CVS Health Reports Good Revenue, Profit Expectations Lower with Rising Medical Costs

CVS Health reported its first-quarter revenue and adjusted earnings, missing expectations and revising its full-year profit outlook downward due to rising medical costs in the U.S. insurance industry. The company’s shares plummeted by 10% in premarket trading following the announcement.

CVS now anticipates adjusted earnings for 2024 to be at least $7 per share, down from the previous guidance of at least $8.30 per share. Analysts had expected full-year adjusted profit to be $8.28 per share.

Furthermore, CVS lowered its unadjusted earnings forecast to at least $5.64 per share, down from at least $7.06 per share. The company attributed its revised outlook to persistent higher medical costs in its insurance business, which includes health insurer Aetna.

CVS Pharmacy (Credits: Bryan Anselm)

Despite the challenges, CVS CEO Karen Lynch expressed confidence in the company’s long-term prospects, stating that the current environment does not diminish their opportunities or enthusiasm.

The surge in medical costs has affected other insurers such as Humana and UnitedHealth Group, with more Medicare Advantage patients seeking medical procedures they delayed during the pandemic.

For the first quarter, CVS reported adjusted earnings per share of $1.31, falling short of the expected $1.69. Revenue stood at $88.44 billion, slightly lower than the expected $89.21 billion.

Net income for the quarter was $1.12 billion, or 88 cents per share, compared to $2.14 billion, or $1.65 per share, in the same period last year. Adjusted earnings per share were $1.31.

CVS Health (Credits: CVS)

The increase in revenue was primarily driven by growth in the pharmacy business and the insurance unit. However, sales in the health services segment, which includes the pharmacy benefit manager Caremark, declined due to the loss of a major client.

Despite these challenges, CVS continues its transformation into a major healthcare company, with recent acquisitions aimed at expanding its presence in the healthcare sector.

The company’s health insurance segment saw a significant increase in revenue but reported lower-than-expected adjusted operating income due to rising medical costs.

CVS remains committed to addressing the evolving needs of the healthcare industry while pursuing its long-term growth objectives.

Josh Alba
Josh Alba
Josh Alba stands at the forefront of contemporary business journalism, his words weaving narratives that illuminate the intricate workings of the corporate world. With a keen eye for detail and a penchant for uncovering the underlying stories behind financial trends, Josh has established himself as a trusted authority in business writing. Drawing from his wealth of experience and relentless pursuit of truth, Josh delivers insights that resonate with readers across industries.
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