CVS Well being plunges on decrease Medicare efficiency score, drags friends

Oct 7 (Reuters) – Shares of drugstore operator CVS Well being Inc (CVS.N) declined as a lot as 10% on Friday after its largest medical insurance plan for Medicare recipients obtained a decrease efficiency score from a federal authorities program.

The corporate noticed greater than $11.6 billion wiped off its market worth by 11:30 a.m. ET. The inventory has fallen greater than 13% this yr.

CVS led a decline in different well being insurers, with Centene Corp (CNC.N), UnitedHealth Group (UNH.N) and Cigna Corp (CI.N) down between 1% and seven%.

The decrease score means the plan, which incorporates greater than 1.9 million members, is ineligible for performance-based bonus funds from the federal government in 2024 and is more likely to affect CVS earnings.

“CVS is not going to scale back advantages to offset the affect, that means the corporate will totally take in the 5% margin hit from misplaced high quality bonus funds,” J.P. Morgan analysts mentioned.

12 months-over-year declines in Star Rankings have been anticipated on account of expiry of the one-time COVID-specific catastrophe reduction program, Oppenheimer analysts mentioned, including that CVS and Cigna have been among the many greatest decliners.

Reporting by Bhanvi Satija in Bengaluru

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