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CVS Health said on Wednesday that the head of its struggling insurance business is leaving the healthcare giant, as its health benefits unit dragged down the rest of the company during the second quarter of 2024.
The healthcare conglomerate includes the CVS chain of pharmacy stores, the insurer Aetna, and the pharmacy benefit manager (PBM) CVS Caremark.
CVS CEO Karen Lynch broke the news to investors during a call on Wednesday that she we would be replacing former Aetna president Brian Kane, who assumed the role just last year.
She said, “we are disappointed by the current performance and outlook for the health care benefits segment, and I have decided to make leadership changes. Effective immediately, Brian Kane is leaving the company. In the interim, I will assume direct leadership of the health care benefits segment.”
The health benefits segment’s operating income fell 39% to $938 million in the three months ending June 30, from $1.5 billion during the same period in 2023. CVS said this was driven by a rise in claims and a drop in quality ratings for its Medicare Advantage plans.
Overall, CVS’s adjusted operating income fell 16% to $3.7 billion during its second quarter, leading the company to cut its 2024 outlook for the the third time.
CVS now anticipates its earnings per share for 2024 to come between $4.95 and $5.20, down from a previous estimate of at least $5.64.
Lynch also announced that CVS is planning a multiyear, $2 billion cost-savings effort that relies, in part, on accelerating its adoption of AI.
“These savings will be driven by further streamlining and optimizing our operations and processes, continuing to rationalize our business portfolio and accelerating the use of artificial intelligence and automation across the enterprise as we consolidate and integrate platforms,” Lynch said on Wednesday’s call.