CVS Health has seen profit and revenue grow over the past year, logging $1.8 billion in profit for the first quarter of the year, and $94.6 billion in revenue (up from $1.1 billion and $88.4 billion in Q1 2024, respectively). But the company's insurance arm, Aetna, is struggling, and will exit the Affordable Care Act individual markets in 2026.
"We are disappointed by the continued underperformance from our individual exchange products and have recently determined there is not a near- or long-term pathway for Aetna to materially improve its position in this product," President and CEO David Joyner said during Thursday's earnings call. "As a result, we've decided that effective 2026, we will exit the states in which Aetna independently operates ACA plans. Despite our multi-year efforts, we must recognize what is and what is not working, and we'll focus on the areas where we have a clear right to win."
Aetna has exited the ACA market before, in 2018, when it joined other insurers in leaving or downsizing its footprint, as premiums rose and insurers lost money.
In 2021, Aetna re-entered the market, with former CEO Karen Lynch saying at the time that the market had stabilized and resolved earlier "structural issues."
Yet Aetna has struggled since its reintroduction into the ACA exchange, and posted an adjusted operating income loss of $924 million in 2024.
At the time, Joyner put much of the onus on the poor performance on elevated utilization coming out of the COVID-19 pandemic, as well as higher acuity. Also, with what he described as "disappointing" star ratings coming into 2024, Joyner said the health benefits segment began the year with a temporary reimbursement challenge.
CVS Health said in an earnings statement that the decision to exit the individual exchanges is the best move toward focusing the company's portfolio.
"The company is best able to serve members through its other health benefit solutions, which offer access to quality care, affordable health benefits and exceptional service," CVS said.
WHAT'S THE IMPACT
Overall, CVS Health's operating income increased 48.6%, largely attributable to a 54.9% increase in adjusted operating income, as well as the absence of a $100 million opioid litigation charge from the previous year.
Revenues increased 7.9% for the health services segment, CVS Caremark, driven by pharmacy drug mix, growth in specialty pharmacy and brand inflation. Adjusted operating income for health services increased 17.6% due to improved purchasing economics and pharmacy drug mix.
CVS said its Caremark division is partnering with Novo Nordisk to increase access to the GLP-1 weight loss drug Wegovy at a more affordable price. The company is taking a formulary action on July 1 to prefer Wegovy for its members, and will combine the medication with additional lifestyle clinical support as part of the CVS Weight Management program.
THE LARGER TREND
CVS Health revised its full-year 2025 GAAP diluted EPS guidance range to $4.23 to $4.43 from $4.58 to $4.83, and raised its 2025 Adjusted EPS guidance range to $6.00 to $6.20 from $5.75 to $6.00. The company also raised its full-year 2025 cash flow from operations guidance to about $7 billion from approximately $6.5 billion.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.