Overview

A class action lawsuit has been filed against CVS Health Corporation (“CVS” or the “Company”) (NYSE: CVS) and certain of the Company’s former and current senior executive officers alleging violations of the federal securities laws.  The CVS class action lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired CVS securities between May 3, 2023, and April 30, 2024, both dates inclusive (the “Class Period”).  Investors have until September 10, 2024, to seek appointment as lead plaintiff of the CVS class action lawsuit.

CVS is a healthcare company that operates through three primary segments: Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness.  The Health Care Benefits segment purportedly offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, prescription drug plans, and Medicaid health care management services.  The Health Care Benefits segment’s revenue consist almost entirely of insurance premiums paid by customers.

The pricing and other terms of the Company’s private health insurance plans are typically determined in advance of a plan’s policy period, which is typically one year.  CVS determines premiums for these plans based on internal forecasts that consider historical data and the profitability of which are dependent on the Company’s ability to accurately model, among other things, medical cost trends and health care utilization patterns.  Generally, a fixed premium rate is determined at the beginning of the policy period.  To the extent that unmodeled-for increases in the costs of health care and other benefits arise during a given policy period, CVS is ultimately responsible for the payment of those costs.  Accordingly, the profitability of the Health Care Benefits segment is particularly sensitive to the accuracy of its cost forecasts.

The CVS class action lawsuit alleges that Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the forecasts CVS used to determine plan premiums were ineffective at accounting for medical cost trends and health care utilization patterns; (2) as a result, CVS was likely to incur significant expenses to cover cost increases that were not accounted for in the Company’s forecasts and thus not covered by plan premiums; (3) accordingly, CVS had overstated the profitability of its Health Care Benefits segment; (4) contrary to Defendants’ assurances, the revenue generated from the Company’s other primary segments were insufficient to offset the negative financial impact of the increasing expenditures within the Health Care Benefits segment; and (5) as a result, the Company’s public statements were materially false and misleading at all relevant times.

*          *          *

If you purchased or otherwise acquired CVS securities between May 3, 2023, and April 30, 2024, both dates inclusive, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at [email protected]. 

The deadline to apply to the Court to serve as a lead plaintiff in the CVS lawsuit is September 10, 2024.