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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-07-31 · 112 added, 86 removed, 455 unchanged (30% 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 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.

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 September 30, 2025 compared with December 31, 2024 and our results of operations for the three and nine months ended September 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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potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities;

the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations;

the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws, regulations or government guidance;

uncertainties surrounding participation in government-sponsored programs and providing services to payors who participate in government-sponsored programs;

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Consolidated Results of Operations (GAAP basis)

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

Three Months Ended September 30, Nine Months Ended September 30,

(Dollars in millions) 2025 2024 Change 2025 2024 Change

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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(38) (241) 87 62 (79) (356) 106 19

(Benefits) associated with litigation matters

(17) (13) — — (17) (13) — —

Deferred tax expenses, net (2)

— 19 — 41 — 53 — 75

Impairment of dividend receivable

— — 182 138 — — 182 138

Total special items $ 174 (61) $ 346 300 $ 767 339 $ 465 367

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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(0.14) (0.90) 0.31 0.22 (0.29) (1.32) 0.37 0.07

(Benefits) associated with litigation matters

(0.06) (0.05) — — (0.06) (0.05) — —

Deferred tax expenses, net (2)

— 0.07 — 0.15 — 0.20 — 0.26

Impairment of dividend receivable

— — 0.65 0.49 — — 0.64 0.48

Total special items $ 0.65 (0.23) $ 1.23 1.07 $ 2.85 1.26 $ 1.63 1.29

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Financial highlights by segment

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

Three Months Ended September 30, Nine Months Ended September 30,

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

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Net investment results from certain equity method investments 178 177 1 272 238 14

Special item related to impairment of dividend receivable — (182) N/M — (182) N/M

Total revenues $ 69,748 $ 63,694 10 % $ 202,428 $ 181,472 12 %

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Amortization of acquired intangible assets (436) (436) — (1,280) (1,279) —

Special items (203) (63) 222 (593) (119) N/M

Special items (174) (346) (50) (767) (465) 65

Income before income taxes

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

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.

Three and Nine Months Ended September 30, 2025 versus Three and Nine Months Ended September 30, 2024

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

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

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.

Shareholders' net income for the three and nine months ended increased 153% and 135%, primarily reflecting the absence of the impairment of VillageMD equity securities that was recorded in 2024.

Adjusted income from operations.

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Pharmacy revenues increased 16% 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.

Premiums decreased 21% and 10%, primarily driven by the impact of the HCSC transaction (-25% and -15%, respectively), partially offset by higher premium rates within our ongoing U.S.

Healthcare businesses (+4% in both periods).

Fees and other revenues increased 13% and 14%, primarily reflecting growth in affordability services (defined in the "Segment Reporting" section) within our Pharmacy Benefit Services operating segment.

Net investment income increased 174% and 2%, primarily due to the absence of the $182 million impairment of the dividend receivable in the third quarter of 2024 related to VillageMD accrued dividends.

For the nine months ended, this impact was offset by lower average assets, due in part to the impact of the HCSC transaction.

Pharmacy and other service costs increased 17% 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.

Medical costs and other benefit expenses decreased 18% and 8%, primarily driven by the impact of the HCSC transaction (-26% and -16%, respectively), partially offset by higher medical costs within our ongoing U.S.

Healthcare businesses (+8% in both periods).

Selling, general and administrative ("SG&A") expenses decreased 6% for the three months ended and was flat for the nine months ended.

Both periods were primarily impacted by the HCSC transaction (-16% and -8%, respectively), partially offset by the strategic optimization program (+5% and +4%, respectively) and supporting business growth (+3% and +4%, respectively).

See Note 14 to the Consolidated Financial Statements for further discussion of the strategic optimization program.

Gain (loss) on sale of businesses primarily reflects the HCSC transaction for the three and nine 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 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%).

Investment results for the three and nine months ended increased, reflecting the absence of the impairment of VillageMD equity securities that was recorded in the three and nine months periods in 2024.

The effective tax rate decreased for the three and nine months ended, primarily driven by the absence of a valuation allowance related to the impairment of equity securities recorded in 2024 (-18% in both periods), partially offset by the absence of state tax benefits recorded in 2024 (+3% and +5%, respectively).

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

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Healthcare operating segment to Health Care Service Corporation ("HCSC," and such transaction, the "HCSC transaction").

The purchase price increased from $3.3 billion to $4.8 billion, subject to post-closing contractual adjustments, reflecting higher statutory surplus for the legal entities when conveyed to HCSC.

The Company received $4.2 billion cash proceeds at closing.

We expect receipt of the remaining $0.6 billion in the fourth quarter of 2025 upon HCSC's collection of amounts due from the Centers for Medicare and Medicaid Services ("CMS").

The purchase price increased from $3.3 billion to $4.9 billion, reflecting higher statutory surplus for the legal entities when conveyed to HCSC and post-closing contractual adjustments.

The Company received approximately $4.2 billion cash proceeds at closing.

We expect receipt of the remaining approximately $0.6 billion in the fourth quarter of 2025 upon HCSC's collection of amounts due from the Centers for Medicare and Medicaid Services ("CMS") and completion of post-closing contractual adjustments.

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

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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 six months ended June 30 were as follows:

Six Months Ended June 30,

Cash flows for the nine months ended September 30 were as follows:

Nine Months Ended September 30,

(In millions) 2025 2024

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Financing activities $ (2,355) $ (4,399)

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.

The following discussion explains variances in the various categories of cash flows for the nine months ended September 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 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.

Operating cash flows decreased for the nine months ended September 30, 2025 primarily due to the absence of the favorable net cash flow impacts from onboarding significant new clients in 2024 and the unfavorable impact of pharmacy and services costs payments, as well as timing of settlements related to the accounts receivable factoring facility.

This decrease is partially offset by higher insurance liabilities and the favorable impact of accrued liabilities.

Investing Activities.

The increase in cash provided by investing activities reflects the net proceeds on the HCSC transaction, partially offset by higher investment purchases.

The increase in cash used in investing activities reflects higher investment purchases, partially offset by the net proceeds on the HCSC transaction.

Financing Activities.

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.

The decrease in net cash used in financing activities in 2025 is primarily driven 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 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.

Dividends received from U.S.-regulated subsidiaries were $0.6 billion for the nine months ended September 30, 2025 and $1.7 billion for the nine months ended September 30, 2024.

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

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;

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Commercial Paper Program .

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

There was no commercial paper outstanding balance as of September 30, 2025.

Revolving Credit Agreement.

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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.

As of September 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), $6.5 billion of remaining capacity under our commercial paper program, and $6.3 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain non-regulated 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 44.9% and 43.3% as of September 30, 2025 and June 30, 2025, respectively.

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

Debt Issuance and Term Loan :

In September 2025, we issued $4.5 billion of new senior notes.

The proceeds from this debt were used to repay the $2.0 billion of loans outstanding under the Term Loan Facility, dated August 2025, the proceeds of which were used to fund an investment in Shields Health Solutions, a leading specialty pharmacy management company.

We used the remainder for general corporate purposes, including investments and repayment of indebtedness.

See Note 7 to the Consolidated Financial Statements for further information regarding our debt issuance and the Term Loan Facility.

Subsidiary Borrowings.

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.

In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.2 billion from its subsidiaries without further approvals as of September 30, 2025.

Use of Capital Resources

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

The Company may, from time to time, repay or repurchase debt in advance of maturities when it deems appropriate.

Capital Expenditures .

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.

Capital expenditures for property, equipment and computer software were $0.9 billion in the nine months ended September 30, 2025 compared with $1.1 billion in the nine months ended September 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 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.

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

Other Sources of Funds and Uses of Capital Resources

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

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.

Due to the issuance, redemption and maturity of senior notes in the nine months ended September 30, 2025, our long-term debt obligations as of September 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.

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Long-Term Debt.

Total scheduled payments on long-term debt are $46.1 billion through February 2054 (of which $1.9 billion relate to the remainder of 2025), which include scheduled interest payments and maturities of long-term debt.

Total scheduled payments on long-term debt are $53.0 billion through January 2056 (of which $1.5 billion relate to the remainder of 2025), which include scheduled interest payments and maturities of long-term debt.

CRITICAL ACCOUNTING ESTIMATES

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

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

Goodwill and Other intangible assets

Our annual evaluations of goodwill and other intangible assets for impairments were completed during the third quarter of 2025.

These evaluations were performed at the reporting unit level, based on discounted cash flow analyses or market data.

The estimated fair value of each of our reporting units exceeded their carrying values by substantial margins.

Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate.

However, if actual experience significantly differs from the assumptions used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our consolidated results of operations and, in certain situations, could have a material adverse effect on liquidity and our financial condition.

SEGMENT REPORTING

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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.

In 2025, the Company renewed or extended contracts with the business’s largest clients through the end of the decade.

Additionally, to further deliver value for the benefit of those we serve and to build a more sustainable model for health care, the Company will incur investment and transition costs to support its recently announced transformational rebate-free model for pharmacy benefits, designed to lower medication costs, improve transparency and support local pharmacies.

As a result, we expect these efforts to impact pre-tax adjusted income from operations for Evernorth Health Services over the short term.

Key Factors Affecting Segment Performance

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• 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.

We manage pharmaceutical manufacturer increases 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 our revenues and income from operations 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" or "affordability services").

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Key factors that impact Specialty and Care Services:

• Customer and client growth, both organic and new business, in our Specialty and Care Services business generally results in increased revenues and income from operations.

This includes client movement in our specialty, specialty distribution services, virtual care, physical primary care, benefits management and behavioral health services as we expand our businesses and build upon our cross-enterprise leverage.

• Customer and client growth, both organic and new business, and key relationships in our Specialty and Care Services business generally results in increased revenues and income from operations.

This includes client movement in our specialty pharmacy, specialty distribution services, virtual care, physical primary care, benefits management and behavioral health services as we expand our businesses and build upon our cross-enterprise leverage.

Results of Operations

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(Dollars in millions) 2025 2024 Change 2025 2024 Change

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

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

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

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 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.

Three and Nine Months Ended September 30, 2025 versus Three and Nine Months Ended September 30, 2024

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

Adjusted revenues increased 15% and 16% for the three and nine months ended, respectively, primarily reflecting higher utilization of prescription drugs from customer growth in Pharmacy Benefit Services (+7% and +6%, respectively) and Specialty and Care Services (+5% and +6%, respectively) and an increase due to claims composition in Pharmacy Benefit Services (+3% and +4%, respectively).

Pre-tax adjusted income from operations increased 1% and 4% for the three and nine months ended, respectively, primarily reflecting specialty pharmacy growth in Specialty and Care Services (+6% and +6%, respectively), and contract affordability improvements and customer growth in Pharmacy Benefit Services (+2% for the nine months ended), partially offset by strategic investments and initiatives to support business growth in Pharmacy and Benefit Services (-4% and -2%, respectively) and Specialty and Care Services (-1% and -2%, respectively).

The SG&A expense ratio was flat for the three months ended and decreased 10 bps for the nine months ended, primarily reflecting higher adjusted revenues as discussed above, offset by strategic investments and initiatives to support business growth.

Cigna Healthcare Segment

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• Revenue growth includes increases to premium rates in consideration of anticipated medical cost increases, customer growth driven by new clients and customers, and increased fee revenue from the expansion of products and services to existing clients and customers, including solutions provided by Evernorth Health Services.

• Higher medical costs (also referred to as higher medical cost trend) is impacted by utilization (the quantity of medical services consumed by our customers), unit costs (the cost per medical service) and mix of services.

• Higher medical costs (also referred to as higher medical cost trend) are impacted by utilization (the quantity of medical services consumed by our customers), unit costs (the cost per medical service) and mix of services.

• Prior to the divestiture of our Medicare Advantage and related businesses to HCSC, the percentage of Medicare Advantage customers in bonus-eligible plans impacted the amount of quality bonus payments we receive.

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

(Dollars in millions) 2025 2024 2025 2024

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

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

Three and Nine Months Ended September 30, 2025 versus Three and Nine Months Ended September 30, 2024

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

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.

Adjusted revenues decreased 18%, or $2,408 million, and 9%, or $3,592 million, primarily due to the impact of the HCSC transaction (-$2,998 million and -$5,524 million, respectively), partially offset by higher premiums within employer insured (+$323 million and +$952 million, respectively) and stop loss (+$219 million and +$633 million, respectively), primarily reflecting premium rate increases.

Pre-tax adjusted income from operations decreased 12%, or $136 million, and 8%, or $299 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.

The medical care ratio increased 200 bps for the three months ended, primarily due to relatively equal contributions from our Individual and Family Plans business and higher expected stop loss medical costs.

The medical care ratio increased 160 bps for the nine months ended, primarily due to higher expected stop loss medical costs.

The SG&A expense ratio decreased 10 bps and 40 bps, primarily due to revenue growth outpacing volume-related expenses within the ongoing businesses (-60 bps and -50 bps, respectively), partially offset by the impact of the HCSC transaction (+60 bps and +20 bps, respectively).

Medical Customers

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Cigna Healthcare Medical Customers

As of June 30,

As of September 30,

(In thousands) 2025 2024 Change

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Unpaid Claims and Claim Expenses

June 30, As of

September 30, As of

(In millions) 2025 2024 Change

Unpaid claims and claim expenses $ 4,676 $ 5,018 (7) %

Our unpaid claims and claim expenses liability decreased 8%, driven by the HCSC transaction (-$983 million), partially offset by the change in stop loss reserves (+$641 million), primarily due to seasonality.

Our unpaid claims and claim expenses liability decreased 7%, driven by the HCSC transaction (-$983 million), partially offset by an increase in stop loss reserves (+$620 million), primarily due to seasonality.

Other Operations

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Financial Summary

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(Dollars in millions) 2025 2024 2025 2024

Adjusted revenues $ 162 $ 234 (31) % $ 521 $ 627 (17) %

Pre-tax adjusted income from operations

Pre-tax adjusted income (loss) from operations

$ 36 $ (6) N/M % $ 61 $ (4) N/M %

Pre-tax margin 22.2 % (2.6) % 2,480 bps 11.7 % (0.6) % 1,230 bps

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

Three and Nine Months Ended September 30, 2025 versus Three and Nine Months Ended September 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.

Pre-tax adjusted income (loss) 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 June 30, Change Six Months Ended

June 30, Change

Three Months Ended September 30, Change Nine Months Ended

September 30, Change

(In millions) 2025 2024 2025 2024

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$ (399) $ (425) (6) % $ (1,192) $ (1,269) (6) %

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

Three and Nine Months Ended September 30, 2025 versus Three and Nine Months Ended September 30, 2024

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

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therefore, we expect to hold a significant portion of these assets for the long term.

Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both

investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material unfavorable effect on our financial condition or liquidity.

Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material unfavorable effect on our financial condition or liquidity.

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

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Debt Securities

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.

The carrying value of our debt securities portfolio decreased from $9.4 billion as of December 31, 2024 to $8.4 billion as of September 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 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.

As of September 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 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.

As of September 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 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.

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 September 30, 2025.

their contract terms.

For further discussion of the results and changes in key credit quality indicators, see Note 11 to the Consolidated Financial Statements.

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Other Long-Term Investments

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.

Other long-term investments of $4.9 billion as of September 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 $17.1 billion as of June 30, 2025.

Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $17.4 billion as of September 30, 2025.

These investments were comprised of approximately 70% debt securities, including government and corporate debt diversified by issuer, industry and geography;

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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 June 30, 2025.

We continuously review the joint venture's investment strategy and its execution.

There were no investments with a material unrealized loss as of September 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 June 30, 2025, there was no material change in our risk exposure as reported in our 2024 Form 10-K.

As of September 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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What changed 10-Q

Item 2. Management’s Discussion and Analysis