Company: CI
Filing Date: 2025-01-16
Form Type: CORRESP
Source: 0001739940-25-000005
Chunk: 5

Company: Cigna Group
Filing Date: 2025-01-16
Form: CORRESP
Chunk 5
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's for the quarterly periods ended March 31, June 30, and September 30, 2024 were as follows:

For one of the periods presented, the Pharmacy Benefit Services margin fell outside of the 3-5% range. However, as described in the Form 10-Q for the quarterly period ended March 31, 2024, this was due to a one-time event (planned investments related to the onboarding of new clients, including one significant new client) and does not change our expectations for longer term projected margins for this operating segment. For all remaining periods presented, the margins for both operating segments were in the 3-5% range.

As shown in the graph above, the absolute historical pre-tax margins of the two Evernorth operating segments were within 1% of each other, which we do not believe is a significant difference. The margins were reflective of the codependency and the similar nature of the products and services between the two operating segments. On a relative basis (calculated as the absolute difference between segment margins divided by the margin for the Pharmacy Benefit Services operating segment for each period in the graph above) excluding the first quarter of 2024 for the factor cited in the paragraph above, margins varied in the range of 3% to 19%. For narrow margin businesses like these, a small absolute difference (1% or less) creates a large relative difference that we do not view as meaningful. Additionally, over the time periods presented in the chart above the Pharmacy Benefit Services average margin was 3.6% and the Specialty and Care Services average margin was 3.8%, which are very similar on both an absolute and relative basis. We continue to believe these margins demonstrate that the operating segments are economically similar, and that aggregation of the operating segments is appropriate.

#### Similarity of economic characteristics
We assess the performance of both Evernorth operating segments by reviewing the same key financial measures and operational factors, including volume, mix of claims, price, contract affordability services, customer, and client growth. These key factors are also disclosed in our quarterly Commission filings to help investors understand the performance of the operating segments. Future cash flows for Evernorth Health Services are primarily driven by the forecasted pre-tax margins of the business, as well as operating expenses and long-term earnings growth rates. Each operating segment has historically generated similar annual pre-tax margins and is expected to continue to generate similar long-term annual pre-tax margins in the 3% to 5% range.

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