What risks should traders watch for CVS's Q1 2025?

Here are some risks that traders should watch for CVS's Q1 2025:

1. **Medicare Advantage Shifts**: CVS Health is navigating shifts in the Medicare Advantage market, with elevated medical trends posing a challenge to its profitability in this segment. Traders should monitor the company's ability to stabilize Aetna and restore target margins in Medicare Advantage.
2. **Individual Exchange and Medicaid Challenges**: The company anticipates a decline in aggregate membership, primarily in Individual Exchange and Medicare products. Traders should be aware of the potential impact of these membership reductions on revenue and profitability.
3. **Pharmacy Operating Income Pressure**: There are pressures on pharmacy operating income due to elevated medical trends. Traders should monitor how CVS Health manages these pressures and the impact on operating income.
4. **Cost Efficiency Efforts**: CVS Health is implementing a multi-year $2 billion cost efficiency effort, which could impact financial results. Traders should watch for the progress and outcomes of these efforts.
5. **Debt Levels and Financial Leverage**: CVS Health has liabilities totalling US$130.0 billion, with a significant portion due beyond 12 months. Traders should monitor the company's debt levels and financial leverage, which could impact its ability to meet obligations and the potential for dilution of shareholders.
6. **Regulatory and Legal Risks**: The company operates in a highly regulated environment, with risks related to competition, pricing, and regulatory changes. Traders should be aware of potential regulatory actions and litigation that could impact the company's reputation and financial performance.
7. **Climate-Related Risks**: CVS Health has recognized climate-related risks to its store locations and supply chain, which could impact operations and financial performance. Traders should monitor the company's strategies to manage and mitigate these risks.

By monitoring these risks, traders can better navigate the potential challenges that CVS Health may face in Q1 2025 and make informed decisions about their investments.