straightnochaser
Guru
- 568
Aetna hasn't traded as AET since 2018.
It’s not just Humana . CVS Aetna just had disaster qtr.
- Thread starter DonP
- Start date
Aetna hasn't traded as AET since 2018.
InsuranceGuy29
Guru
- 411
My bad...you're right. My stock app was showing it as if it was traded recently, for some reason.
To put ( and keep) things in perspective, however, on the topic of CVS/Aetna, this is by no means a "disaster" as it's being painted.
CVS slashes 2024 outlook — again — as Medicare seniors drive spending
Runaway inpatient spending in particular caused CVS’ insurance costs to snowball after returning “to patterns we have not seen since the start of the pandemic,” its CFO said.
The main drivers of the (still profitable) lower than expected earnings are "the two midnight rule," which is "used when a clinician believes that a Medicare beneficiary needs hospital care that will likely eclipse two midnights—requiring inpatient hospital care instead of cheaper outpatient care..." This is a new rule that was instituted by the federal government.
Also, much more utilization of medical care after the pandemic. It should be noted that the pandemic was a time of EXTREME profitability, as most people avoided hospitals like the plague.
That was inevitably always going to go back up again, but Wall Street always adjusts to the way the market was, and stayed for at least 2.5-3 years, and then they panic (like now) when things go back up.
Many people delayed getting major medical services done, due to the pandemic. Now they are coming out of the woodwork in overwhelming numbers. This will level out and back down eventually.
Some other key excerpts from the article....
-"The Rhode Island-based company’s health services segment — usually a reliable driver of growth — also saw its revenue and income fall in the quarter as its pharmacy benefit manager adjusted to the loss of a major contract with insurer Centene."
As a new pharmacy benefits manager comes onboard, there will always be a period of adjustment. This will level out.
-"CVS brought in revenue of $88.4 billion in the quarter, up 4% year over year but significantly below analysts’ expectations. Net income was slashed by almost half compared to the prior-year quarter, to $1.1 billion."
They still made a huge profit, it just happened to fall below analysts expectations. This is where Wall Street comes in and irrationally panics because some random person in a suit (who analyzed the situation VERY wrong and now caused an irrational panic) said earnings should be much higher.
-"Executives stressed that some of those costs appear to be seasonal and shouldn’t carry into the rest of the year. Inpatient utilization patterns are similar to what CVS’ insurance arm Aetna saw in normal years before the COVID-19 pandemic, and appear to be moderating in April, according to Lynch."
This above portion is key. Much of this is basically due to simple Wall Street irrational panic and not thoroughly understanding the situation. They are still immensely profitable.
-"CVS added more MA members coming into 2024 than any other U.S. health insurer, according to an analysis by consultancy Chartis. That growth caused CVS’ membership to grow 1.1 million members in the first quarter compared to the end of 2023, to 26.8 million individuals."
Company still immensely grew. Calm down, Wall Street. It'll be fine.
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ValeRosso
Guru
- 532
Ok yeah you're right. CVS is the new ticker, it looked as though the AET was showing at end of day today but it was back in 2019 lol. Carry on.
Also, Starbucks was down 17% today as well. My Rx is cold brew.
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