Cigna Corp. (NYSE:CI) Q4 2014 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 08:30 am ET


Cigna Corp. (NYSE:CI) Q4 2014 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by for Cigna's Fourth Quarter and Full Year 2014 Results Review. (Operator Instructions) As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded.

We'll begin by turning the conference over to Mr. Will McDowell. Please go ahead, Mr. McDowell.

Will McDowell

Good morning, everyone, and thank you for joining today's call. I am Will McDowell, VP of IR. Joining me this morning are David Cordani, our President and CEO; and Tom McCarthy, Cigna's CFO. In our remarks today, David and Tom will cover a number of topics, including Cigna's full year 2014 financial results as well as our financial outlook for 2015.

(Forward-looking Cautionary Statements)

Before turning the call over to David, I will cover a few items pertaining to our financial results and disclosures. First, please note that when we discuss the number of covered lives for our global medical customers, we will be doing so on a basis that excludes those individuals that were previously covered under Limited Benefits plans. As a reminder, we exited the Limited Benefits business as of December 31, 2013, as required by the Affordable Care Act regulation.

Second, please note that our definition of adjusted income from operations will change for 2015 reporting in that we will now exclude acquisition-related amortization expense from this operating measure. When we discuss our earnings outlook for 2015 today, it will be on a basis of adjusted income from operations that excludes acquisition-related amortization expense. This is a change compared to the basis on which 2014 results are reported and how we have previously provided our 2014 outlook. In 2015, the impact of excluding acquisition-related amortization expense is approximately $100 million after tax or $0.40 per share.

Third, beginning in 2015, we have simplified our guidance and disclosures for our medical care ratios or MCRs by reporting them on a basis of total Commercial and total Government. The total Commercial ratio encompasses all of our commercial risk products, including medical, pharmacy, dental, stop loss and behavioral products, provided through guaranteed cost or experience-rated funding arrangements in both the United States and internationally.

The total Government ratio includes our Medicare Advantage, Medicare Part D and Medicaid businesses. To ease the transition, we have provided historical medical care ratios on these bases within our quarterly financial supplement that was posted in the Investor Relations section of this morning.

Lastly, consistent with past practices, when we make any prospective comments on earnings or EPS outlook, we will do so on a basis that excludes the impact of any future capital deployment or prior year development of medical costs. Our outlook also excludes the impact from our recently announced acquisition of QualCare, which we do not expect will have a material impact to our financial results in 2015.

And with that, I will turn the call over to David.

David M. Cordani

Thanks, Will. Good morning, everyone, and thank you for joining our call today.

To begin, I'll review highlights of our full year