CVS Health (CVS) 2 Aug 232023 Q2 Earnings call transcript

Good morning everyone. My name is Bruno and I will be your conference Operator for today. At this time, I would like to welcome everyone to the CVS Health second quarter 2023 earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

ask by during keypad. one to press time, like followed star on you’d a this question simply If your telephone

you’d your followed withdraw like press If star the question, by please two. to

hand over host, I will to now Larry your McGrath.

begin may You conference. your

to and welcome Health CVS Executive CVS this President I’m Investor and Relations and earnings Vice President morning second McGrath, joined Lynch, Chief I’m for Officer, Larry Officer. morning Guertin, Senior XXXX President by of call Executive the Chief Good and quarter webcast. Shawn Business and Karen Development and Health. Vice Financial

Following a our that leadership session remarks, our of will prepared we’ll question and team. members host include additional answer

have is it will press on morning filed our posted where this to with also our the website, for that archived Our presentation website Today’s SEC. being we and with release broadcast call been year. one our slide be along Form XX-Q

certain call, statements. we’ll this make During forward-looking

morning’s filed in on to cause our the forward-looking recent our our you particular from XX-K, the filed are cautionary are these strongly that and press encourage we and morning, most on results to risks was statements risk subject uncertainties, and earnings risks projected this regarding We described those currently XX-Q, with the file release. actual annual recent report significant filings statements forward-looking X-K reports Our in the to statements results. that differ SEC reports and on Form most review concerning uncertainties factors this including Form in could recent quarterly of Form materially which

condition. company’s about financial non-GAAP use we’ll measures this During talking when the performance financial and call,

the non-GAAP and posted the in reconciliation this press of can morning’s to a portion in You measures Relations website. reconciliation our these documents find of Investor release

Karen. that, like call turn I’d to over to Karen? the With

Larry. morning joining call thanks everyone for and Thank our you Good today.

our and delivering another execution of closed Health quarter, business strategy. model the our successful focused our of through diversified financial on commitments CVS power

engagement, of pursuit quality superior our improving to costs, the experiences by in lowering relentless been broadening outcomes, health of deliver high goals have We and to access levels higher care. driving

XXXX, have in far we several So key achieved accomplishments.

Signify Health, two Oak acquired best-in-class we value-based assets. Health First, care Street and

making are value. multi-payor progress companies We integrating to meaningful create these

opportunities Heath as Oak and patient Signify and engagement unlocking assets Pharmacy, are growth. by such and CVS CVS Aetna, to Street We and MinuteClinic, connecting driving

assets long As our term we healthcare synergy scale accelerate our realize we delivery growth opportunities, trajectory. will and

enrollees our marketplace an new to states million is expanded we and on-boarded this to members. individual Second, successfully that exchange important offering more than in Strategically, XXXX. XX million grew XX approximately one

population and lays earnings the assets. for for foundation at members Our this all growth success Aetna integrated these future with across creates our connection

of to billion flows value shareholders. our return us $XX strong our we to long to generated flow operating $X.X strategy to and returned XX, more Finally, cash enables cash more than than term shareholders. ability and June in Through billion invest generate our

continue enhance to return expect capital shareholders to cash our deploy to shareholder We value. and to

$X.XX we second EPS Today quarter of and income operating reported $X.X billion. adjusted adjusted

environment. by Medicare to consumer and execution emerging navigate Our us our headwinds diversified a in strengthened business Advantage exceptional changing positions

full provide our XXXX Shawn $X.XX $X.XX. on guidance to more adjusted range year will shortly. outlook reaffirming are updated EPS We year the our for details of

exchange, including was billion, membership the we in income benefits quarter in to increase XX%, our performance revenues individual broad-based of an delivered grew of quarter, operating for our members million the and XX.X to prior $X.X healthcare the adjusted year, $XX.X growth of nearly Medical X.X million, second Turning highlights membership. Medicare segment, commercial reflecting increase versus and an billion.

the product growth total whole a our through that For solutions. membership and health address offerings reflects our care our this marks of commercial of of core consecutive membership, integrated eighth cost quarter the member This quarter differentiated the gains.

business. expected Consistent which trends than utilization broader quarter. was Shawn became discuss latter of controlled well of in primary were emerged industry, our will trends Advantage medical The costs more elevated cost the Medical with of our costs part in in outpatient driver business in greater detail. medical these Medicaid settings. the books apparent elevated in the and Medicare commercial these

In Medicaid, Medicaid through deep new add XXXX in market-leading comprehensively clinical Medicaid Oklahoma integrated April awarded solutions. win XXX that beginning contract and the in of a ability will to investment programs, State relationships, local support us our This wellbeing our approximately members. statewide populations demonstrates

our We Adjusted to services X%. benefits our able in with in increase health grew segment of billion. billion, cost $X.X by drug This strong trends the our were the an offset by consumers and quarter, to to execution value driven solutions to consistently Revenues to These and operating X.X% clinical continued $XX.X healthcare innovative successfully bringing managing income business. we were results demonstrate clients nearly pharmacy services segment. market. pressures grew our

choices X drug increased living quarter, category. category In U.S. new branded the in part This the obesity Type for million diabetes. the revenue in adults XX over who who nearly the the fast-growing people second million presents driven and expensive and are have with by GLCX XX

positioned value our our management and programs cost in that We net utilization deliver customers loss to tools clients. to are the for drive weight well with this lowest category

is and This value market-leading our success continued we to deliver foundation day, create drive customers. position. our lowest Every and competition, transparency, the the of our cost, and net choice

by strong our CVS high across delivery, the since drives leveraging our multiple that patient to launched services platform closed we’ve assets. delivering optimal Health we time had healthcare engagement with value-based short multi-payor to Street these transactions, Health patient channels. assets health our engagement In quarters, efforts core Oak drive These Health and expectations. both capabilities to consistent care Turning performance bring business Signify with

the services our build home a with care is in enables such health their care plan and home in partners. total better Health has to unmatched for able lower services connect to and patients points We strategy. hospital are needs readmissions, drive during ultimately insights of in-home reducing points outcomes. health health create core Signify across These an cost patient’s million engagement valuable ability evaluations and as improving engagement broader better X health homes and care, the to capture Signify other annually. into health our trust

Survey who members with recommend trusted additional more to highly are home health consider services. and these likely Signify customers XX recognize relationship and are likely results their more to Signify’s times satisfied power the this health XX% evaluations show plan their services. of in-home value of the that

customers. opportunities further has Signify for services brand expanding customer broad Health’s Since retention and and the with bring patients new the plan to trusted Signify its members. they of relationships, exceptional engage close acquisition, the system the services added CVS health opportunity and our to Signify’s of to Medicare health more We’ve expand increase touch deliver. points demonstrated

the is channels home. pharmacy launched quarter, both to at for there Signify. strong new services and CVS promising CVS Signify Medicare engagement customers utilized. Early This across a select additional with members engagement pharmacies and initiatives Aetna drive results higher CVS evaluations We are demand to IET of in-home member Health conversion in the

who Street are creating presence located launched ability our seniors connections pharmacies are growth multiple Oak broad Medicare-eligible new and Oak to there near X each We Street an on engagement through clinic. providers. Street we focused to digitally, store initiatives engage member patient week and community accelerating in customers, approximately Oak Health and million both between CVS that Turning Health, Medicare-eligible CVS are across visit channels. consumers Today

profitability Medicare primary Aetna the broadly physician to them without connecting serving will while also are Oak Street their with drive care clinic in care. who local re-engage members are to growth These mature a Medicare Oak Street members. path accelerate currently needs their of patient provider initiatives the We and

opportunities XX to transaction. XX will expect to As the growth Oak continue at up the from these Street XXXX, end drive in clinics close geographies, of have Street higher of additional increase. states, the expands By to Oak to patient we

XXXX. We will Oak We new identified year to also to additional have co-located XX pharmacies build locations Street XX clinics now clinics with year. expect and already open next CVS this for

to of in pharmacy $XX.X XX% billion X% prior increase consumer COVID-related nearly grew Turning prior income billion, year to year. the volumes. largely adjusted segments, of the due operating and generated to the wellness We quarter, of from versus an lower $X.X a decrease our we revenues

by COVID of prior sales inflation. the strong brand mix Our prescription store by X%. excluding by drug pharmacy pharmacy of differentiated delivered performance. increased and a customers provide that versus This Same XX% to the Same efforts our driven growth where impact nearly omnichannel meets than grew by growth another when pharmacy primarily quarter more are business year, store is experience fueled pharmacy they

in offerings high increased by penetration, more volatility. demonstrating household we’ve our historically well delivered us more consumer levels. quarter, of and front through sales our front the kits excluding X%, economic to In OTC This resiliency store challenging service our test same manage In positions environment. market store the grown grew than share, store, a

and growing sales. our also make to continue members We progress digital

quarter, up exceeded quarter. digital unique over million XX last we This million customers, from X

versus XX% access conveniently including increased our them their OTC year, sales allowing plan digital in the highly of our members, increase solution important valued is This over-the-counter to offering. Our by offering benefits. health XX% a prior health meaningful

as XXXX. our cost X,XXX Last over assets. facing morning, This efforts of million expected associated well we in we generate of a $XXX of charge savings restructuring approximately structure. run elimination positions nearly non-core of the These million quarter, discussed optimizing beginning non-customer rate are the with announced as impairment to $XXX

drive operational Our excellence additional optimization efficiency technology. to efforts have identifying also using focused on opportunities and

cost we using and intelligence million selectively and are some areas increase opportunities health for of us our of as increasingly $XXX customer to enhance strategy. efficiency $XXX in savings and When combining These biggest and experience, been For such growth critical finding productivity to to all initiatives, our targeting of the achieve example, time actions resources we reallocate that are which XXXX. artificial technology, improve competitiveness. million operations, the enable our services we of invest we’ve will are the our enablers in confident are our

taken on December We day long proof of details our offerings. the term at investor X our Boston. steps tangible of in look value We’ve strategy to on our with meaningful forward more providing integrated unique executing

and the to our a to call over turn Shawn guidance. now Shawn? look provide into I’ll deeper results our

and good Karen, you morning Thank everyone.

and quarter the strength diversified continued results of execution per operations. our power from delivered share second We of and enterprise. demonstrate flow cash our revenue to adjusted Our strong earnings growth, the

total regarding highlights few A performance. company

year our of and income versus our $XX revenues adjusted of in by $X.XX, approximately XX% strong in pharmacy respectively. quarter We segments, partially year-over-year, Second than and of representing nearly businesses. of primarily offset execution delivered due our across XX% adjusted and operating to were EPS growth pharmacy These prior each increased declines healthcare $X.X decreases of and wellness reflecting billion benefits billion decreases XX% by services operations. strong nearly consumer more

CMS of with from cash timing outstanding fourth to to cash These were the payments Our billion. are remains cash expected generate that by in $XX.X year-to-date impacted quarter. flow ability normalize of operations flows the

this our flows impact, strong from remain Excluding cash billion. operations $X at

revenue to for benefits year. prior the the our details Shifting delivered healthcare growth we strong versus segment,

XX.X% individual revenue exchange commercial of XXX,XXX all impact by Membership XX.X quarter reflecting grew $XX.X partially billion in members increased redeterminations. increases sequentially, our by year-over-year, product of million, reflecting growth lines. Second an of offset Medicaid the increase to and businesses across

Adjusted driven cost of was on decline billion management. higher income declined operating the medical operating in This expected approximately quarter the execution XX% investment income ratio strong by higher than $X.X by partially versus net offset a benefit prior and year.

utilization year-over-year, Our higher quarter. in medical health. These expected Medicare utilization and basis points outpatient XXX increased as trends setting XX.X% of Advantage second than well higher the the were benefit driven primarily in behavioral as ratio dental by reflecting

the We important including individual generally lines also our to note exchange, prior the quarter other year, line and first levels in our remain in utilization that of commercial Medicaid It year-over-year quarter. and with in utilization prior development lower business, higher is pricing resulting expectations. recognized period in in

almost payable This end Days pass-through of X.X quarter the impact the the quarter. down the payments sequentially. was was entirely driven days claims in XX.X, increased by Medicaid at of decline

overall DCP this was Excluding of our and impact, remain confident adequacy we stable reserves. in the

year-over-year. our in pharmacy, segment, This offset an the increase growth brand were and price and generated healthcare our specialty by of and the was improvements. Oak services billion, delivery partially driven of approximately continued services drug Signify mix, pharmacy impact $XX.X of by X.X% pharmacy operations inflation increase Our client addition Street. These revenue of includes business, which health increases

Total partially grew by MinuteClinic primarily client of pharmacy price nearly purchasing billion strong business. carve-out testing. improvements operating by when year-over-year, York Total the approximately pharmacy net X% income economics, Medicaid prior members. declined primarily and execution down ongoing the and largely This basis processed X.X% the New versus decline approximately vaccinations. in improved year Adjusted driven attributable quarter XX and offset XXX by lower claims to excluding by points COVID-XX membership offset new million was COVID-XX was $X.X

very XXX,XXX health the in lives, versus encouraged we and services at-risk are of the ended same the Street to an of performance year, healthcare period segment, XX% XX% quarter and Street increases our our in-home XX%. with of completed assets. XX% in Within evaluations quarter quarter, Oak centers over period growing respectively. quarter, last year last by approximately increase Oak Signify growth increased revenue generated compared same the XX% significantly delivery and growth XXX,XXX revenue the last year. XXX and the same of also the

and inflation. pharmacy Moving XX% brand billion, recent mix, the the generic generic of reimbursement X% impact wellness improved COVID-XX up on billion decreases year, increases partially nearly $XX.X front Adjusted prior XX% to purchasing. pressure, pressure. $X.X related year reflecting partially impact by prescriptions prescription lower same revenue testing, by offset income volume basis, of operating reimbursement consumer increased and declined of and introductions, our versus segment, decreased a volumes. store were These driven and and offset These pharmacy generated nearly and volume, of and increased were approximately we drug continue lower store versus the prior the vaccines COVID-XX drug by

were pharmacy inflation. store a more The by the X.X%. drug was prescription XX%, X.X% impact and sales volumes store vaccinations in increase excluding same mix, same up in store COVID-XX prescription increase Same of driven volumes, brand than

in is were test cold we and the and basis As challenges primarily Same sales for cough, value face demonstrate economy, but our flu continue trends not to these business the down store to mentioned, OTC store consumers. in to have front the we broader declines and immune resiliency shown XX of kits. Karen to points the in due store front offer

up sales X%. of kits, were store same the OTC more test by Excluding impact store than front

excellent. Turning to the and liquidity sheet, balance our position capital remain

$XX.X discussed and Through been to generated our to the a prepayment continues billion I flow cash sheet. the at of to identify always second cash we our and ended organization, approximately quarter, the bolstered has generate optimize the quarter ability enterprise Our flow strength the new $X.X subsidiaries. operations opportunities and balance by earlier, of with from cash CMS billion, parent unrestricted of

of term Street fund to $X billion term and the quarter, During we long was the outstanding issued loan Oak repaid transaction. debt $X that approximately of billion used our a portion

to $XXX million to Through We maintaining shareholders. capital our investment-grade returned strategically. committed ratings quarterly to dividend, current remain we our deploy while preserving flexibility

We associated A estate investors. as office few well million. a recognized highlighting other optimization integration charges transactions Street worth quarter transaction $XXX Signify acquisition-related in additional of items the the and with Oak for as total for costs real and

As million charge the our Karen we mentioned assets. also her restructuring cost efforts in took $XXX and of prepared non-core a optimization nearly associated of remarks, with impairment

guidance the higher reflects second quarter business outlook we This expected cost $X.XX. remainder well of guidance a our XXXX, to for by for services medical of our per performance than our Advantage strength in pharmacy offset our as Medicare our reaffirming segment. the within trend Turning as now health to XXXX, share service adjusted $X.XX earnings are through

Medicare the reflecting benefits our of Advantage higher of high fall XXXX XX.X% benefit points, ratio we the segment, In XX expect minus previous at or healthcare now range basis plus our impact the of medical to end utilization.

the operating expect a billion our XXXX update is While guidance to billion. results that which we utilization range of now guidance rest XXXX. trends uncertainty will remain our also to $X.XX medical the there a for of for change income, now this in surrounding fall assumes duration cost to prudently $X.XX of elevated in adjusted these spike, This

While this our reflect a by exchange in prudent trends and to continues business. individual we encouraged are stance guidance that business, cautious for

continued first is call. our remainder and business our expectation Developments strong adjusted XXXB a the the on strength $X.XX of year. year-to-date segment, we our guidance billion, of updated services billion our quarter to services continue reflecting our In in the business our the provided for with to guidance health operating $X.XX range in align execution income of pharmacy

and year-to-date billion updated range a segment, now billion. pharmacy our in to $X.XX guidance weakening operating strong wellness fundamental In consumer recognizing the while environment. This expect income a $X.XX execution for potential of adjusted consumer reflects we

Shifting continue in anticipate to to operations from our flow full cash to a XXXX cash of flow, strong we $XX.X billion billion. year range $XX.X

As a of range of our billion we our of expenditures billion. in capital to now prioritization portfolio $X.X optimize expect a result to cost structure, $X.X

projections our tax XX.X%. interest expense and our share we maintain count, to project continue effective at We and for finally rate adjusted now

components Relations guidance find can Investor XXXX our our on on additional webpage. updated You details the of

Before concluding growth targets. medium projections to my prepared term and our like would remarks, I address

As of cutting of resilient and this our Health by remarks, benefits face Karen operations, for positions in CVS this take us positioning XXXX. which on cost seriously, touched morning the our initiative evidenced from in We improve be meaningfully adversity. commitments her will our announcement the our of to well diversity as the

across emergence potential a point Street our clinic and uncertainty Advantage, starting assets, our adjusted guidance environment contributions COVID, However, for target of given $X to in headwinds set of Medicare of reasonable diverse with retail XXXX the a from is combined Oak our reduced multiple potential weakening range. growth, no consumer longer our for accelerate plans EPS the including

to we EPS expectations now initial to anchor to set challenging Given to $X.XX, flat the believe guidance adjusted XXXX our to existing essentially opportunities outlook $X.XX more achievable range. our our their XXXX should for investors with that for and desire is XXXX guidance outperform,

year does this not any prior reserve assume development. is As convention, our guidance

target EPS of Given on uncertainty investors $XX. XXXX XXXX, no should also of for believe we the adjusted our level rely longer

longer at investor will term our growth in day December. on outlook We our provide earnings clarity more

no convinced system and and mistake care. uncertainty headwinds how XXXX our long are receive payors, make We created and care this and will engage delivery and XXXX term ever in will how strategy. than change we believe of model have patients ultimately - our more the health The power shareholders. emerging they consumers our assets patients, outlook, integrated for our While with customers, benefit

second our resiliency of businesses. results the demonstrate quarter conclude, To enterprise continue power and to of our the diversified our

we to company become growth health We the consumers. on for focus work as operational and continue solution leading execution our maintain to

will we that, questions. call With to your Operator? open now the

instructions] [Operator

Please now proceed. comes your question from first AJ, line Our AJ Credit from Rice open. Suisse. is

it into consumer Thanks, hi teed the and uncertainty. changing Shawn, up couple account you taking backdrop then it know MA times, Karen a everybody. I mentioned and

Just on seeing the cough, on anticipating changing, your that, business you’re are wouldn’t soft, at somewhat but necessarily and it sounds consumer the signaling specifically I this something impacting that’s the being the just that? you like point side, or economy. you Are in about from flu the related think to that’s retail cold consumer

but Then how what obviously the some the year, bids the things half on whether your you and of ’XX the gave seeing might you’re and thinking caution is MA, back in can your utilization? they the on MLR, comment on Oak impact you guidance benefits incorporate of around about some Street,

ask saw consumer things economic I’ll of approach. couple predicting consumer, to are in we talk in we A of reflecting a behavior AJ. bit. saw a of Michelle and in little forward-looking potential our so we on bit this recession, emerge June, volatility pull-back Hey that as and and a But kind June little for

numbers. saw what it to turn talk Michelle I’ll about talk and have about can little to bit back the we I a then Shawn

caution, Karen’s again We high net stronger we just had consumer quarter. abundance penetration softening solid the so just point, and cold store. saw promoter with and out quarter back cough, an above the comping looking historically of share high Yes, gain household of I demand the market It front was think historically on a quarter, in flu. along for slightly scores, another and of at part we’re

is merch and I the service and strength will making investments say though, of coming promotion. we’re and omnichannel course, and simplifying our the from pricing in mix

more about the and structure store footprint, have with improving Medicare-eligible great footprint, our Signify with really inventory turns, introduce We’re more we’re and the community. distribution the Oak Signify right-sizing Street our to and [indiscernible] offerings doing excited seniors Oak and cost and our that Health to Health customers Street in work we’re

ground talk both there, AJ, try as to can, thoroughly saw lot I cover actually we and will Mike and have question, about respectively a There’s let in and Dan HCB. me in the what as your I Aetna so

year-over-year. recall be expected prepared points in was mentioned I basis we year-over-year. that and said really we up As to important RMBR look remarks, that XXX up to the It’s last at quarter, MBR QX

that starting the there’s we point. main here the One the of do to so lot drivers is last with a printed second in year quarter, XX.X in

important than said the that than did QX allowing Medicare XX% Having is It’s also real in we mind that, premium here revenue end that and up in Advantage. Medicare now. and our for is expected, coming driver keep of higher more to

than to it pressure consistent became As in I in we driver and the the was all that and quarter. second May, in the month even real The I others apparent we been want that the closed discussing. clear stated, that expectations mid-June into exchange of or had we have Medicaid commercial, categories performed QX, our outpatient as that better costs remains than be slightly but and the continuing Medicare higher were anticipated quarter,

and that back Oak Dan prepared talk up this. guidance ’XX about with then Street, in talk what Let our a follow about what I’ll I’ll Aetna of bit we saw come how Mike ’XX in little light and have saw we’ve a have and in and me bit little we for

Shawn. thanks Yes,

not seniors it’s Medicare. did pandemic. important in healthcare and utilization business comfortable is expectations, industry, have the we outpatient Medicaid anticipated that system line experience more think as that postponed likely services lines these during by This note been to the largely our higher feeling accessing some due than our reported of commercial in in broadly and were I to of with the

seeing bit orthopedic think use. You and outpatient hips of little some some of mental knees, about procedures, health we’re a increase still in and elevated continued can procedures, cardiac as this dental, levels

inpatient the volumes watching. remain and lower our closely all it’s of business, something outpatient levels, our we’re services, across normalized lines specific same Medicare that’s so Again, to and than

From up an across payor on we’ve similar Street outpatient Oak with our perspective, costs being trends medical seen partners.

the had thousand, strong costs outpatient so Specifically, year a year-over-year we’re though, [indiscernible] to patients offset X% in through in largely we’ve been so keeping with offset able to and increased on continued the a Oak strong in start of the reduction roughly our at able inpatients. and execution per to increase out we’ve the outpatient hospital decreasing Street, admissions really performance

back Great, so as Medicare about than I probably mentioned, first, did come ’XX in turning for expected the to XXX basis points worse quarter.

Given half the which I our the first more way XXX look, it’s instructive emerged, costs at to expectation. think, is have versus year, XXX, of basis the guidance off points

are pent-up from As of some be aspects does that over some and lessen that course mentioned, Dan bubble and involving potentially would deferrable show this and its which discretionary could time, true, preliminary services, demand July if data there a of some improvement.

the basis it’s However, this be XX what year. result we this contrary, think points be range. our persists high outlook to the ’XX that of appropriate second mentioned in MBR remarks, of would basis of half assumed in end the up first evidence of XXX our the in stage half the prepared and of the through the absence is to in cautious at HCB The points my I that guidance the compelling observed any at of have pressure about

into level and we year XXXX XXXX, do what as out, serves In to does settle will of of trend go baseline then off where the to experience terms two which that XXXX XXXX, down baseline. the come things:

did medical our degree again assumptions. cost already consumed experienced in persists higher or, our bid ’XX contemplate but differently, we MA utilization the in trend, assumption. at higher don’t be trends will as that if then on if XXXX current level in then would abatement guidance, an have cost pressured of see Our If we utilization, half said we’ve the levels bid contemplated a first higher of a in trend medical we persist

our develop revised In guidance an a that XXXX our we caution, assumes abate project, and is XXXX more an clear both guidance incremental XXXX over the that upside as of abundance in To indicator the does we of absence for and our have abating to utilization XXXX that headwind out utilization XXXX revised in XXXX. costs than baseline. serve extent could and outlook favorably of

Thanks so much. Okay, great.

Gill Our from Morgan. from open. proceed. Please next question is Lisa comes now JP your Lisa, line

Great, much, thanks very morning. and good

I think that - like potential want upside. my to you said, revising First, around the I that’s and really GLPXs. very expectation for With realistic to question, I words that’s me say thank a Shawn, and XXXX of let move that

component some Karen maybe of both of through GLPXs? comment know and the of commercial was about diabetes. then but As strength in the about you pharmacy just around see can the what seeing what strength GLPXs, had I side are? a talk your any the is activity Are Dan that components services we in given Rx those there fact obesity your think not I around different business, business, due on as of think and the heard rebating I to more the on you we your just both secondly, the line, about side the components medical and of impact programs of you’re biosimilars, business, around made business to GLPXs, starting walk

comments can anything the as that lastly talk think just If around about think incremental you how and business, on services business, any season pharmacy then that to to on and went? and the selling going that how ’XX we services the forward how pharmacy about

Joyner I’ll here. the Hi and team David of and to hand the it’s rest and Karen, Lisa, it over start

that--you like industry, saw we utilization feel that so but we was manageable we seen, with we drugs know, feel have As across businesses. levels have is priced the have and HCB, in seen you what of mentioned, risk the GLPX it, for consistent we higher appropriately each increased like utilization in In of business. our we

we you for this us know, over category why, look PBMs quite is pharmacy frankly going and time, As is believe competitive a be business, you reason the exist. services at to the as

we’re of seeing generating competitiveness, with like different that programs of re-emphasize programs this in. We kind so to them but in mentioned how in overall, of lot business and variety opportunity they give the is in kinds PBM of businesses continue in prepared cost, lowest what we the drugs, to drugs, branded is will a I provide you lowest to those there, is have each the would a there net additional strong the revenue importance perfect it with PCW do of ways. my I net category impacting the just them as kind and and are of the a know very Also, have margin not cost, is create drive remarks. of But GLPX

Let to talk what me the growth pharmacy season. it David on to in turn selling and about seeing the business services he’s over

Sure. this is and David, question. thanks the Lisa, for

As look of business. headwinds we’re have partial the close obviously of transition working orderly XXXX, into and the termination Centene, with and the we Medicaid we obviously of of both Medicare the lines forward

result to Centene, in-force for health a of plan on continue pricing customers. as our will focus business renewing our and year-over-year we be As down prospective discipline customers both

accounts clients PBMs we Aetna. look national and won business weighted it’s for close employer common the pipeline, in enterprise a well, had where we’ve business employer accounts with We’ve particularly the year year, I changed share ’XX. as and success definitely net seen towards As XX% new of XXXX the the that with customers more have at we to this strong as

our industry, operating levels range and wrap goods we and both We as are confident to XXXX in of the in towards growing turn and believe model growth in in best the XXXX long beyond. season we and the selling up outlook focus our cost offer PBM service continue

of care full in to to the focus recent and most a both Oak suite of Finally, I Signify continue the acquisitions our on assets, prop we as value-based suggest would just continue multi-payor offer Street, differentiated we Health value CVS leveraging including marketplace.

about one her [indiscernible], talk the questions. [Indiscernible] biosimilars another of

Sure, it was a multi-faceted question.

as the planned with it’s a Humira biosimilar already been competition from benefited Let category. add we’ve position me biosimilars, and thoughtful the that planned the for because not have just the so we customers and lower result, But announced the on had several obviously to very approach for launch, much coming a year. said, our in spend have our and years the now,

prepared employ will our additional committed for and the formulary and using cost for across to our customers launch, lowest we that more the to even As be competition strategy net we create members. formulary the we’re value same

two offer I’d like to points. additional

is where you more several from and to XX% first savings as product, customers. than have removed biosimilar-like to convert formulary XX% years able a the added record of lower we the market, so in our ago, biosimilar-like Lantus and unique delivered we Basaglar, were we volume a our recall called price The track list

last our yet, most a also similar in to and the we that formulary and customers. haven’t selective innovative providing able Not will cost helps was by strategy our our hep-C took our the only solution we category the While lowest net deliver the our clients that net optionality, provide and we ensuring to we’re we’re clients the lowest realize announcing options also announced truly members continue strategy cost and approach for savings.

and market weeks. deliver viable line, class, Bottom believe AI durable and Humira speaks coming and in well we look more the to the innovation marketplace, we’re around providing to establishing committed a to to we’re biosimilar clarity and this forward in biosimilar positioned broader the

Great, so you much. thank

Our Michael, ahead. now next question Bank of from comes America. is Please go from line Cherny open. Michael your

on work details for Advantage all obviously your a your the bit the that and can so Shawn, progressing, you and the STARs morning I more and color, far. on anything business what Can to on push you sides, thanks think and not fall, relative investments relative just your but about your Good outlook. you broad-based are Maybe build investments in long in two for on in looking dynamic the give things the how includes positioning term we dive little beyond gave and exchange the especially for as if Medicare pull and update clearly business. just to STARs, for ’XX? head where into a work those us the fiscal exchange

STARs Michael, me details and can in start fill Yes the the let numbers. on Shawn on

better in it. strategy how down October I this investments we we and all in our our by measure positive are efforts on made internal significant in measures having all it performance. had is But last We’ve focused remediation you progress recognize margin contract we made CMS the our comes having efforts, such narrow to but underway, and our making show very know STARs positive that, coupling, well we’ll diversification from progress. that all been know, so had think said our As a internal year, significant are of indicators and

and we’re we’re exchanges, be on on continue Michael, terms looking side about outlook positive, revenue But our an things really opportunity planning think another future. so quarter are to utilization something to for our I in this the is that been line in still in and and both that that from in have I as of we expectations, the as year. the and cautious with what mentioned, think

book probably it’s member this like and potentially making meaningful not a year, have in $X We contribution. billion million a something revenue now,

the so that business, of and to of of scale least so and that contributor benefits levers be have. that is, from one can towards now some plan for think, we contribution our do getting XXXX a getting us, for quickly would we One I of at be the think profitability I growth that begin it’s that beyond, turn to profit would

Thanks so much.

Our Lake next Wolfe from comes Justin question Research. from

Justin, your proceed. line Please now open. is

morning. questions. good couple A Thanks,

it appreciate to terms on quarter if on you’re more prior had some it by been you give going some to in it. just some guidance color kind can the of isolate missed of, know could that First, our relative and I bridge, by least points, as yet have I’d so Shawn, the XXX with there, of maybe a little well, XXX, development, just like consensus, us us what’s might trying intra-year at There you help year estimates the XX. quarter looked in you raising MLR, basis

you’re guidance your tied the MA you of to by increase you is on of where instance clarity where on $XXX can million versus seeing change, much typically us would my assumption math, OI, some $XXX, be, give how Then that, etc. for that

apart that well, break for us as helpful. can that’d Thanks. you be If

so for pieces sort mention out. did are the know, largely biggest--you I outlook and year pushing of in pass-throughs, more did have calling Medicare sort I for Medicaid going to the few on worth the that’s on that the PYD biggest our probably the like in quarter first the a unfavorable quarter, MBR, of in as that, recognized than we - the pushed actually has a quarter. change quarter number. I look there’s the that bit instructive, at on thing that a that But points the said, that’s it’s Yes, the assumed. had little this We and one XXX in and that’s guidance - more MBR we think I is for what half, driving basis increase our we’ve mentioned, the quarter off is obviously,

If moving you expectations overall income, the most down going the if operating on at of about look than that’s of better, a points other surface, $XXX the adjusted XX Again, even under other MBR. obviously of line, parts business in million HCB but on basis there’s little not HCB. the largely HCB are lines our

Offsetting million performance discussed. is that, about and by and driven better, in health sound David - segment services that is obviously, that $XXX our the driven again fundamental increase that Karen was pharmacy by services

that year. for QX half You’ll about and now was in strong, carried the talk performance did the recall performance we’ve full that first services underlying strong we pharmacy

those question, decreased you know, considering to the As quarter the of are about were, overall covers. by particular the is much was observed PCW have talked response pretty we in moving million, are impacts end but we mentioned pieces. so consumer those the towards in we pieces outlook we under AOI the second to - softening demand $XXX earlier flat Inside the about, our where on the moving

from UBS. open. Kevin, comes is go Our next line Caliendo from question your Please now Kevin ahead.

originally using a that Does more you had that I off-balance planned, that case also using be potentially I if that opening an the got you’ll to talked Oak planned has on was that is off-balance sheet or headwind. think Thanks. sense that Shawn, do you or metrics increase mean you so, but changed? sheet, less incremental you still mentioned Street clinics about that than

about want so Yes, talk I do that. to

Obviously demand to Oak more for our that correct is your we continue assessment. making, and we’re model. You’re access a in future very believe in the investment strategic care important high differentiated to there’s this that Street and

is identifying the will Our analysis to as in XXXX, to has clinic and access XX mentioned, targeting accelerated the and of expanding and investment Street do consistently working returns with payor key in and for Oak so geographies. closely in terms already to we’re the their going Karen is right XX term on at-risk thing clinics, partners this optimizing shown long growth populations, do that

any of As expansion includes the updated structured of impact mentioned, this you outlook for the our without full benefit accelerated transaction. XXXX

We details on definitive you we’ll material and and update the evaluating develops if are a transaction the still that of such anything merits and front.

on really significant to a already, I We’ve Kevin, the on want couple the leveraging just driving and having not Street. patient closed of make made growth comments Oak entire assets enterprise. that ago, progress long overall

them to if care We’re helping and Oak have Medicare to using primary have recommending to the--recommend Aetna Oak don’t that members care we’re Street. a use primary Street, a people don’t Signify

We’re and and about using really opportunity seen. connections we’ve in the the encouraged what so our by growth, pharmacy as excited I’m really well,

more will that the have we years. thought surface we could that course value the unlock conviction now the of We next couple meaningful over

you. thank Great,

your now go Rich is from question Sachs. next Please Nathan, line Nathan ahead. from is Our Goldman open.

think guidance maybe help and were Street major of - across the COVID you retail how for drove are for the about the the rate question. and what program, and outlook XXXX? revision? Oak you think Great, the Shawn, XXXX run guidance the you ’XX good savings of full given just restructuring terms of macro utilization, revision morning, buckets reduced you each environment, magnitude drove two. see buckets the those on maybe that Then the us on could much in I new do other the mentioned the about a for thanks the of guidance, the number higher talk in guidance, Could

Yes, sure.

of million to is May, the the we’re hire On positions will have been projects. $XXX done in getting going G&A major degree we’ve of timing guidance. that high We’ve the that all through and $XXX restructuring Obviously of reaffirmation close we committed mentioned, to contributed not was in effect that alone, terms and for shutting talked about actions minimal impact charge, into But on of this but the XXXX, a delivering in step extent million down for a benefit, forward we so the impact. have any of XXXX. in that there’s things really, job that there’s savings this to other open as OMs of visibility the our thought we probably well, million as the we $XXX to we of to there take there’s

On of XXXX, so in XXXX positive performance. guidance, environment, will year. positive the we’re of next this and I items, through, do you experiencing client expect to as performance but outperformance that with favorability lot you’re this pricing contracts obviously, to into into it The kind for we pull through are we’re work do pull going through which our not a XXXX correct pull there the meaningful three obviously year, item, XXXX item the external favorably it’s then decision. one really, can note pharmacy have - our some is of the would increase for a say, all would I services that of in it’s will obviously that will reset in not magnitude all that way its not naturally as because much some see

some Oak we of that’s persist decline demand - potential for of get as the to and a Advantage more our of future. largest the year provision impact is year, our and you the next there, next built previous factored well. investment that in well with COVID the headwind guidance on on as biggest PCW, on We’ve the one. have sized year made do question, think for I we’ve be the we’re one guidance, neighborhood provision an as making I as Then the the headwind would for I that, Obviously have other was into in the full in for acceleration so can consumer that side, choice performance. mentioning of has in we’ve other made this kind Street that the in potentially into Medicare the softening made Similarly, we’ve to effect the think in sort provision in

any took this thoughtful weren’t Nathan, term very approach just making we to that that to non-customer facing I very restructuring. a strategy. very We we risk that would careful to comment, be the and action long of were roles we taking had deliberate sure and in execution clear want our that

XXXX. one PYD housekeeping a just that again in for as close we are taken the always, on to well we’ve and year-to-date out that, so that’s Yes, thing probably, and as nickel, where we’re removed a basis,

question next comes is proceed. Please line open. from Our from Josh Research. Raskin Nephron your Josh, now

good squeezing me morning. for and here, in thanks Great,

are thinking in risk for are some How the change--risk Signify, benefit those and Street. assume in I - you Signify light different about income some specifically Street in of and operating contributions would could Oak be changes, the directions headwind from there XXXX, Oak model assume I

in size segment maybe the business also model the could in impact to the reimbursement, Aetna helpful MA would on be too. you changes If risk that the

can XXXX. talk can little I bit talk then a bit a segment, and little I Dan changes the Mike a and about about have bit for talk little the Yes,

a assets these first question quarter of even two estimation meaningful term bring, we’ve our be in think in is part earnings everything and been from do from seen growth their and our about, positive our important about the we’re of improvement will earnings contribution so in It’s the of expect rate, as conviction of consistent we base has from stronger that, contributor ownership, in important assets earnings value an part because with growth strategy into we’ve I an that they more--have growth to that long we think the XXXX. XXXX, a I have XXXX two earnings of in our can talked and increasing these

the I’ll risk changes and the about Mike little talk a Dan turn to it and to bit model XXXX. for

think Yes, it HCB on I side, would this in the about way.

being that model’s We the pleased decision. First time. in over were all, of with phased

of minimal HCB. so to and Our allows the in manage it was CMS, the over impact the with book, frankly very similar aggregate of time, modeling really our size modeling to overall us impact to

documentation of specific codes, and coefficient in net the model of the with the is and perspective, Oak going be on gross same The think those the and to codes lower new being high and that, the of thing to by From changes, are of patients aware advantages lot risk to a patients. centers, less you’ll were of more changes I Street not impact of by our number less specific driven that a changes so same of us guidelines, have of one protocols, technology of we lower right, a remember the in changes operating those codes have the be number clinical new model codes is coefficient faster on so etc. we replaced of Oak to a is react to higher implementing all already it types allows impact Street’s

the like with performer savings Oak to really that. top different across point methodologies. risk-adjusted Street program out, of has successful We part in programs Medicare were I’d very been shared were X% a we and

a We in and of pretty methodologies, CAF, ability have ACO our medical great and be the lowering confident program, you’re this hospital that we’re top care REACH are them across keeping methodologies, etc., will durable results any performer generating in costs, to so goes keep out so going risk-adjusted to doing people great taking just the and of job risk-adjusted the the that if those different fact forward.

us. it’s Yes, tailwind and standpoint, absolutely Signify just from for been a a

we demand business. for this team risk for stay about up in industry care, partners and them. opportunity a an Signify and into it. build testing us with so diagnostic We’ve expand It’s of more follow-on work. clients excited new seen model us we’re in-home change things Our help for manage the the preventative additional surge help to we because changes, We very into actually ahead

retail the pharmacy, It’s and for in us, medication unlock at membership. touch with bringing and kickoff with in engagement Managing integrated retail point huge great we’ve Aetna space nice our partners model us the and really home there results deeper consumer as CVS. we’ve been and a that also we’ve inside the the seen with pharmacy for businesses been a inside so a into is

re-emphasize have his. very that the in important care a in operationalize model. model view, opinion a The differentiating and a platform But made about characteristic common point is Mike that was a our underestimated, quickly there. said technology Mike just on would in ability thing their my ability I this one common not to should that to be and

Makes sense, thanks.

Anderson Our comes Evercore. now Elizabeth, Elizabeth is next open. question line from proceed. Please from your

line now proceed. open. Elizabeth, is your Please

check if microphone might your is You want muted. to

Bruno, she dropped. might have

their dedication wrap customers, colleagues just me for here they that Let by clients every our and single it thanking supporting commitment up our our and show day, our patients.

and goals we in, is today, execution that our environment our business our believe confidence on despite that our I demonstrated we’re the XXXX deliver really can to continue continue XXXX. we I us and testament team that and model outstanding momentum know a gives execute the and and As the this believes resilient consistently to and challenging bold performance strong we throughout

call the joining for Thanks today.

this Ladies Thank you for and today’s call. concludes joining. gentlemen,

You may disconnect Thank you. now your lines.