By Anna Wilde Mathews
CVS Health delivered first-quarter results that beat Wall Street expectations, but said its Aetna unit plans to withdraw next year from the Affordable Care Act exchange business, where the insurer is losing money.
The healthcare giant also said it has struck a deal with the Danish drugmaker Novo Nordisk for its pharmacy-benefit manager, CVS Caremark, to favor the company's weight-loss medication Wegovy among the drugs it covers for clients, a change that will take effect July 1. CVS will also sell Wegovy at a discounted cash price through its pharmacies.
CVS reported adjusted earnings per share in the first quarter of $2.25. That is higher than analysts' projection of $1.70, according to FactSet. The adjusted results, however, didn't include charges because of a jury verdict and a loss on some sold-off assets. The company raised its guidance for 2025 to a range of $6 to $6.20 in adjusted earnings per share, from $5.75 to $6.
Shares of CVS rose more than 7% in morning trading Thursday.
Improvements in Aetna's results, which were a drag on CVS's earnings last year, helped buoy the company's first-quarter performance. CVS's healthcare-benefits segment reported adjusted operating income of about $2 billion, up from $732 million a year earlier.
"We are executing against the multiyear turnaround plan for Aetna," said CVS Chief Executive David Joyner in an interview.
Aetna's results might offer reassurance to investors frazzled by the unexpectedly weak earnings from the industry bellwether, UnitedHealth Group, which saw its shares drop steeply recently after it lowered its 2025 guidance, citing high healthcare costs in its Medicare business, among other concerns.
Aetna offers ACA health plans in 17 states, and has around a million enrollees. It has been ringing up losses on the business, Joyner said. "I don't see a pathway for us to address and/or solve that in the near or even the longer term," he added
Aetna has had a hot-and-cold relationship over the years with the ACA market, where the insurer first pulled back in 2017 and 2018 before announcing in 2021 that it would return, saying at the time that the market had stabilized.
Regarding the pharmacy-benefit business, CVS Caremark, which manages drug coverage for employers and insurers, Joyner said the company won favorable pricing for Wegovy, one of the blockbuster class of drugs known as GLP-1 medications.
"We turn it over to our negotiators to go out and determine who is going to be able to drive the lowest net cost for the customers that we serve, " and Novo Nordisk gave the best terms, Joyner said.
Another branch of CVS, its approximately 9,000 retail pharmacies, will begin selling Wegovy at a cash price of $499 a month for those who pay for it out of pocket, a rate that Novo Nordisk had previously offered through its own online pharmacy. Joyner said CVS expects increased demand for such sales as consumers lose access to versions of the drug sold by compounding pharmacies, which make their own medications.
Novo Nordisk said it is "focused on new ways to drive access and affordability for Wegovy."
The move comes as Novo Nordisk looks to capture a larger chunk of the cash-paying customer market. The drugmaker recently joined with the telehealth providers Hims & Hers, Ro and LifeMD to sell Wegovy on their platforms at lower prices for cash customers.
CVS Health reported net income of $1.78 billion for the first quarter, or $1.41 a share. The net results were affected by a $387 million litigation charge tied to a verdict against the long term care pharmacy unit Omnicare, and a $247 million loss on the sale of assets related to its accountable-care business.
On a call with analysts, CVS warned that it might see a drop-off in demand for vaccinations, due to consumer sentiment and potential changes in federal recommendations. The company said it was specifically concerned about Covid-19 shots.
Write to Anna Wilde Mathews at Anna.Mathews@wsj.com
(END) Dow Jones Newswires
May 01, 2025 10:41 ET (14:41 GMT)
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