Cigna Financial Model
Health Insurance Company Financials Example (Free Excel Download)
The Cigna Group is a global health company that operates a massive pharmacy benefit manager (PBM) and a major commercial health insurance business.
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About this model
This model evaluates the equity valuation and cash flow generation of The Cigna Group, specifically assessing the financial impact of the Q1 2025 divestiture of its Medicare business to HCSC and the margin expansion driven by Evernorth's specialty pharmacy growth.
The Cigna Group is a global health company that operates a massive pharmacy benefit manager (PBM) and a major commercial health insurance business. It provides coordinated health solutions, pharmacy services, and comprehensive medical plans to employers, government entities, and individuals.
Business segments:
- Evernorth Health Services (~80% of consolidated revenue before eliminations): Includes Pharmacy Benefit Services (PBM) and Specialty and Care Services. This is a high-volume, low-margin business.
- Cigna Healthcare (~20% of consolidated revenue before eliminations): Includes U.S. Healthcare (commercial employer plans, individual and family plans) and International Health. This is a lower-volume, higher-margin risk-bearing business.
Key geographies: Primarily the United States, with a smaller footprint in international markets for expatriate and global health coverage. Business model type: A hybrid of an asset-light, transaction-based services model (Evernorth) and a capital-intensive, risk-bearing insurance model (Cigna Healthcare). Competitive position: Evernorth (Express Scripts) is a top-three PBM in the US, competing with CVS Caremark and UnitedHealth's OptumRx. Cigna Healthcare is a top-four US commercial health insurer, competing with UnitedHealth Group, Elevance Health, and Aetna. Recent major events: On 19 March 2025, Cigna closed the sale of its Medicare Advantage, Medicare Part D, Cigna Supplemental Benefits, and CareAllies businesses to Health Care Service Corporation (HCSC) for $3.3 billion. This completely removed Cigna from the direct Medicare Advantage risk business, shifting its focus entirely to commercial insurance and Evernorth services.
The downloadable Cigna financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
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Statements always balancing
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Distinct schedules for clarity
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Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsCigna financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $174.07B | $180.52B | $195.26B | $247.12B | $274.90B |
| Gross profit | $56.52B | $55.68B | $61.46B | $64.61B | $59.91B |
| Operating income | $7.94B | $8.45B | $8.54B | $9.42B | $9.20B |
| Net income | $5.42B | $6.78B | $5.16B | $3.43B | $5.96B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Cigna
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Evernorth Health Services - Pharmacy Benefit Services
- Segment name: Pharmacy Benefit Services
- Revenue driver formula: Adjusted Pharmacy Scripts x Revenue per Script
- Historical growth rate: 4-6% CAGR
- Key growth levers and headwinds: Driven by overall prescription drug utilisation and the transition to a rebate-free pharmacy benefit model. Headwinds include intense regulatory scrutiny on PBM pricing and client demands for pass-through pricing.
- Pricing dynamics: Contractual pricing with health plans and employers, heavily influenced by manufacturer rebates.
- Revenue recognition notes: Recognised when the prescription is dispensed or when the service is provided.
- Seasonality: Relatively stable, with a slight uptick in Q4 due to deductible exhaustion.
Evernorth Health Services - Specialty and Care Services
- Segment name: Specialty and Care Services
- Revenue driver formula: Specialty Scripts x Revenue per Specialty Script
- Historical growth rate: 15-20% CAGR
- Key growth levers and headwinds: The primary growth engine for the company, driven by the adoption of Humira biosimilars, GLP-1 weight loss drugs, and complex oncology treatments.
- Pricing dynamics: High-cost, high-margin contractual pricing.
- Revenue recognition notes: Recognised upon dispensing of specialty medications.
- Seasonality: Minimal seasonality.
Cigna Healthcare - U.S. Healthcare
- Segment name: U.S. Healthcare
- Revenue driver formula: Medical Customers x Premium Per Member Per Month (PMPM)
- Historical growth rate: 5-8% CAGR (excluding the 2025 Medicare divestiture impact)
- Key growth levers and headwinds: Driven by commercial employer headcount growth and premium rate increases. The exit from Medicare Advantage in Q1 2025 creates a permanent step-down in reported revenue for this segment.
- Pricing dynamics: Premiums are priced annually based on actuarial estimates of forward medical cost trends.
- Revenue recognition notes: Premiums are recognised ratably over the coverage period.
- Seasonality: Revenues are linear, but medical costs are seasonal.
Cigna Healthcare - International Health
- Segment name: International Health
- Revenue driver formula: International Customers x Premium PMPM
- Historical growth rate: 3-5% CAGR
- Key growth levers and headwinds: Driven by global expatriate assignments and local market penetration. Subject to foreign currency translation headwinds.
- Pricing dynamics: Contractual annual premiums.
- Revenue recognition notes: Recognised ratably over the policy period.
- Seasonality: Minimal.
Cost Structure
Variable Costs / COGS
- Pharmacy and Other Costs: This is the COGS equivalent for Evernorth. It includes the cost of prescription drugs dispensed and is presented net of rebates received from pharmaceutical manufacturers.
- Medical Costs: This is the COGS equivalent for Cigna Healthcare. It represents claims paid to hospitals, doctors, and other providers.
- Gross margin range: Consolidated gross margin is typically 8-10%. Evernorth operates at a 4-6% gross margin, while Cigna Healthcare operates at a 15-17% gross margin (the inverse of the Medical Care Ratio).
- Key input costs: Branded drug prices, hospital unit costs, and physician reimbursement rates.
- How COGS scales: Pharmacy costs scale linearly with script volume. Medical costs scale with utilisation and provider pricing.
Operating Expenses
- R&D: Not material or separately disclosed; embedded in SG&A as technology investments.
- SG&A: Selling, General and Administrative expenses. Due to the massive revenue denominator from Evernorth, the consolidated SG&A ratio is extremely low (5.3% in 2025). It covers broker commissions, claims processing, and corporate overhead.
- Depreciation & Amortisation: Significant amortisation of acquired intangible assets (typically $1.3 billion annually), primarily stemming from the 2018 Express Scripts acquisition.
- Stock-Based Compensation: Typically 0.2% of total revenue, included within SG&A.
- Restructuring / one-time charges: Occasional charges related to efficiency programmes or divestitures (such as the HCSC transaction).
Margin Profile
- Gross margin: 8-10% consolidated.
- EBITDA margin: Not typically used in this sector; analysts focus on Adjusted Income from Operations.
- Operating margin (Adjusted): 3-4% consolidated.
- Margin trend: Stable to slightly expanding, as the high-margin Specialty business outpaces the lower-margin traditional PBM business.
Balance Sheet Structure
- Total assets: Approximately $150 billion.
- Key asset categories: Investments (bonds backing insurance reserves), Accounts Receivable (from PBM clients and pharma rebates), and Goodwill.
- Goodwill & intangibles: Massive, representing over 50% of total assets (approximately $75 billion), largely due to the Express Scripts acquisition.
- Working capital profile:
- Days Sales Outstanding (DSO): 15-20 days.
- Days Inventory Outstanding (DIO): 5-8 days (pharmacy inventory turns very quickly).
- Days Payable Outstanding (DPO): 25-30 days.
- Net working capital: Typically negative, as the company collects premiums upfront and pays medical claims later, generating a float.
- PP&E: Minimal (less than 2% of assets), reflecting the asset-light nature of the PBM and insurance administration businesses.
- Right-of-use assets: Material but not dominant, representing leased office space and mail-order pharmacy facilities.
Capital Expenditure & Investment
- Capex as % of revenue: Approximately 0.5% ($1.4 billion annually).
- Maintenance capex vs. growth capex: Heavily skewed towards growth and technology (capitalised software for Evernorth platforms).
- Major capex programmes: Investments in digital health platforms, specialty pharmacy dispensing automation, and value-based care analytics.
- Capitalised software: Represents the majority of the capex spend.
- M&A pattern: Historically transformational (Express Scripts), but recently focused on divestitures (Medicare sale to HCSC) to streamline the portfolio.
- Typical acquisition multiple paid: Not applicable currently, as the company is deploying capital towards share repurchases rather than large M&A.
Debt & Capital Structure
- Total debt: Approximately $32-$35 billion.
- Debt/Capitalisation ratio: 43.0% at the end of 2025. The company targets a long-term ratio of approximately 40%.
- Credit rating: Investment grade (typically A- or Baa1 equivalent).
- Key debt instruments: Senior unsecured notes of varying maturities, supported by a revolving credit facility.
- Maturity profile: Well-laddered, with $2-$4 billion maturing annually.
- Interest rate profile: Predominantly fixed-rate bonds.
- Covenants: Standard investment-grade covenants; maximum debt-to-capitalisation limits.
- Share repurchase programme: Highly active. The company repurchased $3.6 billion in shares in 2025 and uses the majority of free cash flow and divestiture proceeds for buybacks.
- Dividend policy: The company pays a growing dividend. The quarterly dividend was increased to $1.56 per share in early 2026 (yielding approximately 2.0-2.5%).
Cash Flow Characteristics
- Operating cash flow conversion: Very strong, typically 1.5x to 2.0x of GAAP Net Income, driven by heavy non-cash amortisation charges.
- Free cash flow margin: 3-4% of total revenue.
- Major non-cash items: Amortisation of acquired intangible assets ($1.3 billion+), depreciation, and deferred taxes.
- Working capital cash flow impact: Timing of pharmaceutical rebate collections and medical claims payments can cause significant quarter-to-quarter volatility in OCF.
- Capex intensity: Very low, allowing for massive free cash flow generation.
- Cash tax rate: Typically tracks slightly below the GAAP effective tax rate of 21-22%.
Sheet Structure
- Assumptions: Hardcoded inputs for script growth, premium PMPM growth, Medical Care Ratio (MCR), SG&A ratio, tax rate, and share repurchases.
- Revenue & Gross Margin: Detailed build for Evernorth (Pharmacy Benefit Services, Specialty and Care Services) and Cigna Healthcare (U.S. Healthcare, International Health). Must include a negative adjustment line for Intersegment Eliminations.
- Income Statement: Consolidated view. Must explicitly show Pharmacy and Other Costs, Medical Costs, SG&A, and Amortisation of Acquired Intangible Assets to match the 10-K format.
- Medical Costs Payable: A specific roll-forward schedule for the insurance claims reserve (Beginning Balance + Medical Costs - Claims Paid = Ending Balance).
- Balance Sheet: Assets (highlighting Goodwill and Intangibles), Liabilities (highlighting Medical Costs Payable and Debt), and Equity.
- Cash Flow Statement: Standard indirect method, starting from Net Income, adding back Amortisation, and capturing working capital changes.
- Debt Schedule: Tranche-by-tranche breakdown of senior notes, interest expense calculation, and debt paydown mechanics.
- Shareholders Equity & EPS: Tracks share count reduction from buybacks, dividend payments, and calculates Adjusted EPS.
- DCF Valuation: Unlevered free cash flow build, WACC calculation, terminal value, and implied share price.
Key Financial Relationships
- `Evernorth Pharmacy Revenue = Adjusted Pharmacy Scripts x Revenue per Pharmacy Script`
- `Evernorth Specialty Revenue = Specialty Scripts x Revenue per Specialty Script`
- `Cigna Healthcare U.S. Premiums = U.S. Medical Customers x U.S. Premium PMPM x 12`
- `Consolidated Total Revenues = Evernorth Revenues + Cigna Healthcare Revenues + Fees/Other Income + Net Investment Income - Intersegment Eliminations`
- `Medical Costs = Cigna Healthcare Premiums x Medical Care Ratio (MCR)`
- `Pharmacy and Other Costs = Evernorth Revenues x (1 - Evernorth Gross Margin %)`
- `SG&A Expense = Consolidated Total Revenues x SG&A Ratio`
- `Adjusted Income from Operations = GAAP Net Income + Amortisation of Acquired Intangibles + Special Items (Net of Tax)`
- `Ending Medical Costs Payable = Beginning Medical Costs Payable + Medical Costs - Cash Claims Paid`
- `Ending Share Count = Beginning Share Count - (Share Repurchase Spend / Average Share Price)`
- `Adjusted EPS = Adjusted Income from Operations / Diluted Weighted Average Shares Outstanding`
Cross-Sheet Dependencies
- The Assumptions sheet dictates the growth rates and margin profiles on the Revenue & Gross Margin sheet.
- The Revenue & Gross Margin sheet feeds the top line and direct costs of the Income Statement.
- The Income Statement generates Medical Costs, which feeds the Medical Costs Payable schedule to determine the liability balance.
- The Income Statement (Net Income) and Medical Costs Payable (working capital change) feed the Cash Flow Statement.
- The Cash Flow Statement determines cash available for buybacks, feeding the Shareholders Equity & EPS sheet to reduce the share count.
- The Debt Schedule calculates interest expense, which feeds back into the Income Statement (requires a circularity toggle).
Sign Convention
- Revenue and Operating Metrics: Positive.
- Expenses on the Income Statement: Positive numbers on their supporting schedules, but subtracted in the Income Statement formulas to arrive at operating income.
- Cash Flow Statement: Cash inflows are positive. Cash outflows (Capex, debt repayment, share repurchases, dividends) are negative.
- Balance Sheet: Assets are positive. Liabilities and Equity are positive.
Things Most Likely to Go Wrong
- Failing to remove the Medicare Advantage business from the Cigna Healthcare segment starting in Q2 2025. The model must reflect a permanent step-down in U.S. Healthcare medical customers and premiums due to the HCSC sale.
- Ignoring Intersegment Eliminations. Evernorth provides PBM services to Cigna Healthcare. If you sum the segment revenues without subtracting eliminations, consolidated revenue will be overstated by tens of billions.
- Confusing GAAP Net Income with Adjusted Income from Operations. Management and Wall Street value the company on Adjusted EPS, which adds back the massive $1.3 billion annual amortisation of acquired intangibles.
- Applying the Medical Care Ratio (MCR) to total consolidated revenue. MCR only applies to Cigna Healthcare premiums, not Evernorth PBM revenue.
- Misunderstanding the SG&A ratio. Because Evernorth inflates the revenue denominator with pass-through drug costs, Cigna's consolidated SG&A ratio looks artificially low (around 5%) compared to pure-play insurers.
- Failing to account for stop-loss seasonality. Medical costs and the MCR typically spike in Q4 as patients hit their deductibles and out-of-pocket maximums.
- Overestimating capex. This is an asset-light business; capex should not exceed 0.5% to 0.6% of total revenue.
- Forgetting that share repurchases are the primary driver of EPS growth. The model must aggressively reduce the share count using free cash flow.
Validation Checks
- "Consolidated SG&A ratio must be between 4.5% and 6.0%; flag if outside this band."
- "Cigna Healthcare Medical Care Ratio (MCR) must be between 83.0% and 85.0% based on recent historical performance."
- "Intersegment Eliminations must be a negative value representing approximately 8-10% of gross segment revenues."
- "Debt-to-Capitalisation ratio should remain between 40.0% and 45.0%."
- "Capex as a % of revenue must not exceed 1.0%."
- "Adjusted Income from Operations must be greater than GAAP Net Income by at least the amount of intangible amortisation."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Operating Cash Flow must exceed GAAP Net Income (OCF/Net Income > 1.2x)."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Evernorth Pharmacy Script Growth | 3.0 | % | Reflects mature PBM market growth and client retention. |
| Evernorth Specialty Script Growth | 12.0 | % | Driven by strong demand for GLP-1s and biosimilars. |
| Cigna Healthcare U.S. Customer Growth (Post-2025) | 2.0 | % | Steady commercial employer market growth after Medicare exit. |
| Medical Care Ratio (MCR) | 84.4 | % | Matches actual full-year 2025 reported MCR. |
| SG&A Ratio | 5.3 | % | Matches actual full-year 2025 reported SG&A ratio. |
| Evernorth Gross Margin | 4.5 | % | Reflects low-margin, high-volume nature of PBM drug costs. |
| Effective Tax Rate | 21.5 | % | Standard corporate rate plus state taxes, net of minor credits. |
| Annual Share Repurchases | 4,000 | $ Millions | Aligns with management's aggressive capital return strategy. |
| Annual Dividend per Share | 6.24 | $ | Based on the $1.56 quarterly dividend declared in February 2026. |
| Cost of Debt | 4.8 | % | Weighted average interest rate on existing senior notes. |
| WACC | 7.5 | % | Reflects low beta of managed care and current risk-free rates. |
| Terminal Growth Rate | 2.0 | % | Standard long-term GDP growth proxy. |
Data Sources & Benchmarks
- Filings: SEC EDGAR for The Cigna Group (CI) 10-K, 10-Q, and 8-K filings. The Cigna Investor Relations page for quarterly earnings supplements.
- Key Peers: UnitedHealth Group (UNH), Elevance Health (ELV), CVS Health (CVS), Humana (HUM).
- Industry Data: Centers for Medicare & Medicaid Services (CMS) for national health expenditure projections, IQVIA for prescription drug volume and specialty pharmaceutical trends.
- Consensus Estimates: FactSet or Bloomberg for forward-looking Adjusted EPS and MCR consensus.
Sources
Do more with the Cigna model
Frequently asked
What does Cigna do and what are its main business segments?+
Cigna is a global health company that provides coordinated health solutions, pharmacy services, and comprehensive medical plans to various entities. Its primary business segments are Evernorth Health Services, which includes its large pharmacy benefit manager (PBM), and Cigna Healthcare, offering commercial health insurance.
How does Cigna generate revenue across its different business segments?+
Cigna generates approximately 80% of its consolidated revenue from Evernorth Health Services, a high-volume, low-margin business focused on pharmacy benefit management and specialty care. The remaining 20% comes from Cigna Healthcare, a lower-volume, higher-margin segment providing risk-bearing insurance plans.
What are the key assumptions for Cigna's revenue growth in financial models?+
Financial models for Cigna typically assume a revenue growth rate, with the provided model using approximately 6.19% for its FY2026–FY2030 forecast horizon. This growth is influenced by factors such as Evernorth's specialty pharmacy expansion and the strategic divestiture of its Medicare business.
What are the primary inputs for a Discounted Cash Flow (DCF) valuation of Cigna?+
Key inputs for a DCF valuation of Cigna include projected revenue growth, cost of goods sold as a percentage of revenue, and capital expenditure as a percentage of revenue. The model also considers the impact of the Q1 2025 Medicare business divestiture and anticipated margin expansion from Evernorth's specialty pharmacy growth.
Can I download an Excel financial model for Cigna (CI) and what is its forecast horizon?+
Yes, an Excel financial model for Cigna (CI) is available for download, providing a detailed financial forecast. This model typically covers a forecast horizon from FY2026 to FY2030, allowing users to analyze long-term financial performance and valuation.
How does Cigna's working capital profile impact its financial model?+
Cigna typically maintains a negative net working capital, as it collects premiums upfront and pays medical claims later, generating a significant float. This characteristic, along with quick inventory turns and longer payable days, is a key consideration when modeling the company's cash flow generation.
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