Company: CI
Filing Date: 2025-01-16
Form Type: CORRESP
Source: 0001739940-25-000005
Chunk: 2

Company: Cigna Group
Filing Date: 2025-01-16
Form: CORRESP
Chunk 2
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 achieve cost savings and better health outcomes by working together as a complete solution that targets various points of the pharmaceutical supply and delivery chain to better control the overall cost of prescription drugs supported by related health products and services. The specific products and services offered and sold through these two operating segments may differ in design and execution but share the same ultimate goal of providing value to our Evernorth customers by helping achieve their health needs at a lower cost through an attractive product offering.

Management, investors, industry analysts and others assess growth opportunities and future cash flow prospects at the Evernorth Health Services reportable segment level. As noted in our 2024 quarterly investor presentations, our annual earnings growth expectations in Specialty and Care Services range from 8% to 12%, while earnings growth expectations in Pharmacy Benefit Services range from 2% to 4%. While the Specialty and Care Services segment is currently growing at a higher rate, these businesses are intrinsically symbiotic - growth in these two businesses is supported by the marketing of our products and services both individually and as a complete Evernorth product offering. We evaluate and underwrite the economics of new and renewal client opportunities at the aggregate Evernorth level, not at the individual operating segment level. The higher earnings growth of the Specialty and Care Services operating segment is driven, in part, by the customer base of the Pharmacy Benefit Services operating segment - as Pharmacy Benefit Services earnings grow, so too does Specialty and Care Services earnings. For example, in 2023, nearly 60% of the specialty pharmacy services business revenue was generated by customers of the Pharmacy Benefit Services operating segment.

As noted above, our Pharmacy Benefit Services operating segment includes our more mature businesses, which is reflected in the lower earnings growth ranges. Our Specialty and Care Services includes our emerging businesses that have not reached full maturity and as a result are growing at a faster pace. The specialty and care industry overall is experiencing prolific growth, driven by significant advancements and the introduction of biosimilars as well as complex and high-cost new drugs to the market. Due to their higher price and rapid introduction, these changes have a larger impact on the specialty and care services industry than they do on the pharmacy benefit services industry, which is reflected in our growth rates. However, these market forces do impact both operating segments, as reflected in our growth projections for each of the operating segments, albeit with a larger impact on Specialty and Care Services. These facts align with the general principles of segment aggregation in line with the commentary set forth in ASC 280-10-55-7A,