The Cigna Group (CI) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us. My name is Nathan Rich, and I cover managed care here at Goldman. Our next session is with Cigna. We're joined by the company's CFO, Brian Evanko. Brian, it's great to see you. Sorry, I couldn't be there in person. COVID got the best of me. So had to sit this one out. But my colleague, Lindsay Golub is also hosting, and we really appreciate the opportunity to speak with you this morning.

Thanks for hosting us, Nate. Great to see you, at least virtually.

Yes. Well, we get to see each other at the Analyst Day earlier this month, and that's sort of where I wanted to start with the questions. So at the Analyst Day, you maintained the guidance for 6% to 8% revenue and earnings growth on a consolidated basis. There's a change in some of the components, I think slightly higher Evernorth growth, maybe offset by slightly a lower outlook for commercial, not big revisions. But can you maybe just go through at a high level, how your view of the drivers of business -- the business has changed as we look out over the next, like, 3 to 5-year period?

Yes. Sure, Nate. So in aggregate, the company expects consolidated revenue and income to grow on average 6% to 8% per year on a sustained basis and that ladders up with our capital deployment expectation of 4% to 5% EPS accretion from that to 10% to 13% all in EPS growth on a sustained basis. That's consistent with our prior targets in aggregate. To Nate's point, the components moved a bit. So we increased the growth outlook for our Evernorth business up to 5% to 7% per year on both the top and the bottom line. That's up from where it was previously, it was 4% to 6%. And if you recall back before Cigna acquired Express Scripts, that business has only been anticipating 2% to 4% annual growth. So significant growth that we've already seen in the last 3 years since the acquisition and now an uptick in the expected growth rate to 5% to 7% per year. That's predominantly driven by 3 things: 1, being we now have greater visibility into what we expect the biosimilar contribution to be for the Evernorth portfolio, and we expect that to be more favorable than our prior expectation; 2, our Evernorth Care services platform, which represents a variety of health-oriented capabilities such as behavioral health, virtual care, home-based care, amongst other things, we expect to generate a higher growth rate in the future to the tune of 10% to 15% or more annually. So that gives us a little bit more tailwind on the top and the bottom line in Evernorth; and then finally, the cross enterprise leverage opportunity we have with Cigna Healthcare, which is our U.S. commercial and U.S. government businesses, we see as providing additional revenue and income growth opportunity. So all of that contributes to the 5% to 7% average annual growth expectation on Evernorth. On the Cigna Health care side of the portfolio, which if you think about our 2 large segments, Evernorth and Cigna Healthcare. Within Cigna Healthcare, U.S. commercial, we have revised the growth down slightly. So it was previously expected to grow 8% to 10% per year. We now expect 6% to 8% average annual growth in that segment for 2 reasons. One, the business is now a lot bigger than it was. So if you rewind the clock just 8, 9 years ago, it's twice the size as it was 8 or 9 years ago. Secondly, our more recent experience has generated a 7% average annual growth rate. So we feel a 6% to 8% forward-looking growth rate is a prudent place for that business to be. And that continues to exceed market growth expectations because we have a significant opportunity to grow in the smaller employer segments, specifically the select segment, which is 50 to 500 sized employers where today, we only have 6.5% market share. So we see significant headroom to grow there, which contributes to above-market growth in the U.S. commercial part of the portfolio. So taken together, a little bit of uptick in the Evernorth growth rate, a little bit of a downtick in the Cigna Healthcare growth rate to be more in line with our expectations moving forward. But in total, very confident in our ability to deliver 6% to 8% average annual growth and 10% to 13% EPS growth.

Great. And then you left the guidance for the U.S. government business, largely unchanged, I think kind of low double-digit growth, kind of what we think would be sort of at or slightly above the market. 2022 came in below your expectations. I guess maybe what did you learn from the experience in 2022? And how are you going to address that and improve the performance of the business going forward?

Yes. So within government, we have Medicare Advantage, the individual exchange, and then we also have some smaller products. Maybe I'll talk about Medicare Advantage since it's the largest part of that portfolio. So as we stepped into 2022, we knew we needed to have some margin enhancement. So our bids were constructed to prioritize margin expansion. Additionally, we curtailed some of our investment in marketing and distribution at the end of 2021, realizing that we were likely not to see meaningful growth in '22. So all those things resulted in the growth being very flattish this year compared to where we were in 2021. On a forward-looking basis, we would expect Medicare Advantage to grow 10% to 15% on average in terms of the customers. And we would expect the all-in government segment revenue to grow 10% to 15% per year on average. And some of the things we learned kind of to the core of the question Nate, as we reflect on this past cycle, one, the provider network is extremely important in the M&A space. And we have some work to do in certain geographies to either expand the network or in some cases, make adjustments to it for affordability reasons. Two, Cigna has a meaningful amount of U.S. commercial employer customers who age into Medicare each year to the tune of about 150,000 people each year. We have not done a very good job of converting those individuals into Medicare Advantage offerings. That gives us a great opportunity moving forward. Third, I mentioned we curtailed our marketing investment a bit last year. We expect to see a step-up in that for purposes of driving 2023 growth. And then finally, our geographic expansion opportunities in Medicare are still significant. Today, we only have a footprint in about 1/3 of all of the Medicare geographies around the country. And so additional expansion there gives us some company-specific growth opportunity in Medicare, also some of the more recent geographic expansions we've done in '22, '21 and '20 have yet to reach full maturity. So taken together, all those pieces give us the confidence to return to a nice growth rate in 2023.

Great. One last high-level one on the guidance, and then I wanted to get into the 2 segments. Capital deployment, you highlighted the $40 billion of free cash flow that you expect to generate over the next 5 years. I think it's $28 billion after you take into account debt repayment and the dividend. Can you talk to us about how you're approaching and allocating between M&A and share repurchase and what that would look like both in '22 and then beyond. And then you did highlight potential for M&A in U.S. government. Is that more focused on breadth or depth? Do you kind of see it as a tool to kind of gain scale in Medicare Advantage or maybe on the exchanges or with the goal being the kind of expand into median market you're not in like Medicaid? Any thoughts you have there would be helpful.

Yes. So in terms of the numbers, your math is right on in terms of we expect to generate $50 billion of cash flow from operations over the 5-year period, '22 to '26. And when you reduce the other uses of that capital, we have about $28 billion that we forecast would be available for strategic M&A or share repurchases. Of course, that will be generated over time. That won't all be available at one point in time, it will be generated over the 5-year span. We would expect to have an end capital deployment strategy, A&D. So as you think about, we would expect to do some M&A and share repurchase. 2022, we've committed to do at least $7 billion of share repurchase, which is a meaningful amount, obviously, given our market cap. That follows in 2021 where we repurchased $7.7 billion of our shares. So '21 and '22 were very heavy repurchase years. In 2021, we did acquire MDLIVE right now. In 2022, we still have some firepower available for smaller acquisitions, which you should think of in hundreds of millions of dollars potentially single-digit billions of dollars range. And the M&A that we look for is really focused on 2 areas. One is U.S. government programs and services, and the other is in our Evernorth platform, specifically health-oriented capabilities to expand Evernorth care services chassis. So we're willing to look at acquisitions that fall into those 2 categories, whether they be small or large in the future. But importantly, larger acquisitions later beyond 2022, have to be strategically aligned to our company's goals, financially attractive, meaning accretive in year 1, and they have to be carrying a high probability of closing relative to antitrust reviews and other considerations. So any larger scale acquisitions have to meet those criteria. And to your point on what are we looking for in the government space specifically, I think of a couple of different things. One, in the U.S. government side of the Cigna Healthcare portfolio. Today, we have a small Medicare Advantage footprint. I made reference to earlier, about 1/3 of the U.S. is covered, we have no Medicaid presence at all, and we have a small individual exchange footprint. So any of those areas are of interest to us on the health plan side. And then over at Evernorth through our government programs and services that are interesting to us as well. So it could be either health plan or service-oriented as we think about where acquisitions could lie.

Great. Okay. I wanted to move into the segments and maybe starting with Evernorth. And the high level one, you're talking about the improvement in Evernorth's performance since you bought Express Scripts. It feels like the company hasn't gotten credit from a stock price perspective. I guess what do you feel like the market is missing? And I think at the Analyst Day, you mentioned some incremental disclosures that you may begin to provide around Evernorth's performance. What do you think would be most helpful for investors to track and maybe better appreciate the opportunity that you have with Evernorth?

Within Evernorth, there's a few things that I think are important to contextualize and then I'll get into the specifics here. One, at the Investor Day, we filed some of the differences between the growth profiles within the different sub businesses within Evernorth. So specifically, our pharmacy benefit services business, Express Scripts, which includes the benefits management capabilities and the home delivery. We characterize that as a foundational growth business, meaning predictable steady growth historically and going forward, and we would expect, on average, that will generate 2% to 4% average annual growth rates. The second component falls into what we call an accelerated growth category, and this is our specialty pharmacy. So for those of you not familiar with Accredo, we have approximately 25% market share today, rapidly growing, huge opportunity going forward. So a very differentiated asset, deep clinical expertise, and we have the most access to exclusive or limited distribution drugs in the United States. And today, this has been growing in the low double digits. We forecast moving forward, it will grow 8% to 10% per year on average in the future. The third component within Evernorth is the Evernorth Care Services platform. I made reference to this in an earlier question. We would expect this to grow 10% to 15% or more per year going forward, and that includes all of the health-oriented services outside the pharmacy swim lane when you think about virtual care, behavioral care, some of the home-based care that we already provide today. All those areas, we would expect to see outsized growth. And so taken together, you've got some lower growth, predictable stable businesses and then some higher growth businesses all within Evernorth, and so some of the disclosure that we would expect to provide. Some of them will occur on an intermittent basis when the needle has moved enough. Some of them we intend to eventually provide on a quarterly basis that will help investors track progress in those 3 sub-businesses I just made reference to, and there are some specific metrics that we're evaluating, providing as well. For example, today, about 7% of the drug spend that we impact has competition in its respective class. Over the next 5 years, we expect that to grow to 25% with biosimilars really coming online to a greater degree as well as continued innovation in the generic space. So those things we would expect to provide on a periodic basis to investors as well. So we're working through that as we speak, Nate, in terms of what will be intermittently disclosed versus what will be disclosed on a quarterly basis.

Makes sense. And I did want to ask on biosimilars because that seems like one of the key drivers over the next several years. You identified it as, I think, a $100 billion opportunity, HUMIRA being the largest of which, which we'll start to face competition next year. HUMIRA is already a highly regulated drug. So I guess, could you help us think about sort of the incremental value that you think can be realized with additional competition? Are there examples like Remicade or assembly? I know hasn't been on the market all that long, but would maybe that provide a guide or an example of what -- how investors should think about the opportunity with HUMIRA and the other biosimilars there to come?

Sure. Yes. So the $100 billion stat that we quoted is the total industry spend that we expect to be subject to biosimilar competition in the coming years. Today, Evernorth impacts about $30 billion of that $100 billion, just given our share in the space. So that's $30 billion of potential value creation for our clients and customers. We would expect to generate a certain amount of savings off of that $30 billion. And of that, we would expect a portion of that to be available for us to capture from the standpoint of our income. And actually, the research report you published a couple of weeks ago, Nate, I thought did a nice job of providing context on the market opportunities. And while I wouldn't necessarily bless the exact numbers that you put forth, it's a nice picture in terms of how to think about for naming the opportunity in the coming years as you look at the industry landscape. The Remicade assembly examples that you called out each of these drugs is going to have their own set of dynamics. So I wouldn't necessarily use Remicade, for example, to try to model HUMIRA when the biosimilar competition comes out because the Remicade introduction was largely in the medical benefit. We see, for example, HUMIRA on some of the other biosimilars, having more value in the pharmacy benefit. And so there's a little bit of apples and oranges there. And the pricing that is introduced by some of the biosimilar manufacturers could vary pretty meaningfully from what we've seen with the historical launches. So I would tend to think of HUMIRA is going to be its own animal. And a lot of dust still needs to settle on that because the more material biosimilar competition won't actually enter until the third quarter of '23. And so that's still a ways away as we sit here in June of '22. But we're very excited about the opportunity to create value and ultimately capture a portion of that for our shareholders.

And how should we think about that for HUMIRA? Because like you said, the biosimilars are going to be coming on at different points over the next year, it probably won't be until 2024 before you kind of see the full impact of competition. But just from a process standpoint, like how frequently can you update the formulary? Will the process look different by different lines of business between commercial and Medicare? If you could maybe just talk to that process, that would be great.

Sure. So our National Preferred Formulary, which is used by the majority of Evernorth's clients is updated twice a year. So we'll have the opportunity for a couple of updates to that. But importantly, our clients have the flexibility to have custom formularies as well. So we have a number of client specific formularies. So they can choose if they want to go to a more unique construct relative to what we've decided to prefer on the national formulary. With that said, we would anticipate later this year to have a little bit further clarity because the first, the Amgen biosimilar is projected to launch in February of '23. So we would expect to have a little bit further clarity on that, but then as I made reference to in July '23 is when the next group of biosimilars will be hitting the market. So we would expect there's going to be a lot more in the way of information as well as economic understanding as we get into '23. So at this juncture, it's -- we've made estimates for what we think will transpire, but we also expect '23 to be a bit more of a partial year effect due to the fact that the more significant competition won't be entering the market until the back half of the year. And we would expect '24 to be a more significant contribution year, '25 to be more given you've got additional biosimilars hitting in '24.

Okay. Makes sense. The other thing that's kind of come to the forefront again is around the regulatory front with the PBMs. I think there is a bill introduced in Congress at the end of May and then an FTC investigation announced into PBM practices. This one, I know these things come up from time to time, and it's kind of difficult to know what the outcome will be, but I guess do you have any kind of high-level thoughts on either of those? And I guess, from our standpoint, it seems like spread pricing is one of the things that's in question here. I guess, maybe how would you characterize the relative importance of spread pricing in the PBM model today versus maybe what it was in the past?

Yes. So I think if we start off with the problem statement here, I think we would all agree affordability of prescription drugs in the U.S. is still a problem, right? So at Evernorth and at Cigna, we don't step back and say, defend the status quo because everything is perfect. So we agree there needs to be changed, whether that's driving more competition through biosimilars or other methods to try to drive at that problem statement, which is affordability. So we start there. I think we all agree on that. Then you get into what's the solution and there are a lot of ideas that are advanced for potential solutions. Some of them misguided, some of them more thought out than others. We received the FTC inquiry last week. We'll fully comply with that. We'll work through the response over the course of the next few months. in conjunction with the FTC. The good news in the inquiry is it's pretty open-ended. So I know you made reference to spread pricing. It didn't necessarily go after that in particular. It was more open ended, which gives us the chance for us to tell our story. And we're confident that when our story is more fully understood, not in the sound bites that sometimes come through the media, but more fully understood in a quantitative and qualitative way, that people will realize the role that pharmacy benefit managers play is to drive affordability on behalf of our clients and customers. And in the absence of our existence, there's no systematic way to guard against drug price inflation from the manufacturers. We play a critical role in driving competition and driving affordability on behalf of our clients and customers. And so we're confident that through this inquiry process through some of the other bills that have been advanced, our story will be better understood. And it will become clear that the world is better off due to the existence of companies like us. Importantly, though, Evernorth, as you think about the value creation and value capture levers, it's not geared to any one in particular. So if something were to transpire, for example, the DIR rule for 2024, that's in cube or something on spread pricing or something on rebates. We have enough levers to drive competition and therefore, lowest net cost that were not dependent on any one. And as a result of that, we'll be able to continue to create value and capture that value for our shareholders and deliver against our long-term financial commitments.

Great. I maybe wanted to move over to the Cigna Healthcare segment, maybe starting with the outlook for the commercial market. At the Analyst Day, you talked about a long-term outlook of kind of 0% to 1% growth for the market. How are you thinking about the outlook for next year, maybe relative to that 0% to 1% range? And can you maybe speak to some of the moving pieces? And then I think just generally, from a high level, it'd be great to get your view on kind of how you think about the company's exposure to either a recession or a softer employment backdrop and what impact that would have.

Sure. So a lot in there. In terms of the Commercial Employer segment though and how to think about the enrollment growth, we would expect on a sustained basis that you'll see a flattish enrollment for the industry, right? So across the industry, we're not anticipating meaningful growth in that space. With premium increases, though you get to secular growth rates in the mid-single digits, and so our expectation of driving 6% to 8% average annual growth over an extended period of time is slightly above that secular growth, predominantly due to the expected select segment growth that I made reference to in an earlier question. And as it relates to '23, in particular, at this point in time, we don't have a reason to believe that there will be a material variance from that 0% to 1% life growth number, up or down. With that said, we continue to remain respectful of what could happen with the economic conditions. Clearly, there's some increasing likelihood that transpired in recent days about a recession on the horizon, whether that be a shallow or a deep one remains to be seen. Importantly, as you think about Cigna in the context of economic stress or a recession, there are some things that actually work in our favor. There are some things that are more neutral and then there are some things that could be risk factors. So the things that tend to be more in the favorable categories, our Evernorth business, which represents, again, over 60% of the company tends to be a little more resilient to times of economic strain because things like medication adherence have always been part of our DNA. And when you think about specialty medications, which often are life or death, people will not forgo those even if there's economic strain transpiring. Two, within the Cigna Healthcare book of business, history has shown that when there is some economic pressure individual spending on out-of-pocket starts to decline a bit. So services that may be somewhat discretionary might be not consumed during times of economic strain. So that provides a little bit of potential favorability. And then within our capital management, our balance sheet, et cetera. We have more floating assets than we do floating liabilities. So if you see an environment where interest rates go up, that tends to be a good thing for us in terms of the effect on our balance sheet relative to assets versus liabilities. In terms of the risk factors, though, I'd be remiss not to call out if the U.S. employment market does take a structural hit that likely provides some volume risk for us as we think about the U.S. commercial growth outlook going forward. Now the offset to that is the subsectors in the industries where we participate tend to be a little more insulated and not necessarily as representative of the broader U.S. employment population. So we tend to have less exposure to leisure and hospitality, we tend to have a little more exposure to technology and consulting and spaces such as that. But again, I don't want you to take away that we're recession-proof by any means because if there's a recession, it likely would have some pressure on our commercial employment levels.

Great. One more on my end and then maybe we can just see if anyone in the audience has a question. But I wanted to ask about kind of cost trend? And obviously, when listening to the providers, they're facing some very tough cost pressures or wage pressures right now. I guess from a provider contracting process, how does that work? What are the negotiations with providers been like? And can you talk about maybe as you go through those negotiations for 2023, what you're kind of open to maybe a rate increase from a provider versus when you're going to -- when you would push back and how that kind of plays itself out into overall cost trend for your book?

Sure. So there's no denying that our health care provider partners are seeing the inflation work its way through their own wages. Important to bifurcate, though that -- which is structural, meaning where there's FTE wage inflation versus that, which could be temporary. If you think about contract labor pressures, which may subside in the future here. So when we get into conversations with providers about rate increases, we start with a fact-based, data-driven approach in terms of what information is available so that we can have a civil conversation in that regard. Most of our contracts are multiyear in nature within Cigna Healthcare in terms of the provider contracts. So on average, the median term is 3 years. So we don't have everything up for renewal in '23. Most of the '22 dollars are already locked up. Virtually everything is already locked up at this point from a unit cost standpoint. In '23, we'll have a certain percentage of the book that's up for renewal and renegotiation. We're in active discussion on some of those already, and some of them are still to come, then we'll have others that are locked for '23. They'll be reopened in '24, and then we'll have some others that reopen in '25. So we do expect, based on what we see right now, based on the negotiations that we've had to have slightly greater than average unit cost trend in 2023 compared to what I call a normal year. And you should think of that in the range of 0 to 100 basis points if the weighted average effect on our book of business above what we would normally see in a time when inflation wasn't spiking the way that it has in recent months. We've had very few requests to reopen contracts off cycle. And so far, we've been able to hold the line against those situations for the reasons that I articulated at the beginning.

Great. Well to just echo Nate's comments. Thank you all again for being here in California, and we have Cigna with us. Just wanted to open it up for any investors that have questions at this time. All right. Maybe I'll kick things off then. I have one on cross enterprise leverage, which sounds like an exciting opportunity for the company. You highlighted an incremental revenue opportunity of $10 billion to $20 billion from using Evernorth for more of Cigna's total cost of care. What solutions within Evernorth today can you better penetrate within your insured client base? And then once you do a pharmacy sold in, does it make it easier to get the client to add additional services? And have you seen any evidence of that?

Sure. Yes. So the cross enterprise leverage opportunity, we talked about at our Investor Day is a big opportunity for Cigna in aggregate. And as you mentioned, we see over the strategic horizon, the opportunity to add up to $20 billion of revenue to the franchise. Our longer-term guidance assumes that we execute against about $10 billion of that. So the additional $10 billion would be upside that we haven't contemplated in our guidance. The areas that we're particularly excited about there would be, for one, there are certain services which are going to grow at a more rapid rate than others where we already have penetration. So again, think mental health services, virtual care capabilities, et cetera. So we're going to get some natural lift from that. Two, there are certain clients today who maybe only have a medical relationship with us or they may have medical and pharmacy, but they don't have the other care services yet. And those represent opportunities for attachment of additional services. And we're seeing more and more demand from our employer clients not to buy a single point solution from a vendor but to buy something that's coordinated or orchestrated by a singular party, meaning us. And so we're seeing more and more demand for that to attach more services. And then finally, we'll have some new services that we introduced, either that we develop organically or that we purchased inorganically in the 2 M&A priorities I talked about earlier that will allow us to see growth in that cross enterprise leverage. The final thing I'd highlight is, as the Cigna Healthcare book grows, the pie gets bigger with which we can attach the Evernorth capabilities too. So you get value from additional services on existing clients, then you get value from the Cigna Healthcare by growing.

Great. Well, it sounds like there are a lot of different ways to attack that opportunity. I'll turn it back to you, Nate, for any final questions. Or actually, let me just check here. Any other questions from the audience at this time? All right. Yes. Go ahead, Nate.

Sure. Maybe in the minutes we have left. I have 2 to 3 more that I wanted to hit if we have some time. So I guess, first on the '22 guidance, sort of a 2-part question. So you reiterated the guidance at the Analyst Day. I don't know if you could maybe talk to what you've seen from a utilization standpoint in the second quarter and how that's played out relative to your expectations. And then more of a high-level question related to utilization. Hospital admissions still aren't back to pre-pandemic levels. But looking at indicators of demand, diagnostic rates, screening rates, stuff like that, it doesn't seem like there's pent-up demand in the system. What do you think might explain that difference?

Yes. So relative to the '22 guide and then I'll get to the second piece, you're right. We reaffirmed our full year 2022 EPS outlook of at least $22.60 per share at the Investor Day that we held 11 days ago and continue to be fully confident in our ability to execute against that commitment. . Sitting here in mid-June a couple of months into the quarter, understanding that the final month is still uncertain, and there's clearly a lot of decisions that also are made relative to where we set risk adjustment accruals and other things. The first couple of months of the quarter, when I look at the totality of both the enterprise as well as the subcomponents are running in line to slightly favorable to our expectations stepping into the quarter. But we thought it was prudent to reaffirm our full year guidance. Again, having respect for the fact that there's still another month to go, and our expectation that we're going to continue to make strategic investments in the back half of the year. So that's how I would encourage you to think about the '22 picture as we sit here today in the middle of June. As it relates to the secondary part of the question in terms of how do you square up what seems like lower admissions with other indicators we have seen in our data, in our book of business preventive care is at pre-pandemic levels, if not stronger, diagnostics and screening similarly. So we do not see any evidence of acuity spikes to come in the future or pent-up demand to come in the future. So in terms of how do you explain that? I think there are a couple of things I might offer. One is we, at least at Cigna have been intensely focused on site of care optimization. And so there have been a number of services that historically were consumed inpatient that are now consumed outpatient, and we think that's a structural change in a number of instances. So the one I've highlighted in other settings has been knee and hip replacements, used to be 80% inpatient, 20% outpatient, that has reversed. Now it's 20% inpatients, 80% in outpatient in round numbers, so that's an example of site-of-care optimization that allows you to reconcile at least partially the point you're trying to make. And we also think there was probably some unnecessary inpatient admits when you rewind the clock to a pre-pandemic basis. But again, in our book of business, we don't see any signs of acuity spikes or pent up demand that's on the horizon.

Great. The last one that I had, and then we can wrap up if there are no audience questions. The Cigna Healthcare margins, maybe a little bit below kind of the long-term range that you have. I guess, how do you see that playing out over the next several years? And one of the questions that we have is, the government businesses and maybe particularly MA have been competitive markets. I guess, are you willing to maybe accept lower margins, you kind of, for a period of time to get higher growth in those markets and kind of get back to that membership growth and revenue growth target that you have. And can you maybe just talk about your approach to that trade-off between margins and potentially faster growth?

Sure, Nate. So for the Cigna Healthcare segment, our target margin is 9% to 10% on a long-term basis. This year, our margin will end in the mid- to high teens relative to that 9% to 10%, so slightly below, which gives us the opportunity for some further margin expansion in '23, and we currently would expect to capture a portion of that. Importantly, though, if you bifurcate the Cigna Healthcare book of business a bit, the U.S. commercial piece of the business is operating near target margins. So we only need a little bit of further margin expansion there. We would expect to get some of that with pricing actions going forward. The government business is still operating below its respective target margins. And we would expect '23, but are likely to continue to operate below its target margins as we continue to make outsized investments, particularly in the Medicare Advantage and individual exchange businesses whether that's geographic expansion, whether that's technology, whether that's people. So we would expect that business will in '23, continue to operate below its long-term target. But that gives us opportunity on a multiyear basis to creep up towards the midpoint of the 9% to 10% all-in Cigna Healthcare range. And to your question on the elasticity or the willingness to trade some profit for some volume. We make those decisions on a geography-by-geography basis when we're submitting our Medicare bids where we're setting our individual pricing. And importantly, if there's a meaningful amount of elasticity between a 1% or 2% margin move, we might consider that. But we're also not willing to run at a 0 margin for an extended period of time. So we would fully expect that business on a glide path to achieve 4% to 5% margin and 4% to 6% in the individual exchange.

Awesome. Well, I think we're up on time. Brian, thank you so much for joining us this morning. I really appreciate it. It's very helpful. Sorry, I couldn't be there in person.

Well, next time, Nate. Thank you for the time.

Thank you.

Thank you. Take care.