CVS anticipates decline in Silverscript, Accendo plans
WOONSOCKET, R.I. —CVS Caremark announced earlier this month that the number of low-income subsidy members enrolled in its Silverscript and Accendo Medicare Part D plans likely will decline by 30% to 35% in 2010, and it could have a negative impact on earnings.
A preliminary review of the results of the 2010 Medicare Part D competitive bidding process recently released by the Centers for Medicare and Medicaid Services indicated that Silverscript and/or Accendo plans qualified to receive automatically assigned LIS members will be in 15 regions (comprising 27 states) as compared with 30 regions (comprising 46 states, plus the District of Columbia) in 2009.
CVS stated that the total number of beneficiaries that ultimately will be enrolled in Silverscript and Accendo Medicare Part D plans during the 2010 year will not be known until early 2010, after the close of the open enrollment period.
Based on these results, the company estimated that the decrease in LIS members enrolled in Silverscript and Accendo plans during 2010 could negatively impact 2010 earnings by 3 cents to 4 cents. In addition, the company previously noted in its second-quarter earnings call that the effect of a regulatory change that effectively eliminated Medicare Part D network differential is expected to negatively impact 2010 earnings by 5 cents to 7 cents. So, in aggregate, the impact on 2010 earnings is expected to be 8 cents to 11 cents.
“While we are disappointed that we will serve fewer auto enrollees in 2010, the Medicare Part D business will still provide good returns and remain solidly profitable,” stated Dave Rickard, EVP, chief administrative officer and CFO of CVS Caremark.
Responding to the news, Bill Dreher, senior analyst at Deutsche Bank, issued a research note that stated: “We continue to expect CVS to show solid sales and EPS growth going forward, driven by unique offerings like Maintenance Choice, and as the company continues to gain share within both the retail and PBM businesses.”