Good morning, CFOs. CVS’s CFO talks about its $5.7 billion write-down; the Fed cuts interest rates by another quarter point; and Nvidia becomes the first $5 trillion company.

CVS Health on Wednesday raised its guidance for the rest of the year, but swung to a net loss, hit by a $5.7 billion write-down. The charge was largely related to its senior clinics business, which CVS bought in 2023 for about $10.6 billion. CVS said it would close 16 of the Oak Street Health locations, leaving 230, and wouldn’t open any new ones next year.

Brian Newman, chief financial officer at CVS Health, talked to me about the write-down as well as its plan to use one enterprise resource planning system instead of two. Edited excerpts follow.

Why did you book the impairment?
Newman: When we bought Oak Street back in 2023, the industry was going through some changes. Regulatory changes in the Medicare business basically threw in some headwinds. We went into a higher inflation and cost basis. Those things combined caused us to do a strategic review of the business, and we're going to lower the clinic growth. When you lower your clinic growth number, particularly the residual value, that impacts the value, which brings down the goodwill. I think it right-sizes the business and allows us to grow from here.

Goodwill impairments are a noncash charge, so it's not hitting cash flow. It's really a recognition of the asset and the value, but we still are a big believer in value-based care.

What are you doing to revamp technology?
Newman: We have two ERP systems. We have essentially three Fortune 100 companies under one roof. These are scaled businesses that have been acquired over time, and I need to make sure that the technology talks to each other and that could be from an ERP system. It could also be from agentic AI.

Do you plan to switch to one ERP system and if so, when?
Newman: I'm working through that right now. I am a big believer in simplifying focus. Rather than have disparate systems, the more consistent and simplified we can do things, the better chances of success.

I did an ERP transformation at a couple of different places. They take a couple of years, but certainly where we'd be kicking it off here in the near term.

Why do you have two?
Newman: We had one large ERP system with the CVS Caremark side of the house. When CVS Health acquired Aetna, they had a different ERP system. We've lived with that for several years. In order to take advantage of technology that's coming down, the first thing you have to do is standardize and harmonize your base.

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The Federal Reserve lowered interest rates at its second consecutive meeting, but Chair Jerome Powell cast doubt on expectations of a further rate cut this year.

Powell made an unusually pointed intervention at a news conference following the meeting Wednesday to push back against market expectations that a rate cut at the Fed’s next gathering in December was a foregone conclusion. “Far from it,” he told reporters.

The latest quarter-point cut will reduce the Fed’s benchmark short-term interest rate to between 3.75% and 4%, the lowest setting in three years and down from a peak of around 5.4% maintained for much of last year. The cut was made to extend an effort to prevent a recent slowdown in hiring from turning into something more serious.

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Earnings wrapup

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CSX, the Jacksonville, Fla.-based railroad operator, named Kevin Boone as its finance chief, succeeding Sean Pelkey, who has departed the company. Boone has held several key leadership roles at the company since joining in 2017, including most recently as chief commercial officer. He previously served as CFO for approximately two years, during which time he helped CSX navigate supply-chain challenges brought on by the Covid-19 pandemic.

Valero Energy, the San Antonio, Texas-based maker of transportation fuels and petrochemical products, said its top finance executive, Jason Fraser, is retiring. Fraser will leave his post as executive vice president and CFO at the end of the year and retire from the company in the first quarter of 2026. Homer Bhullar, who has been vice president of investor relations and finance since April 2021, will become senior vice president and CFO on Jan. 1. Bhullar’s annual base salary will rise to $770,000 from $500,000, and his annual bonus target will increase to 85% of his base pay from 75%.

TriNet Group, the Dublin, Calif.-based provider of human-resources solutions, hired Mala Murthy to succeed Kelly Tuminelli as executive vice president and chief financial officer, effective Nov. 28. Murthy joins the company from Teladoc Health, where she has served as finance chief since June 2019. Teladoc last week announced her planned departure. Murthy will receive an annual base salary of $650,000, a $500,000 sign-on bonus and an annual bonus with a target of 100% of her base pay. Tuminelli, who had been finance chief since late 2020, will serve as a special adviser into March and will receive severance benefits that include a cash payment equal to 12 months of her base salary.

                   —Colin Kellaher and Connor Hart contributed to today’s Ledger.

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