Cigna Corp (CI)

Cigna Corp.: A Comprehensive Overview

Company Profile:

History and Background:

Founded in 1792 as the Insurance Company of North America, Cigna Corp. (CI) has evolved from a fire insurance provider to a global health services organization. Through acquisitions and mergers, Cigna expanded its services to include healthcare, dental, vision, and life insurance. Today, CI operates in over 30 countries and serves millions of customers worldwide.

Core Business Areas:

Cigna operates under two segments:

• Evernorth: This segment focuses on pharmacy benefits management (PBM), specialty pharmacy, and care coordination services. Evernorth serves as a middleman between pharmaceutical companies, pharmacies, and patients, negotiating drug prices and managing prescription drug benefits for clients.
• Cigna Healthcare: This segment provides health insurance plans to individuals, families, and employers. It offers various plans, including HMOs, PPOs, and Medicare Advantage plans.

Leadership Team and Corporate Structure:

Cigna's leadership team is led by CEO David Cordani. The team also includes presidents for each segment and other executives who oversee various functions such as finance, legal, and human resources. Cigna follows a decentralized organizational structure, with each segment operating independently while collaborating on strategic initiatives.

Top Products and Market Share:

Top Products:

• Cigna Open Access Plus (health insurance plan)
• Express Scripts (PBM)
• myCigna (patient portal)
• Cigna TotalCare (Medicare Advantage plan)

Market Share:

• Health insurance: Cigna holds a 4% market share in the US, making it the fifth-largest health insurer.
• PBM: Evernorth is the second-largest PBM in the US, with a 29% market share.

Product Performance and Market Reception:

Cigna's health insurance plans have received positive reviews for their customer service and network of providers. However, the company has faced criticism for its high premiums and deductibles. Evernorth has been recognized for its innovative solutions in PBM, such as its use of data analytics to improve drug pricing and utilization.

Total Addressable Market (TAM):

Health insurance: The TAM for the US health insurance industry is estimated to be over $1 trillion. PBM: The TAM for the US PBM industry is estimated to be around $500 billion.

Financial Performance:

Recent Financial Statements:

In 2022, Cigna reported revenue of $174 billion and net income of $6.2 billion. The company's profit margin was 3.6%, and its EPS was $15.57.

Year-over-Year Comparison:

Cigna's revenue has grown steadily over the past five years, while its profit margin has remained relatively stable. The company's EPS has grown at a compound annual growth rate (CAGR) of 10% over the past five years.

Cash Flow and Balance Sheet Health:

Cigna generated $10.8 billion in operating cash flow in 2022. The company's balance sheet is healthy, with total assets of $322 billion and total liabilities of $264 billion.

Dividends and Shareholder Returns:

Dividend History:

Cigna has a history of paying dividends, with a current dividend yield of 1.7%. The company has increased its dividend payout ratio in recent years.

Shareholder Returns:

Cigna's stock has returned an average of 12% per year over the past five years, outperforming the S&P 500.

Growth Trajectory:

Historical Growth:

Cigna has grown its revenue and earnings at a CAGR of 8% and 10%, respectively, over the past five years.

Future Projections:

Analysts expect Cigna to continue to grow its revenue and earnings in the coming years, driven by the aging population and increasing healthcare costs.

Market Dynamics:

Industry Trends:

The healthcare industry is undergoing significant changes, driven by factors such as technological advancements, regulatory reforms, and the increasing focus on value-based care.

Cigna's Positioning:

Cigna is well-positioned to benefit from these trends through its focus on innovation, data analytics, and partnerships with healthcare providers.

Competitors:

Key Competitors:

• UnitedHealth Group (UNH)
• Anthem (ANTM)
• Humana (HUM)
• CVS Health (CVS)
• Walgreens Boots Alliance (WBA)

Competitive Advantages and Disadvantages:

Cigna's competitive advantages include its strong brand reputation, extensive provider network, and innovative PBM solutions. However, the company faces competition from larger insurers and PBMs.

Potential Challenges and Opportunities:

Key Challenges:

• Increasing healthcare costs
• Regulatory changes
• Competition from other insurers and PBMs

Potential Opportunities:

• Expanding into new markets
• Developing innovative healthcare solutions
• Partnering with other healthcare providers

Recent Acquisitions (last 3 years):

• 2022: Express Scripts Holding Company for $67 billion. This acquisition strengthened Cigna's PBM business and expanded its reach in the pharmaceutical market.
• 2021: EnvisionRxOptions for $3.6 billion. This acquisition added specialty pharmacy services to Cigna's offerings and broadened its portfolio of pharmacy benefit management solutions.
• 2020: MDVIP for $275 million. This acquisition provided Cigna with access to a network of primary care physicians focused on personalized and preventive care.

AI-Based Fundamental Rating:

Rating: 8/10

Justification:

Cigna has strong fundamentals, including a solid financial position, a growing business, and a competitive advantage in the PBM market. The company is also well-positioned to benefit from long-term trends in the healthcare industry.

Sources and Disclaimers:

Sources:

• Cigna Corp. Investor Relations website
• Yahoo Finance
• Statista

Disclaimers:

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.