Cvs Removes Top Aetna Leader As Higher Medical Costs Eat Further Into Profits

WEB CVS Removes Top Aetna Leader as Higher Medical Costs Eat Further into Profits

WEB CVS Cuts Earnings Guidance

WEB CVS chief executive Karen Lynch removed Aetna President Brian Kane, the top executive at the insurance unit, due to rising medical costs that eroded profits. The company cut its unadjusted earnings guidance to a range of 495 to 520 per share, down from at least 564 per share. CVS also lowered its annual profit forecast to 640 to 665 per share from a previous estimate of at least 700, marking the fourth time the healthcare company has downgraded its profit outlook this year.

Aetna's Struggles

Aetna's operating income fell to 938 million in the second quarter, a 39% decline year-over-year. The insurer posted a medical loss ratio of 86.1%, meaning it paid out 86.1 cents in medical claims for every dollar it collected in premiums, indicating higher utilization of healthcare services by members.

The removal of Kane and the downward revisions in CVS's financial guidance highlight the challenges the healthcare industry faces amidst rising medical costs. Lynch acknowledged that the company is "navigating a complex and evolving healthcare landscape," and the company will continue to take steps to manage costs and improve profitability.