All right, good morning, everyone. I want to thank everyone for joining us to the Bank of America Virtual Health Care Conference. It's my pleasure to introduce Cigna. Cigna is one of the largest providers of health insurance and pharmacy benefit management services in the United States and really globally across the world. Presenting today, we have Eric Palmer, who's the Chief Financial Officer. We also have Will McDowell from Investor Relations. I'm going to hand it over to Eric to make a few quick introductory comments, and then we'll jump into Q&A.
Thanks, Kevin. I appreciate the chance to be here and the chance to make a few opening remarks here. Just starting off, overall, I would just note that in these unprecedented times, Cigna is really focused on delivering for our customers, clients, providers, employees, and communities while we continue to work on delivering our commitments for our shareholders and in our business. While we're all facing challenges associated with COVID-19, Cigna is, and I'm really proud of the leadership role Cigna has taken in responding to the needs associated with COVID-19. Just as a couple of examples, we've recently announced Parachute Rx, which is a program that provides really extraordinary discounts to brand and generic medications for newly uninsured individuals, as well as our Customer Protection Program, which protects customers from surprise billing related to COVID-19 treatment and such.
Of course, we've been working with and in support of all of our stakeholders throughout the progression of the pandemic over the course of the last number of weeks now. Now, turning to our results, we delivered strong results in the first quarter, driven really by strength across our health services business, our integrative medical business, and our international markets business. That's driven by our continued focused execution in what was a dynamic environment even before we got to COVID-19. As I noted on our earnings call a couple of weeks ago, COVID-19 impacts emerged late in the quarter. They had a minimal impact on the financial results for the first quarter. The strength of our first quarter results really set us up well to navigate over the balance of the year and navigate through the COVID dynamics. We reaffirmed our full-year guidance of $18- $18.60 for 2020.
We noted in our earnings call a couple of weeks ago that we remain on track for $20- $21 of earnings per share goal for 2021. We expect that there will be headwinds from COVID-19. We expect there will be declines in membership relative to our prior expectations. We also expect there will be directionally offsetting impacts from lower medical costs due to deferred utilization and offsetting that higher costs related to treating COVID-19. Underlying all of those dynamics, continued strong performance in pharmacy services, especially pharmacy, and continued strong growth in Medicare Advantage. Maybe the last point I'd make in our opening marks here just around capital and liquidity positioning, we continue to expect to generate cash flow from operations of greater than $7.5 billion in 2020. That's before the sale of our group disability and life business, which will deliver another $5.3 billion approximately of after-tax proceeds.
We're on track to getting to a debt-to-capitalization ratio in the upper 30% by the end of the year. As we look at 2021, we are on track to deliver our $20- $21 of earnings per share goal. As we navigate the continued evolving environment, building on the strength of our businesses and such, we feel really optimistic about the capabilities and the ability for us to continue to drive value for our clients, customers, shareholders, and all of our stakeholders. Looking forward to talking about our foundation, our expectations, and our outlook with all of you today. Kevin, happy to take any questions you'd like to tee up.
All right, sure. Maybe just following up on that last point there about kind of reiterating the 2020 guidance. What gives you that confidence to reiterate the 2020 guidance? You mentioned membership pressures from a recession, interest incomes probably going to be down. There are some pressures here that maybe you weren't thinking about before. What gives you the confidence to reaffirm next year's numbers when everything is in disruption today?
Sure. Just stepping back, when we originally announced the combination with Express Scripts back in March of 2018, we put out the goal of $20- $21 of earnings per share income in 2021. We said at the time that we saw a number of different paths to be able to get there. We certainly didn't project a pandemic or anything along those lines. Since that time frame, we've continued to reiterate our confidence in that as we've had good, strong core earnings growth. We've executed on the integration. We've worked through our deleveraging. We've brought the debt-to-capitalization ratio down every quarter since we closed the transaction. We've deployed capital, including returning capital to shareholders through share repurchase. All of those things have helped to further increase our confidence over the course of the time since we announced the target.
Now, as we look to next year specifically, a few things that I have you keep in mind. One, we do continue to integrate or to execute on our integration synergies, right? We're continuing to deliver, and we're continuing to deploy capital. All of those things certainly help. Two, we'll have the benefit of closing the group transaction in the third quarter, and the deployment of those proceeds will go towards debt repayment and share repurchase like we've talked about before. Three, we think that will end up being accretive in 2021. We think it'll be neutral for 2020, but accretive in 2021. We've also, since we set that initial target, announced our collaboration with Prime Therapeutics. We expect that as a net additional helpful item for us as well. We feel really good about our underlying momentum, right?
We continue to have good cash flow generation and optionality of how we deploy the capital generated from that cash flow. As you think about COVID and the scenario planning and things along those lines, we've looked at a lot of different scenarios here. We've tested a range of scenarios around the recession. We take a pretty disciplined and prudent approach to how we work through the scenario planning we undertake there. We recognize that there's uncertainty regarding how exactly this will play out. Even as we play through the different scenarios around a rebound in utilization, around the underlying shifts in employment and what that does in terms of playing through our volumes and such, we still think that the $20- $21 earnings per share target is achievable and one that's the right goal for us at this time.
All right, now that does make sense. I guess, can you talk a little bit more about the recession and how you're thinking about how it will impact the different, maybe the three main businesses, your Health Plan, your PBM, and then International Business?
Sure. As we noted on the earnings call, we do expect commercial enrollment pressure driven by unemployment. That is probably the headline impact in terms of the most meaningful one. The specific kind of bottom line impact of that will depend on the depth and duration of the recession. It will depend on how the impacts can even unfold across different geographies and across different industries and really the pace of the return to work and just how long this goes on and such as well. I think sometimes folks will want to just try and translate an unemployment rate to impact. I would note it actually needs to be looked at quite a bit more of a granular level than that. We need to start with looking at things by geography, by market segment, by industry mix. They are all important factors to how we think about that.
Just as an example, there was an article in The Wall Street Journal over the weekend that talked about 45% of the lost service jobs to date occurred in, I think, in leisure and hospitality. That is less than 5% of our book of business, right? Overall, we think at this point we are less exposed to the most impacted industries. We continue to expect there will be impacts to be sure. The other item that I think is different this time around than prior recessions, and if you look back to the global financial crisis and the associated recession, we are seeing employers to date continue to offer benefits continuity for more employees. We noted on our call a couple of weeks ago about 50% of the employers in our book continuing coverage for furloughed or laid off employees.
We think that continuity is really important for a variety of reasons. One, it obviously helps to preserve the employer-employee relationship. It helps the economy and things start back up more rapidly. We think it is important from a health perspective to minimize the disruption to individuals, of course, treatment and things along those lines as well. Those are probably the biggest things I would step back with at a macro level as you think about the commercial portion of the business. On top of that, you think, that plays through a portion of the health services business. It plays through the commercial portion of our integrated medical business. On top of that, as you think about the health services platform more broadly, I just remind you that within that platform, we serve Medicare and Medicaid plans, other health plans. We serve federal programs on top of the commercial account.
We shared at our Investor Day, about a year ago now, that out of the health services platform, about $400 million of the scripts associated with that platform from a pharmacy perspective were tied to the commercial business. That's on a base of around $1.5 billion. It's a meaningful portion, but certainly not the majority of the volume of the health services business. Maybe the last thing I'd say just related to the services business is here, like in the Integrated Medical segment, we think our script volume is less weighted to the most impacted industries as well. We look at the volume of business that we have kind of by industry and things along those lines. That's all part of how we assess the different scenarios and got comfortable with the $20- $21 target for next year and reaffirming that.
You mentioned that you didn't expect a significant pullback in scripts, I guess, during a recession. Why not? I guess when I think about a recession, I think about people pulling back on everything. Is there any thought about how to quantify utilization for the PBM side during the recession?
Yeah, I think you could go back and look at the dynamics from even a number of years ago in terms of the impact within the health services business back in the 2008, 2009 sort of a time frame. Overall, I think you would see that there was kind of less disruption here. I think about that in terms of a couple of contexts, right? One, a big part of the volume is recurring utilization, right? People who are on maintenance types of therapies for a chronic condition or have treatment for a more sustained acute type of portion of utilization tend to generate more of a recurring business and volume and such. That tends to make things a little bit more durable, one. Two, kind of back to the industry mix I'd point to.
I wouldn't lose sight of that from just the makeup of the underlying clients, the book of business and the like. Three, it actually gives us the opportunity to help to use some more of our programs. I would note here even the shift to, and we've seen a shift to even more mail order. That ends up actually being a nice benefit for us. The kind of mix of channels does shift around a bit. Overall, that kind of recurring need to have folks receive their medicine and their therapies is an important kind of continuity that we pull through.
All right, great. You've talked a few times about the strong cash flow of the company and then the $5 billion you're going to get from the United sale. How do you think about deploying that capital? Are there any businesses that you want to get into in a bigger way? Medicare, Medicaid services? What's the priority there?
Yeah, so stepping back, I mean, we've been clear and consistent with our capital priorities here for some time. I would reiterate some of the same framework that we've talked about before. Our primary goals for this year are around achieving our deleveraging goal and working to assure that the divestiture of the group disability and life business is neutral from an EPS perspective this year. We've got a lot of flexibility in terms of exactly the rate and pace that we deploy capital to execute towards those goals. Within 2020, those are the goals that we're focused on. As I noted in my opening comments, we're focused on getting the debt-to-capitalization ratio below 40%.
We've done some share repurchase, and we'll do more share repurchase once we have the proceeds to offset the impact of the loss of the portion of the year that we would have otherwise had the disability and life segment. Now, beyond that, regarding M&A, first, I would just note we really like the path that we've got and the platform that we've got. As I think about our organic growth capabilities, we've got the set and suite of capabilities that we feel like we need to drive our commercial business growth, our government business growth, our international markets business growth, and our services platform. We'd be always looking for things to incrementally improve those platforms. Again, we start with a fundamental point of view that we have strength there. Looking for ways to enhance that would be something in range.
We've talked, obviously, going back even to our last Investor Day around kind of other M&A priorities would be things to help us further drive expansion of our seniors' footprint, things that further drive expansion in our global footprint in a complementary sort of a way to our businesses, things that drive and help with our ability to coordinate and facilitate care, things that drive deeper data and digital analytics and the like. Last but not least, the things that would help us further participate in any state-based risk programs and such. Again, those would be the framework I'd think about this year, focused on deleveraging and offsetting the impact of the disability and life transaction, looking ahead, working to continue to build out the capabilities we have across our four growth platforms, as well as those five items that I just noted.
All right, thank you. It's interesting, I guess we've gone pretty far without really talking too much directly about COVID. How are you thinking about the impact of COVID and the pace and timing of volumes returning to normal, and how it impacts both, I guess, the health plan utilization as well as the pharmacy side?
Yeah, I think a couple of different dynamics here. One, I would note it's really different across different geographies. Obviously, COVID's impacted the New York City area differently than it's impacted other parts of the country. I think we've got some work to do still to see to what extent is that a timing dynamic or is it an intensity dynamic. I think we'll probably see elements of both of those things as we play out geography to geography. As with a lot of things, it's really dangerous to look at the averages. Having said that, we certainly expect an acceleration of the utilization and such to kind of pick back up as we come through the peak of the measures designed to slow the spread.
We're starting to see that just even in the last few days of April and into May, we've started to see some signs of upticks again in usage of services, more deferable or you could call them elective types of services that had been put off. We're starting to see some of those things come back. I'd say it's really early still in terms of calling that exactly in terms of its implications over the course of the balance of the year. I would note late in April, early in May, we'd started to see a bit of kind of return of some of those types of services. The net pull-through in terms of the P&L is consistent with what I noted on our earnings call a week and a half ago.
We would expect the seasonality to look pretty different this year with lower claims in the integrative medical business in the second quarter and that offset by a pickup back in the back half of the year. It shifts around the seasonality a fair bit. On the services platform, here again, a little bit less impactful in terms of the shaping types of dynamics across the platform. We noted in our earnings call that we had seen an acceleration of about 5 million or about 1.5% of scripts from the second quarter back into the first quarter. You should expect to see the drop-off there. At the same time, we've had a nice pickup in terms of the continued shift mail that I noted as folks have really come to appreciate the convenience and the like of that benefit. That plays through the pieces as well.
All in for the services business, probably a little bit less of a notable shift in terms of the timing and the sequencing.
OK, that's helpful. I guess when we think about the 2021 opportunity, how do you price 2021 when the 2020 basis is still kind of so unreliable? How are you thinking about pent-up demand into next year versus maybe lower utilization broadly for some period of time even after COVID is behind us?
Yeah, I really appreciate that question because I think there's a number of intricacies in that that are important to think about. First of all, as you think about the commercial business, we'll just remind you, and you know this, but we'll remind you a big portion of our business, 85% or so is self-funded, right? Here, it's a matter of us working with our clients to help them assess their population. We're going to go through things around geography, kind of risk status of their population, degrees to which they've been able to adopt social distancing measures, et cetera. Working consultatively with our self-funded clients to help them assess the impact for what ramifications there are from deferred utilization and the like. Now, in terms of our risk books in the commercial business, we are doing case-level underwriting for the vast majority of our books.
I would remind you, we're not in the small group market from an employer perspective. We're using client experience, and we're assessing these things in a very bespoke sort of way. We'll be taking into consideration the geography, the risk characteristics of the clients, the industry, how they work, etc. , into an assessment of what the right claims costs will be for them and then pricing towards that. At a most macro- level, it's consistent with what we've done for some time. Obviously, we've got to weave in our best thinking around the rate and pace of utilization coming back. Again, it's important to build that up at a granular level.
In terms of the dynamics on the government business and our individual business, we're right now working through the finalization of how we expect to go to market for the Medicare Advantage MAP plans with the individual plans, etc . Again, same dynamic here, right, of assessing the implications from a market location perspective, the risk dimensions of the population, and bringing together all the different insights that we have on the population in terms of putting our best estimate forward here while balancing our need to be positioned competitively from a market perspective and to be providing a stable and consistent set of experiences for our beneficiaries and for our providers and such. It's working through all those pieces for the individually oriented government risk businesses now.
OK, that's helpful. I guess when we think about Cigna's health plan business, it's unusual because you're the only company, I think, talking about commercial as a growth business. Why do you see that as an opportunity for growth when other companies kind of see it as kind of a cash cow to fund other things?
Yeah, we do think that the commercial business is a growth business, and there's real opportunity for us to continue to grow that business. Stepping back, there's a few reasons I'd point to that. One, there's just a tremendous need for more affordable solutions. There are problems here to be solved and that we are equipped to help solve. I see that as an opportunity for us to continue to drive more, to serve more customers, and to have a bit of a continuous kind of virtuous cycle here, if you will, of us continuing to expand our reach and share and drive to better outcomes for our customers and clients. We've done that for some time now.
We've got a nice track record of consistent organic growth over the course of the last 10 years, driven by growth in particular in the select market and the middle market, but again, growth in aggregate over the course of that time frame. I start with a track record here of us doing this, of us growing the commercial market. It's not just an aspiration, but it's something that we've done year in and year out for a number of years now. Having done that for a number of years, we still think we're only at, call it a 7% or so market share in terms of the select segment.
We think we have a lot of headroom left to go to continue to bring new or more innovative solutions to the market, to do a better job of improving health, to make the rate of health care increases more sustainable. All of those sort of backdrops would be things that I would point to in terms of both track record as well as continued headroom for us. Maybe the last thing I would just say from a commercial perspective is you just need to remember it's not kind of one overall marketplace, right? We need to think about this in terms of looking at the buyer group, by geography, by employer, etc .
As we continue to build in our go deep framework, we continue to see opportunities for us to go deep in additional markets and continue to pick up additional share there and drive our favorable medical cost trend out to the benefit of more and more employer clients.
That's helpful. When we think about the PBM side of things, the market still seems to kind of give a discount to that side of the business for whatever reason. It seems to me like regulatory risk is the biggest concern I hear from people. Can you size or quantify the impact to rebates or spread pricing? If things were to happen legislatively to get rid of them or change them in some way, how do you think about the impact to your business?
Yeah, I mean, I think overall from a pharmacy services business perspective, we continue to think that there's opportunity to do more, right? We think of this as a growth business. We've developed our long-term goals that we communicated at our Investor Day last year and would orient around that, first of all. Now, having said that, we do think that the market will continue to evolve. We're continuing to drive to more transparent models and evolve solutions, kind of moving away from per transaction sorts of models to ones that are more focused on outcomes or transaction, but with full transparency in terms of all of the different economics and such that go there.
We've got today a large number of our clients in full pass-through arrangements with them receiving the benefit of all of the economics in terms of discounts with the supply chain, rebates for manufacturers, et cetera. They pay us a fee, right? We've got that alongside other solutions where the economics are lined up or oriented off of a different dynamic, but oriented again around what's of interest to the clients. At the end of the day, we offer a wide variety of choices to our clients. We facilitate that offering in a flexible way. We let them decide what's going to work best for them. I would continue to expect the market to continue to evolve.
I think we're really well positioned with the intersection of the relationships that we've got with the supply chain, the relationships that we've got with the delivery system, both through our collaborative arrangements as well as through just the overall connectivity we have with the delivery system. We've got leading capabilities from a specialty care perspective. We've got leading amounts of and capabilities related to insights we can generate from the data and such of the enterprise overall. You bring all those things together, and that's a really powerful set of ingredients, if you will, to help impact care better for the benefit of our customers and clients. Again, I think the market will continue to evolve. I'm confident in our ability to continue to evolve with it to create value and then ultimately be rewarded for the value that we create.
OK, that's helpful. I guess one more question that I'm asking all the companies is, is there anything that you think will be the long-term legacy of COVID, and anything that you guys are doing today that you feel like you will be using for a long period of time? Anything about how people are accessing the health care system today that you think will persist even after COVID is addressed?
I think there are probably a handful of things that come to mind. I recognize it's still a little bit of early days. I think I have been thinking about the lasting effects of COVID as maybe accelerants or catalysts on different elements of how care is accessed or how folks think about things. I think this is actually one more step in the direction of providing more technologically enabled points of access from a care perspective and a step away from more traditional bricks and mortar types of dynamics. I think that's likely to be at least, I think we're headed in that direction anyway. This probably accelerates that theme, one. Two, I would note, I think just in today's model, the increase in home delivery is a small kind of change in terms of usage of channels and such.
I think that's a further acceleration of just how people buy things and access things, a further acceleration of the expectation that things come to individuals at their home or via technology. I think there's a continuation of that theme. I think the dynamics of the workplace are likely to evolve as well, right, in ways that we haven't fully rationalized yet. I bet that we will see more people working from home in a permanent sort of a way, and that creates a different set of needs in terms of helping to engage with individuals and actually probably has both risks and opportunities related to other types of well-being from a mental health, from a physical health, and from a loneliness perspective as well. There are a number of different dynamics that come out there. I'm sure there'll be more that we haven't rationalized yet as well.
To recap, the dynamics around more technologically enabled, more shift to things at the home, and more shift to working at home, and the social and behavioral dynamics associated there.
All right, that's helpful. I guess maybe just the last question here since we're out of time. I mean, how are you thinking about, I guess, people are struggling with the concept of if there is a second wave of the virus, how do you think about the impact on your business? Is it basically kind of a non-event since the first one, the first wave was kind of seems like maybe a net positive? Are there things that you're preparing for or dealing with in case this comes back in a bigger way later in the year?
I think that's kind of back to a wide range of scenarios. I wouldn't want to call out kind of one scenario versus another. We're thinking about a variety of scenarios, both operationally, financially, etc . I think in how that plays through from, again, from an economic and employment perspective also. What I think about that is encompassed in the range of different scenarios that we're thinking about, but it's a little difficult to call out implications from a second wave versus a first wave. I go back to the same dynamics of needing to understand the market, the geography, the demographics that we're talking about, and really work it at a much more granular and local level in terms of pulling apart the implications.
All right, that's helpful. Unfortunately, that's all we have time for. Thank you so much for taking the time.
Thank you, Kevin. Have a great day.
All right, bye.