Aetna is waving goodbye to the ACA marketplace.
Executives announced during CVS Health’s Q1 2025 earnings call on May 1 that the insurance giant is withdrawing from the individual marketplace created under the Affordable Care Act, as the company expects to lose as much as $400 million from that part of the business in 2025.
“We are disappointed by the continued underperformance from our individual exchange products and have recently determined there is not a near- or long-term pathway for Aetna to materially improve its position in this product,” David Joyner, president and CEO of CVS Health, said during the earnings call.
Looking back. Aetna, one of the largest health insurers in the US, currently sells ACA plans in 17 states and has around 1 million beneficiaries, according to the Wall Street Journal.
The decision to exit the marketplace comes as executives are trying to turn around Aetna’s financial performance. The insurance business faced higher-than-expected medical costs in 2024, and in response, CVS Health saw its net income fall 45% over the year (from $8.4 billion to $4.6 billion). Since then, executives have announced several leadership changes.
And the tide may be starting to turn. Aetna brought in nearly $2 billion in adjusted operating income in Q1 2025, up 173% from $732 million in the same quarter last year.
Numbers breakdown. CVS reported total revenues of $94.6 billion for the first quarter, up 7% from the same period in 2024.
The company also saw a net income of roughly $1.8 billion, up nearly 60% YoY from $1.1 billion.
Total revenues for Aetna increased 8%, thanks largely to the Medicare business and improved Medicare Advantage (MA) star ratings, according to the company’s earnings release.
Comparatively, higher MA utilization hit competitor UnitedHealth Group hard in its most recent earnings, and the insurer lowered its annual earnings guidance to $26.00–$26.50 per share, down from $29.50–$30.00 per share. Elevance, on the other hand, came out relatively unscathed, and Humana also reported strong earnings despite lower MA star ratings.
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CVS Health raised its 2025 earnings guidance to $6.00–$6.20 per share, up from $5.75–$6.00 per share.
In other news…CVS also announced during the call a new deal between Wegovy maker Novo Nordisk and CVS’s PBM business, Caremark. The deal will give the GLP-1 preferred status on Caremark’s formulary as well as in CVS’s 9,000 pharmacies dispensing the drug. That comes just days after Novo announced a deal with telehealth company Hims & Hers to sell Wegovy.
“Because of the high cost of these medications, about one-third of our clients have elected not to cover GLP-1s as part of their benefits due to affordability concerns, and so today we’re pleased to announce this partnership with Novo Nordisk to significantly increase the access to Wegovy for our members at a more affordable price,” Prem Shah, EVP and group president of CVS Health, said during the call.
Shah added that the lower price will be available for “tens of millions” of beneficiaries.
The partnership may be bad news for Eli Lilly, whose GLP-1 competitor Zepbound was previously given preferred status on Caremark’s formulary.
However, David Ricks, Eli Lilly’s chair and CEO, downplayed concerns during the company’s earnings call, also on May 1, saying he wasn’t surprised “this kind of thing was announced” and that Lilly will “work through it.”
Did somebody say tariffs? It seems no CEO can avoid questions on how tariffs are impacting their business these days, and Joyner was no exception.
CVS isn’t currently being affected much by existing tariffs, he said, as the “vast majority” of front-of-store items are sourced from US-based companies.
On the potential for pharmaceutical tariffs, he said the company is “obviously watching closely the announcements that will be made over the course of the next week or so,” and that it’s hard to project any potential impacts since there are “many variables in play.”