CVS Health has revised its 2024 forecast downwards for the third time due to ongoing challenges in its health insurance division. The company’s Executive Vice President of the segment, Brian Kane, has departed, with CEO Karen Lynch assuming the role. In the last quarter, CVS Health saw a 39% decrease in adjusted operating income from the health insurance segment, amounting to $938 million, impacting the company’s overall profitability. The company attributes this decline to increased claims in the Medicare Advantage business and a decline in quality ratings, affecting government funding for these plans.
Additionally, CVS Health faced heightened expenses from individuals covered by the Medicaid program. Overall, the company’s profit declined by over 7%, reaching $1.77 billion for the quarter. While CVS Health reported adjusted earnings of $1.83 per share on $91.2 billion in revenue – slightly below analysts’ expectations of $1.73 per share on $91.41 billion in revenue – it now anticipates adjusted earnings per share for the year to range between $6.40 and $6.65, a reduction from the previous minimum expectation of $7 per share.
Financial analysts had projected earnings per share of $6.96, as indicated by FactSet. CVS Health Corporation operates a vast drugstore chain and pharmacy benefit management business that manages prescription drug coverage for significant clients such as insurers and employers, along with providing health insurance to over 26 million individuals through its Aetna arm. CVS Health’s stock price declined by 2% to $56.99 in premarket trading. The company’s shares have already depreciated by 25% this year, whereas the Standard & Poor’s 500 index has increased by approximately 10%.
