Direct Answer
The Cigna Group (NYSE: CI) is a diversified health services company operating two primary segments: Evernorth Health Services (which includes Express Scripts, one of the three largest U.S. pharmacy benefit managers) and Cigna Healthcare (commercial employer health insurance). Cigna sold its Medicare Advantage business in 2024 to focus on commercial insurance and health services. The company's business model is unusual among managed care companies because the PBM segment (Evernorth) generates roughly two-thirds of total revenue.
Company Snapshot
| Ticker | CI (NYSE) |
|---|---|
| Sector | Health Care / Managed Care |
| Headquarters | Bloomfield, CT |
| Fiscal Year End | December 31 |
| SEC CIK | 0001739940 |
| Revenue (FY2024) | ~$247 billion (mostly PBM prescription throughput) |
| Business Segments | Evernorth Health Services, Cigna Healthcare |
| Key Metrics | Adjusted income from operations, medical customers, pharmacy scripts processed, MLR |
What Cigna Group Does
The Cigna Group traces its roots to two insurance companies: Connecticut General Life Insurance (founded 1865) and Insurance Company of North America (founded 1792), which merged in 1982 to form CIGNA. The modern company was substantially transformed by its 2018 acquisition of Express Scripts for $67 billion, making Cigna one of the most vertically integrated health care services companies in the United States. Cigna rebranded as "The Cigna Group" in 2022 to reflect that health services (through Evernorth) were becoming as important as traditional insurance.
Evernorth: The PBM Business
Evernorth Health Services is Cigna's health services platform, with Express Scripts at its core. Express Scripts manages pharmacy benefits for large employers, government entities, and union benefit funds. The PBM business processes hundreds of millions of prescriptions per year, negotiating pricing with drug manufacturers and contracting with retail pharmacy networks. PBMs earn revenue in several ways: administrative fees from plan sponsors, manufacturer rebates (fees paid by drug makers to be included on preferred formulary tiers), and revenue from specialty pharmacy services.
The PBM industry has faced intense regulatory and political scrutiny. Critics argue that PBMs keep a portion of manufacturer rebates rather than passing them through to patients at the pharmacy counter, contributing to high out-of-pocket drug costs. PBMs also benefit from "spread pricing" in some contracts, where they charge plan sponsors more than they pay pharmacies and retain the difference. Multiple states and the federal government have passed or proposed laws increasing PBM transparency or restructuring rebate flows.
Cigna Healthcare: Commercial Insurance
Cigna Healthcare provides health benefits to employers and individuals. Its commercial insurance business covers large self-insured employers (where Cigna acts as an administrator) and fully-insured small and mid-sized employers. Cigna also provides international health insurance through its Cigna Global segment, serving multinational corporations and expatriates. The company exited the U.S. individual health insurance market and sold its Medicare Advantage business, leaving commercial insurance as its primary insurance product.
The Medicare Advantage Exit
In 2024, Cigna announced the sale of its Medicare Advantage business to Health Care Service Corporation for approximately $3.3 billion. Medicare Advantage had become extremely competitive and margin-pressured across the industry due to unexpectedly high medical utilization. Cigna's decision to exit MA was consistent with a strategy of focusing on commercial employer benefits where it has strong competitive positions, and on health services through Evernorth. The proceeds, along with robust free cash flow from Evernorth, supported a large share repurchase program.
Frequently Asked Questions
How does Cigna Group make money?
Cigna Group earns revenue through two primary segments. Evernorth Health Services includes Express Scripts (one of the three largest pharmacy benefit managers), specialty pharmacy, and other health services. Evernorth earns fees and revenue from managing pharmacy benefits for large employers, processing prescriptions, and negotiating drug prices. Cigna Healthcare is the commercial health insurance business providing employer health benefits and international health insurance, earning premiums and managing medical costs through the medical loss ratio spread.
What is a pharmacy benefit manager (PBM) and why is Express Scripts important?
A pharmacy benefit manager (PBM) is an intermediary between health insurance plans and pharmacies, drug manufacturers, and patients. PBMs process prescription claims, negotiate manufacturer rebates, contract with pharmacy networks, and develop formularies. Express Scripts is one of the three largest U.S. PBMs alongside CVS Caremark and OptumRx. Cigna acquired Express Scripts in 2018 for $67 billion. PBMs are controversial because they receive rebates from drug manufacturers that critics argue should be passed directly to patients rather than retained by the PBM.
What is the medical loss ratio (MLR) and why does it matter for health insurers?
The medical loss ratio (MLR) is the percentage of premium revenue a health insurer spends on medical claims. An MLR of 85% means $85 paid in claims per $100 in premiums, leaving $15 for administration and profit. The Affordable Care Act requires minimum MLRs with rebates if exceeded. For managed care investors, a rising MLR is a negative signal (claims exceeding expectations), while a falling MLR indicates successful medical cost management. Medical cost trends in specialty drugs, behavioral health, and elective procedures are the key MLR drivers.
Why did Cigna exit Medicare Advantage?
Cigna announced the sale of its Medicare Advantage business to Health Care Service Corporation in 2024. Medicare Advantage had become highly competitive with margin pressure from higher-than-expected medical costs across the industry. Cigna chose to focus on commercial employer benefits and Evernorth health services where it has stronger competitive positions, and to use proceeds for share buybacks.
What are Cigna Group's main risks?
Cigna's primary risks include: PBM regulatory risk (Congress and states have been scrutinizing PBM rebate structures, spread pricing, and formulary decisions; legislation could reduce Evernorth's profitability); medical cost pressure in commercial insurance (unexpected utilization spikes raise MLR and compress margins); concentration risk from a few large employer clients; and competition in PBM services from CVS Caremark and OptumRx, which are vertically integrated with their own insurance and pharmacy operations.