Cigna Corporation (NYSE:CI) Files An 8-K Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure.
As previously disclosed, on March 8, 2018, Cigna Corporation (Cigna) entered into a merger agreement with Express Scripts Holding Company (Express Scripts). Following entry into the merger agreement and throughout the pendency of the transaction, Cigna and Express Scripts designed integration plans to ensure implementation of the management and business reporting structure of the combined company immediately upon closing. On December 20, 2018, Cigna completed the acquisition of Express Scripts. As a result, effective in the fourth quarter of 2018, our segments have changed as described more fully below. Prior period results for the first three quarters and nine months ended September 30, 2018 and the four quarters and full year ended December 31, 2017 and full year December 31, 2016 are presented on the historic and new segment basis in the following tables. Prior period results do not include results attributable to Express Scripts.
Cigna’s segments effective in the fourth quarter 2018 are:
Integrated Medical offers a variety of medical solutions to employers and individuals.
Health Services includes pharmacy benefits management, pharmacy home delivery, and certain medical management services. This includes the acquired Express Scripts business with the exception of Express Scripts Medicare Part D business, which is reported in the Government operating segment.
International Markets includes supplemental health, life and accident insurance products and health care coverage in select international markets as well as health care benefits to globally mobile employees of multinational organizations.
The remainder of our operations are aggregated and reported in Group Disability and Other, consisting of the following businesses:
Corporate reflects amounts not allocated to the businesses and includes intersegment eliminations.
Cigna’s Investor Relations Department will be hosting a conference call this morning, January 23, 2019, beginning at 9:00 a.m. ET to describe the segment reporting changes and answer questions on this topic. The call-in numbers for the conference call are as follows:
It is strongly suggested you dial in to the conference call by 8:45 a.m. ET. The operator will periodically provide instructions regarding the call.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date of this report, except as shall be expressly set forth by specific reference in such a filing.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K, and oral statements made with respect to information contained on this website, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on Cigna’s current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning future financial or operating performance, including our ability to deliver personalized and innovative solutions for our customers and clients; future growth, business strategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; the merger (the Merger) with Express Scripts and other statements regarding Cigna’s future beliefs, expectations, plans, intentions, financial condition or performance. You may identify forward-looking statements by the use of words such as believe, expect, plan, intend, anticipate, estimate, predict, potential, may, should, will or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our financial, strategic and operational plans or initiatives; our ability to predict and manage medical costs and price effectively and develop and maintain good relationships with physicians, hospitals and other health care providers; the impact of modifications to our operations and processes; our ability to identify potential strategic acquisitions or transactions and realize the expected benefits of such transactions, including with respect to the Merger; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; the outcome of litigation, regulatory audits, investigations, actions and/or guaranty fund assessments; uncertainties surrounding participation in government-sponsored programs such as Medicare; the effectiveness and security of our information technology and other business systems; unfavorable industry, economic or political conditions, including foreign currency movements; acts of war, terrorism, natural disasters or pandemics; the possibility that the anticipated benefits (including anticipated synergies) from the Merger cannot be realized in full, or at all or may take longer to realize than expected; problems regarding the successful integration of the businesses of Express Scripts and Cigna; unexpected costs regarding the Merger; the ability to retain key personnel; as well as more specific risks and uncertainties discussed in our most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.cigna.com as well as on Express Scripts most recent report on Form 10-K and subsequent reports on Forms 10-Q and 8-K available on the Investor Relations section of www.express-scripts.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Cigna undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
TABLE OF CONTENTS
Basis of presentation
All dollar amounts are in millions, unless otherwise noted.
Cigna measures its financial results on a consolidated basis using adjusted income from operations and adjusted revenues. Adjusted income from operations and adjusted revenues on a consolidated basis are not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should not be viewed as a substitute for the most directly comparable GAAP measures which are shareholders net income and total revenues. Cigna also uses adjusted income from operations to measure the results of its segments, however the segment metric is determined before income taxes.
For the periods presented in this Form 8-K, adjusted income from operations is defined as shareholders net income (or income before income taxes for the segment metric) excluding: net realized investment results, amortization of acquired intangible assets and special items. Beginning in 2018, the net realized investment result adjustment includes Cigna’s share of certain realized investment results of its joint ventures reported using the equity method. Beginning with the fourth quarter of 2018, earnings contributions from Anthem Inc. and Coventry Health Care, Inc. (transitioning PBM clients) will also be excluded from shareholders net income when determining adjusted income from operations. Adjusted income from operations is used as our principle financial measure of operating performance because management believes it best presents the underlying results of operations of Cigna’s businesses and permits analysis of trends in underlying revenue, expenses and profitability.
For the periods presented in this Form 8-K, adjusted revenues is defined as total revenues excluding: special items and, beginning in 2018, Cigna’s share of certain realized investment results of its joint ventures reported using the equity method. Beginning with the fourth quarter of 2018, revenue contributions from transitioning PBM clients will also be excluded from total revenues when determining adjusted revenues. These items are excluded because they are not indicative of past or future underlying performance of our businesses.
Cigna adopted the new GAAP revenue recognition guidance (Accounting Standards Update (ASU) 2014-09 and related amendments) on a retrospective basis effective January 1, 2018. In addition, Cigna adopted Article 5 of Regulation S-X issued by the Securities and Exchange Commission effective December 31, 2018 in conjunction with the acquisition of Express Scripts on December 20, 2018. As a result, Cigna reclassified realized investment gains and (losses) previously reported in revenue and now reports this item below Income from operations along with interest expense and debt extinguishment charges in the Statements of Income, in conformity with Article 5. Prior year information has been reclassified to conform to this new presentation. Prior period results do not include results attributable to Express Scripts.
About Cigna Corporation (NYSE:CI)
Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company’s segments include Global Health Care, Global Supplemental Benefits, Group Disability and Life, Other Operations and Corporate. The Global Health Care segment aggregates the commercial and Government operating segments. The Global Supplemental Benefits segment offers supplemental health, life and accident insurance products primarily in Asia, Europe and the United States. The Company’s Global Supplemental Benefits segment offers supplemental health, life and accident insurance products primarily in Asia, Europe and the United States. Its products are offered through employers and other groups, such as Governmental and non-Governmental organizations, unions and associations. Cigna also offers commercial health and dental insurance, and Medicare and Medicaid products and health.
