Medicare Advantage Margin Recovery
Q: Will you recover margins in Medicare Advantage in 2025?
A: Management is committed to achieving the 4%-5% margin target for Medicare Advantage in 2025. They acknowledge challenges like flat rates not covering cost trends and uncertainties from the Inflation Reduction Act. They plan to take additional margin actions beyond the Stars rating improvements and expect significant tailwinds from 800,000 new members, whose coding and distribution costs will improve in 2025.

2024 Medical Benefit Ratio Increase
Q: What is driving the increase in 2024 Medical Benefit Ratio?
A: The year-over-year increase in Medical Benefit Ratio is almost entirely due to Medicare Advantage. About 65 basis points relates to the $800 million Stars rating headwind, with the remainder from new member mix and provisions for Medicare utilization pressure.

New Retail Pharmacy Pricing Model
Q: How are payers reacting to your new pharmacy pricing model?
A: Initial feedback from payers on the new pricing model has been generally positive. CVS is leading in providing greater transparency in drug pricing, passing through acquisition costs to payers. This approach aims to address issues like cross-subsidization and focuses on affordability and simplicity.

Medicare Advantage Bidding Strategy
Q: How will your 2025 bid strategy impact margins and growth?
A: The company prioritizes margin recovery over market share gains. While committed to achieving the 4%-5% margin target, they believe they can still grow by leveraging their assets and providing superior customer experiences. The return of higher Stars ratings and significant membership growth offer tailwinds for 2025.

Health Services Guidance Adjustment
Q: Why did you adjust Health Services profit guidance for 2024?
A: Management adjusted the guidance due to potential utilization pressures in the external environment. They incorporated prudence into their outlook, especially within Health Care Delivery assets, in light of marketplace trends and their own fourth-quarter experience.

Impact of New Members on Future Earnings
Q: How will new members affect your performance in 2025?
A: The new membership provides an important tailwind for 2025. As these 800,000 new members are fully coded next year and distribution costs decrease, margins are expected to improve. Risk scores for new members look reasonable, and one-third are D-SNPs without Stars issues.

Pharmacy Script Volume Growth
Q: What is driving growth in pharmacy script volume?
A: Pharmacy script volume saw same-store growth in the high 4% range, outpacing market growth in the mid-2% range. Strong service and customer experiences are contributing factors. The company is confident about script performance and continues to focus on market share growth to offset reimbursement pressures.

Cordavis Contribution to Profit
Q: How is Cordavis contributing to your financials?
A: Cordavis is expected to make a positive contribution to the Health Services segment profit. While specific figures are not disclosed, management is pleased with the progress to date and will provide more details as the year progresses.

Potential PBM Regulatory Changes
Q: What are your thoughts on potential PBM transparency regulations?
A: Management anticipates that any legislation passed will focus on transparency. CVS's initiatives like TrueCost and CostVantage are resonating with legislators and are aimed at improving cost transparency, aligning with potential regulatory directions.

RSV Impact on Financials
Q: How did RSV vaccinations affect your results?
A: RSV vaccinations were a net tailwind for the enterprise in the fourth quarter. While there was pressure in the Medicare business due to vaccination costs, the Pharmacy & Consumer Wellness segment benefited. For 2024, management is cautious due to the newness of these vaccines.