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1. Company Snapshot

1.a. Company Description

Cigna Corporation provides insurance and related products and services in the United States.Its Evernorth segment provides a range of coordinated and point solution health services, including pharmacy, benefits management, care delivery and management, and intelligence solutions to health plans, employers, government organizations, and health care providers.The company's Cigna Healthcare segment offers medical, pharmacy, behavioral health, dental, vision, health advocacy programs, and other products and services for insured and self-insured customers; Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, as well as individual health insurance plans to on and off the public exchanges; and health care coverage in its international markets, as well as health care benefits for mobile individuals and employees of multinational organizations.


The company also offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations.It distributes its products and services through insurance brokers and consultants; directly to employers, unions and other groups, or individuals; and private and public exchanges.The company was founded in 1792 and is headquartered in Bloomfield, Connecticut.

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1.b. Last Insights on CI

Cigna's recent performance was negatively impacted by concerns over margin pressure in its pharmacy-benefit services division. The company warned of a decline in profit margins over the next two years, citing industry-wide pressures. Despite stronger-than-expected quarterly earnings, this announcement weighed on investor sentiment. Additionally, lower premiums and rising costs may have affected margins, while the company's Evernorth Health Services segment showed growth. Cigna's $3.5 billion investment in Shields Health Solutions, a specialty pharmacy management company, may help mitigate these pressures.

1.c. Company Highlights

2. Cigna Group's Strong Q3 Earnings and Strategic Investments Position for Future Growth

Cigna Group reported consolidated revenues of $69.7 billion and adjusted earnings per share (EPS) of $7.83 in Q3, beating analyst estimates of $7.64. Evernorth's revenues grew to $60.4 billion, and pretax adjusted earnings grew to $1.9 billion. Specialty & Care Services delivered strong growth, with revenues up 10% to $26.3 billion and pretax adjusted earnings up 11% to $928 million. The company's EPS growth is expected to be in the mid-single-digit range, driven by the continued strong growth of its specialty and care businesses.

Publication Date: Nov -01

📋 Highlights
  • Rebate-Free Pharmacy Model: Aims to cut brand drug costs by 30% for patients via upfront discounts, with 50% of business transitioned by 2028.
  • Q3 Financials: Reported $69.7B revenue, $7.83 adjusted EPS, reaffirming 2025 EPS guidance of ≥$29.60.
  • Specialty & Care Growth: Achieved 11% adjusted earnings growth, driven by 10% revenue increase to $26.3B.
  • PBM Margin Pressure: Expects <5% 2026 income decline due to rebate-free model rollout and client renewals.
  • Strategic Investments: Acquired Shields Health Solutions to expand specialty market reach, targeting $400B+ potential.

Segment Performance

Evernorth Health Services delivered earnings in line with expectations, while Cigna Healthcare's financial results were also in line with expectations, despite persistently elevated medical costs. The company's investment in Shields Health Solutions is expected to enhance its ability to serve the provider-administered portion of the specialty market. Cigna Healthcare is expected to continue delivering strong business performance, with notable customer growth in its Select segment.

New Rebate-Free Pharmacy Benefits Model

The company is introducing a new rebate-free, delinked fee-based pharmacy benefits model that will simplify its economic model and deliver more value to customers and clients. This model is expected to reduce the cost of brand-name drug prescriptions by an average of 30% for Americans and health plans. The company expects margin pressure within its Pharmacy Benefit Service segment over the next two years due to investments in implementing this new model.

Outlook and Valuation

Analysts estimate revenue growth of 4.6% for next year. Given the current valuation metrics, with a P/E Ratio of 15.32 and an EV/EBITDA of 8.03, the market is pricing in moderate growth expectations. The company's ROE of 10.74% and ROIC of 5.14% indicate a relatively strong profitability profile. As Cigna Group continues to invest in its businesses and implement strategic initiatives, its valuation multiples will likely be influenced by its ability to deliver on its growth expectations.

Growth Prospects

Brian Evanko mentioned that their national accounts business is expected to be flat to slightly declining in 2026, while their Select segment continues to grow. The company's investment in Shields Health Solutions is expected to drive growth in the specialty market. With a strong track record of delivering for its customers and a solid financial profile, Cigna Group is well-positioned for future growth.

3. NewsRoom

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Edgestream Partners L.P. Buys New Stake in Cigna Group $CI

Dec -06

Source: defenseworld.net

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CW Advisors LLC Increases Stock Holdings in Cigna Group $CI

Dec -05

Source: defenseworld.net

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Market Today: WBD Sale Bids, Meta Cuts, Apple Shake-Up

Dec -04

Source: gurufocus.com

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First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

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Groupe la Francaise Takes Position in Cigna Group $CI

Dec -04

Source: defenseworld.net

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CI Investors Have Opportunity to Join The Cigna Group Fraud Investigation with the Schall Law Firm

Dec -03

Source: globenewswire.com

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New Cigna Research Shows Purpose Can Offset Chronic Disease

Dec -03

Source: prnewswire.com

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CI Investors Have Opportunity to Join The Cigna Group Fraud Investigation with the Schall Law Firm

Dec -02

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.60%)

6. Segments

Evernorth Health Services

Expected Growth: 5.0%

Evernorth Health Services is expected to grow at a rate higher than the global revenue growth hypothesis due to its diversified revenue streams, strong client relationships, and the growing demand for healthcare services. The segment's pharmacy benefit management and specialty pharmacy businesses are particularly well-positioned to benefit from the increasing demand for healthcare services.

Cigna Healthcare

Expected Growth: 4.8%

Cigna Healthcare is expected to grow at a rate slightly higher than the global revenue growth hypothesis due to its diverse range of products and services, strong presence in the global health insurance market, and the growing demand for health insurance. The segment's Medicare Advantage and individual insurance businesses are particularly well-positioned to benefit from the increasing demand for health insurance.

Other Operations

Expected Growth: 3.5%

Other Operations is expected to grow at a rate lower than the global revenue growth hypothesis due to its diverse range of businesses and products, some of which may be subject to market volatility. However, the segment's life insurance and disability businesses are still expected to contribute to the company's revenue and profitability.

Corporate and Eliminations

Expected Growth: 0.0%

Corporate and Eliminations is not expected to grow as it is not a business segment and does not generate revenue. The segment is primarily used to eliminate intercompany transactions and to record corporate expenses.

7. Detailed Products

Individual and Family Plans

Cigna's individual and family plans offer flexible and affordable health insurance options for individuals and families who are not covered by an employer-sponsored plan.

Group Health Insurance

Cigna's group health insurance plans provide employers with customizable health insurance options for their employees, including medical, dental, and vision coverage.

Medicare Advantage Plans

Cigna's Medicare Advantage plans offer seniors and individuals with disabilities a range of health insurance options that combine Medicare Parts A and B with additional benefits.

Medicare Supplement Insurance

Cigna's Medicare Supplement insurance plans help fill the gaps in Original Medicare coverage, providing additional financial protection and peace of mind.

Dental Insurance

Cigna's dental insurance plans provide individuals and families with access to a network of dentists and coverage for routine cleanings, fillings, and other dental services.

Vision Insurance

Cigna's vision insurance plans offer individuals and families coverage for eye exams, glasses, and contact lenses, as well as discounts on LASIK and other vision services.

Life Insurance

Cigna's life insurance plans provide individuals and families with financial protection in the event of a loved one's passing, helping to cover final expenses and ensure a secure future.

Accident Insurance

Cigna's accident insurance plans provide individuals and families with financial protection in the event of an unexpected accident, helping to cover medical expenses and lost income.

Critical Illness Insurance

Cigna's critical illness insurance plans provide individuals and families with financial protection in the event of a serious illness, such as cancer, heart attack, or stroke.

Expatriate Health Insurance

Cigna's expatriate health insurance plans provide individuals and families living abroad with access to a network of healthcare providers and facilities worldwide.

8. Cigna Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Cigna Corporation operates in the health insurance industry, where substitutes are limited. However, with the increasing popularity of telemedicine and online health services, there is a growing threat of substitutes. Nevertheless, the complexity and regulatory requirements of the health insurance industry make it difficult for new substitutes to emerge, hence a medium score.

Bargaining Power Of Customers

Cigna Corporation's customers are largely individuals and employers who purchase health insurance plans. While customers have some bargaining power, the complexity of health insurance plans and the lack of transparency in the industry limit their ability to negotiate prices or switch providers easily, resulting in a low score.

Bargaining Power Of Suppliers

Cigna Corporation relies on a network of healthcare providers, including hospitals, doctors, and other medical professionals. While these suppliers have some bargaining power, Cigna's large size and market presence give it significant negotiating power, resulting in a medium score.

Threat Of New Entrants

The health insurance industry is heavily regulated, and new entrants face significant barriers to entry, including high capital requirements, complex regulatory requirements, and the need to establish a network of healthcare providers. These barriers limit the threat of new entrants, resulting in a low score.

Intensity Of Rivalry

The health insurance industry is highly competitive, with several large players competing for market share. Cigna Corporation faces intense competition from rivals such as UnitedHealth Group, Anthem, and Aetna, which drives down prices and increases marketing expenses, resulting in a high score.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.12%
Debt Cost 4.71%
Equity Weight 59.88%
Equity Cost 6.61%
WACC 5.85%
Leverage 67.00%

11. Quality Control: Cigna Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
CVS Health

A-Score: 5.3/10

Value: 4.6

Growth: 4.0

Quality: 2.6

Yield: 6.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Cigna

A-Score: 4.8/10

Value: 5.6

Growth: 6.4

Quality: 4.3

Yield: 4.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

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Elevance Health

A-Score: 4.8/10

Value: 6.6

Growth: 5.7

Quality: 6.8

Yield: 3.0

Momentum: 0.5

Volatility: 6.3

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UnitedHealth

A-Score: 4.3/10

Value: 4.9

Growth: 6.1

Quality: 5.1

Yield: 4.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Humana

A-Score: 4.2/10

Value: 6.0

Growth: 5.3

Quality: 5.2

Yield: 1.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

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Centene

A-Score: 3.6/10

Value: 9.3

Growth: 5.7

Quality: 3.3

Yield: 0.0

Momentum: 0.0

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

265.44$

Current Price

265.44$

Potential

-0.00%

Expected Cash-Flows