The news: CVS Health appointed longtime pharmacy benefit manager (PBM) and health insurance executive David Joyner President and CEO. Joyner replaces Karen Lynch, who stepped down from the position in agreement with the company’s Board of Directors.
- Market reaction to the news was negative, with CVS’s shares falling about 8% as of the time of writing.
Zooming out: The move comes as CVS faces a torrent of headwinds, particularly to its insurance business, Aetna.
- Aetna was acquired by CVS for $70 billion. In an effort to synergize segments, CVS also acquired senior-focused primary care venture Oak Street Health for $10.6 billion and home health tech player Signify Health for $8 billion in 2023. Neither are driving a level of value that matches what CVS paid for them.
- Aetna is dealing with continued cost pressures in the Medicare Advantage (MA) market as MA enrollees receive more medical care after delaying it during the pandemic.
- And there’s no light at the end of the tunnel. Aetna’s medical benefit ratio, a measure of how much a health plan spends on patient care, is expected to reach just over 95% in Q3, up from nearly 90% in Q2. A lower medical benefit ratio means the health plan pays fewer claims for care received.