Cigna (NYSE:CI) (2.2% position) is one of the largest and most diversified health care services organizations in the United States. In late 2018, Cigna acquired Express Scripts, a leading PBM, and we believe there will be significant cost savings from the transaction over the next several years. The combined company is also generating substantial free cash flow that can be used to reduce debt, repurchase shares, and drive earnings growth. In addition, Cigna has proven to be a leading innovator in the midsize employer based segment where continue to gain share due to their patient centric care model and industry leading cost trend which remains well below industry averages. Cigna is trading at only nine times forward earnings amid heightened competitive and regulatory risks surrounding its employer-sponsored health insurance and PBM segments. Weighing the risks and opportunities, we recently added to Cigna based on our view of its modest valuation in light of its solid business franchise and management’s strong execution track record.
From Dodge & Cox's second-quarter 2019 shareholder letter.
