And then certainly, the continued growth in therapies like GLP-1s are is an area that’s a factor in our proposition overall. So you put together that kind of touched on a number of the different capabilities. When you put together that suite of capabilities, that ends up being a really attractive portfolio that we’ve had continued growth in the number of lives we’re serving, growth in our clients’ lives that enable us to deliver the numbers that we’re talking about. Overall, really excited about the momentum we’ve got going into 2024 and see ourselves as well positioned to deliver there and continue the trajectory beyond.
Operator: Thank you. Our next question comes from George Hill with Deutsche Bank. Your line is open. You may ask your question.
George Hill: Yes. Good morning guys. I guess just a couple of clarifying questions for me as it relates to MLR and the guide for ‘2024. You guys have kind of bumped up the medical cost expectations. Can you kind of disaggregate what you’re seeing by line of business there? And I just want to confirm that the MA business is still kind of included in the continuing ops in the MLR guidance for 2024, because I saw in the footnotes it’s kind of being carried as an asset held for sale. So, it just kind of like a, disaggregation of kind of medical cost expectations and trends expectations for 2024.
Brian Evanko: Good morning George, its Brian. So let me just take the MA question first and then I’ll get into the MCR. So as noted in my comments earlier, the Medicare Advantage business will continue to be reported through Cigna Healthcare through 2024. So all of our guidance whether that be the revenue guidance, the customer volume guidance, the earnings guidance, all assumes that the Medicare business will continue to be reported through Cigna Healthcare on an asset held-for-sale basis so, just to clarify that. So, all the metrics that you see line up with that basis. Within the MCR specifically, the midpoint of our guide obviously has a slight up-tick from where we were in 2023. Now important to step back and thank the 2023 MCR performance was favorable to expectations and the primary driver of the Cigna Healthcare income outperformance.
We’re just really pleased with the both quarter and full year coming in favorable to expectations. And as I mentioned earlier, the 81.3% full year MCR was 70 basis points better than the midpoint of where we had started the guidance early in 2023. So you can think of the primary driver of the slightly higher projected 2024 MCR as being our stop-loss products within the U.S. Commercial Employer business. As I mentioned earlier, these ran favorable to our target profit margins in 2023. And due to lower-than-expected cost trends in high-dollar claimants. For 2024, our planning assumptions are for the stop-loss products to normalize back into their typical target profit margin range. Secondarily, there is some product mix shift within the Cigna Health care portfolio between 2023 and 2024 that will impact the overall Cigna Healthcare MCR.
Although, I would note that we expect the overall Cigna Healthcare profit margin percentage to be higher in 2024 compared to 2023. And we’d expect that to land near the low end of our targeted 9% to 10% range in 2024. And then finally, when you think about our MCR guidance, as always, our guidance does have an appropriate level of prudence to start off the year.
George Hill: Thank you.
Operator: Thank you. Our next question comes from Josh Raskin with Nephron Research. You may ask your question.
Josh Raskin: Hi. Thanks. Good morning. I wanted to get back to the Healthcare Services Corp. divestiture. Why was the PDP asset included in that sale? I would have thought that, that would have had strategic value on the Evernorth side and that you have an advantage on the cost structure. And then similarly, including Care allies as well, was that more a tie-in to the Medicare Advantage business? And what does that mean for broad sort of value-based care network development at Cigna?
David Cordani: Good morning Josh, it’s David. Let me take a portion of your question and then ask Eric to expand. And I’m going to come at the latter piece of it in terms of care allies and BBC, et cetera. First, your statement is correct. The thing about the care allies is specifically focused on the MA portion of value-based care. So therefore, there’s alignment there. Stepping back on value-based care, we have a long history and again, a proven track record of delivering very strong positive results for the benefit of our clients, our customers and patients off of our value-based care orientation for commercial, for individual exchange, as well as for Medicare Advantage. As you know from our prior conversations, that’s been a partner and enabled model as opposed to an owned model, broadly speaking.
In terms of owning the care delivery versus partnering enabling. Additionally, I’d ask you to think about the commitment around that continuing. So our collaborative accountable care relationships for our commercial business and our exchange business continues on and our investment in and expansion of our Evernorth Accountable Care of capabilities as we support healthcare delivery system partners around their value-based care. That continues, including our strategic partnership with Village. So on the value-based care side of the equation, no change in strategy for us. this specific subset of our assets was solely aligned to the Medicare Advantage business. I’ll ask Eric to talk about the direction relative to PDP and our multidimensional services relationship there.
Eric?
Eric Palmer: Thanks, David, and good morning, Josh. So two things I would note for you, Josh here. First of all, as David and Brian had in their prepared remarks, we will have a multiyear services relationship between Evernorth and HCSC building on a relationship that already exists there. So Evernorth will have the opportunity to continue to provide services associated not only with the prescription drug element of this business, but some of the other clinical coordination and related capabilities. So we’re excited about that opportunity working to grow together. Specifically to the employer PDP item, you should think of here is Express Scripts continuing to be the face of the employer offerings and this being seamless with all of our clients and services with the role that will be played here around the insurance dynamics going to HCSC.
But again, this will be a set of relationships that Express Scripts and Evernorth will continue to manage from a relationship and account management perspective, and we’ll continue to be very involved in an area of focus for us. So overall, I’m very excited about the opportunity to continue to grow with another partner here.
Operator: Thank you. Our next question comes from Scott Fidel with Stephens. You may ask your question.
Scott Fidel: Hi. Thanks, good morning. Interested just now with the sale of the MA business, how your priorities for investment and for growth in Cigna Healthcare may change from that? And obviously, you talked about how you’ve invested a lot in Medicare. So that should free up capital to invest in other businesses. So curious in terms of how you’re thinking about where you can increase investment for growth in Cigna Healthcare, but also just how you’re thinking about the exchange business now against the exit from MA just around your overall risk business in Cigna Healthcare will now be probably more weighted towards text, which is a pretty volatile business. So curious just on your thinking about the exchange business and sort of how you – how now you’re going to sort of view that business post the sell VMA? Thanks.
David Cordani: Scott, good morning, it’s David. I think your umbrella tenant is right. So as I noted in my prepared remarks, the decision allows for sharpening of focus as we lean into our portfolio going forward. As you think about the investments, though, we have a long track record of making multiyear investments within our portfolio. So think about investments in a digital-first orientation and data-led capabilities continuing to invest in development of new programs and capabilities, be it what we talked about before with ClearCare or Pathwell capabilities. expanding the infrastructure and scale for a broader addressable market expansion and our proven CuraScript SD expansion as we face off and support a broadening array of health care professionals and integrated delivery systems.
And I mentioned to Josh, the Evernorth Accountable Care capability. So think about, broadly speaking, our investment strategy continuing to fuel a variety of items and finally, sustained affordability, be it on the medical class pharmacy cost for administrative leverage that we get out of machine learning and AI through that lens. As it relates to the question around exchange or otherwise, we’ve always viewed the exchange business as sitting between commercial as well as the government. Obviously, the government influences a meaningful portion of that through the benefit design and otherwise, yet we are able to successfully leverage our collaborative accountable care relationships. And as we’ve demonstrated now for about a decade, with the exchange business by taking a very targeted focus within that market from its inception in 2014 to today, we continue to see that as a complementary aspect to our business.
