CVS Health CEO Karen Lynch said the company was in the market for a primary-care asset but she steered clear of directly addressing speculation the company was exploring an acquisition of Oak Street Health.
She did not name companies viewed as potential acquisition targets. “We want to make sure it’s the right asset, at the right time and continue to evaluate options,” Lynch said. “This isn’t a one-and-done.”
Citing people familiar with the matter, Bloomberg News on Monday reported CVS was exploring an acquisition of Chicago-based Oak Street Health that would value the primary care provider at more than $10 billion, including debt.
Much of Lynch's presentation was an update on subsidiary Aetna’s Medicare Advantage membership enrollment. She said membership grew by low- to mid-single-digits during the annual sign-up period this year. “This result is due to a highly competitive open enrollment period,” she said.
Aetna counted 3.2 million Medicare Advantage members as of Sept. 30.
While Lynch said she was “disappointed” in the insurer’s ability to capture new Medicare Advantage members, Aetna reported strong sales among customers dually eligible for Medicare and Medicaid and from employers buying group Medicare Advantage plans for their retired workers, she said.
The enrollment miss comes as Aetna’s largest Medicare Advantage plan will lose the large quality bonuses associated with the Medicare Advantage star ratings quality program. That represents a headwind for 2024, Lynch said. “We’re going to work really hard with our distribution channels, and with our benefit designs, to mitigate that risk for individuals,” she said.
The insurer has received approval from federal regulators to diversify its main preferred provider organization contract, which will help mitigate some of the risk in 2024, Lynch said. Aetna has also focused on improving members’ experience in its Medicare Advantage plan, which will drive its ratings upward, she said.
Aetna has experienced a strong open enrollment season among customers shopping for individual coverage on the state and federal exchanges. The company expects to add more than 700,000 new individual marketplace members in 2023, bringing its total to 750,000 exchange lives. Open enrollment ends Jan. 15.
“The individual marketplace has had another year of disruption, driving members to select new plans,” Lynch said.
The company expects to close its $8 billion acquisition of Signify Health, a home health and physician enablement technology company, during the year’s first half.