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CVS Well being's income elevated 6.three% in comparison with final yr, posting $95.four billion in income for the third quarter, at the same time as its well being advantages phase underperformed, primarily as a consequence of excessive utilization .
The corporate has generated $7.2 billion in money circulation from operations to date this yr and reported third-quarter GAAP diluted EPS of $zero.07 and adjusted EPS of $1.09. However on an earnings name Wednesday morning, CVS Well being President and CEO David Joyner, who took over management of the group final month, stated the well being advantages phase, led by Aetna, “continues to being challenged.”
Aetna's income hit $33 billion within the third quarter, up from $26.three billion within the third quarter of 2023. But it surely posted an adjusted working earnings lack of $924 million this yr. Its medical profit charge was 95.2% within the quarter, up from 85.7% in the identical interval final yr.
Joyner positioned a lot of the blame on poor efficiency in elevated utilization ensuing from the COVID-19 pandemic, in addition to elevated acuity. Moreover, with what he described as “disappointing” star scores this yr, Joyner stated the well being advantages phase started the yr with a brief reimbursement problem.
“After we priced Medicare Benefit plans for 2024, we underestimated medical prices,” Joyner stated. “Wealthy advantages exacerbated utilization pressures and quickly elevated membership. There have been additionally some disappointing threat adjustment updates that considerably impacted Aetna's present outcomes. This efficiency is unacceptable.”
Due partly to Aetna's efficiency, CVS Well being officers stated they weren’t offering a proper outlook, though Joyner stated he was optimistic in regards to the phase's restoration prospects, notably with the announcement that Steve Nelson, a former insurance coverage chief of UnitedHealth Group, will lead Aetna.
“The work at Aetna is underway and we’re assured we’re taking applicable steps to deal with the underlying points,” Joyner stated.
Regardless of the efficiency, CVS Well being Chief Monetary Officer Tom Cowhey stated income within the well being advantages phase elevated 25%, and doctor membership elevated to 271 million.
“Medical prices stay elevated, with strain attributable to hospitals, outpatients, dietary supplements and pharmacy, in addition to unfavorable medical price developments,” Cowhey stated. “It’s negatively impacting the development outlook for the remainder of the yr.”
WHAT IS THE IMPACT?
CVS' healthcare phase noticed a 5.9% decline in income within the quarter, pushed by the lack of a “massive buyer” and continued value enhancements for pharmacy prospects. Pharmacy claims processed decreased 16.5% within the 30-day equal in comparison with the third quarter of 2023.
Pharmacy and client wellness phase complete income elevated 12.three%, pushed by greater prescription quantity, together with greater contributions from vaccines and pharmacy drug combos. These will increase, in response to CVS, had been partially offset by continued reimbursement strain from pharmacies, the impression of current generic introductions and decreased quantity in shops.
Crammed prescriptions elevated 6% and same-store prescription quantity elevated 9.1%.
THE BIGGEST TREND
Along with naming Nelson as head of Aetna, CVS Well being additionally named pharmacy chief Prem Shah as president of its group. Shah will oversee the operational efficiency of CVS Pharmacy, pharmacy advantages supervisor CVS Caremark and CVS' healthcare supply companies.
Jeff Lagasse is editor of Healthcare Finance Information.
Electronic mail: jlagasse@himss.org
Healthcare Finance Information is printed by HIMSS Media.