Next session and to for joining us here today. I'm here with my colleague, Ryan Langston, and we're pleased to have Cigna as our next presentation and to present for the company of Ann Dennison, Chief Financial Officer, and Adam Kautzner, President of Express Scripts and Evernorth Care Management. maybe to kick things off, Ann, I think you wanted to have a couple comments. Sure. I'll be very brief. I just want to say a few things. We've reported our fourth quarter full year 2025 about a month ago. Really pleased with the results that we achieved in 2025. You know, 2025 with, you know, expectations that we shared, and we were able to, you know, keep those expectations steady and deliver on them in 2025, which I think is a differentiator for now in this space. We're excited about, you know, the FTC settlement and what that means. We've been, you know, for over a year now, building a new rebate-free model, which Adam's going to talk a bit about. We're excited for that. We're excited for the fact that, you know, PBM reform, when you put all these pieces together, we're positioned very well, in the context of, you know, the way that we're looking forward. We've been very deliberate in how we've shaped our portfolio of businesses. As we think about the long term, we have, you know, confidence in two things. One, delivering on at least $3.25 a share in 2026, and then delivering on our 10%-14% EPS long-term growth algorithm, over the long term. Great. I think maybe we're gonna switch it up a little bit and maybe let Ryan to kinda start, talk a little about Cigna Healthcare. Okay. Sure. Evernorth You know, stop loss, obviously a huge topic in 2025. I think fourth quarter came in just a little bit above maybe where we thought, but still, you know, overall, seems like the repricing on that product has been successful. Sounds like it'd be a little bit more successful going into 2026. Maybe, you know, in terms of recapturing margin and getting that business back where you want it, maybe in 2026, even into 2027, maybe talk about the steps you've taken and maybe further steps you could take as we move, you know, into next year. Sure. Just as a reminder, you know, at the end of 2024, we had some, you know, unforeseen trend in the quarter that we weren't able to price for in the 2025 cycle. Our commitment was about 1% margin recapture over a two-year period, most of which will happen in 2026 and in 2027. It's all about, you know, for us striking the right balance between pricing and persistency and recapturing that margin over time. We were successful in the 2026 cycle. We've got some more, you know, we've got some more to do in 2027, but we're on track to, you know, to achieve our goals of recapturing that margin over the two-year period. Great. Just from the fully insured standpoint, that part of the book, performed decent, pretty well in 2025. I guess maybe what are trends that you're assuming for the guidance in that range for that book and maybe just any particular pockets of utilization we should be worried about, plus or minus? I mean, we've talked about this a bit when you look at sort of trend in that book and more broadly, I'd point to three. The three largest contributors to trend that have held true for at least the last couple of years. One is behavioral health. Two is our specialty injectables, so specialty medicine. The third is inpatient surgeries. That has held true. We've planned for that. We continue to see those as the biggest, you know, growth, in cost in both, unit cost and in utilization across the book. We've planned and priced for that, going into this year. You know, we're working. Our consumer, the patient, is at the center of everything we do, so we are very focused on how do we bend that curve? What can we do in order to make, you know, those prices. I mean, a part of it's the rebate-free model, but we're doing things on the, you know, across the ecosystem in order to try to bend that cost curve. Got it. Charles? Okay. Obviously, rebate-free model you mentioned earlier, obviously been a big topic here. I guess the first question since the introduction of that at the, you know, at the third quarter, maybe talk a little bit sort of the reception from plan sponsors, in regards to that. Yeah, sure, Charles. Happy to do that. We're thrilled with the introduction of our new rebate-free model that we launched back in October. Receptivity so far has been very strong from a client perspective. They're certainly interested to learn more as our benefit consultants. It's unlike anything else that has ever been entered into in the market in decades. It is new, it's fresh, it's different. Yes, we did start with the consumer and addressing the challenges that a consumer has today around access, affordability, and ultimately improving overall patient outcomes. We've also been responsive to many of the components that you'll see within PBM reform. We're delinking our fees. It's gonna be a simple administrative fee that will be charged for our services. We are addressing the unpredictability of rebates today. If you look at Inflation Reduction Act, you looked at what's happening with Most-Favored-Nation biosimilars, rebates themselves have become a bit unpredictable in the market. We've had to adjust rebate guarantees because of it. From a client perspective, that's resonating. It also addresses, with this new model, the fiduciary component. There certainly have been concerns around fiduciary from an employer perspective. It addresses those types of challenges. Regardless of the positive feedback so far, we are still going to continue to offer a rebate model too, because we wanna make sure we're responsive to the market, we meet our clients where they are, and many of them might be on a different change curve than others. When you factor in PBM reform, though, we've been one step ahead of the market. We expect that most of the market will have to move in this type of direction to a flat-fee administrative type of market, for the long term. Maybe just to help the audience. In a rebate-free model, right, the way I understand it is that you are capturing sort of the discounts at the point of basically purchase between the pharmacy and the manufacturer, right? That when they are then billing to Cigna, then, you know, that's sort of what they're billing at, right? Their invoice cost. You've negotiated that discount for your book of business with manufacturers. Can you talk about how then the formulary still works within this kind of structure? Sure. Yes, happy to do that. The new rebate-free model is, you could call it a supplemental discount. We're gonna negotiate that directly with drug manufacturers, no differently than we negotiate other discounts with them today. This discount isn't gonna be retrospective. It's not gonna be based off a reconciliation or be opaque. It's gonna be clean, it's gonna be upfront. Members will be able to see it on the app when they go in to price those products and be able to then get that lowest net cost. That component of it is really exciting as we look forward to the future and the overall member access and member affordability, and it's responsive from a legislative perspective. From a formulary perspective, it essentially will function the same way as it does today. We will still be focused on lowest net cost. This new model is gonna still have a function for lowest net cost. I would, we expect formularies' decision-making to function in a very similar way as how they function today. We'll still be leveraging competitive classes and the competition in those classes and aggressively negotiating for those discounts. They just manifest as an upfront discount that's gonna be benefited by the consumer today versus a rebate that today may only be enjoyed by the employer. Can I ask kind of a simple question? I understand, like, what we're doing here allows the member to benefit from their upfront costs, isn't that really a, just a benefit design function? Like, there's nothing stopping employers today to change their deductibles or their coinsurance and payments to allow them to effectively capture the same value. Isn't that true? Employers could certainly adjust their benefits. If we were in a flat copay world, and if you paid $25 for every brand, right, this wouldn't be needed. Yeah. We all know the proliferation of deductibles, high co-insurances, and that's been the trend in the market. This is responsive to that trend. By us negotiating these discounts upfront, on average, a drug that has a discount today, it's about 30% off. These members, for the 10% of branded drugs and for those that have discounts within that 10%, it's gonna dramatically reduce their costs. It goes right at most of the cost that's in the system today, because although only 10% of prescriptions in America are brand drugs, they account for about 88% of the total cost, which is an astonishing figure. Yeah. I think one big question that we always get a lot is sort of what does the margin profile of the PBM look like into the future, particularly as you implement this new model? You know, one of the things you mentioned is, you know, we are de-linking fees from the price of drugs, and there's an administrative fee. I can understand maybe at the start, that means you can kind of reprice, you set that fee at what you were kinda making beforehand. When we look at drug price inflation versus, let's say, CPI, obviously there's probably gonna be a difference. How do you preserve sort of the economics as we go forward, would you say? First off, I would say with the Inflation Reduction Act and other changes that are happening in the market, drug price inflation, especially in competitive classes, you're gonna continue to see likely higher prices when they come out, but less inflation going forward than what we've seen historically. Non-competitive classes where effectively a drug has a monopoly, you may continue to see that type of inflation. In terms of our pricing, yes, we are de-linking our fees. We are going to have simple administrative fees. Those may be per member per month, or they may be a per prescription. Whatever a client wants to do, we'll be able to be responsive to those pieces. We will be able to, since we know our margin profile today, and for the different types of business, then what does that mean from an administrative fee? That will be converted. We expect that margin profile to be comparable. We do expect that we can continue to realize efficiencies every year, like we hold ourselves accountable to be able to do. There also may be, certainly yes, an increase in those fees going forward year-over-year. On top of that, though, we're continuing to build out additional products and services, especially in our clinical services area, where we're taking risk on improving patients' adherence, improving formulary compliance, and their overall health. We have today, medical data on over 40 million Americans, prescription data on over 100 million Americans. Leveraging all of that data, we're continuing to create new products and solutions which create additional upside as we sell in those additional products and services. That fee you can think of as being comparable where it is today and where it will be tomorrow within the new model. Got it. One of the big pieces, right, is the amount of investments that you've kinda called out over the next couple years. I think you've cited it roughly, call it $300 million per year, like in this year and into next year. I guess two questions. The first is sort of, you know, the, I think that was kind of an estimate that you gave beforehand. Maybe talk about sort of what you're deploying so far in terms of that $300 million target this year, maybe what are you spending it on in the, in the near term? Second, you know, should we expect these investments to continue past 2027 or does this actually become more of a tailwind as we think about 2028? Maybe I'll start, Adam, you can add anything that you'd like to add. As a reminder, coming out of the third quarter, we started to share this information. We didn't give a point estimate on the investments, but roughly in the range. What it represents for, you know, 2027, 2026 and 2027 is basically the investments that we are doing to support the launch of the entire new model, and that's, you know, transformational, as you can imagine. Investing in technology that needs to be retooled in order to handle this new model, investing in, you know, the people that need to work on the recontracting. You know, as Adam's talked about, you know, we're recontracting with manufacturers. There's a lot that goes into that. The investment, you know, and it has already started to some extent. We'll see more of it in the back half of this year than we will in the front part of the year. Again, we'll see roughly an equal amount in 2027. You asked about sort of does it, you know, just go away. In 2028, it starts to dissipate, and we would expect it to go away over you know, over time, but not all at one shot. Wanna maybe jump back, you know, to something that, Adam, you kinda mentioned before. If we think about the settlement with the FTC and the requirements there, as well as the PBM reform measures passed and the appropriations bill, right? A lot of it is around increasing transparency requirements, more visibility for plan sponsors as well. Maybe talk about sort of, you know, what you need to do outside of the rebate-free model to comply with those and sort of. You know, obviously, the rebate-free model aligns very well with those, but maybe talk about sort of what changes in the traditional model that you need to undertake to be compliant. Yes. So the, we're thrilled to have the global settlement with the FTC behind us. We certainly welcome the appropriations bill and PBM reform and what that may mean for patients long term. Both of those pieces, we walk into eyes wide open, yes, with the new model being fully responsive. You look at the key elements of those pieces, which are the rebate-free, but the additional transparency that we will continue to now be able to offer and expand, delinking our fees, the pass through, moving all ERISA plans to pass through once the appropriation bill goes into effect. We're already moving in that direction, right? Many of the key elements of the delinking, the full pass-through, those are all components that we are addressing today. Additionally, we are continuing to work to expand to make sure, whether it's within the FTC compliance of we're gonna be connecting to GoodRx. We're also gonna be connecting to many other direct-to-consumer and cash solutions across the market. We're expanding the functionality of what's called Price Assure. Price Assure will go out and look for the lowest price, whether it's cash, direct to consumer, or within the benefit. It's gonna pull that lowest price into the benefit. The benefit to the patient is we're gonna do the 18,000 safety and quality benefit checks on that prescription. We're gonna guarantee them the lowest price that exists out in the market. We're gonna apply it to their deductible. It's a big win from that perspective. We keep the script. The employer's able to keep that script in the ecosystem, and for the patient, they get the lowest price, plus all the safety and quality. Those are the types of changes we're making within the traditional benefit today and our ability to ensure that we can continue to offer a sustained benefit that is gonna transition to pass-through as well long term, post 2028 as the regulations are finalized for the appropriations bill. We welcome those pieces. We're well ahead of the market there. Us having new options and offerings and having spent the last year of thinking about this and putting into action a piece does keep us well ahead of where the market is. That's resonating with clients and benefit consultants because we're continuing to be innovative and responsive to what needs to get done. I asked at the beginning sort of the response from plan sponsors, but maybe talk a little about what the response from pharma manufacturers, you know, how's that been? Yes. We are actively engaged on a daily basis of talking with drug manufacturers about the new model, the rebate-free component of the model. Again, we're still gonna be negotiating rebates. We're still gonna have market-leading rebates, and that will be available within the traditional model. We're targeting the largest manufacturers to start with. We've tiered the manufacturers. We've had very productive conversations. We are gonna have to recontract the whole market. Same for pharmacies. Conversations are progressing well. They understand the benefit of this because they want what we want, which is lower prices for the consumer. Today, they offset that with their copay discount cards and those types of things. There's less of a need for those things if I'm lowering patient out-of-pocket on average by 30% on these branded drugs. That means we can go and extract more of that discount from drug manufacturers, what they're paying today, incorporate it into the base supplemental discount that we'll be negotiating for tomorrow. We also will be increasing the level of adherence for patients. There are about 10% of prescriptions that today go unfilled because of cost usually, and they're left at the pharmacy counter. We're gonna reduce that number by putting these types of actions in place, which is gonna expand affordability, access. Ultimately, that's good for drug manufacturers as well, and it's good for patients. There's a win all the way around that's resonating really well so far with manufacturers. You guys put out a target of 50% of your clients by for 2028. If I'm not mistaken, does that include the likes of Prime and Centene, and sort of your big, you know, TRICARE, or is that exclusive of those three? Some of those plans are already on, yes, very transparent models. We expect that many of those will continue to transition into the transparent models that they're already on today as part of what that base is. We do expect still for a large percentage of our commercial book of business, core employers and labor unions to also transition to the new model in 2028 and beyond. We do wanna continue to be responsive though and offer multiple different options to the market. Again, where PBM reform is going and where additional transparency requirements are going, this new model fully aligns with all of those pieces. When you incorporate in concerns around fiduciary and those types of things and the unpredictability of the current rebate model, we expect there's gonna be a lot of uptake of this new model. Got it. Wanna ask a little bit separate question. You know, Senators Warren and Hawley have reintroduced a bill in this Congress, you know, looking to separate, not just you guys, right? But just in general, you know, managed care from owning PBMs or pharmacies. Doesn't seem like there's a lot of appetite on Capitol Hill necessarily for this, but maybe talk through a little bit about what that means, you know, how could you respond, or how would you think to respond? Our organization steadfastly continues to stand for ensuring that patients have affordable access to medications in a fully transparent environment. Unfortunately, what Senators Warren and Hawley are calling for is in complete conflict with that. It actually reduces a consumer's ability for choice. It will increase the cost of medications and ultimately reduce overall transparency and could affect the health of those patients. Unfortunately for us, we aren't in agreement with those things. We actually challenged a similar type of bill that was in the state of Arkansas last year, and we didn't take that lightly. We did file a lawsuit. The judge did grant us an injunction there. Limiting choice and increasing costs for patients is not something that we are in agreement with. I'm not gonna expand any further on that one, but, That's fair. Yes. Maybe I wanna shift gears a little, talk a little bit more about specialty pharmacy. Obviously, you know, specialty and care services, you're kinda guiding to the higher end of your long-term, adjusted, you know, pretax income growth target of 8%-12%, this year. Maybe help us understand sorta what is underpinning sort of your expectations for that, to start. Sure. As you said, we're guiding to the top end of the range, and there's two components to that. One is the Shields investment. The other is the core, and I probably should have said those in the opposite way, is the core business and the growth that we're seeing there. When you think about the core business and what's driving the growth there, biosimilar adoption has been a tailwind for that part of the business. We've seen, you know. As we look forward to 2030, we've got about $100 billion of drugs that are expected to go the biosimilar route. We continue to play a leading position in that space. The adoption of biosimilars is a net positive to the organization. There's a net detriment to PBM, there's a positive to the consumer, and then there's a positive to the specialty and care business, but a net positive to us overall. When you think about sort of the biosimilar pipeline, you know, what would you expect, you know, Like what percentage would you expect to go through something like Accredo, or your own distribution, your CuraScript, you know, or versus just, you know, bringing those products to market? Is it an expectation that more of it goes through your own channel or, you know, how do you think about that? To you. If you look at the performance of the GoodRx Humira biosimilar, it's been very strong at Accredo. I would expect for first Zepbound that we, you know, we continue to see, you know, very strong offerings in that space too. Any others that are coming in the near term that you think is a good fit for GoodRx? We're always looking at different opportunities, that might fit the bill. The largest ones are certainly ones that we've talked about thus far. Those are the largest in the inflammatory class, which have driven so much of the share so far. There's less of an opportunity in biosimilars as you look out into 2027. Okay. Yeah. If you think about our 2026 guide that we've given, Humira, we've got vast majority is already on the biosimilar, and Stelara is a little less than 50%. As we look, you know, out for this year built into our expectations, is growth in both of them, with more penetration. With more penetration. Got it. maybe switch gears a little bit to Shields. Ann, you mentioned a little bit earlier, it's kind of an interesting investment to get into sort of the health system space. I think part of it seems like health systems are really actively building out their specialty pharmacies. It's a revenue stream for them. it's a way to keep in touch with patients once they get discharged. Talk about sort of how that fits into your strategy going forward. Particularly, it would suggest a way to play the channel that's growing outside of what you're traditionally doing, specialty pharmacy, or is there a way to kind of integrate both together? Charles, I mean, you said it exactly right. If you think about the specialty space with over $400 billion of total addressable market, and then if you split that down into, you know, the direct-to-patient portion of it, that's 60% of it, that's, you know, the space that we play in already. The other 40% is the provider-to-patient space, which includes where Shields is and where we are not an industry leader, in our current model. We're really excited about expansion into, you know, further into the other 40% of that addressable market. We think there's a lot of synergy between what Shields does and where we can play. If you think about CuraScript and our ability to, you know, distribute for, you know, Shields, and they're serving, you know, over 1,000 hospitals, 80 hospital systems across all 50 states, there's a lot of opportunity there. There are ways for us to help them with in-inventory management and other things in that same ecosystem, but we think there's a lot of synergies that we'll find working together and expanding our addressable market through the process. Got it. Maybe in the last couple minutes, switching gears a little, capital deployment. Obviously investments coming related to rebate-free model. You kinda talked about not to expect any kind of significant levels of share repurchase in 2026. Maybe just remind us why that's not necessarily possible given sort of what the cash flow profile looks like, and then maybe how we should. Would you expect that to pick up in 2027 as we move past this first year? Yeah. There's a couple of things to point out. What we are expecting a cash flow from operations of, you know, at least $9 billion in this year. Why we've sort of given the guide on share repurchases in the way that we've done it is less about the investments that we're making. You know, we're always prioritizing and making investments. It's more about the timing of our cash flows. If you look at last year, you'll see our cash flows were back half year weighted. We expect that again for 2026. We also ended 2025 with a 43% debt-to-capital ratio, and we wanna get that down closer to 40%. The combination of the back half waiting plus, you know, pushes our repurchases to the back half, and we get less of bang for our buck in terms of share count because of the timing of them. For 2027, I think it will. You know, we think repurchases are really attractive. We wanna do them as much as possible, especially at the price that we're at right now. Obviously, we'll be focused on them for 2027. It'll be about the timing of the cash flows, and we'd expect it to get back to more normal given where we expect to be on our debt journey. I see. The timing of when you expect the cash flows is really more about debt pay down short term. It's more about when the. Okay Net cash flows are coming. Yeah T he organization, but there's. In addition to that. In addition. W e've got debt pay down, so. Is there anything in 2027 that makes a kinda change again, or is it sort of more of an annual thing now that more of your cash flow comes in the back half? I think we'll see a more back half weight, but we won't have the debt repayments in 2027. Got it. You know, we're scheduled to get down to around 40 this year. We'll be able to put that capital to work a little earlier. That makes more sense. Maybe last question here on the guide, just kinda coming back to that. Obviously, you've kinda guided to at least $30.25. Maybe help us understand what areas in your business you think, you know, potentially presents opportunities for upside as we think. Sure. Through the segments. Yeah. Maybe I'd point to just a couple of things. Obviously, our guide is our best view, as we sit here today. On the Cigna Healthcare side, you know, a big component of the picture is the medical cost trend and has been elevated for multiple years now. If there's, you know, if there's, you know, some. I don't know if the right term is relief, but if it, you know, if it, if it comes in better than we expected, then, there's potential upside. I'd say, you know, within the Evernorth space, both on the PBS side and the specialty side, it could be, you know, a story of volumes. We've got expectations. We think our data and the way we're, you know, the way that we're, forecasting is pretty solid. There's always a chance that, you know, there's some outperformance in volumes there. You know, biosimilar penetration is kind of the same, along the same range. We've got an estimate, but it could go a little faster than we think. Okay. Great. Well, I think we're pretty much right on time here, so wanted to thank Ann, Adam, thank you for joining us today. Thanks, everyone. Thank you, everyone. Thanks for having us.