Company: CI
Filing Date: 2025-01-16
Form Type: CORRESP
Source: 0001739940-25-000005
Chunk: 3

Company: Cigna Group
Filing Date: 2025-01-16
Form: CORRESP
Chunk 3
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 "In other words, if the segments do not currently have similar gross margins and sales trends but the economic characteristics and the other five criteria are met and the segments are expected to again have similar long-term average gross margins and sales trends, the two segments may be aggregated." The long-term growth rates for both Evernorth operating segments are expected to differ for the forecasted future, as Specialty and Care Services continues to grow and mature in part by leveraging the Pharmacy Benefit Services’ shared customer base. The ability of each operating segment to leverage the complete suite of product and service offerings to drive their respective growth forecasts indicates these businesses are inherently similar, a position that has been recognized by the users of our financial statements as foundational to our business.

The following discussion points, which are used by the Company, industry analysts and investors to describe the economic value proposition and future cash flow prospects enhanced by the relationship between the two Evernorth Health Services operating segments, collectively further support aggregation:

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• Both segments have historically generated and are expected to continue to generate a similar annual pre-tax margin of 3-5%. As noted above, growth in both Evernorth operating segments is supported in part by the sale of products across a shared customer base as a complete product offering; growth in one business promotes the growth in the rest of our businesses. This element is further discussed below in response to the Staff’s comment.

• Industry reports have generally observed the ability of Evernorth to capitalize on future growth opportunities based on the dynamic product offerings of its two operating segments. Our ability to deliver a broad array of healthcare services on both a standalone or combined basis between our two Evernorth operating segments enables us to drive incremental growth. For instance, a leading investment bank noted, "the company has a broad array of healthcare services solutions under the Evernorth umbrella that can be delivered on a stand-alone basis or combined with other offerings to enable more integrated care management. We believe [Cigna's] ability to aggregate and integrate point solutions should streamline the purchasing process for employers while also enabling them to configure services offerings based on their unique needs – both of which could potentially drive incremental growth."

• Our sell-side analysts regularly produce financial models for our business based on Evernorth Health Services in total and most do not model Pharmacy Benefit Services and Specialty and Care Services separately. This further supports that analysts and investors assess the performance of the Evernorth business as one reportable segment. While many analysts separately discuss the operating segments to provide visibility into current growth targets, they generally assess performance