Detailed Narrative
FTC Settlement and PBM Reform
The Cigna Group announced a global settlement with the Federal Trade Commission, resolving all matters regarding its pharmacy benefits business, including the industry-wide insulin lawsuit. This settlement is expected to deliver $7 billion in out-of-pocket cost relief over the next 10 years for 100 million customers, primarily through lower insulin prices and reduced costs for brand-name medications. The company's new rebate-free pharmacy benefit model, developed in early 2025, is well-positioned to execute on the terms of this settlement and aligns with new federal PBM reform legislation.
Addressing Healthcare Affordability
The company is actively countering rising healthcare costs, which are driven by an aging population, increasing chronic conditions (90% of spending), and elevated costs from providers and pharmaceutical manufacturers. Cigna's strategies include investing in and shaping its portfolio to collaborate rather than own care delivery infrastructure, informing decisions on care location, fostering partnerships like with TrumpRx for fertility treatments, and leveraging competition through generics and biosimilars. These efforts aim to lower costs and expand access to quality care.
Evernorth Performance and Innovation
Evernorth demonstrated continued strong performance in Q4 and full-year 2025. The Specialty and Care Services business achieved 14% adjusted revenue growth and 13% year-over-year growth in specialty scripts, supported by biosimilar adoption and the Shields Health Solutions investment. The Pharmacy Benefit Services business delivered solid results and introduced innovations like EnReachRx for GLP-1 patient support and expanded its patient assurance program to cap GLP-1 out-of-pocket costs. The segment's portfolio shaping has increased its contribution from 25% to 35% of company income over three years.
Cigna Healthcare Strategic Actions
Cigna Healthcare delivered strong results above original expectations in 2025, maintaining disciplined pricing and driving affordability. The company expanded AI-powered digital tools for personalized customer experiences, including provider matching and real-time cost tracking. New partnerships were formed with Progyny, Carrot, and Headspace to enhance fertility and mental health offerings. The segment also reduced prior authorizations by 15% over the past year and is partnering with the administration to further streamline the process.
New Rebate-Free PBM Model Rollout
The new rebate-free pharmacy benefits model, which began development in early 2025, is designed to enhance affordability and transparency. It will be adopted by the entire Cigna Healthcare fully insured book in 2027, and at least 50% of the Evernorth business is expected to adopt it by year-end 2028. This model guarantees patients the lowest possible price through "Price Assure Technology" and aims to maintain a similar margin profile through core admin fees and risk-based compensation for clinical programs, despite the shift away from spread and rebate-oriented models.
Capital Management and Allocation
The Cigna Group generated $9.6 billion in cash flow from operations in 2025. It returned $5.2 billion to shareholders through $3.6 billion in share repurchases (11.9 million shares) and $1.6 billion in dividends. The debt-to-capitalization ratio improved to 43% by year-end 2025, with a long-term target of approximately 40%. For 2026, the company expects $9 billion in operating cash flow, $1.3 billion in capital expenditures, and $1.6 billion in dividends, reflecting an increased quarterly dividend of $1.56 per share.