The Cigna Group (CI) Stock: A Health Services Giant Refocused and on the Rise
- 22 hours ago
- 5 min read
In the vast and ever-shifting landscape of the U.S. healthcare system, The Cigna Group has carved out a unique and powerful identity. While many of its peers are going all-in on vertical integration, Cigna is charting a different course. After a series of transformative strategic moves—most notably the blockbuster acquisition of Express Scripts and the recent, surprising decision to sell its Medicare Advantage business—Cigna has emerged as a more focused, shareholder-friendly, and high-growth enterprise.
The company is now a tale of two powerful platforms: a highly profitable, market-leading commercial insurance business (Cigna Healthcare) and a dominant, high-growth health services behemoth (Evernorth). This combination has turned Cigna into a cash-generating machine, and management is now returning that cash to shareholders at an aggressive pace through a rapidly growing dividend and massive share buybacks.
This strategic clarity and shareholder focus have caught the market's attention, yet the stock still trades at a significant discount to its peers. Is Cigna a deeply undervalued industry leader on the verge of a major re-rating, or are the ever-present regulatory risks in the healthcare sector a cap on its potential? This in-depth analysis will dissect the compelling investment case for The Cigna Group.
A Legacy Spanning Centuries: The History of Cigna Group (CI)
The Cigna Group boasts one of the most storied histories in American business, with roots tracing back to the 1792 founding of the Insurance Company of North America (INA), the nation's first stockholder-owned insurance company. The modern Cigna was formed in 1982 through the merger of INA Corporation and Connecticut General Corporation.
For decades, Cigna operated as a traditional, diversified global insurance company. However, the defining moment in its modern history came in 2018 with the $67 billion acquisition of Express Scripts, one of the three largest pharmacy benefit managers (PBMs) in the United States.
This was a monumental, landscape-altering transaction that completely reshaped the company. It pivoted Cigna away from being just an insurer and transformed it into a diversified health services giant. The Express Scripts deal provided Cigna with immense scale in the pharmacy supply chain and a vast new set of capabilities in managing drug costs, specialty pharmacy, and home delivery. It was this acquisition that created the powerful Evernorth platform, which has become the company's primary engine of growth and profitability.
More recently, in a move that stunned the industry, Cigna announced in early 2025 the sale of its Medicare Advantage (MA) business to Health Care Service Corporation (HCSC) for $3.7 billion. This strategic divestiture sharpens the company's focus on its more profitable commercial insurance business and its high-growth Evernorth platform, freeing up capital and simplifying its story for investors.
The Two-Platform Powerhouse: Cigna Healthcare and Evernorth
To understand Cigna today, you must understand its two distinct but interconnected business platforms.
1. Cigna Healthcare: The Commercial Insurance Leader
This is the company’s foundational insurance business. While it has exited the individual and Medicare markets, Cigna Healthcare is a dominant force in the U.S. commercial insurance market, providing high-quality health plans to large, national employers and small-to-medium-sized businesses. This is a highly attractive and profitable market, as large employers are generally more stable and less price-sensitive than government payers.
The Cigna Healthcare segment is a stable, cash-generating machine. Its focus on the employer-sponsored market gives it a high-quality book of business and insulates it from the regulatory volatility that has recently plagued the Medicare Advantage space. The steady stream of premiums from this segment provides the capital that fuels the growth of Evernorth and the company’s aggressive share repurchase program.
2. Evernorth Health Services: The High-Growth Engine
This is the health services platform that was built around the Express Scripts acquisition, and it is the undisputed growth and profit engine of The Cigna Group. Evernorth is a collection of best-in-class assets that provide a wide range of services to health plans, employers, and government bodies. It operates through three main divisions:
Express Scripts: The cornerstone PBM business. It leverages its massive scale to negotiate lower drug prices for its clients, manages a vast network of retail and mail-order pharmacies, and develops innovative clinical programs to improve patient outcomes and control costs.
Accredo: This is Evernorth's industry-leading specialty pharmacy. Accredo is focused on managing complex, high-cost therapies for diseases like cancer, rheumatoid arthritis, and multiple sclerosis. This is one of the highest-growth areas in all of healthcare, and Accredo’s deep clinical expertise gives it a powerful competitive advantage.
MDLive: This is the company’s telehealth platform, providing virtual access to primary care, urgent care, and behavioral health services.
The Evernorth platform is a high-margin, high-growth, and less capital-intensive business than traditional health insurance. Its success is the primary driver of Cigna's earnings growth and the key to the long-term investment thesis.
Financials: A Shareholder-Friendly Capital Allocation Machine
Cigna’s financial profile is a picture of strength and a testament to its shareholder-friendly strategy.
Consistent Growth: The company has a strong track record of delivering consistent mid-to-high single-digit revenue growth and, more importantly, consistent double-digit earnings per share (EPS) growth. This is driven by stable performance at Cigna Healthcare and robust, high-margin growth at Evernorth.
Aggressive Capital Return Program: Cigna has become one of the most shareholder-friendly companies in the healthcare sector. Management has committed to a powerful capital return strategy:
Rapidly Growing Dividend: After initiating a significant dividend in 2021, Cigna has increased its payout at a double-digit rate each year.
Massive Share Repurchases: The company is executing a huge share buyback program, using its immense free cash flow to significantly reduce its share count. This has been a major driver of its strong EPS growth.
Attractive Valuation: Despite its strong performance and clear strategy, Cigna stock often trades at a very low forward price-to-earnings (P/E) ratio, frequently in the low double digits. This is a significant discount to the S&P 500 and many of its large-cap healthcare peers, forming the core of the value investment thesis.
Fundamental Data
Go beyond the stock price with this deep dive into a company's core fundamentals.
🔖 Key Takeaways
The decision to invest in The Cigna Group is a decision to buy a deeply undervalued, shareholder-friendly leader in the health services industry. It is a bet that the market is overly pessimistic about the regulatory risks and is underappreciating the power and profitability of the Evernorth platform.
For the Value and Income Investor: Cigna is one of the most compelling opportunities in the large-cap space. The combination of a very low P/E ratio, a secure and rapidly growing dividend, and a massive share buyback program is a classic recipe for strong total returns. The investment thesis is that you are buying a best-in-class company at a bargain price, and the market will eventually recognize its true value.
For the Dividend Growth Investor: Cigna has quickly become a premier choice. While its history of dividend growth is shorter than some peers, the company's commitment to double-digit dividend increases, backed by strong free cash flow, is exceptional. It offers a unique combination of a solid starting yield and a high growth rate.
The Cigna Group has successfully transformed itself into a focused health services powerhouse. By shedding its lower-margin government business and doubling down on its commercial insurance franchise and the high-growth Evernorth platform, the company has created a clear and compelling path to value creation. While the risk of regulatory headlines will always be a factor, Cigna’s extremely attractive valuation and its aggressive commitment to returning capital to shareholders make it one of the most interesting and attractive investment opportunities in the entire healthcare sector.
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