Cigna Group (CI -1.93%), a global health services company offering integrated medical, pharmacy, and specialty care solutions, released its second-quarter earnings on July 31, 2025. The company reported headline financial results (non-GAAP) that outpaced analyst expectations, with revenue climbed to $67.2 billion and adjusted diluted EPS was $7.20. Analysts had expected adjusted EPS (non-GAAP) of $7.16 and revenue of $62,571.45 million. The quarter featured broad-based revenue growth, driven by the Evernorth Health Services platform, though overall profit margins moderated and the company faced shifts in customer mix due to the divestiture of Medicare-related businesses. Overall, the period showed strong execution and ongoing investment in innovation across the enterprise.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Adjusted Diluted (Non-GAAP) | $7.20 | $7.16 | $6.72 | 7.1% |
| Revenue (GAAP) | $67.2 billion | N/A | $60.5 billion | 11.1% |
| Adjusted Revenue (Non-GAAP) | $67.1 billion | N/A | N/A | |
| EPS (GAAP) | $5.71 | $5.45 | 4.8% | |
| SG&A Expense Ratio | 5.1% | 6.1% | (1.0 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Cigna Group is organized around two primary business platforms: Evernorth Health Services, which provides pharmacy benefit services and specialty care, and Cigna Healthcare, which offers medical insurance plans in the U.S. and globally. By leveraging both platforms, the company aims to deliver integrated solutions across medical, pharmacy, and specialty categories. This dual-structure enables it to address the unique needs of diverse customer groups, from large employers to individual members.
In recent years, Cigna has focused on digital innovation and operational efficiency, investing in artificial intelligence, biosimilars, and customer experience. Key factors for ongoing success include its ability to innovate with digital-first offerings, maintain compliance in a physically and digitally regulated environment, and foster strong partnerships with providers and major clients. Regulatory compliance and risk management remain central to its business, given the industry’s complexity and evolving state and federal requirements.
Quarter Highlights and Key Developments
The quarter was marked by both revenue outperformance (non-GAAP) and significant changes in customer mix. Revenue surged 11%, easily topping consensus estimates by more than $4.56 billion (non-GAAP). Adjusted diluted EPS also edged out expectations, reflecting strong execution in both core and growth segments. Net income (GAAP) was $1.53 billion.
Evernorth Health Services, which includes the company’s broad pharmacy benefit services and specialty care, was the primary engine for this growth. Segment adjusted revenues increased 17% to $57.8 billion, while pre-tax adjusted income rose 5% to $1.70 billion (non-GAAP). Within the pharmacy benefit services product line, Adjusted revenue for Pharmacy Benefit Services grew 20% to $31.954 billion, driven by continued client expansion and new business. The specialty and care services sub-segment—covering complex, high-cost drugs and associated care management—saw adjusted revenues rise 13% to $25.9 billion, highlighting the increased demand for clinically intensive medications. Despite the revenue gains, the Evernorth segment’s pre-tax margin narrowed from 3.3% to 2.9% (non-GAAP, pre-tax).
Cigna Healthcare experienced an 18% decline in adjusted revenues year over year. This drop was expected, as it reflects the divestiture of Medicare businesses to Health Care Services Corporation (the “HCSC transaction”) completed on March 19, 2025. On a comparable basis (excluding the divested businesses), adjusted revenue in Cigna Healthcare rose 7% year over year, driven by stable performance in employer and international insurance offerings. The business saw its pre-tax adjusted profit margin improve slightly to 10.2%, though absolute profit declined 9% due to higher medical costs. A key industry measure, the medical care ratio (MCR), increased from 82.3% to 83.2%. This ratio captures the portion of premiums paid out for member healthcare claims; an increase typically signals higher claim costs relative to premiums earned. Cigna cited “expected higher stop loss medical costs” as the main cause, with management executing on multi-year plans to restore stop-loss product margins.
The company’s customer base saw mixed trends. Total customer relationships stood at 182.2 million as of June 30, 2025. Excluding the impact of the HCSC transaction, total customer relationships increased 2% from December 2024, but this reflects the removal of Medicare customers following the business sale. Pharmacy customer counts grew 3% from December 2024, reaching 121.9 million as of June 30, 2025. The medical customer base declined to 18.0 million, but remained roughly stable after adjusting for divestitures. even as major client contracts and portfolio changes impact short-term customer numbers.
Cigna also posted notable improvements in cost efficiency, as reflected by a decrease in the adjusted SG&A expense ratio to 4.9% from 6.0% (non-GAAP), reducing its Selling, General & Administrative (SG&A) expense ratio (GAAP) to 5.1% from 6.1%. reflecting a shift in business mix and strong revenue growth. On the capital deployment front, the company reported $2.6 billion in share repurchases year to date through May 1, 2025, and has signaled a continued focus on returning excess capital to shareholders, strategic M&A, and internal investment.
The period also saw continued emphasis on innovation. The company expanded digital engagement initiatives, including programs such as EncircleRx, inReachRx, and InGuide—tools designed to manage the costs and patient experience for GLP-1 prescription drugs, which are increasingly used for diabetes and weight management. Such clinical support models are aimed at both improving patient outcomes and helping corporate clients control pharmacy spending, particularly with high-cost drug trends growing rapidly. Notably, CEO David Cordani highlighted the “meaningful value” delivered through listening, adapting, and innovating to meet client and patient needs.
The divestiture affected year-over-year comparisons by reducing both reported revenue and customer counts within Cigna Healthcare. The company emphasized that apart from this portfolio shift, underlying fundamentals and customer retention remained stable, supported by a multi-year focus on capital discipline, innovation, and regulatory compliance.
Looking Forward: Guidance and Key Watch Areas
Leadership reaffirmed guidance for FY2025, projecting adjusted income from operations of at least $29.60 per share. At the segment level, Evernorth is expected to deliver at least $7.2 billion in pre-tax adjusted income from operations in FY2025, while Cigna Healthcare adjusted income from operations, pre-tax, is set for at least $4.125 billion in FY2025. The company anticipates a medical care ratio in Cigna Healthcare of 83.2% to 84.2% in FY2025. These figures incorporate the impact of additional share repurchases and planned dividend payments over the remainder of FY2025.
Management stressed that, despite exceeding expectations (non-GAAP), it chose not to raise full-year guidance, pointing to ongoing expense pressures—especially in stop loss insurance and rising medical costs. Investors will want to keep an eye on margin trends in both Evernorth and Cigna Healthcare, as well as the broader impacts of industry regulation, client concentration, and innovative product launches in high-cost drug management. Ongoing legislative activity in states such as Arkansas, targeting regulations of pharmacy benefit managers (PBMs) and specialty pharmacies, is also a key area to monitor given the potential business model impact.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
