CVS Health has named Prem Shah as group president and Steve Nelson as the president of Aetna, effective Nov. 6. Both will report to CVS President and CEO David Joyner.
The company also reported a major drop in third-quarter earnings, driven by headwinds at Aetna and premium deficiency reserves recorded in the third quarter related to anticipated losses in the fourth quarter.
Mr. Shah joined CVS in 2013 and has held leadership positions across the company's pharmacy businesses, most recently serving as executive vice president, chief pharmacy officer, and president of pharmacy and consumer wellness.
Mr. Nelson served as CEO of UnitedHealthcare from 2017 to 2019 and was hired to lead JenCare in 2022, a joint venture formed in 2011 between ChenMed and Humana. He was named CEO of ChenMed in July 2023. The company provides primary care to older adults and Medicare Advantage enrollees in more than 125 clinics across 15 states.
CVS appointed Mr. Joyner president and CEO in October, replacing Karen Lynch, who stepped down from the position. He most recently served as executive vice president of CVS and president of the pharmacy benefit manager, CVS Caremark. Ms. Lynch had took over leadership of Aetna after a difficult year for the insurer; revenue for the insurance business dropped 40% year over year in the second quarter. Brian Kane, former president of Aetna, left the company in August.
"Our integrated model accelerates our ability to uniquely do what is most important to today’s health care consumers: deliver lower cost of care, a simpler experience and better outcomes. Our third quarter results reflect strong performance in the Health Services and Pharmacy & Consumer Wellness segments, and also highlight the continued need to work across our enterprise and address macro challenges to the Health Care Benefits segment," Mr. Joyner said in a news release. "My commitment to our CVS Health colleagues and our customers is to drive focused execution of our integrated strategy to improve the health of the 185 million people we are privileged to serve."
Earnings
CVS Health reported $87 million in net income in the third quarter, down from nearly $2.3 billion year over year.
Total revenue in Q3 was $95.4 billion, up 6.3% from the same time period last year. The company reported adjusted earnings per share of $1.09 for Q3.
Insurance
In its insurance segment, CVS posted nearly $33 billion in Q3 revenue, up 25.5% year over year. The segment reported an adjusted operating loss of $924 million, down 160% year over year.
CVS reported a medical benefit ratio of 95.2% in the third quarter, up from 85.7% last year, driven by increased utilization, premium deficiency reserves, the impact of Medicaid redeterminations and a decline in Medicare Advantage star ratings payments.
Aetna has more than 27.1 million total members, including 18.9 million commercial, 4.4 million Medicare Advantage and 2.5 million Medicaid members.
Health Services
Revenues from CVS' health services business decreased 5.9% to $44.1 billion, driven by the previously announced loss of a large client and rising pharmacy client prices.
Total adjusted income in the segment increased 17.4% year over year to $2.2 billion in Q3.
Retail
CVS' retail segment reported a 12.3% increase in revenue in Q3 to $32.4 billion.
The company reported a 14.9% increase in adjusted operating income in the segment, rising to nearly $1.6 billion. The increase was driven by increased prescriptions and vaccinations, and higher drug purchases.