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Today, Cigna took a preemptive step in the conversation around reforming pharmacy benefits by announcing it will end drug rebates across many health plans by 2027. Its stock took a dip in the hours following the news, before rebounding. What’s unclear is how significant this move will be in the federal government’s agenda to bring more transparency to drug pricing. Overall though, the company is a standout in its peer group for having a generally good run over the past few years. So I’ve spent the past few months talking to the industry - current and former employees, analysts, researchers and bankers to figure out why.

Cigna hasn’t escaped rising healthcare costs. But its performance continues to meet (and sometimes exceed) investor expectations, buoyed by multiple quarters of strong earnings and several years of steady growth. Compared to peers like United Healthcare, Humana, Centene and Aetna, Cigna’s stock performance has been remarkably resilient.

As one former health plan executive put it:

“They were either very smart, or very lucky, or both. They zigged when everyone else zagged.”

Cigna’s success has a lot to do with timing, focus, and disciplined strategy…particularly its decision to step away from government-sponsored plans at just the right moment. So let’s talk about it, and why it matters to our industry.

Why Cigna’s business mix works

Cigna’s peers dove deep into Medicare Advantage and Medicaid expansion, while Cigna remained more tethered to the commercial health insurance market. Some analysts once viewed that as a weakness, as fewer government contracts meant less guaranteed growth. But in hindsight, that conservative positioning has worked in its favor.