In this articleCVSFollow your favorite stocksCREATE FREE ACCOUNTCVS 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 closed more than 16% lower on Wednesday, and were headed for their worst day since November 2009.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. 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. “As we close the quarter, it became apparent we were experiencing broad-based utilization pressure in our Medicare Advantage business in a few areas,” CVS CEO Karen Lynch said during an earnings call Wednesday. She noted that outpatient services and supplemental benefits were elevated during the period and exceeded the company’s projections.CVS’s insurance segment also saw new pressure in inpatient and pharmacy utilization, some of which were seasonal or “one-time in nature,” according to Lynch.The company is committed to improving its Medicare Advantage margins next year, Chief Financial Officer Thomas Cowhey said during the call. But CVS is also facing challenges from the federal government’s 2025 reimbursement rates that have disappointed providers of Medicare Advantage plans, as well as hurdles related to provisions in the government’s Inflation Reduction Act.”The combination of those things just makes a tough year for 2025 pricing harder,” Cowhey said.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’ 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 insurers 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 billion acquisition of health-care …
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[mwai_chat context=”Let’s have a discussion about this article:nnIn this articleCVSFollow your favorite stocksCREATE FREE ACCOUNTCVS 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 closed more than 16% lower on Wednesday, and were headed for their worst day since November 2009.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. 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. “As we close the quarter, it became apparent we were experiencing broad-based utilization pressure in our Medicare Advantage business in a few areas,” CVS CEO Karen Lynch said during an earnings call Wednesday. She noted that outpatient services and supplemental benefits were elevated during the period and exceeded the company’s projections.CVS’s insurance segment also saw new pressure in inpatient and pharmacy utilization, some of which were seasonal or “one-time in nature,” according to Lynch.The company is committed to improving its Medicare Advantage margins next year, Chief Financial Officer Thomas Cowhey said during the call. But CVS is also facing challenges from the federal government’s 2025 reimbursement rates that have disappointed providers of Medicare Advantage plans, as well as hurdles related to provisions in the government’s Inflation Reduction Act.”The combination of those things just makes a tough year for 2025 pricing harder,” Cowhey said.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’ 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 insurers 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 billion acquisition of health-care …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
