How did CVS's cost management fare in 2024?

**CVS's cost management in 2024 was challenging**, as evidenced by several factors that impacted its financial performance and outlook. 1. **Increased Medical Costs**: CVS faced a significant rise in medical costs, which significantly affected its financial results. This increase was due to factors such as elevated utilization trends within the Medicare Advantage business, higher acuity in Medicaid, and the impact of CMS rate announcements. 2. **Cost Trend Pressure**: The company was under pressure due to cost trends, particularly in the fourth quarter. This pressure was noted by Morgan Stanley, which highlighted CVS's cautious stance ahead of earnings due to reports from managed care organizations indicating higher costs and missed medical loss ratio targets. 3. **Leadership Changes and Integration Challenges**: The transition of leadership, with the departure of CEO Karen Lynch and the subsequent appointment of David Joyner, created uncertainty and was perceived negatively by the market. The integration of large acquisitions, such as Oak Street Health and Signify Health, also posed challenges, impacting the company's performance. 4. **Outlook Revision Due to Health Care Benefits Segment**: CVS revised its 2024 outlook downward, primarily due to pressures in the Health Care Benefits segment. This segment includes Aetna, which has faced challenges such as increased utilization and the impact of declining Medicare Advantage star ratings. In summary, CVS's cost management in 2024 was complicated by significant increases in medical costs, cost trend pressures, leadership changes, and integration challenges. These factors led to a revision in the company's outlook and a focus on cost-cutting initiatives to address the rising medical costs.