CVS CEO Karen Lynch to take over 'day-to-day' operations at Aetna amid ongoing struggles

CVS Health is making changes at the top of its Aetna division as the insurer navigates choppy waters.

The company said in its earnings report released Wednesday morning that CEO Karen Lynch will take over direct control of the health benefits segment, and will be overseeing its "day-to-day" operations alongside Chief Financial Officer Tom Cowhey.

Aetna President Brian Kane, who joined CVS in September to lead the insurance segment, will depart the company, according to the release.

"Our integrated model and our strategy are enabling us to execute in a challenging environment and we are delivering the value our customers demand," Lynch said in the press release. "We are taking action today to ensure we make the most of our many opportunities, including leadership changes in the Health Care Benefits segment."

CVS will also tap Katerina Guerraz, its executive vice president and chief strategy officer, to serve as the chief operating officer for Aetna. Guerraz has 20 years of experience working at the insurer, CVS said.

According to the report, Aetna posted a medical loss ratio of 89.6%, up from 86.2% in the prior-year quarter amid elevated utilization. MLR through the first six months of the year was 90%.

The company said that in addition to elevated utilization, it's still feeling the sting of changes to its Medicare Advantage star ratings as well as higher acuity among its Medicaid members. CVS also noted a change in the projection for risk adjustment accruals from the individual market.

Despite these headwinds, membership was up in Q2 by 200,000, according to the report.

CVS once again lowered its guidance for the year, and the company now expects to bring in between $4.95 and $5.20 in earnings per share. That's down from a previous projection of at least $5.64.

CVS posted $1.8 billion in profit for the second quarter, surpassing Wall Street analysts' expectations. The healthcare giant missed on revenue, however, according to Zacks Investment Research, with $91.2 billion.

By comparison, CVS reported $88.9 billion in revenue and $1.9 billion in profit for the second quarter of 2023.

Through the first half of 2024, CVS has brought in $179.7 billion in revenue and $2.9 billion in profit. While revenues grew year-over-year from $174.2 billion, mid-year profits were down from $4 billion in 2023.

"We have many points of differentiation that position us to win now and into the future," Lynch said. "Our innovation is accelerating more transparent pharmacy reimbursement models, increasing the use of biosimilars, and providing better patient outcomes through our connected health care delivery assets."