Cigna 2025-26: $7B FTC Settlement, FY26 EPS $30.25+
FY25 revenue $274.95B (+11%); Op income $9.13B (-3%); NI $5.96B (+74%); EPS $22.17 (+83%). EverNorth Q4 revenue $63.1B / pretax adj earnings $2.2B. FTC global settlement Q4 with $7B out-of-pocket cost relief over 10 years. New pharmacy benefit model launching. FY26 guide: revenue ~$280B, adj operating income $30.25+ per share, EverNorth adj earnings $6.9B+.
Key takeaways
- A pivotal year operationally. FY25 adjusted revenue $275B (+11%); adjusted EPS $29.84 (+9%). The structural read is the FTC pharmacy benefits settlement closing a multi-year regulatory overhang, and the launch of new pharmacy benefit model to consumers + clients.
- EverNorth $63.1B Q4 revenue, $2.2B pretax adj earnings. Specialty + care services $26.7B (+14%); pharmacy benefit services $36.3B with $1.2B adj earnings. EverNorth is now the dominant earnings engine.
- GAAP NI +74% to $5.96B reflects FY24 base normalization. FY24 had restructuring + medical loss ratio shocks; FY25 is the cleaner number. Adj basis +9% EPS is the underlying thesis.
- FY26 guide $30.25+ adj EPS — the floor. Up from $29.84 FY25 (+1%+ at floor; mid-single-digit upside likely). EverNorth $6.9B+ adj earnings (Q1 representing >20% of full year).
- $7B 10-year FTC settlement absorbs ~$700M/year in pharmacy benefit consumer relief — a structural cost but explicitly framed as "absorbable" within the new business model.
Business
The Cigna Group is a diversified healthcare services + insurance + pharmacy benefit company. Two reporting segments + corporate:
- EverNorth Health Services (~70% of revenue, growing): Pharmacy Benefit Manager (PBM, Express Scripts) + specialty pharmacy + care services + behavioral + Accredo specialty pharmacy + Evernorth Care Group + analytics. The PBM franchise is the largest in US (managing ~150M people's pharmacy benefits). Q4 specialty/care services $26.7B (+14%); pharmacy benefit services $36.3B with $1.2B adj earnings.
- Cigna Healthcare (~30% of revenue): Commercial + government health insurance — employer + individual + Medicare Advantage + government services. Supplemental + dental + behavioral. Lower-margin than EverNorth but provides whole-person care integration with PBM.
The strategic position: vertically-integrated PBM + insurer + care services. EverNorth's PBM scale (~$200B+ pharmacy spend managed) is the largest in US. The 2024 sale of Cigna's Medicare Advantage business to HCSC ($3.7B) completed the strategic refocus toward EverNorth + commercial + government services.
FTC pharmacy benefits settlement (Q4 2025): $7B in cumulative out-of-pocket cost relief to consumers over 10 years. Resolves multi-year DOJ + FTC scrutiny on PBM rebate practices + spread pricing. New pharmacy benefit model: more transparent pass-through pricing + direct rebates to plan sponsors.
FY25 financial performance
| Metric (FY) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue ($B) | 195.27 | 247.12 | 274.95 |
| Op income ($B) | 8.54 | 9.42 | 9.13 |
| Op margin | 4.4% | 3.8% | 3.3% |
| EBITDA ($B) | 10.85 | 11.45 | 11.61 |
| Net income ($B) | 5.16 | 3.43 | 5.96 |
| Diluted EPS ($) | 17.39 | 12.12 | 22.17 |
| Adj EPS ($) | $26.71 | $27.27 | $29.84 |
| FCF ($B) | 10.24 | 8.96 | 8.39 |
| Capex ($B) | -1.57 | -1.41 | -1.21 |
| Total debt ($B) | 30.93 | 31.97 | 31.46 |
| Dividends ($B) | -1.45 | -1.57 | -1.61 |
| Buyback ($B) | -2.28 | -7.03 | -3.62 |
The headline numbers + adjusted view:
- Adj revenue $275B (+11%); adj EPS $29.84 (+9%) — clean growth print.
- GAAP NI +74% reflects FY24 reset; FY25 is the cleaner organic number.
- FCF $8.39B (-6%) on FTC settlement timing + working capital.
- Buyback $3.62B FY25 — moderated from FY24 $7.03B which was elevated for share count cleanup.
Capital allocation
- Capex: $-1.21B FY25 (0.4% of revenue). Capital-light pharmacy benefits + insurance model.
- Dividends: $-1.61B FY25 (+3% YoY).
- Buybacks: $-3.62B FY25 (vs $-7.03B FY24). Material at scale.
- M&A / Divestitures: Medicare Advantage business sold late 2024. Continues focused-portfolio strategy.
- Debt management: Total debt $31.5B (-$0.5B YoY). Modest paydown.
- FTC settlement: $7B over 10 years (~$700M/year drag on EverNorth earnings).
FY26 outlook (per Q4 2025 call, 2026-02-05)
| FY26 guide | Range / point |
|---|---|
| Consolidated adjusted revenue | ~$280B |
| Adjusted operating income | $30.25+ per share (floor) |
| EverNorth adj earnings | $6.9B+ |
| Q1 represents | >20% of full-year EverNorth earnings |
| New pharmacy benefit model | Launching |
| FTC settlement cost | ~$700M/year drag (already in floor guide) |
Implied: FY26 EPS in mid-$30s range, with conservative floor $30.25. Bridge from $29.84 FY25:
- Revenue growth +mid-single-digit (organic + commercial Healthcare + EverNorth specialty)
- EverNorth pharmacy benefit model transition cost (~$700M)
- Operating leverage on rest of business
- Buyback contribution + tax efficiency
Key risks
- PBM regulatory environment: Despite FTC settlement, ongoing political/regulatory pressure on PBM rebate + spread pricing. Future legislative changes could compress margin further.
- Medical loss ratio: Cigna Healthcare segment exposure to claims trend. A spike (similar to FY24 issues) would compress segment.
- Specialty pharmacy concentration: GLP-1 + autoimmune + oncology spec pharma category drives meaningful EverNorth volume. Pricing controls would compress.
- Customer concentration: Largest plan sponsor relationships material; loss of major contract would compress EverNorth volumes.
- New pharmacy benefit model launch: Execution risk on transition. Customer + plan sponsor uptake matters.
- Government reimbursement: Medicare Part D + Medicaid commercial expansion exposures.
Bottom line
Cigna FY25 is the FTC settlement + pharmacy benefits restructuring year. Adj revenue $275B (+11%), adj EPS $29.84 (+9%), buyback $3.62B continued, debt held. FY26 floor $30.25+ adj EPS implies modest growth + new pharmacy benefit model launch + EverNorth $6.9B+ earnings. The risks are PBM regulatory continuation + medical loss ratio + customer concentration; mitigated by EverNorth scale + integrated care services + diversified end-market mix. At ~$275B revenue scale + ~3.3% op margin with adjusted operating leverage, this is the cleanest defensive healthcare services + insurance compounder.
Citations
- The Cigna Group FY25 Form 10-K (filed February 2026, SEC EDGAR).
- Cigna Q4 2025 earnings call, 2026-02-05 — adj revenue $275B (+11%), adj EPS $29.84 (+9%), EverNorth Q4 $63.1B / $2.2B pretax adj earnings, FTC settlement $7B over 10 years, FY26 guide (~$280B revenue, $30.25+ adj EPS, EverNorth adj earnings $6.9B+).
- Internal financial_statements view (consolidated annual + cash flow + capital return).