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CIGNA ANNUAL REPORT 2020
A MESSAGE FROM OURPRESIDENT AND CEODavidCordaniBy all accounts, 2020 was an extraordinary year. Thehealth crisis, social unrest and political tensions thatunfolded could have each defined a year in their ownright; together they converged to create one of themost unsettling periods in modern history. Familiesand communities were rocked by fear, uncertainty,pain, loss and sorrow. It was a year that many of ushope to never see repeated. However, as I reflect back,I cannot help but also see the bright spots that werepart of the picture: the valuable lessons many of uslearned about compassion and empathy; the medicaladvances that led to the development of vaccines ata pace never before seen in human history; the joiningtogether of countless voices worldwide to demand amore equitable and equal society; and the remarkableresilience shown by so many in the midst of the year’srelentless challenges.As a global health leader, Cigna navigated 2020 bystaying focused on meeting and balancing the needs ofthose we serve and on keeping our promises. This meant: K eeping our purpose – to improve people’s livesby delivering health, well-being and peace of mind– front and center and taking meaningful stepsthroughout the year to fulfill this promise; T aking decisive action to support our clients,customers, patients, partners and communitiesin the wake of the global pandemic; 1 S peaking out against racism and reaffirming ourcommitment to diversity, inclusion, equity andequality, including by launching our Building Equityand Equality Program;2 and D elivering on our financial commitments to ourshareholders by growing our adjusted revenueby 14%, to 160 billion, and delivering adjustedearnings per share of 18.45 – consistent with ouroverall expectations.3, 4You can see the complete summary of our 2020accomplishments on the following pages.I couldn’t be more proud of the way our more than70,000 colleagues around the globe showed upevery day to ask what more they could do to be aforce for positive change, both inside and outsideour company. The results they achieved, for thebenefit of our stakeholders, are a testament to theirdedication and flexibility. It is a privilege to lead suchan extraordinary and caring team.MAKING HEALTH CARE MORE AFFORDABLEIS A TOP PRIORITY AROUND THE GLOBEHealth care costs continue to rise as populations ageand become sicker. In addition, in the United States,pharmacological interventions are exploding at arate and pace that far exceeds the growth of surgicaland medical device interventions – with spendingon pharmaceuticals increasing 26% per capita from2014 to 2018.5 That growth continues today withmany of the preventive, curative and treatmentinnovations coming from the pharmacy space. Oneday, hopefully soon, we could see new drugs cometo market to treat conditions such as Alzheimer’sSHAREHOLDER LETTER1
disease, heart disease and cancer. But with theseadvances come elevated costs – as many researchershave calculated that expenditures for prescriptiondrugs and other pharmacy services will continueto rise in the next 5–10 years. This underscores theneed to bring innovative thinking to the challenge ofaffordability by, for example, leveraging value-basedcare to drive access and care coordination, alignincentives, and lower costs; dramatically evolvingprograms for chronic care by eliminating cost barriersto treatment to incentivize 100% drug adherence; andtransforming business models to drive predictabilityand affordability for high-cost drugs.At Cigna, affordability will continue to be our numberone focus in 2021 – as we recognize that individualsand companies alike need affordable solutions thatenable them to achieve optimal health. Findinginnovative ways to help them do that is the centralunderpinning of our overall strategy.TAKING THE STIGMA OUT OF MENTAL HEALTHWe all know that 2020 has taken a toll on the mentalwell-being of many across the country. Many people arefeeling more isolated and lonely, and parents are feelingthe stress of managing kids’ virtual homeschoolingwhile trying to put in a day’s work. Studies haveshown surging rates of anxiety and depression amidthe pandemic.6 At the same time, Americans are lessequipped than ever to recover from these difficulties.Cigna’s 2020 Resilience Index found that resilience isat risk for more than 60% of Americans – and the mostaffected group is young adults age 18–23, the samegroup that self-classified as the loneliest generation inearlier studies we conducted.7Today, there is greater recognition of the link betweenmental and physical health – with the World HealthOrganization stating that “there is no health withoutmental health.”8 This proclamation is backed byscience showing that perceived stress is a risk factorfor illnesses such as type 2 diabetes and heart disease– and that someone with a chronic medical conditionis seven times more likely to have an underlyingmental health or substance-related illness.9At the same time, the stigma associated with mentalhealth persists, and those who most need help may2SHAREHOLDER LETTERbe reluctant to seek treatment. At Cigna, our goal isto ensure that our customers and patients receive thebehavioral health services they need. With the largestvirtual behavioral health network in the United States,we were well positioned to respond when demandfor behavioral health services rose dramatically in2020. Still, we continued to grow our virtual networkthroughout the year, increasing it by 150% to includemore than 52,000 providers.10USING TECHNOLOGY AND DATA TO ENHANCEACCESS TO AND PERSONALIZATION OF HEALTHVirtual care was widely embraced in 2020, but it’sjust the tip of the iceberg in terms of what’s possible.Technology is enabling people to become moreinvolved in their health than ever before, and it is a keydriver of the expansion of home-based care, thanksto innovations such as “smart glucometers,” whichremotely monitor the blood sugar levels of patientswith diabetes. Studies have long demonstrated thatinnovations like these can reduce the need for hospitalcare – and thus the costs – for patients managinga chronic illness.11 This type of rapid innovation willenable the delivery of more personalized care toaddress what people want and need, delivered whereand how they want to receive it.We believe that this type of care will also play animportant role in rooting out health disparities fromour health care system by expanding access toaffordable care and treatment that breaks throughcultural, social or geographic barriers. That’s whywe’re so excited about our recent agreement toacquire MDLIVE. This transaction will give us theopportunity to build a new model of care delivery,one that provides a connected experience withgreater affordability, predictability and simplicity.With the opportunity to serve millions more people,and with more personalized ways to deliver care, wecan have an even greater impact on our customers,clients and partners – including those in historicallyunderserved communities.12 These are just some ofthe ways that Cigna is thinking about – and forming– the future, to make it better. We recognize thatachieving our goals for an affordable, predictableand simple health care system will not be easy, but
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“ Affordability will continue to beour number one focus in 2021.”we are fully committed. The stakes are too high not tobe. We are well positioned to deliver on our purpose– to make a difference in the lives of those we serve.When you put it all together, our purpose and ourgrowth are inextricably linked: Our purpose fuels ourgrowth, and our growth enables us to broaden ourreach and impact. This translates into more lives tochange for the better and more resources to invest,all of which further accelerate meaningful valuecreation for you, our shareholders.A BETTER TOMORROWToday, as the number of COVID-19 vaccinationssteadily increases, communities around the globe arestarting to envision life beyond the pandemic. Onething is clear: The environment will continue to bedynamic for the foreseeable future. We still face manychallenges – from reinvigorating our global economyto achieving the “herd immunity” that will enable lifeto return to some semblance of normal. But 2020has shown us that we can tackle anything when wechallenge old ways of thinking and innovate together.RESHAPING THE FUTURE OF HEALTH CAREEven as we continue to address the challenges oftoday, we must prepare for tomorrow. The pandemichas spotlighted gaps in our health care system thatmust be addressed, and it has accelerated trendsthat are reshaping the landscape. At Cigna, we arenot content to simply watch from the sidelines –our purpose calls for us to be part of the solution.As such, there are a number of areas that we willcontinue to lean into in the year ahead that webelieve will make a difference for those we serveand for our company.For example, our community program launchedin Houston, Memphis and South Florida to elevatesupport and services for some of those areas’ mostdisadvantaged residents.13In addition, our International Markets team launchedan outreach program to encourage people andorganizations to check in on and support one another– as a way to strengthen emotional health and wellbeing amid the stress of the pandemic.14I’ll say it again: I’m proud of how Cigna delivered onour mission and lived our values during one of thetoughest years for health care in modern history. I’mequally energized by the opportunities that lie ahead.We have the team and orientation to createpositive action.We have the assets and capabilities within our threegrowth platforms – Evernorth, U.S. Medical andInternational Markets – to make a difference for todayand tomorrow.And we have a growth framework that guides us,each and every day, to extend our reach and impact.It is from this strong foundation that we are ableto meet the needs of those we serve and keepour promises, including achieving our financialoutlook for 2021.My colleagues and I very much look forward toanother successful year.D AV I D M . C O R D A N IPresident and Chief Executive OfficerSHAREHOLDER LETTER5
deliveringgrowthwithpurposeleadingthe wayTaking robust action since the start of theCOVID-19startof thepandemic.COVID-19 pandemic. Removed cost as a barrier15 PProtectedrotected customers from surprise bills andlowered prescription costs for the uninsured16xpanded virtual care three times and increased EExpandedon-demand mental health support partnerships17elped employers keep their workforce safe HHelpedand supported18 LLaunchedaunched the Brave of Heart Fund in partnershipwith New York Life Foundation to supportfamilies of frontline health care workers1962 0 2 0 AT A G L A N C E
delivering on acceleratingour missionour journeyChampioning affordable, predictableand simple health care.Delivering value Saved patients and plans nearly 45B20 10% improved pharmacy spend for clients20 44%% improved medical spend for ourintegrated clients21Partnership Innovation EExpandedxpanded virtual care and behavioral networks,and created new solutions and more value22Building on our foundation for positive growth. LLaunchedaunched Evernorth, our new brandfor our growing, high-performing health25services portfolio24 CCompletedompleted 6.2B 6.3B sale of Cigna’s group life,accident, and disability insurance business26to New York Life25 CCompletedompleted the integration of our combinationwith Express Scripts and delivered on our27integration priorities26Expansion 18% 18% membership growth in Medicare Advantage22 550%0% geographic footprint increase in individualexchange market23 18% growth in pretax adjusted income fromoperations for International Markets242 0 2 0 AT A G L A N C E7
takinga standExpanding and accelerating ourefforts to support diversity,inclusion, equity and equality. 60Mcharitable giving through28Cigna and Cigna Foundation2750,00028employee volunteer hours29Building Equity& Equality29Program launch30#1on Dow Jones Sustainability Index30for health services industry31Top 5032DiversityInc’s most diverse companies31“Best places to workfor LGBTQ equality”Human Rights Campaign33Foundation award3282 0 2 0 AT A G L A N C E
160B160B in adjusted revenues,representing growth34, 3435of 14%33,6.8B6.8B 18.45 adjusted income34, 3435from operations33,adjusted earningsper share1.6M1.6M200,00033cash flow from operations34relationships withhealth care providers,33clinics and facilities34mental and behavioralhealth care providersOVER 175MOVER175M70K 30 10.4B10.4B customer relationshipsemployees committedto changing people’slives for the bettercountries andjurisdictionsThe information provided is as of December 31, 2020, except where otherwise noted. All information subject to change.2 0 2 0 AT A G L A N C E9
Corporate & Board of DirectorsBoard of DirectorsIsaiah Harris, Jr.Independent Chairman of the BoardFormer President and Chief Executive OfficerAT&T Advertising and Publishing – East,a communications services companyDavid M. CordaniPresident and Chief Executive OfficerCigna CorporationWilliam J. DeLaneyFormer Chief Executive OfficerSysco Corporation, a food marketingand distribution companyEric J. FossFormer Chairman, Presidentand Chief Executive OfficerARAMARK Corporation, a providerof food services, facilities managementand uniform servicesElder Granger, MD, MG, USA (Retired)Chief Executive OfficerThe 5Ps LLC, a health care, education andleadership consulting firmGeorge KurianChief Executive OfficerNetApp, Inc.a cloud-led, data-centricsoftware companyKathleen M. MazzarellaChairman, President and Chief Executive OfficerGraybar Electric Company, Inc., a distributor ofelectrical, communications and data networkingproducts and provider of related supply chainmanagement and logistics servicesMark B. McClellan, MD, PhDDirectorDuke-Robert J. Margolis, MD,Center for Health Policy10C O R P O R AT E & B O A R D O F D I R E C T O R SJohn M. PartridgeFormer PresidentVisa Inc., a consumer credit companyWilliam L. Roper, MD, MPHFormer Interim PresidentThe University of North CarolinaSystem, a public higher education systemKimberly RossFormer Chief Financial OfficerBaker Hughes, an energytechnology companyEric C. WisemanFormer Executive Chairman,President and Chief Executive OfficerVF Corporation, an apparel andfootwear companyDonna F. ZarconeFormer President and Chief Executive OfficerThe Economic Club of Chicago, a civicand business leadership organizationExecutive CommitteeIsaiah Harris, Jr., ChairDavid M. CordaniJohn M. PartridgeWilliam L. Roper, MD, MPHKimberly RossEric C. WisemanDonna F. ZarconeAudit CommitteeKimberly Ross, ChairWilliam J. DeLaneyJohn M. Partridge
Compliance CommitteeWilliam L. Roper, MD, MPH, ChairEric J. FossElder Granger, MD, MG, USADonna F. ZarconeCorporate Governance CommitteeDonna F. Zarcone, ChairWilliam J. DeLaneyEric J. FossElder Granger, MD, MG, USAMark B. McClellan, MD, PhDFinance CommitteeJohn M. Partridge, ChairKathleen M. MazzarellaWilliam L. Roper, MD, MPHKimberly RossEric C. WisemanPeople Resources CommitteeEric C. Wiseman, ChairKathleen M. MazzarellaMark B. McClellan, MD, PhDExecutive OfficersDavid M. CordaniPresident and Chief Executive OfficerNoelle EderExecutive Vice Presidentand Chief Information OfficerBrian EvankoExecutive Vice Presidentand Chief Financial OfficerKristen LauriaExecutive Vice Presidentand Chief Marketing OfficerMatt MandersPresident,Government and SolutionsSteven B. Miller, MDExecutive Vice Presidentand Chief Clinical OfficerJohn M. MurabitoExecutive Vice President,Human Resources and ServicesEverett NevilleExecutive Vice President,Strategy and Business DevelopmentEric PalmerPresident and Chief Operating Officer,EvernorthJason D. SadlerPresident, International MarketsMichael TriplettPresident, U.S. CommercialTimothy C. WentworthChief Executive Officer, EvernorthOther OfficersJulia BrncicSenior Vice President,Chief Counsel and Corporate SecretaryTimothy D. BuckleySenior Vice President and TreasurerMary T. Agoglia HoeltzelSenior Vice President,Tax and Chief Accounting OfficerNicole S. JonesExecutive Vice Presidentand General CounselC O R P O R AT E & B O A R D O F D I R E C T O R S11
2021 Annual MeetingShareholder Account AccessThe Annual Meeting of Shareholders will be heldvirtually on Wednesday, April 28, 2021, at 8:00 a.m.ET. Information regarding how to attend will beincluded in the proxy materials for the Annual Meeting.Proxies and proxy statements have been made availableto shareholders of record as of the close of businesson March 8, 2021. On December 31, 2020, there were33,418 common shareholders of record.You can access your Cigna shareholder accountonline through the Computershare website,www.computershare.com/investor, or by calling800.760.8864.Financial InformationCigna’s Form 10-K, quarterly earnings releases andSEC filings are available online at Investors.Cigna.com.Offices900 Cottage Grove RoadBloomfield, CT 06002860.226.6000One Express WaySt. Louis, MO 63121314.996.0900Two Liberty Place1601 Chestnut StreetPhiladelphia, PA 19192-1550215.761.1000Direct Stock Purchase PlanShareholders can automatically reinvest their annualdividends and make optional cash purchases ofcommon shares.For information on these services, please contact:ComputersharePO Box 505000Louisville, KY 40233-5000Toll-free: 800.760.8864Outside the United States, U.S. territoriesand Canada:201.680.6578TDD: 800.952.9245Website: www.computershare.com/investor12C O R P O R AT E & B O A R D O F D I R E C T O R SDirect Deposit of DividendsDirect deposit of dividends provides a prompt, efficientway to have your dividends electronically depositedinto your checking or savings account. It avoids thepossibility of lost or delayed dividend checks. Thedeposit is made electronically on the payment date.For more information and an enrollment authorizationform, contact Computershare at 800.760.8864 or, ifoutside the United States, U.S. territories and Canada,at 201.680.6578. You can access your account onlinethrough the Computershare website,www.computershare.com/investor.Stock ListingCigna’s common shares are listed on the New YorkStock Exchange. The ticker symbol is CI.Transfer AgencyBy regular mail:ComputersharePO Box 505000Louisville, KY 40233-5000By overnight delivery:Computershare462 South 4th StreetSuite 1600Louisville, KY 40202Toll-free: 800.760.8864Outside the United States, U.S. territories and Canada:201.680.6578TDD: 800.952.9245Website: www.computershare.com/investorCigna OnlineTo access online information about Cigna, ourproducts and our services, visit Cigna.com.
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549(Mark One)FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2020OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toCommission file number 001-38769Cigna Corporation(Exact name of registrant as specified in its charter)Delaware82-4991898(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)900 Cottage Grove Road, Bloomfield, Connecticut06002(Address of principal executive offices)(Zip Code)(860) 226-6000Registrant’s telephone number, including area codeSecurities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on whichregisteredCommon Stock, Par Value 0.01CINew York Stock Exchange, Inc.Securities registered pursuant to Section 12(g) of the Act:NONEIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesNo if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Actwhether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerginggrowth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growthcompany” in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filer Smaller reportingEmerging growth company companyIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extendedtransition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of itsinternal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2020 was approximately 68.9 billion.As of January 31, 2021, 351,845,606 shares of the registrant’s Common Stock were outstanding.DOCUMENTS INCORPORATED BY REFERENCEPart III of this Form 10-K incorporates by reference information from the registrant’s definitive proxy statement related to the 2021 annual meetingof shareholders.
TABLE OF CONTENTSFREQUENTLY REQUESTED 10-K INFORMATIONRisk FactorsExecutive OverviewIndustry Developments and Other MattersLiquidity and Capital ResourcesCritical Accounting EstimatesSegment InformationRevenues by Product TypePage3453586065138142PageCautionary StatementPART IItem 1.Business.Overview.Evernorth.U.S. Medical.International Markets.Group Disability and Other.Data, Analytics and Technology.Investment Management.Human Capital Management.Miscellaneous.Regulation.Item 1A.Risk Factors.Item 1B.Unresolved Staff Comments.Item 2.Properties.Item 3.Legal Proceedings.Item 4.Mine Safety Disclosures.Information about our Executive Officers.1131015171920212222344848484849
PART IIItem 5.Item 7.Item 7A.Item 8.Item 9.Item 9A.Item 9B.PART IIIItem 10.Market for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities.Management’s Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”).Quantitative and Qualitative Disclosures about Market Risk.Financial Statements and Supplementary Data.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.Controls and Procedures.Other Information.50527677143143143Directors, Executive Officers and Corporate Governance.A. Directors of the Registrant.B. Executive Officers of the Registrant.C. Code of Ethics and Other Corporate Governance Disclosures.D. Delinquent Section 16(a) Reports.Executive Compensation.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters.144Certain Relationships and Related Transactions, and Director Independence.Principal Accountant Fees and Services.145145PART IVItem 15.Exhibits and Financial Statement Schedules.Item 16.Form 10-K Summary.Signatures.Index to Financial Statement Schedules.Exhibits.146155156FS-1E-1Item 11.Item 12.Item 13.Item 14.144145
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities LitigationReform Act of 1995. Forward-looking statements are based on Cigna’s current expectations and projections about future trends, eventsand uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statementsconcerning future financial or operating performance, including our ability to deliver affordable, personalized and innovative solutionsfor our customers and clients, including in light of the challenges presented by the COVID-19 pandemic; future growth, businessstrategy, strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the paceand extent of change in these areas; financing or capital deployment plans and amounts available for future deployment; our prospectsfor growth in the coming years; strategic transactions; and other statements regarding Cigna’s future beliefs, expectations, plans,intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of wordssuch as “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “may,” “should,” “will” or other wordsor expressions of similar meaning, although not all forward-looking statements contain such terms.Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differmaterially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to:our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changingindustry; the scale, scope and duration of the COVID-19 pandemic and its potential impact on our business, operating results, cashflows or financial condition, our ability to compete effectively, differentiate our products and services from those of our competitorsand maintain or increase market share; price competition and other pressures that could compress our margins or result in premiumsthat are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimatesrelated to expected medical claims; our ability to develop and maintain satisfactory rel
programs for chronic care by eliminating cost barriers to treatment to incentivize 100% drug adherence; and transforming business models to drive predictability and affordability for high-cost drugs. At Cigna, affordability will continue to be our number one focus in 2021 - as we recognize that individuals
