# Cigna Group: Form 10-K for the period ended Dec 31, 2024 - Company: [Cigna Group](/companies/ci.md) (CIK 1739940) - Form: 10-K - Filed: 2025-02-27 - Accepted by EDGAR: Feb 27, 2025, 13:38 ET - Period: 2024-12-31 - Accession: 0001739940-25-000009 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1739940/000173994025000009/ci-20241231.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1739940/000173994025000009/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2024-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Revenue | 12 months, 2024-01-01 to 2024-12-31 | $247.12bn | us-gaap:Revenues | | Cost of revenue | 12 months, 2024-01-01 to 2024-12-31 | $182.51bn | us-gaap:CostOfGoodsAndServicesSold | | Selling, general and administrative | 12 months, 2024-01-01 to 2024-12-31 | $14.84bn | us-gaap:SellingGeneralAndAdministrativeExpense | | Operating income | 12 months, 2024-01-01 to 2024-12-31 | $9.42bn | us-gaap:OperatingIncomeLoss | | Income tax | 12 months, 2024-01-01 to 2024-12-31 | $1.49bn | us-gaap:IncomeTaxExpenseBenefit | | Diluted EPS | 12 months, 2024-01-01 to 2024-12-31 | $12.12 | us-gaap:EarningsPerShareDiluted | | Basic EPS | 12 months, 2024-01-01 to 2024-12-31 | $12.25 | us-gaap:EarningsPerShareBasic | | Diluted shares (weighted) | 12 months, 2024-01-01 to 2024-12-31 | 283,218,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding | | Operating cash flow | 12 months, 2024-01-01 to 2024-12-31 | $10.36bn | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Dividends paid | 12 months, 2024-01-01 to 2024-12-31 | $1.57bn | us-gaap:PaymentsOfDividendsCommonStock | | Share repurchases | 12 months, 2024-01-01 to 2024-12-31 | $7.03bn | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2024-12-31 | $7.55bn | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Current assets | at 2024-12-31 | $48.87bn | us-gaap:AssetsCurrent | | Total assets | at 2024-12-31 | $155.88bn | us-gaap:Assets | | Current liabilities | at 2024-12-31 | $57.98bn | us-gaap:LiabilitiesCurrent | | Total liabilities | at 2024-12-31 | $114.64bn | us-gaap:Liabilities | | Current portion of debt | at 2024-12-31 | $3.04bn | us-gaap:DebtCurrent | | Short-term borrowings | at 2024-12-31 | $880.0m | us-gaap:CommercialPaper | | Shareholders' equity | at 2024-12-31 | $41.03bn | us-gaap:StockholdersEquity | ## Business As filed, 95,621 characters. ### OVERVIEW The Cigna GroupSM, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company. ### Our Purpose and Mission The Cigna Group is a global health company committed to creating a better future for every individual and every community. We relentlessly challenge ourselves to partner and innovate solutions for better health. Powered by our people and our brands, we advance our mission to improve the health and vitality of those we serve. ### Our Pathways to Growth To deliver differentiated value to our customers, patients, clients, communities and investors, we will continue to cultivate our portfolio of businesses to provide sustained foundational and accelerated growth through cross-enterprise leverage - today and in the future. ### Our Differentiated Approach - Clinical expertise and longitudinal data provide enhanced care and value. - Relentless focus on value and affordability improves the cost of care for our clients and customers. - Culture of innovation and partnership brings new services and capabilities to market. At The Cigna Group, we relentlessly challenge ourselves to partner and innovate solutions for better health. Our global workforce of approximately 73,500 colleagues strives to fulfill our mission to improve the health and vitality of approximately 182 million customer and patient relationships in more than 30 countries and jurisdictions (as of December 31, 2024). We have two growth platforms: Evernorth Health Services® and Cigna Healthcare®. Evernorth Health Services, through our Pharmacy Benefit Services and Specialty and Care Services operating segments, provides independent and coordinated health solutions and capabilities to enable the health care system to work better and help people live richer, healthier lives. In addition to serving a wide variety of clients, Evernorth Health Services also enables us to deepen existing relationships across our entire book of business. Cigna Healthcare is the health benefits segment of The Cigna Group and serves customers and clients for our U.S. Healthcare and International Health operating segments. Together, Evernorth Health Services and Cigna Healthcare provide a strong and diverse foundation that allows us to capitalize on growth opportunities by leading with our strengths – pharmacy and medical solutions – and then expanding those relationships by addressing additional client needs and innovating and delivering new services and solutions. When considering our broad portfolio of businesses, we have strong foundational businesses that we expect to continue to grow. These businesses often serve as the key entry point for clients with either a pharmacy relationship, a medical relationship or both. We also have accelerated growth businesses, both scaled and emerging, which build upon our foundational relationships or provide exposure to adjacent high-growth areas. Evernorth Health Services and Cigna Healthcare work together to enable cross-enterprise leverage by uniquely using the depth and breadth of our wide-ranging capabilities across the enterprise to efficiently move from ideation to solution creation to meet clients' evolving needs while creating more value, expanding our reach and driving growth. ### Information about Segments We present the financial results of our businesses in the following segments (see "Executive Overview" section of Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") located in Part II, Item 7 of this Form 10-K for a financial summary): ***Evernorth Health Services*** includes our Pharmacy Benefit Services and Specialty and Care Services operating segments, which provide independent and coordinated health solutions and capabilities to enable the health care system to work better and help people live richer, healthier lives. ***Cigna Healthcare*** includes the U.S. Healthcare and International Health operating segments, which provide comprehensive medical plan services and coordinated solutions to clients and customers. ***Other Operations*** comprises the remainder of our business operations, which includes certain continuing, run-off and other 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. See the "Executive Overview - Key Transactions and Business Developments" section of our MD&A located in Part II, Item 7 of this Form 10-K for discussion of key developments impacting the segments. ### Other Information The Cigna Group, through its predecessor companies, was incorporated in Delaware in 1981. The financial information included in this Form 10-K for the fiscal year ended December 31, 2024 is presented in conformity with accounting principles generally accepted in the United States of America ("GAAP") unless otherwise indicated. Industry rankings and percentages set forth herein are for the year ended December 31, 2024, unless otherwise indicated. In addition, statements set forth in this document concerning our rank or position in an industry or particular line of business have been developed internally based on publicly available information unless otherwise noted. You can access our website at http://www.thecignagroup.com to learn more about our company. We make annual, quarterly and current reports and proxy statements and amendments to those reports available, free of charge, through our website as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission ("SEC"). We also use our website as a means of disclosing material information and for complying with our disclosure obligations under the SEC's Regulation FD (Fair Disclosure). Important information, including news releases, analyst presentations and financial information regarding The Cigna Group is routinely posted on our website. Accordingly, investors should monitor the Investor Relations portion of our website, in addition to following our press releases, SEC filings, and public conference calls and webcasts. The information contained on, or that may be accessed through, our website is neither incorporated by reference into nor a part of this report. See also "Code of Ethics and Other Corporate Governance Disclosures" in Part III, Item 10 of this Form 10-K for additional information regarding the availability of our Codes of Ethics on our website. ### EVERNORTH HEALTH SERVICES Evernorth Health Services includes our Pharmacy Benefit Services and Specialty and Care Services operating segments, which provide independent and coordinated health solutions and capabilities to enable the health care system to work better and help people live richer, healthier lives. Within Evernorth Health Services, Pharmacy Benefit Services is a foundational growth business, and Specialty and Care Services is an accelerated growth business. Evernorth Health Services offers a full suite of products and services that both (a) enables our customers to combine our products and services to create a comprehensive benefit offering designed to manage prescription drugs and provide independent and coordinated health solutions and capabilities and (b) addresses the needs of a shared customer base across both operating segments of Evernorth Health Services. Our ability to deliver this broad array of health care services on both a standalone or combined basis between its two operating segments enables us to drive incremental growth. Additionally, many Evernorth Health Services offerings are available within Cigna Healthcare solutions to drive cross-enterprise leverage. ### How We Deliver - **Deep clinical expertise** in evaluating medicines, digital therapeutics and other health solutions for efficacy and value to assist clients in selecting a cost-effective formulary as well as in leveraging evidence-based guidelines to ensure patients receive the most medically appropriate treatments. - **Affordable solutions** that provide more value and align incentives between the patient, health care professional and plan sponsor. - **Modular portfolio** tailored to client needs, using the combined strengths and capabilities of Evernorth Health Services, as well as strategic partnerships, to deliver better, more efficient care for patients; better experiences for clients, providers and customers; and enhanced choices for clients and customers through our open architecture model. - **Talented, experienced and caring people who operate in a culture of innovation and partnership** to solve complex problems across a fragmented health care ecosystem, fueled by data and expertise that drives purposeful innovation. ### Principal Products and Services ### Pharmacy Benefit Services - *Pharmacy Benefits.* We drive high-quality, cost-effective pharmacy care through a range of services. We adjudicate drug claims from retail network participants and provide retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and other services. - *Retail Pharmacy Network Administration.* We contract with retail pharmacies to provide prescription drugs to customers of the pharmacy benefit plans our clients offer. We negotiate with pharmacies throughout the United States to discount drug prices and offer national and regional network options responsive to client preferences related to cost containment, convenience of access for customers and network performance. - *Benefits Design Consultation.* We consult with our clients on how best to structure and leverage the pharmacy benefit to meet plan objectives for affordable and sustainable access to the prescription medications customers need to stay healthy and to ensure the safe and effective use of those medications. - *Drug Utilization Review.* When pharmacies submit claims for prescription drugs to us, we review them in real time for health and safety. If issues are detected, we then alert the dispensing pharmacy. Clients may also choose to enroll in programs that result in communications about potential therapy concerns being sent to prescribers after the initial claim submission. - *Drug Formulary Management.* - Formularies are lists of drugs with designations that may be used to determine drug coverage and customer out-of-pocket costs as well as communicate plan preferences in competitive drug categories. Our formulary management services support clients in establishing formularies that assist customers and physicians in choosing clinically appropriate, cost-effective drugs and prioritize access, safety and affordability. - We administer specific formularies for our clients, including standard formularies developed by Express Scripts by Evernorth® ("Express Scripts") and custom formularies in which we play a more limited role. Many of our clients select standard formularies, governed by both internal and independent committees that make recommendations for formularies that first consider clinical results separate from price considerations. - One of the ways we manage our drug formulary is through negotiating to secure additional affordability for the benefit of our clients based on the utilization of certain prescription drugs and supplies which can be paid to us in the form of a rebate. With respect to our clients' rebate arrangements, most choose to receive the greater of a minimum rebate guarantee or a contractually agreed-upon percentage of rebates. In some rebate arrangements, Express Scripts takes on the risk of securing the rebate value necessary to meet the value guaranteed to its client. The actual amount of value secured by Express Scripts is dependent upon the result of its negotiations for rebates. In 2024, for clients covered under our pharmacy benefit contracts, Express Scripts shared over 95% of the drug formulary management rebates it received with its integrated clients, and more than two-thirds of clients received 100% of rebates. - *Medical Drug Management.* We offer a comprehensive range of services with guaranteed savings for managing medically billed specialty drugs. Our solutions apply utilization management, site of care management and claims prepayment review to help ensure patient safety and healthier outcomes and reduce wasteful spend. - *Administration of Group Purchasing Organizations.* We participate in various group purchasing organizations that negotiate pricing for the purchase of pharmaceuticals or formulary rebates with pharmaceutical manufacturers on behalf of their participants. - *Value-Based Programs.* We offer a variety of solutions aimed at helping clients reduce costs and enhance clinical outcomes. These programs include SafeGuardRx®, Express Scripts Copay AssuranceSM, Express Scripts Patient Assurance® and Evernorth EncircleRxSM. - *Evernorth Wholesale Marketplace.* Evernorth Wholesale Marketplace® offers a suite of flexible, private label pharmacy benefit manager solutions including but not limited to a pharmacy rebate program, a retail network program, value-based solutions, a medical rebate program and utilization management policies. These offerings are captured under either our drug formulary administrative service arrangements or our formulary processing arrangements. - *Home Delivery Pharmacy.* Our Express Scripts Pharmacy by Evernorth® ("Express Scripts Pharmacy") offers free standard shipping of medications nationwide, usually in a 90-day supply, directly to the customer's home and allows for automatic refills on eligible medications and unrestricted telephone access to customer care advocates and specially trained pharmacists. The Home Delivery Pharmacy operations consist of 13 licensed pharmacies, including 4 fulfillment pharmacies. Our fulfillment pharmacies are located in Arizona, Indiana, Missouri and New Jersey. ### Specialty and Care Services - *Specialty Pharmacy.* Specialty medications are primarily characterized as high-cost medications for the treatment of complex and rare diseases. These medications broadly include those with frequent dosing adjustments, intensive clinical monitoring, the need for customer training, specialized product administration requirements or medications limited to certain specialty pharmacy networks by manufacturers. The front-end of our pharmacy, anchored by Accredo by Evernorth® ("Accredo"), is organized into Therapeutic Resource Centers, where pharmacists focus their practice of pharmacy by condition. Accredo provides support for customers through our specially trained clinicians, network of in-home nursing services, nationwide footprint, drug reimbursement services and highly tailored clinical care programs. Our Specialty Pharmacy operations consist of 35 licensed pharmacies. - *Specialty Distribution.* CuraScript SD by Evernorth® is a specialty distributor of pharmaceuticals and medical supplies (including injectable and infusible pharmaceuticals and medications to treat specialty and rare or orphan diseases) directly to health care providers, clinics and hospitals in the United States for office or clinic administration. We provide distribution services primarily to health care providers who treat customers with chronic diseases and regularly order costly specialty pharmaceuticals. This business operates three distribution centers and ships most products overnight within the United States. It is a contracted supplier with most major group purchasing organizations and leverages its distribution platform to operate as a third-party logistics provider for several pharmaceutical companies. - *Care Services.* We offer clinical programs to help our clients, including third-party administrators, drive better whole-person health outcomes through our Care Delivery (MD Live by Evernorth® ("MD Live") virtual care, in-home care and physical primary care) and Care Management (EviCore by Evernorth® ("EviCore"), benefits management, behavioral health services, network services and health coaching capabilities) offerings. ### Clients and Customers We provide products and services in the Evernorth Health Services segment to clients and customers, as described below. - *Clients.* We provide services to managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans, government health programs, providers, clinics, hospitals and others. We provide services to a majority of clients in our Cigna Healthcare segment. - *Customers.* Prescription drugs are dispensed to patients connected to the service offerings we provide to clients. Prescription drugs are dispensed primarily through networks of retail pharmacies under nonexclusive contracts with us and via home delivery pharmacies, including Express Scripts Pharmacy, and specialty pharmacies, including Accredo. Evernorth Health Services has three clients that each drive significant revenues for the segment: - Express Scripts and Centene Corporation ("Centene") have a multi-year agreement, which began January 1, 2024, to manage pharmacy benefit services for Centene's customers, providing them with access to the extensive Express Scripts national network of retail pharmacies. - Express Scripts and Prime Therapeutics LLC ("Prime") have an agreement to deliver improved choice and affordability for Prime's clients and customers by enhancing retail pharmacy networks, providing access to Accredo and Express Scripts Pharmacy, and providing pharmaceutical manufacturer value. - The Department of Defense ("DoD") TRICARE® is the military health care program available to active-duty service members, active-duty family members, National Guard and Reserve members and their family members, retirees and retiree family members, survivors and certain former spouses. ### Competition The primary competitive factors in the industry include the ability to negotiate with retail pharmacies to ensure retail pharmacy networks meet the needs of clients and customers; provide home delivery and specialty pharmacy services; negotiate pricing of prescription drugs with drug manufacturers; manage cost and quality of specialty drugs; specialize in claim adjudication and benefit administration; improve access, outcomes, and efficiencies within the health care ecosystem; deliver quality primary and behavioral care in virtual-led hybrid settings, in the workplace and in home-based settings; navigate the complexities of government-reimbursed business including Medicare, Medicaid and the public exchanges; and use the information obtained about drug, behavioral and medical utilization patterns and consumer behavior to reduce costs for clients and customers and assess the level of service provided. Our focus on improving the health and vitality of those we serve will allow us to further differentiate ourselves from our primary competitors. Our primary competitors include independent and managed care pharmacy benefit managers; retail, home delivery and specialty pharmacies; specialty drug distributors; health plans; third-party benefit administrators; group purchasing organizations; clinical solutions companies, health care data analytics companies; and care services providers. ### Suppliers We maintain an inventory of brand-name and generic pharmaceuticals in our home delivery pharmacies, specialty pharmacies and specialty distributor. Our specialty pharmacies and specialty distributor also carry biopharmaceutical products to meet the needs of our customers, including pharmaceuticals for the treatment of rare or chronic diseases; if a drug is not in our inventory, we can generally obtain it from a supplier within a reasonable amount of time. We purchase pharmaceuticals either directly from manufacturers or through authorized wholesalers. Evernorth Health Services uses one wholesaler for approximately half of our pharmaceutical purchases, but holds contracts with other wholesalers if needs for an alternate source arise. Generic pharmaceuticals are generally purchased directly from manufacturers. ### CIGNA HEALTHCARE Cigna Healthcare includes the U.S. Healthcare and International Health operating segments, which provide comprehensive medical plan services and coordinated solutions to clients and customers. Excluding the businesses pending divestiture to Health Care Service Corporation ("HCSC"), Cigna Healthcare is predominately comprised of foundational growth businesses. ### How We Deliver - **Multifaceted approach to affordability** with a focus on high-quality care to lower costs and drive better outcomes through deep collaborative partnerships with high-performing providers and superior clinical expertise and analytics to guide customers to the highest quality, most affordable sites of care. - **Talented and experienced people** who bring a highly consultative orientation to market and partner with clients to understand their business and goals to address the unique health needs of their population. - **Modular portfolio of products, services and funding options** that provides choice and enables us to build and tailor a unique combination to meet the specific needs of each client. - **Partnering with Evernorth to drive cross-enterprise leverage** to deliver a spectrum of integrated solutions that create value and savings for our customers, clients and partners. We offer administrative services only ("ASO") and insurance funding solutions to employers, groups and individuals along with other health care benefits and solutions to improve the quality of care, lower costs and help customers achieve better health outcomes. Funding solutions, referring to the entity assuming financial risk, are described in the Premiums and Fees section below. ### Principal Products and Services ### U.S. Healthcare Medical Plans - *Employer Medical Plans* include health maintenance organizations ("HMOs"), LocalPlus®, Network and Open Access Plus offered through our insurance companies, and third-party administrators ("TPAs"). These plans use cost-sharing incentives to encourage the use of "in-network" rather than "out-of-network" health care providers. Preferred Provider Organization ("PPO") plan offerings feature broader provider access than the other plans, do not require referrals and typically have a higher cost-share for out-of-network services. Plans are offered nationwide, and our funding solutions include ASO (self-funded), insured guaranteed cost ("GC") and insured experience rated ("ER"). - *Consumer-Driven Products* are paired with employer medical plans and offer customers a tax-advantaged way to pay for eligible health care expenses. Health savings accounts, health reimbursement accounts and flexible spending accounts encourage customers to play an active role in managing their health and health care costs. - *Individual and Family Plans ("IFPs")* are Patient Protection and Affordable Care Act ("ACA") compliant exclusive provider organizations ("EPOs") or HMO plans marketed to individuals under age 65 without access to health care coverage through an employer or government program such as Medicare or Medicaid. Customers receive comprehensive health care benefits and have access to a local network of health care providers who have been selected with cost and quality in mind. Plans are currently offered in 11 states with a GC funding solution. ### Held for Sale In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment to HCSC subject to applicable regulatory approvals and other customary closing conditions, including adjustments to align with the final balance sheet of the divested businesses (the "HCSC transaction"). See Note 5 to the Consolidated Financial Statements for further information. - *Medicare Advantage Plans* allow Medicare-eligible customers to receive health care benefits, including prescription drugs, through a managed care health plan. Our plans include HMO and PPO plans with a GC funding solution marketed to individuals and qualified employer groups in 29 states and the District of Columbia. - *Medicare Individual Stand-Alone Prescription Drug ("Part D") Plans* provide a number of prescription drug plan options, as well as service and information support to Medicare-eligible individuals. Our stand-alone plans offer the coverage of Medicare combined with the flexibility to select a product that provides enhanced benefits and a formulary that aligns with the individual's needs. Plans are offered nationwide with a GC funding solution. - *Medicare Supplement Plans* provide Medicare-eligible customers with federally standardized Medigap plans. Customers may select among the various Center for Medicare and Medicaid Services ("CMS") standardized plan designs to meet their unique needs and may visit any health care provider or facility that accepts Medicare throughout the United States without the need for a referral. Plans are offered in 48 states and the District of Columbia with a GC funding solution. ### U.S. Healthcare Benefits and Solutions The following benefits and solutions are offered nationwide with various funding solutions to enhance the benefits from our health care medical plans. - *Behavioral Health* solutions consist of a broad national network of providers, including one of the largest virtual networks in the United States, specialty case and utilization management, a 24/7-accessible crisis intervention phone line, employee assistance programs, and work/life programs. - *Consumer Health Engagement* solutions include an array of health management, disease management and wellness programs to improve customers' health and well-being. - *Cost Containment Programs* are designed to reduce the cost of covered health care services and supplies by reducing out-of-network costs, protecting customers from balance billing and educating customers regarding the availability of lower cost in-network services. We negotiate discounts with out-of-network providers, review provider bills and recover overpayments. - *Dental* solutions include HMO plans, PPO plans, EPO plans, traditional indemnity plans and a discount program. Employers and other groups may purchase our products as standalone products or in conjunction with medical products. IFP standalone dental PPO plans are available in 49 states and sold to individuals under age 65 and retirees without access to dental coverage through an employer or a government program. - *Pharmacy Management* solutions and benefits may be combined with our medical and behavioral health offerings by leveraging the capabilities of Evernorth Health Services. - *Stop-Loss* insurance coverage is offered to self-funded clients whose group health plans are administered by Cigna Healthcare. Stop-loss insurance provides reimbursement for claims in excess of a predetermined amount for individuals, the entire group or both. ### International Health - *Global Health Care* offerings include medical, dental, pharmacy, vision, life, accidental death and dismemberment, and disability risks. We provide products and services that meet the needs of multinational employers, intergovernmental and nongovernmental organizations, and globally mobile individuals with a focus on keeping employees healthy and productive. Products and services are offered worldwide except as limited by applicable law and include ASO, GC and ER funding solutions. - *Local Health Care* offerings include medical, dental, pharmacy and vision as well as life coverage. Customers include employers and individuals located in specific geographies (China, Singapore, Hong Kong, Spain and India, along with various countries in the Middle East) where the products and services are purchased. Offerings include ASO, GC and ER funding solutions. ### Premiums and Fees - *ASO.* Plan sponsors (i.e., employers, unions and other groups) create self-funded group health plans to fund all claims and may purchase stop-loss insurance to limit exposure. We earn fees for providing access to our participating provider networks, claims administration services, and other benefits and solutions. ASO arrangements represent approximately 26% of segment revenues and 74% of Cigna Healthcare medical customers. - *Insured.* *GC and ER.* Individual and group insurance premium rates generally must be approved by the applicable state regulatory agency, and state or federal laws may restrict or limit the use of rating methods. Premium rates are established at the beginning of a policy period and may be based in whole or in part on prior experience and include estimates of future claims costs over the fixed contract period. With the exception of ER policies, we generally cannot adjust premium rates to reflect actual claims experience until the next policy period, and the policyholder does not share in actual claim experience. We retain any margin if costs are less than the premium charged (subject to minimum medical loss ratio ("MLR") rebate requirements) and bear the risk for costs in excess of the premium charged. *Medicare Advantage* (held for sale). We receive fixed monthly payments from CMS for each plan customer based on customer demographic data and actual customer health risk factors and may earn additional revenue from CMS related to quality performance measures ("Star Ratings"). Premiums may be charged to customers when the plan premium exceeds the revenue determined by CMS. The ACA subjects individual and small group policy rate increases above an identified threshold to review by the United States Department of Health and Human Services ("HHS"), and our U.S. Healthcare medical plans are subject to minimum MLR requirements. The MLR represents the percentage of premiums used to pay claims and expenses for activities that improve the quality of care. If we do not satisfy the prescribed MLR, statutes require premium refunds to policyholders or to CMS. GC and ER insured arrangements, including Medicare Advantage, represent approximately 74% of segment revenues and 26% of Cigna Healthcare medical customers. See the "Business – Regulation" section of this Form 10-K for additional information about MLR requirements, Star Ratings and risk adjustment programs. ### Market Segments *Cigna Healthcare* medical customers are comprised of the following market segments: - *National Accounts.* Employers with 3,000 or more eligible employees. - *Middle Market.* Employers with 500 to 2,999 eligible employees, solutions for third-party payors, Taft-Hartley plans and other groups. - *Select.* Employers with 51 to 499 eligible employees. - *Small.* Employers with 2 to 50 eligible employees. - *IFPs.* Individual health insurance coverage both on and off the public exchanges and individual dental plans for customers across various distribution channels. - *Medicare Advantage* (held for sale). Includes individuals who are Medicare-eligible, as well as employer group-sponsored post-65 retirees. Revenues from CMS are significant to the market segment. - *International Health.* Includes multinational employers and globally mobile individuals, and employers and individuals in specific countries outside of the United States. ### Clients and Customers We provide clients and customers with access to a mix of medical and other health care benefits and solutions. - *Clients.* Employers, TPAs, union-sponsored benefit plans, government health programs and other groups. - *Customers.* Individuals who access our offerings through an employer-sponsored plan, government-sponsored plan, individual plan or other insured group. ### Primary Distribution Channels - *Brokers and Consultants.* Sales representatives distribute our products and solutions to a broad group of brokerage and consulting firms as well as individuals. - *Direct.* Cigna Healthcare sales representatives distribute our products and solutions directly to employers, unions, and other groups or individuals. Various products may also be sold directly to insurance companies, HMOs and TPAs. - *Private Exchanges.* We partner with select private exchanges that provide employees of participating clients access to health insurance, targeting participation to those models that best align with our mission and value proposition. - *Public Exchanges.* Cigna Healthcare offers individual ACA-compliant policies through public health insurance exchanges in select geographies. ### Competition The primary competitive factors affecting our business are quality of care and cost-effectiveness of service and provider networks, effectiveness of medical care management, products that meet the needs of our clients and customers, total cost management, technology, and effectiveness of marketing and sales. Financial strength, as indicated by ratings issued by nationally recognized rating agencies, is also a competitive factor. Our health advocacy capabilities, holistic approach to consumer engagement, breadth of product offerings, and clinical care and health management capabilities along with an array of product funding solutions are competitive advantages. Our primary competitors include national insurers, local health plans, TPAs, dental insurers, independent and managed care pharmacy benefit managers, global insurers, and local non-U.S. insurers. ### Provider Networks and Partnerships - *Participating Provider Networks.* We provide our customers with a national network of participating health care providers, hospitals, and other facilities, pharmacies and providers of health care services and supplies. Our U.S. network has approximately 1.8 million physicians, including specialists, and over 6,000 hospitals. We have strategic alliances with several regional managed care organizations to gain access to their provider networks and discounts. - *Network Strength and Stability.* We successfully maintain a broad provider network with high levels of provider retention to ensure our customers have access to high-quality care at affordable, competitive rates. - *Provider Partnerships.* We partner with a variety of provider groups in value-based payment arrangements to continuously improve the quality of care for those we serve. With more than 200 arrangements with primary care groups, our flagship program is the Cigna Collaborative Accountable Care program, which rewards providers for improving quality outcomes and medical cost performance. We have approximately 100 arrangements with specialist groups across six different disciplines that include incentives for enhanced care coordination or reimbursements for meeting cost and quality goals. We also have contracts with more than 200 hospital systems, involving more than 800 hospitals, with reimbursements tied to quality metrics. - *Site of Care Optimization.* We encourage the use of clinically appropriate settings to reduce the cost of care while ensuring high-quality care and service through our clinical programs and partnership with EviCore. We expand access, reduce the cost of care and offer flexibility while supporting the patient/provider relationship by providing access to virtual care services, including MD Live. ### OTHER OPERATIONS Other Operations comprises the remainder of our business operations, which includes certain continuing, run-off and other non-strategic businesses. Other Operations also included the international life, accident and supplemental benefits businesses and our interest in a joint venture in Türkiye prior to the divestiture of these businesses in 2022. ### Continuing Business ***Corporate-Owned Life Insurance.*** The principal products of the corporate-owned life insurance ("COLI") business are permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. Permanent life insurance provides coverage that, when adequately funded, does not expire after a term of years. The contracts are primarily nonparticipating universal life policies. Fees for universal life insurance products consist primarily of mortality and administrative charges assessed against the policyholder's fund balance. Interest credited and mortality charges for universal life and mortality charges on variable universal life may be adjusted prospectively to reflect expected interest and mortality experience. To reduce our exposure to large individual losses, we purchase reinsurance from unaffiliated reinsurers. ### Run-off Businesses ***Settlement Annuity Business.*** Our settlement annuity business is a closed, run-off block of single premium annuity contracts. These contracts are primarily liability settlements, with approximately 12% of the liabilities associated with guaranteed payments not contingent on survivorship. Non-guaranteed payments are contingent on the survival of one or more parties involved in the settlement. ***Reinsurance.*** Our reinsurance operations are an inactive business in run-off. In February 2013, we effectively exited the variable annuity reinsurance business by reinsuring 100% of our future exposures, net of retrocessional arrangements in place at that time, up to a specified limit. For additional information regarding this reinsurance transaction and the arrangements that secure our reinsurance recoverables, see Note 10 to the Consolidated Financial Statements. ***Individual Life Insurance and Annuity and Retirement Benefits Businesses.*** The individual life insurance and annuity business and the retirement benefits business were sold through reinsurance agreements in 1998 and 2004, respectively. For more information regarding the arrangements that secure our reinsurance recoverables for the retirement benefits business, see Note 10 to the Consolidated Financial Statements. ### MISCELLANEOUS - Revenues from a single pharmacy benefit client were approximately 16% of consolidated revenues for the year ended December 31, 2024. These amounts were reported in the Evernorth Health Services segment. - Revenues from U.S. Federal Government agencies, under a number of contracts, were approximately 11%, 15% and 14% of consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts were reported in the Evernorth Health Services and Cigna Healthcare segments. - The Company does not rely on business from one or a few brokers or agents. ### INVESTMENT MANAGEMENT Our investment operations provide investment management and related services for our various businesses, including the insurance-related invested assets. For additional information about invested assets, see the "Investment Assets" section of the MD&A and Notes 11 and 12 to the Consolidated Financial Statements. We manage our investment portfolios to reflect the underlying characteristics of related insurance and contractholder liabilities and capital requirements, as well as regulatory and tax considerations pertaining to those liabilities and state investment laws. Insurance and contractholder liabilities range from short-duration health care products to longer-term obligations associated with COLI products and the run-off settlement annuity business. Assets supporting these liabilities are managed in segregated investment portfolios to facilitate matching of asset durations and cash flows to those of corresponding liabilities. Investment results are affected by the amount and timing of cash available for investment, economic and market conditions and asset allocation decisions. We routinely monitor and evaluate the status of our investments, obtaining and analyzing relevant investment-specific information and assessing current economic conditions, trends in capital markets and other factors, such as industry-sector, geographic and property-specific information. ***The Cigna Group Ventures.*** In addition to the core insurance and operating investment portfolios described above, The Cigna Group has committed $700 million in aggregate since the formation of The Cigna Group Ventures, our strategic corporate venture fund that invests in promising startups and growth-stage companies making groundbreaking progress in three strategic areas: data and technology, digital health, and care delivery. Through these partnerships, we collaborate, innovate and develop new solutions to improve the health and vitality of those we serve. ### DIGITAL, DATA AND TECHNOLOGY The Cigna Group investments in digital, data and technology are focused on cultivating robust digital-first capabilities to better engage with customers and stakeholders. ***Innovation.*** Customer-centric, digital-first, virtual-led vision for health care remains at the forefront of our priorities. The advancement of our internal innovative capabilities and strategic partnerships continues to produce new and more effective ways to engage with our customers to help close gaps in care, optimize treatment and improve outcomes. At The Cigna Group, we use artificial intelligence ("AI") to support health care transformation by helping to enable the next generation of accessible, effective, affordable and enhanced health care solutions. AI models can facilitate personalized solutions for individuals, inform earlier interventions and simplify health care experiences. We do not view AI as a replacement for expert decisions made by physicians or employees at The Cigna Group. Given this, we consider most of the AI models we use as augmented intelligence, providing information to human experts for further consideration, in combination with many other factors evaluated in care and benefit administration decisions. To ensure our practices and solutions are consistent with our commitment to health equity and to facilitate compliance with applicable laws and regulations, we have a dedicated team and governance structure in place, known as Enterprise Model Governance ("EMG"). Our EMG team oversees the development, deployment and monitoring of AI models - driven by our Responsible AI Principles: validity and reliability; safety; privacy; fairness; transparency; and accountability. EMG is governed by the EMG Board, comprised of senior leaders from across the company, with representation from business, clinical, privacy, legal, internal audit, information protection and other departments. The EMG Board oversees an enterprise-wide model approval and governance process for review of AI models in use or in development across the enterprise. We also have established comprehensive governance processes for new capabilities, such as generative AI ("Gen AI"). Our AI Center of Enablement ("AI COE") expands on EMG and brings together individuals from across our technology, privacy, data governance, security, legal, compliance, marketing and other teams to evaluate and approve Gen AI use cases. The AI COE ensures these use cases align with our Responsible AI Principles and adhere to health care privacy and security requirements. ***Data and Analytics.*** We conduct timely, rigorous and objective research and analysis that informs evidence-based medical and pharmacy benefit management decisions and evaluates the clinical, economic and individual impact of enhanced benefit designs and programs, ultimately resulting in rich, integrated data that helps to provide differentiated outcomes. The combination of our predictive analytics, and our machine learning ("ML") and deep learning capabilities create actionable intelligence that informs decision-making of our health care professionals, improves operational efficiency and enables greater innovation. Our data-driven approach to behavioral health provides personalized and customized care across the entire continuum for the populations we serve. These solutions predict emerging health needs, close gaps in care and drive cost savings, all while empowering whole-person and whole-family health. ***Digital.*** Our digital health focus has shown value across the enterprise by imagining the future of health care and creating engaging experiences that give customers the right information at the right time. We deliver resource-efficient products and features at scale and on time with a commitment to security, resiliency and compliance. At its core, digital is a connected ecosystem that serves customers, clients and providers, and it paves the way to direct-to-consumer relationships and new growth opportunities. Our digital strategy focuses on the drive from analog to digital, which complements the growth strategy of The Cigna Group, creates efficiency and amplifies the value of existing offerings, as well as creates option value with industry-leading personalization and precision to drive better health and business outcomes. Cybersecurity protections continue to be a top priority across The Cigna Group digital offerings to further strengthen our security posture and grow the trust of those we serve. See Part I. Item 1C - "Cybersecurity" of this Form 10-K for additional information regarding our cybersecurity practices and governance. ***Technology Operations.*** Our technology team supports the various information systems essential to our operations, including the health benefit claims processing systems and specialty and home delivery pharmacy systems. Uninterrupted point-of-sale electronic retail pharmacy claims processing is a significant operational requirement for our business. We believe we have substantial capacity for growth in our U.S. pharmacy claims processing facilities. Our pharmacy technology platform allows us to safely, rapidly and accurately adjudicate over two billion adjusted prescriptions annually. Our technology helps retail pharmacies focus on patient care, and our real-time safety checks help avoid medication errors. The Cigna Group companies hold over 480 U.S. patents. We use these patents to protect our proprietary technological advances and to differentiate ourselves in the market. We are not substantially dependent on any single patent or group of related patents. We are not aware of any facts that could materially impact the continuing use of our intellectual property. ### HUMAN CAPITAL MANAGEMENT The mission of The Cigna Group is to improve the health and vitality of those we serve. A healthy and diverse global workforce is essential to achieving our mission and our business growth strategies. We continually invest in our global workforce to support our employees' health and vitality, provide fair and market-competitive pay, and foster growth and development for every employee. As of the end of 2024, we had approximately 73,500 employees, with approximately 90% of our employees based in the United States. Approximately 97% of our employees are full-time. The Cigna Group has a long-standing and deep commitment to fair opportunity for all, regardless of gender, race or ethnicity. As of the end of 2024, our global workforce was approximately 70% women and 30% men. Approximately 41% of our employees in the United States were ethnic minorities. ***Health, Vitality and Other Benefits.*** Tending to our employees' health and vitality is a critical business imperative for our company and one of the most important investments in our enterprise that we make each year. We believe that when we support our employees' health and well-being, they are more productive and engaged in driving our mission and business strategy forward, thereby creating shareholder value. In 2024, The Cigna Group invested approximately 19% of total payroll in health, well-being and other benefits, including life and disability programs, 401(k) contributions, and retirement-related benefits for our employees in the United States. In addition to traditional medical and pharmacy benefits, we provide multidimensional wellness programming to support the physical, mental, financial, and social health as well as overall vitality of employees. Additionally, we encourage employees to self-report additional demographic information, including whether they are a military veteran or living with a disability, so that we can better support the health and vitality of every employee in light of their unique background, experiences and perspectives. ***Talent Acquisition, Development and Retention.*** Our talent acquisition and rewards strategies are designed to attract and retain skilled employees who are engaged in our mission. We are committed to attracting and recruiting key talent from all backgrounds into positions at all levels of the enterprise, including underrepresented groups in various leadership roles across the business. Our compensation program, rooted in our pay-for-performance philosophy, aims to provide market-competitive base salaries and incentives that reward contributions that advance the Company's strategy and mission. In 2024, the voluntary turnover rate was approximately 9% for all employees. Our compensation practices, rooted in our pay-for-performance philosophy, promote fair and competitive pay through measures such as benchmarking compensation by role, eliminating inquiries regarding applicants' compensation history from the hiring process and monitoring for potential disparities. Our most recent pay equity analysis among our U.S. employees, conducted in 2025, illustrated that female employees of The Cigna Group earn more than 99 cents for every dollar earned by similarly situated male employees, and ethnic minority employees (which includes Black/African American, Hispanic or Latino/a, Pacific Islander. and American Indian/Alaskan employees) earn more than 99 cents for every dollar earned by similarly situated white employees. We also analyzed gender pay on a global basis and found that across the entire Company, female employees at The Cigna Group earn more than 99 cents for every dollar earned by similarly situated male employees. Our online learning platform and career development tools, including a career portal and career planning tool, offer a broad range of training, education and development resources to all employees. In 2024, based on internal data, employees on average engaged in 37 hours of learning through these resources. Our agile leadership development strategy, anchored by The Cigna Group Leader Profile and aligned with our mission and enterprise goals, serves to cultivate leadership capabilities for people leaders and critical segments across our organization through innovative programs and resources. The Cigna Group also offers an education reimbursement program for both full- and part-time employees who meet the continuing education criteria. We believe these strategies and programs contribute to employee engagement and retention and prepare our employees to meet our needs now and in the future. ### ENVIRONMENTAL, SOCIAL AND GOVERNANCE The Cigna Group environmental, social and governance framework is structured around four connected pillars that underscore our enterprise mission to improve the health and vitality of those we serve. We drive action through this framework to deliver on our purpose and performance vision: to transform the ecosystem of health into one that is well-functioning, sustainable, accessible and equitable - advancing better health for all. Our commitment to this vision guides us in our multidimensional value-creation strategy as we strive to meet the needs of our many stakeholders. The four pillars of this framework are as follows: ***Healthy Society.*** We are committed to understanding and addressing social determinants of health and improving medical quality and access while lowering health risks, promoting preventive health interventions and coordinating all aspects of care. We drive progress by aligning our products and services with value-based care models, leveraging integrated benefits, managing drug costs through innovation, expanding digital offerings and reviewing coverage policies for health equity. ***Healthy Workforce.*** We believe that employers play a vital role in the health care system, and we strive to be a model for others by prioritizing and investing in the health and vitality of employees within our own company. We aim to cultivate a purpose- and performance-driven workforce that is equipped and empowered to drive growth and innovation across our diverse businesses. See further discussion of this pillar within Part I, Item 1 "Human Capital Management" section above. ***Healthy Environment.*** We believe that responsible environmental stewardship can improve health and vitality and also makes sound business sense. We strive to identify new efficiencies and make strategic investments that reduce our environmental impacts and our operating costs. ***Healthy Company.*** We have a deep and long-held commitment to strong governance as well as ethical and resilient business practices. This includes protecting the sensitive data of our clients and customers by ensuring cybersecurity incident response preparedness, supporting a responsible supply chain and committing to increasing our annual diverse supplier spend. ### REGULATION We are regulated by federal, state and international legislative and executive bodies and agencies, which generally have discretion to issue regulations and interpret and enforce laws and rules. These regulations can vary significantly from jurisdiction to jurisdiction, and the regulations and interpretations thereof may also change periodically. We expect continued legislative and regulatory debate of issues related to our businesses, and executive, judicial or legislative intervention could further impact the regulatory landscape for the health services industry. Our international subsidiaries face an increasingly complex regulatory dynamic, including as a result of rigorous regulations and the impact of geopolitical developments or tensions. Many aspects of our business are directly regulated by federal and state laws and administrative agencies, such as HHS, CMS, the Internal Revenue Service ("IRS"), the U.S. Departments of Labor ("DOL") and Treasury, the Office of Personnel Management ("OPM"), the Federal Trade Commission ("FTC"), the SEC, the Office of the National Coordinator for Health Information Technology, state departments of insurance and state boards of pharmacy. Our business practices may also be shaped by enforcement actions of federal agencies, such as the Department of Justice ("DOJ"), state agencies and judicial decisions. In addition, aspects of our business are subject to indirect regulation. The self-funded benefit plans sponsored by our U.S. employer clients are regulated under federal law. These self-funded clients expect us to administer their plans in compliance with the regulatory requirements applicable to them. Our business operations and the books and records of our regulated businesses are routinely subject to regulatory examination and audit at regular intervals by state insurance and HMO regulatory agencies, state boards of pharmacy, CMS, DOL and OPM to assess compliance with applicable laws and regulations. Our operations are also subject to nonroutine examinations, audits and investigations by various state and federal regulatory agencies, generally as the result of a complaint. In addition, we may be implicated in investigations of our clients whose group benefit plans we administer on their behalf. As a result, we routinely receive subpoenas and other demands or requests for information from various state insurance and HMO regulatory agencies, state attorneys general, the HHS Office of Inspector General ("HHS-OIG"), the DOJ, the FTC, the DOL, and other state, federal and international authorities. We may also be called upon by members of the U.S. Congress to provide information regarding certain of our business practices. If The Cigna Group is determined to have failed to comply with applicable laws or regulations, these examinations, audits, investigations, reviews, subpoenas and demands may (a) result in fines, penalties, injunctions, consent orders or other settlement agreements (such as corporate integrity agreements or loss of licensure); (b) suspend or exclude us from participation in government programs or limit our ability to sell or market our products; (c) require changes in business practices; (d) damage relationships with the agencies that regulate us and affect our ability to secure regulatory approvals necessary for the operation of our business; or (e) damage our brand and reputation. Even where we believe that we are in compliance with the various laws and regulations, any enforcement actions by federal, state or international government officials alleging noncompliance with these rules and regulations could subject us to penalties or restructuring or reorganization of our business. For a discussion of the risks related to our compliance with these laws and regulations, please see the "Risk Factors" section located in Part I, Item 1A of this Form 10-K. ### Consolidated Appropriations Act, 2023 The Consolidated Appropriations Act, 2023, ended federal medical assistance percentage increases that were in effect during the COVID-19 Public Health Emergency ("PHE"), which were tied to continuous coverage requirements for Medicaid enrollees during the PHE, and enabled states to restart Medicaid eligibility renewals and terminations for ineligible individuals. As a result, states resumed Medicaid redeterminations in April 2023 for the first time since the PHE began. Under the redeterminations, many beneficiaries are no longer eligible for Medicaid. As a result, some of the beneficiaries determined to be ineligible for Medicaid sought alternate coverage in the individual marketplace. ### The Patient Protection and Affordable Care Act The Patient Protection and Affordable Care Act and amendments to the law (collectively, "ACA") mandated broad changes to the U.S. health care system that affect insured and self-insured health benefit plans and pharmacy benefit managers ("PBMs"). Our business model is impacted by the ACA and may be impacted by additional, future changes to the ACA, including our relationships with current and future producers and health care providers, products, service providers and technologies. The ACA imposed, among other things, certain assessments on health insurers, created health insurance exchanges for individuals and small group employers to purchase insurance coverage, and implemented minimum MLRs for our Cigna Healthcare business. The ACA allows states to adopt MLR requirements that are more stringent than those established by the ACA. Other provisions of the ACA in effect include reduced Medicare Advantage payment rates, the requirement to cover preventive services with no enrollee cost-sharing, a ban on the use of lifetime and annual limits on the dollar amount of essential health benefits, increased restrictions on rescinding coverage, extended coverage of dependents up to age 26, restrictions on differential pricing, and certain pharmacy benefit transparency requirements. In 2021, in response to the COVID-19 pandemic, the federal government temporarily expanded eligibility for ACA subsidies to higher-income people who did not otherwise qualify and increased ACA subsidies for lower-income people who already qualified in 2021 and 2022, among other actions. The Inflation Reduction Act of 2022 extended the increased premium tax credits for individuals enrolled in ACA-qualified health plans through December 31, 2025. ### Medicare and Medicaid Regulations Through our subsidiaries, we offer individual and group Medicare Advantage, Medicare Prescription Drug and Medicare Supplement products. We also provide Medicare Part D-related products and services to other Medicare Part D sponsors, Medicare Advantage Prescription Drug Plans, and employers and clients offering Medicare Part D benefits to Medicare Part D eligible beneficiaries, including those dually eligible for Medicare and Medicaid benefits ("dual-eligible"). As part of our Medicare Advantage and Medicare Part D business, we contract with CMS to provide services to Medicare beneficiaries. We offer dual-eligible products and participate in state Medicaid programs directly or indirectly through our clients that are Medicaid managed care contractors. We also perform certain Medicaid subrogation services and certain delegated services for clients, including utilization management, which are regulated by federal and state laws. Our products and our participation in government-sponsored health care programs are regulated by CMS, state Medicaid agencies, HHS-OIG, DOJ, and other federal and state agencies, and we are subject to risks associated with audits of our performance and audits to determine compliance with contracts and regulations. Our ability to obtain payment (and the determination of the amount of such payments), market to, enroll and retain customers, and expand into new service areas is subject to compliance with CMS' numerous and complex regulations and requirements that are subject to administrative discretion, review and enforcement. For example, contracts with CMS for coverage of prescription drugs under Medicare Part D contain provisions for risk sharing, which affect our ultimate payments from CMS. Variances exceeding certain thresholds may require us to refund to CMS a portion of the payments we received. We expect federal and state agencies and third-party contractors, such as recovery audit contractors, to closely scrutinize our compliance with program and contractual requirements. Program terms and requirements may change because of rulemaking or enforcement activities, which could result in disruption in the marketplace. Noncompliance with these laws and regulations may result in significant consequences, including fines and penalties, enrollment sanctions, exclusion from the Medicare and Medicaid programs, limitations on expansion, restrictions on marketing our plans, corrections of improper payments and criminal penalties. CMS evaluates Medicare Advantage plans and Part D plans under its "Star Rating" system, which considers various measures adopted by CMS, including quality of care, preventive services, chronic illness management, coverage determinations and appeals, and customer satisfaction. Plans that perform very well are able to offer enhanced benefits, market more effectively and for longer periods of time than other plans, and obtain quality-bonus payments, with Medicare Advantage plans receiving a rating of four or more stars eligible for such payments. The Star Rating system is subject to change annually by CMS, which may make it more difficult to achieve and maintain four stars or greater. CMS provides risk-adjusted premium payments for Medicare Advantage plans based on our customer demographics and medical diagnoses, which may change based on the underlying health of our customers. Under the risk adjustment methodology, Medicare Advantage plans must collect and submit the necessary diagnosis code information from providers to CMS. We generally rely on providers to appropriately document their claims and other submissions with appropriate diagnoses from which we extract hierarchical condition codes to submit to CMS as the basis for our payments. CMS conducts audits to validate the risk adjustment data submitted by health plans. In 2023, CMS issued a final rule ("Final Rule") on its audit methodology and related policies for Risk Adjustment Data Validation ("RADV"), which is currently being challenged in federal court. The Final Rule codifies that CMS will use a statistically valid method for sampling and extrapolation of error rates and a decision not to apply a fee for service adjuster when determining RADV audit findings. Audits for payment years prior to 2018 are not subject to extrapolation. RADV audits for our contract years 2011 through 2015 are currently awaiting CMS finalization. The Company is not currently subject to RADV audits for 2018 and subsequent payment years. The DOJ is currently conducting industry-wide investigations of the risk adjustment data submission practices and business processes of several Medicare Advantage organizations. The Cigna Group was a party to such an investigation, which was settled during the third quarter of 2023 and is subject to a related Corporate Integrity Agreement (the "CIA"). In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment to HCSC. See Note 5 to the Consolidated Financial Statements for further information. ### Health Care Fraud and Abuse Laws Our products and services are subject to health care fraud, waste and abuse laws, including the federal False Claims Act ("False Claims Act"), state false claims acts, federal and state anti-kickback laws, and the federal Civil Monetary Penalties Law. These laws and related regulations prohibit a wide range of activities, including kickbacks in return for customer referrals, billing for unnecessary medical services, beneficiary inducement, upcoding and improper marketing. The regulations and contractual requirements in this area are complex, frequently modified, and subject to administrative discretion and judicial interpretation. Noncompliance with such laws may result in enforcement and other actions, including civil and criminal penalties, substantial financial liabilities (including treble damages under the False Claims Act), and exclusion from participation in federal and state health care programs. Additionally, private individuals have brought and may bring *qui tam*, or "whistleblower," suits under the False Claims Act, which authorizes the payment of a portion of any recovery to the individual bringing suit. Any changes to such laws, and the implementation of any regulations that would eliminate the anti-kickback regulatory safe harbors on which we rely, may impact our ability to engage in certain arrangements, such as price concessions, including rebates, that are offered by pharmaceutical manufacturers to plan sponsors or PBMs under the Medicare Part D program. ### Government Procurement Regulations We have a contract with the U.S. DoD that subjects us to applicable Federal Acquisition Regulations ("FAR") and the DoD FAR Supplement, which govern federal government contracts. Further, there are other federal and state laws applicable to our DoD arrangement and our arrangements with other clients that may be subject to government procurement regulations. In addition, certain of our clients participate as contracting carriers in the Federal Employees Health Benefits Program administered by the OPM, which includes various pharmacy benefit management standards. ### Employee Retirement Income Security Act Our domestic subsidiaries sell most of their products and services to sponsors of employee benefit plans that are governed by the Employee Retirement Income Security Act ("ERISA"). ERISA is a complex set of federal laws and regulations enforced by the IRS and the DOL, as well as the courts. ERISA regulates certain aspects of the relationship between us, the employers that maintain employee welfare benefit plans subject to ERISA and the participants in such plans. Certain of our domestic subsidiaries are also subject to requirements imposed by ERISA affecting claim payment and appeals procedures for individual health insurance and insured and self-insured group health plans and for the insured plans we administer. ### Privacy, Security and Data Standards Regulations On the federal level, we are subject to a number of sector-specific regulations related to the creation, collection, dissemination, receipt, maintenance, protection, use, transmission, disclosure, privacy, confidentiality, security, availability, integrity, processing and disposal of protected health information ("PHI") and other personally identifiable information ("PII"). The federal Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations that implement such laws (collectively, "HIPAA") impose requirements on covered entities and business associates (and we are both) that address the privacy and security of PHI, regulate permissible uses and disclosures of PHI, and impose breach notification requirements. Violations of HIPAA may result in enforcement actions, civil and criminal penalties and settlement, resolution and monitoring agreements. State attorneys general may also bring civil actions seeking injunctions or damages in response to violations of HIPAA that threaten the privacy of state residents. We may also be held liable under HIPAA for violations by our vendors. There can be no assurance that we will not be the subject of an investigation, audit or compliance review regarding our compliance with HIPAA. HIPAA does not preempt more stringent state health privacy laws and regulations, which may protect the health information of certain individuals, such as minors, and certain types of sensitive health information, such as transgender care, HIV/AIDS status, reproductive health information, genetic information, and mental and behavioral health. Other U.S. federal and state consumer privacy laws typically exempt data and/or entities subject to HIPAA, but several states, such as Washington, Nevada and Connecticut, have recently enacted privacy laws to protect consumer health data and require consent for the collection, use and sharing of consumer health data. These laws apply to data that is collected outside the scope of HIPAA. In addition, the California Consumer Privacy Act, as amended by the California Privacy Act ("CCPA"), became effective on January 1, 2020, and applies to data that is collected outside the scope of HIPAA (e.g., employee and business contact information). The CCPA increased the privacy protections afforded to California residents with respect to PII that falls outside the scope of HIPAA, including by providing such residents certain rights with respect to their PII and limiting how we may collect and process such residents' PII. All 50 U.S. states have laws requiring companies to notify individuals and state regulatory authorities in the event of certain data breaches. These laws and others may impact our businesses and practices. The federal government has also enacted final regulations on interoperability and information blocking to support the seamless and secure access, exchange and use of electronic health information by and between patients, enrollees and entities, such as payors and health care providers. The regulations impact how industry participants, including us, comply with disclosure requirements and share information with individuals and other health care organizations. The federal Gramm-Leach-Bliley Act and its implementing regulations generally place restrictions on the disclosure of nonpublic information to nonaffiliated third parties and requires financial institutions, including insurers, to provide customers with notice regarding how their nonpublic personal information is used, including an opportunity to "opt out" of certain disclosures. State departments of insurance and certain federal agencies adopted implementing regulations as required by federal law. Additionally, under Section 5 of the Federal Trade Commission Act ("FTC Act"), the FTC has jurisdiction over certain privacy and security practices deemed unfair and deceptive acts and practices in or affecting commerce, which includes unfair and deceptive practices with respect to consumer privacy rights and safeguarding of PHI and PII. In addition to the FTC Act, the FTC also enforces other federal laws relating to consumers' privacy and security. The FTC has also been active with respect to companies' use of big data and AI, specifically ensuring fair and equitable use of these tools, and the FTC has named AI as an area of enforcement focus. U.S. state legislatures and regulators are similarly interested in the use of AI, particularly as it is used in modeling, and a handful of states have either passed legislation or issued regulatory guidance concerning AI. Additionally, the National Association of Insurance Commissioners ("NAIC"), an organization of state insurance regulators, recently established the Innovation, Cybersecurity and Technology Committee to provide a forum for regulators to learn about, monitor and confer on emerging technology issues, including, among others, cybersecurity and AI. State Departments of Insurance and other state government agencies and legislatures are increasingly aware and active in providing guidance in the AI space. The Cybersecurity Information Sharing Act of 2015 encouraged organizations to share cyber threat indicators with the federal government and, among other things, directed HHS to develop a set of voluntary cybersecurity best practices for organizations in the health care industry. States have also begun to issue regulations specifically related to cybersecurity, which may differ or conflict from state to state. In October 2017, the NAIC adopted the Insurance Data Security Model Law, which creates rules for insurers and other covered entities addressing data security, investigation and notification of breaches. This includes maintaining an information security program based on ongoing risk assessment, overseeing third-party service providers, investigating data breaches and notifying regulators of a cybersecurity event. As the model law is intended to serve as model legislation only, states will need to enact legislation for the model law to become mandatory and enforceable. To date, 21 states have enacted some form of the model law. Over the past several years, the federal government has increasingly focused on the cybersecurity requirements applicable to government contractors, including enhanced guidance and regulation. These include compliance with the Privacy Act of 1974, the Defense Federal Acquisition Regulation Supplement cybersecurity requirements, the Cybersecurity Maturity Model Certification (going into effect over the next four years and based on the National Institute of Standards and Technology ("NIST") standards), the Federal Information Security Modernization Act and the White House's 2021 Executive Order on Improving the Nation's Cybersecurity. In addition, we are or may become subject to international laws, rules and regulations governing privacy, data protection, information security, AI and wider data regulation, such as the European Union's General Data Protection Regulation ("GDPR"), Artificial Intelligence Act and Digital Operational Resilience Act, which can be more stringent than those in the United States. Complying with these laws may increase our compliance costs or necessitate changes to our business activities, and any failure to comply could result in regulatory investigations, fines or other penalties. Some non-U.S. jurisdictions are also instituting data residency regulations requiring that data be maintained within the respective jurisdiction or otherwise restricting transfer of personal data across borders unless specified regulatory requirements are met. ### Consumer Protection Laws We engage in direct-to-consumer activities and are therefore subject to federal and state regulations applicable to electronic communications and other consumer protection laws and regulations, such as the Telephone Consumer Protection Act and the CAN-SPAM Act. We face increased risk under such laws and may be subject to consumer or other lawsuits, penalties, enforcement actions and sanctions. The FTC and state attorneys general are also increasingly exercising their regulatory and enforcement authorities in the areas of consumer privacy and data security. State and federal policymakers have taken actions intended to increase transparency and predictability of health care costs for consumers. For example, the Transparency in Coverage rule issued by the HHS, the DOL and the Department of the Treasury now requires most group health plans and health insurance issuers in the individual and group markets to publicly disclose price and cost-sharing information for all items and services to participants and enrollees. Congress also passed the No Surprises Act, which prohibits health care providers, in certain situations, from balance billing the patient and requires that they work directly with insurers to agree on out-of-network reimbursement, including utilizing an independent dispute resolution process outlined in the act. Many states already have addressed balance billing or surprise medical bills. These laws and regulations vary in their approach, resulting in different impacts on the health care system as a whole. Additionally, most states have consumer protection laws that have been the basis for investigations and multistate settlements relating to financial incentives provided by drug manufacturers to retail pharmacies in connection with product conversion programs. Such statutes have also been cited as the basis for claims or investigations by state attorneys general relative to privacy and data security. ### Office of Foreign Assets Control Sanctions and Anti-Money Laundering We are also subject to regulation by the Office of Foreign Assets Control of the U.S. Department of the Treasury, which administers and enforces economic and trade sanctions against targeted foreign jurisdictions and regimes based on U.S. foreign policy and national security goals. Certain of our products are subject to the Department of the Treasury anti-money laundering regulations under the Bank Secrecy Act. In addition, we are subject to similar regulations in non-U.S. jurisdictions in which we operate. ### Corporate Practice of Medicine and Other Laws Many states in which our subsidiaries operate limit the practice of medicine to licensed individuals or professional organizations comprised of licensed individuals, and business corporations generally may not exercise control over the medical decisions of physicians. Statutes, regulations, and judicial and regulatory interpretations relating to the practice of medicine, fee-splitting between physicians, and referral sources and similar issues vary widely from state to state and are subject to change and varying interpretations. We believe that our health services operations comply with applicable state statutes regarding corporate practice of medicine, fee-splitting and similar issues. However, any enforcement actions by governmental officials alleging noncompliance with these statutes could subject us to penalties or restructuring or reorganization of our business. ### Laws and Legislation Affecting Pharmacy Benefit Plan Design, Administration and Pharmacy Network Access Some states have enacted laws that prohibit plan sponsors from implementing certain restrictive benefit plan design features, and many states have laws or have introduced legislation to regulate various aspects of plans, including provisions relating to the pharmacy benefit. Some states have also enacted legislation that can negatively impact the use of cost-saving network configurations for plan sponsors, such as limiting the implementation of pharmacy benefit designs and reimbursement structures that leverage affiliate pharmacies to reduce costs. CMS and some states have issued laws, guidance and regulations that impose restrictions that generate additional costs and limit our ability to maximize efficiencies, such as those that could otherwise be gained through certain prescription and refill processes. Some states mandate or have proposed to mandate coverage of certain benefits, conditions and U.S. Food and Drug Administration ("FDA")-approved drugs and to restrict certain therapeutic interventions. Additionally, Medicare Part D and most states now have laws, regulations or some form of legislation affecting our ability, or our clients' ability, to limit access to a pharmacy provider network or remove a provider from a network. Certain states have laws prohibiting certain pharmacy benefit management clients from imposing additional copayments, deductibles, limitations on benefits or other conditions on covered individuals utilizing a retail pharmacy when the same conditions are not otherwise imposed on covered individuals utilizing home delivery pharmacies. However, the laws require the retail pharmacy to agree to the same reimbursement amounts and terms and conditions as are imposed on the home delivery pharmacies. An increase in the number of prescriptions filled at retail pharmacies may have a negative impact on the number of prescriptions filled through home delivery. ### Pharmacy Benefit Manager and Drug Pricing Regulation Our pharmacy benefit management services are subject to numerous laws and regulations that govern, and proposed legislation and regulations that may govern, critical practices, including disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers; certain pharmacy contracting practices, including disclosure of cost information to customers; pharmacy reimbursement mandates; the receipt and retention of transmission fees from contracted pharmacies; performance-based price concessions; pharmacy price concessions to drug prices at the point of sale; audits of contracted pharmacies; use of, administration of or changes to drug formularies, the use and disclosure of maximum allowable cost ("MAC") pricing, or clinical programs; "most favored nation" pricing, which provides that a pharmacy participating in a specific government program must give the program the best price the pharmacy makes available to any third-party plan; disclosure of data to third parties; drug utilization management practices; the level of duty a pharmacy benefit manager owes its clients or customers; configuration of pharmacy networks; the operations of our subsidiary pharmacies; referrals to affiliated pharmacies; disclosure of negotiated provider reimbursement rates; disclosure of negotiated drug rebates; calculation of certain customer cost-share for prescription drug claims; pricing that includes differential or spread (i.e., a difference between the drug price charged to the plan sponsor by a pharmacy benefit manager and the price paid by the manager to the dispensing provider); disclosure of fees associated with administrative service agreements and patient care programs that are attributable to customers' drug utilization; utilization management; and registration or licensing of pharmacy benefit managers. We expect federal and state governments to continue to prioritize means of addressing vertical integration and out-of-pocket costs for consumers, particularly related to prescription drug costs. Recently enacted legislation, such as the Inflation Reduction Act and other policy proposals and regulations, including proposed legislation aimed at providing transparency with respect to pharmacy benefit managers, vary broadly in their approaches to achieve that goal. Additionally, proposals at the federal and state levels consider increased regulation of pharmacy benefit managers and health plans as a means to limit consumer out-of-pocket costs. The NAIC has also proposed laws intended to protect consumer drug benefits and has examined regulatory approaches to pharmacy benefit manager business practices. Some states have enacted statutes referred to as "MAC Transparency Laws" regulating the use of MAC pricing. MAC Transparency Laws generally require pharmacy benefit managers to disclose specific information related to MAC pricing to pharmacies and provide certain appeal rights for pharmacies. MAC Transparency Laws also restrict the application of MAC and may require operational changes to maintain compliance with the law. Some states have also enacted laws regulating pharmacy pricing and protecting the profitability of pharmacies for dispensing certain MAC-priced drugs. Some states have enacted laws requiring that the customer cost-share for a prescription drug claim not exceed certain price points, such as the pharmacy's usual and customary charge or its contracted reimbursement for the drug. In a recent Supreme Court decision, the Court found that certain MAC Transparency Laws may be applied by states to ERISA plans in addition to health plans regulated by the applicable state. Following this decision, state legislatures and regulators have sought to extend their oversight authority of self-funded ERISA plans to pharmacy benefit management functions and pharmacy benefit plan designs beyond MAC pricing. ### Pharmacy Regulation We are licensed to do business as a pharmacy in the states in which our pharmacies are located, and the health care professionals who we employ are also licensed by, and subject to, the laws and regulations of state boards of pharmacy and other governmental authorities. Participation in Medicare and Medicaid programs requires our pharmacies to comply with the applicable Medicare and Medicaid provider rules and regulations and exposes the pharmacies to reimbursement, claims submission, pricing and other changes. In addition to the health care fraud and abuse laws and the privacy and security laws described above, our home delivery and specialty pharmacy operations are also subject to extensive federal and state laws and regulations that govern the labeling, packaging, repackaging, compounding, storing, holding, disposal, distribution, advertising, misbranding, adulteration, transfer, handling and security of prescription drugs and the dispensing of prescription, over-the-counter, hazardous and controlled substances, as well as laws enforced by the U.S. Drug Enforcement Administration, the FDA, state-controlled substance authorities, the FTC and the United States Postal Service. Violations of pharmacy laws and regulations may result in warning letters, civil and criminal penalties, seizures, suspension, termination or revocation of licenses and registrations, restrictions on facilities or operations, and other enforcement actions. ### Financial Reporting, Internal Control and Corporate Governance State regulators closely monitor the financial condition of licensed insurance companies and HMOs. States regulate the form and content of statutory financial statements, the type and concentration of permitted investments, and corporate governance over financial reporting. Our insurance and HMO subsidiaries are required to file periodic financial reports and schedules with regulators in most of the jurisdictions in which they do business as well as annual financial statements audited by independent registered public accounting firms. Certain insurance and HMO subsidiaries are required to file an annual report of internal control over financial reporting with most jurisdictions in which they do business. Insurance and HMO subsidiaries' operations and financial statements are subject to examination by regulators. Many states have expanded regulations relating to corporate governance and internal control activities of insurance and HMO subsidiaries as a result of model regulations adopted by the NAIC with elements similar to corporate governance and risk oversight disclosure requirements under federal securities laws. ### Guaranty Associations, Indemnity Funds, Risk Pools and Administrative Funds Most states and certain non-U.S. jurisdictions require insurance companies to support guaranty associations or indemnity funds that are established to pay claims on behalf of insolvent insurance companies. Some states have similar laws relating to HMOs and other payors, such as consumer operated and oriented plans (co-ops) established under the ACA. In the United States, these associations levy assessments on member insurers licensed in a particular state to pay such claims. Certain states require HMOs to participate in guaranty funds, special risk pools and administrative funds. Additionally, certain states continue to require health insurers and HMOs to participate in assigned risk plans, joint underwriting authorities, pools or other residual market mechanisms to cover risks not acceptable under normal underwriting standards, although some states have eliminated these requirements as a result of the ACA. ### Solvency and Capital Requirements Many states have adopted some form of the NAIC model solvency-related laws and risk-based capital ("RBC") rules for life and health insurance companies and HMOs. The RBC rules recommend a minimum level of capital depending on the types and quality of investments held, the types of business written and the types of liabilities incurred. If the ratio of the insurer's adjusted surplus to its RBC falls below statutorily required minimums, the insurer could be subject to regulatory actions ranging from increased scrutiny to conservatorship. In addition, various non-U.S. jurisdictions prescribe minimum surplus requirements that are based upon solvency, liquidity and reserve coverage measures. Our HMOs and life and health insurance subsidiaries, as well as non-U.S. insurance subsidiaries, are compliant with applicable RBC and non-U.S. surplus rules. ### Holding Company Laws Our domestic insurance companies and certain of our HMOs are subject to state laws regulating subsidiaries of insurance holding companies. Under such laws, certain dividends, distributions and other transactions between an insurance company or an HMO subsidiary and its affiliates may require notification to, or approval by, one or more state insurance commissioners. In addition, the holding company acts of states in which our subsidiaries are domiciled restrict the ability of any person to obtain control of an insurance company or HMO subsidiary without prior regulatory approval. ### Marketing, Advertising and Products In most states, our insurance companies and HMO subsidiaries are required to certify compliance with applicable advertising regulations on an annual basis and comply with certain federal and state marketing, advertising and communications laws and regulations. In April 2023, CMS issued a final rule revising regulations governing marketing by Medicare Advantage and Medicare Part D plans, which requires, among other things, enrollees to be notified of their ability to opt out of phone calls regarding Medicare Advantage and Part D marketing, requires agents to explain the effect of an enrollee's enrollment choice on their current coverage, simplifies plan comparisons by requiring medical benefits to be listed in a specific order at the top of a plan's Summary of Benefits, requires Medicare Advantage organizations and Part D sponsors to have an oversight plan that monitors activities of agents and brokers and to report noncompliance to CMS, and limits the time a potential enrollee may be contacted about Medicare plan options to 12 months after the enrollee first asked for information. ### Licensing, Registration and Utilization Management Requirements Our insurance companies and HMO subsidiaries must be licensed by the jurisdictions in which they conduct business, and our international subsidiaries are often required to be licensed when entering new markets or starting new operations in certain jurisdictions. Additionally, certain subsidiaries contract to provide claim administration, utilization management and other related services for the administration of self-insured benefit plans and may be subject to state third-party administration and other licensing requirements and regulation, as well as URAC and other third-party accreditation requirements. Certain states have adopted pharmacy benefit management registration, licensure or disclosure laws, which may mandate disclosure of various aspects of our financial practices, including those concerning pharmaceutical company revenue, prescribing processes, and client and provider audit terms. States have begun to enact laws exempting certain providers from pre-authorization requirements of insurers; laws standardizing the process for, and restricting the use of, utilization management rules; and laws shortening the time frames within which prescription drug prior authorization determinations must be made. The inability to apply pre-authorization requirements could lead to increased costs to plan sponsors and issuers by way of the provision of unnecessary services. The licensure requirements for our insurance companies and subsidiaries vary by jurisdiction and are subject to change. ### International Regulations Our operations outside of the United States expose us to laws of multiple jurisdictions and the rules and regulations of various governing bodies and regulators, including those related to the provision of insurance, financial and other disclosures, the provision of health care-related services, corporate governance, privacy, data protection, data mining, data transfer, intellectual property, labor and employment, consumer protection, direct-to-consumer communications activities, tax, anti-corruption and anti-money laundering. Foreign laws and rules may include requirements that are different from, or more stringent than, similar requirements in the United States. Our operations in countries outside of the United States are subject to local regulations of the jurisdictions where we operate; in some cases, they are subject to regulations in the jurisdictions where customers reside; and in all cases, they are subject to the Foreign Corrupt Practices Act ("FCPA"). The FCPA prohibits offering, promising, providing or authorizing others to give anything of value to a foreign government official or employee to obtain or retain business or otherwise secure a business advantage. Outside of the United States, we may interact with government officials in several different capacities: as regulators of our insurance business; as clients or partners who are state-owned or partially state-owned; as health care providers who are employed by the government; as hospitals that are state-owned; and as officials issuing permits in connection with real estate transactions. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions as well as other penalties. Countries in which we do business also have anti-corruption laws to which we are subject, such as the UK Bribery Act of 2010. As international regulators often share information, any voluntary disclosures of violations may be shared with authorities in other countries, thus potentially exposing companies to liability and potential penalties in multiple jurisdictions. Anti-money laundering requirements in countries where we do business also may impose obligations to collect certain information about each customer at time of sale or to risk rank each customer to determine possible future money laundering risk. ## Risk factors As filed, 88,738 characters. *As a large global health company operating in a complex industry, we encounter a variety of risks and uncertainties, which could have a material adverse effect on our business, liquidity, results of operations, financial condition or the trading price of our securities. You should carefully consider each of the risks and uncertainties discussed below, together with other information contained in this Form 10-K, including the MD&A. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect us. The following risk factors have been organized by category for ease of use; however, many of the risks may have impacts in more than one category. These categories, therefore, should be viewed as a starting point for understanding the significant risks facing us and not as a limitation on the potential impact of the matters discussed. Risk factors are not necessarily listed in order of importance.* ### Strategic and Operational Risks ***Future performance of our business will depend on our ability to execute our strategic and operational initiatives effectively.*** The future performance of our business will depend in large part on our ability to effectively implement and execute our strategic and operational initiatives. Successfully executing on these initiatives depends on a number of factors, including our ability to: - differentiate our products, services and solutions from those of our competitors; - develop and bring to market new and innovative products, solutions or programs that focus on improving patient outcomes and experiences, assist in controlling costs, respond to government regulation or respond to challenges within the health care system; - develop and create responsible data and analytic solutions to support and improve outcomes for our products, services and solutions, including creating and developing solutions and services through partnerships with other industry participants; - grow and support our product portfolio, expand our addressable markets, and identify and introduce the proper mix, coordination or integration of products that the marketplace will accept; - evaluate drugs for efficacy, value and price to assist clients in selecting a cost-effective formulary; - offer cost-effective home delivery pharmacy and specialty services; - access or continue accessing key drugs and successfully penetrate key treatment categories in our specialty pharmacy business; - attract and retain sufficient numbers of qualified employees, particularly in a competitive job market; - attract, develop and maintain collaborative relationships with a sufficient number of qualified partners; - attract new and maintain existing customer and client relationships; - leverage purchase volume to deliver discounts to health benefit providers; - transition health care providers from volume-based fee-for-service arrangements to a value-based system; - improve medical cost competitiveness in our targeted markets; - manage our medical, pharmacy, administrative and other operating costs effectively; and - contract with health care providers, pharmacy providers and pharmaceutical manufacturers on market competitive terms. If our strategic initiatives fail, our business may be unable to grow as planned and we will be unable to rapidly respond to competitive, economic and regulatory changes if we do not make important strategic and operational decisions quickly; define our appetite for risk, implement new governance, managerial and organizational processes smoothly; and communicate roles and responsibilities clearly. If these initiatives fail or are not executed effectively, our consolidated financial position and results of operations could be negatively affected. ***We operate in a highly competitive, evolving and rapidly changing industry, and our failure to adapt could negatively impact our business.*** The health service industry continues to be dynamic and rapidly evolving. Any significant shifts in the structure of the industry could alter industry dynamics and adversely affect our ability to attract or retain clients and customers. Industry shifts could result (and have resulted) from, among other things: - a large intra- or inter-industry merger or industry consolidation; - strategic alliances; - new or alternative business models or new government options or offerings; - continuing consolidation among physicians, hospitals and other health care providers, as well as changes in the organizational structures chosen by physicians, hospitals and health care providers; - new market entrants, including those not traditionally in the health service industry; - the ability of larger employers and clients to contract directly with providers; - technological changes and rapid shifts in the use of technology, such as telehealth and AI; - the impact or consequences of legislation, executive actions or regulatory changes; - impacts to distribution channels, including changes to the United States Postal Service or the consolidation of shipping carriers; - increased drug acquisition cost or unexpected changes to drug pricing trend; - changes in the generic/biosimilar drug market or the failure of new generic/biosimilar drugs to come to market; or - changes in utilization of health care, prescription drugs or other covered services and items, including under risk-based contracts in the health benefit management market and for those businesses that utilize risk adjustment methodology. Our failure to anticipate or appropriately adapt to changes in the industry could negatively impact our competitive position and adversely affect our business and results of operations. ***Our failure to compete effectively, to differentiate our products and services from those of our competitors, and to maintain or increase market share, including maintaining or increasing enrollments in businesses providing health benefits, could materially adversely affect our results of operations, financial position and cash flows.*** We operate in a highly competitive environment and an industry subject to significant market pressures brought about by customer and client needs, legislative and regulatory developments, and other market factors. In particular markets, our competitors may have greater, better or more established capabilities, resources, market share, reputation or business relationships, or lower profit margin or financial return expectations. Our clients are well-informed and organized and can easily move between our competitors and us. Our Express Scripts client contracts generally have three-year terms and may be subject to periodic renegotiation of pricing terms based on market factors. As described in greater detail in the description of our business in Item 1 of this Form 10-K, our key clients in the Evernorth Health Services segment include the DoD, Prime and Centene. If one or more of our large clients terminates or does not renew a contract for any reason, or if the provisions of a contract with a large client are modified with terms less favorable to us, our results of operations could be adversely affected and we could experience a negative reaction in the investment community. Our success depends, in part, on our ability to compete effectively in our markets, set prices appropriately in highly competitive markets to keep or increase our market share, increase customers, differentiate our business offerings, provide quality and satisfactory levels of service, and retain accounts with favorable medical cost experience or more profitable products. We must remain competitive to attract new customers, retain existing customers and further integrate additional product and service offerings. To succeed in this highly competitive marketplace, it is imperative that we maintain a strong reputation. Increasingly, our customers, clients and investors consider our efforts on a variety of matters that could impact our stakeholders, including our employees and the communities in which we operate. Our reputation may be negatively impacted by a failure to meet customer expectations for consistent, transparent, high-quality and accessible care or by other significant events, including a failure to execute on customer or client contracts or strategic or operational initiatives, failure to comply with applicable laws or regulations, or failure to innovate and deliver cost-effective products and services that demonstrate greater value to our customers. Any of these outcomes could affect our ability to grow and retain our customer base and other profitable arrangements, which could have a material adverse effect on our business, results of operations, financial position and cash flows. ***We face price competition and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers.*** While we compete on the basis of many service- and quality-related factors, we expect that price will continue to be a significant basis of competition and we may face pressure to contain premium rates or administrative fees. Our client contracts are subject to negotiation as clients seek to contain their costs, including by reducing benefits offered. Increasingly, our clients seek to negotiate performance guarantees that require us to pay penalties if the guaranteed performance standard is not met. Clients can easily move between our competitors and us. Our clients are well-informed and typically have knowledgeable consultants who seek competing bids from our competitors before contract renewal. In addition, as brokers and benefit consultants seek to enhance their revenue streams, they look to take on services that we typically provide. Each of these events could negatively impact our financial results. Federal and state regulatory agencies may restrict or prevent entirely our ability to implement changes in premium rates or collect certain administrative fees. Fiscal or other concerns related to the government-sponsored programs in which we participate may cause decreasing reimbursement rates, delays in premium payments, restrictions on implementing changes in premium rates or insufficient increases in reimbursement rates. Any limitation on our ability to maintain or increase our premium or reimbursement levels, or a significant loss of customers or clients resulting from our need to increase or maintain premium, administrative fees or reimbursement levels, could adversely affect our business, cash flows, financial condition and results of operations. Premiums in the Cigna Healthcare segment are generally set for one-year periods and are priced well in advance of the date on which the contract commences or renews. Our revenue on Medicare Advantage plans, IFPs and Medicare Part D plans has been based on rates and bids submitted midyear in the year before the contract year, and in January 2024, the Company entered into the HCSC transaction to sell the Medicare Advantage and Part D plans. Although we have based the premiums we charge and our Medicare Advantage, IFP and Medicare Part D rates and bids on our estimate of future health care costs over the contract period, actual costs may exceed what we estimate in setting premiums. Our participation in health insurance exchanges through our IFP offerings involves uncertainties associated with mix and volume of business and could adversely affect our results of operations, financial position and cash flows. Our health care costs are also affected by external events that we cannot forecast or project and over which we have little or no control, including changes in laws and regulations, as well as pandemics, costly new treatments, new treatment guidelines, provider billing practices, inflation and changes in customers' health care utilization patterns, which may, among other things, impact our ability to appropriately document their health conditions. Our profitability depends, in part, on our ability to accurately predict, price for and effectively manage future health care costs. Relatively small differences between predicted and actual medical costs or utilization rates as a percentage of revenue can result in significant changes in our financial results. Strong competition within the pharmacy benefit business has also generated greater demand for lower product and service pricing, increased revenue sharing, and enhanced product and service offerings. These competitive factors have historically applied pressure on our operating margins and caused many companies, including us, to reduce the prices charged for products and services while sharing with clients a greater portion of the formulary fees and related rebates received from pharmaceutical manufacturers. Our inability to maintain positive trends, or failure to identify and implement new ways to mitigate pricing pressures, could negatively impact our ability to attract or retain clients or sell additional services, which could negatively impact our margins and have a material adverse effect on our business and results of operations. In addition, legislative reforms and regulatory or executive actions related to rebates, reporting, owned pharmacies and other activities may adversely affect our competitive position, cash flows, financial condition and results of operations. ***The reserves we hold for expected medical claims are based on estimates that involve an extensive degree of judgment and are inherently variable. If actual claims exceed our estimates, our operating results could be materially adversely affected, and our ability to take timely corrective actions to contain future costs may be limited.*** We maintain and record medical claims reserves in our Consolidated Balance Sheets for estimated future payments. Our estimates of health care costs payable are based on a number of factors, including historical claim experience, but this estimation process requires extensive judgment. Considerable variability is inherent in such estimates, and the accuracy of the estimates is highly sensitive to changes in medical claims submission and processing patterns or procedures; changes in customer base and product mix; changes in the utilization of prescription drugs, medical or other covered items or services; changes in medical cost trends; changes in our health management practices; changes in regulations; and the introduction of new benefits and products. If we are not able to accurately and promptly anticipate and detect medical cost trends, our ability to take timely corrective actions to limit future costs and reflect our current benefit cost experience in our pricing process may be limited. Additionally, we must estimate the amount of rebates payable by us under the ACA's and CMS' minimum loss ratio rules and the amounts payable by us to, and receivable by us from, the federal government under the ACA's remaining premium stabilization program. Because establishing reserves is an inherently uncertain process involving estimates of future losses, there can be no certainty that ultimate losses will not exceed existing reserves, which may adversely affect our results of operations, financial position and cash flows. ***If we fail to develop and maintain satisfactory relationships with health care payors, physicians, hospitals and other health service providers and with producers and consultants, our business and results of operations may be adversely affected.*** We contract with or employ physicians, hospitals and other health service providers and facilities to provide health services to our customers, as well as health care payors (as a service provider to those payors). Our results of operations are substantially dependent on our ability to contract for these services at competitive prices. In any particular market, physicians, hospitals and health service providers may enter into exclusive arrangements with competitors or simply refuse to contract with us, demand higher payments or take other actions that could result in higher medical costs or less desirable products or services for our customers. In some markets, certain providers, particularly hospitals, physician/hospital organizations and multispecialty physician groups, may have significant or controlling market positions that could result in a diminished bargaining position for us. If providers refuse to contract with us, use their market position to negotiate more favorable contracts or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially adversely affected. Additionally, certain regulations may impact our ability to obtain competitive prices. Establishing collaborative arrangements with physician groups, specialist groups, independent practice associations, hospitals and health care delivery systems is key to our strategic focus to transition from volume-based fee-for-service arrangements to a value-based health care system. If such collaborative arrangements do not result in the lower medical costs that we project, if we fail to attract health care providers to such arrangements or if we are less successful at implementing such arrangements than our competitors, our attractiveness to customers may be reduced and our ability to profitably grow our business may be adversely affected. Our ability to develop and maintain satisfactory relationships with providers may also be negatively impacted by other factors not associated with us, such as changes in Medicare or Medicaid reimbursement levels or programmatic changes, increasing pressure on revenue and other pressures on health care providers, and increasing consolidation activity among hospitals, physician groups and providers. Continuing consolidation among physicians, hospitals and other providers; the growth of accountable care organizations; vertical integration of providers and other entities; changes in the organizational structures chosen by physicians, hospitals and providers; new market entrants, including those not traditionally in the health care industry; and the use of new modes of health delivery, including virtual care services, may affect the way providers interact with us and may change the competitive landscape in which we operate. In some instances, these organizations may compete directly with us, potentially affecting the way we price our products and services or causing us to incur increased costs if we change our operations to be more competitive. Out-of-network providers for non-Medicare services are not limited by any agreement with us in the amounts they bill. For Medicare Advantage, out-of-network providers can only receive the same rate that CMS pays for Medicare services. While benefit plans place limits on the amount of charges that will be considered for reimbursement and regulations seek to prescribe payment levels, establish methodologies and dispute resolution processes, providers are increasingly sophisticated and aggressive. As a result, the outcome of disputes where we do not have a provider contract may cause us to pay higher medical or other benefit costs than we projected. Additionally, certain of our products and services are sold in part through nonexclusive producers and consultants for whose services and allegiance we compete. Our sales could be materially adversely affected if we are unable to attract, retain and support such independent producers and consultants or if our sales strategy is not appropriately aligned across distribution channels. ***If we lose our relationship with one or more key pharmaceutical manufacturers, or if the payments made or discounts provided by pharmaceutical manufacturers decline, our business and results of operations could be adversely affected.*** We maintain relationships with numerous pharmaceutical manufacturers, which provide us with, among other things: - discounts for drugs we purchase to be dispensed from our home delivery and specialty pharmacies; - discounts, in the form of rebates, for drug utilization; - fees for administering rebate programs, including invoicing, allocating and collecting rebates; - fees for services provided to pharmaceutical manufacturers by our specialty pharmacies; and - access to limited distribution specialty pharmaceuticals by our specialty pharmacies. Our contracts with pharmaceutical manufacturers are typically nonexclusive and terminable on relatively short notice by either party. The consolidation of pharmaceutical manufacturers, the termination or material alteration of our relationships, or our failure to renew contracts on market competitive terms could have a material adverse effect on our business and results of operations. In addition, arrangements between payors and pharmaceutical manufacturers have been the subject of debate in various public and governmental forums. Adoption of new laws, rules or regulations or changes in, or new interpretations of, existing laws, rules or regulations relating to any of these programs could materially adversely affect our business and results of operations. ***If significant changes occur within the pharmacy provider marketplace, or if other issues arise with respect to our pharmacy networks, including the loss of or adverse change in our relationship with one or more key pharmacy providers, our business and financial results could be adversely affected.*** More than 67,000 pharmacies participated in one or more of our networks as of December 31, 2024. The ten largest retail pharmacy chains represent approximately 60% of the total number of stores in our largest network. In certain geographic areas of the United States, our networks may be comprised of higher concentrations of one or more large pharmacy chains. Contracts with retail pharmacies are generally nonexclusive and are terminable on relatively short notice by either party. If one or more of the larger pharmacy chains terminates its relationship with us, or is able to renegotiate terms substantially less favorable to us, our customers' access to retail pharmacies or our business could be materially adversely affected. The entry of one or more additional large pharmacy chains into the pharmacy benefit management business, the consolidation of existing pharmacy chains, or increased leverage or market share by the largest pharmacy providers could increase the likelihood of negative changes in our relationship with such pharmacies. Changes in the overall composition of our pharmacy networks, including changes due to legislative, regulatory or executive action, or reduced pharmacy access under our networks, could have a negative impact on our claims volume or our competitiveness in the marketplace, which could cause us to fall short of certain guarantees in our contracts with clients or otherwise impair our business or results of operations. ***Changes in drug pricing or industry pricing benchmarks could materially impact our financial performance.*** Contracts in the prescription drug industry, including our contracts with retail pharmacy networks and our pharmacy and specialty pharmacy clients, generally use pricing metrics published by third parties as benchmarks to establish pricing for prescription drugs. If these benchmarks are no longer published by third parties, we, or our contractual partners, adopt other pricing benchmarks for establishing prices within the industry, legislation or regulation requires the use of other pricing benchmarks, or future changes in drug prices substantially deviate from our expectations, the short- or long-term impacts may have a material adverse effect on our business and results of operations. Additionally, laws such as the Inflation Reduction Act have granted CMS the ability to negotiate drug prices for high-cost Part D and Part B drugs, and other federal and state legislative proposals and executive actions can lead to residual effects as drug companies adjust pricing strategies for broader marketplaces, impacting which medications are prioritized. ***Our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation, availability and data integrity of our information technology and other business systems.*** Our business is highly dependent on maintaining effective information systems as well as the integrity and timeliness of the data we use to serve our customers and health care providers and to operate our business. If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party providers or subcontractors that we or they engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our clients, customers and health care providers and hinder our ability to provide or establish appropriate pricing for products and services, retain and attract clients and customers, establish reserves and report financial results accurately and in a timely manner and maintain regulatory compliance, among other things. Our information technology strategy and execution are critical to our continued success. We must continue to invest in and maintain long-term solutions that will enable us to anticipate customer needs and expectations, enhance the customer experience, act as a differentiator in the market, and protect against cybersecurity risks and threats or other events that could disrupt our information technology systems. Our success is dependent, in large part, on maintaining the effectiveness of existing technology systems and continuing to deliver and enhance technology systems that support our business processes in a cost- and resource-efficient manner. Increasing regulatory and legislative changes will place additional demands on our infrastructure that could have a direct impact on resources available for other strategic initiatives. In addition, recent trends toward greater consumer engagement in health care require new and enhanced technologies, including applications for mobile devices. Connectivity among technologies is becoming increasingly important. We must also develop new systems to meet current market standards and keep pace with continuing changes in information processing technology, evolving industry and regulatory standards, and customer needs. Failure to do so may present compliance challenges and impede our ability to deliver services in a competitive manner. Further, because system development projects are long-term in nature, they may be more costly than expected to complete and may not deliver the expected benefits upon completion. Our failure to effectively invest in, implement improvements to and properly maintain the uninterrupted operation, availability and data integrity of our systems could adversely affect our results of operations, financial position, cash flow and internal controls over financial reporting. ***As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents. If we are unable to prevent or contain the effects of any such attacks, or fail to ensure vendors do the same, we may suffer exposure to substantial liability, reputational harm, loss of revenue or other damages.*** Our business depends on our clients' and customers' willingness to entrust us with their health-related and other PII, including PHI, that is subject to privacy, security or data breach notification laws. Computer networks or systems may be vulnerable to intrusion, computer viruses or malware, programming errors, attacks by third parties or similar disruptive problems. We have been, and will likely continue to be, the target of computer viruses or other malicious codes, unauthorized access, cyberattacks or other computer-related penetrations. There have been, and will continue to be, large-scale cyberattacks within the health service industry. For example, Change Healthcare, a health technology company owned by UnitedHealth Group and a service provider for certain of our pharmacy benefit management services, was the victim of a ransomware attack in February 2024, which resulted in limited disruption of certain of our services and necessitated security validations for certain systems before we reconnected with Change Healthcare to resume such services. Additionally, hardware, software or applications we develop or procure from third parties may contain defects in design, manufacturer defects or other problems that could unexpectedly compromise information technology. Human or technological error has and could in the future result in, for example, unauthorized access to and acquisition, disclosure, modification, misuse, loss or destruction of company, customer, or other third-party data or systems; theft of sensitive, regulated or confidential data, including PII and intellectual property; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions, or denials of service. As we increase the amount of PII that we store and share digitally, our exposure to unauthorized uses and disclosures and data privacy and related cybersecurity risks increases, including the risk of undetected attacks, damage, loss, or unauthorized access or acquisition or misappropriation of proprietary or personal information. The cost of attempting to protect against these risks also increases. The health care data ecosystem is complex and requires data exchange with vendors, business partners, health care professionals, the government and others. If disruptions, data disclosures, security incidents or breaches are not detected quickly, their effect could be compounded. We have dedicated significant resources to implement privacy and security technologies, processes and procedures to protect PII and provide employee awareness training around phishing, malware and other cyber risks; however, there are no assurances that such measures will be effective against all types of security incidents. Cybersecurity threats are rapidly evolving, and those threats and the means for obtaining access to our proprietary systems are becoming increasingly sophisticated. Cyberattacks can originate from a wide variety of sources, including terrorists, nation states, internal actors or third parties, such as external service providers, and the techniques used change frequently or are often not recognized until after they have been launched. For example, there continues to be an increase in new financial fraud schemes akin to ransomware attacks on large companies whereby a cybercriminal installs a type of malicious software, or malware, that prevents a user or enterprise from accessing computer files, systems or networks and demands payment of a ransom for their return. Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose or inadvertently provide access to systems in order to gain access to our data or that of our customers. In addition, while we have certain standards for all vendors that provide us services, our vendors, and in turn, their own service providers, may become subject to the same types of security breaches. Finally, our offices may be vulnerable to security incidents or security attacks, acts of vandalism or theft, misplaced or lost data, human error or similar events that could negatively affect our systems and our customers' and clients' data. The costs to eliminate or address security threats and vulnerabilities before or after a cyber-incident could be significant. Our remediation efforts may not be successful and could result in interruptions, delays, or cessation of service and loss of customers. In addition, the unauthorized access to and the acquisition, use, disclosure or dissemination of information about us, our customers or other third parties could expose our customers and their private information to the risk of financial or medical identity theft. Unauthorized access to and the acquisition, use, disclosure or dissemination of information about our business and strategy could also negatively affect the achievement of our strategic initiatives. Such events could cause us to breach our contractual obligations and violate applicable laws. These events would negatively affect our ability to compete, our reputation, our customer base and our revenues and expose us to mandatory disclosure requirements, government investigations, litigation, and other enforcement proceedings, material fines, penalties, or remediation costs and compensatory, special, punitive and statutory damages, consent orders, and other adverse actions, any of which could adversely affect our business, results of operations, financial condition or liquidity. ***Our use of artificial intelligence and machine learning present regulatory and legal challenges that could negatively affect our business and our reputation.*** Our use of AI, including ML technologies, as well as more recent technological advances in AI/ML, poses risks to us and subjects us to new and existing laws and regulations. While we are committed to responsible use of AI/ML and following applicable laws and regulations, and while we have made progress developing governance as to use of AI/ML by our organization, any failure to use AI/ML responsibly and to adhere to such laws, regulations and governance could have a material unfavorable effect on our business, results of operations and financial condition. Depending on how existing laws and regulations are interpreted, and as new laws go into effect, we may have to make changes to our business practices to comply with such obligations. These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to retrain our AI/ML, require us to comply with outside standards, or prevent or limit our use of AI/ML. Our use of AI/ML technologies has resulted in and could continue to result in additional compliance costs, regulatory investigations and actions, and lawsuits. For example, we are currently subject to litigation claiming that we improperly used AI in the claims evaluation process. If we are unable to use AI/ML, or if regulators restrict our ability to use AI/ML for certain purposes, it could make our business less efficient, result in competitive disadvantages, and subject us to potential unfavorable business impacts. To the extent that we rely on or use the output of AI/ML, any inaccuracies, biases or errors could have unfavorable impacts on us, our business, and our results of operations or financial condition. The impact of regulatory and legal risks associated with AI/ML is largely unknown. ***As a global company, we face political, legal, operational, regulatory, economic and other risks that present challenges and could negatively affect our multinational operations or our long-term growth.*** As a global company, our business is increasingly exposed to risks inherent in foreign operations. These risks can vary substantially by market and include political, legal, operational, regulatory, economic and other risks, including government intervention that we do not face in our U.S. operations. The global nature of our business and operations may present challenges including, but not limited to, those arising from: - geopolitical business conditions and demands; - regulation that may discriminate against U.S. companies, favor nationalization or expropriate assets; - price controls or other pricing issues and exchange controls, including tariffs; - restrictions that prevent us from transferring funds out of the countries in which we operate; - foreign currency exchange rates and fluctuations and restrictions on converting currencies from foreign operations into other currencies; - uncertainty with respect to the adoption of new tax laws and the interpretation of tax positions, such as the European Union's ("EU’s") recent adoption of the Pillar Two directive; - reliance on local employees and interpretations of labor laws in foreign jurisdictions; - the management of our partner relationships in countries outside of the United States; - the provision of data protection on a global basis and sufficient levels of technical support in different locations; - the global trend for companies to enact local data residency requirements; - acts of civil unrest, war and terrorism, including the ongoing conflict in the Middle East as well as other political and economic conflicts, such as through imposition of economic or political sanctions; - man-made disasters, natural disasters (including those arising as a result of climate change) and pandemics in locations where we operate; and - general economic and political conditions. These factors may increase in significance as we continue to expand globally, and operating in new foreign markets may require considerable management time before operations generate any significant revenues and earnings. Any one of these challenges could negatively affect our operations or long-term growth. International operations also require us to devote significant resources to implement controls and systems in new markets to comply with, and to ensure that our vendors and partners comply with, U.S. and foreign laws prohibiting bribery, corruption and money laundering, in addition to other regulations regarding, among other things, our products, direct-to-consumer communications, customer privacy, data protection and data residency. Violations of these laws and regulations could result in fines; criminal sanctions against us, our officers or employees, restrictions or outright prohibitions on the conduct of our business; and significant reputational harm. Our success depends, in part, on our ability to anticipate these risks and manage these challenges. Our failure to comply with laws and regulations governing our conduct outside of the United States or to establish constructive relations with non-U.S. regulators could have a material adverse effect on our business, results of operations, financial condition, liquidity and long-term growth. Please see "—Legal and Compliance Risks" below. ***Strategic transactions involve risks and we may not realize the expected benefits because of integration or separation difficulties, underperformance relative to our expectations and other challenges, which could lead to an impairment charge.*** As part of our strategy, we regularly consider and enter into strategic transactions, including mergers, acquisitions, joint ventures, licensing arrangements, divestitures and other relationships (collectively referred to as "strategic transactions"). There is significant competition for attractive targets and opportunities, and we may be unable to identify and successfully complete strategic transactions in the future. In addition, from time to time, we evaluate alternatives for our businesses that do not meet our strategic, growth or profitability objectives, and we may divest or wind down such businesses. We may be unable to complete any such divestiture on terms favorable to us within the expected time frames, or at all. For example, in January 2024, we entered into the HCSC transaction, which is subject to regulatory approvals and other closing conditions. We may be unable to satisfy the closing conditions in a timely manner to complete the HCSC transaction, or we may otherwise fail to receive the anticipated benefits from the transaction, even if it is completed. We may fail to receive the anticipated benefits from the transaction. We may have continued financial exposure to divested businesses, including the businesses subject to the HCSC transaction, following the completion of any such transaction, including increased costs due to potential litigation, contingent liabilities and indemnification of the buyer related to, among other things, lawsuits, regulatory matters or tax liabilities. Our ability to achieve the anticipated benefits of strategic transactions, including synergies, cost savings, innovation and operational efficiencies, is subject to numerous uncertainties and risks, including our ability to successfully combine or separate business operations, resources and systems, including data security systems and internal financial control standards, in an efficient and effective manner. Integration and separation activities may result in additional and unforeseen expenses, and the anticipated benefits may not be fully realized or may take longer to realize than expected. These activities are complex, costly and time-consuming and may divert management's attention from ongoing business concerns. Delays or issues encountered in these activities could have a material adverse effect on the revenues, expenses, operating results and financial condition of the Company. Additionally, the benefits of strategic transactions and the related timing could be impacted by various factors, including political instability, natural disasters, fluctuations in currency exchange rates, delays in obtaining regulatory approval and changes in regulations. Strategic transactions could result in increased costs, including facilities and systems consolidation or separation costs and costs to retain key employees, decreases in expected revenues, earnings or cash flows, and goodwill or other intangible asset impairment charges. As of December 31, 2024, our goodwill and other intangible assets had a carrying value of approximately $73.8 billion, representing 47% of our total consolidated assets. The value of our goodwill may be materially and adversely impacted if the businesses we acquire do not perform in a manner consistent with our assumptions. Future evaluations requiring an impairment to goodwill and other intangible assets could materially affect our results of operations and shareholders' equity in the period in which the impairment occurs. A material decrease in shareholders' equity could negatively impact our debt ratings or potentially impact our compliance with existing debt covenants. See Note 18 to the Consolidated Financial Statements for more information on goodwill and intangibles. In addition, the trading price of our securities may decline if, among other things, we are unable to achieve our estimates of earnings growth and operational cost savings or the transaction costs are greater than expected. The trading price also may decline if we do not achieve the perceived benefits of a transaction as rapidly or to the extent anticipated by financial or industry analysts. Additionally, joint ventures and equity investments present risks that are different from acquisitions, including risks related to specific operations and finances of the businesses we invest in; selection of appropriate parties; differing objectives of the various parties; competition between and among parties; compliance activities (including compliance with applicable CMS requirements); growing of the business in a manner acceptable to all the parties; the maintenance of positive relationships among the parties, clients and customers; and initial and ongoing governance of joint ventures and customer and business disruption that may occur upon a joint venture termination. For example, in the year ended December 31, 2024, we determined our investment in VillageMD was fully impaired and recorded a $2.7 billion loss in Net investment losses in our Consolidated Statements of Income. Further, we may finance strategic transactions by issuing common stock for some or all of the purchase price that could dilute the ownership interests of our shareholders or by incurring additional debt that could increase costs and impact our ability to access capital in the future. In addition, effective internal controls are necessary to provide reliable and accurate financial reports and to mitigate the risk of fraud. The integration of businesses is likely to cause increasing complexity in our systems and internal controls and make them more difficult to manage. Any difficulties in assimilating businesses into our control system could cause us to fail to meet our financial reporting obligations. We also rely on the internal controls and financial reporting controls of joint venture entities and other entities in which we invest, and their failure to maintain effectiveness or comply with applicable standards may materially and adversely affect us. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could negatively impact the trading price of our securities and our access to capital. ***We are dependent on the success of our relationships with third parties for various services and functions.*** To improve operating costs, productivity and efficiencies, we contract with third parties for the provision of specific services. Our operations may be adversely affected if a third party fails to satisfy its obligations, if the arrangement is terminated in whole or in part, or if there is a contractual dispute between us and the third party. Even though contracts are intended to provide certain protections, we have limited control over the actions of third parties. For example, noncompliance with any privacy or security laws and regulations, any security breach involving one of our third-party vendors, or a dispute between us and a third-party vendor related to our arrangement could have a material adverse effect on our business, results of operations, financial condition, liquidity and reputation. Outsourcing also may require us to change our existing operations, adopt new processes for managing these service providers, or redistribute responsibilities to realize the potential productivity and operational efficiencies. If there are delays or difficulties in changing business processes or our third-party vendors do not perform as expected, we may not realize, or not realize on a timely basis, the anticipated economic and other benefits of these relationships. This could result in additional costs or regulatory compliance issues or create other operational or financial problems for us. Terminating or transitioning, in whole or in part, arrangements with key vendors could result in additional costs or penalties, risks of operational delays, or potential errors and control issues during the termination or transition phase. We may not be able to find an alternative vendor in a timely manner or on acceptable terms. If there is an interruption in business or loss of access to data resulting from a security breach, termination or transition in services, we may not be able to meet the demands of our customers and, in turn, our business and results of operations could be adversely impacted. ***A significant disruption in service within our operations or among our key suppliers or other third parties could materially adversely affect our business and results of operations.*** Our business is highly dependent upon our ability to perform, in an efficient and uninterrupted fashion, necessary business functions, such as claims processing and payment, internet support and customer call centers, data centers and corporate facilities, the processing of new and renewal business, the maintenance of appropriate shipment and storage conditions for prescriptions (such as temperature and protection from contamination) and home delivery processing. In some instances, our ability to provide services or products (including processing and dispensing prescriptions) depends on the availability of services and products provided by suppliers, providers, pharmaceutical manufacturers, vendors or shipping carriers. A disruption, or threat of disruption, in our supply chain or inability to access or deliver products that meet requisite quality safety standards and patient needs in a timely and efficient manner could adversely impact our business. Increasing natural disasters in connection with climate change could also be a direct threat to us and our third-party vendors, service providers or other stakeholders. Natural disasters have impacted and may continue to impact our customers and pose a risk to our employees and facilities located in the impacted region. Responses to such scenarios have included and may include, among other things, making temporary policy changes, such as waiving various medical requirements, assisting with replacement medications, transferring prescriptions and expanding our help line. In addition, there is a risk that actions taken to respond to climate change could increase the cost of energy, fuel and other commodities, which would increase our operating costs. We are also subject to risk as a result of information technology disruptions. Any failure or disruption of our performance of, or our ability to perform, key business functions, including through unavailability or cyberattack of our information technology systems or those of third parties (including cloud service providers), could cause slower response times, decreased levels of service satisfaction and harm to our reputation. Our systems interface with and depend on third-party systems, and we could experience service denials if demand for such service exceeds capacity or a third-party system fails or experiences an interruption. For further information related to risks as a result of information technology disruptions, please refer to "—As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents. If we are unable to prevent or contain the effects of any such attacks, or fail to ensure vendors do the same, we may suffer exposure to substantial liability, reputational harm, loss of revenue or other damages." While we have adopted, and continue to enhance, business continuity and disaster recovery plans and strategies, there is no guarantee that such plans and strategies will be effective, which could interrupt the functionality of our information technology systems or those of third parties. Our failure to implement adequate business continuity and disaster recovery strategies could significantly reduce our ability to provide products and services to our customers and clients, which could have material adverse effects on our business and results of operations. ***In managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities, we may be subject to additional liability that could result in significant time and expense.*** In addition to contracting with physicians and other health care providers for services, we employ physicians, pharmacists, nurses and other health care providers at our home delivery and specialty pharmacies, onsite low-acuity and primary care practices and infusion clinics that we manage and operate for our customers, as well as certain clinics for our employees. We also provide in-home care through health care providers that we employ, as well as through third-party contractors. As such, we may be subject to liability for certain acts, omissions or injuries caused by our employees or agents, or that occur at one of these practices, pharmacies or clinics. The defense of any actions may require diverting personnel and other resources and incurring significant costs that could have a material adverse effect on our business, results of operations, financial condition, liquidity and reputation. ### Legal and Compliance Risks ***Our business is subject to substantial government regulation, as well as new laws or regulations or changes in existing laws or regulations that could have a material adverse effect on our business, results of operations, financial condition and liquidity.*** Our business is regulated at the federal, state, local and international levels. The laws and rules governing our business and related interpretations are increasing in number and complexity, are subject to frequent change, and can be inconsistent or in conflict with each other. Noncompliance with applicable regulations by us or our third-party vendors could have material adverse effects on our business, results of operations, financial condition, liquidity and reputation. We must identify, assess and respond to new trends in the legislative and regulatory environment, as well as comply with the various existing regulations applicable to our business and respond to policymakers and enforcement agencies accordingly. There are currently pending, and in the future there will likely be, legislative or regulatory proposals or executive actions which seek to manage or significantly change the health services industry, including managing prescription drug costs and health records as well as regulating drug distribution. These and other legislative ideas and executive actions could adversely affect our business. Federal and state governments have enacted, and we expect federal and state governments to continue to enact and seriously consider, many broad-based legislative and regulatory proposals that will or could materially impact various aspects of the health care and related benefits system. In addition, changes to government policies not specifically targeted to the health services industry, such as a change in tax laws and the corporate tax rate, government spending or program cuts or changes, imposition of tariffs across an industry sector such as pharmaceuticals could have significant impacts on our business, results of operations, financial condition and liquidity. There can be no assurance that our effective tax rate or tax payments will not be adversely affected by legislation resulting from these initiatives both within the United States and other foreign jurisdictions in which we operate. In addition, tax laws and regulations are extremely complex and subject to varying interpretations. While we believe that our historical tax positions are consistent with applicable laws, regulations and existing precedent, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. The trading price of our securities may react to the announcement of such proposals. As disclosed in Part II, Item 5 of this Form 10-K, we have an active share repurchase program authorized by our Board of Directors (the "Board"). Regulators, customers, investors, employees and other stakeholders have focused on environmental, social and governance matters and related disclosures. These changing rules, regulations and stakeholder expectations have previously resulted in increased general and administrative expenses and increased management time and attention spent complying with such regulations or meeting such expectations. For example, the EU's Corporate Sustainability Reporting Directive ("CSRD") will require expansive disclosures on various sustainability topics such as climate change, biodiversity, workforce, supply chain and business ethics by in-scope EU entities and certain non-EU entities with significant cross-border business in EU markets. In addition, California's enacted Climate Corporate Data Accountability Act will require annual disclosures of covered companies' Scope 1, 2 and 3 greenhouse gas emissions. We are assessing our obligations under CSRD and other enhanced reporting requirements based on policymaker direction and expect that compliance could require substantial efforts in the future. Overall, sustainability matters and related stakeholder reaction may impact our reputation and have other business impacts which could adversely affect our business. Existing or future laws, rules, actions by governmental or regulatory authorities, or judgments could force us to change how we conduct our business, affect the products and services we offer and where we offer them, restrict revenue and enrollment growth, increase our costs, including medical, operating, health care technology and administrative costs, and require enhancements to our compliance infrastructure and internal controls environment. Some proposals or criticisms may be bipartisan or gain momentum, and we expect that governmental and regulatory authorities will continue to seek changes to business practices and the health care industry as a whole. For example, health care reforms or the invalidation, modification, repeal or replacement of the ACA or portions thereof could result in material changes to the way we conduct our business, as well as the loss of subsidies related to our IFP offerings, and could impact the market for our products. We are required to obtain and maintain insurance and other regulatory approvals to, among other things, market many of our products, expand into additional geographic or product markets, increase prices for certain regulated products, and consummate some of our acquisitions and dispositions. Delays in obtaining or failure to obtain or maintain these approvals could reduce our revenue or increase our costs. Additionally, we must maintain licenses and registrations in the jurisdictions in which we conduct business, and the suspension, material adverse modification or termination of such licenses and registrations could adversely affect our operations. Such licensure subjects many of our businesses to state regulation of our operations and products, as well as risks associated with doing business in those jurisdictions. Existing or future laws and rules could also require or lead us to take other actions, such as changing our business practices, and could increase our liability. Further, failure to effectively implement or adjust our strategic and operational initiatives, such as by reducing operating costs, adjusting premium pricing or benefit design, or transforming our business model in response to laws, regulatory changes or executive actions may have a material adverse effect on our results of operations, financial condition and cash flows. For more information on regulations affecting our business, see "Business – Regulation" in Part I, Item 1 of this Form 10-K. ***There are various risks associated with participating in government-sponsored programs and providing services to payors who participate in government-sponsored programs, including dependence upon government funding, compliance with government contracts and increased regulatory oversight and enforcement.*** Through our U.S. Healthcare business, we contract with CMS and various state governmental agencies. Additionally, our Evernorth Health Services business provides services to government entities and payors participating in government health care programs, and our relationships with these government entities are subject to laws and regulations regarding government contracts. Our revenues from government-funded programs, including our Medicare programs and our government clients, are dependent, in whole or in part, upon annual funding from the federal government or applicable state or local governments. Funding for these programs is dependent on many factors outside our control, including general economic conditions, continuing government efforts to contain health care costs, budgetary constraints at the federal or applicable state or local level, and general political issues and priorities. These entities generally have the right to not renew or to cancel their contracts with us on short notice without cause or if funds are not available. Unanticipated changes in funding, such as the application of sequestration by the federal or state governments, retroactive rate adjustments, a delay by Congress in raising the federal debt ceiling, or the failure to provide for continued appropriations or regular ongoing scheduled payments to us, could substantially reduce our revenues or profitability or impact our liquidity. The Medicare program has been the subject of regulatory reform initiatives. The premium rates paid to Medicare Advantage plans and Medicare Part D plans are established by contract, although the rates differ depending on a combination of factors, some of which are outside our control. For example, the base premium rate paid differs depending upon a combination of various factors, such as defined upper payment limits, a member's health status, age, gender, county or region, benefit mix, member eligibility category, and risk scores. Additionally, a portion of each Medicare Advantage plan's reimbursement is tied to the plan's Star Rating, with those plans receiving a rating of four or more stars eligible for quality-based bonus payments. A plan's Star Rating affects its image in the market, and plans that perform well are able to offer enhanced benefits and market more effectively and for longer periods of time than other plans. The Star Rating system is subject to change annually by CMS, which may make it more difficult to achieve four stars or greater. Our Medicare Advantage plans' and Medicare Part D plans' operating results, premium revenue and benefit offerings are likely to continue to be significantly determined by their Star Ratings. There can be no assurances that we will be successful in maintaining or improving our Star Ratings in future years. In addition, audits of our performance for past or future periods may result in downgrades to our Star Ratings. If we do not maintain or improve our Star Ratings, or if the quality-based bonus payments are reduced or eliminated, we may experience a negative impact on our revenue and the marketability of our plans may be adversely affected. Accordingly, our plans may not be eligible for full-level quality bonuses, which could adversely affect the benefits such plans can offer, reduce membership or impact our financial performance. Additionally, if we fail to comply with CMS' regulatory or contractual requirements, including data submission, enrollment and marketing, provider network adequacy, provider directory accuracy, quality measures, claims payment, continuity of care, timely and accurate processing of appeals and grievances, adverse findings under RADV audits, oversight of first-tier downstream and related entities, and call center performance, we may be subject to administrative actions, including enrollment sanctions or contract termination, fines or other penalties or enforcement actions that could materially impact our profitability. ### We face risks related to litigation, regulatory audits and investigations. We are routinely involved in numerous claims, lawsuits, regulatory audits, investigations and other legal matters arising, for the most part, in the ordinary course of business. These legal matters could include civil claims (including tort and breach of contract claims) as well as claims arising from alleged violations of certain laws (such as consumer protection or false claims act laws). In addition, we have incurred and likely will continue to incur liability for practices and claims related to our health care business, such as marketing misconduct, failure to timely or appropriately pay for or provide health care, provider network structure, poor outcomes for care delivered or arranged, provider disputes including disputes over compensation or contractual provisions, ERISA claims, allegations related to calculations of cost-sharing, and claims related to our administration of self-funded business. We are also routinely involved in legal matters arising from our health services business, including without limitation claims related to the dispensing of pharmaceutical products by our home delivery and specialty pharmacies, pharmacy benefit management services, such as formulary management services, health benefit management services and provider services. Our pharmacy services operations are subject to the clinical quality, patient safety and other risks inherent in the dispensing, packaging and distribution of drugs, including claims related to purported dispensing and other operational errors. There are currently, and may be in the future, attempts to bring class action lawsuits against the Company and other companies in our industry; individual plaintiffs also may bring multiple claims regarding the same subject matter against us and other companies in our industry. Court decisions and legislative and regulatory activity may increase our exposure to any of these types of claims. In some cases, substantial noneconomic or punitive damages may be sought. We procure insurance coverage to cover some of these potential liabilities, and we also self-insure a significant portion of our litigation risks. While we maintain some third-party insurance coverage, including excess liability insurance with third-party insurance carriers, certain liabilities or types of damages, such as punitive damages, may not be covered by insurance, insurers may dispute coverage, or the amount of insurance may be insufficient to cover the entire damages awarded. Resolving disputes is often expensive and disruptive, regardless of the outcome. Additionally, it is possible that the resolution of current or future legal matters and claims could result in changes to our industry and business practices, losses material to our results of operations, financial condition, and liquidity or damage to our reputation. We are frequently the subject of regulatory market conduct and other reviews, audits and investigations by state insurance and health and welfare and pharmacy departments, attorneys general, DOJ, FTC, CMS, DOL and the HHS-OIG and comparable authorities in foreign jurisdictions. Additionally, we have, in the past, been, and may in the future be, subject to *qui tam* actions in which the government may or may not intervene. With respect to our Medicare Advantage and Medicare Part D businesses, which are subject to the HCSC transaction, CMS and HHS-OIG perform audits to determine a health plan's compliance with federal regulations and contractual obligations, including compliance with proper coding practices and fraud and abuse enforcement practices through audits designed to detect and correct improper payments. Certain of our contracts currently have RADV audits by CMS and the HHS-OIG that are awaiting CMS finalization. These audits could result in repayments to the government. There also continues to be heightened review by federal and state regulators of business and reporting practices within the health services industry, including with respect to claims payment and related escheat practices, and increased scrutiny by other federal and state governmental agencies (such as state attorneys general) empowered to bring criminal actions in circumstances that could have previously given rise only to civil or administrative proceedings. In addition, various government agencies have conducted investigations, inquiries and audits into certain pharmacy benefit management practices, which in certain instances has resulted in litigation or other adverse outcomes. For example, the FTC recently released staff reports on PBMs and the accessibility and affordability of prescription drugs. In September 2024, the FTC filed a complaint against Express Scripts and two other PBMs for allegedly engaging in anticompetitive and unfair rebate practices related to insulin drug pricing. Although we strongly disagree with the claims made by the FTC and intend to respond to them vigorously, there can be no assurance that the outcome of these matters will be resolved to our satisfactions. Many investigations and audits have resulted in companies being subject to civil penalties, including the payment of money and entry into corporate integrity agreements. For example, in September 2023, we resolved certain matters related to our Medicare Advantage Business and risk adjustment practices by entering into the CIA with the HHS-OIG. The CIA imposes various compliance, reporting and governance obligations on us for five years and requires record reviews by an independent review organization. Our failure to meet these obligations could result in monetary penalties and our exclusion from participation in federal health care programs (such as Medicare and Medicaid), which could adversely impact our business, cash flows, financial condition, results of operations and reputation. Any failure, or alleged failure, to comply with various state and federal health care laws and regulations, including those related to the CIA or otherwise directed at preventing fraud and abuse in government-funded programs, has resulted in and could in the future result in investigations or litigation, such as actions under the federal False Claims Act and similar whistleblower statutes under state laws. A successful action or claim against us could subject us to damage awards, including treble damages, fines, penalties or other enforcement actions, restrictions on our ability to market or enroll new customers, limits on expansion, restrictions or exclusions from programs or other agreements with federal or state governmental agencies, which could adversely impact our business, cash flows, financial condition, results of operations and reputation. We cannot predict what effect, if any, such government investigations and audits may ultimately have on us or on the industry in general. However, we will likely continue to experience government scrutiny and audit activity, which has and may in the future result in civil penalties. Regulatory audits, investigations, litigation, or reviews or actions by other government agencies have resulted in and could result in changes to our business practices, retroactive adjustments to certain premiums, significant fines, penalties, civil liabilities, criminal liabilities or other sanctions, including corporate integrity agreements, restrictions on our ability to participate in government programs or exclusion from such programs, and our ability to market certain products or engage in business-related activities, that could have a material adverse effect on our business, results of operation, financial condition and liquidity. In addition, disclosure of an adverse investigation or audit or the imposition of fines or other sanctions could negatively affect our reputation in certain markets and make it more difficult for us to sell our products and services. A description of material pending legal actions and other legal and regulatory matters is included in Note 21 to the Consolidated Financial Statements included in this Form 10-K. The outcome of litigation and other legal or regulatory matters is always uncertain. ***If we fail to comply with applicable privacy, security and data laws, regulations and standards, our business and reputation could be materially adversely affected.*** Most of our activities involve the receipt, use, storage or transmission of a substantial amount of individuals' PII, including PHI. We also use aggregated and/or anonymized data for research and analysis purposes and, in some cases, provide access to such anonymized data, or analytics created from such data, to pharmaceutical manufacturers and third-party data aggregators and analysts. We may also use such information to create analytic models designed to predict, and potentially improve, outcomes and patient care. The collection, dissemination, receipt, maintenance, protection, use, transmission, disclosure, privacy, confidentiality, security, availability, integrity, creation, processing and disposal of PII are regulated at the federal, state, international and industry levels, and requirements are imposed on us by contracts with clients. In some cases, such laws, rules, regulations and contractual requirements also apply to our vendors and require us to obtain written assurances of their compliance with such requirements. We are also subject to various other consumer protection laws that regulate our communications with customers, such as the FTC Act and the Telephone Consumer Protection Act. Certain of our businesses are also subject to the Payment Card Industry Data Security Standard ("PCI DSS"), which is designed to protect credit card account data as mandated by payment card industry entities. International laws, rules and regulations governing the use and disclosure of such information, such as the GDPR, can be more stringent than similar laws in the United States, and they vary across jurisdictions. In addition, more jurisdictions are regulating the transfer of data across borders, and domestic privacy and data protection laws are generally becoming more onerous. These laws, rules and contractual requirements are subject to change and the regulatory environment surrounding data security and privacy is increasingly demanding. Compliance with existing or new privacy, security and data laws, regulations and requirements may result in increased operating costs and may constrain or require us to alter our business model or operations. For more information on privacy regulations to which we are subject, see "Business – Regulation" in Part I, Item 1 of this Form 10-K. HIPAA requires covered entities and business associates to comply with the HIPAA privacy, security and breach rules. While we endeavor to provide appropriate protections through our contracts with our third-party service providers and in certain cases assess their security controls, we have limited oversight or control over their actions and practices. Several of our businesses act as business associates to their covered entity clients and, as a result, collect, receive, use, disclose, transmit and maintain PHI in order to provide services to these customers. HHS administers an audit program to assess HIPAA compliance efforts by covered entities and business associates. In addition, HHS continues to exercise its enforcement authority to bring enforcement actions resulting from complaints, compliance reviews, audits and investigations brought on by notification to HHS of a breach or other HIPAA violation. An audit resulting in findings or allegations of noncompliance or the implementation of an enforcement action could have an adverse effect on our results of operations, financial position, cash flows and reputation. For example, in December 2024, we received a request for a voluntary audit from HHS's Office for Civil Rights ("OCR") to review our compliance with HIPAA security rules. We are in the process of preparing our initial response to OCR's request. As participation in this audit is voluntary, the information provided will not result in any HIPAA enforcement action or civil monetary penalty; however, any serious compliance issues could open up subsequent compliance reviews that could include a range of remedies from OCR. Noncompliance or findings of noncompliance with applicable laws, regulations or requirements, or the occurrence of any privacy or security breach involving the misappropriation, loss or other unauthorized disclosure of PII, whether by us or by one of our third-party service providers, could materially adversely affect our business and reputation, including our results of operations, financial position and cash flows. ***Effective prevention, detection and control systems are critical to maintain regulatory compliance and prevent fraud; failure of these systems could adversely affect us.*** Federal and state governments have made investigating and prosecuting health care and other insurance fraud and abuse a priority. Fraud and abuse prohibitions encompass a wide range of activities including kickbacks for referral of customers, billing for unnecessary medical services, improper marketing and violations of patient privacy rights. Some of our businesses are also subject to federal and state laws and regulations that may impact our relationships with health care providers and customers, including laws on self-referrals, beneficiary inducements, false claims, fee-splitting, telemedicine, corporate practice of medicine, dispensing, packaging, fulfillment and distribution of controlled substances, other pharmaceutical products and medical devices, medical malpractice, consumer protection, product liability, narrow networks, provider tiering programs, provider contracts, overpayments, reimbursement of out-of-network claims and licensure. The regulations and contractual requirements applicable to us are complex and subject to change and may affect our ability to market or provide our products or services. In addition, ongoing vigorous law enforcement, a highly technical regulatory scheme, and the Dodd-Frank Act and related regulations enhance regulators' enforcement powers and whistleblower incentives and protections. Our compliance efforts in this area will continue to require significant resources. Failure of our prevention, detection or control systems related to regulatory compliance, or the failure of employees to comply with our internal policies, including data systems security or unethical conduct by managers and employees, could adversely affect our reputation and also expose us to litigation and other proceedings, fines and penalties. In addition, provider or customer fraud that is not prevented or detected could impact our medical costs or those of our self-insured clients. Further, during an economic downturn, we may experience increased fraudulent claims volume that may lead to additional costs due to an increase in disputed claims and litigation. ### Economic Risks ***Economic and market conditions affect the value of our financial instruments and the value of particular assets and liabilities, investment income and interest expense.*** As an insurer, we have substantial investment assets that support insurance and contractholder deposit liabilities and surplus requirements in our regulated companies. The market values of our investments vary depending on economic and market conditions with no offsetting change in the value of a portion of our liabilities. A substantial portion of our investment assets are in fixed interest-yielding debt securities of varying maturities and commercial mortgage loans. The value of these investment assets can fluctuate significantly with changes in market conditions. In addition, an economic contraction could result in delay in payment of principal or interest by issuers, or defaults by issuers, reducing our investment income and requiring us to write down the value of our investments. ***Significant stock market or interest rate declines could result in unfunded pension obligations resulting in the need for additional plan funding by us and increased pension expenses.*** We currently have overfunded obligations in our frozen pension plan. A significant decline in the value of the plan's equity and fixed income investments or unfavorable changes in applicable laws or regulations could materially increase our expenses and change the timing and amount of required plan funding. This could reduce the cash available to us, including our subsidiaries. We are also exposed to interest rate and equity risk associated with our pension obligations. Sustained declines in interest rates could have an adverse impact on the funded status of our pension plans and our reinvestment yield on new investments. See Note 16 to the Consolidated Financial Statements for more information on our obligations under the pension plans. ***A downgrade in the financial strength ratings of our insurance subsidiaries could adversely affect new sales and retention of current business, and a downgrade in our debt ratings would increase the cost of borrowed funds and could negatively affect our ability to access capital.*** Financial strength, claims paying ability and debt ratings by recognized rating organizations are each important factors in establishing the competitive position of insurance and health benefits companies. Ratings information by nationally recognized rating agencies is broadly disseminated and generally used throughout the industry. We believe that the claims paying ability and financial strength ratings of our principal insurance subsidiaries are important factors in marketing our products to certain customers. Our debt ratings impact both the cost and availability of future borrowings and, accordingly, our cost of capital. Each of the rating agencies reviews ratings periodically, and there can be no assurance that current ratings will be maintained in the future. A downgrade of any of these ratings in the future could make it more difficult to either market our products successfully or raise capital to support business growth. ***We maintain significant indebtedness in the ordinary course of business and may incur further indebtedness in the future. Our indebtedness could adversely affect our financial condition, our ability to react to changes in the economy or our industry and could divert our cash flow from operations for debt service costs, leaving us with less cash flow from operations available to fund growth, stock repurchases, dividends and other corporate purposes.*** The total indebtedness of The Cigna Group was approximately $32.0 billion as of December 31, 2024. Carrying indebtedness: - requires us to dedicate a portion of our cash flow from operations to debt payments, thereby reducing the availability of cash flow to fund our operations and growth strategy; - increases our vulnerability to general adverse economic and industry conditions, which may require us to dedicate an even greater percentage of our cash to the payment of principal and interest on our debt and limit our access to capital markets; - exposes us to increases in interest rates to the extent increased interest expense is not offset by increased income from our investment assets; and - limits our flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry. The covenants in our debt instruments may have the effect of restricting our financial and operating flexibility to respond to significant changes in business and economic conditions, among other things. We may incur or assume significantly more debt in the future, which may subject us to additional restrictive covenants and increase the risks described above. If our cash flow and capital resources are insufficient to service our debt obligations, we may be forced to seek additional dividends from our subsidiaries, sell assets, seek additional equity or debt capital, or restructure our debt. ***Unfavorable developments in economic conditions may adversely affect our business, results of operations and financial condition.*** Many factors, including geopolitical issues, future economic downturns, man-made disasters, natural disasters (including those as a result of climate change) and pandemics, availability and cost of credit, and other capital and consumer spending, can negatively impact the U.S. and global economies. Our results of operations could be materially adversely affected by the impact of unfavorable economic conditions on our clients and customers (both employers and individuals), health care providers, pharmacy manufacturers, pharmacy providers and third-party vendors. For example: - Employers may take action to reduce their operating costs by modifying, delaying or canceling plans to purchase our products or making changes in the mix of products purchased that are unfavorable to us. - Higher unemployment rates, employee attrition (including challenges filling open positions in light of a competitive job market) and workforce reductions could result in lower enrollment in our employer-based plans (including an increase in the number of employees who opt out of employer-based plans) or our individual plans. - Significant disruption or volatility in the capital and credit markets could affect our ability to access those markets for additional borrowings or increase costs. - Because of unfavorable economic conditions or legislation and regulation affecting employer-sponsored coverage, employers may stop offering health care coverage to employees or elect to offer this coverage on a voluntary, employee-funded basis as a means to reduce their operating costs. - If clients are not successful in generating sufficient funds or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. - Our clients or potential clients may force us to compete more vigorously on factors such as price and service to retain or obtain their business. - Our clients may be acquired, consolidated, or otherwise fail to successfully maintain or grow their business or workforce, which could reduce the number of customers we serve or otherwise result in lower than anticipated utilization of our services. - A prolonged unfavorable economic environment could adversely impact the financial position of hospitals and other health care providers, potentially increasing our medical costs. - Our third-party vendors could significantly and quickly increase their prices or reduce their output to reduce their operating costs. Our business depends on our ability to perform necessary business functions in an efficient and uninterrupted fashion. - Other insurers' financial condition may be weakened, increasing the risk that we will receive significant assessments for obligations of insolvent insurers pursuant to guaranty associations, indemnity funds or other similar laws and regulations. The occurrence of these events have led, and may lead, to a decrease in our customer base, revenues or margins or an increase in our operating costs. In addition, during and following a prolonged unfavorable economic environment, federal and state budgets could be materially adversely affected, resulting in reduced or delayed reimbursements or payments in government programs such as Medicare and Social Security or under contracts with government entities. These budgetary pressures also could cause the government to impose new or a higher level of taxes or assessments on us, such as premium taxes on insurance companies and HMOs and surcharges or fees on select fee-for-service and capitated medical claims. Although we could attempt to mitigate or cover our exposure from such increased costs through, among other things, increases in premiums, there can be no assurance that we will be able to mitigate or cover all of such costs, which may have a material adverse effect on our business, results of operations, financial condition and liquidity. ### We are subject to the credit risk of our reinsurers. We enter into reinsurance arrangements with other insurance companies, primarily in connection with acquisition or divestiture transactions when the underwriting company is not being acquired or sold. Under all reinsurance arrangements, reinsurers assume insured losses, subject to certain limitations or exceptions that may include a loss limit. These arrangements also subject us to various obligations, representations and warranties with the reinsurers. Reinsurance does not relieve us of liability as the originating insurer. We remain liable to the underlying policyholders if a reinsurer defaults on obligations under the reinsurance arrangement. Although we regularly evaluate the financial condition of reinsurers to minimize exposure to significant losses from reinsurer insolvencies, reinsurers may become financially unsound. If a reinsurer fails to meet its obligations under the reinsurance contract or if the liabilities exceed any applicable loss limit, we will be forced to cover the claims on the reinsured policies. The collectability of amounts due from reinsurers is subject to uncertainty arising from a number of factors, including whether the insured losses meet the qualifying conditions of the reinsurance contract, whether reinsurers or their affiliates have the financial capacity and willingness to make payments under the terms of the reinsurance contract, and the magnitude and type of collateral supporting our reinsurance recoverable, such as holding sufficient qualifying assets in trusts or letters of credit issued. Although a portion of our reinsurance exposures are secured, the inability to collect a material recovery from a reinsurer could have a material adverse effect on our results of operations, financial condition and liquidity. ## Cybersecurity As filed, 8,931 characters. ### Cybersecurity Strategy and Risk Management Our comprehensive cybersecurity program is supported by policies and procedures designed to protect our systems and operations as well as the sensitive personal information and data of our clients and customers from foreseeable cybersecurity threats. This program is an integral component of our enterprise risk management program. Core to our security model is our defense-in-depth framework, comprising multiple layers of processes and technologies that help prevent, detect and respond to threats. Our approach to safeguarding against external threats incorporates a suite of preventive technologies, including malicious email blocking, defenses against automated attacks and multifactor authentication. Event monitoring technologies run continuously, detecting suspected intrusion attempts and alerting our Cybersecurity Incident Response Team. We undertake a number of critical security processes to mitigate and protect against cybersecurity risks, which include but are not limited to (i) identity and access management; (ii) security awareness and training; (iii) security operations and monitoring; (iv) change management; (v) disaster recovery/business continuity; (vi) intelligence feeds; (vii) physical security; (viii) third-party vendor security reviews; (ix) vulnerability management/patching; and (x) cybersecurity incident reporting. We routinely manage cybersecurity risks through a defined framework that includes activities aimed at the identification, assessment, treatment and monitoring of risks. Cybersecurity risk assessment results are used by senior management to make informed decisions about where to allocate resources to reduce cybersecurity risks and improve overall security posture. We examine our entire program annually with third parties and measure the program against generally accepted industry standards and frameworks, such as an internationally recognized security control framework established by the NIST and used by companies to assess and improve their ability to prevent, detect and respond to cyberattacks. Our cybersecurity policies and standards are reviewed annually and are mainly guided by the NIST 800-53 Cybersecurity Framework. In addition to the NIST framework, we leverage the International Organization for Standardization 27001 and 27002 standards. Our information protection policies and standards are informed by NIST 800-53b, moderate-level security control baseline requirements. To enhance our preparedness and practice our collective cybersecurity response capabilities, we conduct tabletop exercises with leaders, stakeholders, subject matter experts and certain executives that are developed in partnership with external security experts. These events are designed to exercise and engage some of the most critical areas of cybersecurity incident response and preparedness through an interactive/evolving, simulated scenario. In addition to these internal measures, the effectiveness of components of our overall cybersecurity program is frequently evaluated by external third parties, which includes work performed over various levels of control assessments for specific business lines and core processes. These include Health Information Trust Alliance for health care data security, PCI DSS for payment security and System Organization Controls 2 for information security and related controls for specific business lines and core processes. We also perform an annual maturity assessment and benchmark our security controls to identify opportunities to strengthen our cybersecurity program. As part of our Global Threat Management Program, a dedicated Incident Handling Team, comprising both technical and management personnel, determines the severity of a validated cybersecurity event across the enterprise and is responsible for the development and ongoing maintenance of our comprehensive Global Incident Response Plan ("GIRP"). The GIRP is reviewed quarterly at a minimum but may be updated as needed based on lessons learned, changes in key teams or processes or other circumstances as warranted, and the procedures therein are tested annually. The GIRP's incident handling procedures dictate our actions during each phase of an incident, including the assembly of a broad, cross-functional Computer Security Incident Response Team, the formulation of a response, and post-incident reviews and corrective actions. Our information protection department maintains a risk register that is used to manage cybersecurity risks associated with its business activities, technology assets and its interaction with business, information technology and security parties, internal and external. Cybersecurity risks are also periodically reviewed by Enterprise Risk Management to ensure appropriate oversight of cybersecurity risk management activities. Suppliers that have access to, host or transmit our data are contractually required to comply with our Security Policies and Standards. Additionally, suppliers may be subject to periodic security audits or risk assessments, which include security questionnaires, security capabilities and maturity assessments, controls evidence reviews, application vulnerability assessments, public internet presence monitoring, and alignment reviews with service-specific industry standards. Follow-up activities are performed as needed. Contracts with suppliers also include critical security requirements, such as right to audit, technology requirements and hiring practices, including background checks for those who have access to our network. To further ensure supplier resilience and continuity, we regularly evaluate and assess our critical supplier relationships and business continuity plans, enabling us to quickly adapt and maintain operations in the event of prolonged disruption. As of the date of this report, we do not believe that any risks from any cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. That said, as discussed more fully under Part I, Item 1A "Risk Factors – Strategic and Operational Risks – As a large global health company, we and our vendors are subject to cyberattacks or other privacy or data security incidents. If we are unable to prevent or contain the effects of any such attacks, or fail to ensure vendors do the same, we may suffer exposure to substantial liability, reputational harm, loss of revenue or other damages," the sophistication of cybersecurity threats continues to increase, and the preventive actions we take to reduce the risk of cybersecurity incidents and protect our systems and information may become insufficient. Accordingly, no matter how well designed or implemented our controls are, we will not be able to anticipate all attacks of these types, and we may not be able to implement effective preventive measures against such security breaches in a timely manner. ### Cybersecurity Governance Our Board has ultimate oversight over our privacy and cybersecurity programs and strategy and is responsible for ensuring that we have risk management policies and processes in place to meet and mitigate evolving risks and threats. Certain members of the Board have cybersecurity certifications. The Board executes this oversight directly and through both the Audit Committee, for cybersecurity purposes, and the Compliance Committee, for privacy purposes. In these capacities, these committees are regularly briefed by the Global Chief Information Security Officer ("GCISO") and Chief Privacy Officer on cybersecurity and privacy matters. These briefings are designed to provide visibility about the identification, assessment and management of critical risks, audit findings, and management's risk mitigation strategies. Additionally, these briefings include information about current trends in the environment, incident preparedness, artificial intelligence and various components of our cybersecurity and privacy programs. On an annual basis, the Board reviews our cybersecurity program, including the threat landscape and related controls, and periodically conducts cybersecurity tabletop exercises. Our dedicated cybersecurity team is led by our GCISO. Our current GCISO joined the Company in October 2023 and works closely with senior management to develop and innovate the cybersecurity strategy and risk management. Prior to joining the team, our GCISO held senior information security roles at other global organizations where this individual defined information security strategies, built global information security programs, implemented cybersecurity capabilities that protect consumers, wholesale partners and brands, and oversaw the security of a global payment network, a corporate network and digital assets. ## Properties As filed, 1,357 characters. At the end of 2024, our global real estate portfolio consisted of approximately 9.2 million square feet of owned and leased properties to support the operations of our reporting segments. Our domestic portfolio had approximately 7.8 million square feet in 50 states, the District of Columbia and the U.S. Virgin Islands. Our international properties contain approximately 1.4 million square feet located throughout 22 countries. Our principal domestic office locations include the Wilde Building, located at 900 Cottage Grove Road in Bloomfield, Connecticut (our corporate headquarters, which we own), the Evernorth Health Services leased corporate offices located at and around One Express Way in St. Louis, Missouri, and leased office space at Two Liberty Place located at 1601 Chestnut Street in Philadelphia, Pennsylvania. These principal domestic office locations total approximately 2 million square feet. The pharmacy operations consist of 9 home delivery pharmacies, 35 specialty pharmacies and 4 high-volume automated dispensing pharmacies located throughout the United States. Our high-volume automated dispensing pharmacies are located in Arizona, Indiana, Missouri and New Jersey. We believe our properties are adequate and suitable for our business as presently conducted. The foregoing does not include information on investment properties. ## Legal proceedings As filed, 169 characters. The information contained under "Legal and Regulatory Matters" in Note 21 to the Consolidated Financial Statements of this Form 10-K is incorporated herein by reference. ## Management's discussion and analysis As filed, 71,839 characters. *Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating the financial condition of The Cigna Group as of December 31, 2024 compared with December 31, 2023 and our results of operations for 2024 compared with 2023 and 2022 and is intended to help you understand the ongoing trends in our business. For comparisons of our results of operations for 2023 compared with 2022, please refer to the previously filed MD&A included in Part II, Item 7 of our Form 10-K for the year ended December 31, 2023. We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K ("Form 10-K") and the "Risk Factors" contained in Part I, Item 1A of this Form 10-K.* *Unless otherwise indicated, financial information in this MD&A is presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See Note 2 to the Consolidated Financial Statements in this Form 10-K for additional information regarding the Company's significant accounting policies. In some of our financial tables in this MD&A, we present either percentage changes or "N/M" when those changes are so large as to become not meaningful. 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," "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 (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. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. 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. See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income.* *The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See the below Financial Highlights section for a reconciliation of consolidated adjusted revenues to total revenues.* ### EXECUTIVE OVERVIEW The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company committed to creating a better future for every individual and every community. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental, and related products and services. For further information on our business and strategy, see Part I, Item 1 "Business" of this Form 10-K. ### Financial Highlights *(Dollars in millions)* | Consolidated Results of Operations (GAAP basis) | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Pharmacy revenues | **$185,362** | $137,243 | $128,566 | $48,119 | 35% | $8,677 | 7% | | Premiums | **45,996** | 44,237 | 39,916 | 1,759 | 4 | 4,321 | 11 | | Fees and other revenues | **14,790** | 12,619 | 10,881 | 2,171 | 17 | 1,738 | 16 | | Net investment income | **973** | 1,166 | 1,155 | (193) | (17) | 11 | 1 | | **Total revenues** | **247,121** | 195,265 | 180,518 | 51,856 | 27 | 14,747 | 8 | | Pharmacy and other service costs | **182,509** | 133,801 | 124,834 | 48,708 | 36 | 8,967 | 7 | | Medical costs and other benefit expenses | **38,648** | 36,287 | 32,184 | 2,361 | 7 | 4,103 | 13 | | Selling, general and administrative expenses | **14,844** | 14,822 | 13,174 | 22 | — | 1,648 | 13 | | Amortization of acquired intangible assets | **1,703** | 1,819 | 1,876 | (116) | (6) | (57) | (3) | | **Total benefits and expenses** | **237,704** | 186,729 | 172,068 | 50,975 | 27 | 14,661 | 9 | | Income from operations | **9,417** | 8,536 | 8,450 | 881 | 10 | 86 | 1 | | Interest expense and other | **(1,435)** | (1,446) | (1,228) | 11 | (1) | (218) | 18 | | Net gain (loss) on sale of businesses | **24** | (1,499) | 1,662 | 1,523 | N/M | (3,161) | N/M | | Net investment losses | **(2,737)** | (78) | (487) | (2,659) | N/M | 409 | (84) | | **Income before income taxes** | **5,269** | 5,513 | 8,397 | (244) | (4) | (2,884) | (34) | | Total income taxes | **1,491** | 141 | 1,615 | 1,350 | N/M | (1,474) | (91) | | **Net income** | **3,778** | 5,372 | 6,782 | (1,594) | (30) | (1,410) | (21) | | Less: Net income attributable to noncontrolling interests | **344** | 208 | 78 | 136 | 65 | 130 | 167 | | **Shareholders' net income** | **$3,434** | $5,164 | $6,704 | $(1,730) | (34)% | $(1,540) | (23)% | | Consolidated effective tax rate | **28.3%** | 2.6% | 19.2% | | 2,570 bps | | (1,660) bps | | **Medical customers (in thousands)** | **19,147** | 19,780 | 18,004 | (633) | (3)% | 1,776 | 10% | 39 *Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations* *(In millions)* | | For the Years Ended December 31, 2024 Pre-tax | After-tax | 2023 Pre-tax | After-tax | 2022 Pre-tax | After-tax | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | **Shareholders' net income** | | **$3,434** | | $5,164 | | $6,704 | | **Adjustments to reconcile to adjusted income from operations** | | | | | | | | Net investment losses (1) | **$2,533** | **2,529** | $135 | 114 | $613 | 496 | | Amortization of acquired intangible assets | **1,703** | **1,347** | 1,819 | 1,413 | 1,876 | 1,345 | | **Special items** | | | | | | | | Integration and transaction-related costs | **275** | **211** | 45 | 35 | 135 | 103 | | Impairment of dividend receivable | **182** | **138** | — | — | — | — | | Deferred tax expenses (benefits), net | **—** | **84** | — | (1,071) | — | — | | Net (gain) loss on sale of businesses | **(24)** | **(2)** | 1,499 | 1,429 | (1,662) | (1,332) | | Charge for organizational efficiency plan | **—** | **—** | 252 | 193 | 22 | 17 | | Charges (benefits) associated with litigation matters | **—** | **—** | 201 | 171 | (28) | (20) | | Total special items | **$433** | **431** | $1,997 | 757 | $(1,533) | (1,232) | | **Adjusted income from operations** | | **$7,741** | | $7,448 | | $7,313 | *(1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.* | Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations (Diluted earnings per share) | For the Years Ended December 31, 2024 Pre-tax | After-tax | 2023 Pre-tax | After-tax | 2022 Pre-tax | After-tax | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | **Shareholders' net income** | | **$12.12** | | $17.39 | | $21.41 | | **Adjustments to reconcile to adjusted income from operations** | | | | | | | | Net investment losses (1) | **$8.95** | **8.93** | $0.45 | 0.38 | $1.96 | 1.59 | | Amortization of acquired intangible assets | **6.01** | **4.76** | 6.13 | 4.77 | 5.99 | 4.30 | | **Special items** | | | | | | | | Integration and transaction-related costs | **0.97** | **0.75** | 0.15 | 0.12 | 0.43 | 0.33 | | Impairment of dividend receivable | **0.64** | **0.49** | — | — | — | — | | Deferred tax expenses (benefits), net | **—** | **0.30** | — | (3.61) | — | — | | Net (gain) loss on sale of businesses | **(0.08)** | **(0.02)** | 5.05 | 4.81 | (5.31) | (4.26) | | Charge for organizational efficiency plan | **—** | **—** | 0.85 | 0.65 | 0.07 | 0.05 | | Charges (benefits) associated with litigation matters | **—** | **—** | 0.68 | 0.58 | (0.09) | (0.06) | | Total special items | **$1.53** | **1.52** | $6.73 | 2.55 | $(4.90) | (3.94) | | **Adjusted income from operations** | | **$27.33** | | $25.09 | | $23.36 | *(1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.* *(Dollars in millions, except per share amounts)* | Financial highlights by segment Revenues Adjusted revenues by segment | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | Change 2023 vs. 2022 | | --- | ---: | ---: | ---: | ---: | ---: | | Evernorth Health Services | **$202,155** | $153,499 | $140,335 | 32% | 9% | | Cigna Healthcare | **52,914** | 51,205 | 45,037 | 3 | 14 | | Other Operations | **828** | 596 | 2,263 | 39 | (74) | | Corporate, net of eliminations | **(8,798)** | (9,978) | (6,991) | (12) | 43 | | Adjusted revenues | **247,099** | 195,322 | 180,644 | 27 | 8 | | Net investment results from certain equity method investments | **204** | (57) | (126) | N/M | (55) | | Special item related to impairment of dividend receivable | **(182)** | — | — | N/M | N/M | | Total revenues | **$247,121** | $195,265 | $180,518 | 27% | 8% | | **Shareholders' net income** | **$3,434** | $5,164 | $6,704 | (34)% | (23)% | | **Adjusted income from operations** | **$7,741** | $7,448 | $7,313 | 4% | 2% | | **Earnings per share (diluted)** | | | | | | | Shareholders' net income | **$12.12** | $17.39 | $21.41 | (30)% | (19)% | | Adjusted income from operations | **$27.33** | $25.09 | $23.36 | 9% | 7% | | **Pre-tax adjusted income (loss) from operations by segment** | | | | | | | Evernorth Health Services | **$7,001** | $6,442 | $6,127 | 9% | 5% | | Cigna Healthcare | **4,229** | 4,478 | 4,099 | (6) | 9 | | Other Operations | **(9)** | 96 | 509 | N/M | (81) | | Corporate, net of eliminations | **(1,688)** | (1,698) | (1,466) | (1) | 16 | | Consolidated pre-tax adjusted income from operations | **9,533** | 9,318 | 9,269 | 2 | 1 | | Income attributable to noncontrolling interests | **405** | 146 | 84 | 177 | 74 | | Net investment (losses) (1) | **(2,533)** | (135) | (613) | N/M | (78) | | Amortization of acquired intangible assets | **(1,703)** | (1,819) | (1,876) | (6) | (3) | | Special items | **(433)** | (1,997) | 1,533 | (78) | N/M | | **Income before income taxes** | **$5,269** | $5,513 | $8,397 | (4)% | (34)% | *(1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.* For further analysis and explanation of each segment's results, see the "Segment Reporting" section of this MD&A. ### Commentary: 2024 versus 2023 The commentary presented below, and the segment commentaries that follow, compare results for the year ended December 31, 2024 with results for the year ended December 31, 2023. Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category. ***Shareholders' net income*** decreased 34%, or $1,730 million, primarily reflecting increased net investment losses (-$2,415 million) driven by the impairment of VillageMD equity securities, as well as the absence of the foreign deferred tax benefits recorded in 2023 (-$1,155 million). These unfavorable items were partially offset by lower net losses on sale of businesses (+$1,431 million) and higher adjusted income from operations (+$293 million). See further discussion of these drivers below. ***Adjusted income from operations*** increased 4%, primarily reflecting higher earnings in Evernorth Health Services, partially offset by lower earnings in Cigna Healthcare. ***Medical customers*** decreased 3%, primarily reflecting a decrease in Individual and Family Plans ("IFP") customers. ***Pharmacy revenues*** increased 35%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services. ***Premiums*** increased 4%, 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 17%, primarily due to a $182 million impairment of dividend receivable in the third quarter of 2024 related to VillageMD accrued dividends. ***Pharmacy and other service costs*** increased 36%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services. ***Medical costs and other benefit expenses*** increased 7%, primarily reflecting higher medical costs in our U.S. Healthcare operating segment. ***Selling, general and administrative ("SG&A") expenses*** were flat, primarily reflecting increases in strategic investments to support both business growth and continued advancement of our digital capabilities and solutions (3%), offset by the absence of costs reported in 2023 for an organizational efficiency plan (-2%) and litigation settlements (-1%). ***Net gain (loss) on sale of businesses.*** The gain reported in 2024 reflects the sale of a portion of an equity method investment, partially offset by an estimated loss on sale (primarily goodwill impairment) related to the HCSC transaction (defined below). The loss reported in 2023 primarily reflects a goodwill impairment related to the HCSC transaction. See Note 5 and Note 14 to the Consolidated Financial Statements for further discussion of the HCSC transaction and the equity method investment sale, respectively. ***Investment results*** primarily reflect the impairment of VillageMD equity securities in 2024. See Note 11 to the Consolidated Financial Statements for further discussion of the impairment of VillageMD equity securities. ***The effective tax rate*** increased, primarily driven by the absence of foreign deferred tax benefits recorded in 2023 and a valuation allowance related to the impairment of VillageMD equity securities, partially offset by the absence of the impact of the valuation allowance resulting from the HCSC transaction recorded in 2023. See Note 20 to the Consolidated Financial Statements for further discussion of these matters. ### Key Transactions and Business Developments ### Sale of Medicare Advantage and Related Businesses In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment to Health Care Service Corporation ("HCSC") ("HCSC transaction"). The initial $3.3 billion purchase price is anticipated to increase at closing, reflecting higher statutory surplus for the legal entities that will convey to HCSC. The transaction is expected to close in the first quarter of 2025. See Note 5 to the Consolidated Financial Statements for further information. ### LIQUIDITY AND CAPITAL RESOURCES ### Liquidity We maintain liquidity at two levels: the subsidiary level and the parent company level. ***Subsidiary Level.*** Cash requirements at the subsidiary level generally consist of pharmacy, medical costs and other benefit payments; expense requirements, primarily for employee compensation and benefits, information technology and facilities costs; income taxes; and debt service. Our subsidiaries normally meet their liquidity requirements by maintaining appropriate levels of cash, cash equivalents and short-term investments; using cash flows from operating activities; matching durations of investments to estimated durations for the related insurance and contractholder liabilities; selling investments; and borrowing from affiliates, subject to applicable regulatory limits. ***Parent Level.*** 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; collecting dividends from its subsidiaries; using proceeds from issuing debt and common stock; and borrowing from its subsidiaries, subject to applicable regulatory limits. ***Regulatory Restrictions.*** Dividends from our insurance, Health Maintenance Organization ("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. See Note 19 to the Consolidated Financial Statements in this Form 10-K for additional information regarding these restrictions. Most of the Evernorth Health Services segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to The Cigna Group. ***Investment Portfolio.*** We support the liquidity needs of our businesses by managing the duration of invested assets to be consistent with the duration of liabilities. We manage the portfolio to both optimize returns in the current economic environment and meet our liquidity needs. Cash flows for the years ended December 31 were as follows: *(In millions)* | | For the Years Ended December 31, 2024 | 2023 | 2022 | | --- | ---: | ---: | ---: | | Operating activities | **$10,363** | $11,813 | $8,656 | | Investing activities | **$(2,102)** | $(5,174) | $3,098 | | Financing activities | **$(7,647)** | $(4,294) | $(11,240) | The following discussion explains variances in the various categories of cash flows for the year ended December 31, 2024 compared with the same period in 2023. ***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 year ended December 31, 2024 due to higher insurance claims and related payments as well as higher accounts receivable as a result of organic business growth and timing. These decreases were partially offset by the favorable net cash flow impacts of new clients in Evernorth Health Services, higher pharmacy and service costs payable, and lower income tax payments. ***Investing Activities.*** The decrease in cash used in investing activities during the year ended December 31, 2024 was primarily due to lower purchases of equity securities. ***Financing Activities.*** The Company had higher share repurchases, including the completed ASR Agreements (described below), partially offset by net cash provided by debt financing activities in 2024. ### Capital Resources Our capital resources consist primarily of cash, cash equivalents and investments maintained at regulated subsidiaries required to underwrite insurance risks, cash flows from operating activities, our commercial paper program, credit agreements and the issuance of long-term debt and equity securities. Our businesses generate significant cash flows from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends received from U.S.- regulated subsidiaries were $2.4 billion for the year ended December 31, 2024 and $1.2 billion for the year ended December 31, 2023. Non-regulated subsidiaries also generate significant cash flows from operating activities, which is 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; (ii) pay dividends to shareholders; (iii) consider acquisitions and investments that are strategically and economically advantageous; and (iv) return capital to shareholders through share repurchases. ### Funds Available ***Commercial Paper Program.*** The commercial paper program had approximately $0.9 billion outstanding at December 31, 2024. ***Revolving Credit Agreements.*** Our revolving credit agreements provide us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed above. See Note 7 to the Consolidated Financial Statements for further information on our credit agreements and commercial paper program. As of December 31, 2024, we had $6.5 billion of undrawn committed capacity under our revolving credit agreements (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.6 billion of remaining capacity under our commercial paper program and $7.6 billion in cash and short-term investments, approximately $0.8 billion of which was held by the parent company or certain nonregulated subsidiaries. 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 43.8% and 40.1% at December 31, 2024 and 2023, 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 $1.8 billion from its subsidiaries without further approvals as of December 31, 2024. ### Use of Capital Resources ***Capital Expenditures.*** Capital expenditures for property, equipment and computer software were $1.4 billion in 2024 compared to $1.6 billion in the year ended December 31, 2023. We expect to deploy approximately $1.4 billion in capital expenditures in 2025, which will be funded primarily from operating cash flows. ***Dividends.*** The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. See Note 8 to the Consolidated Financial Statements for further information regarding the dividend payments declared and paid during 2024, as well as the first quarter 2025 declared cash dividend. ***Share Repurchases.*** The Company maintains a share repurchase program authorized by the Board of Directors, under which it may repurchase shares of its common stock from time to time. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through Rule 10b5-1 trading plans or privately negotiated transactions. The program may be suspended or discontinued at any time. Including the Accelerated Share Repurchase agreements (discussed further in Note 8 to the Consolidated Financial Statements) (the "ASR Agreements"), we repurchased 20.9 million shares for approximately $7.0 billion during the year ended December 31, 2024, compared to 7.8 million shares for approximately $2.3 billion during the year ended December 31, 2023. In December 2024, the Board of Directors approved an increase of $6.0 billion in incremental share repurchase authorization, bringing the company's total share repurchase authority to $10.3 billion as of December 31, 2024. From January 1, 2025 through February 26, 2025, we repurchased 3.0 million shares for approximately $901 million. Share repurchase authority was $9.4 billion as of February 26, 2025. ### Other Sources of Funds and Uses of Capital Resources ***Divestiture.*** As discussed in the "Key Transactions and Business Developments" section above, the HCSC transaction is expected to close in the first quarter of 2025. We anticipate use of the proceeds in alignment with our capital deployment priorities, with the majority allocated to share repurchases. ### Risks to Liquidity and Capital Resources Risks to our liquidity and capital resources outlook include cash projections that may not be realized, and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the "Risk Factors" section of this Form 10-K. ### Guarantees and Contractual Obligations We are contingently liable for various contractual obligations and financial and other guarantees entered into in the ordinary course of business. See Note 21 to the Consolidated Financial Statements for discussion of various guarantees. ### On Balance Sheet: ***Long-Term Debt.*** Total scheduled payments on long-term debt are $48.5 billion (of which $3.5 billion relate to the fiscal year ending December 31, 2025), which include scheduled interest payments and maturities of long-term debt. See Note 7 to the Consolidated Financial Statements for information regarding principal maturities of long-term debt. ***Other Non-Current Liabilities.*** These include other long-term liabilities reflected in our Consolidated Balance Sheets as of December 31, 2024, including obligations associated with other postretirement and postemployment benefit obligations, reinsurance liabilities, supplemental and deferred compensation plans, and interest rate and foreign currency swap contracts. ***Uncertain Tax Positions.*** In the event we are unable to sustain all of our $1.5 billion of uncertain tax positions, it could result in future tax payments of approximately $1.0 billion. We are adequately reserved for such positions. As a result, there is minimal direct risk to earnings should we fail to sustain our positions. We cannot reasonably estimate the timing of such future payments. See Note 20 to the Consolidated Financial Statements for additional information on uncertain tax positions. ### Off-Balance Sheet: ***Purchase Obligations.*** These include agreements to purchase goods or services that are enforceable and legally binding. Purchase obligations exclude contracts that are cancellable without penalty and those that do not contractually require minimum levels of goods or services to be purchased. As of December 31, 2024, purchase obligations consisted of a total of $4.2 billion of estimated payments required under contractual arrangements (of which we expect $1.6 billion of purchase obligations to be paid within the next 12 months beginning January 1, 2025). This includes the following: - $2.7 billion of investment commitments (of which we expect $0.9 billion of the committed amounts to be disbursed in 2025). See Note 11 of the Consolidated Financial Statements for additional information on investment commitments. - $1.5 billion of future service commitments (of which we expect $0.7 billion of the committed amounts to be disbursed in 2025), primarily comprised of contracts for certain outsourced business processes and information technology maintenance and support. ### CRITICAL ACCOUNTING ESTIMATES The preparation of Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures in the Consolidated Financial Statements. Management considers an accounting estimate to be critical if: - it requires assumptions to be made that were uncertain at the time the estimate was made; and - changes in the estimate or different estimates that could have been selected could have a material effect on our consolidated results of operations or financial condition. Management has discussed how critical accounting estimates are developed and selected with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the disclosures presented in this Form 10-K. We regularly evaluate items that may impact critical accounting estimates. In addition to the estimates described below, the Notes to the Consolidated Financial Statements describe other estimates that management has made in preparation of the financial statements. Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate. 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. The information below presents the adverse impacts of certain possible changes in assumptions. The effect of assumption changes in the opposite direction would be a positive impact to our consolidated results of operations, liquidity or financial condition, except for assessing impairment of goodwill. ### Goodwill and Other Intangible Assets ***Nature of Critical Accounting Estimate.*** Goodwill represents the excess of the cost of businesses acquired over the fair value of their net assets at the acquisition date. Intangible assets primarily reflect the value of customer relationships and other intangibles acquired in business combinations. Fair values of reporting units are estimated based on discounted cash flow analysis and market approach models using assumptions that we believe a hypothetical market participant would use to determine a current transaction price. The significant assumptions and estimates used in determining fair value primarily include the discount rate and future cash flows. A discount rate is selected to correspond with each reporting unit's weighted average cost of capital, consistent with that used for investment decisions considering the specific and detailed operating plans and strategies within each reporting unit. Projections of future cash flows differ by reporting unit and are consistent with our ongoing strategic projections. Future cash flows for the Evernorth Health Services reporting units are primarily driven by the forecasted gross margins of the business, as well as operating expenses and long-term growth rates. Future cash flows for our other reporting units are primarily driven by forecasted revenues, benefit expenses, operating expenses and long- term growth rates. The fair value of intangibles and the amortization method were determined using an income approach that relies on projected future cash flows, including key assumptions for customer attrition and discount rates. Management revises amortization periods if it believes there has been a change in the length of time that an intangible asset will continue to have value. The Company conducts its quantitative evaluation for goodwill impairment at least annually during the third quarter at the reporting unit level and performs qualitative impairment assessments on a quarterly basis to determine if events or changes in circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value. Excluding amounts classified as held for sale, Goodwill and other intangibles as of December 31, 2024 were $44,370 million and $29,417 million, respectively, and as of December 31, 2023, were $44,259 million and $30,863 million, respectively. See Note 18 to the Consolidated Financial Statements for additional discussion of our goodwill and other intangible assets. ***Effect if Different Assumptions Used.*** We completed our normal annual evaluations for impairment of goodwill and intangible assets during the third quarter of 2024. The evaluations support that as of December 31, 2024, the fair value estimates of our reporting units exceed their carrying values by substantial margins. Changes in assumptions concerning future financial results or other underlying assumptions, including macroeconomic factors, government legislation, changes in the competitive landscape or other market conditions, could impact our ability to achieve profitability projections. If we consistently do not achieve our earnings and cash flow projections or our cost of capital rises significantly, the assumptions and estimates underlying the goodwill and intangible asset impairment evaluations could be adversely affected and result in future impairment charges that would negatively impact our operating results and financial position. ### Income Taxes - Uncertain Tax Positions ***Nature of Critical Accounting Estimate.*** We evaluate tax positions to determine whether the benefits are more likely than not to be sustained on audit based on their technical merits. The Company establishes a liability if the probability that the position will be sustained is 50% or less. For uncertain positions that management believes are more likely than not to be sustained, the Company recognizes a liability based upon management's estimate of the most likely settlement outcome with the taxing authority. These amounts primarily relate to federal and state uncertain positions of the value and timing of deductions and uncertain positions of attributing taxable income to states. Balances that are included in the Consolidated Balance Sheets within Accrued expenses and other liabilities were $1,477 million and $1,399 million as of December 31, 2024 and December 31, 2023, respectively. See Note 20 to the Consolidated Financial Statements for additional discussion around uncertain tax positions and the Liquidity and Capital Resources section of this MD&A for a discussion of their potential impact on liquidity. ***Effect if Different Assumptions Used.*** The factors that could impact our estimates of uncertain tax positions include the likelihood of sustaining our tax position (and related assumed interest and penalties) under audit. If our positions are upheld upon audit, our net income would increase. ### Income Taxes - Valuation Allowance ***Nature of Critical Accounting Estimate.*** Deferred income taxes in the Consolidated Balance Sheets reflect differences between the financial and income tax reporting bases of the Company's underlying assets and liabilities, and are established based upon enacted tax rates and laws. Deferred income tax assets are recognized when available evidence indicates that realization is more likely than not and a valuation allowance is established to the extent this standard is not met. It is possible that the realization of deferred tax assets may be impacted by changes in forecasted future earnings in various foreign jurisdictions or the Company's ability to generate future capital gains. Valuation allowances that are included in the Consolidated Balance Sheets within Deferred tax liabilities, net were $2,332 million and $1,498 million as of December 31, 2024 and December 31, 2023, respectively. See Note 20 to the Consolidated Financial Statements for additional discussion around valuation allowances. ***Effect if Different Assumptions Used.*** The factors that could impact our estimates of valuation allowances include changes in forecasted future earnings in foreign jurisdictions, potential international tax reform as a result of Organization for Economic Cooperation and Development initiatives, and the Company's future ability to generate capital gains. Decreases in our valuation allowance would increase net income, while increases in our valuation allowance would decrease net income. ### Unpaid Claims and Claims Expenses - Cigna Healthcare ***Nature of Critical Accounting Estimate.*** Unpaid claims and claim expenses reflect estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. Unpaid claims and claim expenses in Cigna Healthcare are primarily impacted by assumptions related to completion factors and medical cost trend. Variation of actual results from either assumption could impact the unpaid claims balance as noted below. A large number of factors may cause the medical cost trend to vary from the Company's estimates, including changes in health management practices, changes in the level and mix of benefits offered and services utilized, and changes in medical practices. Completion factors may be affected if actual claims submission rates from providers differ from estimates (that can be influenced by a number of factors, including provider mix and electronic versus manual submissions), or if changes to the Company's internal claims processing patterns occur. Unpaid claims and claim expenses for the Cigna Healthcare segment, both gross and net of reinsurance and other recoverables, as of December 31, 2024 were $5,018 million gross and $4,859 million net and as of December 31, 2023 were $5,092 million gross and $4,856 million net. See Note 9 to the Consolidated Financial Statements for additional information regarding assumptions and methods used to estimate this liability. ***Effect if Different Assumptions Used.*** Based on studies of our claim experience, it is reasonably possible that a 100 basis point change in the medical cost trend and a 50 basis point change in completion factors could occur in the near term. A 100 basis point increase in the medical cost trend rate would increase this liability by approximately $110 million, resulting in a decrease in net income of approximately $85 million after-tax, and a 50 basis point decrease in completion factors would increase this liability by approximately $185 million, resulting in a decrease in net income of approximately $145 million after-tax. ### Valuation of Debt Security Investments ***Nature of Critical Accounting Estimate.*** Most debt securities are classified as available for sale and are carried at fair value with changes in fair value recorded in Accumulated other comprehensive loss within Shareholders' equity. Fair value is defined as the price at which an asset could be exchanged in an orderly transaction between market participants at the balance sheet date. Determining fair value for a financial instrument requires management judgment. The degree of judgment involved generally correlates to the level of pricing readily observable in the markets. Financial instruments with quoted prices in active markets or with market-observable inputs to determine fair value, such as public securities, generally require less judgment. Conversely, private placements including more complex securities that are traded infrequently are typically measured using pricing models that require more judgment as to the inputs and assumptions used to estimate fair value. There may be a number of alternative inputs to select based on an understanding of the issuer, the structure of the security and overall market conditions. In addition, these factors are inherently variable in nature as they change frequently in response to market conditions. Approximately 60% of our debt securities are public securities and approximately 40% are private placement securities. Typically, the most significant input in the measurement of fair value is the market interest rate used to discount the estimated future cash flows of the instrument. Such market rates are derived by calculating the appropriate spreads over comparable U.S. Treasury securities, based on the credit quality, industry and structure of the asset. Balances that are included in the Consolidated Balance Sheets within Investments and Long-term investments, inclusive of amounts held for sale, were $9,423 million and $9,855 million as of December 31, 2024 and December 31, 2023, respectively. See Notes 11A and 12 to the Consolidated Financial Statements for a discussion of our fair value measurements, the procedures performed by management to determine that the amounts represent appropriate estimates and our accounting policy regarding unrealized appreciation on debt securities. ***Effect if Different Assumptions Used.*** If the derived market rates used to calculate fair value increased by 100 basis points, the fair value of the total debt security portfolio of $9.4 billion would decrease by approximately $0.5 billion, resulting in an after-tax decrease to shareholders' equity of approximately $0.4 billion as of December 31, 2024. ### SEGMENT REPORTING The following section of this MD&A discusses the results of each of our segments. See Note 1 to the Consolidated Financial Statements for further description of our segments. In segment discussions, we present "adjusted revenues" and "pre-tax adjusted income (loss) from operations," defined as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net investment gains/losses, amortization of acquired intangible assets and special items. 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. The Cigna Group share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management, including the chief operating decision maker, believes are not representative of the underlying results of operations due to their nature or size. Ratios presented in this segment discussion exclude the same items as adjusted revenues and pre-tax adjusted income (loss) from operations. See Note 22 to the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of income (loss) before income taxes to pre-tax adjusted income (loss) from operations, as well as a reconciliation of Total revenues to adjusted revenues. Note 22 to the Consolidated Financial Statements also explains that segment revenues include both external revenues and sales between segments that are eliminated in Corporate. In these segment discussions, we also present "pre-tax margin," calculated as pre-tax adjusted income (loss) from operations divided by adjusted revenues. See the "Executive Overview" section of this MD&A for summarized financial results of each of our segments. ### Evernorth Health Services Segment Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, 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. ### Key Factors Affecting Segment Performance The key factors that impact the performance of Evernorth Health Services Pharmacy Benefit Services and Specialty and Care Services revenues and income from operations are volume, mix of claims, price and contract affordability services. Specialty and Care Services revenues are also impacted by specialty distribution customer growth and client growth. These key factors are discussed further below. Certain of the key factors impact both operating segments as services are offered through an integrated client contract. See Note 2 to the Consolidated Financial Statements included in this Form 10-K for additional information on revenue and cost recognition policies for this segment. Key factors that impact both Pharmacy Benefit Services and Specialty and Care Services: - 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. - The mix of claims generally considers the type of drug and distribution method used for dispensing and fulfilling. 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 drugs they replace, providing positive impacts or our clients, our customers and us. - Pharmaceutical manufacturer inflation also impacts our pricing because most of our contracts provide that we bill clients and pay pharmacies based on a generally recognized price index for pharmaceuticals. 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 on our clients' behalf (also referred to as affordability improvements). Through these affordability services, we seek to improve the effectiveness of our integrated and fee-for-service solutions, for the benefit of our new and existing clients, by continuously innovating, improving affordability and implementing drug purchasing contract initiatives. Our continued affordability improvements further reduce drug costs for the benefit of our consumers and clients, and we share in the value delivered, which generally results in a favorable impact on our income from operations. Key factors that impact Specialty and Care Services: - Customer growth generally results in increased revenues and income from operations. This generally includes both organic customer growth through the expansion of existing business and new business, as well as higher volume in our specialty distribution services where we deliver pharmaceuticals and medical supplies directly to health care providers, clinics and hospitals, primarily to physicians who regularly order costly specialty pharmaceuticals. This business provides competitive pricing on pharmaceuticals and medical supplies and leverages our distribution platform to improve our results. - Client growth, both organic and new business, in our Care Services business generally results in increased revenues and income from operations. This includes client movement in our virtual care, in-home 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 *(Dollars in millions)* | Financial Summary | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Adjusted revenues (1) | **$202,155** | $153,499 | $140,335 | $48,656 | 32% | $13,164 | 9% | | Pre-tax adjusted income from operations (1) | **$7,001** | $6,442 | $6,127 | $559 | 9% | $315 | 5% | | Pre-tax margin (1)(2) | **3.5%** | 4.2% | 4.4% | | (70) bps | | (20) bps | | SG&A expense ratio (3) | **1.9%** | 2.2% | 2.0% | | (30) bps | | 20 bps | *(1) See Note 22 to the Consolidated Financial Statements for reconciliation of adjusted revenues and pre-tax adjusted income from operations to Total revenues and Income before income taxes, respectively.* *(2) Pre-tax margin is calculated as pre-tax adjusted income from operations divided by adjusted revenues.* *(3) SG&A expense ratio is calculated as segment selling, general and administrative expenses divided by adjusted revenues. See Note 22 to the Consolidated Financial Statements for further details.* In this selected financial information, we present adjusted revenues and pre-tax income from operations by our two operating segments, Pharmacy Benefit Services and Specialty and Care Services. *(Dollars and adjusted scripts in millions)* | Selected Financial Information Total adjusted revenues | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | Change 2023 vs. 2022 | | --- | ---: | ---: | ---: | ---: | ---: | | Pharmacy Benefit Services | **$111,822** | $76,792 | $75,801 | 46% | 1% | | Specialty and Care Services | **90,333** | 76,707 | 64,534 | 18 | 19 | | Total adjusted revenues | **$202,155** | $153,499 | $140,335 | 32% | 9% | | **Pre-tax adjusted income from operations** | | | | | | | Pharmacy Benefit Services | **$3,577** | $3,469 | $3,616 | 3% | (4)% | | Specialty and Care Services | **3,424** | 2,973 | 2,511 | 15 | 18 | | Total pre-tax adjusted income from operations | **$7,001** | $6,442 | $6,127 | 9% | 5% | | **Pharmacy claim volume (1)** | **2,120** | 1,585 | 1,575 | 34% | 1% | *(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.* ### 2024 versus 2023 *Commentary in parentheses regarding percentage changes represents the driver's impact on the overall category.* ***Adjusted revenues*** increased 32%, primarily reflecting higher utilization of prescription drugs from customer growth in both Pharmacy Benefit Services (+24%) and Specialty and Care Services (+7%). ***Pre-tax adjusted income from operations*** increased 9%, primarily reflecting customer growth in Specialty and Care Services (+10%) and continued affordability improvements in Pharmacy Benefit Services (+5%). These increases were partially offset by strategic investments to support business growth and continued advancement of our capabilities and solutions (-3% in Specialty and Care Services and -2% in Pharmacy Benefit Services). The ***SG&A expense ratio*** decreased 30 bps, primarily reflecting higher adjusted revenues as discussed above. ### Cigna Healthcare Segment Cigna Healthcare includes the U.S. Healthcare and International Health businesses, which provide comprehensive medical and coordinated solutions to clients and customers. As described in the introduction to Segment Reporting, performance of the Cigna Healthcare segment is measured using adjusted revenues and pre-tax adjusted income from operations. In January 2024, the Company entered into a definitive agreement to sell the Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment. See "Key Transactions and Business Developments" for further discussion. ### Key Factors Affecting Segment Performance The key factors that impact Cigna Healthcare revenues and income from operations include revenue growth, customer growth, medical cost trend, percentage of Medicare Advantage customers in plans eligible for quality bonus payments, the medical care ratio ("MCR") and the SG&A expense ratio. These key factors are discussed further below. See Note 2 to the Consolidated Financial Statements included in this Form 10-K for additional information on revenue and cost-recognition policies for this segment. - 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. - Prior to the divestiture of our Medicare Advantage and related businesses to HCSC, the percentage of Medicare Advantage customers in bonus-eligible plans impacts the amount of quality bonus payments we receive. - MCR represents medical costs as a percentage of premiums for our segment's insured businesses, and it is impacted by medical cost trend and premium rates. Affordability initiatives that serve to mitigate medical cost inflation also impact the MCR. - The SG&A expense ratio represents the segment's selling, general and administrative expenses divided by adjusted revenues. ### Results of Operations *(Dollars in millions)* | Financial Summary | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Adjusted revenues (1) | **$52,914** | $51,205 | $45,037 | $1,709 | 3% | $6,168 | 14% | | Pre-tax adjusted income from operations (1) | **$4,229** | $4,478 | $4,099 | $(249) | (6)% | $379 | 9% | | Pre-tax margin (1)(2) | **8.0%** | 8.7% | 9.1% | | (70) bps | | (40) bps | | Medical care ratio | **83.2%** | 81.3% | 81.7% | | 190 bps | | (40) bps | | SG&A expense ratio (3) | **20.4%** | 21.6% | 21.8% | | (120) bps | | (20) bps | *(1) See Note 22 to the Consolidated Financial Statements for reconciliation of adjusted revenues and pre-tax adjusted income from operations to Total revenues and Income before income taxes, respectively.* *(2) Pre-tax margin is calculated as pre-tax adjusted income from operations divided by adjusted revenues.* *(3) SG&A expense ratio is calculated as segment selling, general and administrative expenses divided by adjusted revenues. See Note 22 to the Consolidated Financial Statements for further details.* ### 2024 versus 2023 *Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.* ***Adjusted revenues*** increased 3%, or $1,709 million, primarily due to higher premiums within employer insured (+$1,086 million), stop loss (+$601 million) and Medicare Part D (+$595 million), reflecting premium rate increases across those businesses, partially offset by lower premiums within IFP (-$1,137 million), reflecting a decrease in customers. ***Pre-tax adjusted income from operations*** decreased 6%, or $249 million, primarily due to higher medical costs (-$2,209 million), partially offset by higher adjusted revenues (+$1,709 million) and lower SG&A expenses (+$250 million), primarily reflecting ongoing efficiencies. The impact of higher premiums in adjusted revenues and medical costs are reflected in the medical care ratio calculation. The ***medical care ratio*** increased 190 bps for the year ended and 570 bps for the three months ended December 31, 2024. The increases for both periods were primarily due to higher stop loss medical costs. The ***SG&A expense ratio*** decreased 120 bps, primarily due to revenue growth outpacing volume-related expenses (-60 bps), as well as ongoing efficiencies (-30 bps). ### Medical Customers A medical customer is defined as a person meeting any one of the following criteria: - is covered under a medical insurance policy, managed care arrangement or administrative services agreement issued by us; - has access to our provider network for covered services under their medical plan; or - has medical claims that are administered by us. *(In thousands)* | Cigna Healthcare Medical Customers | As of December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | U.S. Healthcare | **3,853** | 4,280 | 3,587 | (427) | (10) | 693 | 19 | | International Health (1) | **1,211** | 1,184 | 1,169 | 27 | 2 | 15 | 1 | | **Insured** | **5,064** | 5,464 | 4,756 | (400) | (7)% | 708 | 15% | | U.S. Healthcare | **13,649** | 13,890 | 12,619 | (241) | (2) | 1,271 | 10 | | International Health (1) | **434** | 426 | 629 | 8 | 2 | (203) | (32) | | **Administrative services only** | **14,083** | 14,316 | 13,248 | (233) | (2) | 1,068 | 8 | | **Total** | **19,147** | 19,780 | 18,004 | (633) | (3)% | 1,776 | 10% | *(1) International Health excludes medical customers served by less than 100%-owned subsidiaries, as well as certain customers served by our third-party administrator.* Total medical customers decreased 3%, primarily due to a decline in IFP customers. See Part I, Item 1 of this Form 10-K for definitions of Cigna Healthcare market segments. ### Unpaid Claims and Claim Expenses *(In millions)* | | As of December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Unpaid claims and claim expenses | **$5,018** | $5,092 | $4,176 | $(74) | (1)% | $916 | 22% | Our unpaid claims and claim expenses liability decreased 1%, driven by a decrease in IFP customers (-$300 million), partially offset by an increase related to the Medicare businesses (+$175 million). ### Other Operations Other Operations includes corporate-owned life insurance ("COLI"), the Company's run-off operations and other non-strategic businesses. As described in the introduction of Segment Reporting, performance of Other Operations is measured using adjusted revenues and pre-tax adjusted income from operations. ### Results of Operations *(Dollars in millions)* | Financial Summary | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Adjusted revenues | **$828** | $596 | $2,263 | $232 | 39% | $(1,667) | (74)% | | Pre-tax adjusted (loss) income from operations | **$(9)** | $96 | $509 | $(105) | N/M% | $(413) | (81)% | | Pre-tax margin | **(1.1)%** | 16.1% | 22.5% | | (1,720) bps | | (640) bps | ### 2024 versus 2023 ***Adjusted revenues*** primarily reflect premiums and net investment income associated with COLI and our run-off operations and revenues from other non-strategic businesses. ***Pre-tax adjusted (loss) income from operations*** decreased primarily driven by unfavorable margins in our non-strategic businesses. ### Corporate Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs, and eliminations for products and services sold between segments. *(In millions)* | Financial Summary | For the Years Ended December 31, 2024 | 2023 | 2022 | Change 2024 vs. 2023 | | Change 2023 vs. 2022 | | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Pre-tax adjusted loss from operations | **$(1,688)** | $(1,698) | $(1,466) | $10 | (1)% | $(232) | 16% | ### 2024 versus 2023 *Commentary regarding percentage changes represents the driver's impact on the overall category.* ***Pre-tax adjusted loss from operations*** decreased 1%, primarily due to lower pension and operating costs (-7%), partially offset by higher interest rates on our indebtedness (+6%). ### INVESTMENT ASSETS Information regarding our investment assets is included in Notes 11, 12, 13 and 15 to the Consolidated Financial Statements. ### Investment Outlook Future realized and unrealized investment results will be driven largely by market conditions, and these future conditions are not reasonably predictable. We believe that the vast majority of our investments will continue to perform under their contractual terms. We manage the portfolio for long-term economics and 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. The below discussion addresses the strategies and risks associated with our various classes of investment assets. See Item 1A "Risk Factors" for additional information regarding risks associated with our investment portfolio. ### Debt Securities The carrying value of our debt securities portfolio decreased from $9.9 billion as of December 31, 2023 to $9.4 billion as of December 31, 2024, primarily reflecting net sales activity. Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the past few years. As of December 31, 2024, $8.1 billion, or 86%, 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. The majority of the bonds that are below investment grade were rated at the higher end of the non-investment grade spectrum. These quality characteristics have not materially changed since the prior year and remain consistent with our investment strategy. Investments in debt securities are diversified by issuer, geography and industry. On an aggregate basis, the debt securities portfolio continues to perform according to original expectations, which includes a long-term economic investment strategy. Primary risks facing many of the issuers in our portfolio include ongoing geopolitical events and economic conditions, including expectations for a longer period of higher inflation and interest rates. To date, most issuers have been successful in managing these issues without a meaningful change in credit quality. We continue to monitor the economic environment and its effect on our portfolio; we also continue to consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 11 to the Consolidated Financial Statements. ### Commercial Mortgage Loans As of December 31, 2024, our $1.4 billion commercial mortgage loan portfolio consisted of approximately 45 fixed-rate loans, diversified by property type, location and borrower. These loans are carried in our Consolidated Balance Sheets at their unpaid principal balance, net of an allowance for expected credit losses. As a result of increasing market interest rates since the majority of these loans were made, the carrying value exceeds the market value of these loans as of December 31, 2024. 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. For further discussion of the results and changes in key credit quality indicators, see Note 11 to the Consolidated Financial Statements. Office sector fundamentals have been and continue to be weak, and values are experiencing stress due to multiple headwinds: expanded work-from-home flexibility, shorter term leases, elevated tenant improvement allowances and corporate migration to lower cost states. Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital-intensive assets (e.g., offices and regional shopping malls). Our commercial mortgage loan portfolio has no exposure to regional shopping malls and approximately 25% exposure to office properties. Although future losses remain possible due to further credit deterioration, we do not expect these losses to have a material unfavorable effect on our results of operations, financial condition or liquidity. ### Other Long-Term Investments Other long-term investments of $4.6 billion as of December 31, 2024 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures and other deposit activity that is required to support various insurance and health services businesses. These limited partnership entities typically invest in mezzanine debt or equity of privately held companies and equity real estate. Given our subordinate position in the capital structure of these underlying entities, we assume a higher level of risk for higher expected returns. To mitigate risk, these investments are diversified by industry sector or property type and geographic region. No single partnership investment exceeded 3% of our securities and real estate limited partnership portfolio. We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions. Less than 4% of our other long-term investments are exposed to real estate in the office sector. ### Unconsolidated Subsidiary Investments Portfolio We participate in an insurance joint venture in China with a 50% ownership interest. 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 $15.6 billion as of December 31, 2024. These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 15% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans. We continuously review the joint venture's investment strategy and its execution. There were no investments with a material unrealized loss as of December 31, 2024. See Note 14 to the Consolidated Financial Statements for additional information regarding unconsolidated subsidiaries. ### MARKET RISK Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices. Our primary market risk exposure from financial instruments is our interest-rate risk exposure to fixed-rate, medium-term instruments. Changes in market interest rates affect the value of instruments that promise a fixed return. Consistent with disclosure requirements, the following items have been excluded from this consideration of market risk for financial instruments: changes in the fair values of insurance-related assets and liabilities as disclosed in Note 9 to the Consolidated Financial Statements (because their primary risks are insurance rather than market risk); changes in the fair values of investments recorded using the equity method of accounting and liabilities for pension and other postretirement and postemployment benefit plans (and related assets); and changes in the fair values of other significant assets and liabilities, such as goodwill, taxes and various accrued liabilities (because they are not financial instruments, their primary risks are other than market risks). ### Our Management of Market Risks We predominantly rely on two techniques to manage our exposure to market risk: - ***Investment/liability matching.*** We generally select investment assets with characteristics (such as duration, yield, currency and liquidity) that correspond to the underlying characteristics of our related insurance and contractholder liabilities so that we can match the investments to our obligations. Shorter-term investments generally support shorter-term life and health liabilities. Medium-term, fixed-rate investments support interest-sensitive and medium-term health liabilities. Longer-term investments generally support products with longer payout periods such as annuities. - ***Use of derivatives.*** We use derivative financial instruments to reduce our primary market risks. See Note 11 to the Consolidated Financial Statements for additional information about derivative financial instruments. ### Effect of Market Fluctuations We determine the sensitivity of market risk for our fixed income financial instruments, including debt securities and commercial mortgage loans, by estimating the present value of future cash flows using duration modeling and applying a 100 basis point increase in interest rates. The effect of these hypothetical changes in market rates or prices on the fair value of certain noninsurance financial instruments would have been as follows: *(in billions)* | Market scenario for certain noninsurance financial instruments | Loss in Fair Value December 31, 2024 | December 31, 2023 | | --- | ---: | ---: | | 100 basis point increase in interest rates (excluding the Company's long-term debt) | **$0.6** | $0.7 | In the event of a hypothetical 100 basis point increase in interest rates, the fair value of the Company's long-term debt would decrease approximately $1.8 billion at both December 31, 2024 and December 31, 2023. Changes in the fair value of our long-term debt do not impact our financial position or operating results since long-term debt is not required to be recorded at fair value. See Note 7 to the Consolidated Financial Statements for additional information about the Company's debt. ## Market risk As filed, 125 characters. The information contained under the caption "Market Risk" in the MD&A section of this Form 10-K is incorporated by reference. ## Controls and procedures As filed, 3,591 characters. ### A. Disclosure Controls and Procedures Based on an evaluation of the effectiveness of The Cigna Group's disclosure controls and procedures conducted under the supervision and with the participation of The Cigna Group's management (including The Cigna Group's Chief Executive Officer and Chief Financial Officer), The Cigna Group's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, The Cigna Group's disclosure controls and procedures are effective to ensure that information required to be disclosed by The Cigna Group in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and is accumulated and communicated to The Cigna Group's management (including The Cigna Group's Chief Executive Officer and Chief Financial Officer) as appropriate to allow timely decisions regarding required disclosure. ### B. Internal Control Over Financial Reporting ### Management's Annual Report on Internal Control over Financial Reporting Management of The Cigna Group is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal controls were designed to provide reasonable assurance that the Company's consolidated published financial statements for external purposes were prepared in accordance with accounting principles generally accepted in the United States. The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the Company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in *Internal Control-Integrated Framework (2013).* Based on management's assessment and the criteria set forth by COSO, it was determined that the Company's internal control over financial reporting is effective as of December 31, 2024. The Company's independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of and has issued an attestation report on the Company's internal control over financial reporting, as stated in their report located in Item 8 of this Form 10-K. ### Change in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, The Cigna Group's internal control over financial reporting. Filed Feb 27, 2025. Source: SEC EDGAR, the filing index for accession 0001739940-25-000009. Last ingested by Listed: Nov 5, 2026, 13:13 ET. No prices; not investment advice.