Cigna Group: 10-K Risk Factor Changes

Our business is regulated at the federal, state and international level. The laws and rules governing our business and related interpretations are increasing in number and complexity, are subject to frequent change, and can be inconsistent or in conflict with each other. Noncompliance with applicable regulations by us or third-party vendors could have material adverse effects on our business, results of operations, financial condition, liquidity and reputation. We must identify, assess and respond to new trends in the legislative and regulatory environment, as well as comply with the various existing laws and regulations applicable to our business and respond to policymakers and enforcement agencies accordingly. We expect federal and state governments to continue to enact legislative and regulatory reforms that will or could materially impact various aspects of the health services system, including pharmacy benefits manager, drug pricing or insurance market reforms. These reforms could result in material changes to the way we conduct our business and could impact the market for our products. Existing or future laws, regulations, actions by governmental or regulatory authorities, or judgments could force us to change how we conduct our business; affect the products and services we offer and where we offer them; restrict revenue and enrollment growth; increase our costs, including medical, operating, health care technology and administrative costs; increase our liability; and require enhancements to our compliance infrastructure and internal controls environment. For example, we are required to obtain and maintain approvals from state boards of pharmacy, departments of insurance, and other federal and state regulatory agencies to, among other things, market many of our products, expand into additional geographic or product markets, increase prices for certain regulated products, and consummate some of our acquisitions and dispositions. Delays in obtaining or failure to obtain or maintain these approvals could reduce our revenue or increase our costs. Additionally, we must maintain licenses and registrations in the jurisdictions in which we conduct business, and the suspension, material adverse modification or termination of such licenses and registrations could adversely affect operations. Such licensure subjects many of our business operations and products to state regulation, as well as risks associated with doing business in those jurisdictions. Failure to effectively implement or adjust our strategic and operational initiatives, such as reducing operating costs, adjusting premium pricing or benefit design, or transforming our business model in response to new laws, regulatory changes or executive actions may have a material adverse effect on our results of operations, financial condition and cash flows. Our effective tax rate or tax payments could also be adversely affected by new laws or regulations, both within the United States and in other foreign jurisdictions in which we operate. While we believe that our historical tax positions are consistent with applicable laws, regulations and existing precedent, our tax positions could be challenged by relevant tax authorities, and we may not be successful in any such challenge. The market price of our securities may react to the announcement of such proposals. Customers, investors, employees and other stakeholders have focused on corporate governance, environmental stewardship and social matters. Environmental, social and governance-related laws and regulations, including those aimed at restricting the consideration of these factors by companies and requiring climate- and sustainability-related disclosures, and related stakeholder expectations have resulted, and may in the future result, in increased expenses and management time and attention spent complying with or meeting such laws, regulations or expectations. Overall, environmental, social and governance matters, and related stakeholder reactions, which may be conflicting or divergent, may impact our reputation and have other business impacts which could adversely affect our business. For more information on regulations affecting our business, see "Business – Regulation" in Part I, Item 1 of this Form 10-K.

Our business is regulated at the federal, state, local and international levels. The laws and rules governing our business and related interpretations are increasing in number and complexity, are subject to frequent change, and can be inconsistent or in conflict with 27 27 27 each other. Noncompliance with applicable regulations by us or our third-party vendors could have material adverse effects on our business, results of operations, financial condition, liquidity and reputation. We must identify, assess and respond to new trends in the legislative and regulatory environment, as well as comply with the various existing regulations applicable to our business and respond to policymakers and enforcement agencies accordingly. There are currently pending, and in the future there will likely be, legislative or regulatory proposals or executive actions which seek to manage or significantly change the health services industry, including managing prescription drug costs and health records as well as regulating drug distribution. These and other legislative ideas and executive actions could adversely affect our business. Federal and state governments have enacted, and we expect federal and state governments to continue to enact and seriously consider, many broad-based legislative and regulatory proposals that will or could materially impact various aspects of the health care and related benefits system. In addition, changes to government policies not specifically targeted to the health services industry, such as a change in tax laws and the corporate tax rate, government spending or program cuts or changes, imposition of tariffs across an industry sector such as pharmaceuticals could have significant impacts on our business, results of operations, financial condition and liquidity. There can be no assurance that our effective tax rate or tax payments will not be adversely affected by legislation resulting from these initiatives both within the United States and other foreign jurisdictions in which we operate. In addition, tax laws and regulations are extremely complex and subject to varying interpretations. While we believe that our historical tax positions are consistent with applicable laws, regulations and existing precedent, there can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge. The trading price of our securities may react to the announcement of such proposals. As disclosed in Part II, Item 5 of this Form 10-K, we have an active share repurchase program authorized by our Board of Directors (the "Board"). Regulators, customers, investors, employees and other stakeholders have focused on environmental, social and governance matters and related disclosures. These changing rules, regulations and stakeholder expectations have previously resulted in increased general and administrative expenses and increased management time and attention spent complying with such regulations or meeting such expectations. For example, the EU's Corporate Sustainability Reporting Directive ("CSRD") will require expansive disclosures on various sustainability topics such as climate change, biodiversity, workforce, supply chain and business ethics by in-scope EU entities and certain non-EU entities with significant cross-border business in EU markets. In addition, California's enacted Climate Corporate Data Accountability Act will require annual disclosures of covered companies' Scope 1, 2 and 3 greenhouse gas emissions. We are assessing our obligations under CSRD and other enhanced reporting requirements based on policymaker direction and expect that compliance could require substantial efforts in the future. Overall, sustainability matters and related stakeholder reaction may impact our reputation and have other business impacts which could adversely affect our business. Existing or future laws, rules, actions by governmental or regulatory authorities, or judgments could force us to change how we conduct our business, affect the products and services we offer and where we offer them, restrict revenue and enrollment growth, increase our costs, including medical, operating, health care technology and administrative costs, and require enhancements to our compliance infrastructure and internal controls environment. Some proposals or criticisms may be bipartisan or gain momentum, and we expect that governmental and regulatory authorities will continue to seek changes to business practices and the health care industry as a whole. For example, health care reforms or the invalidation, modification, repeal or replacement of the ACA or portions thereof could result in material changes to the way we conduct our business, as well as the loss of subsidies related to our IFP offerings, and could impact the market for our products. We are required to obtain and maintain insurance and other regulatory approvals to, among other things, market many of our products, expand into additional geographic or product markets, increase prices for certain regulated products, and consummate some of our acquisitions and dispositions. Delays in obtaining or failure to obtain or maintain these approvals could reduce our revenue or increase our costs. Additionally, we must maintain licenses and registrations in the jurisdictions in which we conduct business, and the suspension, material adverse modification or termination of such licenses and registrations could adversely affect our operations. Such licensure subjects many of our businesses to state regulation of our operations and products, as well as risks associated with doing business in those jurisdictions. Existing or future laws and rules could also require or lead us to take other actions, such as changing our business practices, and could increase our liability. Further, failure to effectively implement or adjust our strategic and operational initiatives, such as by reducing operating costs, adjusting premium pricing or benefit design, or transforming our business model in response to laws, regulatory changes or executive actions may have a material adverse effect on our results of operations, financial condition and cash flows. For more information on regulations affecting our business, see "Business – Regulation" in Part I, Item 1 of this Form 10-K.