CVS Delivers Strong 4Q Results Amid Mixed Aetna Performance

by Peter Johnson For the fourth quarter and full-year 2021, CVS Health Corp. reported a strong financial performance across its vertically integrated health care business, but its health insurance division Aetna had mixed results. While Aetna delivered higher-than-expected enrollment in Medicare Advantage, it didn’t meet expectations for enrollment on the Affordable Care Act exchanges — a book of business the firm re-entered after several years away from the individual marketplaces.  Aetna sees increased COVID costs  Aetna took in $20.6 billion in revenue in the third quarter of 2021, according to a CVS press release, up from $19.1 billion in the same period of 2020. It recorded a medical loss ratio of 87%, up from 86.7% in the same period last year; for the full year, Aetna reported an MLR of 85%, up from 80.9% in 2020.  During a Feb. 9 conference call discussing the results, Chief Financial Officer Shawn Guertin said Aetna’s COVID-19-related capital investments were lower in 2021 in comparison to 2020, but COVID-related utilization was higher.  “As a result of the omicron variant, we experienced higher COVID testing and treatment costs in the fourth quarter, but this was largely offset by lower non-COVID costs, particularly in Medicare and Medicaid,” Guertin said.  CVS beats the street on revenue, earnings   Across the entire firm, CVS beat Wall Street’s projections in the fourth quarter of 2021, taking in $76.6 billion in revenue, up $7 billion from the same time in 2020, and delivering adjusted earnings per share (EPS) of $1.98, up from $1.30 in the same period in 2020.   CEO Karen Lynch and Guertin attributed those results to strong sales of over-the-counter COVID-19 tests and COVID-19 vaccines administered at CVS pharmacies and clinics.  Firm eyes takeout targets  Lynch said the firm continues to pursue its ambitious mergers and acquisitions strategy. During a conference call discussing the firm’s results in the third quarter of 2021, Guertin said that CVS will have as much as $25 billion in cash to spend on M&A between 2022 and 2024.   “We’re advancing our care delivery capabilities, optimizing our retail portfolio, and further diversifying the health products and services that we offer. We’re driving this evolution both through internal initiatives and by seeking to execute capability-focused M&A for complementary health services,” Lynch said, also highlighting the firm’s digital health initiatives.  “For our HealthHUB and MinuteClinic patients, we simplified and digitized the check-in process for patients. Our self-service digital tool enables individuals to complete traditional paperwork in advance of their appointment.” Lynch added that 80% of patients are using this capability.  From Health Plan Weekly Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.