The Cigna Group

Ladies and gentlemen, thank you for standing by for Cigna's second quarter 2022 results review. At this time, all callers are in a listen-only mode. We will conduct a question and answer session later during the conference and review procedures on how to enter queue to ask questions at that time. If you should require assistance during the call, please press star zero on your touchtone phone. As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Mr. Ralph Jacoby. Please go ahead, Mr. Jacoby.

Great, thanks. Good morning, everyone. Thank you for joining today's call. I'm Ralph Jacoby, Senior Vice President of Investor Relations. With me on the line this morning are David Cordani, Cigna's Chairman and Chief Executive Officer, and Brian Ivanko, Cigna's Chief Financial Officer. In our remarks today, David and Brian are going to cover a number of topics, including Cigna's second quarter 2022 financial results, as well as an update on our financial outlook for the year. As noted in our earnings release, when describing our financial results, Cigna uses certain financial measures, adjusted income from operations and adjusted revenues, which are not determined in accordance with accounting principles generally accepted in the United States, otherwise known as GAAP. A reconciliation of these measures to the most directly comparable GAAP measures, shareholders' net income and total revenues, respectively, is contained in today's earnings release, which is posted in the investor relations section of Cigna.com. We use the term labeled adjusted income from operations and adjusted earnings per share on the same basis as our principle measures of financial performance. In our remarks today, we will be making some forward-looking statements, including statements regarding our outlook for 2022 and future performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. A description of these risks and uncertainties is contained in the cautionary note of today's earnings release and in our most recent reports filed with the SEC. Before turning the call over to David, I will cover a few items pertaining to our financial results and disclosures. Regarding our results, in the second quarter, we recorded after-tax special item charges of $26 million, or 8 cents per share, for integration and transaction-related costs, and $17 million, or 5 cents per share, related to a strategic plan to further leverage the company's ongoing growth to drive operational efficiency. We also recorded an after-tax special item benefit of $20 million, or six cents per share, associated with litigation matters. As described in today's earnings release, special items are excluded from adjusted income from operations and adjusted revenues in our discussion of financial results. Additionally, please note that when we make prospective comments regarding financial performance, including our full year 2022 outlook, we will do so on a basis that includes the potential impact of future share or purchases and anticipated 2022 dividends and excludes the impact of any business combinations or divestitures that may occur after today. As a reminder, we completed the sale of our international life accident and supplemental businesses to Chubb on July 1st. which is contemplated in our perspective statements. With that, I'll turn the call over to David.

Thanks, Ralph. Good morning, everyone, and thank you for joining our call today. In the second quarter, our company continued delivering differentiated value for our clients, customers, patients, and partners as we execute on our mission to improve the health, well-being, and peace of mind of those we serve. And we posted strong results for the quarter and continue to build on our momentum from the first quarter. Now today, I'll briefly discuss our quarterly performance and the key strategic drivers of our growth. Then Brian will review additional details about our financial results during the quarter, our increased outlook for the rest of 2002, as well as our strong capital position. And then we'll take your questions. Let's get started. In the second quarter, we delivered total revenues of $45.5 billion and adjusted EPS of $6.22 per share. Our differentiated capabilities and innovative approaches are resonating in the market, and we achieved another quarter of strong performance across our growth platforms. In Evernorth, we're pleased with the way our solutions are continuing to gain traction with health plans, large commercial employers, governmental agencies, healthcare delivery systems, and medical professionals. Today, more than 180 million individual customers have access to our Evernorth solutions. We're also encouraged by our progress during the selling season for 2023, and we are on track for another year of high client retention levels. In Cigna Healthcare, our discipline execution is driving a balance of sustained customer growth and continued progress with expanding margins. Our medical care ratio during the quarter was 80.7%, which was better than expected and a substantial improvement over the same period last year. Similar to last quarter, we continue to see a positive impact from the targeted pricing and affordability actions we put in place last year and in early 2022. Overall results during the first half of the year, including the strength of our ongoing performance, give us confidence in delivering our increased full-year 2022 EPS guidance of at least $22.90. Additionally, we recently completed the divestiture of our life accident and supplemental benefits businesses in six markets across Asia Pacific to Chubb. And we launched a $3.5 billion accelerated share repurchase program. At current levels, we view this as an attractive use of our capital. When combined with our previously completed activity, we remain on track to repurchase at least $7 billion of our shares in 2022. Overall, we delivered a strong first half of 2022, and we are positioned to deliver on our increased outlook for revenue, customer growth, and EPS for this year. Our performance is a direct result of our ability to leverage our expertise, capabilities, and ongoing commitment to innovation, all focused on the most pressing needs of those we serve. Affordability remains, first and foremost, a top need for all of our stakeholders. In response to this, we continue to drive target innovations. including, for example, a new solution launched in June that leverages our capabilities of Evacor to support post-acute care for Cigna Medicare Advantage patients. As a patient prepares for discharge from a hospital, our team draws upon the extensive evidence-based guidelines, as well as analytics we have, to work closely with providers and patients. The result is that we're able to determine the most appropriate side of care and services to support a patient's recovery. which improves health outcomes, drives meaningful cost savings, and provides better patient experience and satisfaction. We've also launched a number of programs that address the rising costs of vital medications. Cigna Healthcare at Evernorth's Patient Assurance Program is an industry-first innovation, capping out-of-pocket costs for insulin. In 2021 alone, we provided more than $42 million of financial relief to approximately 220,000 patients with diabetes. We've continued to broaden the impact of this program by expanding it to other chronic conditions, growing on the strength of our expertise as well as our relationships with pharmaceutical manufacturers. Building on the success of this program, last month our U.S. commercial business introduced Cigna Pathwell Specialty, a new approach to specialty care. Pathwell Specialty leverages our specialty capabilities in Cigna and Evernorth and provides enhanced support to patients for better outcomes while also controlling rising specialty costs. We plan to extend this offering to additional groups of clients later this year. At our investor day in June, we talked about how we're able to consistently deliver sustained, attractive, healthy growth, even in challenging economic environments. Our company is built to perform in a variety of market conditions, including economic slowdowns. It starts with a growth framework that positions us to expand our addressable markets, and capture value in three specific ways. First, foundational growth to our businesses that are mature, scaled, and contribute steady, predictable results for our company. These businesses currently contribute about 60% of our annual revenue and include Express Scripts, U.S. Commercial, and our international health business. Second is accelerated growth to our businesses with differentiated capabilities aided by secular trends creating very attractive addressable markets. These businesses represent about 40% of our company's revenues, and we expect to grow these further with momentum from our specialty pharmacy and care services businesses within Evernorth and our U.S. government business, Insignia Healthcare. And third, cross-enterprise leverage, where businesses work together to create value and capture more value than any one of them could achieve on their own. Putting it all together, this growth framework translates into continued strong top and bottom line contributions from Evernorth. Our health service platform continues providing industry-leading pharmacy solutions while also building out our Evernorth care capabilities to address the growing demand for behavioral services, health coaching, and care delivery. Evernorth strengthens our abilities for customers and clients with the forces facing and reshaping healthcare today, including the significant societal shift bringing widespread and growing recognition of the connection between mental and physical health. This has resulted, for example, in a rising demand for services, and we've continued to expand our traditional network. For example, Evernorth Behavioral Network has more than doubled in size over the past five years. We're also supporting enhanced services by providing virtual care. Recently, we launched Confide Behavioral Health Navigator, to improve the way we guide people to the right behavioral care at the right setting at the right time. We also have an extensive and growing portfolio of solutions, supporting both virtual and digital first solutions, including our MDLive platform. For Cigna Healthcare, our growth framework translates into strong performance driven by ongoing customer growth in U.S. commercial, as we continue to improve affordability in key geographies, including through advancing our value-based care and site-of-care service programs. also accelerating Cigna Healthcare's adoption of Evernorth solutions, which creates even greater value for our customers and clients, and is a driver of attractive, sustainable revenue growth for Evernorth. In international health, following the divestiture of our international life, accident, and supplemental benefits portfolio, we are intensifying our focus on health and health service offerings. And in U.S. government, both for Medicare Advantage and individual family plans, We are delivering strong value for those we serve while we are investing in markets where we see sustained path for growth and a clear right to win over the long term. This balanced and diversified approach to growth, together with our substantial capital generation, affords us a significant level of strategic and financial flexibility that positions us for sustained, differentiated growth under a variety of scenarios. Now to wrap up, we delivered on our customer and client commitments in the first half of the year Looking ahead, we are well positioned to drive continued attractive healthy growth across our Evernorth and Cigna healthcare platforms by leveraging our portfolio of foundational assets, accelerated growth businesses, and fueled by the power of our cross-enterprise leverage. We are encouraged by our strong retention outlook for the start of 2023, as well as new business wins for the start of the year. We remain on track for continued delivery of our commitments, and as a result, we are increasing our full-year outlook to at least $22.90 for EPS, which represents a growth rate of 12%, which is within our long-term average annual adjusted EPS growth target of 10% to 13%. We're continuing to deliver significant value for our shareholders, and we expect to deliver at least $7 billion through share repurchase in 2022, as well as continue to pay a meaningful dividend. We also continue to make strategic investments to strengthen our capabilities and broaden our reach in both our foundational and accelerated growth businesses. With that, I'll turn it over to Brian.