Let's start. Thanks everybody for coming. I'm Gary Taylor, cover healthcare facilities and managed care. Talk louder. It's not working? Okay. Put this up a little bit. Well, I don't know how to do that. Can I do that in the back? Are we good on volume? I'll try to talk a little louder. Anyway, my pleasure to introduce Cigna. Cigna is a global healthcare company with two distinct segments, Cigna Healthcare and Evernorth. Cigna Healthcare is the health benefits business. That includes the third largest commercial risk, health insurer, the largest ASO administrator. Evernorth Health Services operates the second-largest PBM and also the second-largest specialty pharmacy in the U.S., as well as various healthcare services businesses. We have Brian Evanko, the Chief Financial Officer, joining us today for the chat. Brian, thanks for being here. I think I'll start with, you know, just a question I've had from, you know, some folks. Long-term earnings guidance for Cigna is 10%-13%. Going into 2023, you've guided lower than that. You called out a couple headwinds to that and sort of that the underlying, you know, growth ex those headwinds would be in line with your long-term range. Maybe just refresh us on some of those headwinds and how that's shaping up. Sure, Gary, thanks to you and Cowen for hosting us. Can you guys hear me back there, in the back? No? No. I'll try this. Maybe this will work a little bit better. Again, thanks to you and the team for hosting us here. As you mentioned, our long-term average annual EPS commitment is 10%-13% per year. And if you look back over the past decade, we've grown 14% compounded in terms of our adjusted EPS. 2022 was a strong year, where we came in at 14% EPS growth. We're, we're pleased with both the long-term track record of success as well as the strong year in 2022. To your point, our 2023 guide, the adjusted EPS growth rate is below the 10%-13% average annual growth rate range, and there's really three drivers of that that I'd call your attention to. One is our Centene contract win, which is effective January first of 2024. We will spend about $200 million in 2023 preparing to onboard Centene. Before the revenue comes in, we're gonna be spending money, which naturally creates some pressure on the P&L. The second item, which we haven't actually discussed in our prior earnings releases but is relevant for 2023, is our defined benefit pension plan, which is overfunded. The way that U.S. GAAP accounting works in this context is we have to reset each year the interest rate assumption, with interest rates popping up over the last 12-18 months, it's created about $100 million of U.S. GAAP expense in 2023 that wouldn't have been there in the absence of that interest rate increase, which weighs a bit on the 2023 EPS growth rate range. Importantly, this is a non-cash expense because we're overfunded. We have no required contributions into the pension, but the way that it is recognized causes a bit of a pressure point on our 2023 EPS growth rate range. Finally, as we always do stepping into a new year, we tend to start with a level of prudence in the guide, and our convention is an at least convention. Our EPS guide for this year is at least $24.60, which you should view as a floor as opposed to a range. Those three factors combined lead to the EPS growth for 2023 being a little more muted compared to our long-term expectation. Gotcha. Just to be clear, is my mic picking up or do I need to? Can I get thumbs up? I get a thumbs up. Okay, I'm gonna leave it there. The $100 million, I think is maybe $0.25 or so after tax, if I'm thinking through that correctly, quickly. This isn't new. This was contemplated when you gave the guidance for 2023 back in January. Correct. Yeah. Correct. Yeah. We reset these each year toward the end of the year. Typically, November, December, we'll reset the interest rate assumption. You're right, $100 million pre-tax translates to roughly a quarter EPS. Okay, great. I'm gonna slide a little curveball in, just because it's, it seems a little more topical lately, but it's big picture. Well, this is probably the most common question I've had recently, but what do you make of, you know, the regulatory noise around PBM, you know, right now? I mean, there's always kind of an undercurrent, but you had the 2022 PBM Transparency Act. You know, it didn't move, but there's a little bit of congressional interest. The FTC, either late last year or early this year, wants a whole bunch of information from the industry. We think that's probably a year before we hear anything from them. Last week, the oversight committee, you know, wants more information. What do you make of that? Is it, because insulin and EpiPen, you know, during the pandemic seemed to get a lot of attention, and we're heading into election year, do you think there's anything besides usual kind of undercurrent of politics that are, you know, driving what seems to be, you know, some extra scrutiny? Yeah. There's certainly a bit of additional scrutiny recently that's come up, as you pointed out, from those different areas. If, if you go back in the 25 years I've been in the healthcare world, there have been many instances like this where it spikes, and then we prove the value that we create for our clients and customers, and then it moves on. Right? We're confident that with the inquiries that are underway now, we're gonna be able to tell our story. Show the value creation from the standpoint of the data and the analytics that surround that, and come out stronger on the other side. That said, clearly there are some opportunities that led to these inquiries. One is we're seeing more and more independent pharmacies put their hand up and saying, "I'm struggling to survive, so maybe the PBMs are to blame." Two, we have, in some instances, some of our patients who have high cost sharing, right? They might be in a high deductible plan, they might have a specialty pharmaceutical that needs to get filled, and that creates noise in the system, particularly early in the year, and it's important for the industry to get after that as an opportunity. Finally, part of our role in terms of controlling costs is at times we have to say no, or we have to gain access to certain drugs, and that creates noise at times. We're, as I said earlier, Gary, we're confident that through the ability to create value for our clients and customers and participate in some of that value that we create, we're striving to a lowest net cost outcome for the finance year, and ultimately creating value for clients and driving costs out of the system compared to if PBMs did not exist. Thanks. I know I'll fall back into saying PBM when you'd rather me say Evernorth than. You can correct me on that as we go along, because obviously Evernorth has become much larger than just sort of the core PBM capabilities. What are your kind of core outlook for profitability at Evernorth? I think, quite frankly, there's been a bear case about EBITDA per script, which is how traditionally PBM was looked at for a decade. If I look at my model, I think the EBITDA per script is the same today as it was 10 years ago. It hasn't compressed materially despite concerns that people have had about the space. When you just think about Evernorth going forward, I guess, one, what is kind of the core margin outlook? Two, do we need to start moving away from this EBITDA per script because you're obviously growing the, you know, services part of the business model as well. Yeah. I appreciate you leading me to the correction of the way we think about Evernorth, because we definitely see Evernorth as far more than our Express Scripts PBM. The Accredo Specialty Pharmacy, which has been growing double digits for many years in a row now, is almost 40% of the revenue in that part of our company, in the service company. Our health services business, which right now is relatively small but growing, also represents, you know, circa 10% of the segment. The per script metrics become less and less relevant each day as the specialty pharmacy continues to grow at a more rapid rate. To your point on margins, we're currently operating in the zone of about 4.5% for the segment, but that reflects many different sub-margins by business type within. We wouldn't expect there to be a massive amount of margin change at the product level or the solution level, but the overall segment margin level will change based on the mix of clients and customers and products within. Importantly, for this year, we're on track for income of at least $6.4 billion, which represents growth of 4.5%, even with the Centene related onboarding costs I made reference to. On average, over the longer run, we'd expect this segment of the company to grow 5%-7% per year. We've significantly outperformed our original expectations at the time we acquired Express Scripts back in 2018, where at that point it was viewed as a 2%-4% grower, and now we're on track for 5%-7% per year on average. There's definitely parts of Evernorth that are growing a lot faster, so that line I always ask about after the quarter, that fees and other income, it's like $7.3 billion in 2022, it was up 19%. What are sort of the biggest contributors to that line? Can you give us a sense of that 19% growth, how much of that was organic? Yes, you're right. The fees and other revenue line has been growing quite substantially for us the past several quarters now. A few different components in there. One, in the health services space that I was alluding to just a minute ago, MDLIVE visits and fees show up in that line. Secondly, our eviCore Benefits Management business, the medical benefits management business shows up in that line. Thirdly, our behavioral healthcare solutions show up in that line. In the pharmacy space, we have many clients now who are asking for network management services or formulary management services, they wanna pay their own claims. When we have those relationships, that shows up as fee income in that line. Then we have clinical programs as well in the pharmacy space like SafeGuardRx that show up in that line. The vast majority of that growth, though, is organic. MDLIVE, which we acquired in April of 2021, with the exception of that first quarter of 2021, everything else in there is organic growth, we're quite pleased with that. Is on MDLIVE, is the primary care part, growing as fast or slower than the behavioral piece? 'Cause I know some of the other virtual care companies, it's like the behavioral piece is the piece that's really been driving a lot of outsized growth lately. We're showing strong growth across the board in MDLIVE. If you look at the total visits for the full year of 2022, you can think of percentage growth in the high teens for MDLIVE compared to 2021. If you think about how the world changed, 2022 should have been a tougher year to have virtual care growth than 2021 when everyone's locked down. High teens growth across the MDLIVE platform, which we're quite pleased with. About a quarter of all the MDLIVE visits are behavioral health in nature right now, which means the other three-quarters are unrelated to that. They're primary care, as well as we continue to build out that portfolio to include the opportunity down the line to do more chronic condition management, which is where we think the real opportunity is over time to link the complex physical care delivery for complex chronic care with the virtual capabilities that we have within MDLIVE. Got it. I wanna talk about VillageMD a little bit. I think probably three-quarters of the last conf call felt like were about VillageMD. The $2.7 billion investment for mid-teens stake in VillageMD, Summit and City. What's Am I forgetting? What was the other part of Summit slash-? CityMD. Okay, yeah. Your investment was in that whole piece, right? I guess I've got questions, you know, client questions run the gamut from, is that designed that, you know, the Cigna Healthcare business is gonna start, you know, sending its members to, you know, VillageMD as preferred primary care. On the call, you kinda talked about being able to sell in some of your care management services from Evernorth into VillageMD as a customer. I've got people that think, but gee, you know, ultimately Walgreens, VillageMD, you know, Cigna starts to look a lot like, you know, this, you know, super vertically integrated, you know, CVS. I still think people are kind of all over the board really trying to understand sort of the key motivation behind that deal. I know Dave has spent a lot of time on the call, but maybe take another crack at, like, two or three key points on why you guys wanted to do that. Sure. You're right. It did consume four of the 13 questions on our earnings call, who's counting? Relative to this opportunity, which we're thrilled with, you should think of it in two broad categories in terms of why we did it. One, the financial, secondly, the strategic. Financially, we invested $2.7 billion into the combined Village plus Summit company, and for that, we got about 14% equity. Obviously you can do the math on what that equates to. Importantly, though, we also will get a dividend of 5.5% on $2.2 billion of that. That made the financial picture more attractive than just having the minority equity ownership. The strategic piece of this is, for us, far more interesting and important over the medium to longer term. Importantly, the way you should think about the strategic interest here is really, it's an acceleration of our value-based care strategy. Our value-based care strategy is not one that's simply around ownership and capitation. It's much more about partnership and enablement. What we're intending to build here in partnership with VillageMD, so you think of it as an interoperable set of capabilities, combining Village's primary care, Cigna's supplemental care. Think of virtual through MDLIVE, think of our behavioral health, and think of our care coordination capabilities powered by data and insights, all of that in a risk-based construct, meaning where we generate savings through that interoperable ecosystem at a local geographic market level, those savings will be split between the client, meaning the health plan or the employer, Village, and Evernorth. I said Evernorth, I didn't say Cigna, because Evernorth, our service company, will be the part of the company that's actually creating these constructs. Local market level, we'll start chapter one of this will be in a handful of geographies where we have high density of Cigna Healthcare health plan lives and relevance in terms of Village having quite a bit of physician panel. In those geographies, there'll be a handful of those in 2023, we'll build these risk-based constructs. In the medium term, we'll extend that concept to additional geographies, other places where Cigna Healthcare has a lot of health plan lives and Village has physicians, as well as to other provider partners. This is an Evernorth capability that will be extensible to other geographies, and it'll be extensible to other providers. That's why Evernorth is playing the role. Cigna Healthcare health plan will be a beneficiary, but it's not a health plan capability, it's a service company capability, and introduces new profit pools for us, but also the opportunity to take cost out of the system. That's how I broadly think about it. Got it. You know, Cigna health plan business could be a customer or beneficiary of this local ecosystem that you've created, but so could another, you know, health plan or employer. Is that the right way to think about it? Correct. Phase I you should think about as being built for the Cigna Health Plan, but it can be extensible to others. With a particular focus on where you have MA or very line of business agnostic? One of the things we really liked about the VillageMD partnership is it's about 60% commercial employer today, when you combine it with Summit Health and the balance mostly MA, quite different. Most people, when they think value-based care, they think MA, they think risk-based, capitation transfer, et cetera. In this instance, it allows us to get into the commercial employer space with value-based care solutions in a very different way than what we typically do in other geographies. We like that quite a bit. Now it doesn't preclude MA by any means, but it allows us to get into significantly more commercial employer populations. Are any of those contracts between Evernorth and Village, are those in place today? There's any certain amount of guaranteed contracts, or that's all getting built now from the ground up and then goes live at some point, you know, later this year in 2024? Yeah. The today component of our contracting with them, you should think of it as traditional provider networks. Meaning we have Village and Summit physicians and Cigna Healthcare's provider networks today, but not the value-based care model I just made a reference to. Our investment into VillageMD was predicated on building the value-based care constructs, the interoperable networks I described, those need to be constructed geography by geography across the country. As I mentioned, we expect a handful of those by the end of 2023 to be up and live. Maybe last one on this. Any, like, specific year one, year two goals that you might be able to, you know, share from this? I think you know, it's building, it's getting going. As investors are sort of evaluating over the next 12- 24 months, is this taking off or is this getting built, you know, the way that Cigna hoped or intended? Are there any milestones you could point us to keep our eye on? We'll think about what to give you in terms of more detailed insights in terms of our quarterly results. You should not think of the value-based care constructs as being particularly material to the 2023 financial results, meaning the faster they come online, the better, but not particularly material to our outlook. The dividend income, obviously it starts to accrue to us immediately, given that the money went in January of this year. That, that's the bigger driver financially for us in 2023. Gotcha. Excuse me. Here's another topic, you know, that's really been on investors' minds over the last, you know, 12 months or so, biosimilars. I know you guys have talked a lot about it. You spent a lot of time last summer at your investor day talking about it. How would you explain, and I think Evernorth, you were able to boost the OI growth target by a point, you know, long term based on the multi-year trend you see in biosimilars. How in simplest terms would you break it down that biosimilars help Evernorth's, you know, revenue and profit trajectory? Yeah. In the simplest terms, the way we tend to think of it is whenever there's additional competition in the drug supply chain, that's when we go to work, and we're able to drive further cost out. Today, approximately 7% of all of our specialty drug spend has competition, and the other 93 does not, right? Which is a problem, because when you're single source, you have much less negotiating power than if you've got competition in the market. One of the beauties of biosimilars is it brings something that's chemically equivalent up against the reference drug and allows companies like Evernorth to negotiate against the respective manufacturers and get optimal terms on behalf of our clients and subsequently our customers. We've been able to see value creation here in 2023 already from Humira having a competitor in the market in February through the Amgen drug. In the 3rd quarter of this year, we'll see additional competitors come to market. Each of those has the net effect of bringing the lowest net cost into the market. When we create that value, meaning we're able to take cost out, we're able to essentially keep a component of that or a fraction of that. That's the way to think of why it's so valuable for us in Evernorth. The lion's share of that benefit is going to the financier, our clients. It's not going to us, but we're able to keep a piece of it. To your point of the increased long-term outlook for income, a portion of that is biosimilars. Not all of it, though. We also expect higher growth in the health services component of Evernorth, as we were touching on earlier. Let's shift to the health benefits business for a few minutes. You know, let's start with MA. Not your largest business, but very topical to investors because of the advance notice, the 2% rate cut and the expectation that 2024 is gonna be a little more challenging. Every year is a solve for, you know, benefits versus enrollment, you know, trade-off, but it's a tougher solve for if the benchmark moves down 2% instead of +3%, basically. How are you guys thinking about that at this moment? In particular, have you run numbers on how your members flow through that new risk model that CMS has promulgated? How do you think that, if it stands, how do you think that impacts your ability to grow MA in 2024? Yeah. Lots in there. I'll try to be as concise as possible here. First of all, the Medicare Advantage program overall, we see as a great example of a public-private partnership over time. You can see it in the form of not only the growth in the market, but the satisfaction levels from the beneficiaries. Now that we have over 30 million people who are enrolled in Medicare Advantage plans, it represents about half of the U.S. Medicare population. We view it over time as being a great example of public-private partnership. We've been participating in that, but obviously to a lesser degree than many of our competitors. We currently have about 5% of Cigna's total revenue, and we've got about 2% national share if you look at the lives. That's a big opportunity for us to grow over the longer term. A really important part of this, though, is the funding of the program, and there have been three things over the last several months that have started to put a bit of pressure on the funding. The first was the Stars changes that are effective for the 2024 revenue year, where the industry in aggregate came down, which means the funding level came down. Cigna's impact was very consistent with the overall industry. If you look at the percentage of our lives in four stars, it moved very similarly to the industry. You should think of that as pretty much tracking, but that was one example of a revenue headwind when you think about program funding. The second one was the RADV rule that was published, a little over a month ago now, which, while the final rule was certainly less extreme than it could have been, still looks like it will take a bit of funding out of the program over time through the retrospective audits. From our point of view, we would expect to have a similar level of kind of a 2% type impact. If you think about our national share, there's no reason that Cigna will be more or less exposed than anyone else as it relates to the RADV rule. The final item in, as it relates to the 2024 rate notice, The +1% headline growth number minus the three for the- Yeah, we never paid attention. the risk adjustment model gets to the -2 you referenced to. Our impact as we run our own book of business through is very similar to that -3 in terms of the impact of the risk adjustment model. What we do see is when we break it down by sub-segments, there's quite a bit of variability by geography. There's also variability based on patient type. For example, dual eligibles appear to have a more negative impact versus new to Medicare individuals seem to be a little more favorably impacted from it. Similarly, risk-bearing provider groups that we partner with seem to have a more negative impact, whereas those in a more traditional fee-for-service contact, a little more favorable. There's variability from all of that. I would expect some of our competitors likely have a more negative effect than we do. In average for us, we're coming in very close to the industry numbers that were published by CMS. As you look at 2024, if the advance notice stands, you can either take a substantial possible margin hit or you have to rein in the benefit through the bid structure to sort of protect margins, rein in benefits. In theory, that has some impact on enrollment growth for the industry. I know you guys are hoping and intending to grow faster than industry in MA for a period of time. Is that the way you look at 2024? If the rule stands, whatever you thought the industry might grow, you probably have to rein in that growth expectation modestly. Is that fair? I think your caveat of if the rule stands is a really important one because there's still, four weeks or so before we get the final notice, and a lot could change in that time period. Importantly, the MA market is so localized when it comes to bids. I mean, we're putting bids together not only at the product level, but down at the MSA and then, county and zip level. It's, it's a, it's very micro market. It's, from our point of view, too early to conclude that we would have a low growth year or a no growth year. We remain optimistic over the medium to longer term that this will continue to be a very attractive secular growth market, and that we'll participate in that and be able to achieve our longer term goal of 10%-15% average annual growth. Switching to the commercial business, what are you seeing from employers right now? I mean, unemployment's at what, a 50-year low. I think, we're actually gonna have an employee benefits panel tomorrow morning, so ease that a little bit. What are you guys seeing employers do? I mean, generally what we're hearing is unemployment this low, it's a really tough environment for employers to make carrier changes, material benefit changes, cost shifting, like all that sort of stalls because they're using benefits as a recruitment and retention tool, and it's an important part of the total, you know, compensation equation. Are you guys seeing anything, you know, different from that? How would you characterize just the, you know, the underwriting environment for 2023 now that, you know, we're done with that? We continue to see quite a bit of interest from our employer clients in maintaining and/or in certain instances, enhancing benefits to compete for talent. 3.4% unemployment rate right now. Low workforce participation rates. All those things are creating dynamics where employers are competing very aggressively for talent, definitely not backing away from health benefits. We're seeing that's just a confirmation of your comment, Gary. Additionally, there's a lot of interest in behavioral health, where we're seeing higher levels of utilization of behavioral benefits than we've really ever seen. Finally, more and more of our larger employers are seeking to consolidate some of their point solutions into more of a full service provider, of which Evernorth is one. There are others in the market as well. Those are a few of the more directional trends that we're seeing. The pricing environment remains rational. As we always do, we price to forward-looking cost trends, and we're expecting this year, to see more normalized levels of both utilization and unit cost trend after we had a favorable 2022. On top of that, we expect some level of provider inflation, which is already essentially locked into our contracts to the tune of, I think, 50- 100 basis points, that's being passed through into our pricing as well. You've sort of anticipated, you know, some return to normalization. I mean, we've seen in some of our surveys and third-party data that in the first part of the year, it does look like that certain parts of the country, certainly hospitals, seems to have picked up. Is there anything you guys are seeing that's surprising or inconsistent with how you think you've priced, you know, the book of business, you know, this early in the year? Far, Q1's tracking in line with our expectations. There's nothing I'd call out here that's abnormal in that respect. Again, that's in line with our expectations. Others may have had different expectations, but we're seeing patterns largely consistent with what we expected to at this point. Great. We're out of time. Thanks, everybody, for joining us.