01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Completed the acquisition of Express Scripts for $52.8 billion, significantly expanding health services and pharmacy benefit management capabilities.
- Reported total revenues of $48.7 billion for fiscal year 2018, an increase of 16% year-over-year.
- Achieved shareholders' net income of $2.6 billion, a 18% increase from the prior year.
- Adjusted income from operations increased by 33% to $3.6 billion, reflecting strong performance across all segments and the inclusion of Express Scripts.
- Continued to transition towards value-based care arrangements with healthcare providers.
- Invested in technology and data analytics to enhance customer experience, drive innovation, and gain competitive advantage.
- Maintained a strong focus on global markets, particularly in Asia, with international operations contributing significantly to revenue and profit.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Cigna Group kept $0.05.
- Revenue$48.65B100.0%
- Cost of revenue−$4.79B9.9%
- Gross profit$43.86B90.1%
- Operating costs−$39.70B81.6%
- Operating income$4.16B8.6%
- Interest, other & tax−$1.52B3.1%
- Net income$2.64B5.4%
Where FY2018 revenue went
$48.65B- Other operating costs: $27.76B, 57% of revenue
- SG&A: $11.93B, 25% of revenue
- Net income: $2.64B, 5.4% of revenue
- Cost of revenue: $4.79B, 9.9% of revenue
- Interest, other & tax: $1.52B, 3.1% of revenue
Kept 5.4% as net incomeNet income $2.64B · 5.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $48.65B$41.81B | +16.4% |
| Cost of Revenue | $4.79B$2.46B | +95.2% |
| Gross Profit | $43.86B$39.35B | +11.5% |
| SG&A Expenses | $11.93B$10.03B | +19.0% |
| Operating Income | $4.16B$3.94B | +5.5% |
| Interest Expense | $507.00M$243.00M | +108.6% |
| Net Income | $2.64B$2.24B | +17.9% |
| EPS (Basic) | $10.69$8.92 | +19.8% |
| EPS (Diluted) | $10.54$8.77 | +20.2% |
| Shares Outstanding (Diluted) | 250.22M255.07M | −1.9% |
05—Questions
Frequently Asked Questions
What were the main financial highlights for Cigna in 2018?
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.
How did the acquisition of Express Scripts impact Cigna's business segments?
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.
What is Cigna's strategy for future growth and profitability?
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.
What is Cigna's approach to managing its increased debt load after the Express Scripts acquisition?
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.
06—Continue