CVS Health Exits ACA Exchanges, Strikes Major Deal with Novo Nordisk for Wegovy

CVS Health announced significant changes to its business strategy, including the exit of its insurance division Aetna from the Affordable Care Act (ACA) individual exchanges and a landmark agreement with Novo Nordisk for its weight loss drug Wegovy. These developments come alongside the company's strong first-quarter financial results, signaling a shift in focus towards more profitable ventures.

Aetna's Retreat from ACA Marketplace

CVS Health revealed that Aetna will cease offering plans for individuals on the ACA exchanges in 2026. This decision follows projected losses of hundreds of millions of dollars in the ACA business for the current year. The company has set aside a reserve of $448 million to cover anticipated losses not covered by premiums.

CEO David Joyner expressed disappointment with the continued underperformance of Aetna's individual exchange products, stating, "We must recognize what is and what is not working and will focus on the areas where we have a clear right to win." The exit affects approximately 1 million of CVS's 27.1 million medical coverage members.

Novo Nordisk Partnership and GLP-1 Market Shakeup

In a major development for the obesity drug market, CVS's pharmacy benefit manager Caremark has reached an agreement with Novo Nordisk to give preferred access to Wegovy on its standard formulary. Effective July 1, Wegovy will replace Eli Lilly's Zepbound as the preferred GLP-1 medication for tens of millions of Americans covered by Caremark.

This deal is expected to significantly increase access to Wegovy while potentially raising costs for Zepbound. CVS Pharmacy will also offer Wegovy to cash-paying customers at $499, less than half its list price, as part of Novo Nordisk's broader program to expand access to the medication.

Financial Performance and Market Reaction

CVS Health reported strong first-quarter results, with net profit rising 60% year-over-year to $1.8 billion on revenue of $94.6 billion. The company's healthcare benefits segment, including Aetna, recorded adjusted operating earnings of almost $2 billion, nearly triple the amount from the same period last year.

Investors responded positively to the news, with CVS's stock rising more than 7% in morning trading. Analyst Michael Cherny of Leerink Partners noted, "CVS's overall reported enterprise results showed clear positive signs across all segments."

The announcement also impacted other companies in the pharmaceutical space, with Novo Nordisk's stock rising about 2% while Eli Lilly's fell more than 7% following the news of the Wegovy deal.