2025 EPS Growth
Q: Will you still deliver double-digit EPS growth in 2025?
A: Karen Lynch affirmed that their goal remains double-digit EPS growth in 2025 and they are striving to achieve that. They feel good about positive momentum going into 2025 but will provide more detailed guidance later in the year.

Medicare Advantage Margins
Q: Can you achieve 100–200 bps margin improvement in Medicare Advantage?
A: They expect to achieve 100 to 200 basis points of margin improvement in Medicare Advantage in 2025. They have made meaningful adjustments to their offerings and feel confident in this target, though achieving the higher end will depend on trends over the remainder of the year.

Cost Trends in Medicare
Q: How are elevated cost trends impacting your outlook?
A: They are experiencing all-in, including pharmacy, double-digit trends in Medicare costs. They have assumed these elevated trends will persist into 2025 and have been very conservative in both the baseline and trend assumptions.

Membership Declines in Medicare Advantage
Q: Should we expect up to 10% MA membership decline in 2025?
A: They anticipate a 5% to 10% decline in Medicare Advantage membership in 2025 due to county exits and restructuring products to achieve target margins, which may result in lower resales.

$500 Million Cost Savings
Q: How will the $500 million cost savings affect 2025 earnings?
A: They have line of sight to over $500 million of incremental cost savings in 2025, which will help drive results and invest in products and infrastructure. These efficiencies will allow them to strive toward their double-digit EPS growth goal.

Stars Ratings Impact
Q: Has anything changed regarding Stars Ratings benefits in 2025?
A: Their Stars Ratings have actually improved due to changes earlier in the quarter, providing an incremental tailwind for 2025.

Aetna Leadership Changes
Q: What are your priorities after the Aetna leadership change?
A: Karen Lynch is establishing a strong management process and driving execution of improved financial and operational performance at Aetna, as the financial performance was not meeting her expectations.

PBM Pricing Model Changes
Q: How is the CostVantage model progressing with PBMs?
A: They have signed contracts with eight PBMs and are transitioning all Commercial contracts to the CostVantage model by January 1, 2025. They continue to have productive discussions with large PBM partners.

Part D Marketplace Stability
Q: Does the CMS Part D demo help de-risk the marketplace?
A: They are pleased that CMS offered the Part D program to restabilize premiums. They have applied for the demonstration and are looking forward to working out the details.

Addressing PBM Criticism
Q: How are you addressing negative perceptions of PBMs?
A: They have aggressively been educating Congress on the role of PBMs and demonstrating the savings they provide. They are leading industry change by evolving pricing models for greater transparency.

Managing Dual Reimbursement Structures
Q: How will you handle dual reimbursement if not all PBMs adopt CostVantage?
A: They intend to move all Commercial contracts to CostVantage by January 1, 2025, while Medicare and Medicaid will transition later. They are prepared to handle multiple pricing models during the transition.

Confidence in Revised Guidance
Q: How can investors be confident in your revised guidance?
A: They have incorporated prudent assumptions, expecting trends to persist or modestly increase, and have accounted for pressures from Medicare, risk adjustment, and Medicaid acuity. They have tried to incorporate as much prudence into the outlook as appropriate.