What drove CVS's operating profit decline in Q3 2024?

CVS's operating profit decline in Q3 2024 was primarily driven by increased Medicare utilization and the unfavorable impact of the previously disclosed decline in the Health Care Benefits segment. 1. **Increased Medicare Utilization**: The Health Care Benefits segment, which offers Medicare Advantage and Medicare Supplement plans, has been affected by increased utilization. This means that the company is paying out more claims, which increases the cost of providing these benefits. 2. **Decline in Health Care Benefits Segment**: The Health Care Benefits segment's adjusted operating income dropped significantly, which contributed to the overall profit decline. This segment's revenues are largely based on insurance premiums, and any misforecasting of medical cost trends and health care utilization patterns can lead to unexpected increases in claims payouts. The company's internal forecasts, which determine the pricing of these plans, are sensitive to the accuracy of these cost forecasts. Any miscalibration can result in profitability challenges, especially when there are unmodeled-for increases in health care costs during a policy period. In summary, CVS's operating profit decline in Q3 2024 was driven by a combination of increased Medicare utilization and the operational challenges within its Health Care Benefits segment.