CVS Health’s (CVS) new CEO, David Joyner, is making leadership changes to address the challenges in the company’s insurance unit, Aetna. These changes were announced at the company’s Q3 earnings call, held yesterday.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
In major changes, CVS has appointed Steve Nelson as the new CEO of Aetna because of his vast experience in the insurance industry. He is expected to help address Aetna’s challenges, particularly in the Medicare business. In addition, CVS has appointed Prem Shah, the current Chief Pharmacy Officer, as the company’s new president.
Aetna’s Woes Impact CVS’ Performance
Aetna has been facing significant headwinds, primarily due to higher-than-expected medical costs in its Medicare Advantage business. This has impacted CVS’ financial performance and drawn the attention of activist investors like Glenview Capital Management.
It’s worth noting that CVS reported a third-quarter earnings miss and withdrew its full-year 2024 earnings forecast due to high spending on medical services in the Aetna unit.
To boost Aetna’s performance, Joyner has introduced a plan to grow its membership and enhance margins in the Medicare business. These initiatives should help strengthen the company’s long-term financial outlook.
Is CVS Health a Buy?
Turning to Wall Street, CVS stock has a Moderate Buy consensus rating based on nine Buys and four Holds assigned in the last three months. At $69.73, the average CVS Health price target implies a 13.18% upside potential.
