CVS Health has identified a “multi-year opportunity” to deliver $2 billion in savings, said President and CEO Karen Lynch during a call discussing the retailer’s Q2 financial results. The cuts will come from a combination of streamlining and optimizing operations, rationalizing its business portfolio and accelerating the use of AI and automation across the enterprise.
Lynch also announced executive changes to CVS’ underperforming healthcare benefits segment. Brian Kane, President of Aetna, is leaving the company; Lynch will assume direct leadership of the segment, handling day-to-day management with CFO Tom Cowhey. Chief Strategy Officer Katerina Guerraz will become COO of the segment.
“Katerina is a 20-year Aetna veteran with extensive commercial and Medicare experience and has a track record of operational excellence,” said Lynch during the call. “We are committed to returning healthcare benefits to its rightful place and will drive execution and address the challenges facing this business.”
The healthcare benefits segment generated $32.5 billion in Q2 revenues, a 21.4% increase over the $26.7 billion generated in Q2 2023. However, adjusted operating income dropped by 39.1%,falling from $1.54 billion to $938 million. One reason for the lower operating income is that healthcare costs as a percentage of premium revenues increased during this period, from 86.2% in Q2 2023 to 89.6% in Q2 2024.
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The company as a whole increased total revenues during Q2, climbing from $88.9 billion in Q2 2023 to $91.2 billion this year.
In August 2023 CVS Health revealed plans to cut 5,000 jobs as it focused more on healthcare services, according to a Wall Street Journal report. Additionally, CVS Health has focused on gathering, and using, customer feedback as part of its differentiation strategy.
