CVS Health Corp. reported lower-than-expected earnings for the first quarter and significantly lowered its 2024 outlook, falling more than a dollar below the forecast set by Wall Street. The health care giant’s stock took a hit on Wednesday morning as the company continues to face challenges from rising costs associated with care use in its Medicare Advantage business.
For the first quarter, CVS Health reported adjusted earnings of $1.31 per share on $88.4 billion in total revenue. Analysts had anticipated earnings of $1.69 per share on revenue totaling $89.33 billion for the same period, according to FactSet.
As one of the largest drugstore chains in the United States, CVS Health operates a substantial pharmacy benefit management business that provides prescription drug coverage for major clients such as insurers and employers. Additionally, the company offers health insurance through its Aetna arm. Shares of the Rhode Island-based company dropped by 11% to $60 in premarket trading, indicating concern about its ability to achieve previously stated goals of double-digit growth in earnings per share next year as noted by Leerink analyst Michael Cherny.
The company revised its adjusted earnings forecast to at least $7, down from the previous projection of at least $8.30 due to rising costs associated with care use in its Medicare Advantage business.
The reduction in guidance exceeded expectations, raising concerns about CVS Health’s ability to achieve its previously stated goal of double-digit growth in earnings per share next year.
According to FactSet, analysts predict full-year earnings of $8.27 per share.
In summary, CVS Health reported lower than expected first-quarter earnings and significantly lowered its 2024 outlook due to rising costs associated with care use in its Medicare Advantage business. This has raised concerns about its ability to achieve previously stated goals and has caused shares of the company to drop by 11%.
