People walk by a CVS pharmacy store in Manhattan, New York, U.S., November 15, 2021. REUTERS
(Reuters) – CVS Health (CVS.N), said on Friday it has cut bonuses for some employees because of its low profit levels last year, as the healthcare conglomerate grapples with higher costs across its Medicare plans.
“We did not meet our financial goals in 2024, and that’s reflected in our corporate bonus,” a company representative told Reuters in a statement.
The conglomerate has faced a more pronounced impact from rising costs as it enrolled the highest number of new members under the Medicare plans for people aged 65 and older, or who are disabled.
Its healthcare business has been hurt by increased use of medical services, a change in quality ratings and bonus payments for its Medicare Advantage plans and a rise in sicker members enrolled in its Medicaid plans for lower-income people.
In October, CVS replaced CEO Karen Lynch with company veteran David Joyner, after it faced pressure from investors, including activist Glenview Capital, to improve its stagnant share price.
The company had also laid out cost-cutting plans and named a new insurance head in November as part of Joyner’s efforts to turn around the company.
Earlier this month, CVS beat Wall Street estimate for fourth-quarter profit and provided an annual forecast that largely met expectations, hinting at an improvement in performance in its first full quarter under the new CEO.
Reporting by Christy Santhosh in Bengaluru; Editing by Shilpi Majumdar
