10-KPeriod: FY2018

Cigna Group Annual Report, Year Ended Dec 31, 2018

Filed February 28, 2019For Securities:CI

Summary

Cigna Group (CI) reported significant growth in its 2018 fiscal year, largely driven by the transformative acquisition of Express Scripts Holding Company, completed in December 2018. Total revenues increased by 16% to $48.7 billion, while shareholders' net income rose by 18% to $2.6 billion. The integration of Express Scripts significantly expanded Cigna's capabilities in health services, particularly in pharmacy benefit management, creating a more comprehensive health service organization. The company's strategy, "Go Deeper, Go Local, Go Beyond," leverages expanded capabilities to improve health outcomes and affordability. Key segments include Integrated Medical, Health Services, International Markets, and Group Disability and Other. The report highlights the strategic shift towards value-based care within the Integrated Medical segment and the focus on innovation in technology and data analytics across all operations. Despite the increased debt from the acquisition, Cigna remains focused on deleveraging and returning capital to shareholders through its share repurchase program.

Financial Highlights

54 data points
Beta

Revenue

$48.65B

90.1% Gross Margin

Net Income

$2.64B

5.4% Net Margin

EPS (Diluted)

$10.54

Total Assets

$153.23B

Cash & Equivalents

$3.85B

Free Cash Flow

$3.24B

Financial Statements
Beta
Revenue$48.65B
Cost of Revenue$4.79B
Gross Profit$43.86B
SG&A Expenses$11.93B
Operating Income$4.16B
Interest Expense$507.00M
Net Income$2.64B
EPS (Basic)$10.69
EPS (Diluted)$10.54
Shares Outstanding (Diluted)250.22M

Key Highlights

  • 1Completed the acquisition of Express Scripts for $52.8 billion, significantly expanding health services and pharmacy benefit management capabilities.
  • 2Reported total revenues of $48.7 billion for fiscal year 2018, an increase of 16% year-over-year.
  • 3Achieved shareholders' net income of $2.6 billion, a 18% increase from the prior year.
  • 4Adjusted income from operations increased by 33% to $3.6 billion, reflecting strong performance across all segments and the inclusion of Express Scripts.
  • 5Continued to transition towards value-based care arrangements with healthcare providers.
  • 6Invested in technology and data analytics to enhance customer experience, drive innovation, and gain competitive advantage.
  • 7Maintained a strong focus on global markets, particularly in Asia, with international operations contributing significantly to revenue and profit.

Frequently Asked Questions

Cigna's 2018 financial performance was strong, with total revenues reaching $48.7 billion, up 16% from 2017. Shareholders' net income grew 18% to $2.6 billion. A key driver was the successful acquisition of Express Scripts, completed in December 2018, which significantly boosted the Health Services segment.

The acquisition of Express Scripts led to a restructuring of Cigna's reporting segments. The Health Services segment, which now includes Express Scripts' PBM business and Cigna's legacy home delivery pharmacy, saw a substantial increase in revenues. This integration enhanced Cigna's overall health service offerings, particularly in pharmacy management and cost containment.

Cigna's strategy, "Go Deeper, Go Local, Go Beyond," focuses on delivering differentiated, personalized, and affordable health solutions. Key initiatives include fostering value-based care, enhancing technological capabilities for data analytics and digital health, expanding international market presence, and integrating its medical and pharmacy services to provide a more holistic approach to customer well-being.

Following the acquisition, Cigna's debt levels increased significantly. The company has stated its intention to deleverage by using cash flows from operating activities to reduce debt levels over the next 18-24 months. Despite the higher debt service costs, Cigna aims to maintain financial flexibility for strategic investments and capital returns.