CVS Health CEO Karen Lynch will take over leadership of Aetna after a difficult year for the insurer.
The company reported its second-quarter earnings Aug. 7. Revenue in CVS' healthcare benefits segment dropped 40% from the second quarter of 2023.
Brian Kane, president of Aetna, is no longer with the company, Ms. Lynch told investors.
"We are disappointed by the current performance and outlook for the healthcare benefits segment, and I have decided to make leadership changes, effective immediately," she said on an Aug. 7 call.
Mr. Kane was appointed executive vice president and CEO of Aetna in 2023, after serving as CFO of Humana. He replaced Daniel Finke, who stepped down for health reasons.
CVS has faced challenges in its health benefits business, especially in Medicare Advantage. The company expects to lose up to 10% of its MA members in 2025 as it cuts benefits to recover margins.
The company lowered its earnings guidance for 2024 based on the performance of the healthcare benefits segment. It expects to earn between $4.95 to $5.20 per share in 2024, down from its previous estimate of at least $5.64.
Ms. Lynch said she and CVS Health CFO Tom Cowhey will assume day-to-day leadership of Aetna until a new president is named. Ms. Lynch was previously president of Aetna and was promoted to lead CVS Health in 2021.
The company also named Katerina Guerraz, vice president and chief strategy officer at CVS, as the chief operating officer of the company's health benefits segment.
"I will be establishing a very strong management process driving execution of improved financial and operational performance, and those will be my key priorities," Ms. Lynch told investors.
CVS Health is also planning to cut $2 billion in expenses in the coming years. The plan includes further streamlining the company's portfolio and using AI and automation, Ms. Lynch said.
"As we consolidate and integrate platforms, we will be thoughtful and deliberate as we execute these actions to ensure we continue to meet consumer needs," Ms. Lynch told investors. "These savings will create both capacity to invest in our businesses and opportunities for outperformance."