The Cigna Group

Ladies and gentlemen, thank you for standing by for Cigna's fourth 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 Ralph Jacoby. Please go ahead.

Great, thanks. Good morning, everyone, and 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 will cover a number of topics, including Cigna's fourth quarter and full year 2022 financial results, as well as our financial outlook for 2023. 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 2023 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 our cautionary note in 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 fourth quarter, we recorded after-tax special item charges of $17 million, or six cents per share, for integration and transaction-related costs. We also recorded an after-tax special item charge of $56 million, or 18 cents per share, for costs associated with the sale of businesses. 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 perspective comments regarding financial performance, including our full year 2023 outlook, we will do so on a basis that includes the potential impact of future share of purchases and anticipated 2023 dividends. With that, I'll turn the call over to David.

Thank you, Ralph. Good morning, everyone, and thanks for joining today's call. 2022 was a pivotal year of performance and growth for our company. Evernorth further expanded its health service reach and impact, and Cigna Healthcare demonstrated tremendous resilience in the dynamic market. Together, the breadth and complementary nature of our portfolio enabled us to exceed our revenue and earnings outlook and return meaningful capital to our shareholders. This provides us with momentum as we begin 2023, And we expect another year of customer and earnings growth as we innovate and expand our broad portfolio of services and capabilities. Today, I'll provide perspective about our key drivers for our 2022 performance and how we're positioned for sustained growth going forward. Then Brian will walk through additional details about our 2022 financial results and discuss our 23 outlook. Then we'll take your questions. So let's jump in. As we reflect on our performance for 2022, I'm proud of what our company and Cigna team delivered overall. We grew full-year revenues to approximately $181 billion. We delivered full-year adjusted earnings per share of $23.27, reflecting a 14% rate of growth. We returned $9 billion to shareholders through a combination of share repurchase and dividends. and we sharpened the health service focus of our international business through the divestiture of our life accident and supplemental benefits businesses across seven markets. This performance demonstrates how well our Evernorth and Cigna Healthcare platforms are strategically positioned for sustained, attractive growth. In 2022, Evernorth delivered strong top and bottom line growth and also won, renewed, and expanded several large multi-year client relationships for 2023 and beyond. The depth of Evernote's capabilities and expertise is highly valued by our clients and partners and enables us to deepen existing relationships across our entire portfolio of businesses. Speaking of healthcare, our health benefits platform also had a strong gear delivering customer growth along with differentiated medical cost performance for the benefit of our customers and clients. Our U.S. commercial business had a standout performance, achieving outsized customer growth while maintaining pricing discipline and driving margin improvement. This reflects our ability of our Cigna commercial team to work consultatively to help employers of all sizes manage affordability, all while we support healthy, highly engaged employees for the benefit of their businesses. Overall, we're pleased with the strength of our 2022 performance across our enterprise. As we look to 2023, we continue to deliver and capture meaningful value in multiple ways. First, we expect sustained growth through our foundational businesses, pharmacy benefit services, U.S. commercial, and international health. These are mature, skilled businesses that have established core relationships with corporate clients, health plans, and governmental agencies. The value proposition for these businesses continues to resonate very well in the marketplace. In pharmacy benefit services, we expect continued contributions in 2023 through the strength of our unique solutions and partnership orientation. With a strong selling season across our employer, health plan, and governmental agency portfolio, we will continue delivering greater affordability to more customers and patients. Additionally, we are investing meaningfully to put in place the teams and resources to make prescriptions more accessible and affordable for approximately 20 million Centene customers starting in 2024. In the US commercial business, we also had a strong 2023 selling season across all our market segments and across all funding types, self-funded, risk, and shared return arrangements. As a result, we anticipate driving another year of earnings, customer, and revenue growth. And in international health, we expect continued revenue and earnings contributions through our leadership in meeting the health and well-being needs in attractive growth markets and for the globally mobile. Second, we expect outsized growth from our accelerated businesses, Acredo Specialty Pharmacy, Evernorth Care Services, and U.S. Government. These businesses have differentiated capabilities and platforms addressing accelerated secular growth trends. With Acredo, we are able to lower costs for patients and plans while preserving choice and flexibility for those who could benefit from new drugs. This includes our work to increase the availability of biosimilars. We've seen a handful of these lower-cost alternatives for biologic drugs launch in the past few years and understand the exceptional value they deliver for the benefit of clients and customers. 2023 will mark the start of a growing market opportunity for biosimilars, a trend that we expect to continue ramping up in 2024 and beyond. This includes Humira, a treatment for a range of inflammatory conditions, and one of the top-selling drugs globally over the past decade. Now there's a biosimilar alternative that we've co-preferred on a national preferred formulary, creating significant savings opportunities for clients and customers. We will continue our leadership in advocating for greater availability of biosimilars, which over time we expect to drive even more savings and benefit for patients and clients. In Evernote Care Services, we are continuing to enhance and expand our portfolio of capabilities in care management and care delivery. Last year, MDLive virtual patient visits grew meaningfully, including a substantial increase in primary care visits. Demand and satisfaction with virtual care is rising, and we will continue expanding our MDLive platform to provide even more of these options for the benefit of our customers. Evernorth Care Services is also accelerating our value-based care capabilities through our recently announced partnership with VillageMD. By wrapping Evernorth's health service capabilities with VillageMD's network of physicians, we will help guide more patients to high-quality care experiences at lower overall total costs. We expect this partnership to begin rolling out over the course of this year. And in U.S. government, another accelerated business, we expect strong growth in 2023 as we expand services and our geographic presence across a large and growing addressable market. This includes Medicare Advantage, where we will introduce enhanced services and benefits, and we nearly doubled the size of our provider network over the last two years as we expanded to new geographies. Additionally, as we have demonstrated continued consistent commitment to participating in the ACA Exchange Marketplace in a dynamic environment, our individual and family plans business will see outsized customer growth in 2023. The third growth driver for us in 2023 and beyond is enterprise leverage. This is where our businesses work together to create or capture more value than anyone could achieve on their own. Here, think about our ability to look across our enterprise and client relationships to broaden and deepen them by leveraging our entire suite of capabilities. A great example is a new, large, service-based relationship for Cigna Healthcare where we were able to expand our support for a long-served Evernorth client. Additionally, the depth of clinical expertise, success in advancing innovation, and breadth of solutions within Evernorth all combined to help further improve Cigna Healthcare's value proposition. For example, in 2022, by harnessing Evernorth's capabilities and programs, Cigna Healthcare delivered exceptional affordability, a key reason it continues to be a competitively attractive option for employers of all sizes. This ability to deliver meaningful value is what makes Evernorth a partner of choice to a wide range of health plans, large employers, and other clients. Another way we generate enterprise leverage is with our longitudinal portfolio of data, which enables us to accelerate innovation and create new solutions for our clients and customers. This is specifically how we developed our PathWell programs. We're able to integrate Cigna Healthcare's high-performing provider networks and benefits management with Evernote's analytical and clinical expertise, as well as personalized digital support. This equips PathWell to lower costs while connecting patients with the right care, anticipating their future needs, and helping them recover more quickly. PathWell's focus in 2023 includes musculoskeletal conditions and patients who take injectable or infusible biologic drugs. Early feedback here has been very positive, and we expect to support millions of patients throughout these programs with better experience, clinical quality, costs, resulting in improved overall value. These examples illustrate just some of the impact we've already achieved with our cross-enterprise leverage and will continue acting on additional opportunities in the years ahead to expand relationships, accelerate innovation for the benefit of our customers, patients, and clients. Now, I'll briefly summarize. 2022 was a strong year of performance and growth for our company. With our Evernorth and Cigna healthcare platforms and our durable growth framework, we are well positioned to meet the needs of our customers, clients, and partners as we look to the future. We are delivering on our commitments to our shareholders, with a 2022 adjusted EPS of $23.27 and returning $9 billion in share repurchase and dividends. And we are also responding to evolving needs of those we serve in the coming years in the healthcare environment of accelerated change. We have a differentiated innovation pipeline that will allow us to build on our momentum and create value, continue to advance our growth strategy. We are confident 2023 will be another year strong performance for our company as we expect to deliver customer and earnings growth. Our EPS outlook of at least $24.60 and the 10% increase of our quarterly dividend reinforce our commitment to sustained impact and growth for the benefit of all of our stakeholders. And with that, I'll turn the call over to Brian.