CVS Health Misses on Profit, Revenue; Slashes Earnings Outlook
CVS Health missed Street estimates for its top- and bottom-lines and lowered its full-year outlook, citing higher medical costs in the insurance industry.
CVS, which owns health insurance giant Aetna, reported net income of $1.12 billion, or $0.88 per share, for the quarter ended March 31, compared to net income of $2.14 billion, or $1.65 per share, for the year-ago quarter. Adjusted earnings per share were $1.31, missing analysts’ estimates of $1.69 per share.
Revenue rose 3.7% to $88.44 billion, driven by growth in its health care benefits and pharmacy and consumer wellness segments, which were partially offset by a decline in the health services segment. Analyst had expected sales of $89.21 billion.
Total revenues increased 2.9% in the pharmacy and consumer wellness segment, primarily driven by increased prescription volume, including increased contributions from vaccinations, improved drug purchasing and decreased operating expenses.
The increases were partially offset by continued pharmacy reimbursement pressure. Prescriptions filled increased 3.2%.
Revenues at the health services segment, which includes pharmacy benefit manager Caremark, CVS' health clinics and home health services, fell 9.7% to $40.3 billion.
“The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company,” stated Karen S. Lynch, president and CEO, CVS Health. “We are confident we have a pathway to address our near-term Medicare Advantage challenges. We remain committed to our strategy and believe that we have the right assets in place to deliver value to our customers, members, patients, and shareholders.”
[RELATED: Grocers Weigh In on Food as Medicine]
While Medicare Advantage has been a major source of growth and profits for the insurance industry, investors have become concerned about the runaway costs associated with the plans, according to a report by CNBC. CVS is also facing challenges from the federal government’s 2025 reimbursement rates, which did not increase payments for Medicare Advantage plans as much as the industry has hoped.
CVS said it now expects 2024 adjusted earnings of at least $7 per share, down from its previous guidance of at least $8.30 per share.
With its CVS Pharmacy subsidiary, Woonsocket, R.I.-based CVS Health has over 300,000 colleagues – including more than 40,000 physicians, pharmacists, nurses and nurse practitioners. The company is No. 7 on The PG 100, Progressive Grocer’s 2023 list of top food and consumables retailers in North America.
This article first published in sister publication Chain Store Age.
