4.8 billion as of June 30, 2025 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.

These limited partnership entities typically invest in mezzanine debt or equity of privately held companies and equity real estate.

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We account for this joint venture under the equity method of accounting.

Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $16.2 billion as of March 31, 2025.

Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $17.1 billion as of June 30, 2025.

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;

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.

There were no investments with a material unrealized loss as of March 31, 2025.

We continuously review the joint venture's investment strategy and

its execution.

There were no investments with a material unrealized loss as of June 30, 2025.

See Note 14 to the Consolidated Financial Statements in our 2024 Form 10-K for additional information regarding unconsolidated subsidiaries.

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We encourage you to read this in conjunction with "Market Risk – Financial Instruments" included in the MD&A section in our 2024 Form 10-K.

As of March 31, 2025, there was no material change in our risk exposure as reported in our 2024 Form 10-K.

As of June 30, 2025, there was no material change in our risk exposure as reported in our 2024 Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis