CVS Health Corporation (NYSE:CVS) Q1 2024 Earnings Call Transcript

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A – Tom Cowhey: Yeah, I’d just add to that. This is with a partnership between healthcare delivery and Aetna comes in, between Signify and some of the capabilities we have at Oak Street, there’s a lot of boots on the ground in market capabilities that we have to really change the health trajectory of patients, whether that be readmissions to the hospital or managing your most complex chronic patients. And so this is where I think a lot of that partnership plays out, is in that space of getting a deeper level of impact, because we have the resource, we have the program, we have the know-how. Now we can extend those over a lot more members, and so I think both Signify and Oak Street will bring a lot to the table over the coming years on how we can really bend that cost around.

Operator: Our final question comes from Ann Hynes of Mizuho Securities. Please go ahead.

Ann Hynes: Great, thanks. You talked about pharmacy services. There was some pressure on mix and also your inability to make prior guarantees. Can you just elaborate on both comments? Is the prior guarantee a diabetes issue, given the GLP class? Thanks.

Tom Cowhey: It’s not a diabetes issue. Think of it as we have to have projections about what the mix looks like, to ensure that we appropriately hit all of our client guarantees. And with the changing mix inside the quarter, given some of the disruption that we saw, not only with the loss of a large client, but with the insourcing of another client’s business and some of the disruptions in the marketplace in terms of volume, specifically GLP-1’s were part of that. We missed our guarantees by a little bit. We’ll see how we’re able to recoup that over the remainder of the year. But at this point, what we’ve assumed is that, that first quarter is permanent and that we can get back to our previous projections for the remainder of the year. David, anything you’d add to that?

David Falkowski: No, I think that’s consistent with the way we see it. I will just add one thing on GLP-1. Obviously there’s been a lot of volatility. One, because of supply constraints that we’ve experienced and obviously a lot of work around managing what we would see is this unprecedented demand, combined with a very challenging price point is leading to a lot of energy around how to best manage this category through whether it be formulary, more aggressive utilization management. I mean the broader care management wrapper is on this. But this category alone is driving obviously significant costs for our clients, and it’s also driving significant expense within our organization, just to support what is now one of our highest drivers of call volume around people trying to find access to the product and making sure that we get consistent supply in the market.

So we believe we’ve got a really strong set of programs and services to manage the category. And we believe once there’s competition and adequate supply, we’ll be able to have more consistency around how we manage this category.

Karen Lynch: As we close the call, I want to just take this opportunity to thank our colleagues for their many contributions, and we look forward to providing updates throughout the year. Thank you for joining the call today.

Operator: Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect.

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