In this articleCVSFollow your favorite stocksCREATE FREE ACCOUNTA person walks by a CVS Pharmacy store in Manhattan, New York, on Nov. 15, 2021.Andrew Kelly | ReutersCVS Health on Wednesday reported first-quarter revenue and adjusted earnings that missed expectations and slashed its full-year profit outlook, citing higher medical costs that are dogging the U.S. insurance industry.Shares of the company dropped 10% in premarket trading.The drugstore chain expects 2024 adjusted earnings of at least $7 per share, down from a previous guidance of at least $8.30 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $8.28 per share. CVS also cut its unadjusted earnings guidance to at least $5.64 per share, down from at least $7.06 per share. The company said its new outlook assumes that higher medical costs in its insurance business during the first quarter will persist throughout the year. CVS owns health insurer Aetna. Still, CVS CEO Karen Lynch said in a statement that the “the current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company.” The company is confident “we have a pathway to address our near-term Medicare Advantage challenges,” she added.Insurers such as Humana and UnitedHealth Group have seen medical costs spike as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic, such as joint and hip replacements. Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a key source of growth and profits for the insurance industry. But investors have become more concerned about the runaway costs associated with those plans, which cover more than half of all Medicare beneficiaries. Here’s what CVS reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: $1.31 adjusted vs. $1.69 expectedRevenue: $88.44 billion vs. $89.21 billion expectedCVS reported net income of $1.12 billion, or 88 cents per share, for the first quarter. That compares with net income of $2.14 billion, or $1.65 per share, for the same period a year ago. Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $1.31 for the quarter.CVS booked sales of $88.44 billion for the quarter, up nearly 4% from the year-earlier period. That increase was driven by its pharmacy business and insurance unit. Meanwhile, CVS said sales in its health services segment, which includes the pharmacy benefit manager Caremark, declined during the period. That was mainly due to the loss of a large unnamed client, the company noted. In January, Tyson Foods said it had dropped CVS’s Caremark and instead chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting this year. That came months after Blue Shield of California, one of the largest in the nation’s most populous state, also dropped Caremark and instead partnered with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs company. Those decisions add to an upheaval in the health-care industry, as startups promising lower costs and transparency challenge the largest PBMs and pressure them to change their own business models. The first-quarter results come as CVS pushes to transform from a major drugstore chain into a large health-care company. CVS deepened that push over the last year with its nearly $8 bill …
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[mwai_chat context=”Let’s have a discussion about this article:nnIn this articleCVSFollow your favorite stocksCREATE FREE ACCOUNTA person walks by a CVS Pharmacy store in Manhattan, New York, on Nov. 15, 2021.Andrew Kelly | ReutersCVS Health on Wednesday reported first-quarter revenue and adjusted earnings that missed expectations and slashed its full-year profit outlook, citing higher medical costs that are dogging the U.S. insurance industry.Shares of the company dropped 10% in premarket trading.The drugstore chain expects 2024 adjusted earnings of at least $7 per share, down from a previous guidance of at least $8.30 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $8.28 per share. CVS also cut its unadjusted earnings guidance to at least $5.64 per share, down from at least $7.06 per share. The company said its new outlook assumes that higher medical costs in its insurance business during the first quarter will persist throughout the year. CVS owns health insurer Aetna. Still, CVS CEO Karen Lynch said in a statement that the “the current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company.” The company is confident “we have a pathway to address our near-term Medicare Advantage challenges,” she added.Insurers such as Humana and UnitedHealth Group have seen medical costs spike as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic, such as joint and hip replacements. Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a key source of growth and profits for the insurance industry. But investors have become more concerned about the runaway costs associated with those plans, which cover more than half of all Medicare beneficiaries. Here’s what CVS reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: $1.31 adjusted vs. $1.69 expectedRevenue: $88.44 billion vs. $89.21 billion expectedCVS reported net income of $1.12 billion, or 88 cents per share, for the first quarter. That compares with net income of $2.14 billion, or $1.65 per share, for the same period a year ago. Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $1.31 for the quarter.CVS booked sales of $88.44 billion for the quarter, up nearly 4% from the year-earlier period. That increase was driven by its pharmacy business and insurance unit. Meanwhile, CVS said sales in its health services segment, which includes the pharmacy benefit manager Caremark, declined during the period. That was mainly due to the loss of a large unnamed client, the company noted. In January, Tyson Foods said it had dropped CVS’s Caremark and instead chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting this year. That came months after Blue Shield of California, one of the largest in the nation’s most populous state, also dropped Caremark and instead partnered with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs company. Those decisions add to an upheaval in the health-care industry, as startups promising lower costs and transparency challenge the largest PBMs and pressure them to change their own business models. The first-quarter results come as CVS pushes to transform from a major drugstore chain into a large health-care company. CVS deepened that push over the last year with its nearly $8 bill …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
