CVS Health swung to a fourth-quarter profit and is starting the new year with a management shakeup for its largest business.
The company will replace Derica Rice with Dr. Alan Lotvin as the leader of its pharmacy benefit management segment.
CVS Health also named former Concerto Healthcare executive Alec Cunningham to lead its Aetna insurance business as it focuses more on government programs like Medicare Advantage.
CEO Larry Merlo told analysts the changes give CVS Health experienced leaders as it evolves.
CVS Health operates one of the nation’s largest drugstore chains with more than 9,900 retail locations. Its pharmacy benefit management segment runs prescription drug plans for big clients like employers and insurers. It pulled in more than $141 billion in revenue last year.
The company said Lotvin has deep experience in that area and in working with high-cost specialty drugs that have become a growing focus for insurers and other bill payers.
CVS Health is focusing more on providing health care services and managing customer care. It added health insurance to its business mix with the 2018 purchase of the nation’s third-largest insurer, Aetna.
Its new business helped CVS Health Corp. earn $1.75 billion in the final quarter of 2019. That compares to a loss of $419 million the previous year, when the company booked a big charge from a struggling business that provides services to long-term care facilities.
In the most recent quarter, adjusted earnings totaled $1.73 per share, the Woonsocket, Rhode Island, company said.
Revenue climbed 23% to $66.89 billion, helped in part by an increase in prescriptions filled and higher prices for some brand-name drugs.
Analysts polled by FactSet expected a profit of $1.68 per share on revenue of $63.93 billion.
CVS Health also said Wednesday that it expects adjusted earnings for 2020 to range between $7.04 and $7.17 per share.
Wall Street expected, on average, earnings of $7.15 per share, according to FactSet. The company’s stock got off to a rough start last year, when CVS Health debuted a forecast that fell short of analyst expectations.
Aside from the leadership changes announced Wednesday, CVS Health said earlier this month that its board of directors would shrink to 13 members from 16. Three directors will not stand for re-election this year.
That includes former Aetna CEO Mark Bertolini, whom the company said would be leaving following the health insurer’s successful integration with CVS.
But Bertolini told The Wall Street Journal that the integration wasn’t complete, and he was being pushed out.
Company shares rose more than 1%, or $1.04, to $74.89 in Wednesday morning trading, while broader indexes advanced at a slower pace.
CVS Health shares climbed about 13% last year but were down slightly so far in 2020.
Source: Associated Press – Tom Murphy