US Stock Market Move | CVS Health Corporation (CVS.US) plans to withdraw from the Obamacare health insurance business, and its performance is boosted by cooperation in weight loss drugs, increasing the stock price.

On Thursday, the stock price of the American healthcare giant CVS Health Corporation (CVS.US) rose, with the stock price increasing by over 7% to $71.56 as of the time of writing. The company announced that it will exit the individual health insurance market, also known as the Affordable Care Act (ACA) individual health insurance market, by 2026. CVS stated that its insurance subsidiary Aetna will cease all operations in the ACA market in 2026. Aetna was acquired by CVS for $78 billion in 2018. The company cited the main reason for the exit being projected losses in the insurance sector for the 2025 insurance year, with a provision of $448 million in premium loss reserves in the individual health insurance product line for this quarter. Nevertheless, the first-quarter performance of CVS's health insurance business still showed bright spots. The "Health Benefits" segment, where this business is located, saw a revenue growth of approximately 8% year-on-year, reaching $34.8 billion, higher than the market's expected $33.2 billion. Benefitting from the Medicare insurance plan performing better than expected, the medical loss ratio in this segment decreased from 90.4% in the same period last year to 87.3%, demonstrating improved profitability. In the pharmacy and consumer health segment, CVS also performed strongly. The segment's revenue reached $31.9 billion for the quarter, a growth of about 11% year-on-year, exceeding market expectations. The company processed approximately 435.5 million prescription orders in the quarter, a 4.3% increase year-on-year. CVS's health services division, which includes the pharmacy benefit management company CVS Caremark, also achieved a revenue of $43.5 billion, with a growth of approximately 8% year-on-year. This was mainly due to factors such as drug portfolio optimization and price increases of brand-name drugs, with overall revenue also surpassing Wall Street's expectations. Notably, CVS Caremark announced a partnership with the Danish pharmaceutical giant Novo Nordisk A/S Sponsored ADR Class B (NVO.US) this quarter to enhance the accessibility of their popular weight-loss drug Wegovy in the U.S. weight management market. In the weight management market, Wegovy by Novo Nordisk A/S Sponsored ADR Class B competes with Zepbound by Eli Lilly (LLY.US). CVS stated that starting July 1, they will prioritize Wegovy as the preferred weight-loss drug in their insurance plans to provide more convenience for members. Overall, the company achieved total revenue of $94.6 billion in the quarter, exceeding market expectations by $1.2 billion. Adjusted earnings per share increased by approximately 72% year-on-year to $2.25, surpassing market expectations by $0.58. Given the outstanding performance of all business segments, the company has revised its full-year adjusted earnings per share guidance for 2025 to $6.00 to $6.20, higher than the previous forecast of $5.75 to $6.00, and above the market consensus of $5.91.