By Manas Mishra and Caroline Humer
(Reuters) – CVS Health Corp said on Tuesday it would return to selling individual health insurance plans on the online marketplaces created by the Affordable Care Act (ACA), popularly known as Obamacare, saying the market had stabilized.
CVS Health’s Aetna insurance unit and other large health insurers such as UnitedHealth Group Inc exited these online exchanges in 2017 and 2018, due to financial losses and uncertainty as Republicans took aim at former U.S. President Barack Obama’s signature law.
More than 11.4 million people signed up in 2020 for these plans, which provide government subsidies based on income levels.
“We’ve been studying the individual market for a while. Some of the remedies have been put in place. Clearly there’s a big market,” CVS Health’s recently-appointed Chief Executive Officer Karen Lynch said at a post-earnings conference call.
The move by CVS comes as President Joe Biden told the U.S. Supreme Court last week that the ACA should be upheld and Democrats consider expanding coverage to more people.
Lynch made the comments during a company conference call where the company said it expects 2021 adjusted profit between $7.39 and $7.55 per share, versus $7.50 in 2020.
Analysts’ had expected 2021 profit of $7.54 per share, according to IBES data from Refinitiv. CVS shares fell 4.7% to $70.68 in afternoon trading.
Evercore ISI analyst Michael Newshel said the share move seemed overdone given that the 2021 financial outlook was in line with the company’s previous comments.
CVS said that COVID-19 vaccinations and testing would contribute $400 mln to $500 mln next year.
The company has administered over three million COVID-19 vaccines in long-term care facilities and is now giving 250,000 shots per week in its pharmacies under a broader federal program.
The vaccines are two-dose regimens requiring 15 minutes’ observation for each patient on site, adding the potential for additional sales, the company said.
Lynch said it will increase dose vaccinations and expand into more pharmacies and states as soon as March or April if supply increases as hoped. It plans to offer 20 million to 25 million shots per month.
During the conference call, CVS executive vice president Alan Lotvin said that based on conversations with pharmaceutical makers, CVS estimates about 500 million doses of vaccines would be made available between now and the end of June.
Most vaccine will be from Pfizer Inc/BioNTech SE and Moderna Inc. The U.S. Food and Drug Administration is currently considering a vaccine from Johnson & Johnson Inc. that could be authorized in a few weeks and Novavax Inc is also hoping to apply to the FDA in coming months.
On an adjusted basis, the company earned $1.30 per share in the reported quarter, beating estimates of $1.24 per share.
(Reporting by Manas Mishra, Trisha Roy in Bengaluru and Caroline Humer in New York; Editing by Shounak Dasgupta and Nick Zieminski)