Okay, so we're going to kick off. Let Tom, who is not the interim CFO but the CFO, speak to a few statements, and then Karen's going to start off with some introductory comments.
Thanks, Lance. Thanks, everyone, for joining us. I just wanted to say, you know, we will make forward-looking statements today, so we encourage everyone to please look at our risk factors that are in our SEC filings. You can access them through the SEC website or through the investor portion of cvshealth.com.
Thank you, Lance, for having us this morning. Really appreciate the opportunity. I just wanted to start with some opening comments. As you know, our recent performance has been disappointing to us, but it is, you know, representative of one of our businesses, and I thought it was important this morning to talk about a fair amount of things that we have going on in our business so that you appreciate the broad portfolio of assets that we have. As you know, our strategy is really to build a convenient, connected, personalized, integrated solutions company that is focused on the long lifetime value of a consumer.
You know, as we know, consumers and patients who interact with the healthcare system have, you know, will deliver lower costs, will have improved quality, and eventually, you know, continue to drive growth for our company, because of the better outcomes and because of the better retention that we have with them. But I thought it was important this morning to really highlight some of the things that are going on with the company that are going well before I talk about, you know, Medicare Advantage. You know, in December, we, you know, talked about our strategic intent of doing a number of things, relative to our business. We started and we talked about Cordavis, which is, you know, a new approach to the biosimilar market. In a very short period of time, one month, we have dispensed more biosimilars than the entire market did this year.
I think that speaks volumes to our ability to execute and our ability to drive down costs as a result. You know, we expect to see continued growth from that market. Our pharmacy and consumer wellness business, you know, outperformed in the first quarter. And as we said in December, we're introducing two new pharmacy models. One is CostVantage and the other is TrueCost and the PBM. We are having very productive and meaningful conversations around our CostVantage program. And I can assure you that our Caremark PBM will be, you know, contracting with CostVantage, and we'll have more to talk about towards the latter half of this year. The other thing I would just comment on is, you know, TrueCost. We've had a lot of good conversations with customers, and there's big interest with our customers in TrueCost.
It's been very well received from consumers. Then I would just say, with Oak Street, Oak Street is performing. If you think about what we tried to do with Oak Street and Signify Health, it's really to introduce a new health services business in our company. Oak Street is performing in line with expectations and Signify, you know, had more in-home assessments in the quarter than they ever had before. So really good results in that healthcare delivery, you know, part of our company. You know, obviously in the quarter, we had a tough quarter in Medicare Advantage, which was disappointing to us, as I said earlier. But we took immediate action, and the most immediate action that we could take to influence 2025 was pricing. Our bids are due in a couple of days. We have taken a very prudent and thoughtful approach.
We'll talk about this, I'm sure. But we are committed to margin recovery in that business, and our bids will be going in. So I thought it was important to kind of just level set before we got into Q&A. We have a broad portfolio of assets. We have one business that is underperforming, but many of our businesses are doing quite well.
Great. Well, I appreciate that. And you know, the characteristic of this event is focusing on you know, the long-term strategic opportunities. We want to walk through those. You know, for the current environment, probably two topics that would be worthwhile to just hit and knock through. One, I just mentioned to you, on the MA pricing. You know, I think the most common question I'm getting from investors, and being a former person, you know, it, it's one of those ones that is surprising to me, because of how I think of some of the actuarial rigor and whatnot is, so what went wrong with MA pricing for 2024, and what are the steps you're taking and have taken to address that, you know, so it goes right in 2025 and beyond?
Yeah, I think there's a number of things. One, obviously, we're seeing just, you know, a broad secular trend of utilization. And then, you know, relative to pricing, one of the things we did was we missed trend. And, you know, we had a super elevated trend and then a flat, stable trend. That's not what we saw in the market, obviously. We continue to see elevated trends. The second thing we did was we added new supplemental benefits, and people are utilizing that benefit, but that is not the full driver of our utilization, but we are seeing, you know, uses of supplemental benefits.
And then, because we grew, we had some, you know, operational, you know, we didn't have enough nurses on the, you know, kind of on the lines, to start, but, you know, obviously we, you know, fixed that subsequent to that. So what are we doing? So the first thing we did when we saw some of these pressures was we put together an entire cross-enterprise group to really look at all aspects of the Aetna organization to make sure we just shored up anything in the operations. The second thing we did was we took an intense review, Tom and I and a host of our colleagues, intense review of the pricing bids that are going in in a couple of days. And we've done a number of reviews. And what we've done, and we said our sole goal is margin recovery.
So one of a couple of things that we've done is we had reduced benefits. We said we were going to exit counties. We are going to, in some counties, pull products and refile. And then we took a view that the elevated trends will continue to see elevated trends in 2025. So we've taken the entire, you know, kind of organization to look at operations, and then we, you know, took an intense review of our pricing, and Tom and I have been ultimately involved in that. Is there anything you want to add there?
No, I mean, as you think about the bids for 2025, like Karen said it and, you know, just reemphasized it, we tried to take a prudent and thoughtful approach. So, you know, we're looking at the pathway to profit improvement at a very granular level. You know, we're filing bids in, I think it's over 2,000 counties, you know, and literally our teams are looking at each of the competitive dynamics associated with each of the products in each of those markets and coming to an individual decision on what it is that we need to do across the enterprise with those local market teams and the product teams, medical management teams all working together, you know, to recapture the margin that we're talking about. There's two things that need to happen.
First, we've made an assumption that trends are going to persist at this very, very high level. So we've, we saw that level of core trends in 2023. Our guidance and our baseline assumes that that's going to persist in 2024 and then into 2025. So we've, we've rarely seen two years of trend like this. We've never seen three, three years of trend like this, but that's the approach that we're taking. So when you think about that level of trend relative to the rate that we have for 2025, the first order of business, just to stay at par, is you've got to go through and pull all of the levers that you can to try to cover that gap. And then we've talked about an additional up to 200 basis points of margin improvement.
So the way we're doing that is we're looking at every lever available to us. So that could be medical management, you know, trend benefits is some of my peers like to call them, and Brian likes to call them as well, network configurations and, and benefits. And so benefits are TBC benefits and non-TBC benefits. And there's lots of complicated rules about that, including, you know, our STARS, you know, restoration in our largest contract actually reduces our ability to impact TBC benefits. But these are the choices and the, the context that we're looking at in every market. And so when you've pulled all of those levers, the only thing that's left to you is to exit. And so there are some places where we'll simply exit completely.
There are other places where, and this is probably a bigger impact than the, the pure market exits, where we will pull a product from the market and we will reintroduce a different product with a different level of benefits. Now, that comes at a cost. We, in a year where there could be a lot of disruption, where some of our peers could be making significant changes as well, where you've got the Part D changes out in the marketplace that, you know, could have various different impacts, we're going to be, you know, telling these folks, your plan is no longer available, and they're probably going to go shop. And so as we think about that, we think that the retention levels on those, those exit refiles are probably pretty low.
That's where, as you start to think about different scenarios, you know, there's a wide range of outcomes. It really depends on what do the competitors do in each market. But, you know, could you lose 5% of membership in that case? Sure. Could you lose up to 10%? It's very possible, but that's okay because we're making, you know, rational decisions about the progress that we want to make on margin in 2025.
Gotcha. Just two follow-up questions on that aspect. One is, for the audience, you know, my experiences in sector have been that when you have big portfolios, you have a lot of dispersion in MLR. And so it's when you're talking about exiting counties, it makes a lot of sense to me. Maybe you could just describe a little bit of the characteristics of dispersion and MLR across markets, understand if there is wide variability there first. And then the second is, given the uncertainty around what might be the member impact of this, how do you deal with your operating expense load to be able to get to the margin? And obviously you got to be nimble with that because you're going to need to see how that plays. So you could just talk to those two execution aspects.
I just talk operational about the expenses that I've asked the team, and we are putting together the plan under a variety of scenarios of where are the expense takeouts? How do we, what do we need to do? How do we get those expenses out if, you know, depending on that membership loss? So there is a plan that it will be executed and will be delivered to me so that we can see where we will, you know, surgically reduce spending to match the membership. Critically important.
Yeah. I mean, to Karen's point, the teams are all over this and pre-planning for what those options are going to be based on how the ultimate membership forecasts come out. And what I gave you is not guidance, just directional in terms of how we're thinking about things right now. But I'd much rather be in a position where we have the ability to take out our own costs rather than trying to think about what utilization trends might be in the, you know, out in the market that, you know, are much more difficult to control. As you think about the dispersion, the places where we're exiting, which is a minority of the what we're doing here in the membership loss, those are really places where, you know, we don't like where we're positioned from a contracting perspective.
We don't think that we can get there. The benchmarks, you know, are not where we think they need to be based on the costs in the market. You know, it's, and so there is a wide dispersion of earnings as you think about, you know, our largest contract, the national PPO, obviously it lost its STAR bonus. We priced through that. That's pressured this year. You know, as we think about some of our dual products, they're faring better than the rest of the book. You know, there is dispersion both at the product level and also the geographic level.
you know, we're looking at all of those different intersections to roll up, thinking about an elevated level of trend and then really driving the teams to deliver up, you know, 150, 200 basis points of margin improvement next year across the entire market.
Gotcha. One more current-looking topic, and this is, I guess, something that maybe is moving some stocks today, is utilization. And we, and so if you could just comment a little bit on, you know, the first quarter and then maybe any further development as far as insights into what that first quarter is looking like, and, and any perspectives on, you know, kind of outlook for utilization for the year?
So, on the first quarter call, we highlighted that we had a lot of earnings pressure in Medicare Advantage. You know, since then, we've only really closed April, right? And so, as you look at the first quarter trends, so what do we know, you know, post the first quarter about how that's developed? We talked about this all, but it looked like it was going to develop positively and it has, which is, which is great news. As we look at MA, one of the places where there's been particular focus, has been inpatient. You know, as we said before, January, February, the admits were very high. March and April were notably better. But the, you know, as we look at the first quarter restatement, you know, we have seen that pain remains elevated, but we've actually seen improvement in other cost categories.
So, you know, it's still really early in the second quarter. You know, we're watching all of this very closely. There's still a lot left to play out. You know, April is a seasonally intense month. June is a seasonally much less intense month because of the way the calendars work and the year-over-year trends. And so, you know, we're watching it closely and we're going to update folks when we get to the second quarter call.
Gotcha. Okay. That's really helpful. And then now broadening it back out to kind of the corporate strategy and where you're going, one of the questions that kind of bridges us from here to there is, given the situation you're in, how has this impacted capital deployment priorities for you? You know, what's sort of your game plan going forward?
Well, just relative to the strategy, I would say that, you know, we are committed, you know, to our overall strategy, which is really to, you know, to continue to grow our foundational businesses, to expand into other growth drivers, like the health services business, and, you know, to really, you know, drive fundamental growth around the integrated value of the company. And that's really the core of our strategy. And, and we are, you know, continuing to commit to that. If you think about the utilization pressures in Medicare Advantage right now, we have the, the two premier assets, you know, Oak Street and Signify in Medicare Advantage, in value-based care. So it really can support that.
However, given some of the pressures, we've, you know, taking a broad look, making sure that we are prudently focused on where we're, what we're doing, how we're investing in our businesses, how we're investing in our capital. Tom talked about our capital deployment, but, you know, so, and what we're also doing relative to our expense structure. We talked in the first quarter about looking at expenses. So committed to the strategy, but really important that we take a fresh look across the board to make sure that, you know, we're focused on profitable businesses. We're focused on our expense structure. We're focused on deploying capital appropriately. Anything you want to add?
Yeah, I mean, for both cash generation and liquidity remain very strong, right, as we think about the business. And that's a real enabler for the strategy and will be for, you know, for the next multiple years. On liquidity, we just actually completed a very successful debt transaction. Both S&P and Moody's reaffirmed both our ratings and our outlook. And, you know, when we launched that transaction, you know, we were about 4x oversubscribed at its peak, which actually allowed us to pull in some of the pricing on that. So like just very pleased with the execution on that transaction. You know, that said, leverage is higher than normal. It's, you know, we have a demonstrated ability, though, to de-lever.
We proved that after the Aetna acquisition and in 2025, the restoration of some of the margin in the Medicare Advantage business will go a long way towards, you know, driving down that leverage. And we feel we have a very strong ability to drive that leverage below 4x, which is really what we you know, kind of where we would like to be is below 4x on sustained basis, at least slightly above that this year. And that's okay as long as, like, we can go up for a period of time, as long as we're committed to and driving it back down, which is what we're going to do. As you think about deploying cash, you know, the priorities really haven't changed. So first and foremost, we invest in organic growth.
You know, we've had capital expenditures that are, you know, approaching almost $3 billion this year. Those are all investments in our infrastructure, in our stores, in our technology, you know, things of that nature that are going to help drive customer experience, help drive growth. Then, you know, some of the investments that we make on the insurance company side are risk-based capital investments to support growth in the business. We've had great success in growing the top line this year at Aetna. Then we have a very attractive dividend. Both management and the board recognize its importance to shareholders, and are committed to that. As we evaluate our remaining capacity, then, you know, we have looked to repurchase shares. We did share repurchase in the first quarter of this year.
You know, that was really to help offset some of the annualization of the acquisition interest expense. But, you know, we want to continue to deploy capital to drive EPS growth. And we believe that we will continue to have opportunities to do that once we are closer to our leverage targets.
Gotcha. With respect to the broader corporate strategy and kind of the Oak Street as an element of that strategy, one question would be, how fast do you need to export the risk-taking clinics to make it effective as an integration with the Aetna products and maybe to absorb some of the expenses out of the retail side of the business? So trying to understand, in order to deploy your strategy, obviously there's the opportunistic side of like, oh, I'd like to grow this business that potentially is a really attractive long-term growth business. But how much do you need to grow that to get some of the other synergies across the businesses?
Yeah, I think you said it right, Lance. You look at, kind of the ability to take that health services, you know, part of our company, and that is a, a longer-term, growth prospect. You know, and that's really why, you know, we see a longer-term value with Oak Street and Signify. You know, I would just comment on a couple of things, you know, relative to Oak Street. First and foremost, we acquired Oak Street. We tripled our Aetna membership, and I, I think that is a testament to kind of that integrated flywheel that we have. You know, we have, you know, continued to, grow, some of the clinics. What I would say, the Oak Street clinics that are kind of the older clinics are doing quite well. And they're hitting, you know, the performance of Oak Street is in line with our expectations.
And so we will, you know, we'll, we'll continue to take that approach to, take a measured approach to, you know, growing the clinics to support the growth of, you know, our own Aetna members. But remember, it's a multipayer and we have the opportunity to really drive value not only for our company, but, you know, for, for other companies as well. Signify Health, as you know, as we said this quarter, had the most number of IHEs that they ever had in the quarter. So it is a true testament. And what we're seeing is we're seeing that integrated flywheel and the value of the integration where Signify is referring to Oak Street, where in our pharmacies, people are visiting our pharmacies, we're referring them to Oak Street. We're seeing, you know, more Aetna members in Oak Street. So you are seeing sort of the effective flywheel.
Like I said, Oak Street is performing. I do think, you know, we bought those assets for the long-term growth trajectory of our company. If you want to add anything else to that.
No, I mean, clinic expansion, it's an important just driver of growth, right, over the long term. And, you know, we're committed to continuing to expand that footprint. You know, as you think about the Oak model, right, you, when you open a clinic, you have losses over the course of the first couple of years. That's a J Curve that, you know, they talk about before it reaches, you know, profitability and then starts to expand. And some of that is, you know, you're building your patient panels in the early years. You have to understand their health needs, develop the care plans, and, you know, give those time to mature it, those results come through in, in the medical costs.
But, you know, it is that, it's that, that initial build and that lag on when you can start to make a difference in the health outcomes that really drives that J Curve. You know, but even in 2023, you know, with the MA utilization pressures that we saw broadly, as you think about that four-wall clinic margin, that contribution margin that Oak Street used to talk about, about 40% of clinics were actually profitable at that line. And we think that that will, despite V28 and other headwinds, that'll probably be more like 50% as we think about, you know, 2024. And, you know, part of that is about where are our curves, where are the clinics in maturation, you know, path?
We think that there'll be progress again, but that 10%, as you think about where some of those older clinics are and there were less clinics than there have been in the last couple of years, you know, that's where you get about a 10% bump there. There's been a lot of inquiries, you know, based on some recent press reports on Oak Street. You know, I, I just, let me reiterate, I think we've said it two or three times already, like first quarter performance at Oak Street was in line with our expectations. But since the time of the acquisition, we've been very clear that we might explore some sort of alternative financing mechanism to think about the growth there. You know, that's our job as management to continually try to, you know, think about how do we balance short-term versus long-term?
You know, and healthcare delivery and Oak are really important to the long-term growth of the business. And we're committed to executing on the strategy to improve care and deliver that value for shareholders. You know, if there were to be a financing transaction, I think it's a, it's a function of how do we think about the near-term earnings pressure versus the higher cost of capital of doing something like that? Clearly, some of our carriers have chosen to finance that in a different way. We're not sure whether or not that's the right answer for us or not. It's something that we continue to evaluate as we're evaluating everything, you know, relative to where we are and how we want to drive performance, you know, over the remainder of 2024 and into 2025 and beyond.
Yeah, Lance, I would just say that, you know, our job is to make sure, given sort of where we are, to explore and look at everything in the company. That's what, that's what we're doing. The only other point I'd add on kind of the strategic use of, you asked about the pharmacies. We are building some Oak Street in our retail clinic, so pulling out the front door, putting Oak Street in some of the pharmacies. We've piloting some of those things in, in Texas, and we're looking at different formats and to use our real estate a little bit differently.
Yeah, I saw those pilots. That's particularly interesting to me because, again, like as I think of your position, and if I was trying to put myself in those positions, it seems like for some other populations you service, like individual, Medicaid, employer, that colocated clinic might be interesting. You see much appetite in either product design for individual or in employer, like ASO employers interested in value-based care, sorts of capabilities with your Aetna hat on.
Yeah, I would probably talk about that just, you know, because you asked coming off of the Oak Street. I think there's opportunities for us with Oak Street. You know, they're skilled at chronic conditions, right? And so if you think about the other populations, that Aetna, you know, the Medicaid business or the individual business or high chronic, we can leverage that asset to support. So we're looking at that and seeing if there's opportunities there. You don't want to pull too far away from their core capability, but they already do those kinds of things. So there's opportunities to reduce, you know, that will help reduce overall cost, you know, medical costs. So, that exploration that it's happening as well.
Lance, one quick thing before we move on, just some part of the other bit of chatter, you know, if we were to do a financing transaction off the Oak clinics, I want to make sure it's clear. It's not something that we need to do to achieve our goals for 2025. But, you know, the guidance that we gave preliminary as it was, you know, didn't incorporate any upside from that type of a structuring.
Yeah, that's great. That's very helpful to understand. And as you're thinking about maybe everything being on the table, from a strategic perspective, obviously you've got a broad collection of businesses, really strong market share in a number of those. Are there particular areas that investors ought to be thinking of that present opportunity, either for you to exit, for you to structure in different sorts of ways?
Yeah, I think that we just have to look at, you know, are there assets that are performing where we want, obviously, looking at, you know, looking at how we kind of can grow the businesses that are performing really well. I think some of the things that we're already doing, like Cordavis is a really good example where, we have the, you know, the $100 billion market opportunity in biosimilar. We just demonstrated and proved that we can, you know, convert a market, you know, in one month more than last year. There's a big pipeline of opportunities coming, in the biosimilar. So that's a, a good opportunity for kind of the longer-term growth for, you know, our, our shareholders. You know, obviously we've taken actions in our retail pharmacy business.
We've started with, from the end of this year, we'll have shut down 900 of them, but while retaining 70% of the script volume, while retaining colleagues. And then, you know, what we said strategically is looking at our expense structure across the entire portfolio and making sure that we're optimizing our expenses across the company. So those are just some of the things that, you know, we're looking at in addition to, you know, how do we just, you know, continue to capitalize on growth in our commercial business, growth in our Medicaid business, growth in our PBM business. Those are, you know, important elements of our long-term strategy.
Yeah. Lance, just, yeah, as a reminder, we've done some of this as well in terms of portfolio management. We exited our international business. We sold, we sold bswift, right? There, there have been things that we have been doing to look at assets. And, you know, it's a continuous process and we're committed to, you know, continually evaluating all of the assets inside the portfolio and, you know, figuring out whether we need to accelerate growth or whether we're not the best owner for them or whether we need to partner with them. Going back to Medicare Advantage, but more with an eye towards long-term, how should investors think about the opportunities that business presents once it's kind of able to get to a run rate? So how do you look at sort of long-term margin targets for that business in, in the current environment?
And what do you think are the growth prospects for that sector? When you think of like, where do you think penetration maxes out and things like that?
Yeah, so, you know, in 2024, Medicare Advantage hit the 50% mark in sort of total Medicare. It's projected to get to 60% by 2030. So it's still a, you know, a growth market. Given everything that's going on, this year, you know, with PDP and the pricing, there's probably more opportunities to see, growth in Medicare Advantage because as, as people look at, you know, the cost of, you know, PDP, the cost of Med Supp, and the cost of fee-for-service this year, there's going to be some disruption, right? Because both what you're going to see, coming out, with bids. So there's probably, you know, additional, growth in Medicare Advantage. Medicare Advantage is a, you know, is an important, product and it's a capability that will continue to grow over time. It's an important capability for us.
That's why we've brought a, you know, whole host of assets, you know, between Signify, Oak Street, our pharmacy business. Those all can wrap around a Medicare Advantage member. And what we've seen is when you wrap around services with members, they tend to be stickier. We tend to kind of grow more services with them. So it's a viable, you know, market, going forward. Now, it's disappointing this year with the way the rate fed turned out, but I do think, you know, we will be able to restore our margins. You know, but we as a company at Aetna, we were always hitting those 4%-5% kind of, you know, margins over a long period of time. And I'm confident that we can restore back to those levels.
No, I mean, you asked about penetration. I think there's several surveys out there that suggest, you know, that, you know, by the end of the decade, a little bit more that you could be in the 60s in penetration. We think that, you know, that those are reasonable. That might mean that, you know, the growth in membership, 2025, Tom emphasized, might slow from the high end, the low end to high double digits to the high end of mid digits, but that still means it's a very attractive business. And, you know, we believe that we can drive this business back towards that 4%-5% margin target. And with that level of growth and that level of margin, it's a very attractive, and all the other services that we can wrap around members, we think that that's a very attractive business. Yeah.
Maybe, again, you've got a lot of portfolio managers in here as well. Can you talk a little bit about maybe some of the structural advantages you've got with the combination of assets? To what extent does CVS brand and location help you with distribution of MA? And then what are the opportunities, you know, today versus in the future to further penetrate like Oak with a dual eligible Medicaid member? So maybe kind of where we are today and what are the most important things to drive that equation going forward?
Yeah, what I would say is, first of all, CVS is one of the most trusted brands in healthcare today. So that kind of gives us sort of, you know, that brand advantage. You know, five million people walk into our stores every day. So, you know, some set of those are, are seniors. So that gives us an opportunity to interact with people. They're using our pharmacy. So our pharmacists can react, you know, talk to them about the importance of, you know, Oak Street or even home visits with Signify. We have, you know, we were under-penetrated with our Aetna membership into Oak, into Signify. We've seen, as I said earlier, tripling of that membership. There's more opportunity there. And as we constructed our bids, as we thought about our bid next year, there's more opportunity to drive, you know, growth into, into Oak Street.
We obviously have been driving growth into Signify as well. So, the other piece is CVS Pharmacy is the number one pharmacy driving medication adherence that helps us with starts. So you could see sort of that kind of the overall flywheel get better starts for pharmacy, get better, you know, adherence to your meds. You've got a holistic approach in care delivery through Oak Street, through Signify, returning them to care that they need. What does that mean? That means lower overall medical costs will improve retention of those Medicare Advantage members over time. We'll grow because we have a different and unique assets that we can bring to our Medicare Advantage members. So I think you have to think about it kind of that whole flywheel and get the economic advantage of having that member.
We've seen a number of steps four times, but lifetime value is substantial when we get that member into that our portfolio of assets.
But it's not just the Medicare business, right? So the other one that I think is worth highlighting is just the individual business. So it's our first co-branded CVS Aetna product. It's got over 1.7 million members in it today, and growing. And, you know, it's some of the things that we've been able to do, like, I think, really helpful relative to that ecosystem. There's two that come to mind for me. The first is that, you know, penetration of that book, how often does that book use the CVS pharmacy? It's almost 50% of the time, right? And so we have an insurance product, which is on a path to profitability. Should be profitable this year, right? It's on that, you know, path and trajectory as of the first quarter and inside our guidance.
And it's driving volume into the stores, which we think is a real positive. We also have a, you know, I think it's a no-cost benefit in MinuteClinic. And what we found is that those individuals use the MinuteClinic twice as often as other folks do. And, you know, that's a very high-quality, low-cost, you know, interaction that helps to drive costs out of the system. And we can also use and have been using our Signify asset to do in-home evaluations on these individuals. That helps with revenue capture, but it also helps with return to care. So that we can understand what, you know, what the, the diagnoses are for these individuals and make sure that they're getting the care that they need, helping us, you know, with, both, as I said, the revenue side, but also just the medical management side.
Let me ask a little bit on the PBM and on the specialty pharmacy side. And if you could comment a little bit about, obviously we've, we've talked a bit about, biosimilar opportunity. But if you could maybe for the audience, give a little, description of the specialty pharmacy capabilities you have and maybe the magnitude of that portion of the business. And then if you could talk about GLP-1 opportunities, any sort of trends in coverage you're seeing with GLP-1s.
Yeah, I'll start with the GLP-1s. Obviously, you know, it's an important, you know, medication, albeit incredibly expensive. And it is the number 1 topic that we have, when we talk to our consultants, our customers. And it is driving substantial trends. And so one of the things that, you know, we're doing is obviously, you know, our PBM has the ability to, you know, lower overall costs there through kind of, you know, their contracting. We also have kind of medical management capabilities that we've put in place. And so as we speak about GLP-1s, important driver, but we're really working very closely on how do we lower the overall cost? How do we make sure that the people that need it are getting it? And you know, obviously there's been shortages and we're working with the manufacturers to make sure that there's availability of it.
On the specialty pharmacy, we have the number one specialty pharmacy company in the U.S. We've been, you know, that business performs very well. It has demonstrated its ability to lower all, lower overall pharmacy costs. We've been using technology to enhance its capabilities and its efficiency and effectiveness. And it's part of the reason that we drove the performance of the biosimilar market, given the, given the capabilities and the teams in that business.
Yeah, I think that's really helpful framing for that. Coming out of Investor Day in December, I would say the top question or the top topic I was getting from investors is really related to the new retail pricing markup. And so you made comments earlier today that Caremark definitely will be contracted with it.
Better be.
That's awesome. But I guess it'd be interesting to understand both what's the market reaction and like the outlook for the other major PBMs. And then what's the approach? Because again, it seems like a very rational approach you're taking to me. The signaling associated with the approach seems like it's being taken up by others in the market, which I think is an important aspect of it. But maybe what does the rollout path look like and maybe just general like acceptance at this stage and how much does that matter?
Yeah, I think I'm going to step back and look at the pharmacy industry at large. You know, we've seen pharmacy reimbursement pressures, you know, for years and years and years, right? And, you know, we'd sit up here and we'd talk about, you know, we're doing, you know, lower cost of goods, increasing script share and, you know, lower expenses, you know. And what we said was, you know, the definition of insanity is that we keep doing the same thing, expecting a different result. So we came up with a new innovative approach to really address the market. We've seen, you know, one of our competitors, you know, basically fall by the wayside, and go into bankruptcy. So there's a lot of turbulence going on.
So we decided that we had to do something different and innovative to address this market, which is, you know, let's put CostVantage out to stem sort of the reimbursement pressures that we're having. The conversations that we've had have been very constructive. There's a lot of interest, but as I said earlier, we, you know, those conversations and those contracts don't happen until the latter half of the year. But we do expect to see movement for 2025. And Caremark will obviously be the first one. There's anything to add there? No.
Then, one other aspect on retail has been, you know, the potential for greater use of online pharmacy, of centralized pharmacy. And, you know, you guys are positioned with your collection of assets and you actually frequently talk about things as being not just in the store, but also in the home. And I think you can hold it in the palm of your hand. And the other phrase you used, you know, what are you doing with respect to sort of digital, digital pharmacy and either direct home delivery or how do you look at maybe drive-thrus and things like that, diversifying away from the kind of physical retail pharmacy?
Yeah, we've done a number of things, obviously. We now have, when we first started this journey, we didn't have very many digital customers. Now it's 55 million digital customers, which, you know, people would, you know, want to have 55 million digital customers to interact with. So there's a lot we've done to upgrade our digital capabilities and there's a lot more we are doing, to upgrade those capabilities. We do deliver in the home. We've been delivering in the home for a very long time. We're also using artificial intelligence and machine learning in our pharmacies to really do workforce optimization so that we are supporting our pharmacists, in, you know, when before it used to be one store with one floor, now we can look at the fleet and help you up, like pharmacists can help other stores, you know, clean their inventory up.
So we've been using that dynamic workload balancing using artificial intelligence. We've been using AI to change the way our call centers work. For example, we now have the ability to use AI to script the call after it's done so that we have that capability. So no one has to write. So we're doing a lot using technology to support kind of the pharmacies and those brick and mortar. So we have delivery, we have online capabilities. But sometimes there is that need to go to a location to pick up your drug because you know you go to the emergency room and you need it immediately, and you can't wait for a delivery. So you know there's a place and time for brick and mortar. There's a place and time for digital.
There's a, you know, place and time for other kind of technology uses, and that we're looking at all those things.
As you think about that interaction in the store, one of the things that we have done that's been extremely successful is our Air Support launch. So part of what that allows pharmacists to do is to actually have other members in the network, usually in that local geography, do a lot of the backend work on the prescription so that they can spend that time with the customer at the, you know, at the counter and not come back to a backlog. That's really launched that in the majority of our stores at this point, with a plan to continue to roll that out. The impact has been noticeable. It's really a great help for both the pharmacists, but I think it's also driving some of our customer satisfaction.
We have the highest NPS scores in our stores than we've ever had before. And as a huge thing, sort of all this technology and support.
Yeah, that makes a lot of sense. One question we've got, came in, pass along our condolences on the, the death of the founder, Mr. Goldstein. And as I think this is probably a PM type of question, just asking for your view on your competitiveness, by segment, and seeing that as like historically a CVS strength. So just asking kind of just to provide the audience a view as to how you perceive your role in each of the four major businesses driven, you know.
Yeah, I think I'll start back. I'll start with the retail pharmacy. I think, you know, given sort of the landscape of retail pharmacies, I think, you know, we're well positioned there, and very competitive. You know, we've been doing, you know, a number of things that we just talked about, to support our pharmacies. We've been, and you can see that in our increasing script and growing share. You know, in our PBM business, I think we're, you know, well positioned there. We have strong competition, you know, kind of strong competitiveness, you know, with our specialty business, with what we're doing with biosimilars. That is, and with TrueCost, those three things are resonating in the marketplace. We just had a customer forum.
We got lots of good feedback, a lot of good interaction, more to come, on sort of growth there, what we feel really good about the growth in that business. And then if we look at, you know, we've been, you know, growing our commercial business. So I think that speaks well to the competitiveness. Obviously, in Medicaid, important business, we've won some, you know, business there, but I think there's more we can do in our Medicaid business. And then, you know, Medicare Advantage, we've talked a lot about and we're repositioning for 2025.
Gotcha. Last question I got to tee up here. And this is, you know, frequently PBM policy, PBM regulatory environment would be like that first question we'd ask. And it would be great if it was that. But as the last question, you know, me as somebody who's maybe historically been a little more negative on PBMs, they're deep in my heart. And like I've gotten more, much more positive on this outlook on evaluation on an adjusted sort of basis. You know, this seemed like a lot of policy folks I talk with say there's potential for lame duck session policy. It might be like transparency, PBM policy, or something like that that might get access. It's interesting your perspectives on what the policy outlook is for PBMs. Obviously, you know, enormously well connected there.
Yeah, I would say it is difficult to get alignment and bipartisan support on the specifics relative to PBM. So I'll just start there. I think if anything happens, it'll be on transparency. But you have seen time and time again that there's been some challenges. But I would say that we are very well positioned because we are on the forefront of leading change in the PBM model. And I think that is what's critically important for us as we go talk to you know our you know congressmen and senators in Washington. That is the conversation that we lead with, that we're leading transparency through our and our TrueCost model, that we are driving lower costs. We can show how we've been able to keep trends, pharmacy trends, you know, relatively stable.
That puts us in a position to really demonstrate that we're doing what they're asking to do before they actually tell us to do it. And that's what we want to see. And that is because my view is we are the leading PBM, leading pharmacy. If there's anyone that should and could be doing it, it should be us. And we're well on our way to do that through cost management through TrueCost. And it's resonating with them. When we go and explain it, they're like, oh, okay, I get it.
Yeah. TrueCost model to me is a very innovative and positive step towards, you know, diffusing some of the regulatory pressure that can actually stick. Well, I appreciate your time. I only have a minute left and there's no way I can sneak in one more question before I'm done. So I'll let you get to your series of meetings. But thanks so much for coming.
Thanks, Lance.
Always a pleasure. Thanks, everybody.
Thank you.