CVS Health On Wednesday, the fourth quarter reported revenue and benefits, which topped the estimates, even its troubled insurance business continued to look at high medical costs.
The company also released an adjusted income outlook of $ 5.75 to $ 6 per share in 2025 throughout the year, in line with Wall Street’s expectations. But CVS did not provide revenue forecast for the year.
It closes with the first full quarter David jionarFor a long time CVS executive, as the CEO of the troubled retail drug store. Jayner made Karen Lynch successful in mid -October, as CVS struggled to run high profits and improve its stock performance.
The company reshuffled a management as part of a comprehensive turnaround scheme $ 2 billion cost Cut in the next several years. The CVS has put pressure on its insurance unit, AETNA, and a retail pharmacy business with a low reimbursement for soft consumer expenses and prescription drugs with rising costs.
Based on a survey of analysts by LSEG, what CVS expected for the fourth quarter compared to Wall Street:
- earnings per share: $ 1.19 per share adjusted vs. 93 cents per share
- Income: $ 97.71 billion vs $ 97.19 billion is expected
The stocks increased by more than 6% in premarket trading.
Such as CVS and other insurers United health group And Humana Has seen medical costs compared to the previous year as more medicare benefits return to hospitals for patients that they delayed during epidemic.
A private health insurance scheme contracted by Medicare Advantage, Medicare has been the driver of development and profits for long -term insurers. But investors have become concerned about the costs of fugitives bound by those schemes, which cover more than half of the medicines beneficiaries.
CVS booked a $ 97.19 billion sales for the fourth quarter, which is 4.2% more than the same period a year ago, which was due to an increase in the pharmacy business and insurance unit.
The company posted a net income of $ 1.64 billion, or $ 1.30 per share for the fourth quarter. It compares with a net income of $ 2.05 billion for the year-east period, or $ 1.58 per share.
Except for some items, such as a refinement of abstract property, restructuring fee and capital loss, $ 1.19 per share for the adjusted income quarter.
The CVS stated that its fourth quarter earnings reflect high medical costs and low Medicare Advantage Star Rating in their insurance business for 2024 payment year, both weighed over the operating results of the segment for the quarter. They help Star Rating Medicare patients compare the quality of Medicare Health and Pharmaceutical Schemes.
Pressure on insurance unit
All three business segments of CVS defeated Wall Street’s expectations for the fourth quarter.
According to Strikount estimates, the CVS insurance business recorded a revenue of $ 32.96 billion during the quarter, which was more than 23% from the fourth quarter of 2023. Analysts expected the unit to rake at $ 32.89 billion for this period.
But the business reported adjusted operating loss of $ 439 million for the fourth quarter, while compared to the adjusted operating income of $ 676 million in the year-time period. The change was operated by high medical costs and the company’s Medicare Advantage Star Rating among other factors.
Medical benefit ratio of insurance unit – A measure of total medical expenses relative to the premium collected – increased from 88.5% to 94.8% a year ago. A low ratio usually indicates that a company collected more in the premium, as it was paid in profit, resulting in high profitability.
Strikount estimates stated that the fourth quarter ratio was less than 95.9%.
According to the Strikent, the CVS’s Health Services Segment generated a revenue of $ 47.02 billion for this quarter in 2023, compared to this quarter, which was more than 4% compared to 4% compared to the same quarter in 2023 compared to the same quarter in 2023. .
The unit includes Caremark, one of the country’s largest pharmacy profit managers. Cayermark interacts with manufacturers on drug discounts on behalf of insurance plans and makes a list of drugs, or formulaies, who reimburse pharmacies for insurance and prescription.
CVS’s Health Services Division processed claims of 499.4 million pharmacy during the quarter, which was below 600.8 million during the year ago period due to loss of an anonymous large customer. Tyson foods Told CNBC in January 2024 that It dropped CVS For about 140,000 employees as the pharmacy profit manager, but it is not clear that any other companies stopped working with CVS during the year, as well as.
CVS’s pharmacy and consumer wellness division booked $ 33.51 billion in sales for the fourth quarter, more than 7% from the same period a year ago. The Strikunt said analysts expected to sell $ 33.03 billion for the quarter.
The unit distributes prescriptions to more than 9,000 retail pharmacies of CVS and provides other pharmacy services, such as vaccination and clinical trials.
The CVS stated that the growth was partially inspired by the amount of high prescription. Pharmacy reimbursement pressure, new generic drug launch and pantry food and toiletries such as front-off-store items were weighed in less quantity, from low store count, unit.
