CVS Cuts Bonuses Amid Low Profits, Rising Healthcare Costs
CVS Health announced Friday a reduction in bonuses for select employees due to subpar profit margins in 2024. The healthcare conglomerate attributed the shortfall to escalating expenses associated with Medicare plans.
"Our performance in 2024 did not align with financial targets, which has affected corporate bonuses," a company spokesperson confirmed.
CVS has incurred heightened costs due to an influx of new members enrolled in Medicare plans for seniors and individuals with disabilities. Its healthcare operations have been impacted by increased medical service utilization, adjustments in quality ratings, bonus incentives for Medicare Advantage plans, and an increase in chronically ill patients enrolled in Medicaid plans for low-income recipients.
In October, the company replaced CEO Karen Lynch with David Joyner, a veteran executive, following investor pressure to address the company's stagnant stock performance. Subsequent actions by Joyner included cost-cutting measures and the appointment of a new insurance chief in November.
Despite these challenges, CVS reported a fourth-quarter profit that surpassed Wall Street estimates earlier this month. The company's annual outlook generally met expectations, signaling potential improvements under Joyner's full-quarter leadership.