Cigna Group (NYSE:CI)

Inventory Turnover

The inventory turnover ratio shows variability over the observed quarters. Starting from 32.7 in the first available quarter (Mar 31, 2020), it increased to a peak near 37.54 by the end of 2020. Subsequently, a gradual decline is noted, reaching a low of 23.7 in the first quarter of 2024, before partially recovering to 33.2 by the third quarter of 2024 and then falling again to 27.27 in the final quarter. This fluctuation suggests periods of faster inventory movement followed by slower turnover, indicating variable inventory management efficiency or changing demand conditions.

Payables Turnover

The payables turnover ratio remains relatively stable initially, around 7.7 between 2020 and early 2022, but starts to decline steadily from mid-2022 onwards, dropping from 7.18 to a low of 5.63 in mid-2024 before slightly increasing to 6.41 later in 2024. This downward trend suggests that the company is taking a longer time to pay its suppliers, which may reflect changes in payment policies, cash flow management, or supplier negotiations.

Average Inventory Processing Period

The average inventory processing period remains fairly consistent during 2020, holding at around 10 to 11 days, then it increases to 12-14 days during 2021-2022, showing a slight slowdown in inventory turnover. Early 2024 shows a notable peak of 15 days, indicating longer inventory holding times, before returning to 11-13 days towards the end of 2024. This suggests some periods of reduced inventory efficiency or possible stock accumulation.

Average Payables Payment Period

The average payables payment period has been increasing steadily, starting from around 47 days in early 2020, maintaining that range until late 2021. From 2022 onwards, the period extends progressively, reaching a peak of 65 days in mid-2024. Towards the end of 2024, the period slightly decreases but remains elevated at around 57 days. This trend indicates that the company is extending its payment terms or delaying payments, which can be a strategic choice to improve liquidity or reflect changing supplier relationships.

Working Capital Turnover

No data is available for working capital turnover across the periods, preventing analysis of trends in this metric.

Pharmacy and other service costs

The cost of pharmacy and other services exhibited a generally increasing trend over the observed quarters. Starting at 24,190 million US dollars in March 2020, the costs rose steadily to 31,247 million by December 2021. This upward trajectory continued with fluctuations, reaching 35,261 million in December 2023 and peaking at 49,021 million by December 2024. Notable accelerations occurred from 2023 onwards, with more pronounced increases especially in the final two quarters.

Inventories

Inventory levels demonstrated a fluctuating yet upward pattern during the period. From 2,565 million US dollars in March 2020, inventories rose with some cyclic variability to 3,722 million by December 2021. Subsequently, inventories showed further increases with some short-term decreases but overall growth, culminating at 6,692 million in December 2024. The progression indicates an expansion in stock holdings, particularly significant in the final year.

Inventory turnover ratio

Inventory turnover ratio data are available from March 2021 onwards and show moderate fluctuations. The ratio began at 32.7 and showed slight increases and decreases, peaking at 37.54 in December 2021. Afterwards, it experienced a notable decline to 23.7 by March 2024, indicating slower turnover relative to inventory levels. Although there were subsequent minor rebounds, the trend suggests some challenges in inventory management efficiency toward the end of the period.

Overall analysis

The cost of pharmacy and other services increased substantially, outpacing inventory growth in absolute terms. The increasing inventories alongside rising costs imply higher demand or expanded operations. The decline in inventory turnover ratio towards the latter quarters indicates potential inefficiencies or slower movement of inventory. This mixed dynamic could reflect changing market conditions, inventory management policies, or supply chain factors influencing the company's financial operations.

The analysis of the quarterly financial data reveals several notable trends related to pharmacy and other service costs, their corresponding payables, and the payables turnover ratio over a five-year period.

Pharmacy and Other Service Costs

The pharmacy and other service costs exhibit an overall upward trajectory from the first quarter of 2020 through the end of 2024. Starting at approximately $24.19 billion in March 2020, these costs progressively increase almost every quarter, reaching nearly $49.02 billion by December 2024. Despite minor fluctuations, the general trend indicates a steady rise, with more rapid growth observable from 2023 onward, where quarterly costs increase by amounts ranging generally from $1 billion to $2 billion compared to prior quarters.

Pharmacy and Other Service Costs Payable

The payables related to pharmacy and other service costs also follow a rising pattern throughout the examined quarters. Beginning at about $10.8 billion in March 2020, payables increase steadily, reaching a peak of nearly $28.8 billion by September 2024 before slightly declining to roughly $28.5 billion in December 2024. The pace of increase is relatively consistent, with incremental growth each quarter, reflecting the parallel trend in underlying service costs. The data suggest a close correlation between the costs incurred and the liabilities recorded as payables.

Payables Turnover Ratio

The payables turnover ratio, calculated for periods starting in September 2020, demonstrates a general downward trend, indicating a deceleration in the frequency with which the company settles its payables. Initially, the ratio hovers around 7.75 to 7.68, during late 2020 and early 2021, reflecting higher turnover velocity. However, from mid-2021 forward, the ratio declines steadily, reaching lows around 5.63 in June 2024, with minor recoveries to 6.41 by the end of 2024. This decline points to longer payment cycles or possibly an accumulation of payables relative to payments made, potentially due to increased cost volumes or strategic payment scheduling.

The financial data reveals several noteworthy trends in working capital and pharmacy revenues over the observed periods.

Working Capital

Working capital exhibits considerable fluctuations throughout the quarters. It generally remains in negative territory, indicating that current liabilities exceed current assets across the entire period. The magnitude of negative working capital intensified significantly from early 2020 through late 2022, with notable troughs reaching about -12,700 million US dollars. However, starting in early 2023, there is a visible effort in reducing this deficit, with values becoming less negative, particularly towards mid-2024. Though still negative, the reduction suggests an improvement in managing short-term assets and liabilities.

Pharmacy Revenues

Pharmacy revenues demonstrate a steady upward trajectory from March 2020 through December 2024. The growth appears consistent quarter-over-quarter, with revenue increasing from approximately 25 billion US dollars to nearly 50 billion US dollars by the end of 2024. This pattern reflects strong operational performance within the pharmacy segment, with accelerated increments observed particularly in the last few quarters, marking a robust expansion in business activities or enhanced sales volume in this area.

Working Capital Turnover

Data for working capital turnover ratio is unavailable for analysis, thus no conclusions can be drawn regarding asset utilization or efficiency in generating revenue relative to working capital during the reported periods.

In summary, the overall financial pattern suggests the company faces ongoing working capital challenges, as reflected in persistent negative values, but simultaneously achieves significant growth in pharmacy revenue streams. The negative working capital might imply liquidity risk or aggressive short-term financing strategies, yet the growing revenue base may provide a potential offsetting strength. Continuous monitoring of both metrics is recommended to ensure sustainable operational and financial health.

Inventory Turnover Ratio

The inventory turnover ratio shows a fluctuation trend over the observed periods, beginning from March 31, 2020, where data is unavailable, and starting from March 31, 2021, with a value of 32.7. It peaked at 37.54 in December 31, 2021, indicating a high efficiency in inventory management during that quarter. However, following this peak, the ratio experienced a general decline, reaching a low of 23.7 by March 31, 2024. Thereafter, it showed some recovery with values moving up again, finishing at 27.27 by December 31, 2024. This trend suggests periods of both strengthening and weakening in inventory turnover efficiency across the timeline.

Average Inventory Processing Period (Days)

The average inventory processing period inversely correlates broadly with the inventory turnover ratio. Starting at 11 days on March 31, 2021, the period remained stable around 10 to 12 days through the end of 2022. Notably, there was a gradual increase beginning in the first quarter of 2023, reaching a peak of 15 days by March 31, 2024, indicating a slower inventory processing during this time. Post this peak, the period decreased somewhat, ending at 13 days by December 31, 2024. The increase in days processed indicates occasional slower inventory movement, consistent with declines in inventory turnover observed in the same periods.

Overall Analysis

The data illustrate a cyclical pattern in inventory management efficiency. The inventory turnover ratio and average inventory processing period exhibit inverse relations as expected, with improvements in turnover coinciding with decreases in processing days and vice versa. Peaks and troughs in these indicators suggest operational adjustment phases or external influences impacting inventory flow. The recent trends toward lower turnover and longer processing times may warrant further investigation to identify and address underlying causes for the decline in inventory handling efficiency.

The payable turnover ratio and the average payable payment period reveal notable trends over the observed quarterly periods. Initially, the payable turnover ratio held relatively steady in the range around 7.6 to 7.9 from March 2021 through December 2022. However, starting in March 2023, a clear downward trend is observable, with the ratio declining steadily to a low of approximately 5.63 by June 2024 before a slight recovery towards the end of the period.

Correspondingly, the average payable payment period exhibits an inverse pattern. From March 2021 to December 2022, the average payment days fluctuated moderately between 46 and 51 days. Beginning in March 2023, this figure increased progressively, reaching a peak of 65 days by June 2024, before decreasing to 57 days by December 2024.

Payables Turnover Ratio

The ratio remained relatively stable and healthy above 7.5 until early 2023, after which it declined consistently, denoting a slower turnover of payables. This reduction suggests that the company has been taking longer to pay its suppliers, potentially reflecting changes in payment policies or cash flow management strategies.

Average Payables Payment Period

The payment period was stable and generally under 51 days until early 2023. A pronounced increase thereafter indicates that the company extended its payment terms or delayed payments, which aligns with the decline observed in the payable turnover ratio. The peak at 65 days signals a significant elongation of payment cycles, which then slightly moderate toward the close of the period.

In summary, the data illustrate a shift toward longer payment periods and slower payables turnover beginning in early 2023. This change may impact supplier relationships and working capital dynamics. The slight normalization at the end of the last observed period could suggest a partial reversal of this trend or an adjustment to more balanced payment practices.