CVS Health’s new CEO, David Joyner, has promoted an internal executive, Prem Shah, as … [+]
CVS Health’s new CEO, David Joyner, promoted an insider, Prem Shah, to the company’s group president and hired former UnitedHealth Group executive Steve Nelson to run Aetna, the third-largest health insurer of the country.
The appointments, announced Wednesday, come as CVS reported net income of just $87 million, or 7 cents per share, in the third quarter ended Sept. 30. That’s a huge drop from last year’s third quarter, when the company had net income of more than $2.2 billion, or $1.75 per share.
The third quarter is the first earnings report issued under Joyner, who was promoted less than a month ago to replace Karen S. Lynch, who resigned. CVS Health has struggled to control costs at its Aetna insurance business and its retail pharmacies have struggled, contributing to the company’s share price decline.
Although revenue rose more than 6% to $95 billion in the quarter, earnings fell “primarily due to a decline in the health benefits segment’s operating results, which reflected continued utilization pressure and premium deficiency reserves of approximately $1.1 billion dollars recorded in the third quarter of 2024, related to expected losses in the fourth quarter of 2024 within the Medicare product lines and individual parts.”
Medicare Advantage plans are struggling this year as seniors with a reduced demand for health care services after the Covid-19 pandemic seek care and file claims with their health insurers. Medicare Advantage plans contract with the federal government to provide traditional coverage available in traditional Medicare plus additional benefits and services to seniors, such as disease management and nurse help lines, and some also offer vision, dental care, and wellness plans.
But Joyner is looking ahead to right the ship, while committed to CVS’s diversified portfolio of businesses that includes: pharmacies and a range of outpatient services and primary care clinics. pharmacy benefit management company Caremark; and Aetna, which has more than 27 million medical members, including more than 4.4 million enrolled in Medicare Advantage plans.
“As group president, Shah will be responsible for operational performance and integrated value creation across CVS Caremark, CVS Pharmacy and the company’s healthcare businesses,” CVS said of the 44-year-old executive who joined the company in 2013 and has held various leadership roles.
Shah was most recently CVS Health’s executive vice president and chief pharmacy officer and president of the company’s pharmacy and consumer wellness division “with oversight and responsibility for the company’s omnichannel pharmacy strategy,” the company said.
“Prem is a strong operator and innovator with deep experience in our businesses, and in his role he will help me and the rest of our leadership team improve our financial and operational performance across our company,” Joyner said. “I am confident in the future of our integrated model and that Prem and Steve’s leadership will help us deliver greater value from our integrated business model.”
Meanwhile, Nelson, who is 66, has experience leading several “healthcare and management services companies” and most recently served as CEO of primary care company ChenMed. Before that, he led UnitedHealthcare, the nation’s largest health insurer and a $200 billion unit of UnitedHealth Group.
“Steve is an industry veteran who has successfully led multiple divisions of a diverse managed care company and driven innovation and growth throughout his career,” said Joyner. “I will work closely with him and the team, building and accelerating the plan to move Aetna forward.”
