CVS Health Corp said on Tuesday it would return to selling individual health insurance plans that offer Affordable Care Act premium subsidies next year, saying the market had stabilized.
The move by CVS comes a week after President Joe Biden’s administration told the U.S. Supreme Court that the Affordable Care Act, or Obamacare healthcare law, should be upheld.
“As the ACA has evolved, there is evidence of market stabilization and remedies to earlier issues. It is now time for us to participate in these markets,” CVS CEO Karen Lynch said on a post-earnings conference call.
CVS Health operates a large health insurance business, acquired through its $69-billion purchase of Aetna in 2018, when health insurer Aetna fully exited Obamacare exchanges.
CVS’ shares rose nearly 2% before the opening bell.
The company reported better-than-expected quarterly profit but forecast full-year earnings largely below estimates as the pharmacy chain operator’s health insurance business grapples with costs related to the resumption of non-urgent surgeries that were halted during the pandemic.
Sales at the company’s pharmacy unit was boosted by COVID-19 testing at its retail locations, with CVS also expected to benefit from distributing COVID-19 vaccines across the country.
The company’s forecast was in-line with prior commentary, and could be conservative due to the appointment of new Chief Executive Officer Karen Lynch and the COVID-19 pandemic, said Evercore ISI analysts.
The company has administered over three million COVID-19 vaccines across the United States, CVS said.
CVS expects 2021 adjusted profit between $7.39 and $7.55 per share, compared with analysts’ estimates of $7.54 per share, according to IBES data from Refinitiv.
On an adjusted basis, the company earned $1.30 per share in the reported quarter, beating estimates of $1.24 per share.
Sales rose to $69.55 billion from $66.89 billion.
(Reporting by Manas Mishra and Trisha Roy in Bengaluru; Editing by Shounak Dasgupta and Nick Zieminski)