Company BackgroundCore Strategies, Value Proposition, and Core Drivers

Team members:Jon MaesnerKate BielawiecRose Ann CalegariEdmond MackGeoff CarrYelena YakuninaVenecia AlfonsoJessica Schmitz

September 2014

Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. © Copyright 2012 Cigna

Business Acumen classExpress Scripts, Inc (ESI) Case Study

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Quick Facts 1986 – Express Scripts begins as JV between retail store chain Medicare Glasner

and Sanus Corp Health Systems. 1989 – Purchased by New York Life Insurance 1992 – Express Scripts becomes publicly traded 1996 – Established Express Scripts Canada 1998 - Express Scripts Inc. acquired ValueRx, the PBM business of

Columbia/HCA Healthcare Corp. 2009 – Express Scripts purchased WellPoint's NextRx subsidiaries for $4.675

billion. 2012 - Express Scripts completed a $29.1 billion acquisition of Medco Health

Solutions The acquisition positioned Express Scripts Holding Co. as the largest pharmacy benefit manager, filling 1.4 billion annual prescriptions

Express Scripts, IncHistory and Background

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Primary Products & Services Pharmacy benefit management services

Geographic Operations US – New Jersey, Missouri(HQ), Philadelphia, Illinois Canada Europe

Key Customers/Distribution Channels Express Scripts Holding Company provides its PBM services to managed care

organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’ compensation plans, and government health programs.

Competitors include CVS, Cigna, Catamaran, Optum Rx

Express Scripts, IncHistory and Background

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CEO

George Paz drives Express Scripts' strategy, ensuring our business model of alignment with clients’ best interests delivers better, more cost-effective health outcomes for millions of people. George joined Express Scripts in 1998 as Senior Vice President and Chief Financial Officer and became President in 2003. In 2005 he was named Chief Executive Officer and the following year was elected chairman of the board. He currently serves as a member of the board of directors for Honeywell, Inc. George holds a bachelor's degree in business administration and accounting from the University of Missouri - St. Louis and is a member of the American Institute of Certified Public Accountants.

Express Scripts, IncCompany Background

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What is the role of this organization within healthcare environment? Express Scripts, Inc. is one of the nation's leading full-service pharmacy benefit

management ("PBM") companies. The Company coordinates the distribution of outpatient pharmaceuticals through a combination of benefit management services, including retail drug card programs, Home Delivery services, formulary management programs and other clinical management programs.

They also distribute a full range of injectible biopharmaceutical products directly to patients or their physicians, and provide extensive cost-management and patient-care services.

These services are provided to health maintenance organizations, health insurers (including Cigna), employers, union-sponsored benefit plans, third-party administrators, workers’ compensation and governmental health programs.

Relationship/impact with Cigna?

Historically, Cigna’s relationship with ESI has evolved from market/supplier partners to

currently being a PBM competitor.

Market trend is toward specialty drugs (i.e. injectibles). ESI is looking to expand their

earnings into this area which is achieved through Medical Benefits (not Pharmacy

Benefits). In order to maximize their earnings in this area, they need to penetrate the

Medical Benefits arena.

Express Scripts, IncCompany Background

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ESI: Analysis of relationship of core strategies to 5 DriversHow does ESI influence Cigna’s Financial Performance?

Cash

Growth People Profit

Assets

• Historically focused on inorganic growth drivers (most recently: Medco 2012) drives Rx volume and contracting leverage

• Limited future inorganic growth opportunities in traditional PBM

Contracting and dispensing pharmacy assets drive lower COGS and contribute to profit

Example of key assets: -High automation mail order pharmacies-Specialty Rx Pharmacies-Vendor contracting

Key profit levers. Generate cash flow (buy-sell spread on): •Mail order and specialty pharmacies, •pharmacy network discounts, •manufacturer contracts

• Cash flow generates ability for asset investment

• Future assets likely to focus on Specialty Pharmacy, which increases competitive pressure with Cigna

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Healthier Outcomes Require Better Decisions.

The Express Way - Six core valuesThree values shape who we are: Integrity, Mutual Respect and Passion. Integrity is first and foremost for a reason; it's our

guiding beacon. Three more values define how we work: Alignment, Collaboration and Service. Together, we do the right thing for clients and patients, who count on us every day.

To achieve healthier outcomes, we design and deliver solutions to support better prescription-related decisions. Our experience and research show that achieving optimal outcomes ultimately requires better decisions on the part of patients, caregivers and providers. We apply decision science to help us understand why people make the decisions they do and to help us determine how to make better decisions easier.

Our platform for discovery and innovation is Health Decision ScienceSM.

Behavioral Sciences - We apply proven strategies from the behavioral sciences, including choice architecture and message framing, in an approach we call Consumerology®. Because patient engagement is often unachievable, we work to make the best decisions as easy as possible. Our research has shown that poor decisions typically reflect a gap between intentions and behaviors. By anticipating member needs and preferences, then earning their attention, we can close these "intent-behavior" gaps.Clinical Specialization - Our specialist pharmacists and nurses provide personalized attention to patients diagnosed with costly chronic and complex conditions. We have a deep understanding of specific disease states, allowing us to better anticipate patient care needs. More than 1800 Express Scripts clinical specialists work directly with patients to optimize the health choices they make, ensuring safety, improving affordability and delivering world-class care.Actionable Data - Actionable data means providing the right data at the point of prescribing and running real-time safety checks at the point of dispensing. It means advising clients with data-driven recommendations for formularies, and counseling patients with relevant safety and savings information. With actionable data, we can predict nonadherence risks and work toward determining the most cost-effective interventions.Health Decision Science is at the heart of how we add value for clients and members. With this expertise, we have built practical solutions for three decision areas:Drug Choices - Express Scripts drug-choice solutions facilitate the proper use, selection and amount of the safest, most cost-effective generics and preferred brands.Pharmacy Choices - Our pharmacy-choice solutions help patients and their providers choose the most cost-effective, high-quality pharmacies for their conditions.Health Choices - Our health-choice solutions increase the effectiveness, safety and affordability of clinical care.

Express Scripts, IncCore Strategy and Value Proposition

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Express Scripts, IncBalance Sheet

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Profit Margins: Gross -7.8% Operating -2.88% Net - 1.7%

Growth 2013 v. 2012: Revenue – 11% Net Income – 35% EPS – 28%

Express Scripts, IncIncome Statement

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2013 Cash Flow = $4.8 bln.2013 Cash & Cash Equiv. $1.99bln

Express Scripts, IncIncome Statement