CVS Health Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Justin Lake - Wolfe Research, LLC - Analyst : I wanted to focus on your comments around Medicare Advantage, specifically -- it sounds like you're seeing early trends better in individual and Part D, maybe some pressure incrementally in (inaudible). So hoping you can give us some more color there across those 3 segments. And also maybe give us your early impression of trend versus that high single-digit medical trend you put in guidance for MA?

Question: Lisa Gill - J.P. Morgan Securities LLC - Analyst : I'm going to shift over to the relationship that you announced today with Novo for Wegovy. David, can you help me understand a few things. One, when we think about your preferred formulary, can you talk about the number of lives that are on there? Two, when we think about coverage, I know we've been talking in the last few years around how expensive this is for employers to cover, where are we on coverage today for weight loss? And will this increase the number of potential lives that could be covered with this program? And then just wrapping that around, you talked about clinical services, and this will come through Caremark, can you maybe just talk about the economic value of this for both care markets as well as the member? And then just lastly, when I think about the pricing, should I assume that you've been able to negotiate through Caremark is going to be better than the 499 that you also announced at retail?

Question: Stephen Baxter - Wells Fargo Securities, LLC - Analyst : Just a follow-up on the Health Care Benefits guidance. It looks like you had close to $1.6 billion worth of prior year development and understanding it, it seems like the individual losses are also increasing inside the P&L. But just trying to understand better what are these prior period sort of revenue adjustments that you're talking about, I guess what businesses actually relate to? And how do we think about there's an impact to the prior year? Is there an impact to 2025 to consider? And then as we just think about your expectations around the kind of earnings that you can generate from exiting the individual business, I know you gave us the variable loss figure for the year. Is that the right way to think about the potential for year-over-year earnings contribution from (inaudible) the exchanges? Or are there other considerations we should be keeping in mind?

Question: Elizabeth Anderson - Evercore ISI Institutional Equities - Analyst : I was wondering if -- two questions about your sort of guidance expectations. One, are you having any change in your guidance expectation on the back of the Wegovy announcement? It doesn't look like it, but I just wanted to check on that. And two, could you comment on how you see the potential tariff impact? I know some of the pieces are still very much moving, but maybe you could at least sort of comment on the front end of the store? And then maybe some of your broader thoughts on potential other impact to the business?

Question: Andrew Mok - Barclays Capital - Analyst : I wanted to follow up on your comments at Oak Street, where you noted some early signs of pressure. Can you elaborate on the nature and timing of what you're seeing there? And relatedly, is there anything that changed from year one to year two of B-28 that was either unanticipated or more challenging from an operational perspective?

Question: Michael Cherny - Leerink Partners - Analyst : Maybe just a follow-up on PCW. Obviously, this is the first quarter that you've had the cost vantage impact. Anything you can say about the market impact, how it's trended based to your expectations? And then going forward, you've talked about the potential to roll this into government. Any updated thoughts there?

Question: Charles Rhyee - TD Cowen - Analyst : David, I wanted to circle back to your comments earlier about the (inaudible) pass in Arkansas. And obviously, I think it's been reported that you could end up potentially closing sort of your retail locations in the state. Obviously, some other states are considering kind of similar legislation and certainly, maybe Arkansas is an easy state to exit from if you had to -- if we think this gets adopted more broadly. And I think back to the (inaudible) California contract where you -- they kind of split that contract up and you guys ended up retaining the specialty pharmacy part of the business. And I think at the time, you guys had said that was obviously the most profitable part of the business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, CVS.N - Q1 2025 CVS Health Corp Earnings Call If that's the case, and we see a future where sort of splitting these business, and I understand the argument why having a vertically integrated business makes more sense, but if you have to divest or the other, is it fair to think that you would look to divest maybe the PBM part of the business and retain specialty pharmacy? And if that's the case, is that a difficult kind of process to enact if you had to? And just a quick follow-up to Lisa's question earlier, Wegovy being on the national formulary, I assume that comes with a better rebate structure?

Question: Ann Hynes - Mizuho Securities USA Inc. - Analyst : Yes. Can you just provide a little bit more commentary on your -- commentary on the flu in your prepared remarks. I guess what makes you a little bit more concerned? Is it just less support from the CDC? And can you remind us how much of your -- how many flu vaccines you do a year and what you have embedded in guidance for a potential change in behavior? And then additionally, is it -- are you just worried about the flu? Are you just -- or is it your entire vaccine portfolio that you might be a little bit more worried about given the Washington environment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:00PM, CVS.N - Q1 2025 CVS Health Corp Earnings Call