Ladies and gentlemen, thank you for standing by for Cigna's First Quarter 2018 Results Review. At this time all callers are in a listen-only mode. We will conduct a question-and-answer session later during the conference and review procedures on how to enter queue to ask questions at that time. As a reminder, ladies and gentlemen, this conference including the question-and-answer session is being recorded. We'll begin by turning the conference over to Mr. Will McDowell. Please go ahead, Mr. McDowell.

Good morning, everyone, and thank you for joining today's call. I am Will McDowell, Vice President of Investor Relations. With me this morning are David Cordani, our President and Chief Executive Officer; and Eric Palmer, Cigna's Chief Financial Officer. In our remarks today, David and Eric will cover a number of topics, including Cigna's first quarter 2018 financial results as well as an update on our financial outlook for 2018. As noted in our earnings release, when describing our financial results, Cigna uses certain financial measures, which are not determined in accordance with accounting principles generally accepted in the United States, otherwise known as GAAP. Specifically, we use the term labeled adjusted income from operations and earnings per share on the same basis as our principal measures of financial performance. A reconciliation of these measures to the most directly comparable GAAP measure, shareholders' net income, is contained in today's earnings release which is posted in the Investor Relations section of cigna.com. In our remarks today, we will be making some forward-looking statements including statements regarding our outlook for 2018 and future performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. A description of these risks and uncertainties is contained in the cautionary note to today's earnings release and in our most recent reports filed with the SEC. Before turning the call over to David, I will cover a few items pertaining to our financial results and disclosures. Regarding our results, I note that in the first quarter, we recorded an after-tax special item charge of $50 million or $0.21 per share for transaction-related costs. As described in today's earnings release, special items are excluded from adjusted income from operations in our discussion of financial results. Also, as previously…

Thanks, Will. Good morning, everyone, and thank you for joining today's call. I'll begin by highlighting Cigna's very strong quarterly financial results, which continue our consistent track record of growth and value creation across our portfolio of businesses. I'll then discuss how a combination with Express Scripts advances our proven growth strategy by accelerating our ability to provide greater affordability along with expanded choice and broader distribution reach, all with greater predictability. Eric will then address our first quarter results in more detail as well as our outlook for meaningful growth in customers, revenue and earnings in 2018. We'll then move to the Q&A portion of the call, and following Q&A, I'll conclude the call with a few closing comments. I'll start with some highlights of our results. For the first quarter of 2018, consolidated revenue increased 9% to $11.4 billion. First quarter earnings increased to $1 billion with earnings per share of $4.11. Turning to our business segments, Global Health Care revenue increased by 10% with very strong earnings growth. This outstanding result was led by our Commercial Employer business, which once again delivered differentiated organic growth in both risk and ASO medical customers, particularly in our Select and Middle-market segments. Our Commercial Employer business also delivered attractive margins and sustained industry-leading medical cost trend. And in our Global Supplemental Benefits business, we grew revenue by more than 20% over the first quarter of 2017, with earnings increasing to $112 million. Collectively, our first quarter results reflect strong momentum across our portfolio of businesses and give us confidence we will achieve our improved outlook for 2018, earnings and EPS. Our first quarter performance also highlights the significant value we create through our integrated offerings. Cigna's continued and long track record of value creation is especially evident in the Commercial…

Thanks, David, and good morning, everyone. In my remarks today I will briefly review key aspects of Cigna's first quarter 2018 results and discuss our updated outlook for the full year. I will also discuss our capital position and outlook for 2018 as well as following the close of our acquisition of Express Scripts. Key financial highlights in the quarter are consolidated revenue growth of 9% to $11.4 billion, consolidated earnings of $1 billion led by exceptional growth and strong margins in our Global Health Care and Global Supplemental Benefits segments, quarterly earnings per share of $4.11, and continued strong free cash flow and financial flexibility. Overall, our results demonstrate continued strong performance across the enterprise. Regarding our business segments, I will first comment on Global Health Care. First quarter operating revenues in Global Health Care grew 10% to $9.1 billion, driven by commercial customer growth, premium increases consistent with underlying cost trends and inclusive of the return of the health insurance tax, and specialty contributions. We ended first quarter 2018 with 16.2 million global medical customers, an organic increase of 327,000 lives year-to-date, driven by growth in our Select, Individual and Middle Market segments. We grew customers in both risk and ASO funding arrangements as our industry-leading trend results continue to resonate with the market. First quarter earnings in Global Health Care were $871 million, reflecting growth in medical customers and specialty relationships, continued effective medical cost management and a lower tax rate compared to 2017. Turning to our medical care ratios, our first quarter 2018 total Commercial medical care ratio, or MCR, of 73.7% reflects ongoing strong performance of our Commercial business, particularly from our integrated medical platform, the pricing effect of the resumption of the health insurance tax and favorable prior-year reserve development. Our first quarter 2018…

Our first question comes from Matthew Borsch with BMO Capital Markets. You may ask your question.

Yes, I was just hoping you could talk about the growth in commercial risk that you've seen this quarter. And we're framing it in the context of attrition that we've seen at several of your large peers, so it's a little bit surprising, and if like you could just address how you would achieve that in this environment.

Yeah, Matt. It's Eric. I'll start. With respect to the growth that we delivered in the quarter, as David noted in his prepared remarks, again, this is our eighth year of consistent growth in terms of organic commercial enrollment. We approach the market with growth in both self-funded and commercial risk products and really work to ensure that we've got the best funding arrangements for the needs of our clients and customers. Overall, I would point to the increasing recognition of the trend in the cost performance that we've been able to generate for our clients across all the funding arrangements as the primary driver of our success in the growth cycle coming into this year. And we've had good growth in both self-funded and risk products to show for it.

If you can comment, are you expecting growth will continue over the balance of the year?

Our growth continues to come primarily from the Select and Middle-market segments. And those segments do tend to be spread more throughout the year, so we're optimistic about the trajectory for additional growth across all of our funding arrangements in those segments over the balance of the year.

And maybe I can just ask one last question which is just an early view on your setup for the Medicare Advantage products going into the 2019 open enrollment. Not looking for guidance, but just to understand, do you see this upcoming season as being a normal one after you've had a period of recovery?

Hey, Matthew. Good morning. It's David.

Good morning, David.

So first and foremost, we're excited to be back in the growth mode in our Seniors business. For 2018, we expected to turn the business back from a growth orientation and we expect to build some of that growth momentum throughout the rest of this year. We started with very strong retention results and starting to add some new sales. Specific to 2019, the team is excited. We're well-positioned for 2019. We're also oriented around further geographic expansion in 2019, 2020, and 2021 as we look forward. So the team's on their toes right now and we're excited to restart that growth engine with some increasing momentum.

Fantastic. Thank you.

Thank you, Mr. Borsch. Our next question comes from Gary Taylor with JPMorgan. You may ask your question.

Hi. Good morning. This question's for David. I think you and Eric both have spent a lot of time since the Express deal was announced meeting with shareholders, talking to them. I guess I'd invite you to share what do you think is the biggest concern and pushback shareholders have about the transaction, and what is the response that you've been sharing to that concern?

Gary, good morning. You're correct. We continue an open dialogue consistent with our culture. I think first off, big picture, stepping back, shareholders recognize the fact that Cigna has had and continues to have, as evidenced by this quarter, a consistent strong track record of success, momentum, growth, and earnings growth, so understanding the strategic accelerant that is either perceived to be necessary or being pursued. Second piece of the conversation is just a rapidly evolving environment and better understanding how the additional capabilities position us not just for today's business but the evolution of tomorrow's business. And in those conversations understanding that further improvement of medical cost or affordability is mission critical. We've put forth the strategic objective of further stepping down medical cost trend from our industry-leading levels as a strategic objective for the future at a CPI level, because we think that's what the market demands and that's what is possible with a well-run organization. And then helping the market understand the fact that we're going to deliver outstanding financial results even without the revenue synergies we've talked about. So putting that whole picture together, I think the appreciation for the strategic value, the financial value and the forward-looking strategic flexibility and optionality is being better understood today.

Thank you.

Thank you, Mr. Taylor. Our next question comes from A.J. Rice with Credit Suisse. You may ask your question. A.J. Rice - Credit Suisse Securities (USA) LLC: Thanks. Hi, everybody. Just conceptually, you beat, I think, the consensus by almost $0.70-plus, and you raised the guidance for the full year by $0.35 to $0.45. I know there's a number of reasons why that might happen. Maybe internally, your forecast was higher than what the Street had, maybe just being conservative earlier in the year, maybe there was a pull-forward or something else. I guess first question would just be to get your perspective on that dichotomy, the really strong beat and a strong raise but not quite as much as you beat by.

A.J., it's Eric. I would just note we're really pleased with the strong start that we've had to the year. I wouldn't call out anything in particular in terms of dynamic there, other than just it's early in the year. We're pleased with the momentum that we've got and excited about the opportunity to be raising our guidance over the balance of the year at this point, but nothing else I'd call out in particular. A.J. Rice - Credit Suisse Securities (USA) LLC: Okay. And then, obviously, one of the areas of outperformance was on the MLR/MCR. One of the things we've been hearing from people – both hospitals and from at least one of your peers – was potentially an increase in acuity on the inpatient side. Again, there's several reasons for that. One is the industry may be very effective in pushing the low intensity stuff into the outpatient side, or there may be an increase in these higher acuity patients. I wonder if you could indicate maybe where in particular you saw positive trends on the medical loss ratio? And specifically on that acuity question, are you seeing anything unusual there?

A.J., I wouldn't call it anything unusual in terms of acuity or anything along those lines. Our medical cost trends are performing consistent with our expectations and the guidance that we set back when we provided 2018 guidance in February. We continue to be in the range of 4% to 5% which we think is a great result for the year. A.J. Rice - Credit Suisse Securities (USA) LLC: Okay. Thanks a lot.

Thank you, Mr. Rice. Our next question comes from Josh Raskin with Nephron Research. You may ask your question.

Hi. Thanks. Good morning. Want to stay on the Commercial segment and sort of a two-parter here. Commercial MLR was a lot lower than we were looking for and I know there's some seasonality around some of the products, et cetera, but I'm just curious how sustainable you think that quarterly result is. And then I kind of want to juxtapose that with this mid-market sort of stop-loss product. We heard from Humana yesterday for the first time on one of their calls speaking specifically around that product. So are you seeing more competition? Do you think margins are sustainable there? Is that just a growing market that feeds everybody or do you think you're starting to see new entry there?

Josh, good morning. It's David. Let me start talking about the market and the, I'll call it, the acceptance and the trends relative to the product, and then ask Eric to expand a little bit relative to just our outstanding result for the quarter and how it unfolds. First, more broadly, as you know, 85% of all of our Commercial lives are ASO and we like the transparent funding mechanism to drive alignment. So it comes all the way back to the philosophy of driving alignment with the employer, greater transparency and the dynamism that happens throughout the course of the year to be able to work with the employer to try to optimize results for their employees, our customers. Stop-loss is an important part of that portfolio as you come downmarket to provide peace of mind and predictability relative to the cost outcomes and we've been doing this for a long, long time. Secondly, as we've discussed before, we've talked about the fact that the evolution of the transparent funding mechanisms continued to be broader accepted in the marketplace beyond the legacy of middle-market, but the broader market continues the option and we see that trend moving forward. And lastly, we have expected over time to see additional competition coming to this marketplace. That's a good thing because it's reinforcing of the tremendous demand for this product and service. We like the fact that we have a dedicated unit, dedicated technology, dedicated resources and very importantly, continued investment in innovation and services around the expansion, if necessary, to drive this on a go-forward basis. So we see an optimistic future for this portfolio as we look to future. I'll ask Eric to give you some color relative to our very strong MLR and how it shapes over the rest of the year.

Hey, Josh. It's Eric. Just on the MLRs, as David noted, we're really pleased with the performance that we delivered in the first quarter here. Would expect that that would follow, I'll say, a normal seasonal pattern as we move throughout the course of the year, I mean, ultimately, the Commercial loss ratio for the full year landing in the 77.5% to 78.5% range that I talked about in my prepared remarks. We think that's a great result and we're on track to deliver it.

Great. And if I could just throw one more out there, the life insurance claims, you talked about sort of a slightly higher than expected life insurance claims. Maybe just talk a little bit about the product and the funding. Just want to make sure this is just the traditional life. Maybe mortality rates increased a little bit, nothing more than sort of industry factors there.

Yeah. Josh, on the Life businesses, is just a pretty plain vanilla group, employer-sponsored and voluntary life set of products where employees may elect additional coverage, things along those lines. There's some variability in this from period to period. We saw higher claims in the month of March specifically, but have seen the month of April, for example, has been right back to where we were expecting. So again, we do just see variability from time to time in this business and I would note that as the driver for the results in the first quarter here.

Thank you.

Thank you, Mr. Raskin. Our next question comes from Kevin Fischbeck with Bank of America. You may ask your question.

Great. Thanks. I guess I want go back to maybe follow up on an earlier question about the investor feedback around the Express deal. Because I guess from what I've heard, I think the things that you've outlined around the opportunities here I think are pretty clear but the concerns tend to be more around the core underlying performance of a PBM, I guess Express in particular but maybe to the PBM market broadly. Just wondering as you've spent some time talking to investors, you had more time to talk to Express about the issues, is there anything that you can kind of provide to us to give us comfort around the work that you've done to kind of say that the earnings profile of Express going forward is in fact more or less what the market believes that there is sustainability? Or if there's any levers that you think that, as a combined company, Express might not have on its own, that give you that confidence that the pro forma numbers into 2021 will play out.

Kevin, it's David. So a couple different dimensions to your question. First and foremost, let me start with the basic chassis and that is the fact that Express continues to deliver strong performance to their clients that they serve each and every day, as evidenced by their very strong retention rates. So you come back in a dynamic market of servicing commercial employers, sophisticated health plans, governmental agencies, strong retention rates are reinforcing a high-value creation. The second piece to the core of your question, the whole notion relative to the earnings profile, the sustainability of the earnings, just to spend a moment on that, it's clear that Express has a strong margin profile relative to its traditional competitors. Unlike their traditional competitors that they're benchmarked against, Express Scripts is focused in the pharmacy space exclusively and, as such, doesn't have other lines of business to, kind of, cross margin against or otherwise. Additionally, the market better understands through some of the disclosures that have taken place in the ongoing dialogue that Express' portfolio of business is a little different. So a broad commercial portfolio, but that commercial portfolio has both large national accounts and smaller national accounts and therefore the margin profile is little different from that standpoint. Secondly, that they have a broad services portfolio they offer to the marketplace that doesn't correlate to the facilitation of prescriptions being fulfilled, yet they have the revenue and earnings from that. Hence, it makes the margin profile per script look a bit higher. So a little better visibility into that from the filings that have taken place. But at the end of the day on a go-forward basis, whether it's legacy Cigna, legacy Express, or anybody else, the ability to capture value for the shareholders is totally predicated on the ability to deliver value for clients and customers. And the visibility relative to just the sheer size and the impact of pharmacy, specialty pharmacy, medical, behavioral being better coordinated to deliver an outstanding cost and quality outcome, we believe, is being better understood, because that's the fundamental market need. And the combined company's going to have the ability to take market-leading trend already and step it to another level, which is going to be key to being able to deliver value to clients and customers and, as a result, capture value for the benefit of shareholders. And to me, that's the core of the dialogue.

Okay. Great. And then just, when you talk about the MLR for the two businesses, you threw prior-period development in the Commercial explanation but not in the Government explanation. So I assume that most of the PPD was in Commercial. And yet, you lowered your MLR in Government and kept it in Commercial. So just wanted to understand that dynamic, if there's anything going on there either at the Government or the Commercial business.

Kevin, it's Eric. We reported favorable prior-year development in both the Commercial and the Government businesses, skewed more on the Commercial side or end of the book. But the Commercial book is quite bit bigger than the Government book as well. And so again, nothing I would call out as particularly notable or anything along those lines. Again, pleased with the performance in both so far, year to date, and the visibility that we had to the outlook for the full year on a Government basis led us to lower the loss ratio there. But again, overall, good momentum in both.

Thanks.

Thank you, Mr. Fischbeck. Our next question comes from Justin Lake with Wolfe Research you may ask your question.

Thanks. Good morning. I wanted to follow up on the membership growth. I mean, I'm sure you guys realize this, but you're significantly differentiated from your peers here in the first quarter at least. It looks like just in the first quarter versus 4Q, you guys added about 150,000 Commercial group members, while your peers shrunk by about 750,000. So can you give us some more color in terms of products, geographies, markets, where you feel like you're seeing momentum, or anything you're doing differently here?

Justin, good morning. It's David. First I appreciate the callout relative to significantly differentiated. And just come back, as Eric and I noted, we have eight years of growth in the commercial space and it's been disciplined growth. Coming back to the geographies, anchor back to our Go Deep or Go Deeper orientation first and foremost. We seek to be higher focused geographically. Second, it's really imperative to anchor this back, as Eric articulated before, off of the multiple years of differentiated medical trend delivery. Third, as we've discussed in the past, we have continued to pour significant resources into innovation of products, programs and services. For example, the Cigna One Guide offering that was rolled out in 2017 to 2 million customers. In 2018, we'll have 4 million customers being serviced by that. So an evolving chassis through that dimension. And lastly, as you may recall, we profiled in our Investor Day – and as Will noted in his opening comments – we profile that our view was that we had significant headroom, for example, in the 251 to 500 life employer space. And we reoriented and aligned the team relative to that and expanded our density of orientation. And we saw meaningful progress in the 250 to 500 space as well. Broadly speaking, by way of funding mechanism philosophy, our team uses our broad portfolio, from ASO, ASO stop-loss, shared returns and guaranteed costs, and we're really pleased with what the team was able to deliver with outstanding retention and good new business adds.

Okay. And just as a follow-up there, it was interesting just because I thought your ASO, this would be a year where you would take share in self-insured that just given the HIF coming back, anybody with guaranteed risk is going to be taking a big price increase. So the fact that that didn't happen, and you're seeing what seems like more competition on that ASO and stop-loss business chassis, whatever you want to call it, is it possible that you've now kind of evolved that to say, instead of just shared risk or instead of – where you'll get some upside if things are better, are you stepping out even further and guaranteeing that upside? Have you changed any of your pricing methodology around that ASO and stop-loss to just take the next step to guaranteed cost?

Justin, it's David. First, consistent with our past dialog, we have not viewed nor have we seen that the implementation of the HIF, pausing the HIF, re-implementation of the HIF, et cetera. We've had the posture that that doesn't change the purchasing patterns broadly. It doesn't change what and philosophically how an employer's going to buy. You're either going to orient around transparency or not, you may get a little movement on the margin. So point one. Point two is we've invested meaningfully into evolving our portfolio of services with dedicated platforms, dedicated distribution resources, dedicated client management resources and evolving the products, programs and capabilities. And we like our portfolio of services. To the point you made, we have not had a pricing philosophy change. Our pricing philosophy is very consistent, as evidenced by our really strong client retention levels to come back to delivering on our promises and delivering an outstanding medical cost trend.

Thank you.

Thank you, Mr. Lake. Our next question comes from Ralph Giacobbe with Citi. You may ask your question.

Thanks. Good morning. I know it's early and we're sort of in the midst of the 2019 selling season, but any general views of kind of what you're seeing or hearing whether we're likely to see less movement in Commercial next year just given some of the pending deals? Or if it's a big RFP calendar both in terms of your renewals and new business?

Ralph, good morning. It's David. So, relative to 2019, your question points toward mostly, essentially, the national accounts marketplace, so a little color there. Before I give you color, just to remind everybody, we define national accounts a bit differently than our competition. So, for us, a national account is a commercial employer with 5,000 or more employees that are multi-state. So, our focus is very clear there. Specifically, relative to point-in-time today versus point-in-time last year, the amount of RFPs we have to look at are about equal year-over-year and the portion of our portfolio that's out to bid is about equal year-over-year. So, we see consistency through the volume. The only double click-down I would give you there is still the intensity and momentum of the market looking for just proven incentive engagement-based programs, further evolution of proven points of integration to deliver step functions of affordability, health improvement, productivity improvement. That intensity just continues to mount over time and we're well-positioned to step up to those opportunities.

Okay. Right. That's helpful. And then just to follow up on that, I guess I do want to drill down a little bit on the national account book and just want to get your views of sort of looking ahead. How much of a focus will that be? Why is it that sort of the Select and smaller end of the market has been more receptive, I guess, to your strategy in terms of the growth you've seen than the national account book? And then, I'm hoping you can give us the overlap of your national accounts that carve out to Express Scripts. Thanks.

Yes. So, Ralph, two dimensions there. Dimension number one, to be clear, we continue to perform well in national. We pick our spots because what we're looking for is the philosophical alignment with what the employer is seeking to do and we try to go really deep in those relationships. And you may recall from our prior conversation, we value the depth of the relationships and the cross-selling and the integration of services, and we've seen continued further deepening of those relationships. And that enables us to deliver outstanding medical costs, that enables us to deliver strong retention and further expand those relationships going forward. We grew our national accounts relationships in 2017, and we see the opportunity to continue to grow both in the traditional marketplace as well as importantly on a targeted basis on the private exchanges. Specific to the second part of your question, think about a 10% to 15% overlap, hence, flip it around the other way, massive opportunity. And we've talked about those opportunities in the past between the Cigna and the Express portfolio of relationships. So, we see tremendous upside and opportunity there.

Okay. Thank you.

Thank you, Mr. Giacobbe. Your next question comes from Steve Tanal with Goldman Sachs. You may ask your question. Stephen Tanal - Goldman Sachs & Co. LLC: Good morning, guys. Thanks for the question. Just wanted to triangulate some of the comments around the Commercial enrollment and, frankly, the MLR beat with the return of the HIF and I guess strong enrollment gains, some of the comments we've heard from your competitors. I guess I'd be interested in just understanding if high deductibles or just higher deductibles in general gained more traction this year than in years past in a way that might drive increased seasonality in the business, and whether that might've been a part of the thought process as you considered how much of the upside in Q1 to flow through to the guidance.

Yeah. Steve, it's Eric. Couple of dimensions to that. So, first of all, with respect to deductibles and the like, I wouldn't actually call out a particular change in terms of the overall book of business and such. Our customers in 2018 have about the same cost sharing as they had in 2017, and there hasn't been a pronounced shift there. In any given year, there's different dynamics as the terms of the seasonality of the quarterly pattern of the loss ratio evolves, as you think about the impact of the amount of stop-loss in the portfolio, the amount of the Commercial business, the timing of the sales and the makeup of the individual book of business. But again, overall, pulling those pieces together, we think we're well on track for the strong result that we've communicated previously. Stephen Tanal - Goldman Sachs & Co. LLC: Got it. It's great to hear. Just one follow-up on trend. I think it was on the 4Q call where you sort of outlined expectations of an acceleration in utilization. Are you actually seeing that? And if you could talk to maybe inpatient versus outpatient, both utilization and pricing that you're seeing, that would be helpful. Thank you.

Sure. So, as we noted coming out of 2017, we delivered a particularly strong trend result in 2017, finishing the year at 3%. We did note that we assumed and expected a bit of a utilization uptick coming into the year. Overall, wouldn't call out anything particular in terms of areas of increase and such, but more that we were just making sure that we had an outlook that was allowed for a bit of an uptick relative to 2017. As you think about the different service categories and such, overall, would continue to note inpatient and outpatient both in kind of that mid-single-digit sort of a range, but all consistent with the outlook that we provided three months ago. Stephen Tanal - Goldman Sachs & Co. LLC: Okay. Thank you.

Thank you, Mr. Tanal. Next question comes from Steven Valiquette with Barclays. You may ask your question.

All right. Great. Thanks. Good morning, David and Eric. So, I hate to beat the medical cost trend questions to death here, but I had sort of a similar question to some other folks just on the dynamics around favorably reducing the Government MLR guidance but leaving the Commercial MLR guidance unchanged, even though there seemed to be that bigger delta, favorable results on the Commercial side. Is there just anything noteworthy or magical about changing one and not the other? Thanks.

Yeah, Steve. It's Eric. Overall, I would just say it's early in the year, and I think that we're off to a good start. But I would note it's early in the year, so again, nothing along those lines. As I noted in one of the other answers, just the impact and the size of the Government business. We had visibility given the PYD that we've delivered, and the track record or the results in the first quarter led us to lowering that ratio. But, again, nothing else that I would call out underneath the numbers. Just early in the year and again, off to a good start.

Okay. Great. Thanks.

Thank you, Mr. Valiquette. Our next question comes from Ana Gupte the Leerink Partners. You may ask your question.

Yeah. Thanks. Good morning. Following up again on the Mid-Market and Select growths and what you're expecting to see post the deal close. Think Mid-Market, you've grown year-over-year single digits. Select is well into the teens it looks like. What type of feedback are you getting from the Mid-Market and Select brokers and the employers on the cross-selling value proposition Express to Cigna and vice versa?

Ana, good morning. It's David. Our dialogue with clients as well as brokers, and we've had significant interaction post the announcement, macro, favorable reaction. Why favorable reaction? Expansion of capabilities to further improve affordability, expansion of services and flexibility of offerings, so very positive. You may recall as we've talked about the additional uptick from a revenue standpoint that the new franchise will be able to deliver beyond the base case of both organizations. We did identify the ability for further uptick within the legacy of Express as it relates to additional growth opportunities. Additionally, in a prior question, I indicated the modest amount of overlap in the relationships that exist today. So, big picture, I'd say energy and optimism, twofold. One, the ability to further step up and further deliver differentiated affordability, which is job number one. And secondly, the broadening of services that will be available through either side of the channels, whether it's the integrated medical or the services-based offering, both being received very favorably in the market.

Great. Thanks. And then following up on the affordability point, you've guided to $600 million in synergies on admins and we're taking that to the bottom line. So, I'm assuming given the price sensitivity in those markets that you are looking to pass through some of your medical cost synergies into the employer customers. And what is kind of the driver of that and what is the timing? And as you even look into the 2019 selling season, might you be thinking about what you might do together?

Ana, it sounds like you're trying to negotiate a rate renewal with us right now, but specific to your question, you're correct. And to be very clear, it's important. We've committed the expense in administrative-oriented synergies back from a shareholder standpoint and we were clear on the date of the announcement. We expect to flow the preponderance of all the medical and pharmacy savings back to customers and clients because we seek to drive further step function and affordability. As you might imagine, that intent and that strategic direction is being received favorably in the marketplace and we look forward to being able to carry that forward as quickly as possible there after closing the combination. So, we couldn't be more excited about it to further build on the affordability momentum we have today with yet another step function of good value for the benefit of clients and customers.

Thanks for the color.

Thank you, Ms. Gupte. Our next question comes from Peter Costa with Wells Fargo Securities. You may ask your question.

Good morning, everyone. Nice quarter. Can you tell us about – one of the opportunities you see some of your competitors exploring that you guys have not explored with Medicare Advantage group business. How many of your commercial retirees at this point – commercial members are retirees and that could be an opportunity for you to convert into Medicare Advantage group lives?

Peter, good morning. It's David. First, macro, we don't have that data point disclosed. Stepping back, you identify a future growth opportunity that is not lost on us in any way, shape or form. So, we continue to be excited and optimistic around our Medicare Advantage growth chassis, both in the individual market as well as the opportunity over time relative to the group space. We have not pursued that, as you noted. We have stayed focused in an incredibly Go Deep orientation to drive the individual chassis but, over time, we see a significant opportunity there. We're clearly aware of what that number is. We just don't have that number disclosed and we see that as a future growth opportunity for us.

Has that risen or declined over the last year or two as your competitors start rolling these products out more and more aggressively? Are they coming into your customer base? Or are you still retaining most of those retirees within your customer base and that what they're actually having is mostly just conversions of their own commercial group into Medicare Advantage?

Experience has been pretty stable and we don't see disruption relative to our customer base at this point in time.

Terrific. Thank you very much.

Thank you, Mr. Costa. Our next question comes from Dave Windley with Jefferies. You may ask your question.

Hi. Good morning. Thanks for taking my questions. Your enrollment guidance increase suggests that you are expecting enrollment growth over the balance of the year. Your revenue guidance maintenance, I can kind of get beyond that by just annualizing the first quarter. I wondered if there's a mix disconnect that I'm not thinking about, or what might be the reason that we wouldn't see revenue grow at more like double digits just annualizing the first quarter. Thanks.

Dave, it's Eric. Nothing I would note in particular, I think. Over the balance of the year, we would expect to have growth in the Select and Middle-market segments across a range of funding arrangements. We'd also expect the individual book will attrit consistent with the normal pattern over the balance of the year until you pull those pieces together and you get to the range that we've talked about. Again, we're pleased with the early momentum that we've got from a customer base perspective and from a growth perspective, but just that kind of evolution of the mix of funding arrangements over the back half of the year, that lands you still at the 7% to 8% growth.

Super. I appreciate that. I don't think I've read or heard any call-out with regard to flu. Was there a quantification of flu impact? And did that end up being lower than you expected, or in line?

Yeah, the flu season overall, we had pretty good visibility into when we provided our guidance back at the beginning of February. It played out pretty consistent, so I would note it as a variance kind of one way or the other in terms of our performance so far this year or in our outlook.

And if I can sneak in one more, David. Competitively, are you seeing competitors creating networks that favor owned delivery assets? And is that a competitive challenge or opportunity for you?

Dave, macro, generally speaking, no. Over time, we expect to see that as a potential. We see it more as an opportunity than not. We believe the more choice, partnered, open-access framework and the alignment around that is superior based upon needs and buying behaviors so long as the cost quality equation is there and we've been able to prove an outstanding cost quality equation. So, big picture, to-date, no. See it as a potential change in the future and we think that change creates more opportunity for us than not.

Great. Thank you.

Thank you, Mr. Windley. Our next question comes from Lance Wilkes with Stanford Bernstein. You may ask your question. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: Yeah. Morning, guys. Just had a question strategically. Following the Express Scripts merger and ultimate integration of that, what are the additional strategic capabilities that you feel you need to add? And how would you prioritize things like local market scale, government program growth and vertical integration with risk-bearing providers?

Good morning, Lance. So, you recall we have a very clear set of priorities relative to M&A. Your question was premised on what we have to add. We will be extremely well-positioned post the combination and we're excited for that. We remain focused in terms of five categories of M&A so long as they are strategic as well as financially attractive. And to remind you, they further our global footprint, they continue to perform quite well, further our U.S. seniors capabilities, further our physician engagement and pharmacy capabilities, further our retail base capabilities and over time, expand our state-based risk program capabilities. So, our orientation, if you look back, has been very consistent with the five priorities we put forward. We don't prioritize one over the other. We dynamically seek to identify the best opportunity in any of those categories as the marketplace evolves and we'll continue to be optimistic around that. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: Okay. And just a quick question on pharmacy membership for the quarter. It looked like the pharmacy cross-sell rate may have declined a little bit in the quarter. Just wondering what drove that, kind of who won that business and if there were any changes in how you're going about cross-selling that?

The decline of the PBM lives for the first quarter was primarily driven by the loss of a large national account relationship. Looking over the balance of the year, I'd expect pharmacy lives to grow as it's a key element of the integrated offering that we have in our Select and Middle-market segments. And obviously, the combination with Express scripts will position us to even more effectively serve those clients on an integrated or on a stand-alone basis. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: Got you. And I just note that in your prepared remarks, David, you mentioned your clients and an expansive view clients including health plans and you mentioned pharma manufacturers a number of times. I was wondering just kind of your perspective on how you look at pharma manufacturers and kind of the orientation of them as clients and how you might service them going forward.

Yeah. Lance, thanks. It was referring to the pharma manufacturers in terms of opportunities for alignment opportunities for value creation, et cetera. So, coming back to orientation around partner of choice, coming back to orientation around driving value-based outcomes, we believe it's imperative in the next chapter of health care in the United States to find some of the success that the marketplace has seen and we have seen in aligning incentives around collaboratives, or otherwise, with physicians or hospitals carrying that same philosophy much more deeply and much more comprehensively into the pharmaceutical manufacturing environment because, again, the cost curve cannot continue to be borne by society. And we see a tremendous opportunity to step-function the value creation for clients and customers working with forward-looking pharmaceutical manufacturers. That was the intent of that comment.

Thank you, Mr. Wilkes. Our last question comes from Frank Morgan with RBC Capital Markets. You may ask your question.

Good morning. Most of mine have been answered, but I did want to go back to the guidance just one last time. And maybe this is an Eric question. When you look at the strong results in the quarter relative to the amount of guidance raised and you look at just the EPS contribution in the first quarter, it's obviously a lot higher than what you historically run. So I'm just curious, is there any final thoughts, this is the last question, in terms of just the cadence over the course of the year that we should be mindful of when we work the quarterly progression out to get to your guidance? Thanks.

Frank, I appreciate the question. The dynamics here, I would call, would be all kind of normal things. But I would note the following in terms of things that will shape the seasonal pattern over the balance of the year. First is just the normal seasonal impact of deductibles and the normal impact of things like Part D and the like. And with the deductibles, in particular, as you know, as you move throughout the year, those have an upward increase on the cost end of things, one. Two is the rate and pace of spending on our capabilities, including the impact of some of the investments that we've talked about in terms of tax reform and those sorts of things. We expect that those will come in over the back part of the year, as well as spending on our readiness for January 2019 selling cycle. And then, third would just be the impact of the 2019 industry fees suspension that'll come back out of rates as we get closer to the 2019 timeframe and such. And so, again, we've seen this dynamic in the past when the industry fee comes and goes in terms of the impact that it has on the seasonal pattern and the like. Those would be the things I'd encourage you to think about as you look at the overall pattern. But again I'd reiterate, off to a great start this year and really confident in our ability to deliver the results and the guidance that we put forward.

Thank you, Mr. Morgan. At this time, I'll turn the call back over to David Cordani for closing remarks.

Thank you. To wrap up our call, I just want to reiterate a few key points from our discussion. Cigna delivered very strong first quarter financial results, which continue our consistent track record of growth and value creation across our well-positioned portfolio of businesses. Our results reflect strong momentum across our portfolio, led by our Commercial Employer business, which once again delivered strong organic medical customer growth, particularly in the Select and Middle-market segments, attractive margins and continued industry-leading medical cost trend. Collectively, our first quarter results reflect strong momentum and give us confidence we will achieve our improved 2018 outlook for earnings, EPS growth and customer growth. Our first quarter performance also continued Cigna's long track record of value creation in our employer customer space through deep integration in medical, pharmacy behavioral and other specialty solutions that enables us to more comprehensively support the health needs of our customers. Looking ahead, our combination with Express Scripts will position us to continue to build on this track record and will accelerate our growth strategy by creating deeper alignment across critical elements of the health care system to drive improved affordability and clinical quality and will result in attractive financial results, exceptional free cash flow and capital flexibility. We thank you for joining our call today and look forward to our future discussions.

Ladies and gentlemen, this concludes Cigna's First Quarter 2018 Results Review. Cigna Investor Relations will be available to respond to additional questions shortly. A recording of this conference will be available for 10 business days following this call. You may access the recorded conference by dialing 866-484-6429 or 203-369-1603. Thank you for participating. We will now disconnect.