Company: CI
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001739940-25-000028
Chunk: 41

Company: Cigna Group
Filing Date: 2025-07-31
Form: 10-Q
Item: Part II, Item 4
Chunk 41
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Net investment income decreased 26% and 22%, primarily due to lower average assets, due in part to the impact of the HCSC transaction.

Pharmacy and other service costs increased 20% and 18%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.

Medical costs and other benefit expenses decreased 19% and 4%, primarily driven by the impact of the HCSC transaction (-27% and -11%, respectively), partially offset by higher medical costs in our ongoing U.S. Healthcare businesses (+9% and +8%, respectively).

Selling, general and administrative ("SG&A") expenses decreased 7% for the three months ended and increased 3% for the six months ended. Both periods were primarily impacted by the HCSC transaction (-12% and -4%, respectively), the strategic optimization program (+2% and +4%, respectively), and supporting business growth (+2% and +3%, respectively). 

Gain (loss) on sale of businesses primarily reflects the HCSC transaction for the six months ended. See the "Divestiture of Medicare Advantage and Related Businesses" section below and Note 5 to the Consolidated Financial Statements for further discussion of the HCSC transaction.

Investment results for the three and six months ended increased, reflecting investment gains related to the change in fair value of certain equity securities in the second quarter of 2025 and the absence of the impairment of VillageMD equity securities that was recorded in the first quarter of 2024.

The effective tax rate increased for the three months ended, primarily driven by the absence of tax benefits recorded in 2024 related to favorable state audit resolutions (+2%), partially offset by the favorable impact of foreign operations (-1%). For the six months ended, the effective tax rate decreased, primarily driven by the absence of a valuation allowance related to the impairment of equity securities recorded in 2024 (-21%), partially offset by the absence of state tax benefits recorded in 2024 (+6%) and the impact related to the HCSC transaction (+1%). See Note 15 to the Consolidated Financial Statements for further discussion of these matters.

Developments

Divestiture of Medicare Advantage and Related Businesses

On March 19, 2025, the Company completed the sale of our Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment to Health Care Service Corporation ("HCSC," and such transaction, the "HCSC transaction").