The Cigna Group Reports Strong Fourth Quarter and Full Year 2023 Results, Raises 2024 Adjusted EPS Outlook, and Increases Dividend
- Total revenues for 2023 were
$195.3 billion - Shareholders' net income for 2023 was
$5.2 billion , or$17.39 per share - Adjusted income from operations1 for 2023 was
$7.4 billion , or$25.09 per share - 2024 adjusted income from operations1,2 is projected to be at least
$8.025 billion , or at least$28.25 per share2 - Board of Directors declared a 14% increase in the quarterly dividend to
$1.40 per share
Global health company The Cigna Group (NYSE: CI) today reported strong 2023 results reflecting revenue and earnings growth across its diversified portfolio of businesses.
"2023 was another very strong year for our company with consistent execution and sustained growth," said
Shareholders' net income for fourth quarter 2023 was
Shareholders' net income for 2023 was
A reconciliation of shareholders' net income to adjusted income from operations1 is provided on the following page and on Exhibit 1 of this earnings release.
CONSOLIDATED HIGHLIGHTS
The following table includes highlights of results and reconciliations of total revenues to adjusted revenues4 and shareholders' net income to adjusted income from operations1:
Consolidated Financial Results (dollars in millions): |
||||
Three Months Ended |
Year Ended |
|||
|
|
|||
2023 |
20223 |
2023 |
20223 |
|
Total Revenues |
$ 51,114 |
$ 45,753 |
$ 195,265 |
$ 180,518 |
Net Realized Investment Losses (Gains) from Equity Method Investments4 |
35 |
(8) |
57 |
126 |
Adjusted Revenues4 |
$ 51,149 |
$ 45,745 |
$ 195,322 |
$ 180,644 |
Consolidated Earnings, net of taxes |
||||
Shareholders' Net Income |
$ 1,029 |
$ 1,193 |
$ 5,164 |
$ 6,704 |
Net Realized Investment Losses (Gains)1 |
58 |
(17) |
114 |
496 |
Amortization of Acquired Intangible Assets1 |
360 |
284 |
1,413 |
1,345 |
Special Items1 |
552 |
73 |
757 |
(1,232) |
Adjusted Income from Operations1 |
$ 1,999 |
$ 1,533 |
$ 7,448 |
$ 7,313 |
Shareholders' Net Income, per share |
$ 3.49 |
$ 3.91 |
$ 17.39 |
$ 21.41 |
Adjusted Income from Operations1, per share |
$ 6.79 |
$ 5.02 |
$ 25.09 |
$ 23.36 |
- Total revenues for fourth quarter 2023 increased 12% from fourth quarter 2022, reflecting strong growth across
Evernorth Health Services and Cigna Healthcare . - Shareholders' net income for fourth quarter 2023 was
$1.0 billion , or$3.49 per share, including a net after-tax loss of$552 million , or$1.88 per share, primarily associated with the loss on sale of businesses, a deferred tax benefit, as well as a charge for the organizational efficiency plan, compared with$1.2 billion , or$3.91 per share, for fourth quarter 20223. - Adjusted income from operations1 for fourth quarter 2023 increased 30% from fourth quarter 20223, reflecting strong contributions from
Evernorth Health Services and Cigna Healthcare . - The SG&A expense ratio5 was 7.9% for fourth quarter 2023, compared to 7.6% for fourth quarter 20223, reflecting the one-time cost of an organizational efficiency plan, partially offset by revenue growth. The adjusted SG&A expense ratio5 was 7.4% for fourth quarter 2023, compared to 7.6% for fourth quarter 20223.
- The debt-to-capitalization ratio was 40.1% at
December 31, 2023 compared to 40.5% atSeptember 30, 2023 and 41.0% atDecember 31, 2022 3. - In 2023, the Company repurchased 7.8 million shares of common stock for approximately
$2.3 billion . - On
February 2, 2024 , the Company's Board of Directors declared a cash quarterly dividend of$1.40 per share of Cigna common stock to be paid onMarch 21, 2024 to shareholders of record as of the close of trading onMarch 6, 2024 . This reflects a 14% increase from the 2023 cash quarterly dividend of$1.23 per share.
CUSTOMER RELATIONSHIPS
The following table summarizes
Customer Relationships (in thousands):
As of the Periods Ended |
||
|
||
2023 |
2022 |
|
Total Pharmacy Customers6 |
98,570 |
93,905 |
|
18,170 |
16,206 |
|
1,610 |
1,798 |
Total Medical Customers6 |
19,780 |
18,004 |
Behavioral Care |
24,956 |
44,841 |
Dental |
18,543 |
18,397 |
Medicare Part D |
2,550 |
2,874 |
Total Customer Relationships6 |
164,399 |
178,021 |
- Total pharmacy customers6 at
December 31, 2023 increased 5% fromDecember 31, 2022 to 98.6 million due to new sales and the continued expansion of relationships. - Total medical customers6 at
December 31, 2023 grew 10% fromDecember 31, 2022 to 19.8 million, an increase of 1.8 million customers, primarily driven by growth inU.S. Healthcare , including fee-based customers as well as Individual and Family Plans and Medicare Advantage customers. - Customer relationships6 were impacted by the non-renewal of a supplemental behavioral coverage contract with
New York Life , which was insignificant to total revenues and adjusted income from operations1. Excluding the impact of this contract6, behavioral care and total customer relationships6 atDecember 31, 2023 increased 1% and 4%, respectively, fromDecember 31, 2022 .
HIGHLIGHTS OF SEGMENT RESULTS
See Exhibit 1 for a reconciliation of adjusted income (loss) from operations1 to shareholders' net income.
This segment offers a broad range of coordinated and point solution health services and capabilities, as well as those from partners across the health care system, in Pharmacy Benefits,
Financial Results (dollars in millions): |
||||
Three Months Ended |
Year Ended |
|||
|
|
|||
2023 |
2022 |
2023 |
2022 |
|
Adjusted Revenues4 |
$ 40,519 |
$ 36,188 |
$ 153,499 |
$ 140,335 |
Adjusted Income from Operations, Pre-Tax1 |
$ 1,890 |
$ 1,725 |
$ 6,442 |
$ 6,127 |
Adjusted Margin, Pre-Tax7 |
4.7 % |
4.8 % |
4.2 % |
4.4 % |
- Fourth quarter and full year 2023 adjusted revenues4 increased 12% and 9%, relative to fourth quarter and full year 2022, respectively, reflecting strong organic growth in specialty pharmacy and care solutions.
- Fourth quarter and full year 2023 adjusted income from operations, pre-tax1, increased 10% and 5%, relative to fourth quarter and full year 2022, respectively, reflecting continued affordability improvements and growth in specialty, partially offset by increased strategic investments in technology to support the onboarding of new clients and continued advancement of our digital capabilities and care solutions.
- Fourth quarter and full year 2023 adjusted margin, pre-tax7, was 4.7% and 4.2%, compared to 4.8% and 4.4%, for fourth quarter and full year 2022, respectively, reflecting continued strategic investments in technology to support the onboarding of new clients and expansion of existing client relationships.
This segment includes the
Financial Results (dollars in millions): |
||||
Three Months Ended |
Year Ended |
|||
|
|
|||
2023 |
20223 |
2023 |
20223 |
|
Adjusted Revenues4,8 |
$ 13,005 |
$ 11,132 |
$ 51,205 |
$ 45,037 |
Adjusted Income from Operations, Pre-Tax1 |
$ 969 |
$ 517 |
$ 4,478 |
$ 4,099 |
Adjusted Margin, Pre-Tax7 |
7.5 % |
4.6 % |
8.7 % |
9.1 % |
- Fourth quarter and full year 2023 adjusted revenues4,8 grew 17% and 14%, over fourth quarter and full year 2022, respectively, reflecting customer growth and premium rate increases to cover underlying medical cost trends.
- Fourth quarter 2023 adjusted income from operations, pre-tax1, increased relative to fourth quarter 20223, primarily driven by a lower adjusted SG&A expense ratio5, reflecting strong revenue growth, timing of investments, and operating efficiency, as well as a lower MCR5 and higher net investment income.
- Full year 2023 adjusted income from operations, pre-tax1, increased relative to full year 20223, primarily driven by a lower MCR5 and a lower adjusted SG&A expense ratio5.
- The Cigna Healthcare MCR5 was 82.2% and 81.3% for fourth quarter and full year 2023 compared to 83.8% and 81.7% for fourth quarter and full year 2022, respectively. The fourth quarter and full year 2023 MCR5 benefited from continued strong performance in our
U.S. Healthcare business, including affordability initiatives, effective pricing execution, and favorable stop loss results. Cigna Healthcare net medical costs payable9 was$4.86 billion atDecember 31, 2023 ,$5.09 billion atSeptember 30, 2023 , and$3.96 billion atDecember 31, 2022 . The year-over-year increase was primarily driven by customer growth and business mix. The sequential decrease was consistent with prior years, reflecting stop loss seasonality. Favorable prior year reserve development on a gross pre-tax basis was$279 million and$259 million for full year 2023 and 2022, respectively.
Corporate and Other Operations
Corporate reflects interest expense, amounts not allocated to operating segments and includes intersegment eliminations. Additionally, this discussion includes items reported in Other Operations, which is comprised of
Financial Results (dollars in millions): |
||||
Three Months Ended |
Year Ended |
|||
|
|
|||
2023 |
20223 |
2023 |
20223 |
|
Adjusted (Loss) from Operations, Pre-Tax1 |
$ (400) |
$ (375) |
$ (1,602) |
$ (957) |
- Fourth quarter 2023 adjusted loss from operations, pre-tax1, was
$400 million compared to$375 million for fourth quarter 2022, primarily reflecting the impact of higher interest rates. - Full year 2023 adjusted loss from operations, pre-tax1, was
$1,602 million compared to$957 million for full year 2022, primarily reflecting the absence of income from divested businesses10.
2024 OUTLOOK2
(dollars in millions, except where noted and per share amounts) |
||
2024 Consolidated Metrics |
Projection for Full Year Ending |
|
Adjusted Revenues2,4 |
at least |
|
Adjusted Income from Operations1,2 |
at least |
|
Adjusted Income from Operations, per share1,2 |
at least |
|
Adjusted SG&A Expense Ratio2,5 |
~6.1% |
|
Adjusted Effective Tax Rate2,11 |
20.5% to 21.0% |
|
Cash Flow from Operations2 |
at least |
|
Capital Expenditures2 |
|
|
Shareholder Dividends2 |
|
|
Weighted Average Shares Outstanding (millions)2 |
282 to 286 |
|
2024 Evernorth Metrics |
||
Adjusted Income from Operations, Pre-Tax1,2 |
at least |
|
2024 Cigna Healthcare Metrics |
||
Adjusted Income from Operations, Pre-Tax1,2 |
at least |
|
Medical Care Ratio2,5 |
81.7% to 82.7% |
|
Total Medical Customers2,6 |
~19.3M |
The foregoing statements represent the Company's current estimates of
This quarterly earnings release and the Quarterly Financial Supplement are available on
The call-in numbers for the conference call are as follows:
Live Call
(888) 566-1889 (Domestic)
(773) 799-3989 (International)
Passcode: 2022024
Replay
(800) 839-9317 (Domestic)
(203) 369-3605 (International)
It is strongly suggested you dial in to the conference call by
About
Notes: |
|
1. |
Adjusted income (loss) from operations is a principal financial measure of profitability used by |
2. |
Management is not able to provide a reconciliation of adjusted income from operations to shareholders' net income (loss), adjusted revenues to total revenues, adjusted SG&A expense ratio to SG&A expense ratio, or adjusted effective tax rate to effective tax rate, on a forward-looking basis because it is unable to predict, without unreasonable effort, certain components thereof including (i) future net realized investment results (from equity method investments with respect to adjusted revenues) and (ii) future special items. These items are inherently uncertain and depend on various factors, many of which are beyond |
The Company's outlook excludes the potential effects of any other business combinations that may occur after the date of this earnings release. The Company's outlook includes the potential effects of expected future share repurchases and anticipated 2024 dividends. |
|
As announced in |
|
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, including through Rule 10b5-1 trading plans, or privately negotiated transactions. The program may be suspended or discontinued at any time. |
|
3. |
Effective |
4. |
Adjusted revenues is used by |
5 |
Operating ratios are defined as follows: |
|
|
6. |
Customer relationships are defined as follows: |
|
|
7. |
Adjusted margin, pre-tax, is calculated by dividing adjusted income (loss) from operations, pre-tax by adjusted revenues for each segment. |
8. |
|
9. |
Medical costs payable within the |
10. |
On |
11. |
The measure "adjusted effective tax rate" is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, "consolidated effective tax rate". We define adjusted effective tax rate as the consolidated income tax rate applicable to the Company's pre-tax income excluding pre-tax income (loss) attributable to noncontrolling interests, net realized investment results, amortization of acquired intangible assets, and special items. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release, and oral statements made in connection with this release, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; our ability to compete effectively, differentiate our products and services from those of our competitors and maintain or increase market share; price competition, inflation 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; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain satisfactory relationships with physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of potential cyberattack or other privacy or data security incidents; risks related to our use of artificial intelligence and machine learning; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations; dependence on success of relationships with third parties; risk of significant disruption within our operations or among key suppliers or third parties; potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; uncertainties surrounding participation in government-sponsored programs such as Medicare; the outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates and risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available through the Investor Relations section of www.thecignagroup.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify.
THE CIGNA GROUP |
Exhibit 1 |
||||||||||
COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited) |
|||||||||||
Three Months Ended |
Years Ended |
||||||||||
|
|
||||||||||
(Dollars in millions, except per share amounts) |
2023 |
2022 (1) |
2023 |
2022 (1) |
|||||||
REVENUES |
|||||||||||
Pharmacy revenues |
|
|
$ 137,243 |
$ 128,566 |
|||||||
Premiums |
11,175 |
9,548 |
44,237 |
39,916 |
|||||||
Fees and other revenues |
3,045 |
2,858 |
12,619 |
10,881 |
|||||||
Net investment income |
290 |
212 |
1,166 |
1,155 |
|||||||
Total Revenues |
51,114 |
45,753 |
195,265 |
180,518 |
|||||||
Net realized investment results from certain equity method investments |
35 |
(8) |
57 |
126 |
|||||||
Adjusted revenues (2) |
|
|
$ 195,322 |
$ 180,644 |
|||||||
Shareholders' net income |
$ 1,029 |
$ 1,193 |
$ 5,164 |
$ 6,704 |
|||||||
Pre-tax adjusted income (loss) from operations by segment |
|||||||||||
|
$ 1,890 |
$ 1,725 |
$ 6,442 |
$ 6,127 |
|||||||
|
969 |
517 |
4,478 |
4,099 |
|||||||
Corporate and Other Operations |
(400) |
(375) |
(1,602) |
(957) |
|||||||
Consolidated pre-tax adjusted income from operations |
2,459 |
1,867 |
9,318 |
9,269 |
|||||||
Adjusted income tax expense |
(460) |
(334) |
(1,870) |
(1,956) |
|||||||
Consolidated after-tax adjusted income from operations |
$ 1,999 |
$ 1,533 |
$ 7,448 |
$ 7,313 |
|||||||
Weighted average shares (in thousands) |
294,565 |
305,413 |
296,882 |
313,065 |
|||||||
Common shares outstanding (in thousands) |
292,504 |
298,676 |
|||||||||
SHAREHOLDERS' EQUITY at |
|
|
|||||||||
SHAREHOLDERS' EQUITY PER SHARE at |
|
|
|||||||||
Three Months Ended |
Years Ended |
||||||||||
|
|
||||||||||
2023 |
2022 (1) |
2023 |
2022 (1) |
||||||||
(Dollars in millions, except per share amounts) |
Pre-tax |
After-tax |
Pre-tax |
After-tax |
Pre-tax |
After-tax |
Pre-tax |
After-tax |
|||
SHAREHOLDERS' NET INCOME |
|||||||||||
Shareholders' net income |
$ 1,029 |
$ 1,193 |
$ 5,164 |
$ 6,704 |
|||||||
Adjustments to reconcile adjusted income from operations |
|||||||||||
Net realized investment losses (gains) (3) |
$ 69 |
58 |
$ (14) |
(17) |
$ 135 |
114 |
$ 613 |
496 |
|||
Amortization of acquired intangible assets |
451 |
360 |
457 |
284 |
1,819 |
1,413 |
1,876 |
1,345 |
|||
Special Items |
|||||||||||
Loss (gain) on sale of businesses |
1,478 |
1,410 |
73 |
56 |
1,499 |
1,429 |
(1,662) |
(1,332) |
|||
Charge for organizational efficiency plan |
252 |
193 |
— |
— |
252 |
193 |
22 |
17 |
|||
Charges (benefits) associated with litigation matters |
— |
— |
— |
— |
201 |
171 |
(28) |
(20) |
|||
Integration and transaction-related costs |
25 |
20 |
23 |
17 |
45 |
35 |
135 |
103 |
|||
Deferred tax (benefits), net |
— |
(1,071) |
— |
— |
— |
(1,071) |
— |
— |
|||
Adjusted income from operations (4) |
$ 1,999 |
$ 1,533 |
$ 7,448 |
$ 7,313 |
|||||||
DILUTED EARNINGS PER SHARE |
|||||||||||
Shareholders' net income |
$ 3.49 |
$ 3.91 |
$ 17.39 |
$ 21.41 |
|||||||
Adjustments to reconcile to adjusted income from operations |
|||||||||||
Net realized investment losses (gains) (3) |
$ 0.23 |
0.20 |
$ (0.05) |
(0.06) |
$ 0.45 |
0.38 |
$ 1.96 |
1.59 |
|||
Amortization of acquired intangible assets |
1.53 |
1.22 |
1.50 |
0.93 |
6.13 |
4.77 |
5.99 |
4.30 |
|||
Special Items |
|||||||||||
Loss (gain) on sale of businesses |
5.02 |
4.79 |
0.23 |
0.18 |
5.05 |
4.81 |
(5.31) |
(4.26) |
|||
Charge for organizational efficiency plan |
0.86 |
0.66 |
— |
— |
0.85 |
0.65 |
0.07 |
0.05 |
|||
Charges (benefits) associated with litigation matters |
— |
— |
— |
— |
0.68 |
0.58 |
(0.09) |
(0.06) |
|||
Integration and transaction-related costs |
0.08 |
0.07 |
0.08 |
0.06 |
0.15 |
0.12 |
0.43 |
0.33 |
|||
Deferred tax (benefits), net |
— |
(3.64) |
— |
— |
— |
(3.61) |
— |
— |
|||
Adjusted income from operations (4) |
$ 6.79 |
$ 5.02 |
$ 25.09 |
$ 23.36 |
(1) |
Effective |
(2) |
Adjusted revenues is defined as total revenues excluding the following adjustments: special items and |
(3) |
Includes |
(4) |
Adjusted income (loss) from operations is defined as shareholders' net income (or income before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding the following adjustments: net realized investment results, amortization of acquired intangible assets and special items. |
INVESTOR RELATIONS CONTACT:
[email protected]
MEDIA CONTACT:
Justine.Sessions@Evernorth.com
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