Hi, everyone. Good morning, and thank you for joining us today at day three of Morgan Stanley's Global Healthcare Conference. I'm Ricky Goldwasser, Morgan Stanley's Healthcare Services Analyst. Before we get started, please note that this is a webcast for Morgan Stanley's clients and appropriate Morgan Stanley employees only. The webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com. If you have any questions, please reach out to your Morgan Stanley sales representative. With that out of the way, I'm very pleased to have Cigna CEO David Cordani here with us today. 2020, David, has demonstrated really the company's strong ability to execute and work with clients despite a very challenging year on the COVID front for clients and patients.
I wanted to, David, turn it over to you to spend a few minutes talking about your to-date, about strategy, some introductory remarks before we go to Q&A. For everybody on the webcast, if you have any questions for David, please type it into the browser, and I will be happy to relay it. David, on you go.
Good morning, Ricky. Thank you for hosting this. Hello, everyone. Thanks for spending time today. I'll make my remarks relatively brief because I know there's a lot of Q&A ahead of us. I do want to frame that Q&A. First and foremost, Cigna as a corporation has been and continues to be guided by our mission. Our mission is to improve the health, well-being, and peace of mind of those we serve. To that end, we strive to be champions for affordable, predictable, and simple solutions for all that we serve around the globe, today having approximately 180 million customer relationships around the globe. In this very disruptive environment, both the COVID pandemic as well as the racial tensions that we confront both in the United States.
as well as outside the Unites States, I'm quite proud of the way Cigna has stepped forward in a whole variety of ways, proactively, in many cases leading, putting our customers, our clients, our partners, and our communities front and center in terms of what we do, how we do it, et cetera, on behalf of our clients, our customers, and our communities from that standpoint. Now, as we think about our business portfolio, today is a really exciting day. Our announcement of Evernorth represents an exciting next chapter for our corporation. Evernorth represents codification of our commitment as well as the breadth of what we have in our current portfolio around health services. The successful integration of Cigna with Express Scripts, now almost two years since we closed that combination, puts us in position to take the next step on our strategic journey.
Evernorth is a brand codification of what that is in terms of bringing together capabilities around pharmacy services, care management services, benefit management services, and data analytics services, both in existing capabilities. New innovations are standing up and will be further fueled by additional innovations, partnerships, which is core to who we are, as well as potentially some acquisitions. That portfolio of services will be oriented toward the needs of health plan clients, core clients, of course, as well as governmental entities and increasingly over time, physicians and delivery systems that are taking performance-based risks and challenges. That complements our existing growth platforms of our U.S. commercial platform, our U.S. government platform, and our international platform, and our fourth platform, our health services portfolio.
Taken as a whole, that portfolio of services continues to put us in a position to deliver our long-term goals and objectives, which is 6%- 8% revenue growth and 10%- 13% EPS growth. I would note that we have a track record of not just putting the objectives on the page but delivering. For example, over the last decade, we have delivered that 10%- 13% EPS growth objective. Punching it down to specifics, we reiterated our 2020 EPS outlook of $18- $18.60 in this disruptive environment, all while we deliver significant value back to our clients and customers. For example, our ASO clients have benefited by $2 billion of lower spend in the first half of the year.
As we noted in our second quarter call, we returned an additional almost $300 million back in support of our clients in this unique environment that we operate in from that standpoint. Additionally, we remain focused on our 2021 EPS objective of $20- $21 per share. We remain on track to achieve our deleveraging objective by the end of this calendar year, so fourth quarter of 2020, a short 24 months post-closing our combination. My final comment is that puts us in a position to have our balance sheet where we seek to have our balance sheet. We're in a position to generate well in excess of $8 billion of operating cash flow in 2021, which represents a significant shareholder value creation opportunity.
Taken as a whole, we are quite excited about our performance this year in a very challenging environment of what we're doing for our customers, our clients, our partners, and our communities. Two, Evernorth is an exciting step forward for our franchise and is on strategy as we broaden our health service portfolio. That business will be led by Tim Wentworth as the CEO. It leverages a broad portfolio of existing services and will be expanded through new innovations, partnerships, as well as acquisitions that fit in the pharmacy services space, the care management space, the benefit management space, and the data analytics space. With that, Ricky, I'll turn it over to you. I look forward to exploring what's on your mind and the investors' minds.
David, I would like to start actually with Evernorth. I'd say that innovation and partnership have really been kind of the key themes in the conference in the first couple of days of the conference. Evernorth, I think, fits right into that theme. Why create Evernorth? Why now?
Yeah. I'm going to go to the why now first and then the why working back. As I indicated, almost two years ago, we closed the combination with Express Scripts. We were very clear about what we were seeking to accomplish relative to that combination. First and foremost, in 2019, it was head-bound, focused on execution because we had two very large growing health service platforms that we needed to ensure delivered phenomenal results for our clients, our customers, our patients, and our partners. I'm proud to say we did in 2019, led by our colleagues around the globe from that standpoint. Our client retention levels and our customer retention levels and our market-leading medical cost trend and pharmacy trend and service results reinforced that in 2019.
That put us in a position to have another attractive growth year in 2020, which put us in a position to get ready to unveil our strategy. We've worked with our leadership team because alignment of a corporation in our breadth is quite important throughout the second quarter of this year. This marks the right time to roll out Evernorth off the health and successful integration of our two companies and complementary leverage. It also is reinforced by the health service needs, as you articulated. Those we serve, health plan clients, corporations, governmental entities, individual consumers, and health care providers are seeking more coordinated and leveraged services to create more value for them. For example, almost every pharmacy event is a behavioral event. Yet traditional pharmacy management services tend not to leverage the best of behavioral health services on behalf of the patient or customer.
We have leading pharmacy services and leading behavioral services. Evernorth will bring the best of those two capabilities together for the benefit of a patient and therefore ultimately for the benefit of either a health plan, a corporate client, or a government intermediary who's financing some of those solutions. It's an evolution of our strategy. It's the right time. The market need is there. Our core capabilities are there. Ricky, last comment I would make, we seek to be the undisputed partner of choice. It is a clear declarative statement that we have made for years. We have many examples of the way in which we partner to create shared value. Evernorth is an example of how we seek to continue to partner to create value.
That means with those we serve, be it a health plan or a corporate client, and who we seek to work with to create that value. You'll note, you'll probably peel it back, we have a significant number of partnerships with entities of all sizes where we seek to create shared value for the marketplace. As long as we create differentiated shared value, we get to capture a reasonable amount for the benefit of our shareholders.
David, we're already getting interest from investors in Evernorth and a few questions that have come through. First of all, is Evernorth initially focused on servicing Cigna fully insured customers? Would it also be targeting self-insured?
Let's separate for a moment. Think about two large leading brands or market positions for our corporation. Cigna, from a health benefits standpoint, largely going after the integrated market for commercial and the government business. Then Evernorth, a service portfolio with pharmacy services, care management services, benefit management services, and data analytics services. Evernorth's primary customer base is serving non-Cigna customers and clients. Cigna contracts to consume those services like any other client milestone, be it a health plan, a corporation, a governmental entity, an integrated delivery system. Don't think about it as servicing guaranteed cost or ASO or otherwise. Think about Evernorth as a separate business portfolio of capabilities that is focused on the non-Cigna marketplace, if you want to use Cigna as guaranteed cost to make it really rigid, and create value for those buyers, health plan, corporation, governmental entity, risk-bearing healthcare provider.
Think about the fact that Cigna, in the traditional sense of the way the question was asked, can contract with or seek to buy services from Evernorth based upon what Cigna needs from that standpoint.
David, it sounds like an agnostic platform that allows you to expand your market reach. The follow-up questions that we got, and I think you answered some of it, but I'll still pose it, is when you think about competitors in the marketplace, what kind of like is how are you differentiating with Evernorth versus what's available in the marketplace today? I think you talked about fertility services, for example. How is it different from what you do today?
Yeah. You first, do you have a hard time to use the word agnostic? I appreciate that. I think that's directly correct. We talk about open architected. We've talked about open architected since the day we put the two companies together because we believe that the addressable market is much broader than the traditional view of what people might view in an insurance orientation because it's more of a health services orientation. Now, back to I think the core of your question, how does it differentiate itself in the marketplace? I'll give you three major buckets. One, it's a customer or client-centric orientation to all solutions. So Evernorth will not be pushing product. It will not be going to market with a portfolio of products and trying to identify buyers.
Evernorth goes to market through a need set and working in a client-centric or customer-centric way of saying, how do we put a set of solutions together that best meet your needs? It's a client-oriented, solution-oriented organization and configuration, which is very different than a product push organization. Two, there's a relentless orientation to data-driven innovation. The fertility management services we'll come back to in a moment is a data-driven innovation from that standpoint. Third, a relentless orientation to open framework and partnering. Most of whom we compete with seek to manufacture their own and turn it into product and sell product. We'll manufacture some of it ourselves. We'll innovate it ourselves. We will have an open architected framework of partnering because that creates accelerated shared leverage from that standpoint. Customer-centric solution, data-driven innovation, relentless open architected partnership orientation comes to bear relative to it.
In the case of the fertility services, orientation around partnership is going back to the pharmaceutical manufacturer and seeking to better align the value-based outcomes, working with the clinical delivery system where now as an aggregate enterprise to have expanded services around the fertility interventions, and then coordinating the care management and the behavioral management services around that that is patient-centric or client-centric. That's an example of what is on the shelf today within Evernorth. The product portfolio will continue to grow over time.
Very helpful. Thank you. Next on investors' minds is 2020 enrollment and utilization trends. Can you talk about what you're seeing in terms of commercial enrollment now that we are more than two-thirds of the way done with this third quarter? How have things trended relative to the expectations that you laid out on the second quarter? How has the utilization to date kind of shaped your view of the rest of the year?
Sure. Just to put it in context, one, at a franchise level, we are delighted with our aggregate revenue performance for 2020. I would note that we entered the year with a strong outlook, and we strengthened that outlook throughout the course of the year. Growth for the franchise is quite strong. Two, within the context of enrollment growth, I'll come to commercial in a second. We're really pleased to see the step function we made relative to Medicare Advantage growth, where we set forth a five-year objective of growing Medicare Advantage organically by 10%- 15% customer growth per year. In 2020, we were at or above that threshold from that performance. As it relates to commercial performance in the medical portfolio, we expected this to be a very challenging year given the pandemic.
The first half of the year, as we talked about in the second quarter, the results of, if you will, disenrollment were less acute than I think many people anticipated and in part less acute than we anticipated. Part of our less acute performance or less disenrollment was driven by where we play. We have less concentration in the sectors that were initially most disrupted through COVID, travel, leisure, et cetera, from that standpoint. As it relates to the second half of the year, you recall from our second quarter call, we said we expect to see further pressure on disenrollment. That was fully factored into our outlook for the full year when we reiterated our revenue guidance as well as our earnings guidance from that standpoint.
We said we expected to see further pressure on disenrollment as furloughed employees either some made their way back to full employment or some went beyond furlough to full unemployment from that standpoint. An early look at that, we're through July and August, the rate of erosion is a little slower than we even anticipated on that. I'd come back to two headlines that I think are quite important. One, the durability of the U.S. economy, the U.S. economy, and the strength of corporations in terms of seeking to innovate their way through this pandemic. Secondly, I think something that gets a little less attention than it should get, employers are working in extraordinary ways to help their employees in a variety of ways, either avoiding layoffs, extending furloughs, having continuity of benefits, et cetera.
I think one of the messages around that is it underpins the strength of the U.S. employer market and the philosophical approach of employers at large relative to their employees, whether it's an obligation they feel and/or an expectation that they're going to be returning the majority of those employees back to the workforce as their buying ramps up. As a headline, we expect it to erode throughout the course of the year. That pressure exists. Thus far, through the third quarter, the rate of erosion is slower than we anticipated or better.
David, that actually brings an interesting question because it really talks about the strength of the U.S. employer and the philosophical approach when there is a public health crisis to provide health benefits. How do you think this is going to evolve into next year?
I want to pinpoint that when you say this is going to evolve, what part of this?
That approach that the employers have been very open to, extending benefits and really thinking about the member and the employee and the need to provide health care benefits.
Yeah. Let me step back and, Ricky, see if this is directly responsive. If we want a vibrant economy, and a vibrant economy feeds everything, it feeds social programs, it feeds community evolution, it feeds education systems, it feeds innovation from that standpoint, we need healthy, productive, present, highly engaged individuals as employees. The current environment reinforces that at an even greater level. The conversations I'm having with CEOs are all around that. The conversations I'm having with policymakers are around that as well. There is almost this regrounding of, if you want a vibrant economy, you need vibrant employers. If you want vibrant employers, you need healthy, productive, present, highly engaged employees. By the way, that's what our products, programs, and services do. In the pandemic environment, employers present actually an engagement, communication, and in some cases, a resource deployment opportunity.
For example, the Business Roundtable is expending massive energy to making sure that employers are communicating the imperative of flu vaccines, which everybody understands. We need to get the flu vaccination rate up tremendously in the country because of the pandemic to create capacity in the event that there's yet another wave. That's the employer market as a lever from that standpoint. The way in which vaccinations will be coordinated going forward once we get through the essential workers from that standpoint, activation of the employers is quite important. Activation of the employers relative to innovation in terms of more aggressive adoption of virtual care, at-home care, chronic care management programs, et cetera.
I see this as a further call to action of what and how that marketplace works and what how employers could drive innovation, engagement, and connectivity for the benefit of their employees and therefore for the benefit of the market. Is that directionally helpful?
It is. I think that what investors are kind of like thinking when they look into next year, trying to understand how kind of like the enrollment is going to shape into next year as things kind of like settle into new cadence. I don't know. Maybe too early to predict at this point.
There is a variety of predictions out there relative to the unemployment rate. Let's take that as a corollary. In most cases, the unemployment rate that we sit on right now is a lower level or a better level than was predicted four or five months ago. I'm not saying that's an opportunity for unbridled optimism. I think it's an indicator of the ecosystem, the commercial ecosystem in the marketplace, wanting to get business back on an accelerated rate and the need for employment to be able to drive that. 2021 will be a disruptive year from a United States standpoint and for many of the developed markets around the world. There is no doubt around that. The employer has the ability to drive innovation, engagement, adaptation through that at an accelerated rate because there is more localization, more personalization, more engagement along the way.
I think we're seeing, if you will, both of those forces work in concert with one another, not perfectly, but work in concert with one another.
We got a couple of questions on the government business. Let's just focus there. Can you give us an update? You talked about being at or exceeding expectations on the MA side. If we can hear more on the government side of the portfolio, Medicare Advantage, any thoughts about the Medicaid market? Lastly, on that one, you know Medicare Advantage and Part D released their payment methodology recently. They've done that three months earlier than usual. How does that impact kind of like how you think about the bid and process for 2022? Thank you.
Yes. Yeah. A variety of items there. First, grounding. Historically, Cigna has only participated in the individual HMO Medicare Advantage offerings in a limited number of MSAs. If you go back to a year plus ago, we articulated that we essentially were present in about 18%- 19% of the addressable market. We said strategically, we're going to grow that from some 20%- 50% of the addressable market over a five-year period of time. We're well into that execution path. We're going to expand our portfolio from individual HMO and augment that with an individual PPO offering, which we did and stood up for 2020. We said we would grow 10%- 15%, as I noted before. Foundationally, we have about 87% of our MA lives in four-star plus plans.
The average of our Net Promoter Score (NPS), the retail measurement of delight and loyalty at the consumer level, is about 70, which is an outstanding result from that standpoint. Lastly, our corporate star rating is 4. That's the star rating we carry into new market opening. We're systematically into growing our individual HMO business, expanding our individual PPO portfolio, and opening new markets. We have significant demand to open new markets from our successful commercial relationships we have with health care delivery systems in many of the MSAs we want to open going forward that are value-based in nature. We're in an execution path surrounding that on a go-forward basis. We continue to see MA as an attractive growth market. Everything I've just articulated is organic. Ultimately, we can augment that with group MA offerings on a more accelerated basis. That presents yet another growth platform for us.
We continue to view potential acquisition as an augmentation to that growth strategy. The growth strategy is an organic growth strategy. That's on what is performing very well right now off the foundation of what we're able to build on with that star rating, the NPS rating, and the geographic expansion we have sitting in front of us right now. Medicaid has always been a lower priority growth platform within the Cigna portfolio, in part because we had other high growth, high margin, high return platforms where we had more differentiation to bring to the market. We've talked in the past of saying that we believe that increasingly states, due to the budgetary pressure, are going to need to look for new solutions, new carve-out or performance-based solutions for a subset of the population to get more value.
The polychronic or omnichronic population or the acute services that are necessary or the specialty services that are necessary, we see that as a growth opportunity on a go-forward basis, both through our government programs and, importantly, through Evernorth. Evernorth today serves a significant number of health plans. Those health plans have government business, and our ability to make those health plans' value propositions even more successful presents a growth opportunity for us as we look forward. As states evaluate potentially carving out subsegments of the service population, we have two chassis to go after the Medicaid state-by-state opportunities that sit in front of us. Lastly, relative to your payment guidance, I don't have detailed comments on it. You're correct. They came out early. This is the first wave of guidance. Initial review of it is no huge surprises. You'll know that bids are already in.
Our bids are already in based upon guidance at a given point in time from that standpoint, and our assessment of our bid framework, both market by market, product portfolio by product portfolio, is quite positive. Therefore, we feel bullish about 2021 from our growth objectives.
David, I just wanted to touch upon capital deployment. Obviously, the strength of the balance sheet is one of the key, I think, investment thesis in what investors are focused on. You talked about supplementing Evernorth with potential acquisitions, potential for acquisition on the M&A side. With the cash that you have on the balance sheet, how should we think about the markets that you find attractive or you think that it's important to deploy more capital into expanding the scale?
Yeah. First, in terms of stepping back and thinking about the headline you just articulated, which I appreciate, we worked very deliberately to position Cigna, the aggregate franchise, to be a growing high cash flow production, free cash flow deployment model. There are different ways you can grow but encumber your cash flow from a business profile standpoint. We not only have a growth business and a growth business with a high return, we have a growth business with a high return that frees a significant amount of the operating earnings to be deployable cash. That is not a happenstance, that is strategic positioning. As we come out on the back end of this year, and even during the deleveraging process that we've aggressively executed during the first 24 months, we've executed our deleveraging.
We've invested in a full tranche of CapEx innovation within our portfolio so we maintain that capacity. Usually, large combinations decrease that. We did not decrease that at all. We executed some bolt-on acquisitions over the last 18 months from that standpoint. Now, as we go forward into 2021 and beyond, our macro priorities remain the same. Ensure that the enterprise is appropriately capitalized for growth. That is built into our base and has the CapEx portfolio built into that. Two, pursue targeted strategic and financially attractive M&A. I'll come back to that in a minute. Three, return it to our shareholders. Historically, we've returned to our shareholders through share repurchase. Given the capital profile of the franchise as we look forward, we will more comprehensively look at the mix of both share repurchase and dividend given the breadth and health of our overall capital profile.
Our M&A priorities, we've historically had five categories of priority. The last time we refreshed it was our investor day in 2019. You recall the asset classes in there included further our global platform, further our U.S. Seniors platform, further our care coordination capabilities, further our digital and analytics and retail capabilities, and then further our state-based risk programs, that notion of what we expect to happen as states look for more advanced solutions from that standpoint. We feel really good about our portfolio solutions today. We do not view that there is a gaping hole within our portfolio solutions. We're mindful of the fact that our equity currently does not represent, in our mindset, the value of the franchise.
That puts us in a great position relative to shareholder value creation as we step into 2021 with the significant balance sheet health that you articulated and free cash flow generation we'll have. We are going to challenge ourselves to make sure that we create ample visibility for shareholders, not just on our strategic direction, growth path, what's going to drive our revenue and EPS growth, but also our capital deployment because of the size of our free cash flow, creating more visibility in terms of our capital deployment expectations in 2021 and beyond. Stay tuned for more there.
How are you thinking about the opportunity for accelerated share repurchases?
You know that we have meaningful share repurchase capacity on the shelf right now based upon board approval. We expect to have a significant amount of share repurchase upon closing the group transaction that, as we noted, moved from Q3 into Q4 due to some final COVID-related regulatory slowdowns in a few jurisdictions from that standpoint. First and foremost, that $5.3 billion net cash flow, we've said the meaningful majority of that goes towards share repurchase. Some will go toward debt extinguishment. The meaningful majority of that will go to repurchase from that standpoint. I would say stay tuned for more relative to 2021 and beyond per my prior comments. We recognize the fact that the $8 billion plus free cash flow generation puts us in a different position. We have a responsibility to creating some visibility around how we expect to deploy that.
We see that as a massive shareholder value creation opportunity, especially in the current environment.
We're almost at time. I have to ask you one more. The upcoming election, your view on how the possible election outcomes could impact the business. What do you think is the favorable outcome for Cigna?
Yeah. We don't handicap elections. I've been in the space for over 30 years. I've had the blessing and good fortune to be in this role for a little over a decade now. Our responsibility is to make sure we position Cigna as having a clear strategy, strategic flexibility, and financial flexibility to support that strategic flexibility. That's what we have. We have multiple growth platforms, a service-based portfolio, a high-return portfolio, and a more cash-expensive portfolio. Additionally, we've deliberately built our portfolio to be able to serve corporations, health plans, governmental entities, individuals, and health care providers. As you think about the election outcome and evolution of policy, legislation, and regulation around what we know as a health service space, we believe we are well positioned for a changing agenda or an evolving agenda. We are not beholden to any one segment or any one business model.
What drives us is to create the highest and best value for the end consumer through whatever intermediary we seek to do business with on behalf of that consumer. That historically has generated the lowest medical cost trend in the commercial space for eight years, the best-in-class pharmacy trend in the space, high clinical excellence, and as I noted in the Medicare Advantage space as an illustration, a 70 from an NPS standpoint. That doesn't mean we're perfect. That doesn't mean we're done. It means deliberate strategic flexibility, multiple growth platforms, value creation framework, and the financial flexibility to move quickly as the marketplace innovates and evolves and to do so both as a sovereign as well as in a partnered model. We think that's durable under any election outcomes.
Great. David, thank you very much for your time. This concludes our session. For everybody listening to the webcast, thank you for listening, and thank you for all the thoughtful questions.
Thank you very much, Ricky. Thank you, team.