Jul 30, 2026 earnings call — Evernorth specialty growth and Signature PBM transition
Cigna raised full-year adjusted EPS outlook to at least $30.45 after Q2 adjusted EPS of $7.78 and revenues of $71.7 billion.
Revenue $71.7B (est $70.1B) · EPS $7.78 (est $7.60)
Key quotes
"Specialty & Care Services delivered strong performance with pretax adjusted earnings growing 22% year-over-year to $1.1 billion, ahead of expectations."
"The team is making strong progress in the build-out of our Signature Pharmacy benefits model. We see significant early interest from health plans and employers as we prepare for our broader market launch in 2028."
"Our targeted use of AI is expected to cut time to therapy in half on average."
Analyst Q&A 10
Evernorth specialty vs PBM earnings
Q (Stephen Baxter · Wells Fargo): How will earnings grow within Evernorth for Specialty & Care and for Pharmacy Benefit Services? How do investments affect that pace?
A: Management said Specialty & Care beat expectations in Q2, driven by specialty utilization and fast adoption of biosimilars and specialty generics. They said this benefit came earlier than expected and is unlikely to repeat at the same magnitude in Q3 and Q4, but they still expect strong results in the back half of the year.
"So overall, we expect it to continue to perform well as we look through the back half of the year." — Ann Dennison (CFO)
PBM renewals and new business
Q (Lisa Gill · JPMorgan): What were PBM renewals and how large were new business wins? What did you see in specialty during the selling season?
A: Management said affordability and personalization are key themes in the selling season. They reported over 97% retention for the PBS business in 2026 and early indicators suggest mid-90s retention for 2027, and they said total new business secured for 2027 is above the prior two selling seasons combined. They also said Signature is drawing interest and Specialty & Care continues to benefit from secular tailwinds and growth in hospitals and health systems.
"Total new business already secured is above the prior two selling seasons combined." — Brian Evanko (CEO)
Commercial cost trend and risk adjustment
Q (Albert Rice · UBS): Is commercial medical cost trend still high single digits and is surgical trend moving it? Is GLP-1 affecting commercial costs? How meaningful was risk adjustment?
A: Management said they continue to see high single-digit cost trends and are not seeing a significant deceleration or acceleration. They said GLP-1 prescriptions decelerated a bit in Q2, which put modest downward pressure on PBS but was more than offset by Specialty strength. Management confirmed the 2025 final risk adjustment data and 2026 update matched their expectations and did not drive the quarter's results.
"So A.J., the release of the 2025 final risk adjustment data and also the June weekly update for 2026 confirmed our risk adjustment position, so results were consistent with our expectations, and it wasn't a driver for the quarter." — Ann Dennison (CFO)
Biosimilars' P&L impact and IDR exposure
Q (Charles Rhyee · TD Cowen): Do biosimilars shift economics from PBM to specialty and how does that affect rebates and fees? What is your exposure to IDR and stop loss?
A: Management said faster adoption of biosimilars and specialty generics is a multiyear wave that benefits patients and reduces net drug prices. They explained the economic effect moves results from Pharmacy Benefit Services into Specialty & Care, producing a net benefit to Evernorth, and said the IDR mechanism is being abused with high volumes concentrated among few providers. They added stop loss is tracking in line with expectations and was not a variance driver in Q2.
"However, we're seeing some clear abuses of the IDR vehicle in practice." — Brian Evanko (CEO)
How specialty gains offset PBM changes
Q (Justin Lake · Wolfe): Can you quantify how much specialty gains helped and how much PBM was offset by biosimilars and GLP-1 changes?
A: Management said Evernorth outperformed in Q2 due to faster specialty generic and biosimilar penetration and modestly lower GLP-1 growth. They said the strong Q2 benefit was earlier than expected and unlikely to repeat at the same level, and that modestly lower GLP-1 volumes in the back half will give back some of the outperformance, while they remain confident in the full-year outlook.
"So essentially, the outperformance in the second quarter is given back in the form of slightly lower GLP-1 volumes in the back half of the year." — Brian Evanko (CEO)
Signature model and PBS long-term growth
Q (Erin Wilson Wright · Morgan Stanley): Is PBS expected to be flat in 2027 and grow 2%–4% long term with durable margins? How is the Signature transition progressing with pharma and pharmacies?
A: Management said it's early to give formal 2027 guidance but the enterprise view remains consistent with delivering the 10% to 14% EPS algorithm. They said the Signature model is tracking well, aligns with Consolidated Appropriations Act timing in mid-2028, is getting positive market feedback from clients, manufacturers and pharmacies, will scale in 2028 with Cigna Healthcare insured book as early adopters in 2027, and they are confident Signature can yield margins around 4%.
"We're confident that ultimately, our Signature product will yield margins in that 4% range as you asked about, similar to what our legacy Pharmacy Benefit Solutions products were able to deliver." — Brian Evanko (CEO)
Cash flow, transition costs, risk reception
Q (Kevin Fischbeck · BofA): What free cash flow do you expect in the back half and how are transition expenses tracking? How are risk customers reacting to Signature?
A: Management said quarterly cash flow can vary with timing, Q2 is typically lighter, and they continue to expect operating free cash flow of approximately $9 billion with most of it back half weighted. They said Signature transition expenses are tracking to plan this year and expected to be similar in 2027 before ramping down, and that risk customers have been smooth so far because risk pricing already folds in plan costs and clients have been receptive during consultations.
"We continue to expect operating free cash flow of approximately $9 billion and that to be mostly back half weighted." — Ann Dennison (CFO)
Exit from exchange and redeploying capital
Q (Scott Fidel · Goldman Sachs): Will exiting the exchange business free capital and resources to emphasize other markets like national accounts or large group?
A: Management said they are focused on where they have a right to win and do not see a need to enter new end markets right now. They plan to keep investing in the U.S. employer business, see growth room in the under-500 Select segment, noted fee customers are up 5% year-over-year and stop loss is tracking for over $8 billion of premiums this year, and said the ACA exchange exit will cause modest stranded overhead and a modest capital release but nothing significant.
"Overall, we really like our positioning in the Cigna Healthcare business and do not feel any compelling need to enter different end markets at this juncture." — Brian Evanko (CEO)
Shields and hospital market opportunity
Q (Jason Cassorla · Guggenheim): Where are you seeing traction with hospitals and health systems after the Shields investment and what are expectations for penetrating that market?
A: Management said the Health System Services business targets hospitals and health systems building on specialty pharmacy expertise. They described a near $500 billion addressable market with about 60% direct-to-patient (where Accredo leads) and 40% provider-administered (where they are investing via Carepath, Verity and Shields). Shields serves over 80 sizable health systems covering more than 1,000 hospitals across 50 states, and growth opportunities include secular drug growth, more systems hiring management companies, and joint value creation with Shields and Evernorth.
"Shields is specifically focused on providing management services to health systems to operate their own specialty pharmacies, and Shields is the clear leader in the management services space." — Brian Evanko (CEO)
GLP-1 coverage and EnCircle impact
Q (Sarah James · Cantor Fitzgerald): After Cigna stopped employee coverage of Wegovy and Zepbound, are clients making similar coverage changes and how does that affect EnCircle growth?
A: Management said they discontinued financial support for GLP-1s for weight management in their employee plan in 2026 because net cost strained affordability, and they are offering a supplemental discount program and continuing coverage for diabetes. They said some clients are making similar coverage decisions causing a modest headwind to 2026 results that was offset by specialty strength, that EnCircle remains effective for employers who cover GLP-1s, and they offer a range of financing solutions from full coverage to sponsored or voluntary options.
"we did make the difficult decision during 2026 to discontinue financial support for GLP-1 drugs for weight management within our own employee health plan." — Brian Evanko (CEO)