Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Condensed Consolidating Financial Information

Note 17 – Condensed Consolidating Financial Information

Effective upon closing of the Merger on December 20, 2018 (see Note 4 for further information) the senior notes issued by Cigna, Old Cigna, Express Scripts, ESI and Medco became jointly and severally and fully and unconditionally (subject to certain customary release provisions, including sale, exchange, transfer or liquidation of the guarantor subsidiary) guaranteed by Cigna, Old Cigna, Express Scripts, ESI and Medco, as applicable. All of the guarantor subsidiaries are 100% owned by Cigna. Details of these debt obligations are presented in Note 6. The following condensed consolidating financial information has been prepared in accordance with the requirements as prescribed by the SEC in Regulation S-X. The condensed consolidating financial information presented below is not indicative of what the financial position, results of operations or cash flows would have been had each of the entities operated as an independent company during the periods for various reasons, including, but not limited to, intercompany transactions and integration of systems.

In the fourth quarter of 2019, as a result of the settlement of an exchange of subsidiary notes for Cigna notes (see Note 6 for further information), certain guarantees of obligations under the notes were released pursuant to the terms of such indebtedness. The release of these guarantees is not reflected in the condensed consolidated financial information below as it occurred subsequent to September 30, 2019.

The condensed consolidating financial information is presented separately for:

(i)Cigna (the Parent Company), guarantor, the issuer of certain guaranteed obligations;

(ii)Old Cigna (former Parent Company), guarantor, the issuer of additional guaranteed obligations;

(iii)Express Scripts, guarantor, the issuer of additional guaranteed obligations;

(iv)ESI, guarantor, the issuer of additional guaranteed obligations through June 15, 2019;

(v)Medco, guarantor through June 15, 2019, the issuer of additional guaranteed obligations;

(vi)Non-guarantor subsidiaries, on a combined basis;

(vii)Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among Cigna, Old Cigna, Express Scripts, ESI, Medco and the non-guarantor subsidiaries, (b) eliminate the investments in our subsidiaries and (c) record consolidating entries; and

(viii)Cigna and subsidiaries on a consolidated basis.

Condensed Consolidating Statements of Income
	For the Three Months Ended September 30, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Revenues
Pharmacy revenues	$	-	$	-	$	-	$	18,726	$	3,165	$	14,328	$	(10,232)	$	25,987
Premiums		-		-		-		-		-		9,935		-		9,935
Fees and other revenues		-		-		-		224		40		7,516		(5,495)		2,285
Net investment income (loss)		-		-		(15)		3		3		358		-		349
Total revenues		-		-		(15)		18,953		3,208		32,137		(15,727)		38,556
Benefits and expenses
Pharmacy and other service costs		-		-		-		17,421		3,004		18,768		(14,641)		24,552
Medical costs and other benefit expenses		-		-		-		1		-		7,728		5		7,734
Selling, general and administrative expenses		-		74		29		991		120		3,290		(1,091)		3,413
Amortization of acquired intangible assets		-		-		-		573		82		79		-		734
Total benefits and expenses		-		74		29		18,986		3,206		29,865		(15,727)		36,433
Income (loss) from operations		-		(74)		(44)		(33)		2		2,272		-		2,123
Interest and other expense		(229)		(57)		(115)		-		(5)		(5)		-		(411)
Intercompany interest income (expense)		(28)		(14)		153		(58)		(38)		(15)		-		-
Net realized investment gains		-		-		-		-		-		51		-		51
Income (loss) before income taxes		(257)		(145)		(6)		(91)		(41)		2,303		-		1,763
Total income tax (benefit) expense		(60)		(21)		(1)		(25)		(14)		530		-		409
Income (loss) before equity in earnings of subsidiaries		(197)		(124)		(5)		(66)		(27)		1,773		-		1,354
Equity in earnings of subsidiaries		1,548		1,083		594		574		115		-		(3,914)		-
Net income		1,351		959		589		508		88		1,773		(3,914)		1,354
Less: Net income attributable to noncontrolling interests		-		-		-		-		-		3		-		3
Shareholders' net income	$	1,351	$	959	$	589	$	508	$	88	$	1,770	$	(3,914)	$	1,351
Other comprehensive income (loss), net of tax		107		108		(1)		(1)		-		80		(186)		107
Shareholders' comprehensive income	$	1,458	$	1,067	$	588	$	507	$	88	$	1,850	$	(4,100)	$	1,458

Condensed Consolidating Statements of Income
	For the Three Months Ended September 30, 2018
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Revenues
Pharmacy revenues	$	-	$	-	$	-	$	-	$	-	$	747	$	-	$	747
Premiums		-		-		-		-		-		8,994		-		8,994
Fees and other revenues		-		-		-		-		-		1,361		-		1,361
Net investment income		13		1		-		-		-		341		-		355
Total revenues		13		1		-		-		-		11,443		-		11,457
Benefits and expenses
Pharmacy and other service costs		-		-		-		-		-		602		-		602
Medical costs and other benefit expenses		-		-		-		-		-		6,803		-		6,803
Selling, general and administrative expenses		-		126		-		-		-		2,746		-		2,872
Amortization of acquired intangible assets		-		-		-		-		-		48		-		48
Total benefits and expenses		-		126		-		-		-		10,199		-		10,325
Income (loss) from operations		13		(125)		-		-		-		1,244		-		1,132
Interest and other expense		(33)		(64)		-		-		-		(2)		-		(99)
Intercompany interest income (expense)		-		(16)		-		-		-		16		-		-
Net realized investment (losses)		-		-		-		-		-		-		-		-
Income (loss) before income taxes		(20)		(205)		-		-		-		1,258		-		1,033
Total income tax (benefit) expense		(4)		(35)		-		-		-		298		-		259
Income (loss) before equity in earnings of subsidiaries		(16)		(170)		-		-		-		960		-		774
Equity in earnings of subsidiaries		788		958		-		-		-		-		(1,746)		-
Net income		772		788		-		-		-		960		(1,746)		774
Less: Net income attributable to noncontrolling interests		-		-		-		-		-		2		-		2
Shareholders' net income	$	772	$	788	$	-	$	-	$	-	$	958	$	(1,746)	$	772
Other comprehensive (loss), net of tax		(14)		(14)		-		-		-		(25)		39		(14)
Shareholders' comprehensive income	$	758	$	774	$	-	$	-	$	-	$	933	$	(1,707)	$	758

Condensed Consolidating Statements of Income
	For the Nine Months Ended September 30, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Revenues
Pharmacy revenues	$	-	$	-	$	-	$	55,326	$	10,219	$	43,246	$	(31,337)	$	77,454
Premiums		-		-		-		-		-		29,709		-		29,709
Fees and other revenues		-		-		-		639		133		15,034		(8,683)		7,123
Net investment income (loss)		(8)		-		27		10		8		998		-		1,035
Total revenues		(8)		-		27		55,975		10,360		88,987		(40,020)		115,321
Benefits and expenses
Pharmacy and other service costs		-		-		-		51,444		9,670		49,388		(36,937)		73,565
Medical costs and other benefit expenses		-		-		-		1		-		22,960		(31)		22,930
Selling, general and administrative expenses		(99)		234		72		2,750		438		9,753		(3,052)		10,096
Amortization of acquired intangible assets		-		-		-		1,724		247		243		-		2,214
Total benefits and expenses		(99)		234		72		55,919		10,355		82,344		(40,020)		108,805
Income (loss) from operations		91		(234)		(45)		56		5		6,643		-		6,516
Interest and other expense		(695)		(197)		(361)		(7)		(19)		(12)		-		(1,291)
Intercompany interest income (expense)		(93)		(25)		399		(181)		(115)		15		-		-
Net realized investment gains		-		-		-		-		-		84		-		84
Income (loss) before income taxes		(697)		(456)		(7)		(132)		(129)		6,730		-		5,309
Total income tax (benefit) expense		(166)		(88)		(1)		(46)		(80)		1,554		-		1,173
Income (loss) before equity in earnings of subsidiaries		(531)		(368)		(6)		(86)		(49)		5,176		-		4,136
Equity in earnings of subsidiaries		4,658		3,304		1,728		1,549		294		-		(11,533)		-
Net income		4,127		2,936		1,722		1,463		245		5,176		(11,533)		4,136
Less: Net income attributable to noncontrolling interests		-		-		-		-		-		9		-		9
Shareholders' net income	$	4,127	$	2,936	$	1,722	$	1,463	$	245	$	5,167	$	(11,533)	$	4,127
Other comprehensive income, net of tax		853		851		2		2		-		800		(1,655)		853
Shareholders' comprehensive income	$	4,980	$	3,787	$	1,724	$	1,465	$	245	$	5,967	$	(13,188)	$	4,980

Condensed Consolidating Statements of Income
	For the Nine Months Ended September 30, 2018
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Revenues
Pharmacy revenues	$	-	$	-	$	-	$	-	$	-	$	2,222	$	-	$	2,222
Premiums		-		-		-		-		-		27,005		-		27,005
Fees and other revenues		-		-		-		-		-		4,087		-		4,087
Net investment income		13		1		-		-		-		1,022		-		1,036
Total revenues		13		1		-		-		-		34,336		-		34,350
Benefits and expenses
Pharmacy and other service costs		-		-		-		-		-		1,776		-		1,776
Medical costs and other benefit expenses		-		-		-		-		-		20,420		-		20,420
Selling, general and administrative expenses		-		361		-		-		-		8,093		-		8,454
Amortization of acquired intangible assets		-		-		-		-		-		99		-		99
Total benefits and expenses		-		361		-		-		-		30,388		-		30,749
Income (loss) from operations		13		(360)		-		-		-		3,948		-		3,601
Interest and other income (expense)		(33)		(191)		-		-		-		12		-		(212)
Intercompany interest income (expense)		-		(50)		-		-		-		50		-		-
Net realized investment (losses)		-		-		-		-		-		(36)		-		(36)
Income (loss) before income taxes		(20)		(601)		-		-		-		3,974		-		3,353
Total income tax (benefit) expense		(4)		(102)		-		-		-		960		-		854
Income (loss) before equity in earnings of subsidiaries		(16)		(499)		-		-		-		3,014		-		2,499
Equity in earnings of subsidiaries		2,509		3,008		-		-		-		-		(5,517)		-
Net income		2,493		2,509		-		-		-		3,014		(5,517)		2,499
Less: Net income attributable to noncontrolling interests		-		-		-		-		-		6		-		6
Shareholders' net income	$	2,493	$	2,509	$	-	$	-	$	-	$	3,008	$	(5,517)	$	2,493
Other comprehensive (loss), net of tax		(536)		(536)		-		-		-		(572)		1,108		(536)
Shareholders' comprehensive income	$	1,957	$	1,973	$	-	$	-	$	-	$	2,436	$	(4,409)	$	1,957

Condensed Consolidating Balance Sheets
	As of September 30, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Assets
Cash and cash equivalents	$	-	$	-	$	430	$	16	$	-	$	4,131	$	-	$	4,577
Investments		5		-		402		-		-		964		-		1,371
Accounts receivable, net		-		(2)		-		2,711		592		8,418		-		11,719
Inventories		-		-		-		-		-		2,160		-		2,160
Other current assets		4		210		2		287		24		814		-		1,341
Total current assets		9		208		834		3,014		616		16,487		-		21,168
Long-term investments		-		10		-		-		-		28,894		-		28,904
Reinsurance recoverables		-		-		-		-		-		5,274		-		5,274
Deferred policy acquisition costs		-		-		-		-		-		2,795		-		2,795
Property and equipment		-		-		-		2,298		-		2,150		-		4,448
Investments in subsidiaries		72,654		29,680		53,871		18,693		8,385		-		(183,283)		-
Intercompany receivables, net		134		2,950		-		10,171		2,367		26,096		(41,718)		-
Goodwill		-		-		30,988		-		-		13,474		-		44,462
Other intangible assets		-		-		8,400		17,544		6,793		4,347		-		37,084
Other assets		27		221		-		144		86		2,108		(207)		2,379
Separate account assets		-		-		-		-		-		8,333		-		8,333
TOTAL ASSETS	$	72,824	$	33,069	$	94,093	$	51,864	$	18,247	$	109,958	$	(225,208)	$	154,847
Liabilities
Current insurance and contractholder liabilities	$	-	$	-	$	-	$	-	$	-	$	7,180	$	-	$	7,180
Pharmacy and service costs payable		-		-		-		8,731		1,355		771		-		10,857
Accounts payable		26		-		-		662		3		3,811		-		4,502
Accrued expenses and other liabilities		316		410		69		1,600		185		4,616		-		7,196
Short-term debt		3,885		300		-		13		503		11		-		4,712
Total current liabilities		4,227		710		69		11,006		2,046		16,389		-		34,447
Non-current insurance and contractholder liabilities		-		-		-		-		-		20,090		-		20,090
Deferred tax liabilities, net		-		-		2,001		4,652		1,637		1,201		(207)		9,284
Other non-current liabilities		-		697		-		598		246		2,378		-		3,919
Intercompany payables, net		5,766		4,512		30,754		-		-		686		(41,718)		-
Long-term debt		18,135		4,816		10,949		36		-		105		-		34,041
Separate account liabilities		-		-		-		-		-		8,333		-		8,333
TOTAL LIABILITIES		28,128		10,735		43,773		16,292		3,929		49,182		(41,925)		110,114
Redeemable noncontrolling interests		-		-		-		-		-		34		-		34
TOTAL SHAREHOLDERS’ EQUITY		44,696		22,334		50,320		35,572		14,318		60,739		(183,283)		44,696
Noncontrolling interests		-		-		-		-		-		3		-		3
TOTAL EQUITY		44,696		22,334		50,320		35,572		14,318		60,742		(183,283)		44,699
TOTAL LIABILITIES AND EQUITY	$	72,824	$	33,069	$	94,093	$	51,864	$	18,247	$	109,958	$	(225,208)	$	154,847

Condensed Consolidating Balance Sheets
	As of December 31, 2018
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
Assets
Cash and cash equivalents	$	243	$	-	$	633	$	43	$	-	$	2,936	$	-	$	3,855
Investments		-		-		-		-		-		2,045		-		2,045
Accounts receivable, net		-		-		-		4,206		748		5,519		-		10,473
Inventories		-		-		-		-		-		2,821		-		2,821
Other current assets		14		59		-		310		-		1,063		(210)		1,236
Total current assets		257		59		633		4,559		748		14,384		(210)		20,430
Long-term investments		-		10		-		-		-		26,919		-		26,929
Reinsurance recoverables		-		-		-		-		-		5,507		-		5,507
Deferred policy acquisition costs		-		-		-		-		-		2,821		-		2,821
Property and equipment		-		-		-		2,432		-		2,130		-		4,562
Investments in subsidiaries		68,969		27,544		52,035		17,115		8,117		-		(173,780)		-
Intercompany receivables, net		-		4,505		-		7,425		2,335		24,882		(39,147)		-
Goodwill		-		-		31,049		-		-		13,456		-		44,505
Other intangible assets		-		-		8,400		18,962		7,040		4,601		-		39,003
Other assets		48		198		-		68		74		1,488		(246)		1,630
Separate account assets		-		-		-		-		-		7,839		-		7,839
TOTAL ASSETS	$	69,274	$	32,316	$	92,117	$	50,561	$	18,314	$	104,027	$	(213,383)	$	153,226
Liabilities
Current insurance and contractholder liabilities	$	-	$	-	$	-	$	-	$	-	$	6,801	$	-	$	6,801
Pharmacy and service costs payable		-		-		-		8,422		1,579		701		-		10,702
Accounts payable		22		-		-		834		4		3,506		-		4,366
Accrued expenses and other liabilities		396		182		129		1,387		189		4,998		(210)		7,071
Short-term debt		-		1,500		995		353		-		107		-		2,955
Total current liabilities		418		1,682		1,124		10,996		1,772		16,113		(210)		31,895
Non-current insurance and contractholder liabilities		-		-		-		-		-		19,974		-		19,974
Deferred tax liabilities, net		-		-		2,001		5,012		1,685		1,001		(246)		9,453
Other non-current liabilities		-		685		-		497		290		1,998		-		3,470
Intercompany payables, net		4,965		4,361		29,569		-		-		252		(39,147)		-
Long-term debt		22,863		5,110		10,932		24		506		88		-		39,523
Separate account liabilities		-		-		-		-		-		7,839		-		7,839
TOTAL LIABILITIES		28,246		11,838		43,626		16,529		4,253		47,265		(39,603)		112,154
Redeemable noncontrolling interests		-		-		-		-		-		37		-		37
TOTAL SHAREHOLDERS’ EQUITY		41,028		20,478		48,491		34,032		14,061		56,718		(173,780)		41,028
Noncontrolling interest		-		-		-		-		-		7		-		7
TOTAL EQUITY		41,028		20,478		48,491		34,032		14,061		56,725		(173,780)		41,035
TOTAL LIABILITIES AND EQUITY	$	69,274	$	32,316	$	92,117	$	50,561	$	18,314	$	104,027	$	(213,383)	$	153,226

Condensed Consolidating Cash Flow Statements
	For the Nine Months Ended September 30, 2019
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	1,256	$	2,259	$	72	$	4,087	$	43	$	2,930	$	(3,955)	$	6,692
Cash Flows from Investing Activities
Net change in amounts due to (from) affiliates		-		1,695		(2,698)		-		-		537		466		-
Proceeds from investments sold:
Debt securities and equity securities		-		-		-		-		-		2,639		-		2,639
Investment maturities and repayments:
Debt securities and equity securities		-		-		-		-		-		1,281		-		1,281
Commercial mortgage loans		-		-		-		-		-		174		-		174
Other sales, maturities and repayments (primarily short-term and other long-term investments)		-		-		-		-		-		978		-		978
Investments purchased or originated:
Debt securities and equity securities		-		-		-		-		-		(3,347)		-		(3,347)
Commercial mortgage loans		-		-		-		-		-		(221)		-		(221)
Other (primarily short-term and other long-term investments)		(5)		-		(402)		-		-		(807)		-		(1,214)
Property and equipment purchases, net		-		-		-		(232)		-		(508)		-		(740)
Acquisitions, net of cash acquired		-		-		-		-		-		(6)		-		(6)
Other, net		-		-		-		-		-		(7)		-		(7)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(5)		1,695		(3,100)		(232)		-		713		466		(463)
Cash Flows from Financing Activities
Net change in amounts due to (from) affiliates		903		(537)		3,825		(3,537)		(43)		(145)		(466)		-
Intercompany dividends paid		-		(1,917)		-		-		-		(2,038)		3,955		-
Deposits and interest credited to contractholder deposit funds		-		-		-		-		-		731		-		731
Withdrawals and benefit payments from contractholder deposit funds		-		-		-		-		-		(845)		-		(845)
Net change in short-term debt		1,140		(1,500)		-		(8)		-		(111)		-		(479)
Repayment of long-term debt		(2,003)		-		(1,000)		(337)		-		-		-		(3,340)
Repurchase of common stock		(1,540)		-		-		-		-		-		-		(1,540)
Issuance of common stock		101		-		-		-		-		-		-		101
Other, net		(95)		-		-		-		-		(13)		-		(108)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(1,494)		(3,954)		2,825		(3,882)		(43)		(2,421)		3,489		(5,480)
Effect of foreign currency rate changes on cash and cash equivalents		-		-		-		-		-		(27)		-		(27)
Net (decrease) increase in cash and cash equivalents		(243)		-		(203)		(27)		-		1,195		-		722
Cash and cash equivalents, January 1, 2019		243		-		633		43		-		2,936		-		3,855
Cash and cash equivalents, September 30, 2019	$	-	$	-	$	430	$	16	$	-	$	4,131	$	-	$	4,577

Condensed Consolidating Cash Flow Statements
	For the Nine Months Ended September 30, 2018
(In millions)	Cigna		Old Cigna		Express Scripts Holding Company		Express Scripts, Inc.		Medco Health Solutions, Inc.		Non-Guarantors		Eliminations and Consolidation Adjustments		Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	5	$	1,113	$	-	$	-	$	-	$	3,900	$	(1,374)	$	3,644
Cash Flows from Investing Activities
Net change in amounts due (from) to affiliates		-		(275)		-		-		-		428		(153)		-
Proceeds from investments sold:
Debt securities and equity securities		-		-		-		-		-		1,930		-		1,930
Investment maturities and repayments:
Debt securities and equity securities		-		-		-		-		-		1,394		-		1,394
Commercial mortgage loans		-		-		-		-		-		181		-		181
Other sales, maturities and repayments (primarily short-term and other long-term investments)		-		53		-		-		-		535		-		588
Investments purchased or originated:
Debt securities and equity securities		-		-		-		-		-		(4,461)		-		(4,461)
Commercial mortgage loans		-		-		-		-		-		(288)		-		(288)
Other (primarily short-term and other long-term investments)		-		-		-		-		-		(660)		-		(660)
Property and equipment purchases, net		-		-		-		-		-		(346)		-		(346)
Other, net		-		-		-		-		-		(12)		-		(12)
NET CASH (USED IN) INVESTING ACTIVITIES		-		(222)		-		-		-		(1,299)		(153)		(1,674)
Cash Flows from Financing Activities
Net change in amounts due (from) to affiliates		-		(428)		-		-		-		275		153		-
Intercompany dividends paid		-		-		-		-		-		(1,374)		1,374		-
Deposits and interest credited to contractholder deposit funds		-		-		-		-		-		816		-		816
Withdrawals and benefit payments from contractholder deposit funds		-		-		-		-		-		(872)		-		(872)
Net change in short-term debt		-		(5)		-		-		-		(104)		-		(109)
Repayment of long-term debt		-		(131)		-		-		-		-		-		(131)
Net proceeds on issuance of long-term debt		19,884		-		-		-		-		-		-		19,884
Repurchase of common stock		-		(310)		-		-		-		-		-		(310)
Issuance of common stock		-		41		-		-		-		-		-		41
Other, net		-		(67)		-		-		-		(137)		-		(204)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		19,884		(900)		-		-		-		(1,396)		1,527		19,115
Effect of foreign currency rate changes on cash and cash equivalents		-		-		-		-		-		(25)		-		(25)
Net increase (decrease) in cash and cash equivalents		19,889		(9)		-		-		-		1,180		-		21,060
Cash and cash equivalents, January 1, 2018		-		9		-		-		-		2,963		-		2,972
Cash and cash equivalents, September 30, 2018	$	19,889	$	-	$	-	$	-	$	-	$	4,143	$	-	$	24,032