The company reported its fourth-quarter and full-year earnings for 2024 Feb. 12. CVS Health reported $4.6 billion in net income in 2024, down from $8.4 billion in 2023.
The company faced a difficult 2024, driven by rising costs in Medicare Advantage. CVS Health ousted former CEO Karen Lynch in the face of declining revenue and installed David Joyner as CEO. The company also named two new executives to lead Aetna.
Mr. Joyner told investors the company has “delivered material progress” in stabilizing Aetna’s financials in his first few months leading CVS.
“I’m very confident and very bullish on the continued recovery of that business,” Mr. Joyner told investors on a Feb. 12 call.
CVS Health’s medical benefit ratio in the fourth quarter was 94.8%, down slightly from 95.2% in the third quarter.
Here are five things to know about Aetna’s outlook for 2025:
- Medical costs remained high through the end of 2024, but the company saw “modest improvement” in spending in Medicare Advantage, Mr. Cowhey said.
- Though margins are improving, Aetna’s Medicare Advantage business will likely operate at a loss in 2025, Mr. Cowhey said.
- The company is projecting a medical loss ratio of around 91.5% in 2025, Mr. Cowhey said, improving from 92.5% in 2024.
- CVS expects its Medicare Advantage membership to decline by a “high single-digit percentage,” Mr. Joyner told investors. Company executives previously said the company could lose up to 10% of its Medicare Advantage members as it exited markets and cut back on supplemental benefits.
- The decline in Medicare Advantage membership will likely be partially offset by increasing enrollment in Aetna’s commercial, self-insured plans, Mr. Cowhey said.
- Aetna’s individual plan enrollment will also decline in 2025, Mr. Cowhey said, to under 1 million members.
“That’s consistent with the actions we took,” Mr. Cowhey added. “This is a business with over $10 billion in premium revenues last year that lost over a billion dollars. That’s just not acceptable performance.”
- In January, Aetna took over administration of North Carolina’s state employee health plan, one of the largest accounts in the company’s history, Aetna President Steve Nelson told investors.
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