Q2 2024 The Cigna Group Earnings Call

Speaker Change: ♪♪

Operator: Ladies and gentlemen, thank you for standing by for the Cigna Group second quarter 2024 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 the queue to ask questions at that time. If you should require assistance during the call, please press star zero on your touchtone phone.

Operator: Ladies and gentlemen, thank you for standing by for the Cigna Group second quarter 2024 results review. At this time, all colors are in a listen-only mode. We will conduct a question and answer session later during the conference and review procedures how to intercute ask questions at that time.

Speaker Change: Ladies and gentlemen, thank you for standing by for the Cigna Group second quarter 2024 results review. At this time, all callers are in a listen-only mode.

Speaker Change: We will conduct a question and answer session later during the conference and review procedures for 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.

Operator: If you should require assistance during the call, please press star zero on your touchdown zone. As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded.

Ralph Giacobbe: We'll begin by turning the call to Ralph Giacobbe. Please go ahead.

Speaker Change: As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the call over to Ralph Giacobbe. Please go ahead.

David Cordani: Thank you.

Ralph Giacobbe: Good morning, everyone. Thanks for joining today's call. I'm Ralph Giacobbe, Senior Vice President of Investor Relations. With me on the line this morning are David Cordani, the Cigna Group's chairman and chief executive officer, Brian Evanko, chief financial officer of the Cigna Group, and president and chief executive officer of Signal Healthcare, and Eric Palmer, president and chief executive officer of Ever North Health Services. In our remarks today, David and Brian will cover a number of topics, including our second quarter financial results and our financial outlook for 2024. Following their prepared remarks, David, Brian, and Eric will be available for Q&A.

Ralph Giacobbe: Thank you. Good morning, everyone. Thanks for joining today's call. I'm Ralph Giacobbe, Senior Vice President of Investor Relations. In our remarks today, David and Brian will cover a number of topics, including our second quarter financial results and our financial outlook for 2024. 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 CignaGroup.com. We use the terms Adjusted Adjusted Income from Operations and Adjusted Earnings per Share on the same basis as our principal measures of financial performance.

Speaker Change: Thank you. Good morning, everyone. Thanks for joining today's call. I'm Ralph Giacobbe, Senior Vice President of Investor Relations.

Speaker Change: With me on the line this morning are David Cordani, the Cigna Group's Chairman and Chief Executive Officer, Brian Evanko, Chief Financial Officer of the Cigna Group and President and Chief Executive Officer of Cigna Healthcare, and Eric Palmer, President and Chief Executive Officer of Evernorth Health Services.

Speaker Change: In our remarks today, David and Brian will cover a number of topics, including our second quarter financial results and our financial outlook for 2024. Following their prepared remarks, David, Brian , and Eric will be available for Q&A.

Ralph Giacobbe: As noted in our earnings release, when describing our financial results, we use certain financial measures, including 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 the Cigna Group.com. We use the term labeled adjusted income from operations and adjusted earnings for share on the same basis as our principal measures of financial performance.

Speaker Change: As noted in our earnings release, when describing our financial results, we use certain financial measures, including 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.

Speaker Change: 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 the CignaGroup.com.

Speaker Change: We use the term labeled Adjusted Income from Operations and Adjusted Earnings per Share on the same basis as our principal measures of financial performance.

Ralph Giacobbe: In our remarks today, we will be making some forward-looking statements, including statements regarding our outlook for 2024 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 to today's earnings release and in our most recent reports filed with the SEC. Regarding our results in the second quarter, we recorded an after-tax net special item charge of $64 million, or 23 cents per share. Details of the special items are included in our quarterly financial supplement.

Speaker Change: In our remarks today, we will be making some forward-looking statements, including statements regarding our outlook for 2024 and future performance.

Ralph Giacobbe: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. Additionally, please note that when we make prospective comments regarding financial performance, including our full year 2024 outlook, we will do so on a basis that includes the potential impact of future share of purchases and anticipated 2024 dividends. With that, I'll turn the call over to David.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations.

Speaker Change: A description of these risks and uncertainties is contained in the cautionary note to today's earnings release and in our most recent reports filed with the SEC.

Speaker Change: Regarding our results in the second quarter, we recorded an after-tax net special item charge of $64 million, or $0.23 per share. Details of the special items are included in our quarterly financial supplement.

Ralph Giacobbe: Additionally, please note that when we make prospective comments regarding financial performance, including our full-year 2024 outlook, we will do so on a basis that includes the potential impact of future share purchases and anticipated 2024 dividends.

David: Additionally, please note that when we make prospective comments regarding financial performance, including our full year 2024 outlook, we will do so on a basis that includes the potential impact of future share of purchases and anticipated 2024 dividends. With that, I'll turn the call over to David.

David Cordani: With that, I'll turn the call over to David. Thanks, Ralph. Good morning, everyone, and thank you for joining our call today. For the second quarter, we again delivered strong performance as we continue to build on our momentum. Today, I'll discuss our performance for the quarter and key strategic drivers of our growth, demonstrate how the strength and durable nature of our model is fueling our success. Then, by final review, additional details on our results in our outlook for the rest of the year, and we'll move to your questions. So, let's get started.

David Michael Cordani: Thanks Ralph, good morning everyone, and thank you for joining our call today. For the second quarter, we again delivered strong performance as we continue to build on our momentum. Then Brian will review additional details on the results in our Outlook for the rest of the year, and we'll move to your questions. So let's get started.

David: Thanks, Ralph. Good morning, everyone, and thank you for joining our call today.

David: For the second quarter, we again delivered strong performance as we continue to build on our momentum.

David: Today, I'll discuss our performance for the quarter and key strategic drivers of our growth, demonstrate how the strength and durable nature of our model is fueling our success. Then Brian will review additional details on the results in our outlook for the rest of the year, and we'll move to your questions. So let's get started.

David Cordani: For the second quarter, I'm pleased to report that the Signal Group delivered a total revenue of $60.5 billion and adjusted earnings per share of $6.72. Evans. We achieved these positive overall results in a dynamic environment, and I'm proud of our team for continuing to focus on those we serve, ensuring that they get the care they need, to get their medications at an affordable cost, and to get the support they need in order to make the best decisions about their health and vitality. All of this requires a relentless focus on innovation, discipline, execution, and a passionate commitment to our mission.

Brian: For the second quarter, I'm pleased to report that Cigna Group delivered total revenue of $60.5 billion and adjusted earnings per share of $6.72.

David Michael Cordani: We achieved these positive overall results in a dynamic environment, and I'm proud of our team for continuing to focus on those we serve, ensuring that they get the care they need, get their medications at an affordable cost, and get the support they need in order to make the best decisions about their health and vitality. During the quarter, our Evernorth Health Service businesses demonstrated continued strength with our market-leading specialty and pharmacy benefit services capabilities.

Brian: We achieved these positive overall results in a dynamic environment and I'm proud of our team for continuing to focus on those we serve, ensuring that they get the care they need, to get their medications at an affordable cost, and to get the support they need in order to make the best decisions about their health and vitality.

Brian: All of this requires a relentless focus on innovation, disciplined execution, and a passionate commitment to our mission.

David Cordani: During the quarter, our Illinois health service businesses demonstrated continued strength with our market-leading specialty and pharmacy benefit services capabilities. Within Evernote, I'll start with our accelerated growth specialty and care businesses, which provide specialty drugs for the treatment of complex and rare diseases, distribution of specialty pharmaceuticals, as well as clinical programs to help clients improve health and vitality. We saw strong growth in the quarter, with adjusted income growing 12% year-over-year, reflecting continued demand for our services while we also continue to invest in broadening our offerings and expanding our reach. In a credo, our specialty business, our growth continues to be fueled by secular tailwinds as well as a credo's differentiated strength, which makes us the market leader in the space.

Brian: During the quarter, our Evernorth Health Service businesses demonstrated continued strength with our market-leading specialty and pharmacy benefit services capabilities.

David Michael Cordani: Within Evernote, I'll start with our accelerated growth specialty care business, which provides specialty drugs for the treatment of complex and rare diseases, distribution of specialty pharmaceuticals, as well as clinical programs to help clients improve health and vitality. We saw strong growth in the quarter, with adjusted income growing 12% year-over-year, reflecting continued demand for our services, while we also continue to invest in broadening our offerings and expanding our reach. In Accredo, our specialty business, our growth continues to be fueled by secular tailwinds as well as Accredo's differentiated strength, which makes us the market leader in the space.

Brian: Distribution of specialty pharmaceuticals, as well as clinical programs to help clients improve health and vitality.

David Michael Cordani: Biosimilars, for example, represent a force of change and a substantial opportunity for continued growth and impact. At the end of June, we began dispensing our interchangeable biosimilar for Humira. Our program has $0 out-of-pocket costs for patients, saving them on average $3,500 per year.

David Cordani: Biosimilers, for example, represent a force of change and a substantial opportunity for continued growth and impact. At the end of June, we began dispensing our interchangeable biosimilar for Humira. Our program has zero-dollar out-of-pocket costs for patients, saving them on average $3,500 per year. To deliver these savings, we have agreements in place with multiple manufacturers that will produce biosimilers for Evernote Pharmaceutical Distributor pharmaceuticals. Now, the biosimilar opportunity goes well beyond Humira. By 2030, we expect an additional $100 billion of annual specialty drug spend in the U.S. will be subject to biosimilar e-engineer competition. And a credo is well positioned to deliver differentiated value for clients, customers, and patients.

Brian: Biosimilars, for example, represent a force of change and a substantial opportunity for continued growth and impact.

David Michael Cordani: To deliver these savings, we have agreements in place with multiple manufacturers that will produce biosimilars for Evernorth Pharmaceutical Distributor and Qualant Pharmaceutical, and Credo is well positioned to deliver differentiated value for our clients, customers, and patients. In our care services businesses, we are continuing to grow and expand in key areas of increased demand, including behavioral health, virtual, and home care. For example, this summer, we further expanded Evernorth Behavioral Care Group to an additional seven states, with fully 84% of patients experiencing clinically significant reductions in depression and anxiety symptoms.

Brian: To deliver these savings, we have agreements in place with multiple manufacturers that will produce biosimilars for Ever North Pharmaceutical Distributor, Qualant Pharmaceuticals.

Brian: And Accredo is well positioned to deliver differentiated value for our clients, customers, and patients.

David Cordani: In our care services businesses, we are continuing to grow and expand in key areas of increased demand, including behavioral health, virtual, and home care. For example, we further expand the Evernote Behavioral Care Group to an additional seven states. We are seeing positive patient outcomes from our unique clinician matching capabilities based on individual needs and preferences, with fully 84% of patients experiencing clinically significant reductions in the depression and anxiety symptoms. Now, shifting to Express Groups are foundational pharmacy-benefit services businesses. We are seeing continued strong client demand given our breadth of clinical and supply chain expertise, as well as our proven partnership orientation.

Brian: In our care services businesses, we are continuing to grow and expand in key areas of increased demand, including behavioral health, virtual, and home care.

David Michael Cordani: Now shifting to Express Scripts, our foundational pharmacy benefits services business, we are seeing continued strong client demand given our breadth of clinical and supply chain expertise, as well as our proven partnership orientation. This quarter, Express Scripts built on a long track record of innovating for those we serve with continued enhancements and new solutions. For example, given the high cost of GLP-1 drugs.

Brian: Now shifting to Express Scripts, our foundational pharmacy benefits services businesses, we are seeing continued strong client demand given our breadth of clinical and supply chain expertise, as well as our proven partnership orientation.

David Cordani: This quarter, Express Groups built on a long track record of innovating for those we serve with continued enhancements and new solutions. For example, given the high-cost and TLP-1 drugs, we are continuing to see meaningful interest from our clients in encircle our acts, now with more than 2 million lives already enrolled. Our program starts with our longitudinal data to target patients who will most benefit from these medications. And we provide patients with resources to make lasting changes, help maximize the effectiveness of these medications, both in the short and long term. term.

David Michael Cordani: We're continuing to see meaningful interest from our clients in EncircleRx, now with more than 2 million lives already enrolled. Another example of our innovation orientation is a recent announcement of Express Script's Oncology Benefit Services, which will be available in 2025. Our new solution helps patients navigate the challenges of cancer care by providing a single oncology benefit, integrating pharmacy, medical, and behavioral health treatment.

David Cordani: Another example of our innovation orientation is a recent announcement of Express Grip's Oncology Benefit Services, which will be available in 2025. Our new solution helps patients navigate the challenges of cancer care by providing a single oncology benefit, integrating pharmacy, medical, and behavioral health treatments. Our patient-centered approach will help to ensure the earliest possible detection, guide individuals to high-quality providers, and coordinate care across clinical teams. Now moving to signal health care or health benefits platform, we continue to deliver solutions that create value and better outcomes for clients and customers, coupled with highly competitive total cost of care.

Brian: Our new solution helps patients navigate the challenges of cancer care by providing a single oncology benefit, integrating pharmacy, medical, and behavioral health treatments.

Brian: Our patient-centered approach will help to ensure the earliest possible detection, guide individuals to high-quality providers, and coordinate care across clinical teams.

David Michael Cordani: Our patient-centered approach will help to ensure the earliest possible detection, guide individuals to high-quality providers, and coordinate care across clinical disciplines. Now moving to Cigna Healthcare, our health benefits platform, we continue to deliver solutions that create value and better outcomes for clients and customers, coupled with highly competitive total cost of care. Similar to others in the industry, and as we've anticipated, we are seeing increased utilization in our book of business. I would note that our results are largely in line with the elevated levels in our planning and pricing assumptions. Our U.S.

Brian: Now moving to Cigna Healthcare, our health benefits platform, we continue to deliver solutions that create value and better outcomes for clients and customers, coupled with highly competitive total cost of care.

David Cordani: Similar to others in the industry, and as we've anticipated, we are seeing increased utilization in our vocal business. I would note that our results are largely in line with the elevated levels in our planning and pricing assumptions. Our U.S. Employer foundational growth business continues to perform in line with our expectations. Over this year, I've met with hundreds of clients across the U.S. and globally, and while the needs of every client are unique, there are a few consistent themes across every discussion. First, continue to focus on affordability, particularly in live medications like G.L.P. and G.L.P. is coming to market.

David Michael Cordani: The Employer Foundational Growth Business continues to perform in line with our expectations. Over this year, I've met with hundreds of clients across the U.S. and globally, and while the needs of every client are unique, there are a few consistent themes that cross every discussion. Third is mounting point solution fatigue. And fourth...

Brian: Our U.S. Employer Foundational Growth Business continues to perform in line with our expectations.

David Cordani: Next, an increased need of improved access and, importantly, coordination of behavioral health services. Third, is mounting point solution fatigue. And fourth, the opportunity and need for leverage of our longitudinal data and clinical programs to help keep people healthy and vital. Our solutions continue to resonate well, given our highly consultative approach to help clients choose the right set of solutions, our proven capability to support the workforce, and our innovative programs that help to keep costs down. As a result, we are further gaining share and capacity to see outside's opportunities; for example, in our SLAC segment. Another key ability of our U.S.

Brian: Next, an increased need of improved access and importantly coordination of behavioral health services.

David Michael Cordani: The opportunity and need to leverage our longitudinal data and clinical programs to help keep people healthy and vital while also providing improved care and clinical outcomes for patients. Next, I want to take a few minutes to talk about the current environment surrounding pharmacy benefit managers and the related landscape. At the heart of this debate is the cost of pharmaceuticals. As we previously discussed, a key force of change in health care is the surge of pharmacological innovation.

Brian: Third is mounting point solution fatigue. And fourth, the opportunity and need for leverage of our longitudinal data and clinical programs to help keep people healthy and vital.

Brian: Our proven capabilities to support the workforce and our innovative programs that help to keep costs down. As a result, we are further gaining share and continue to see outsized opportunities, for example, in our select segment.

David Cordani: Employer business to deliver integrated and tailored benefits for our clients and customers are modular solutions that incorporate innovative services from Heaven North, including behavioral, virtual care, and pharmacy. Our pathological solution, which continues to drive exceptional value, is a prime example. Pathological specialty is another way we are reducing costs associated with specialty drug therapies, while also providing improved care and clinical outcomes for patients. With our credo nurses, nearly 50 percent of our pathological specialty patients who've transitioned their side of care now receive treatment in the comfort and convenience of their home. We are pleased with how the market continues to recognize the value we are delivering through solutions like Pathwall.

Brian: With our Acredo nurses, nearly 50% of our Pathway Specialty patients who've transitioned their site of care now receive treatment in the comfort and convenience of their home.

Brian: We are pleased with how the market continues to recognize the value we are delivering through solutions like PathWall.

David Cordani: Turning to our Medicare Advantage business, we can make great progress regarding the sale of this business, and I'm pleased that we remain on track to close in the first quarter of 2025 as planned.

Brian: Turning to our Medicare Advantage business, we continue to make great progress regarding the sale of this business, and I'm pleased that we remain on track to close in the first quarter of 2025 as planned.

David Cordani: Next, I want to take a few minutes to talk about the current environment surrounding pharmacy benefit managers and the relative landscape. At the heart of this debate is the cost of pharmaceuticals. As we previously discussed, a key force of change in healthcare is the surge in pharmacological for context, prescription drug coverage is the most frequently used care benefit and on average it's used 15 times per year per person, resulting in billions of dollars, billions of prescriptions over a year annually in the United States. Today and for the foreseeable future, the most meaningful advances extending and improving quality of life will come through gene therapies, breakthrough and treatments for cancers in other conditions, as well as personalized medicines.

Speaker Change: At the heart of this debate is the cost of pharmaceuticals.

Speaker Change: As we previously discussed, a key force of change in healthcare is the surge of pharmacological innovation.

David Michael Cordani: For context, prescription drug coverage is the most frequently used care benefit, and on average, it's used 15 times per year per person, resulting in billions of dollars, billions of prescriptions per year in the United States. Today and for the foreseeable future, the most meaningful advances extending and improving quality of life will come through gene therapies, breakthroughs in treatments for cancers and other conditions, as well as personalized medicine. In the U.S., for example, there are already more than 20 gene therapy and cell therapy options available.

Speaker Change: For context, prescription drug coverage is the most frequently used care benefit, and on average, it's used 15 times per year per person, resulting in billions of prescriptions per year annually in the United States.

David Cordani: In the US, for example, there're already more than 20 gene therapy and cell therapies available. However, there are nearly 1,000 more in the pipeline. Additionally, as we know, GLP-1s are grown rapidly, helping to treat diseases and complications that stem from obesity and diabetes. This class of drug is on tap to be the number one pharmacy benefit trend driver, but plans of all sizes this year. And the impact will grow, with some forecasting nearly 10 percent of the US population using GLP-1s in the next 10 years or sooner. The implications rippling from the fast growing pharmaceutical trends across the entire healthcare system are undeniable.

Speaker Change: In the U.S., for example, there are already more than 20 gene therapy and cell therapies available. However, there are nearly 1,000 more in the pipeline.

David Michael Cordani: However, there are nearly 1,000 more in the pipeline. The implications rippling from these fast-growing pharmaceutical trends across the entire healthcare system are undeniable. And one of the biggest unanswered questions is, how can society afford this continued trajectory? Our role is to negotiate with pharmaceutical manufacturers as well as pharmacies to ensure that individuals are able to access pharmacological innovations at a fair and affordable price. In fact, pharmacy benefit companies are the only part of the drug supply chain that works to drive costs down.

Speaker Change: Additionally, as we know, GLP-1s are growing rapidly, helping to treat diseases and complications that stem from obesity and diabetes. This class of drug is on tap to be the number one pharmacy benefit trend driver for plans of all sizes this year.

Speaker Change: The implications rippling from these fast-growing pharmaceutical trends across the entire healthcare system are undeniable.

David Cordani: And one of the biggest financial questions is how could society afford this continued trajectory? Our role is to negotiate with pharmaceutical manufacturers as well as pharmacies to ensure that individuals are able to access pharmacological innovations at a fair and affordable price. In fact, pharmacy benefit companies are the only part of the drug supply chain who work to drive costs down. To underscore this, new drugs coming to market with unsustainable prices in 2023 were up $300,000 on a medium basis, up over 35 percent over 2022. And last year, median brand drug price increases were greater than 5 percent more than the rate of inflation.

Speaker Change: Our role is to negotiate with pharmaceutical manufacturers as well as pharmacies to ensure that individuals are able to access pharmacological innovations at a fair and affordable price.

Speaker Change: In fact, pharmacy benefit companies are the only part of the drug supply chain who work to drive costs down.

David Michael Cordani: To underscore this, new drugs are coming to market, up 35% over 2020. Meanwhile, in 2023, Express Group's change in pace and cost sharing was relatively flat on average. And for our clients, Express Scripts delivered more than $38 billion in savings annually. Stepping back, our industry negotiations to drive these results and, at times, generate friction in the system. Friction that has spilled into and now has reached heightened levels in the political arena and the media, with industry winners and losers being declared in every report and every headline.

Speaker Change: To underscore this, new drugs coming to market.

Speaker Change: with unsustainable prices in 2023 were up $300,000 on a medium basis, up over 35% over 2022. And last year, median brand drug price increases were greater than 5% more than the rate of inflation. Let me repeat this.

David Cordani: Let me repeat this. Last year, the median annual price for new drugs coming to market was $300,000, up 35 percent over 2022. Meanwhile, in 2023, express grips change in pace and cost sharing was relatively flat on average. Express grips patients with employers sponsored drug coverage pay on average $15 out of pocket for a 30-day supply. And for a client, Express Grips delivered more than $38 billion in savings annually. Stepping back, our industry negotiations to drive these results and, at times, generate friction in the system. Friction that is spilled into and now has reached heightened levels in the political arena and media, with industry winners and losers being declared at every report and every headline.

Speaker Change: Last year, the median annual price for new drugs coming to market was $300,000, up 35% over 2022.

Speaker Change: Express Grip's patients with employer-sponsored drug coverage pay on average $15 out-of-pocket for a 30-day supply.

Speaker Change: And for our clients, Express Scripts delivered more than $38 billion in savings annually.

Speaker Change: Friction that has spilled into and now has reached heightened levels in the political arena and media, with industry winners and losers being declared at every report and every headline.

David Cordani: We believe that the facts and results and outcomes delivered to our clients' customers and patients were ruled today. However, the environment calls on us to be more proactive. This means ensuring that what we do in the value we bring is more widely and better understood. And we continue to evolve our model to address legitimate pain points and opportunities.

David Michael Cordani: We believe that facts and results and outcomes delivered to our clients, customers, and patients should rule today. However, the environment calls on us to be more proactive. This means ensuring that what we do and the value we bring is more widely and better understood, and we continue to evolve our model to address legitimate pain points and opportunities.

David Cordani: For example, in 2023, one percent of the patients in the United States experience out-of-pocket costs of about $2,000 a year. From our point of view, that's too many. We accept the responsibility to accelerate innovation to make medications more affordable while continuing to improve health outcomes and finding solutions for every person we serve. Make no doubt, our team will continue to lean into these challenges for the benefit of our patients, clients, and the healthcare ecosystem, and we are proud of the work that our team does every day and the role we play and the results we're able to achieve.

Speaker Change: And we continue to evolve our model to address legitimate pain points and opportunities. For example, in 2023, 1% of the patients in the United States experience out-of-pocket costs above $2,000 a year.

David Michael Cordani: In 2023, 1% of patients in the United States will experience out-of-pocket costs above $2,000 a year. From our point of view, that's too many. Now, let me pause and summarize before transitioning to Bryan. When you combine our compelling growth potential and strong execution focus, we have confidence in our ability to meet our 2024 and long-term growth targets. We have a proven track record of delivering differentiated value for those we serve by innovating new solutions like EnCircleRx and our PathWall Suite, as well as expanding meaningful partnerships.

Speaker Change: From our point of view, that's too many.

Speaker Change: We accept the responsibility to accelerate innovation to make medications more affordable while continuing to improve health outcomes and finding solutions for every person we serve.

Speaker Change: Let me pause and summarize before transitioning to Bryan.

Speaker Change: When you combine our compelling growth potential and strong execution focus, we have confidence in our ability to meet our 2024 and long-term growth targets.

David Cordani: We differentiate a value for those we serve by innovating new solutions like in CircleRx and our Path Wall suite, as well as expanding meaningful partnerships. As a result in the second quarter, we delivered our financial commitment with adjusted EPS of $6.72 and would remain on track to deliver our guidance for four year adjusted earnings per year, a bet released $28.40 for 2024. Further, our company has attractive sustainable growth opportunities over the long term, and we remain on track to deliver average annual adjusted EPS growth at 10 to 14%. Building under track record of achieving 13% adjusted EPS growth over the last decade, all will be generated cumulative operating cash flow of $60 billion over the next five years while continuing to meaningfully invest capital for the benefit of shareholders.

David Michael Cordani: As a result, in the second quarter, we delivered on our financial commitment with adjusted EPS of $6.72, and we remain on track to deliver our guidance for full-year adjusted earnings per share of at least $28.40 in 2024.

Brian Evanko: In addition, our company has attractive sustainable growth opportunities over the long term, and we remain on track to deliver average annual adjusted EPS growth of 10 to 14 percent, building on our track record of achieving 13 percent adjusted EPS growth over the last decade. Overall, our strong performance through the first half of the year reflects the balance in our company portfolio and the significant value creation that positions us for sustained and differentiated growth. With that, I'll turn it over to Brian.

Speaker Change: All will regenerate cumulative operating cash flow of $60 billion over the next five years while continuing to meaningfully invest capital for the benefit of shareholders.

David Cordani: We also continue to make strategic investments in strengthening our capabilities in our foundational and accelerated growth business and remain focusing on harnessing the breadth of our capabilities of our organization to make the evolving needs of those we serve. Overall, our strong performance through the first half of the year reflects the balance in our company portfolio and the significant value creation that positions us for sustained and differentiated growth.

Speaker Change: We also continue to make strategic investments in strengthening our capabilities in our foundational and accelerated growth business and remain focusing on harnessing the breadth of our capabilities of our organization to meet the evolving needs of those we serve.

Speaker Change: Overall, our strong performance through the first half of the year reflects the balance in our company portfolio and the significant value creation that positions us for sustained and differentiated growth.

Brian Evanko: With that, I'll turn it over to Brian.

Brian Evanko: Thank you, David. Good morning, everyone. Today, I'll review the second quarter of 2024 results and discuss our outlook for the full year. We're pleased with our strong second quarter results reflecting growth across ever North and Signal healthcare. The results underpin the strength and the stability of our diversified portfolio of businesses in a dynamic environment and demonstrate continued execution against their operating and financial commitments. Econsolidated financial highlights for the second quarter include revenue of $60.5 billion, which represents 25% year-over-year growth, and adjusted our share of $6.72, or 10% year-over-year growth. With the strong first half performance, we continue to have confidence in our full year 2024 adjusted earnings per share outlook of at least $28.40, which represents more than 13% year-over-year growth in EPS.

Speaker Change: With that, I'll turn it over to Brian .

Brian Evanko: Today, I'll review Cigna's second quarter 2024 results and discuss our outlook for the full year. We're pleased with our strong second quarter results, reflecting growth across Evernorth and Cigna Healthcare. The results underpin the strength and stability of our diversified portfolio of businesses in a dynamic environment. E-Consolidated financial highlights for the second quarter include revenue of $60.5 billion, which represents 25% year-over-year growth, and adjusted for a share of $6.72, or 10% year-over-year growth.

Brian: Thank you, David. Good morning, everyone.

Brian: Today, I'll review Cigna's second quarter 2024 results and discuss our outlook for the full year.

Brian: We're pleased with our strong second quarter results, reflecting growth across Evernorth and Cigna Healthcare.

Speaker Change: in a dynamic environment.

Speaker Change: E-Consolidated financial highlights for the second quarter include revenue of $60.5 billion, which represents 25% year-over-year growth.

Brian: And adjusted earnings per share of $6.72, or 10% year-over-year growth.

Brian Evanko: With the strong first half performance, we continue to have confidence in our full year 2024 adjusted earnings per share outlook of at least $28.40, which represents more than 13% year-over-year growth in EPS. Now turning to our segment results, I'll first comment on Evernor. Evernorth continues to deliver strong results, driven by both of its operating sectors, largely ahead of expectation.

Brian: With the strong first half performance, we continue to have confidence in our full year 2024 adjusted earnings per share outlook of at least $28.40.

Brian: which represents more than 13% year-over-year growth in EPS.

Brian Evanko: Now, turning to our segment results, I'll first comment on Ever North. Ever North continues to deliver strong results driven by both of its operating segments. That can quarter 2024 revenues grew to $49.5 billion, while pre-tax adjusted earnings grew 7% to $1.6 billion, blatantly ahead of expectations. Specialty and Care Services showed strong growth, with revenue of 18% to $22.9 billion. and pre-tax adjusted earnings were up 12% to $756 million at the high end of our long-term target growth range. This performance is a demonstration of our robust and diversified capabilities as we delivered broad-based growth across our specialty businesses, a credo and care script, as well as in our care services businesses.

Brian: Specialty in Care Services showed strong growth with revenue up 18% to $22.9 billion.

Brian: And pre-tax adjusted earnings were up 12% to $756 million.

Brian Evanko: This performance is a demonstration of our robust and diversified capabilities, as well as in our care services business. Pharmacy benefit services also posted strong revenue growth driven by the addition of new business wins and expansion of existing relationships. Pre-tax Adjusted Earnings increased to $798 million, as our innovative capabilities continue to drive value for our clients, customers, and patients. Overall, we're pleased with EverNorth's second quarter results and continue to expect strong income growth in the second half of the year. Turning to Cigna Healthcare, second quarter 2024 revenues were $13.2 billion, and pre-tax adjusted earnings were $1.2 billion.

Brian: This performance is a demonstration of our robust and diversified capabilities.

Brian: As we deliver broad-based growth across our specialty businesses, Accredo and KeraScript

Brian Evanko: Pharmacy Benefit Services also posted strong revenue growth driven by the addition of new business wins and expansion of existing relationships. Pre-tax adjusted earnings increased to $798 million, as our innovative capabilities continue to drive value for our clients, customers, and patients.

Brian: as well as in our care services businesses.

Brian: Pharmacy benefit services also posted strong revenue growth driven by the addition of new business wins and expansion of existing relationships.

Brian: Pre-tax Adjusted Earnings increased to $798 million.

Brian Evanko: Overall, we're pleased with Ever North's second quarter results and continue to expect strong income growth in the second half of the year.

Speaker Change: Overall, we're pleased with EverNorth's second quarter results and continue to expect strong income growth in the second half of the year.

Brian Evanko: Turning to Signal Health Care, second quarter, 2024 revenues were $13.2 billion, and pre-tax adjusted earnings were $1.2 billion. Second quarter earnings were in line with expectations and included approximately $50 million of an unfavorable prior year impact related to Medicare Advantage risk adjustment. The second quarter medical care ratio of 82.3% was within our expected range, inclusive of the aforementioned unfavorable prior year impact of approximately $50 million or 40 basis points on the medical care ratio. Absent this item, the underlying medical care ratio was broadly in line with expectations. As noted previously, we had planned and priced for 2024 medical cost trend to be above 2023 levels, which took into account both unit cost inflation as well as continued elevated utilization.

Speaker Change: Turning to Cigna Healthcare, second quarter 2024 revenues were $13.2 billion and pre-tax adjusted earnings were $1.2 billion.

Brian Evanko: Second quarter earnings were in line with expectations and included approximately $50 million of an unfavorable prior year impact related to Medicare Advantage risk adjustment. The second quarter medical care ratio of 82.3% was within our expected range, inclusive of the aforementioned unfavorable prior year impact of approximately $50 million, or 40 basis points on the medical care ratio. Absent this item, the underlying medical care ratio is broadly in line with expectations.

Speaker Change: Second quarter earnings were in line with expectations.

Speaker Change: Absent this item, the underlying medical care ratio is broadly in line with expectations.

Brian Evanko: As noted previously, we had planned and priced for 2024 medical cost trends to be above 2023 levels, which took into account both unit cost inflation as well as continued elevated utilization. Year-to-date, we have seen elevated cost trends consistent with our planning and pricing. The net medical cost payable at the end of the second quarter was $5.04 billion.

Speaker Change: which took into account both unit cost inflation as well as continued elevated utilization.

Brian Evanko: Year to date, we have seen elevated cost trends consistent with our planning and pricing assumptions. The net medical cost payable at the end of the second quarter was $5.04 billion compared to $5.66 billion at the end of the first quarter. As noted previously, in the first quarter, we had booked approximately $650 million in incremental reserves relating to the change health care disruption. Those reserves have since developed in line with expectations, and claims payments have returned to more normalized levels, driving the sequential decline and net medical cost payable.

Speaker Change: Year-to-date, we have seen elevated cost trends consistent with our planning and pricing assumptions.

Speaker Change: The net medical cost payable at the end of the second quarter was $5.04 billion compared to $5.66 billion at the end of the first quarter.

Speaker Change: As noted previously, in the first quarter, we had booked approximately $650 million in incremental reserves relating to the change healthcare disruption.

Brian Evanko: Moving to signal healthcare medical customers, we ended the quarter with $19 million total medical customers. We expect growth in Signal Healthcare medical customers for the remainder of the year, primarily driven by growth in our US employer, the LECT, and middle market segments.

Brian Evanko: Those reserves have since developed in line with expectations, and claims payments have returned to more normalized levels, driving the sequential decline in net medical costs payable. Moving to Cigna Healthcare Medical Customers, we ended the quarter with 19 million total medical customers. We expect growth in Cigna healthcare medical customers for the remainder of the year, primarily driven by growth in our U.S. employer select and middle market segments. Now, turning to our 2024 outlook for each of our growth platforms.

Speaker Change: Driving the sequential decline in net medical cost payable.

Speaker Change: We expect growth in Cigna healthcare medical customers for the remainder of the year, primarily driven by growth in our U.S. employer, select, and middle market segments.

Brian Evanko: Overall, Signal Healthcare delivered consistent results in a dynamic operating environment.

Speaker Change: Overall, Cigna Healthcare delivered consistent results in a dynamic operating environment.

Brian Evanko: Now, turning to our outlook for full year 2024. With our continued strong underlying performance in Evernorth and Signal Healthcare, we are reaffirming our full year 2024 expectation for consolidated adjusted income from operations of at least $8.065 billion or at least $28.40 per share. Carter, regarding cadence of earnings, we expect a third quarter adjusted earnings per share to be approximately 25% of the full year outlook. Now turning to our 2024 outlook for each of our growth platforms. In Evernorth, we continue to expect full-year 2024 pre-tax adjusted earnings of at least $7 billion. This reflects continued momentum into the second half, with third quarter Evernorth earnings expected to accelerate to high single-digit year-rear growth, in part due to an increase in adoption of our interchangeable biosimilar offering.

Speaker Change: Now turning to our 2024 outlook for each of our growth platforms.

Speaker Change: In Evernorth, we continue to expect full year 2024 pre-tax adjusted earnings of at least $7 billion.

Brian Evanko: This reflects continued momentum into the second half, in part due to an increase in adoption of our interchangeable by a similar offer. And we expect the third quarter adjusted earnings to be approximately 25% of the full year outlook. We continue to expect the full-year medical care ratio within the range of 81.7% to 82.5%. With the first half medical care ratio coming in at 81.1 percent, we would expect the third quarter to be slightly below that level.

Speaker Change: This reflects continued momentum into the second half.

Speaker Change: With third quarter Evernorth earnings expected to accelerate to high single-digit year-over-year growth.

Speaker Change: in part due to an increase in adoption of Art Interchangeable by a similar offering.

Brian Evanko: For Cigna Healthcare, we continue to expect full-year 2024 pre-tax adjusted earnings of at least $4.775 billion. And we expect the third quarter adjusted earnings to be approximately 25% of the full year outlook. We continue to expect the full year medical care ratio within the range of 81.7% to 82.5%. With the first half medical care ratio coming in at 81.1%, the midpoint of our guidance implies an 83.1% medical care ratio for the second half of the year. We would expect the third quarter to be slightly below that level.

Speaker Change: And we expect the third quarter adjusted earnings to be approximately 25% of the full year outlook.

Speaker Change: We continue to expect the full year medical care ratio within the range of 81.7% to 82.5%.

Speaker Change: The midpoint of our guidance implies an 83.1% medical care ratio for the second half of the year.

Speaker Change: We would expect the third quarter to be slightly below that level.

Brian Evanko: Turning to our 2024 capital management position. As of July 31st, we have repurchased 14.7 million shares of common stock for approximately $5 billion, consistent with our previous commentary. We continue to expect at least $11 billion of cash flow from operations. Our balance sheet and cash flow outlook remains strong, benefiting from our efficient asset-light framework that drives attractive returns on capital.

Brian Evanko: Turning to our 2024 capital management position, for approximately $5 billion, consistent with our previous commentary, we continue to expect at least $11 billion of cash flow from operations. Our balance sheet and cash flow outlook remain strong, benefiting from our efficient asset-led framework that drives attractive returns on capital. Now, to recap, our first half 2024 consolidated results reflect strong contributions and execution from both Evernorth and Cigna Healthcare. Our 2024 outlook reflects the sustained momentum and strong fundamentals of our two growth platforms. Thanks.

Speaker Change: Turning to our 2024 Capital Management position.

Speaker Change: As of July 31st, we have repurchased 14.7 million shares of Common Stock.

Speaker Change: for approximately $5 billion, consistent with our previous commentary.

Speaker Change: We continue to expect at least $11 billion of cash flow from operations.

Speaker Change: Our balance sheet and cash flow outlook remains strong, benefiting from our efficient, asset-light framework that drives attractive returns on capital.

Brian Evanko: Now to recap, our first half 2024 consolidated results reflect strong contributions and execution from both Evernorth and Cigna Healthcare. Our 2024 outlook reflects the sustained momentum and strong fundamentals of our two growth platforms, which gives us confidence to deliver on our full year 2024 adjusted earnings per share outlook of at least $28.40.

Speaker Change: Now to recap, our first half 2024 consolidated results reflect strong contributions and execution from both Evernorth and Cigna Healthcare.

Speaker Change: Our 2024 outlook reflects the sustained momentum and strong fundamentals of our two growth platforms.

Speaker Change: which gives us confidence to deliver on our full year 2024 adjusted earnings per share outlook of at least $28.40.

Operator: With that, we'll turn it over to the operator for the Q&A portion of the call. Ladies and gentlemen, at this time, if you do have a question, please press star one on your touch-tone zone. If someone asked your question ahead of you, you can remove yourself in the queue by pressing star two. Also, if you're using a speakerphone, please pick up the handset before pressing the button. One moment, please, for the first question.

Speaker Change: Ladies and gentlemen, at this time if you do have a question, please press star 1 on your touchtone phone.

Justin Lake: Our first question comes from Justin Lake with Wolf Research. You may ask your question.

Speaker Change: One moment, please, for the first question.

Speaker Change: Our first question comes from Justin Lake with Wolf Research. You may ask your question.

Brian Evanko: Thanks, good morning. Appreciate the commentary on question. Maybe you can give us an update on what you're seeing by business line and also, you know, how things have trended to queue versus one queue.

Operator: Good morning. Appreciate the commentary on the quench trend. Maybe you can give us an update on what you're seeing by business line and also, you know, how things have trended 2Q versus 1Q. When you say it's in line with your, There are a few puts and takes that I call out if we get into specific cost drivers. So we continue to see elevated usage of facility-based services, including emergency rooms.

Justin Lake: Thanks, good morning. Appreciate the commentary on quash trend. Maybe you can give us an update on what you're seeing by business line and also, you know, how things have trended 2Q versus 1Q. When you say it's in line with your

Brian Evanko: When you say it's in line with your pricing and your expectations, is that a year to date? Is that a year-to-date discussion, or is that, you know, where trend is running today, you know, coming out of the second quarter? Is that in line, or is that more or less elevated versus what you expected? Thanks.

Justin Lake: With your pricing and your expectations, is that a year-to-date discussion, or is that, you know, where trend is running today, you know, coming out of the second quarter? Is that in line, or is that more or less elevated versus what you expected? Thanks.

Brian Evanko: Morgan Justice, Brian, so I start by saying we're pleased to have delivered another solid quarter of MCR performance in Signal Healthcare, which ran toward the lower end of our MCR guidance range when you exclude the prior year Medicare risk adjustment revenue impacts in the quarter that I mentioned earlier. Now, within the quarter, total cost of care was broadly in line with expectations. There are a few puts and takes that I call out if we get into specific cost drivers, so we continue to see elevated usage of facility-based services, including emergency room. Additionally, we saw a continuation of elevated utilization of mental healthcare services, which we do see as a positive over the longer term, given the correlation to whole-person health.

Speaker Change: Good morning, Justice. This is Brian. So, I start by saying we're pleased to have delivered another solid quarter of MCR performance at Cigna Healthcare.

Operator: Additionally, we saw a continuation of elevated utilization of mental health care services. Thank you. And this question comes from Lisa Gill with J.P. Morgan. You may ask your question. Good morning, Lisa. It's Eric.

Speaker Change: Additionally, we saw a continuation of elevated utilization of mental health care services, which we do see as a positive over the longer term, given the correlation to whole person health.

Brian Evanko: You recall in the first quarter, I highlighted slow and growth in surgical costs. During the second quarter, we continued to see abatement in the rate of growth of surgical costs; although costs still did grow. Now, taking all together, we are seeing sustained high cost trends, yet these are broadly in line with our guidance as we planned and priced for the elevated utilization level that began in 2023 to continue throughout 2024. Now, specifically in the second quarter, we did not witness aggregate acceleration or deceleration of care patterns within the quarter. I also would not note any month-to-month variability relative to the year-to-date experience that we've seen.

Speaker Change: You'll recall in the first quarter, I highlighted slowing growth and surgical costs.

Speaker Change: During the second quarter, we continued to see abatement in the rate of growth of surgical costs.

Speaker Change: Although costs still did grow.

Justin Lake: Now, taken all together, we are seeing sustained high-cost trends.

Justin Lake: I also would not note any month-to-month variability relative to the year-to-date experience that we've seen. So overall, we remain confident in the full-year MCR range outlined in our guidance.

Brian Evanko: So overall, we remain confident in the full-year MCR range outlined in our guidance.

Lisa Gill: In this question, come to Lisa Gill with JP Morgan. You may ask your question.

Speaker Change: Thank you. And this question comes from Lisa Gill with J.P. Morgan. You may ask your question.

Lisa Gill: Good morning, and thank you. I want to start with the 2025 selling season on the pharmacy side. You made comments around GLP-1s. We continue to see new indications there.

Lisa Gill: Good morning and thank you. I want to start with the 2025 selling season on the pharmacy side. You made comments around GLP-1s. We continue to see new indications there. I'm just curious, one, when we think about the opportunities in 2025, how would you characterize that?

Lisa Gill: I'm just curious. One, when we think about the opportunities in 2025, how would you characterize that? Two, what kind of programs are people buying going into 2025? And then lastly, David, you need a comment that just facts need to be more widely understood when it comes to the pharmacy business. What are your plans around making those facts more widely known? Because, as you know, I agree with you that both Congress as well as the media reports don't fairly reflect what the benefits are of the business.

Justin Lake: to what kind of programs are people buying going into 2025? And then lastly, David, you made a comment that the facts need to be more widely understood when it comes to the pharmacy business. What are your plans around making those facts more widely known? Because as you know, I agree with you that both Congress as well as the media reports don't fairly

David: reflect what the benefits are of the business.

Brian Evanko: Good morning, Lisa. I'll start, then maybe invite David to add some additional comments on the edge here. But overall, our foundational pharmacy benefit services business, Express Groups, is off to a really good start for 2025. We'll get a strong new sales, and our 2025 retention rate is going to be consistent with recent years and the mid-90s or better.

Eric Palmer: I'll start and then maybe invite David to add some additional comments at the end here. But overall, our foundational pharmacy benefits services business, Express Scripts, is off to a really good start for 2025. We've got strong new sales, and our 2025 retention rate is going to be consistent with recent years in the mid-90s or better. Stepping back a little bit, Evernorth overall continues to be well positioned to grow.

Speaker Change: Maybe invite David to add some additional comments on the ads here. But overall, our foundational pharmacy benefits services business, Express Scripts, is off to a really good start for 2025. We've got strong new sales.

Brian Evanko: Stepping back a little bit, ever north overall continues to be well positioned to grow. The specialty business is also positioned for strong growth, with significant growth driven by our pharmacy benefits clients electing to use our specialty capabilities, as well as strong growth in services so directly to health systems and other health plans. So overall, we are quite excited about the strength of the solutions and how they continue to resonate with the market overall. The themes are specific programs that I would point to come back to areas that help to make the value of the dollars spent on medicines more effective.

Eric Palmer: The specialty business is also positioned for strong growth, with significant growth driven by our pharmacy benefits clients electing to use our specialty capabilities, as well as strong growth in services sold directly to health systems and other health plans. So overall, we are quite excited about the strength of the solutions and how they continue to resonate with the market overall. The themes or specific programs that I would point out come back to areas that help to make the value of the dollars spent on medicines more effective, right?

Speaker Change: So overall, I'm...

David: strength of the solutions and how they continue to resonate with the market overall.

Eric Palmer: So programs like our EncircleRx program that helps to effectively manage weight loss medications, GLP-1, or our most recent oncology benefit offering that David mentioned a bit ago in his prepared remarks. So targeted specific types of programs that work really well with the broader suite of benefit offerings continue to resonate really well, and that's an area we continue to invest in. David, do you want to take a bit on the broader environmental comment? Sure. Eric, thank you. Good morning, Lisa.

David Cordani: So programs like our Encircleorex program that helps to effectively manage weight loss medications GLP1 or our most recent oncology benefit offering that David just mentioned a bit ago in his prepared remarks. So targeted specific types of programs that work really well with the broader suite of benefit offerings continue to resonate really well in that scenario. We continue to invest in.

Speaker Change: The value of the dollars spent on medicine is more effective, so programs like our EnCircleRx program that helps to effectively manage weight loss medications, GLP-1.

David Cordani: David, do you want to take a bit on the broader environment coming? Sure, Eric, thank you. Good morning, Lisa. Lisa, I appreciate the call-out. First and foremost, when we reiterate, we're proud of the work we do daily, and I'm greatly appreciative of our team. It gets up every day serving our patients and customers through employer relationships, health plan relationships, governmental entity relationships, and increasingly through partnerships and collaboration with healthcare professionals. Second, we will and need to continue to innovate for the benefit of those we serve, whether that's through the likes of ClearCareRx, our patient insurance program, our insurance program, our independent pharmacy program, all of which are first in the space.

David Michael Cordani: And Lisa, I appreciate the call out. First and foremost, let me reiterate, we're proud of the work we do daily, and I'm greatly appreciative of our team that gets up every day serving our patients and customers through employer relationships, health plan relationships, governmental entity relationships, and increasingly through partnerships and collaborations with health care professionals. Second, we will and need to continue to innovate for the benefit of those we serve, whether that's through the likes of ClearCareRx, our patient assurance program, our EncircleRx program, and our independent pharmacy program, all of which are first in the space.

Speaker Change: We're proud of the work we do daily, and I'm greatly appreciative of our team that gets up every day serving our patients and customers through employer relationships, health plan relationships, governmental entity relationships.

Speaker Change: and increasingly through partnerships and collaborations with healthcare professionals.

Speaker Change: Second, we will and need to continue to innovate for the benefit of those we serve, whether that's through the likes of Clear Care Rx, our patient insurance program, our in-circle program, our independent pharmacy program, all of which are first in the space.

David Michael Cordani: Now, specific to your question, we challenge ourselves to be much more aggressive and complete relative to communication and engagement in support of our clients, be they employers or health plan customers, collaborating even more deeply and intensely with independent pharmacies and subsegmenting the independent pharmacists who are truly independent and rural, working on the Hill, of course, and then lastly, more aggressively leveraging credible third-party independent analysis of what our industry does and specifically what we do So you should expect to see us a bit more complete and aggressive, ensuring that we're amplifying that.

David Cordani: Now, specific to your question, we challenge ourselves to be much more aggressive and complete relative to communication and engagement in support of our clients, be they employers or health plan customers, collaborate even more deeply and intensely with the independent pharmacies and sub-sagmiting the independent pharmacists who are truly independent and rural. Working on the Hill, of course, and then lastly, more aggressively leveraging a credible third-party independent analysis of what our industry does and specifically what we do on behalf of those we serve in a fact-based and credible way. So, you should expect to see us a bit more complete and aggressive, ensuring that we're ample of finding that.

Speaker Change: Now, specific to your question, we challenge ourselves to be much more aggressive and complete relative to communication and engagement in support of our clients, be they employers or health plan customers, collaborating even more deeply and intensely with the independent pharmacies and sub-segmenting the independent pharmacists who are truly independent and rural, working on the Hill, of course, and then lastly, more aggressively leveraging a credible third-party independent analysis of what our industry does and specifically what we do on behalf of those we serve in a fact-based and credible way. So you should expect to see us a bit more complete and aggressive, ensuring that we're amplifying that. But make no doubt, we also need to continue to innovate as we have and we will continue to innovate.

David Michael Cordani: But there is no doubt that we also need to continue to innovate as we have, and we will continue to innovate for the benefit of those we serve. Thanks for your question. Thank you.

David Cordani: But make no doubt, we also need to continue to innovate as we have and we will. I'll continue to innovate for the benefit of those we serve. Thanks for your questions.

AJ Rice: Thank you. And as question comes from AJ Rice, your mind is open.

Speaker Change: for the benefit of those we serve. Thanks for your question.

Operator: Third, we're seeing mental health and substance abuse benefits and programs becoming more and more important each year, particularly given some of the downstream effects of the pandemic. Thank you. Our next question comes from Andrew Mok with Barclays.

Brian Evanko: You may ask your question with UBS. Thanks, everybody.

Brian Evanko: I might just flip over and ask you about the point solutions. I wonder; I understand how you're addressing affordability, and I understand how you're addressing behavioral health integration.

Speaker Change: for quite a while now, fatigue on...

David Cordani: But on the point solution question, is there anything that this, do you think you'll consider buying some of these point solutions? And then offering it as far to your integrated offering. Do you sort of see yourself getting in the middle of the helping employers choose between the myriad of point solutions? How are you addressing that?

Speaker Change: Integration, but on the point solution question, is there anything that this, or do you think you'll...

Brian Evanko: Morning, AJ. It's Brian. I'll start on the signal healthcare selling season and buying pattern dynamic. And then I think David will pick up on the second part of your question relative to point solutions and some of our inorganic activities. So as relates to the signal healthcare selling season, I'll concentrate my comments on the larger end of the US employer market just given the time of the year. We're seeing a relatively consistent number of RFPs this year in comparison to last year at this time. And similarly, in terms of our existing clients, we have a similar amount out to bid as we did last year at this time.

Brian Evanko: So just for some context on the numbers. Now, each of these larger employer clients tend to have unique needs. There's a few areas that I'd thematically call out in terms of what our teams are seeing out the market. One is David made reference to earlier. Affordability continues to be a key area of focus, particularly with the wave of drug innovation, including GLP1's and sheen therapy sitting the market. Secondly, to your point, some of the larger employers are seeking to consolidate vendors or point solutions with those who can supply more integrated offerings. Third, we're seeing mental health and substance abuse benefits and programs becoming more and more important each year, particularly given some of the downstream effects of the pandemic.

Brian Evanko: And finally, many of these larger clients are interested in digitally enabled care navigation capabilities to drive either further study, care optimization, or consumer empowerment. So, taking all together, our signal healthcare offerings are well positioned to address these themes and demands from large employers.

Speaker Change: And finally, many of these larger clients are interested in digitally-enabled care navigation capabilities.

Speaker Change: to drive either further study care optimization or consumer empowerment. So taken all together, our Cigna healthcare offerings are well positioned to address these themes and demands from large employers.

Brian Evanko: And importantly, we also continue to see strong traction and net growth in our under 500 select segment, as you'll see in the statistical supplement: 7% year-over-year growth in customers within our signal healthcare select segment specifically.

David Cordani: David, maybe you want to pick up on the point solution question? Sure. So first, if you think about some of the solutions we identified, both in today's call and in part conversations, you can think about our digital health formulary as a way that we connect capabilities and work to connect them seamlessly. You can think about the way the Encircle program is designed; it's designed to have actually coordination and continuity that's patient centric. The oncology program that we will all out in 2025 is another example of taking a specific care need or episode of care and redesigning the pathway to care in a much more coordinated basis, staying focused on the patient and healthcare professional.

Speaker Change: within our Cigna Healthcare Select segment specifically.

Speaker Change: You can think about our digital health formulary as a way that we connect capabilities and work to connect them seamlessly.

David Cordani: The signal behavioral group offering that I reference has much more continuity and coordination of the care experience starting from the access to the medical professional, the matching and the coordination and the be new offerings. You can think about all those as largely having been built organically as we continue to invest back in the organization. To record a question through acquisition, you can think about that as well. You never roll it out largely not fueled through acquisition, although there could be episodic coordination of point solutions.

Speaker Change: The Significant Behavioral Group offering that I referenced has much more continuity

David Cordani: Then I would graph in the middle; I would remind you that we operate the Sign Eventures organization, where we have a now meaningful track record of partnering with organizations where they are, by definition, almost point solutions and helping collaboratively to co-innovate with them as we go forward. So stepping back largely organically driven proven track record and the acceleration of new innovations that are coming to market for the benefit of those we serve to meet that demand.

David Cordani: Thank you for the question. Thank you.

Andrew Mok: Our next question comes from Andrew Mok with Barclays. Your line is open.

Andrew Mok: You may ask your question.

Speaker Change: Thank you. Our next question comes from Andrew Mok with Barclays. Your line is open. You may ask your question.

Andrew Mok: Hi, good morning. With all the changes coming to Part D, there could be significant changes not only in the membership, but also in formulary management for next year.

Andrew Mok: Hi, good morning. With all the changes coming to Part D, there could be significant changes, not only to membership, but also formulary management for next year. How does the shifting risk to Part D sponsors impact Evernote more broadly, and how are you helping clients navigate these changes? Thanks.

Andrew Mok: How does the shifting risk to part these sponsors impact every North more broadly and how are you helping clients and obligations changes?

David Cordani: Morning, Andrew, David. Let me comment briefly on the PDP macro environment. And then ask Eric to walk through our capabilities and our proven track record of supporting our clients relative to their PDP offerings. As you step back, it was clear that the Eflation Reduction Act, as it was designed and the ultimate implementation of it, was going to cause PDP premiums to rise meaningfully. And most likely that was going to create some meaningful disruption for seniors. Now, with the bits have gone in, CMS has assessed those bits and has drawn apparently some of the similar conclusions.

David Michael Cordani: You may ask your question. Morning Andrews, David, let me comment briefly on the PDP macro environment and then ask Eric to walk through our capabilities and our proven track record of supporting our clients relative to their PDP offerings. As you step back, it was clear that the inflation Reduction Act, as it was designed and in its ultimate implementation, was going to cause PDP premiums to rise meaningfully, and most likely that was going to create some meaningful disruption for seniors.

Speaker Change: Morning Andrew, this is David. Let me comment briefly on the PDP macro environment and then ask Eric to walk through our capabilities and our proven track record of supporting our clients relative to their PDP offerings. As you step back, it was clear that the Inflation Reduction Act

David Michael Cordani: Now, as the bids have gone in, CMS has assessed those bids and has drawn apparently some similar conclusions relative to the acceleration of the bids and the acceleration of the premiums required given the design features. And after reviewing those, it's created a short-term window for some bid adjustments that we, and like others, are going through on an accelerated basis. So that disruption was designed by the Inflation Reduction Act and the marketplaces reacting to that.

Speaker Change: Now as the bids have gone in, CMS has assessed those bids and has drawn apparently some of the similar conclusions relative to the acceleration of the bids and the acceleration of the premiums required given the design features.

Eric Palmer: Relative to the acceleration of the bits and acceleration of the premiums required given the design features. And after reviewing those, it's created a short-term window for some bit adjustments that we and like others are going through that on an accelerated basis. So that that disruption was designed from the Eflation Reduction Act, and the marketplace is reacting to that.

Eric Palmer: Matthew Eric to talk more specifically to our capabilities and how we work in support of the many cases, our health plan clients and their PDP people can business to ensure we deliver the right quality and overall affordability, Eric. Thanks, David. Good morning, Andrew.

David Michael Cordani: I'm going to ask Eric to talk more specifically about our capabilities and how we work in support of, in many cases, our health plan clients and their PDP book of business to ensure we deliver the right quality and overall affordability.

Eric Palmer: Thanks, David. Good morning, Andrew. Evernote and Express Script specifically have a long history of supporting health plans that offer Medicare Part D plans.

Eric: and their PDP book of business to ensure we deliver direct quality and overall affordability. Eric? Thanks, David. Good morning, Andrew. EverNorth and Express Script specifically has a long history of supporting health plans who offer Medicare Part D plans. We've got a great track record of achieving...

Eric Palmer: Every North and ExpressCrip specifically has a long history of supporting health plans who offer Medicare for V plans. We've got a great track record of achieving strong stars outcomes for them and supporting our plans and their offerings and helping them with the tools to manage formularies and model the impacts of changes.

Eric Palmer: For example, we're continuing to make investments to help ensure our plans are well positioned with the continued evolution of party coverage, you know, even with the most recent round of changes from the IRA, like the administrative requirements associated with the co-based moving, just as one example.

Eric Palmer: Does this continue to be an important part of the Evernote and ExpressCrip's business that we're positioned to continue to help our plans succeed and thrive as they work through these changes?

Scott Fadel: Thank you. The next question comes from Scott Fadel with Steven.

Scott Fadel: Your line is open. You may ask your question.

Scott Fadel: Hi, thanks. Good morning. We're hoping to maybe just touch on the marketplace and a couple of things there.

Scott Fadel: One, just with the the hips 2023 risk adjustment true opposite, you can tell us what the net impact was to earnings if there was any relative to how you had accrued for that. And then also just when thinking about the commentary on cost trends, maybe if you could overlay that into the marketplace in terms of if you're seeing a similar trend there and how that's influencing your view on exchange margins for the full year. I think that your prior view had been, you know, probably still a bit below long-term target there for marketplace margins this year. Just interested in an updated view on margins for the year.

Brian Evanko: Thanks.

Brian Evanko: Morning, Scott. Brian, maybe I'll try to just take a big picture view of the individual exchange business and aggregate and hit your risk adjustment question as part of that. So the headline I asked you to take away is broadly speaking, or individual exchange book is performing as we expected in 2024. As it relates to the final 2023 individual exchange risk adjustment true-up, we had already been accrued for a sizable risk adjustment payable. And in the second quarter results, we did have a small unfavorable true-up that was recorded in the Signal Healthcare P&L. But overall, this was not a meaningful performance driver in the second quarter for us.

Eric Palmer: We've got a great track record of achieving strong STARS outcomes for them and supporting our plans and their offerings and helping them with the tools to manage formularies and model the impacts of changes, for example. We're continuing to make investments to help ensure our plans are well-positioned with the continued evolution of Part D coverage, even with the most recent round of changes from the IRA, like the administrative requirements associated with copay smoothing, just as one example. So this continues to be an important part of the Evernote and Express Script business that we're positioned to continue to help our plans succeed and thrive as they work through these changes. Morning, Scott. It's Brian.

Brian: Morning, Scott. It's Brian . Maybe I'll try to just take a big picture view of the individual exchange business and aggregate and hit your risk adjustment question as part of that.

Brian Evanko: Maybe I'll try to just take a big picture view of the individual exchange business in aggregate and hit your risk adjustment question as part of that. So, the headline on SEO Takeaway is, broadly speaking, our individual exchange book is performing as we expected in 2024. As it relates to the final 2023 individual exchange risk adjustment true-up, we had already been accrued for a sizable risk adjustment payable. And in the second quarter results, we did have a small, unfavorable true-up that was recorded in the Cigna Healthcare P&L. But overall, this was not a meaningful performance driver in the second quarter for us.

Speaker Change: So the headline I'd ask you to take away is broadly speaking our individual exchange book is performing as we expected in 2024.

Ryan Langston: And then, as it relates to the 2024 performance year, we did receive our first look at the industry-wide risk adjustment data for the specific states we participate in as we closed up the second quarter books, and the preliminary industry data confirmed that our previous 2024. Our risk adjustment assumptions were reasonable. My earlier commentary on cost trends was broadly applicable to the individual exchange business as well. So, when you put all the pieces together, we are tracking toward the improved 2024 margin profile we outlined during our first quarter call. And therefore we'd expect to land the years slightly below our long-term target margin range of four to six for the individual exchange business.

Brian Evanko: And then as it relates to the 2024 performance year, we did receive our first look at the industry-wide risk adjustment data for the specific states where we participate as we closed up the second quarter books. And the preliminary industry data confirmed that our previous 2024 risk adjustment assumptions were reasonable. My earlier commentary on cost trends was broadly applicable to the individual exchange business as well. So, when you put all the pieces together, we are tracking toward the improved 2024 margin profile we outlined during our first quarter call. And therefore, we'd expect to land the year slightly below our long-term target margin range of 4 to 6 for the individual exchange business.

Eric: We did receive our first look at the industry-wide risk adjustment data.

Eric: for the specific states where we participate as we closed up the second quarter books and the preliminary industry data confirmed

Eric: that our previous 2024 risk adjustment assumptions were reasonable. My earlier commentary on cost trends was broadly applicable to the individual exchange business as well.

Eric: During our first quarter call and therefore we'd expect to land the year slightly below our long-term target margin range of four to six for the individual exchange business

Ryan Langston: with us.

Ryan Langston: Thanks for the question. Thank you.

Operator: Thanks for the question. Thank you. Our next question comes from Ryan Langston with TD Cowen.

Ryan Langston: Our next question comes from Ryan Langston with TD Cowan. Your mind is open.

Speaker Change: Thanks for the question.

Ryan Langston: You may ask your question.

Speaker Change: Thank you. Our next question comes from Ryan Langston with TD Cowen. Your line is open. You may ask your question.

Ryan Langston: Hey, good morning. This looks like the exchange business was down maybe 99 to 100,000 members sequentially. I'm certainly understand why I was down for 23 year end, but wasn't exactly expecting that sequential move.

Operator: Your line is open. You may ask your question. Hey, good morning. This looks like the exchange business was down maybe 99 to 100,000 members sequentially. I certainly understand why it was down versus 23 year end, but wasn't exactly expecting that sequential move.

Ryan Langston: Hey, good morning. It just looks like the exchange business was down maybe $99,000 to $100,000.

Operator: Anything to call out there? And maybe a little early, but I'll ask just your expectations for 2025 in terms of growth trajectory and perhaps even margin profile. Thanks. Hi, thanks. Good morning. I'd be curious to get your views on the potential for ICHRA and specifically how that could impact a small group or select market and maybe how stop loss fits into that equation. Morning, Josh. It's Brian. I'll take that one as well.

Ryan Langston: Anything to call out there, and maybe a little early, but I'll ask just any expectations on 2025 in terms of growth trajectory and perhaps even margin profile. Thanks.

Speaker Change: Maybe a little early, but I'll ask, just any expectations on 2025 in terms of growth trajectory and perhaps even margin profile? Thanks.

Brian Evanko: Morning, Ryan.

Brian Evanko: It's Brian. Congratulations on your new role. As it relates to the individual exchange lives in for a year, maybe I'll just step back and give you a year-to-date perspective, and then I'll get into this sequential component of your question. So, as we discussed during our first quarter results call, the primary driver of the year-to-date change in signal healthcare customer volumes is our individual exchange book. You'll recall that we repositioned this business in 2024, including taking some needed pricing actions in certain geographies in order to improve profitability. And we expected to see a reduction in customer volumes as we have witnessed.

Brian: Good morning, Ryan. It's Brian , and congratulations on your new role. As it relates to the individual exchange labs intra-year, maybe I'll just step back and give you kind of a year-to-date perspective, and then I'll get into the sequential component of your question.

Speaker Change: So, as we discussed during our first quarter results call, the primary driver of the year-to-date change in Cigna healthcare customer volumes is our individual exchange book. You'll recall that we repositioned this business in 2024, including taking some needed pricing actions in certain geographies in order to improve profitability.

Brian Evanko: And sequentially, the individual exchange business drove the majority of the modest decline in the second quarter customer volumes. Now, you should think of the primary driver of that being non-payment of premiums as a result of some of the pricing actions we took in a couple of the larger geographies. So it was essentially the delayed effect of those grace periods kicking in. It was an immaterial impact to our financial results in the quarter. Over the course of the balance of this year, we would expect to see continued strong growth within our US employer under 500 select segment, which should result in sequential growth in US employer and signal healthcare lives for the balance of the year.

Brian: And we expected to see a reduction in customer volumes as we have witnessed.

Brian: It was an immaterial impact to our financial results in the quarter. Over the course of the balance of this year, we would expect to see continued strong growth within our U.S. employer under 500 select segment, which should result in sequential growth in U.S. employer and Cigna healthcare lives.

Brian Evanko: So, taking all together, we're pleased with the overall balance in the Signal Healthcare portfolio.

Speaker Change: for the balance of the year. So taken all together, we're pleased with the overall balance.

Brian Evanko: As it relates to 2025 in the picture there, we've just recently completed all the pricing and rate filings and network design. And so we really see all the competitive dynamics. It's hard to know how that will shake through. We would expect our margins to be similar or potentially a little bit better next year in the digital exchange book as we look for, but too early to know exactly how we'll shake out from a membership standpoint. Thanks.

Speaker Change: in the Cigna Healthcare portfolio.

Josh Raskin: Thank you.

Josh Raskin: Next question, can some Josh Raskin with Neffon Research?

Josh Raskin: You may ask your question. Hi, thanks.

David Cordani: Good morning. I'd be curious to get your views on the potential for IPCRA and specifically how that could impact the small group or select market and maybe how to stop plus fit into that equation. Morning, Josh.

Speaker Change: Hi, thanks. Good morning. I'd be curious to get your views on the potential for ICRA and specifically how that could impact a small group or select market and maybe how to stop loss fit into that equation.

Brian Evanko: So we see the ICHRA market in its current form as likely being a niche market, but one that we're monitoring closely. So more specifically, we see the ICHRA market as something that could be an appealing option for smaller employers who tend to be more commoditized buyers. And we expect this is most likely to be an attractive option for employers with less than 50 employees, which is a market segment that is financially immaterial for us today. And within the under-50 market, the average employer there has fewer than 10 employees, so very small employers typically.

David Cordani: I'll take that one as well. So we see the IPCRA market in its current form as likely being a niche market, but one that we're monitoring closely. So more specifically, we see the IPCRA market as something that could be an appealing option for smaller employers who tend to be more commoditized buyers, and we expect this is most likely to be an attractive option for employers with less than 50 employees, which is a market segment that is financially immaterial for us today. And within the under 50 market, the average employer there has fewer than 10 employees, so very small employers typically.

Speaker Change: And we expect this is most likely to be an attractive option for employers with less than 50 employees, which is a market segment that is financially immaterial for us today.

Brian Evanko: Now, all that said, our individual exchange business represents an opportunity for us to participate in the ICHRA space should it gain more momentum. Thank you. Our next question comes from George Hill with Deutsche Bank. You may ask your question. Yeah, good morning, guys.

David Cordani: Now all that said, our individual exchange business represents an opportunity for us to participate in the IPCRA space should gain more momentum. Again, I'd end though where I started, and that we see this most likely being a niche market.

David Cordani: Our stop loss offerings to your question are fully integrated with our select segment. Business should not think of that as something that is a net threat to us in the select market, provided that the under 50 concentration transpires the way that I described earlier. Thanks for the question.

George Hill: Thank you.

George Hill: Our next question comes from George Hill with Dwayce Abank.

George Hill: You may ask your question. Yeah, good morning, guys.

Speaker Change: Thank you. Our next question comes from George Hill with Deutsche Bank. You may ask your question.

Operator: I thought I'd just ask you a question on what I consider to be your cost of goods sold line, which is that there continues to be a lot of discussion from the retail pharmacy side of the business around trying to negotiate new payment models or changes in terms. I don't know if there's any update that you can provide on how those conversations are progressing. Good morning, George. It's Eric.

George Hill: I thought I'd just ask you a question on what I consider to be your close to good soul line, which is there continues to be a lot of discussion from the retail pharmacy side of the business around trying to negotiate new payment models or changes in terms. I don't know if there's any update that you can provide on how those conversations are progressing. Good morning, George, Sarah. Thanks for the question.

George Hill: Yeah, good morning guys. I thought I'd just ask you a question on what I consider to be your cost of goods sold line, which is there continues to be a lot of discussion from the retail pharmacy side of the business around trying to negotiate new payment models or changes in terms. I don't know if there's any update that you can provide on how those conversations are progressing.

Eric Palmer: Thanks for the question. Of course, I'm not going to comment on any specific negotiations with any pharmacies or things along those lines, but as you know, we've got a wide array of choices and options for our clients. That extends to how we've constructed our network as we look to balance access and affordability that best meets the needs of our clients and their patients. So we work to assemble a range of different network options under a range of different reimbursement types that match up with the needs for cost access and the associated tradeoffs and such there for our clients.

David Cordani: Of course, I'm not going to comment on specific negotiations with any pharmacies or things along those lines. But, as you know, we've got a wide array of choices and options for our clients. That extends to how we've constructed our network as we look to balance access and affordability that best meets the needs of our clients and their patients. So, so we've worked to assemble a range of different network options under a range of different reimbursement types that match up. With the needs for cost access and the associated trade-offs and such on their for our clients.

Speaker Change: Thanks for the question. Of course, I'm not going to comment on any specific negotiations with any pharmacies or things along those lines. But as you know, we've got a wide array of choices and options for our clients. That extends to how we've constructed our network as we look to balance access and affordability that best meets the needs of our clients and their patients. So we work to assemble a range of different network options under a range of different reimbursement types that match up with the needs for cost access.

Eric Palmer: So overall, that approach has served us well. We work to continue to innovate to bring new solutions to market. An example of a new solution would be late last year we announced our Clear Network solution. Clear Network provides a comprehensive, simple solution in that the pricing is based off of an independent, externally created index, and then it's got a simple margin that's shared between us and the pharmacy.

David Cordani: So, overall, that approach has served us well. We work to continue to innovate, to bring new solutions to market.

David Cordani: An example of a new solution there would be like late last year, we announced our Clear Network solution. The Clear Network provides a comprehensive simple solution in that the pricing is based off of independent externally created index. And then it's got a simple margin that's shared between us and the pharmacies. So, it's a new offering we put in the market last year that's generating interest. But again, overall, the portfolio of offerings that we continue to pull together resonates with our buyers and is part of the reason we've continued to grow the pharmacy benefits services chassis so nicely over the last few years.

Speaker Change: ClearNetwork provides a comprehensive, simple solution in that the pricing is based off of independent, externally created index, and then it's got a simple margin that's shared between us and the pharmacy. So it's a new offering we put in the market last year that's generating interest. But again, overall, the portfolio of offerings that we continue to pull together resonates with our buyers and is part of the reason we've continued to grow the pharmacy benefits services chassis so nicely over the last few years.

Eric Palmer: So that's a new offering we put out in the market last year that's generating interest. But again, overall, the portfolio of offerings that we continue to pull together resonates with our buyers and is part of the reason we've continued to grow the pharmacy benefits services business so nicely over the last few years. Morning, Adam. It's Brian.

Kevin Fishback: Thank you.

Adam Kautzner: And the next question comes from Kevin Fishback with Bank of America.

Adam Kautzner: You may have her question. Hey, this is Adam on for Kevin.

Brian Evanko: So, you raised guidance in Q1 on what seemed like a smaller beat, at least first street expectations.

Brian Evanko: But you didn't raise guidance this quick. And you give a little more color on why, you know, maybe you wouldn't raise on how things came in versus your expectations. And if it's anything to read into on the PID or maybe on DCP being down, but any color would be helpful. Thanks.

Speaker Change: You know maybe wouldn't raise and how things came in versus your expectations and if there's anything to read into on the PYD or on the maybe on DCPS being down but any any color would be helpful.

Brian Evanko: Morning, Adam.

Brian Evanko: So first off, we're pleased to have delivered another strong quarter on both the top and bottom lines, with overall results slightly ahead of our expectations in the second quarter. Now, within the quarter, we did have some timing-related benefits, including tax items, that contributed to the strength in the EPS line. And we're pleased to reaffirm our full-year guidance, as well as all key supporting metrics, considering this dynamic environment. And importantly, both EverNorth and Cigna Healthcare are delivering on their respective commitments.

Brian Evanko: It's Brian. So first off, we're pleased to deliver another strong quarter results on both the top and bottom lines, with overall results slightly ahead of our expectations in the second quarter. Now, within the quarter, we did have some timing-related benefits, including tax items that contributed to the strength and the EPS line. And we're pleased to reaffirm our full-year guidance as well as all key supporting metrics, considering this dynamic environment. And importantly, both Evernor and Signal Healthcare are delivering against their respective commitments, taking into account the environment. We're being prudent with this attractive all year EPS.

Speaker Change: And we're pleased to reaffirm our full-year guidance, as well as all key supporting metrics considering this dynamic environment. And importantly, both Evernorth and Cigna Healthcare are delivering against their respective commitments.

Brian Evanko: Taking into account the environment, we're being prudent with this attractive full-year EPS outlook of at least $28.40, representing over 13% growth near the high end of our long-term average annual EPS growth rate range of 10% to 14%. Good morning, it's David.

Brian Evanko: I look at at least $28.40, representing over 13% growth, near the high end of our long term average annual EPS growth rate range of 10 to 14%.

Aaron Wright: Thank you.

Aaron Wright: Our next question comes from Aaron Wright with Morgan Stanley. You may answer a question.

Speaker Change: Thank you. Our next question comes from Erin Wright with Morgan Stanley . You may ask your question.

David Cordani: Thanks so much. So you called out the strength across specialty and services at Ever North.

David Cordani: I guess, how do we think about the humair strategy, contributing to the results now? And then how does that influence sort of the quarterly progression across Ever North in the back half of the year? And in just the strategy around Humair and how that's playing out relative to your expectations. Have you, for instance, in source humair of iris similar and across your pure script business. Does it make sense to enforce more than the 50% for instance that you're targeting on that front? Okay, thanks.

Eric Palmer: Aaron, good morning and David. Let me start. You have a lot in your in your question. I'm going to appreciate it, given the importance of the space. First, just to reiterate, the specialty and care part of the portfolio represents fully 30% of our enterprise today. And we're quite excited about the growth potential for that business. We see the broader business portfolio is a provision of care businesses that leverages. In many cases, and we're talking about the specialty services as noted, we had strong growth in the second quarter of 12%. And as we discussed for quite some time, the breath of our capabilities position as well.

Speaker Change: Everyone, good morning. It's David. Let me start. You have a lot in your question and I appreciate it given the importance of the space. First, just to reiterate,

David Michael Cordani: Let me start by saying you have a lot in your question and I appreciate it given the importance of the space. First, just to reiterate, the specialty and care part of the portfolio represents fully 30% of our enterprise today. And we're quite excited about the growth potential for that business. We see the broader business portfolio as a provision of care business that leverages in many cases, and we're talking about specialty services. As noted, we had strong growth in the second quarter of 12%.

Eric: Provision of Care Business that leverages, in many cases, and we were talking about the specialty services. As noted, we had strong growth in the second quarter of 12%, and as we discussed for quite some time, the breadth of our capabilities positioned us well relative to changes in the marketplace, more specifically to biosimilar opportunity. Now, I know you had multiple questions there that I'll ask Eric to peel back a little bit relative to the more specific opportunities we see, both in terms of our core business through Acredo as well as through CuraScript as we're expanding our capabilities in our portfolio. Eric? Thanks, David. Good morning, Eric.

David Michael Cordani: And as we discussed for quite some time, the breadth of our capabilities position as well, relative to changes in the marketplace, more specifically to buy a similar opportunity. Now, you had multiple questions there that I'll ask Eric to peel back a little bit relative to these more specific opportunities we see, both in terms of our core business through a credo as well as through cura script as we're expanding our capabilities in our portfolio. Thanks, David. Good morning, Eric.

Eric Palmer: We're all to the changes in the marketplace, more specifically to biosimilar opportunity.

Eric Palmer: Now, you have multiple questions there that I'll ask Eric to peel back a little bit. We're all to this more specific opportunities. We say both in terms of our core business through Credo as well, through Pure Script is we're expanding our capabilities and our portfolio Eric.

Eric Palmer: So just stepping back a little bit again, as well, biosimilars are a really important opportunity to improve the affordability of these high-cost specialty medicines, and we're really well positioned to help connect our clients and their customers with these therapies. Our approach here has been consistent in that we offer choice and value to best align with our clients' needs. And we're focused on getting to low net cost, fueling competition and aligning incentives for everyone involved, the patients, our clients, our plan sponsors, and the pharma supply chain.

Eric Palmer: Thanks, David. Good morning, Aaron. So just stepping back a little bit again as well. Biosimilars are a really important opportunity to improve affordability of these high cost specialty medicine. And we're really well positioned to help to connect our clients and their customers with these therapies. Our approach here has been consistent in that we offer choice and value to best align with our clients' needs. And we're focused on getting to low net cost fuel and competition and aligning incentives for everyone involved: their patients, our clients, our client sponsors, and the farmer supply chain. As you've made reference to in your question through quality pharmaceuticals, our private labeled distributor was contracted with multiple manufacturers for interchangeable biosimilar, and this is available at no cost to patients and attractive cost plan sponsors.

Eric Palmer: As you made reference to in your question, through Qualant Pharmaceuticals, our private label distributor, we've contracted with multiple manufacturers for interchangeable biosimilar Hemira, and this is available at no cost to patients and an attractive cost to plan sponsors.

Eric: As you made reference to in your question, through Qualant Pharmaceuticals, our private label distributor, we've contracted with multiple manufacturers for interchangeable biosimilar Hemira, and this is available at no cost to patients and attractive cost-to-plan sponsors. We began shipping this product at the very end of June, so just a few weeks ago, and we've already seen meaningful uptake in the last few weeks, consistent with our expectations.

Eric Palmer: We began shipping this product at the very end of June, so just a few weeks ago, we've already seen meaningful uptake in the last few weeks, consistent with our expectations. We expect the customer adoption to continue to grow over the balance of the year, and it's early, you know, five weeks in really or so, but we see biosimilars having about a 20% share of our block at this point after just shipping this product for the last five weeks. I've said to overall continue to see that this is a real opportunity for us to improve the affordability of healthcare for the benefit of our clients and our plan sponsors.

Eric Palmer: We began shipping this product at the very end of June, so just a few weeks ago. We've already seen meaningful uptake in the last few weeks, consistent with our expectations. We expect customer adoption to continue to grow over the balance of the year. And it's early, you know, five weeks in, really, or so, but we see biosimilars having about a 20% share of our book at this point after just shipping this product for the last five weeks.

Speaker Change: We expect the customer adoption to continue to grow over the balance of the year, and it's early, you know, five weeks in really or so, but we see Biosimilar as having about a 20% share of our book at this point after just shipping this product for the last five weeks.

Eric Palmer: So overall, continue to see that this is a real opportunity for us to improve the affordability of healthcare for the benefit of our clients and our plan sponsors. Thank you. Our next question comes from Stephen Baxter with Wells Fargo. You may ask your question, too. Thank you. The next question comes from Dave Windley with Jefferies. You may ask your question. And maybe a last question would be, relative to pricing, would you view yourselves as pricing to a forward view of trend as you head into next year, or would you be pricing to expand margin? Thanks.

Speaker Change: So overall, continue to see that this is a real opportunity for us to improve the affordability of health care for the benefit of our clients and our plan sponsors.

Eric Palmer: Thank you.

Stephen Baxter: Our next question comes from Stephen Baxter with Wells Fargo. You may ask your question.

Speaker Change: Thank you. Our next question comes from Stephen Baxter with Wells Fargo. You may ask your question.

Stephen Baxter: Yeah, hi, thanks. One of the questions asked but wanted to ask about Ingrid membership trends does seem like we're starting to see more mixed data on the job front.

Stephen Baxter: Yeah, hi, thanks. One of the questions being asked, I wanted to ask about in-group membership trends. It does seem like we're starting to see more mixed data on the job front. Could you spike out a little bit what you're seeing with in-group trends and do you think your sequential membership changes are generally a good reflection of that? Thanks.

Stephen Baxter: Could you spike out a little bit for your seeing if Ingrid trends and do you think your sequential membership changes are generally a good reflection of that. Thanks.

David Cordani: Steve Good morning, it's David. As we discussed back in 2023, as the year was unfolding, just by way of context, we were very mindful of the potential for some softening of the employer marketplace and then, to your point, in group trends softening a little bit, and what we stayed quite close to monitoring, it didn't really manifest itself in any material way. Given employers were still working to get to a full level of employment. For 2024, we've taken a similar cautious, curious, monitoring approach and built a little bit of consideration, relative to softening, and by large we have not seen that to date.

Speaker Change: We were very mindful of the potential for some softening of the employer marketplace and then, to your point, in-group trends softening a little bit.

Speaker Change: of quite close to monitoring it, it didn't really manifest itself in any material way, given employers were still working to get to a full level of employment.

Stephen Baxter: For 2024, we've taken a similar cautious, curious monitoring approach.

David Cordani: So the membership headline that we've delivered represents good fundamental strength. As Brian noted previously, the change in our membership is largely driven by our expected dampening of the marketplace, as you would call it, our individual exchange business. But we remain close and monitoring any dampening tied to the economy, and thus far, haven't seen anything material to call on there.

Speaker Change: So the membership headlines that we've delivered represent good fundamental strength.

Speaker Change: As Brian noted previously, the change in our membership is largely driven by our, as expected, dampening of the marketplace, as you would call it, or individual exchange business. But we remain close in monitoring any dampening tied to the economy and thus far haven't seen anything material to call out there.

David Cordani: Thank you.

Dave Winley: Our next question comes from Dave Winley. Would Jeffries be me ask your question? Hi, good morning.

Speaker Change: Thank you. Our next question comes from Dave Winley. Would Jeffrey see me ask your question?

Brian Evanko: Thanks for taking my question, which is on MLR progression. Brian, in your comments, I think I heard you say that the excess reserves from one queue have basically developed in line with your expectations. I think I also heard you say that you didn't see any, say, intra-quarter trends or a particular month in the quarter that stood out as an anomaly.

Dave Winley: You didn't see any, say, intra-quarter trends or a particular month in the quarter that stood out as an anomaly.

Brian Evanko: And I think in looking at your progression, it looks like MLR implied for the second half is maybe in the neighborhood of 200 basis points above the first half; historical normal maybe about half of that. So just wanted to understand if the higher MLR expectation for the second half is kind of cautious posture, or if you're expecting certain things to accelerate in the second half that would drive that.

Dave Winley: And I think, in looking at our, at your progression, it looks like...

Speaker Change: MLR implied for the second half is maybe in the neighborhood of 200 basis points above the first half historical normal maybe about half of that so just wanted to understand

Speaker Change: If the higher MLR expectation for the second half is kind of cautious posture, or if you're expecting certain things to accelerate in the second half that would drive that.

Brian Evanko: Then maybe a last question would be relative to pricing. Would you view yourselves as pricing to forward view of trend as you head into next year, or would you be pricing to expand margin? Thanks. I know a long question. No problem, Dave. Good morning. So, as it relates to the second half MCR guidance, I think your question was in a year-over-year context. Really, three factors that I'd highlight if you're looking at it relative to the back half of 23. You may recall from our first quarter earnings release, we discussed that the 2024 seasonality would be more similar to pre-pandemic norms. With the MCR increasing as the year unfolded, in part driven by our individual exchange business metal tier mix, which has skewed more bronze this year.

Speaker Change: And maybe a last question would be relative to pricing, would you view yourselves as pricing to forward view of trend as you head into next year, or would you be pricing to expand margin? Thanks.

Speaker Change: No problem, David. Good morning. As it relates to the second half MCR guidance, I think your question was in a year-over-year context.

Brian Evanko: Additionally, we had some favorable stop loss utilization in the fourth quarter of 2023. That we are anticipating will normalize in 2024, and our year-to-date experience is consistent with that expectation. And then finally, there is one additional business day in the third quarter of this year, which has some elevation in the MCR, the third quarter specifically for that. So all those factors combined to generate a higher second half MCR year over year.

Speaker Change: Additionally, we had some favorable stop-loss utilization in the fourth quarter of 2023.

Dave Winley: that we are anticipating will normalize in 2024.

Speaker Change: and our year-to-date experience is consistent with that expectation.

Brian Evanko: But again, we remain comfortable and confident with the full year MCR guidance range that we provided here.

Brian Evanko: As it relates to the pricing environment, and I'll comment specifically in our US employer business. As a reminder, this is a book that's nearly 85% ASO or self-funded. So, therefore, we have earnings levers that go well beyond a peer risk-based MCR. But that said, our US employer book is currently operating from a position of strength as we've been performing within target margin ranges. And we've remained disciplined with our own pricing strategy in the current environment. We continue to price to our best estimate of forward-looking cost trends. To your point, don't need additional margin recapture at the book level.

Operator: And we've remained disciplined with our own pricing strategy in the current environment. We continue to price to our best estimate of forward-looking cost trends. To your point, we don't need additional margin recapture at the book level.

Brian Evanko: We are seeing the impact of inflation work its way through our provider contracts. As these contracts renew, we continue to expect elevated levels of utilization through 2024. So when you put all those pieces together, are all in pricing trend for 2024, slightly higher than what we had assumed a year ago for the corresponding 2023 pricing cycle. And we're confident in our ability to secure appropriate pricing for 2025 and beyond. So long answer to your long question.

Operator: We are seeing the impact of inflation work its way through our provider contracts. As these contracts renew, we continue to expect elevated levels of utilization through 2024. So when you put all those pieces together, our all-in pricing trend for 2024 is slightly higher than what we had assumed a year ago for the corresponding 2023 pricing cycle. And we're confident in our ability to secure appropriate pricing for 2025 and beyond. So, a long answer to your long question.

Speaker Change: As these contracts renew, we continue to expect elevated levels of utilization through 2024. So when you put all those pieces together, our all-in pricing trend for 2024 is slightly higher than what we had assumed a year ago for the corresponding 2023 pricing cycle.

Jessica Tassan: On this question, can some Jessica Tassan with Pipe for Sandler? You may ask your question.

Jessica Tassan: Hi, thank you so much for taking the question. I'm curious about the possibility that Guy Rizzy and Rin Vogue substitutions could maybe foreclose the Humira biosimilar opportunity. And I guess just what recourse do you have to ensure that the biosimilar products that you've gotten the market succeed? I think you've given us plenty of evidence that they're the best for the patients. So just, yeah, how are you thinking about the possibility of foreclosure, and what can you do to kind of prevent or mitigate that?

Jessica Tassan: Thank you.

Eric Palmer: Jessica Tassan, Good morning. So again, stepping back, our approach is focused on getting offering choice and value and getting to the lowest cost and best available solution from a patient perspective. So a couple of things I would note. First of all, our biosimilar offering is interchangeable. And so that facilitates an easier election if a patient chooses to choose a biosimilar. It's an easier process by it being interchangeable. So that would be one thing I would note as a differentiator for us. More broadly, we're here to facilitate and ensure patients have access to the medicines that they need.

Operator: Thank you, facilitates an easier election if a patient chooses to choose a biosimilar, it's an easier process because it's interchangeable, so that would be one thing I would note as a differentiator for us. More broadly, we're here to facilitate and ensure patients have access to the medicines that they need. So if they need Skyrizzi or Invoke, we'll be in a position to fulfill that as well

Eric Palmer: So the Sky Rizzy or Rin Vogue will be in a position to fulfill that as well. But overall, we're working to make sure that we've got the right access to all of the medication.

Operator: But overall, we're working to make sure that we have the right access to all of the medication. As we look ahead, ensuring we've got a fully developed portfolio of all of the available biosimilar offerings will be important, and we'll continue to be in a position to lead here. Thank you. Our last question comes from Lance Wilkes with Bernstein. Your line is open.

Eric Palmer: As we look ahead, ensuring we've got a fully developed portfolio of all of the available biosimilar offerings will be important, and we'll continue to be in a position to lead here.

Lance Wilkes: Thank you.

Lance Wilkes: Our last question comes in from Lance Wilkes with Bernstein.

Eric Palmer: You may ask your question. Good morning, Lance. It's Eric.

Lance Wilkes: Your 90s open. You may ask your question.

David Cordani: Great. Thanks, guys.

David Cordani: Could you just give me a little more color on some of the faster growth areas in Ever North? In particular, if you could talk a little bit about GLP-1 coverage, I'll look for during the selling season for next year. Also, peak growth has been really strong. How much of that is coming from traditional PBM versus care services growth? And are you seeing any of that in a credo? Thanks a lot.

Speaker Change: Great, thanks guys. Could you just give me a little more color on some of the faster growth areas in Evernorth? In particular, if you could talk a little bit about GLP-1 coverage outlook for during the selling season for next year.

Brian Evanko: Good morning, Lance.

Eric Palmer: So, let me start and just talk a little bit about Encircle, and then I'll ask Brian to talk a little bit more about the numerical dimensions of things. So, within the Encircle program, we've got over 2 million covered lives at this point, so that's growing nicely. Stepping back a little bit in terms of just looking at the coverage for GLP-1s for weight loss indications overall, in the Express Scripts business, we've now got essentially 50% or so of plan sponsors covering for weight loss indications.

Brian Evanko: So let me start and just talk a little bit about the circle, and then I'll add Brian to talk a little bit more about the numerical dimensions of things. So within the Encircle program, we've got over 2 million covered lives at this point, so that's growing nicely. Stepping back a little bit in terms of just looking at the coverage for GLP-1's for weight loss indications overall in the express curves business, we've now got essentially 50% or so of plan sponsors covering for weight loss indications. So we've seen continued incremental growth there. The underlying utilization level to also continue to grow nicely. We've seen growth there consistent with what you might have seen from an industry growth perspective or things along those lines.

Speaker Change: Stepping back a little bit in terms of just looking at the coverage for GLP-1s for weight loss indications overall, in the ExpressGrips business, we've now got essentially 50% or so of plan sponsors covering for weight loss indications. So we've seen continued incremental growth there. The underlying utilization levels also continue to grow nicely. We've seen growth there consistent with what you might have seen from an industry growth perspective or things along those lines.

Eric Palmer: So, we've seen continued incremental growth there. The underlying utilization levels also continue to grow nicely. We've seen growth there consistent with what you might have seen from an industry growth perspective or things along those lines. Looking ahead, we expect the use of these medications to continue to grow, and that is part of the growth algorithm for EverNorth overall. Stepping away from GLP-1 specifically, we see broader growth opportunities in specialty with continued growth both through new therapies, through biosimilars coming to market, as well as us continuing to expand our relationships, whether that's through our CuraScript specialty distributor or through other direct opportunities. So overall, growth across a number of different fronts within EverNorth that we're pleased to be in the position to deliver. Brian, do you want to pick up the second part of Lance's question? Sure, Eric.

Brian Evanko: Looking ahead, we expect these medications to continue to grow, and that is part of the growth algorithm for Ever North overall.

Brian Evanko: Stepping away from GLP-1 specifically, we see broader growth opportunity and specialty, with continued growth both through new therapies, through biosimilars coming to market, as well as continuing to expand our relationships, whether that's through our PureScript, specialty distributor, or through other direct opportunities. So overall growth across a number of different fronts within Ever North that we're pleased to be in the position to deliver.

Brian: Whether that's through our CuraScript specialty distributor or through other direct opportunities. So, overall growth across a number of different fronts within Evernorth that we're pleased to be in a position to deliver. Brian , do you want to pick up the second part of Lance's question? Sure, Eric. Good morning, Lance. So, as it relates to the Feed & Other Revenue line in Evernorth, which is up 14% quarter over quarter,

Brian Evanko: Probably you want to pick up the second part of the lens, this question.

Brian Evanko: Sure. Morning, so as relates to the Feed Another Revenue line in Ever North, which is up 14% quarter of a quarter, think of a number of different areas contributing to this strong performance. Contributions from our Ever North care businesses are reflected here. So think of Evacore MD Live or behavioral health business. And then additionally to the core your question, we are seeing continued growth and service-based solutions within pharmacy benefit services business. More clients are electing more fee-based orientations with us.

Brian Evanko: Good morning, Lance. So as it relates to the Feed & Other Revenue line in EverNorth, which is up 14% quarter over quarter, think of a number of different areas contributing to this strong performance. Contributions from our EverNorth care businesses are reflected here. So think of Evacor, MDLive, our behavioral health business, and then additionally, to the core of your question, we are seeing continued growth in service-based solutions within the pharmacy benefit services business, where clients are electing more fee-based orientations with us.

Brian: of different areas contributing to this strong performance.

Brian Evanko: So finally, the other contributor to this is the cross-enterprise leverage that we're driving with Signal Healthcare results in revenue from Signal Healthcare. We're showing up in fees and other revenue in Ever North and then being eliminated at the corporate level. So all those contribute to that strong growth in the fees and other revenue line. Great.

Brian Evanko: So finally, the other contributor to this is the cross-enterprise leverage that we're driving with Cigna Healthcare, which results in revenue from Cigna Healthcare showing up in Feed & Other Revenue and EverNorth and then being eliminated at the corporate level. So all those contribute to that strong growth in the Feed & Other Revenue line. Great. Thanks.

Brian: results in revenue from Cigna Healthcare showing up in fees and other revenue in Evernorth and then being eliminated at the corporate level. So all those contribute to that strong growth in the fees and other revenue line.

David Cordani: Thanks.

David Cordani: Thank you.

David Cordani: I will turn the call back over to David Cordani for closing remarks. First, let me thank you all for your engagement today, your time, and your questions. I just want to highlight a few headline points. With our momentum, we are confident that we will deliver on our EPS outlook of at least $28.40 for 2024, which represents over a 13% growth rate from 2023.

Brian: Thank you. I will turn the call back over to David Cordani for closing remarks.

David Michael Cordani: First, let me thank you all for your engagement today, your time, and your questions. I just want to highlight a few key points. With our momentum, we are confident that we will deliver on our EPS outlook of at least $28.40 for 2024, which represents over a 13% growth rate from 2023. Additionally, before we close, I want to recognize and express appreciation to our 70,000 co-workers across the globe. It's their continued focus, dedication, and commitment to support our clients, our customers, our patients, and our partners that enable us to deliver on our commitments, including those to you, our shareholders. We're proud of what we've achieved, and we're excited about the opportunities that stand as we look ahead. And, as always, we look forward to our future discussions. Have a great day!

David Cordani: With our momentum, we are confident that we will deliver on our EPS outlook of at least $28.40 for 2024, which represents over a 13% growth rate from 2023.

David Cordani: Additionally, before we close, I want to recognize and express appreciation to our 70,000 co-workers across the globe. It's their continued focus, dedication, and commitment to support our clients, our customers, our patients, and our partners that enable us to deliver on our commitments, including those to your shareholders. We're proud of what we've achieved, and we're excited about the opportunities that we look ahead. And as always, we look forward to our future discussions.

Speaker Change: Additionally before we close I want to recognize and express appreciation to our 70,000 co-workers across the globe.

David Cordani: It's their continued focus, dedication, and commitment to support our clients, our customers, our patients, and our partners that enable us to deliver on our commitments, including those to you, our shareholders. We're proud of what we've achieved, and we're excited about the opportunities as we look ahead. And as always, we look forward to our future discussions. Have a great day.

Operator: Have a great day. Thanks.

Operator: Ladies and gentlemen, this concludes the Sigma Group's second quarter 2024 results review. Cigna Investor Relations will be available to respond to additional questions shortly. A recording of this conference will be available for 10 business days following this call. You may access the recorded conference by dialing 800-839-1190 or 203-369-3031. There is no passcode required for this replay. Thank you for participating.

Speaker Change: Ladies and gentlemen, this concludes the Cigna Group second quarter 2024 results review.

Speaker Change: Cigna Investor Relations will be available to respond to additional questions shortly.

Speaker Change: A recording of this conference will be available for 10 business days following this call.

Speaker Change: You may access the recorded conference by dialing 800-839-1190 or 203-369-3031. There is no passcode required for this replay. Thank you for participating. We will now disconnect.

Operator: We will now disconnect.