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- Revenue: Approximately $95.4 billion, a 6% increase year-over-year.
- Adjusted Earnings Per Share (EPS): $1.09.
- Adjusted Operating Income: Approximately $2.5 billion.
- Cash Flow from Operations: Approximately $7.2 billion year-to-date.
- Health Care Benefits Revenue: Approximately $33 billion, over 25% increase year-over-year.
- Medical (TASE:PMCN) Membership: Approximately 27.1 million, an increase of 178,000 members sequentially.
- Adjusted Operating Loss (Health Care Benefits): $924 million.
- Medical Benefit Ratio: 95.2%, increased 950 basis points from the prior year quarter.
- Health Services Revenue: $44.1 billion, a decrease of approximately 6% year-over-year.
- Adjusted Operating Income (Health Services): Approximately $2.2 billion, a 17% increase year-over-year.
- Pharmacy and Consumer Wellness Revenue: Approximately $32.4 billion, over 12% increase year-over-year.
- Same-Store Pharmacy Sales: Increased nearly 20% year-over-year.
- Same-Store Prescription Volumes: Increased approximately 9% year-over-year.
- Retail Pharmacy Script Share: 27.3%.
- Restructuring Charge: Nearly $1.2 billion, including impairment charges for approximately 270 stores expected to close in 2025.
- Leverage Ratio: Approximately 4.6 times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CVS Health Corp (NYSE:NYSE:CVS) achieved a record high retail pharmacy script share of 27.3%, indicating strong market presence.
- The company introduced Simple Pay, a new product offering for Aetna's self-insured customers, which has shown to drive a 60% increase in the use of top-quality providers and a 12% total cost of care savings.
- CVS Health Corp (NYSE:CVS) reported strong performance in its Health Services segment, with improved purchasing economics and growth in specialty pharmacy.
- The company has made significant progress in its biosimilar strategy, driving down commercial specialty trend to 1.3%, the lowest level in recent history.
- CVS Health Corp (NYSE:CVS) has implemented a multiyear cost savings initiative expected to generate over $500 million next year, helping to offset the return of variable expenses in 2025.
- The Health Care Benefits segment faced challenges with an adjusted operating loss of $924 million, primarily due to premium deficiency reserves.
- CVS Health Corp (NYSE:CVS) is experiencing elevated utilization and higher acuity in its Medicare and Medicaid businesses, impacting financial performance.
- The company has not provided a formal outlook for 2024 due to ongoing challenges and uncertainties in its Health Care Benefits segment.
- CVS Health Corp (NYSE:CVS) is facing pressures in its individual exchange business, with higher-than-expected utilization and disappointing risk adjustment updates.
- The company took a restructuring charge of nearly $1.2 billion in the quarter, reflecting store closures and workforce optimization costs.
A: We are early in the open enrollment season, but we expect a 5% to 10% disenrollment in the total book, particularly in individual and dual eligible populations. We feel confident in the 2025 bids, which are designed to improve results, with improvements in star ratings and benefit design changes. Regarding pharmacy trends, we have anticipated changes due to the Inflation Reduction Act and broader macro trends, and we are integrating pharmacy benefits more closely with medical pharmacy to manage costs effectively. - Thomas Cowhey, CFO
Q: Could you clarify the potential 700 basis point increase in the fourth quarter MLR and how it relates to PDRs? Also, how should we think about the 2024 run rate earnings into 2025?
A: The potential 700 basis point increase in the fourth quarter MLR includes the release of the third quarter PDR but not necessarily a PDR for group Medicare Advantage. We are closely monitoring trends and risk adjustments, and while we are not providing formal guidance, we are taking deliberate actions to position for growth in 2025. - Thomas Cowhey, CFO
Q: Can you explain the differentiation between trends driven by benefits that have been restructured for 2025 and core utilization trends? Also, why might a PDR be needed for group Medicare but not for individual MA or exchanges?
A: The PDRs are calculated based on how products are sold, with group Medicare having less flexibility for year-over-year improvement. We have taken significant rate increases and expect to shrink the individual exchange book, which should improve performance. The elevated trends in 2024 were partly due to supplemental benefits, which have been restructured for 2025. - Thomas Cowhey, CFO
Q: How are Signify and Oak Street performing, and do you expect any changes in their trends next year?
A: Signify has had a strong year with significant volume growth, and Oak Street has performed in line with expectations despite industry pressures. We are pleased with their performance and expect continued growth, particularly as we increase the share of Aetna members in Oak Street clinics. - Thomas Cowhey, CFO
Q: Can you provide an update on the Cost Vantage program and its impact on pricing structures?
A: We have made significant progress with over 50% of our clients in the Cost Vantage program, and we expect to have 100% of our commercial book signed by the end of the year. This program addresses reimbursement pressure and aims to transform pharmaceutical pricing, benefiting consumers and reducing complexity. - Prem Shah, Group President
For the complete transcript of the earnings call, please refer to the full earnings call transcript.