Ladies and gentlemen, thank you for standing by for The Cigna Group's 1st quarter 2023 results review. At this time, all callers are in a listen only mode. We will conduct a question and answer session later during the conference and review procedures on how to enter queue to ask questions at that time. If you should require assistance during the call, please press *0 on your touch-tone phone. As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Ralph Giacobbe. Please go ahead. Great. Good morning, everyone. Thanks for joining today's call. I'm Ralph Giacobbe, Senior Vice President of Investor Relations. With me on the line this morning are David Cordani, The Cigna Group's Chairman and Chief Executive Officer, and Brian Evanko, Chief Financial Officer. In our remarks today, David and Brian will cover a number of topics, including our first quarter financial results and our updated financial outlook for 2023. As noted in our earnings release, when describing our financial results, we use certain financial measures, adjusted income from operations and adjusted revenues, which are not determined in accordance with accounting principles generally accepted in the United States, otherwise known as GAAP. A reconciliation of these measures to the most directly comparable GAAP measures, shareholders' net income and total revenues, respectively, is contained in today's earnings release, which is posted in the investor relations section of thecignagroup.com. We use the term adjusted income from operations and adjusted earnings per share on the same basis as our principal measures of financial performance. In our remarks today, we will be making some forward-looking statements, including statements regarding our outlook for 2023 and future performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. A description of these results and uncertainties is contained in the cautionary note to today's earnings release and in our most recent reports filed with the SEC. Regarding our results, effective January 1st, 2023, we adopted amended accounting guidance for long duration insurance contracts, LDTI, and related amendments. Our 2023 full year outlook included the impact of LDTI, and prior results have been restated to reflect this change. There has been no material impact to our prior results, and this change will not materially impact our future operating results. Additionally, please note that when we make prospective comments regarding financial performance, including our full year 2023 outlook, we will do so on a basis that includes potential impact of future share purchases and anticipated 2023 dividends. With that, I'll turn the call over to David. Thanks, Ralph. Good morning, everyone, thanks for joining today's call. We begin 2023 with momentum. In the first quarter, we again delivered strong performance and continued our long track record of innovating for customers, clients and partners. Today, I'll discuss some of the key drivers fueling our growth during the quarter. I'll also talk about how we're leading the way to address evolving stakeholder needs with a flexible and agile model providing multiple avenues to deliver and capture value. Specifically, I'll describe how the durable and flexible pharmacy benefit services we offer continue to thrive in the marketplace. Brian will provide additional detail about our financial results and discuss our outlook for 2023. Then we'll take your questions. With that, let's get started. In the first quarter, we delivered $46.5 billion in total revenues, $5.41 in adjusted earnings per share. We are raising our full year 2023 guidance for adjusted EPS, revenue and customer growth. We are pleased with the strong start across Evernorth Health Services and Cigna Healthcare. As we look forward, we expect another very good year for The Cigna Group. Evernorth, comprising pharmacy benefit services, specialty pharmacy, and Evernorth Care, again contributed strong growth while retaining, expanding, and winning new relationships with the employers, health plans, and governmental organizations we serve. Our foundational pharmacy benefit service business continued its strong performance, demonstrating the value we provide to our clients and patients. Specialty pharmacy, which accounts for approximately 40% of Evernorth's total revenue, drove outsized growth with a continued rise in new to market specialty drugs and increasing demand. Evernorth Care represents one of our most significant long-term growth opportunities, given the growing needs in virtual care as well as, for example, behavioral health services. In Cigna Healthcare, our health benefits platform, we achieved another quarter of revenue and customer growth with strong performance across our U.S. commercial, U.S. government, and international health businesses. With our focus on affordability and disciplined pricing, we are pleased with our medical cost performance and our medical care ratio, which was 81.3%. Our U.S. commercial business is on pace for another good year. Our affordability initiatives continue to strengthen our overall competitive position. This has helped fuel our strong customer growth. Our momentum also is a reflection of how employers of all sizes rely upon our consultative approach and the breadth of our solutions to support the health, engagement, and productivity of their workforces. In U.S. government, our Medicare Advantage business is achieving above-market growth in 2023 from our high quality and affordable plans, our geographic expansion, and the maturation of markets we previously expanded into. In a dynamic individual exchange market, we also have substantial growth in our individual and family plan business, allowing us to bring Cigna Healthcare capabilities to a larger customer base. In international health, our earnings growth has been strong for the past few years, and we expect positive top line and bottom line contributions again in 2023, given our high quality and localized health insurance solutions supported by our global provider network. Overall, we're pleased with the quality, strength, and resilience demonstrated in our results, and importantly, how they position us for another year of sustained growth and attractive value creation. Looking ahead, we are confident in our increased outlook for the year, as well as our ability to sustainably deliver 10%-13% compounded EPS growth over our strategic horizon, along with providing an attractive dividend. Today, I want to spend a few minutes on Express Scripts, our pharmacy benefits business within Evernorth, including our recent announcements about how we are continuing to provide greater affordability, choice, and transparency for our clients and customers. Pharmacy services have an essential and impactful role in a time when, in medical care, physical or behavioral, are increasingly relying upon the use of pharmaceutical interventions. It's also important to recognize that successful care coordination programs for pharmacy services often create significant benefit and value for the medical services. We recognize the ongoing attention and legislative debate regarding the rising costs of prescription drugs. We are taking an active leadership role, and I want to be clear about how we are using our differentiated capabilities to create and capture value out of the drug supply chain on behalf of our clients and customers. First is the strength of our model, which is to deliver solutions and care coordination that address specific client needs and expand relationships with our full suite of services and capabilities, fueling our sustained attractive growth over time. Second, we are committed to enabling and prioritizing choice for our clients as we drive down costs. Third, we continue to build on our long track record of innovation to drive greater affordability, access, transparency, and improved clinical outcomes. Stepping back, our pharmacy benefit service business is achieving attractive growth because we're able to secure a diverse group of and a growing client base, leading with the strength of our supply chain, clinical, and care management programs. With our proven model, Express Scripts client retention rates are consistently in the mid-90s or higher, and we've been able to continuously grow our pipeline and win new business from medium-sized to the largest employers, from the local health plans to national players, and even the largest government-sponsored programs. We've expanded our efforts to advocate on behalf of our clients and customers, particularly as it relates to financing models, which are key areas of focus for some of the current legislative proposals. Express Scripts' business model starts with the commitment to enabling and prioritizing choice in benefit design and financing options for clients who are the primary financers of their employee benefit programs. This includes providing them the option to finance the cost of their programs by allowing us to share in the discounts we secure on their behalf, be it rebates or spread pricing. Our clients choose amongst these models based upon their needs for managing risk and greater predictability for their pharmacy costs as well as their cash flow. For context, across the breadth of our Express Scripts pharmacy benefit service portfolio today, over 95% of rebate dollars are passed through to clients. The key point is that each client chooses the financing mechanism that works best for them. They have choices in how they pay for the value we deliver. Many find that using rebate sharing or spread pricing generates a stronger level of aligned incentives, in addition to being able to plan for predictable cash flow that it generates. Proposals to limit the availability and scope of these options will result in less choice for thousands of employers, health plans, and government clients we serve and increase their costs over time. As it relates to Express Scripts, we are confident in our ability to earn sustainable and attractive margins for our services under a variety of legislative scenarios. We are able to create value through the breadth of our capabilities from supply chain to benefit design, driving competition amongst drug manufacturers to bring costs down and deliver better health outcomes through our clinical programs. One area of focus for multiple stakeholders has been the amount of income we earn from rebate retention and retail spread. To put this in context, we expect about 20% of Evernorth's 2023 pre-tax adjusted earnings to come from Express Scripts retention of rebates and retail spread. This percentage has trended down over time, and we expect it to continue trending downward. This is fueled by our ongoing innovation and greater diversification of our Evernorth businesses. Said otherwise, if these programs decrease further over time, fee-based income would increase. Therefore, we are confident that if some of these payment vehicles were reduced or removed by regulatory change or client preference, Express Scripts has a broad set of capabilities that create value and will continue to earn an attractive return. Let me provide some specific examples that reinforce our flexibility and durable model, and how we tap into our long track record of innovation for better outcomes on behalf of our customers and clients who are seeking greater affordability and transparency for prescription drugs. First, we are taking several steps to expand transparency. Express Scripts new ClearCareRx fully demonstrates the flexibility we have for prescription drug benefits, where clients pay exactly what Express Scripts pays pharmacies for prescriptions. They receive 100% of drug rebates that Express Scripts obtains by negotiating with pharmaceutical companies. They pay one service fee to cover the administration of pharmacy benefits, product services, reporting analytics, and the program is supported by a fully auditable mechanism. In addition, clients also benefit from guarantees to keep Express Scripts accountable for clinical and financial performance measures, including improvements in overall adherence rates and patient outcomes. Additional steps to drive even greater transparency include providing clients with enhanced financial and fee disclosures regarding their spread pricing programs when they exist. Along with today's release about our first quarter financial results, you will also find additional disclosures we are providing about Express Scripts model in our quarterly regulatory filings and on our new microsite. We will also offer a new digital pharmacy benefit statement for customers starting in 2024. The statement will share drug pricing information, out-of-pocket costs, and the net value delivered by Express Scripts on behalf of customers. With respect to the broader issue of drug pricing, to be clear, we are fully aligned with lowering costs of prescription drugs for customers. For example, Express Scripts Patient Assurance Program, launched in 2019, capped out-of-pocket costs for eligible members of select diabetes and cardiovascular medications. In 2022 alone, customers taking insulin saved more than $18 million because of this program. Now, with the introduction of our new Copay Assurance Plan, we are taking further action to cap out-of-pocket costs for customers in client prescription drug benefits at $5 for generic drugs, $25 for preferred brand medications, and $45 for preferred specialty medications. Finally, we also have a series of groundbreaking initiatives to further support pharmacists in rural communities across the United States. We are offering increased reimbursement to true independent pharmacists and partnering on opportunities to expand their clinical practices to further support care needs of their local communities. We are also convening an advisory committee of community pharmacists. These initiatives will encourage better care, expanded access to lower prices for rural Americans, as well as increasing a more sustainable revenue stream for independent pharmacists. We are encouraged by how our recent actions have been received by a wide range of stakeholders, including clients, our pharmacy network partners, and policymakers. They recognize our commitment as a leader and trusted partner that continues to create value through our deep expertise in designing programs for specific client needs, driving innovation and broadening our reach. In summary, we are demonstrating our leadership in the competitive pharmacy benefits market that is such a critical building block for the American healthcare system. We are serving specific client needs through the strength of our model and the effectiveness of our care coordination programs, allowing us to drive sustained, attractive growth. We are continuing to advocate for clients and their ability to choose the appropriateness of programs that work best for their business as we help to lower costs. We are continuing to innovate in driving greater affordability, transparency and improved outcomes for those we serve. Now, let me briefly recap our performance for the quarter and our outlook. In the first quarter, we continued to execute and perform well. We delivered for our customers, clients, and partners, and our business kept our commitment to our shareholders. We delivered adjusted EPS of $5.41 per share, and we're pleased to have increased our full-year outlook for adjusted EPS, revenue, and customer growth, as well as an improved medical care ratio. We are confident in our ability to continue to deliver and capture value in a dynamic and changing environment. We have shaped our business model to navigate varying economic conditions, and our differentiated capabilities within Evernorth provide us with the flexibility to meet unique client needs and potential changes caused by regulatory requirements. Additionally, our business is driving growth that is generating strong cash flows, and we are confident that we will further create value through successful and effective capital deployment. With that, I'll turn the call over to Brian. Thank you, David. Good morning, everyone. Today, I'll review The Cigna Group's first quarter 2023 results and discuss our updated outlook for the full-year. We're pleased with our strong start to the year, as first quarter adjusted earnings per share were above our expectations, demonstrating focused execution across our high-performing Evernorth and Cigna Healthcare businesses. Looking at the quarter specifically, some key consolidated financial highlights include revenue growth of 6% to $46.5 billion, after-tax adjusted earnings of $1.6 billion, adjusted earnings per share of $5.41, and cash flow from operations of $5 billion. This performance gives us the confidence to increase our full-year adjusted earnings outlook to at least $24.70 per share. Before I discuss our Evernorth results, I'll build on David's comments regarding our recent announcement to advance transparency around our PBM, and I'll provide incremental details on our earnings drivers. I'd first start with a level setting that of our operating platforms, Evernorth makes up approximately 60% of earnings and Cigna Healthcare is about 40%. Within Evernorth, our Express Scripts PBM is a foundational asset with a diverse set of earning sources, including service and administrative fees, clinical programs, and value-based care arrangements, along with retained rebates and retail spread. These earning sources are a function of the choices made by our clients. As David referenced, approximately 20% of Evernorth's adjusted pre-tax earnings are comprised of PBM retained rebates and retail spread. This percentage has decreased over time as we continue to expand fee-based client relationships and as our Evernorth portfolio becomes more diverse and continues to grow. Importantly, as Evernorth's business mix has changed over the years, margins have remained stable. This speaks to our flexibility to adapt to an ever-changing market and gives us confidence in our ability to navigate disruption in the operating or regulatory environment. As David mentioned, and I would underscore, our foundational PBM asset will continue to create and deliver significant value, which will allow us to sustain growth at attractive competitive returns. Shifting to our current period Evernorth results, first quarter 2023 revenues grew 8% to $36.2 billion, and pre-tax adjusted earnings were $1.3 billion, in line with our expectations. Evernorth's results in the quarter were driven by continued strong growth in our high-performing specialty pharmacy business and our focus on affordability and delivering lowest net cost solutions for our customers and clients. Additionally, we continue to build our cross-enterprise leverage capabilities, providing an additional avenue for growth as we further deepen our relationships across Evernorth and Cigna Healthcare. We also continue to make strategic investments which serve to strengthen and grow our client relationships, expand our portfolio of products and services, and advance our digital capabilities. As it relates to our strategic partnerships, we remain on track in our implementation of the Centene contract that begins in 2024. Our collaboration with VillageMD is progressing and provides us an attractive opportunity to further accelerate our value-based care programs and capabilities. We will continue to expand these value-based solutions for the benefit of our Cigna Healthcare U.S. Commercial and U.S. Government clients, as well as other provider partners and Evernorth health plan clients. Additionally, we remain confident around the multiyear accelerating biosimilar opportunity with high visibility into expected savings for customers and clients in the second half of this year, consistent with our prior expectations and regardless of utilization shifts or product approvals in the market. Overall, Evernorth continues to perform very well. Our diversified set of earning streams, along with flexible financing models, enable us to innovate and adapt through dynamic environments. Turning to Cigna Healthcare, first quarter 2023 adjusted revenues grew 12% to $12.7 billion, and pre-tax adjusted earnings were $1.1 billion, slightly above our expectations. The medical care ratio of 81.3% was better than expectations as overall utilization came in slightly favorable. This was reinforced by our clinical engagement models and related affordability initiatives, as well as our continued pricing discipline. Turning to medical customers, we ended the quarter with 19.5 million total medical customers, growth of approximately 1.5 million customers since the end of 2022. This strong growth demonstrates the continued de-differentiation of our market-leading products and services. Our commercial customers increased 8% year to date, aided by the addition of a large fee-based health plan client that expands upon an existing Evernorth relationship. Even excluding this client win, we drove organic customer growth across all of our U.S. commercial market segments. In our U.S. Government business, we saw considerable growth in our U.S. Individual and Medicare Advantage customers, with MA growth of 10% on a year to date basis. Overall, Cigna Healthcare is off to a strong start in 2023 as we continue to deliver differentiated value and affordability to our customers and clients. Across our Evernorth and Cigna Healthcare platforms, we delivered strong first quarter financial results driven by our diversified portfolio of foundational and accelerated growth businesses, further bolstered by cross-enterprise leverage. Turning to our outlook for full year 2023. We have increased our expectations for full year 2023 consolidated adjusted revenues to at least $188 billion, enabled by continued growth and deepening customer relationships in Cigna Healthcare and Evernorth. We are also increasing our adjusted earnings per share outlook to at least $24.70 per share. Consistent with our prior commentary, we expect earnings this year to be back-half weighted, in large part driven by Evernorth's earnings ramp over the course of the year, with second half EPS contributing slightly below 55% of full year EPS. In Evernorth, we expect continued strong performance, all while investing in growth and innovation. We continue to expect Evernorth full year 2023 adjusted earnings of at least $6.4 billion. In Cigna Healthcare, we are raising our medical customer growth expectation to at least 1.3 million customers, an increase of 100,000 lives. We are improving our 2023 medical care ratio outlook to a range of 81.5%-82.3%. We are raising our expected full year 2023 adjusted earnings to at least $4.425 billion. Despite the dynamic macroeconomic environment, we have yet to see material impact to Cigna Healthcare enrollment levels. We remain prudent with respect to our enrollment outlook for the rest of the year, as evidenced by our full year guidance relative to the first quarter customer growth results. To be clear, we continue to expect underlying organic employer client growth as we move through the year, and our outlook continues to assume some elevated disenrollment in the second half of the year, corresponding with some expected softening in the economy. Additionally, as a reminder, our outlook does not contemplate incremental customer growth from Medicaid redeterminations. Finally, when contemplating The Cigna Group's performance under various future economic scenarios, it's important to keep in mind that we have strategically positioned the company's portfolio of businesses to be more diversified than it was in prior economic downturns. This gives us confidence and resilience to weather dynamic macroeconomic environments. Switching gears, let's move to our 2023 capital management position and outlook. Our debt to capitalization ratio is 42.2% as of March 31st. We expect to lower this ratio over the balance of the year, and we continue to target a long-term debt to capitalization ratio of approximately 40%. Year to date through May 4th, 2023, we have repurchased approximately 3.7 million shares of common stock for approximately $1.1 billion. For full year 2023, we continue to expect at least $9 billion of cash flow from operations. Our balance sheet and our cash flow outlook remain strong, benefiting from our highly efficient service-based model that drives strategic flexibility, strong margins, and attractive returns on capital. Now to recap. First quarter results were above our expectations, reflecting strong contributions across our diversified portfolio of complementary businesses. Evernorth continued to deliver strong results with the first quarter in line with our expectations, while Cigna Healthcare had a strong start to the year, giving us confidence to deliver on our increased 2023 EPS guidance of at least $24.70. We continue to expect 2024 adjusted EPS of at least $28, consistent with our prior commentary. Over the long run, we continue to expect average annual EPS growth of 10%-13% and are confident in our ability to adapt and navigate the operating and regulatory backdrop with our diversified business mix and complementary capabilities across Evernorth and Cigna Healthcare. With that, we'll turn it over to the operator for the Q&A portion of the call. Ladies and gentlemen, at this time, if you do have a question, please press star one on your touch-tone phone. If someone asks your question ahead of you can remove yourself from the queue by pressing star two. Also, if you're using a speakerphone, please pick up your handset before pressing the buttons. One moment, please, for the first question. Our first question comes from Miss Lisa Gill with JP Morgan. You may ask your question. Thanks very much. Good morning. David, thank you for all the comments around the PBM and profitability, et cetera. I guess my first question is really to understand where do you think the disconnect is from a legislative standpoint versus how the PBMs actually operate? Secondly, when we think about an employer, it feels to me that a lot of this legislation is going to take away that decision-making by the employer. What are employers saying to you around legislation? What are they saying to you around the selling season? Also if you can just give us an update as to how you're thinking about the 2024 selling season. Well, Lisa, you put a lot in there. Good morning, and thanks for the questions. Let me try to touch on each. First, as we step back, as I noted, we're quite proud of the results that we have delivered and continue to deliver in view that the PBMs using that acronym, but the pharmacy service organizations are the organizations that relentlessly work to improve affordability for the benefit of a broad constituency group. I think to your first question, if we step back, while we could point to tremendous results in terms of clinical trends, outcome, affordability, on average, less than a $1 increase in out-of-pocket costs for individuals, we do recognize, and I think this is part of the legislation or the legislative energy, the programs still don't work for everyone. For example, while the programs are designed to generate overall affordability, if there's a high deductible plan as an illustration, and in the month of January, someone hasn't hit their deductible and has a significant out-of-pocket for a pharmaceutical experience that creates a financial dislocation for an individual, that's a failure of the system, right? We need to step up to that. We need to innovate because that's an unintended consequence and a failure of a system. We can talk about the averages that we're proud of from an affordability, but we need to make sure we continue to innovate so it works for everyone. We could talk about the fact that we have leading breadth of network access through our pharmacy networks coupled with our home delivery. When you look at the uniqueness of America, some rural locations may not have the access or accessibility in a specific case, and therefore the market is not working for those individuals. You see some of the innovations we step forward on. Our Copay Assurance Program directly goes at the out-of-pocket predictability for individuals under a variety of circumstances. Our rural pharmacy and independent pharmacy initiatives go directly at specific actions to support individuals. The averages, when we sit and look at the data, is accepted. We need to do better, and we're stepping forward as a leader to do better from that standpoint. As it relates to employers, our retention rates and our new business growth rates reinforce the fact that by and large, employers see us as being successful. I would note that our ClearCareRx program that we just rolled out, that was two years in design, and we worked with about a dozen sophisticated, large employers to design those programs to work for them and work for us and how we could roll those out and scale. As we sit here today, we have hundreds of clients together with our Evernorth team and our Express Scripts team talking about future innovations. There remains high receptivity and high receptivity to the advancements we're making in terms of further transparency and clinical programs, but they like their choice. They like having the choice of financing mechanisms which we're aligned with. Then finally, maybe just to manage time. On the 2024 selling season, 2024 will be another year of growth for us in the Evernorth service portfolio. We will see strong retention. As I noted, our retention's historically been in the mid-90s or better. We will see strong retention, and we will see good growth as our products and programs resonate in the marketplace. Lisa, thanks for the questions. Thank you, Ms. Gill. Our next question comes from Mr. Steven Valiquette with Barclays. You may ask your question. Great. Thanks. Good morning. Regarding the Evernorth results in the first quarter, you mentioned they were in line with the expectations. Just with the script volume, though, being down, just curious to get more color on that. Also, I know you're not giving script volume guidance for the full year, but just curious if the trends in the first quarter are good, you know, run rates for the full year. Thanks. Morning, Steve. It's Brian. Yeah, as I mentioned earlier, our Evernorth results are very much in line with expectations for the quarter. One thing that's important to keep in mind, David mentioned 40% of the revenue in Evernorth now is derived from our specialty pharmacy business. As you can appreciate the specialty pharmacy script counts end up being dwarfed by the generics and the higher volume script counts that come through the PBM. It's a little bit misleading to look at the aggregate script counts for those reasons. I'd note our the revenue in the specialty pharmacy grew mid-teens year-over-year, so it was a very strong grower. You saw strong script growth in specialty, but again, it was dwarfed by the big picture of the PBM generic volumes moving around a bit. As you think about the overall script counts year on year, think of the client mix changes that occurred from 2022 to 2023 as driving a good bit of that, and that really drove the kind of flattish all-in script counts. As we look forward to 2024, obviously, we prepare to onboard Centene. You'll see a meaningful step-up in that metric. As I mentioned earlier, with the specialty pharmacy growing at such an attractive rate, it's a bit masked when you look purely at the script count metric. Hopefully that helps a bit. When you put all those pieces together, we're again confident and comfortable with the full year outlook in terms of Evernorth income. Perfect. Thanks. Thank you, Mr. Valiquette. Our next question comes from Mr. Nathan Rich with Goldman Sachs. You may ask your question. Thanks. Good morning. I wanted to go back to the PBM and the regulatory focus. David, you know, you mentioned that, you know, not all pharmacy benefit designs work for everyone. You know, the target, I think, of much of the legislation is focused on lowering out-of-pocket costs for patients. You know, you've had plan options in the past that address some of these areas. You know, I know you said that clients, you know, like having that choice, but is there any middle ground in terms of, you know, different solutions that you could maybe roll out more broadly that would address some of these pain points, you know, kind of proactively ahead of, you know, it maybe being forced legislatively? I guess kind of my follow-up to that is, you know, client preferences, I think, kind of change, you know, relatively slowly over time. I guess if we did see legislation go in place, you know, how quickly could you kind of shift clients to new payment models to kind of adjust to a new regulatory backdrop? Morning, Nate. First, on the affordability and the out-of-pocket, choices have been in the marketplace for some time. Important to note, by and large, as I noted before, on average, those programs are working well in terms of the balance of overall affordability. Plan sponsors make trade-offs in terms of how much is put in premiums, how much is put into benefits, et cetera, from that standpoint. Two, just pointing at a specific, 'cause you said, actions we could take. In 2019, we rolled out the first of its kind, the Patient Assurance Program for insulin-dependent diabetics, capped monthly costs at $25, full stop. There's 11 million people benefiting from that program today, as you see more focus relative to insulin. We can, have, and will from that standpoint. Second is you click down, 'cause in many cases, the devil's in the details. As you roll out new programs, you learn that, for example, some of the Copay Assurance Programs can work in an HRA program, but in some cases don't work in an HSA program because of the regulatory requirements of the HSA program. They'll only work for preventative drugs, but they won't work for a broader class of drugs. That now enables us to be more consultative with employers to make sure there's even a more pinpointed focus on benefit design and communication strategies as open enrollment happens. In some cases, an individual will enroll in an HSA, yet learn later that they have more dislocation in their out-of-pocket costs in a given month, from their copays. My point is. Actions taken, actions being taken, more precision that is necessary from that standpoint. As it relates to the how quickly we could pivot, we've proven tremendous flexibility in our model. Some of the additional data we're providing, we noted even last year at our Investor Day, we continue to push ourself with expanded disclosures, and you're seeing more and more. We can pivot. We will pivot. We will continue to offer choice. The tools exist today, as exemplary with our ClearCareRx program, to provide further choice that use different financing mechanisms. We are confident that we will be able to flex rapidly if necessary. We want to also ensure that we are a voice for employers to still work to preserve choices for them, as how they want to finance their programs, how they wanna manage their overall cost and predictability from that standpoint. To reassure you, we have ample flexibility to flex rapidly. Thank you, Mr. Rich. Our next question comes from Mr. A.J. Rice with Credit Suisse. You may ask your question. Hi, everybody. I guess I'll try to pivot away from the PBM discussion. In the prepared remarks, you mentioned your ongoing discussions with VillageMD about putting in place value-based contracting. I wonder if you can give us any further update on that. When you start to think about your 24 bids commercially or in MA, will any of those arrangements be part of the package that you offer or a factor in your bids? Since I'm asking about 2024, anything on the MA final rate notice and whether that changes your view on growth or margin trajectory that you're on in MA. A.J., good morning. You tucked a lot of questions in there, but let me start from the top. Relative to value-based care, before I get to Village first, we've had a long commitment and positive track record relative to value-based care programs. Our orientation, as you may recall, is oriented around partnering, using data, and collaborating with additional care extended resources to drive better, more consistent clinical outcomes and therefore overall value. Today, think about order of magnitude approaching 75% of our MA lives are in a value-based program. Depending on whether you're looking at commercial or individual exchange, 40% or 50% of lives benefiting from a value-based program. I'd underscore that we're seeing benefits from that in our continued market leading lower medical cost trend. Specific to Village, we're pleased to advance it even further, partnering more deeply with Village, and collaborating with them. There are many ways in which we'll collaborate with Village to further accelerate value-based care traction off of their already successful model. I would note and highlight, one of the portions that we are really excited about with Village is they've proven, their current value-based care approach for commercial as well as Medicare Advantage. Our model with them has the ability to design and benefit from not only commercial and Medicare Advantage, but ASO and guaranteed cost as we bring more Evernorth services and collaborate with them as we curate, more specialty networks, et cetera, going forward. As it relates to the part of your question, are there benefits in our current pricing, as a result of our Village initiative, they're starting to yield benefits already, starting to contribute to pricing in specific markets where the initiatives are underway, is the headline. As it relates to your last question relative to bid strategy, rate notice, et cetera, you should think about, our view is our net rate for 2024 approximates the industry average when you take all the puts and takes that are framed in. Secondly, as you know, we're in the latter part of the bid cycle right now, so it would be premature and inappropriate for me to speak in any depth relative to our specific pricing strategy for 2024. We're pleased with our growth in 2023. We're pleased to see the 10% that we've yielded to date and the traction in some of our markets that are maturing. We will work it on a market-by-market basis relative to the bid strategies and look forward to updates as we get into the second half of the year. Thanks, A.J. Rice. Thanks. Thank you, Mr. Rice. Our next question comes from Mr. Justin Lake with Wolfe Research. You may ask your question. Thanks. Good morning. I'll just echo how much we appreciate the comments on the PBM transparency there. Wanted to follow up with a couple things on the PBM. The first is, 20% of your profits come from those spread contracts and rebates. If the government did pass what they're talking about, you know, this year, how are your contracts structured such that, you know, you could pivot away? Is that something that would have to happen over time? You know, what would the near-term impact be versus the longer term? Secondly, you know, Dave, I've gotten a lot of questions on 340B, given what one of your peers talked about as a pretty meaningful headwind versus their expectations this year. Curious if you can give us some color there in terms of maybe what percentage of earnings come from 340B or how your outlook has changed there, within your expressed updates? Thanks. Good morning, Justin. I'm gonna take your questions. It's David. I'll take your questions in reverse order. Specific to 340B, we've seen some recent extrapolations of what potential exposure could be for us. Based upon what some others said or the size of certain others programs, I would start by saying we think those estimates are overstated. Now let me step back. By way of context, we do believe the 340B represents an important series of capabilities in many cases for hospitals to benefit from more affordable pharmaceuticals for underserved populations. Some pharmaceutical manufacturers have unilaterally removed or made it much more difficult for those hospitals to engender those benefits. By way of context, we saw a deceleration in our volumes in the first half of 2022. We saw that deceleration trough mid-2022. We saw volumes begin to increase in the second half of 2022 as different data sharing and other activities move forward. As it relates to our impact, we have factored into our plan for the year and our most recent updated outlook for the year, our best estimate, which includes some dampening of the overall program as it relates to our results. I would stress some of the extrapolations based on the size of certain others programs we think is overstated. This is manageable within our portfolio and not a material driver of the overall Evernorth portfolio. As it relates to your first question, which I really appreciate, Justin, I can't give you a precise answer to your question. If we take a theoretical and say that legislation is passed tomorrow, that creates an immediacy which we don't believe will transpire. In fact, you could look at some of the most recent dialogue coming out of committees and otherwise for the consideration of consideration of consideration being implemented in the latter half of 2025, for example. We don't think that theoretical exists. Having said that, you should think that we have contractual, by and large, contractual frameworks that take into consideration unanticipated, immediate legislative or regulatory movement. We don't believe that is the case. We will continue to advocate for our clients. We will continue to work to ensure that choice exists. As we've made clear, even with our ClearCareRx program, we have the tools and flexibility to deliver what a client wants from a choice standpoint, with or without sharing, and being able to earn a sustained, attractive margin for the value we create. Thanks, Justin. Thank you, Mr. Lake. Our next question comes from Miss Erin Wright, Morgan Stanley. You may ask your question. Great. Thanks. You mentioned some elevated disenrollment in the second half embedded in your guidance from a softening economy, and can you quantify that range, or how are you thinking about that, and what are you seeing now, and how did that change relative to what you were anticipating previously? Thanks. Morning, Erin. It's Brian. First of all, just would reiterate, we're really pleased with the strong growth momentum across the Cigna Healthcare portfolio when you think of our U.S. Commercial Medicare Advantage and our U.S. Individual businesses all showing strong year-to-date results, running ahead of expectations in aggregate for enrollment levels. That builds upon our really strong performance in 2022, where we added nearly a million customers across the Cigna Healthcare platform. As I mentioned, we are not yet seeing signs of economic pressure in our book. For example, the disenrollment levels in the most recent months are very much in line with historical norms. As I mentioned, we have assumed some level of elevated disenrollment in the back half of the year in order to be prudent. In addition to that, we typically see some in-year attrition within the U.S. Individual book over the course of a given calendar year. As I mentioned, we still see organic growth in net client counts in the U.S. Commercial business, particularly as the select segment continues its sales cycle through the balance of the year. Finally, we have not yet incorporated any assumption of potential volume for Medicaid redetermination, so that represents pure upside for us. Should we not see economic weakness transpire later in the year, or should we pick up some unexpected customers from the Medicaid redeterminations, we may have some upside in our Cigna Healthcare customer accounts. Final comment I'll give you just in terms of sensitivities. In prior economic downturns, we've seen for every 1% change in the unemployment rate, our commercial employer levels, enrollment levels will move by either 0.5%-1% as it relates to a 1% move in the unemployment rate. It gives you a sense for the sensitivity relative to the size of the book as you think about how to model the rest of the year. Thank you, Ms. Wright. Our next question comes from Mr. Kevin Fischbeck with Bank of America. You may ask your question. Great. Thanks. It seems like cost trend really wasn't a problem for you in the quarter, but still after earning season is basically over, still trying to reconcile the strong numbers from the providers and the med tech companies with the relatively solid numbers from the managed care industry. Can you help reconcile what seems to be an apparent conflict and any color on cost trend, particularly, I guess, through the quarter, and into this quarter would be helpful? Thanks. Morning, Kevin. It's Brian. Just a few thoughts for you in terms of the reconciliation to the provider side, et cetera. I'd start by saying we're pleased to have delivered another strong quarter here of MCR performance in line or better than expected, pleased to start the year in that position. You can think of that as a function of the strong progress we've made in recent years with our affordability initiatives. That includes items such as our provider contracting improvements, clinical program evolution, site of care optimization, along with our continued pricing discipline. All that served us well, all while allowing us to grow 1.5 million customers year to date. As you think about the first quarter specifically, the favorability that we saw was driven by lighter than expected viral or respiratory claims. In this case, think of COVID, flu, RSV in aggregate, running a little bit lower than what we had been expecting. Now, on the non-viral side, we had planned and priced for normalized utilization levels to transpire in 2023 that were more consistent with pre-COVID levels. And during the first quarter, that's what we saw. We saw non-viral utilization reflecting this more normalized pattern. Again, this was in line with our expectations that we had planned and priced for stepping into the year. Thank you, Mr. Fischbeck. Our next question comes from Mr. Gary Taylor with Cowen. You may ask your question. Hi, good morning. Quick question. Do appreciate the PBM disclosure because, obviously, if you're talking about 10%-15% of the company's total earnings that you expect to retain, it seems like the down 26% stock price is quite overdone this year, so I appreciate that. Are we gonna see some of that financial disclosure in the 10-Q when you talk about new disclosure? Will that be around some of the economics of retained spread and rebate? My second question is, we did see the Florida law pass, or I believe is gonna be signed or just was signed by the governor that would prohibit spread pricing in Florida across all lines of business. Just wondered what the, if you knew what the implementation date on that was and just how quickly you had to sort of move to address that in Florida? Morning, Gary, it's Brian. I'll take your first question. I think David will comment on the situation that you referenced in Florida. As it relates to the incremental disclosure, really those were designed today to give all of our investors some further context on the earnings sources within Evernorth, just given the amount of misinformation in the ecosystem. Alongside our 10-Q that we filed today, you'll find a supplemental disclosure that provides some additional qualitative information as well as some metrics that we think are important to help various stakeholders understand what the PBM does and doesn't do. Hopefully we find that investors look at that as useful information. As it relates to some of the additional data points David and I shared, for example, the 20% of pretax adjusted earnings associated with PBM retained rebates and spread. As we referenced, that percentage has declined over time. At this point, we're not necessarily intending to update that every quarter in the 10-Q, but we will obviously give you context for how the earning sources are evolving over time as that business continues to grow. David, you wanna comment on the? Sure. Trish? Good morning, Gary. Relative to the Florida activity, it's one of the two components we talked about. We talked about rebates. This is specific to your question relative to spread. We're still working through the details from a state standpoint. Interesting timing as well. We literally have our large client gathering that is taking place as we speak. This is a topic of discussion for clients in terms of digesting the ramifications. We'll have the ability to flex our capabilities, as I noted in prior questions, relative to this one aspect as it's implemented. I don't wanna go any further in terms of quantifying or otherwise. Big picture, it's manageable. Specifically, we'll work through client by client, the impacts relative to their respective Florida footprint and then considerations on a go-forward basis as to whether or not they wanna flex, financing mechanisms for other geographies going forward using our capabilities. We have the ability to flex, and we will be compliant obviously, with the implementation timeline. Great. Appreciate it. Thank you, Mr. Taylor. Our next question comes from Mr. Stephen Baxter with Wells Fargo. You may ask your question. Hi. Yeah, I wanted to ask about ClearCareRx. I guess first, how quickly do you think this model will be adopted? Is there any kind of target for this that you can share? Obviously, you know, your clients are sophisticated and have access to tools to evaluate your economics during RFPs, but how do you think about competitive dynamics of the industry as a whole over time could be progressing to explicit fee-based pricing models? Thanks. Good morning, Steven. The ClearCareRx program, as I noted previously, we've worked for about two years with a small number, think of a dozen large sophisticated clients to design this program, to work through the program, to perfect aspects of the program, and we're excited to roll it out on a more extensive basis. I would think about the addressable market as more the larger of the large clients working down, given the immediacy of pass-through and then the potential cash flow management ramifications that it creates from that standpoint. This will be another choice that's offered in the marketplace. I think to your broader question, infer to your broader question, the relentless ongoing commitment to innovation is mission critical in any industry. In this subset of our industries, it's mission critical. And we're proud of the fact that we have leadership relative to a variety of programs. As I mentioned, insulin programs, as we've talked before about our Embarc program on high-cost gene therapies, our SafeGuardRx program that is benefiting all of our clients relative to care management programs. TRCs, as you know, more therapeutic resource groups and centers that come together and focus on specific diagnosis and have detailed expertise, and then how they're coordinated with the medical professionals and how they're coordinated with the behavioral professionals are mission critical. The path of innovation and whether it is, to your point, a fee-based environment that transpires, may transpire. Having the choice, we think is mission critical. Finally, for you and maybe the broader audience. We may see some similarities as we've seen in the medical space, where as you think about our approach, in the medical benefit space, our approach was broad funding mechanisms and financing mechanisms, an agnostic model, meaning we could flex in any of them, whether it's self-funded, self-funded with stop-loss or risk management, a shared return model, or guaranteed cost model. We see those same trends manifesting in the pharmacy space, and we're in position to lead there. Largest of large employers, two years in its design. It's perfected, and it's ready to scale. We don't think the entire market shifts to this in 2024. We think there'll be more adoption of programs like ClearCare Rx, and we're happy to be the leader in the space. Thank you, Mr. Baxter. Our next question comes from Mr. Josh Raskin with Nephron Research. You may ask your question. Hi. Thanks. Good morning. I was hoping you could give us some more color on the individual book. It looks like it came in maybe 100,000 or so more than expected. Maybe where did those lives come from, and was that the reason for the increased total membership guidance? Maybe any early signs on utilization and other metrics that give you comfort on the that you priced that business correctly? Morning, Josh. It's Brian. Overall, the strong individual customer growth in 2023 you can think of as a combination of a few things. One, obviously, the industry had some strong growth rates from 22 into 23. We also had some new market entries, and there were some competitors that exited certain geographies where we participate in. If you think about the sources of that, our growth, it came from a combination of existing geographies and those three new states that we stepped into, which were Texas, Indiana, and South Carolina here in 2023. We did see the majority of our growth come from three states in particular, so Texas, Georgia, and Florida drove the majority of the growth, not any one specific city, 'cause we're in multiple locations in those states. Fortunately, we have a long history in these geographies that goes well beyond the U.S. individual business, meaning our commercial and MA businesses have been operating in those locations for some time. Our provider engagement in clinical programs should benefit these individual customers as well. For purposes of the claims experience and the margins, et cetera, for the 2023 calendar year, we continue to expect the margins on this book will run below our long-term goal, which is 4%-6%, and our Cigna Healthcare income and MCR guidance reflects this. We expect to run below that 4%-6% long-term goal. Given the substantial amount of new customers we've added in 2023, we think this is a prudent assumption to make from the standpoint of the margins running below that long-term target. While it's early in the year so far, the claims are largely in line with our expectations through the first quarter. Importantly, as you think about the first quarter actuals as well as our full-year outlook, we've assumed that we will be in a risk adjustment payable position for the 2023 plan year, despite the fact that we were in a receivable position for the 2022 plan year. Again, we think that's a prudent assumption to make at this early juncture in the year until later in 2023 when we see some industry-wide risk adjustment data that'll help us to recalibrate that assumption. As you think about the longer run, this is a book of business that does represent a source of future embedded earnings power that'll help contribute to the segment's long-term margin expansion and income growth. Overall, a good start to the year. Still a long way to go for the full year, and we think we've taken a prudent posture as it relates to the approvals. Thank you, Mr. Raskin. Our next question comes from Mr. Scott Fidel with Stephens. You may ask your question. Hi. Thanks. Good morning. Would be interested if you could maybe just drill in a bit more into your latest thinking on both the GLP-1 drugs and then the emerging Alzheimer's drugs. Maybe give us just some up insights from both the Cigna Healthcare and Evernorth business segment perspectives. Thanks. Morning, Scott, it's David. Clearly, the GLP-1 drugs have been in the press pretty significantly. By way of headline, we think the drugs and the the treatment protocols represent a positive step forward, specifically for diabetics. As such, we have coverage within our formulary. I would remind you that early on, when the first within the class came out, we actually stepped in with some value-based care arrangements with pharmaceutical manufacturers and have seen positive contributions for both the benefit of patients as well as our clients. To date, I'd also add that employers have had a more limited appetite to expand coverage beyond clinical diagnoses such as diabetes for certain lifestyle treatments. There has been some, but we've seen more limited adoption of that thus far. On a go-forward basis, we would expect this to have our P&T committee and our external clinical oversight continue to monitor the progress relative to ongoing testing development in this important class. I would take that trend and carry it across similarly relative to the Alzheimer's space. Clearly, a lot of interest, excitement, and demand for drugs within the Alzheimer's space to help a growing population confronting this challenging disease from that standpoint. We've seen more limited adoption thus far. We see some early data like you're seeing right now relative to next in class drugs seeming to demonstrate some promise going through FDA, working through CMS relative to Medicare reimbursement, and we will stay tightly aligned relative to that. On a final note, if you put a circle around this, I think inferred in the latter part of your question, you can think about these drugs as, in some cases, creating cost on the benefit side of the equation with an offset, of a benefit, clearly. You should also think about The Cigna Group's portfolio because of Evernorth as having some dimension of a natural hedge, given the size and sophistication and reach of our pharmacy and specialty pharmacy programs, and the breadth of the clients we're able to serve within that portfolio. We see this as a growth opportunity within the Evernorth portfolio, and the clinical depth we have in there in terms of coordinating services for individuals will be helpful in terms of ensuring that the value is delivered. Emerging space in both categories, some promise, early adoption, some track record in value-based care, and importantly, would underscore we have a natural hedge relative to some cost pressure you would think about in the benefit space for our high-performing services space. Thank you, Mr. Fidel. Our last question comes from Kevin. Mr. Kevin Caliendo with UBS, you may ask your question. Great. Thanks for getting me in. Getting back to the 20% of Evernorth earnings, does that include the ESI rebates and pass-through and spread? Does that also account for the medical profit, like the pharmacy profit in the medical segment as well, or is that separate? Since you've been in such a giving mood, can you provide us, is there any transparency around that number? Morning, Kevin. It's Brian Evanko. The 20% that we made reference to is the PBM retained rebates and the retail spread that comprise the Evernorth segment's contribution specifically. As with all of our clients of Evernorth, whether they be the Cigna Healthcare affiliated health plan or our unaffiliated health plan clients, they choose how they would like to use the pharmacy value that we create for them. To your question, if there are pharmacy earnings in the Cigna Healthcare segment, that's not reflected in the 20% metric. We're specifically dimensioning the Evernorth contribution. Like I said, the Cigna Healthcare health plan decides how they choose to deploy any value that's created from Evernorth, the sister company. David Cordani, maybe you wanna pile on here. Sure. Kevin, to add on that, as you think about the health plans that are served by Evernorth, if you consider the total cost of care, a health plan through their medical contracting, ancillary contracting, pharmacy contracting, behavioral contracting, aggregating total cost of care to generate their price point. In the case of a guaranteed cost offering or risk-based offering, the cost of the pharmaceuticals are baked into that from that standpoint. Whether that's commercial, individual exchange business, or a Medicare Advantage business for a health plan. That's value delivered, just like the value that's delivered for their medical contracting, their DME contracting, their behavioral contracting, et cetera, and part of their overall cost equation that they'll factor into the net pricing that they're offering to the marketplace. Appreciate it. Thanks, guys. Thank you, Mr. Caliendo. I will turn the call back over to David Cordani for closing remarks. Thanks again for joining our call today. Let me just reinforce a couple quick points. One, we are confident that we will deliver our increased adjusted EPS, revenue, and customer growth outlook for this year. To do that, our team remains focused on everyone we serve and is executing with good focus and discipline, all while we continue to innovate. We will also continue our leadership in working to improve healthcare, including our increased transparency, choice, and clinical programs to drive down further drug costs for our customers, our patients, and our clients. I would wanna underscore that the progress we continue to make all starts with and is fueled by the dedication and commitment of our 70,000 coworkers around the world, who I wanna thank for their commitment and demonstration every day to working to make a very positive difference in the people's lives we're able to serve, both formally, through our commercial relationships, as well as in the communities we serve each and every day. Finally, on the end, thank you for joining our call. As always, we look forward to our continued discussions in the future. Ladies and gentlemen, this concludes The Cigna Group's first quarter 2023 results review. Cigna Investor Relations will be available to respond to additional questions shortly. A recording of this conference will be available for 10 business days following this call. You may access the recorded conference by dialing 888-282-0036 or 203-369-3022. There is no passcode required for this replay. Thank you for participating. We will now disconnect.