Cigna Group (NYSE:CI)

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating but generally declining trend over the observed period. Beginning at 36.5 in March 2021, the ratio decreases notably to 26.13 by December 2022, indicating a slower rate of inventory turnover. Although there are intermittent recoveries in early 2023, the ratio does not return to earlier peak levels and dips again towards the end of 2024, suggesting some variability and softening in inventory management efficiency.

Payables Turnover

The payables turnover ratio shows a clear downward trend throughout the periods. Starting at around 7.74 in the first quarter of 2021, the ratio steadily decreases, reaching a low of 5.63 by mid-2024 before slightly rebounding to 6.41 in December 2024. This decline indicates an elongation in the time taken to pay suppliers, which may imply strategic stretches in payment terms or potential liquidity considerations.

Average Inventory Processing Period

The average inventory processing period lengthens over time, moving from 10 days in March 2021 to a peak of 15 days in December 2023. This rise corresponds with the decline in inventory turnover and signals a slowing in inventory movement or increased holding periods. Although there are minor reductions after the peak, the period remains elevated compared to earlier years, suggesting continued slower inventory processing.

Average Payables Payment Period

The average payables payment period shows an increasing trend, expanding from 47 days initially to a peak of 65 days by June 2024. This increase is consistent with the downward trend in the payables turnover ratio. The extension of payment periods indicates longer credit terms or delayed payments to suppliers, possibly reflecting deliberate management of cash flows.

The analysis of the quarterly financial data reveals notable trends in pharmacy and other service costs, inventories, and inventory turnover over the periods from March 2021 through December 2024.

Pharmacy and Other Service Costs

These costs exhibit a generally upward trajectory throughout the time frame. Starting at $27,235 million in March 2021, the costs showed steady growth, reaching $31,247 million by December 2021. The trend continues with moderate increases into 2022, and particularly notable rises occur in 2023 and 2024, culminating in $49,021 million by December 2024. This indicates a significant increase in spending or operational scale related to pharmacy and other services over the four-year span.

Inventories

Inventory values demonstrate upward movement but with more volatility compared to service costs. Initial figures fluctuate modestly in 2021 around the $3,000 million mark, followed by an increase to $4,777 million in December 2022. Subsequent quarters in 2023 show variability with some decreases, but a sharp rise occurs towards the end of 2023 and into 2024, peaking at $6,692 million in December 2024. Overall, inventories increased substantially, suggesting expanding inventory holdings, potentially to support the growing service levels.

Inventory Turnover Ratio

The inventory turnover ratio starts at a high value of 36.5 in March 2021, indicative of efficient inventory management and rapid stock movement. However, there is a clear downward trend over time, with some fluctuations. Notably, the ratio declines sharply towards the end of 2021 and remains below initial levels through 2022 and 2023. Despite slight recoveries, the ratio in December 2024 stands at 27.27, significantly lower than the starting point. This decline suggests a slowing in inventory turnover speed, which could imply increased inventory levels relative to sales or longer holding periods.

In summary, the company’s pharmacy and service-related costs steadily increase over the observed period, potentially reflecting growth or inflationary pressures. Inventory levels also rise, particularly in the latter periods, indicating accumulation possibly aligned with service expansion or supply chain strategy adjustments. The decreasing inventory turnover ratio points to less frequent inventory replacement, which could warrant attention to efficiency and stock management practices.

Pharmacy and other service costs

Pharmacy and other service costs steadily increased from 27,235 million US$ in March 2021 to 35,261 million US$ by December 2023. This upward trend continued more sharply thereafter, with costs reaching 49,021 million US$ by December 2024. The data indicates an accelerating rise in costs particularly during 2024, suggesting factors such as increasing drug prices, volume, or service utilization.

Pharmacy and other service costs payable

The payable amounts associated with pharmacy and other service costs showed a consistent increase over the observed period. Beginning at 13,762 million US$ in March 2021, payables rose to 19,815 million US$ in December 2023, then surged to 28,465 million US$ by the end of 2024. This pattern mirrors the rise in service costs and reflects growing liabilities related to these costs.

Payables turnover ratio

The payables turnover ratio displayed a declining trend over the entire period. Starting at 7.74 in March 2021, the ratio gradually decreased to 6.75 by December 2023, continuing downward to a low of 5.63 in June 2024. Thereafter, a slight recovery occurred, with the rate increasing to 6.41 by December 2024. The overall decline suggests lengthening payment cycles or delays in settling pharmacy and service payables, potentially indicating cash flow management adjustments or increasing working capital requirements.

Summary of trends

The data highlights a consistent increase in both the costs and the associated payables for pharmacy and related services, with a pronounced acceleration in 2024. Concurrently, the payables turnover ratio's downward trend suggests slower payment to suppliers over time, although a minor rebound is observed at the end of 2024. These patterns may reflect inflationary pressures, expanded service volumes, or strategic changes in accounts payable management.

Working Capital

The working capital demonstrates a predominantly negative value throughout the periods observed, indicating that current liabilities consistently exceed current assets. From March 2021 to December 2024, the negative working capital fluctuates notably. It began at approximately -7,916 million USD in March 2021 and worsened to -11,109 million USD by December 2022. Following this decline, it slightly improved, reaching around -7,838 million USD in September 2024, before declining again to about -9,109 million USD at the end of 2024. The trend shows significant volatility with no sustained improvement, suggesting ongoing challenges in managing short-term liquidity or a strategic choice favoring high current liabilities.

Pharmacy Revenues

Pharmacy revenues display a clear upward trend across all quarters. Beginning at 28,025 million USD in March 2021, revenues increase steadily, with periodic acceleration in growth. By December 2021, revenues reached approximately 32,328 million USD, continuing to rise through 2022 and into 2023. Noteworthy growth is observed in 2024, with revenues peaking at 49,941 million USD by December 2024. This represents a substantial revenue expansion over the four-year period, suggesting strong market demand, successful sales strategies, or expansion initiatives within the pharmacy segment.

Working Capital Turnover

No data is available for the working capital turnover ratio, preventing analysis of asset efficiency or operational effectiveness related to working capital.

The financial data reveals notable trends in inventory management over several quarters. Two key metrics under review are the inventory turnover ratio and the average inventory processing period, both critical indicators of operational efficiency.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a general declining trend from March 2021 to December 2024. Initially, the ratio remains relatively high, fluctuating around 36 to 37 in early 2021, indicating efficient inventory movement. However, from the end of 2021 onward, there is a progressive decrease, with the ratio falling to the mid-20s by late 2022 and remaining lower than the initial periods throughout 2023 and 2024. The lowest recorded ratio is 23.7 in December 2023, suggesting slower inventory turnover during that period. Despite some fluctuations, there is no sustained recovery to the earlier high levels by the end of the observed timeline. This trend may suggest either slower sales pace, higher inventory levels, or both, indicating potential challenges in inventory management or changes in demand patterns.

Average Inventory Processing Period

The average inventory processing period, measured in days, conversely shows an increasing trend over the same timeframe. It starts at around 10 days in the first quarter of 2021 and gradually extends to 12 to 15 days in subsequent quarters, reaching its peak at 15 days in December 2023. This increase aligns inversely with the declining inventory turnover ratio, reflecting a longer duration for inventory to be processed and moved through the supply chain. Notably, this period remains elevated above the initial 10-day benchmark throughout the latter half of the timeline, indicating a sustained lengthening in inventory holding periods.

In summary, the data indicates a gradual decline in inventory turnover efficiency coupled with an extended inventory processing period over the quarters under review. Such trends may highlight operational inefficiencies or market conditions leading to slower inventory movement. Continuous monitoring and investigation into underlying causes, such as demand variations, supply chain constraints, or inventory policy changes, would be prudent to address the emerging concerns in inventory management performance.

Payables Turnover

The payables turnover ratio exhibits a gradual decline over the analyzed periods. Starting at 7.74 in March 2021, the ratio shows minor fluctuations but maintains a general downward trend, reaching as low as 5.63 by June 2024. This decrease indicates that the company is taking longer to pay its suppliers compared to earlier periods. Toward the end of 2024, there is a slight rebound to 6.41, suggesting a modest acceleration in payment frequency.

Average Payables Payment Period

The average payables payment period displays a complementary upward trend over the same timeframe. Beginning at 47 days in March 2021, the period generally increases, peaking around 65 days in June 2024. This trend signifies an elongation in the time taken to settle payables. Following the peak, a moderate reduction occurs to 57 days by December 2024, indicating a partial recovery in payment timeliness.

Overall Insights

The inverse relationship between payables turnover and average payment period aligns with typical financial dynamics; as the turnover ratio decreases, the payment period lengthens. The gradual extension of payment periods may reflect changes in working capital management, liquidity considerations, or negotiation terms with suppliers. The slight improvements observed late in 2024 may point toward strategic efforts to optimize payment schedules or respond to market conditions.