CVS health On Wednesday, revenues and profits reported the fourth quarter which exceeded estimates, even if its insurance activity in difficulty continued to see higher medical costs.
The company also issued profit prospects adjusted in 2025 from the year to year all year round from $ 5.75 to $ 6 per share, which was in line with Wall Street expectations. But CVS did not provide income forecasts for the year.
It ends the first full quarter with David Joyner, a long -standing framework of CVS, as CEO of the pharmacy chain in difficulty in difficulty. Joyner succeeded Karen Lynch in mid-October, when CVS had trouble generating higher profits and improving her performance in stock.
The company has undergone a management reshuffle within the framework of a broader recovery plan which includes $ 2 billion in costs in the coming years. CVS faced the cost increase in its insurance unit, AETNA, and a retail company forced by softer consumption expenses and reimbursements below prescription drugs.
Here is what CVS has reported for the fourth quarter compared to what Wall Street was expecting, on the basis of a survey of LSEG analysts:
- Profit by action: $ 1.19 per adjusted share vs 93 cents per expected action
- Income: $ 97.71 billion against $ 97.19 billion expected
The company’s shares increased by 15% at the start of negotiations.
CVS and other insurers such as Unitedhealth Group and Humana have seen medical costs increase in the past year, as more Medicare patients have returned to hospitals for the procedures they have delayed during the pandemic.
Medicare Advantage, a private health insurance scheme contracted by Medicare, has long been an engine of growth and profits for insurers. But investors have become concerned about the excitement costs linked to these plans, which cover more than half of all the beneficiaries of Medicare.
CVS reserved sales of $ 97.71 billion for the fourth quarter, up 4.2% compared to the same period a year ago due to the growth of his pharmacy and insurance business.
The company posted a net profit of $ 1.64 billion, or $ 1.30 per share, for the fourth quarter. This is compared to net profit of $ 2.05 billion, or $ 1.58 per share, for the annual period.
The exclusion of certain elements, such as amortization of intangible assets, restructuring costs and capital losses, the adjusted profits were $ 1.19 per share for the quarter.
CVS said that its fourth quarter profits reflect higher medical costs in its insurance company and the same lower medicare stars for the 2024 payment year, which both weighed on the operating results of the operating results segment for the quarter. These stars assessments help Medicare patients compare the quality of Medicare health and medication plans.
Pressure on the insurance unit
The three commercial segments of CVS have beaten Wall Street’s expectations for the fourth quarter.
CVS insurance activity reserved 32.96 billion dollars in revenues during the quarter, up more than 23% compared to the fourth quarter of 2023. The analysts expected the unit to take 32.89 billion dollars for the period, according to Streetaccount estimates.
But the company declared an adjusted operating loss of $ 439 million for the fourth quarter, compared to the adjusted operating income of $ 676 million during the annual period. This change has been motivated by higher medical costs and the focus of the company’s medical stars of the company, among other factors.
The ratio of medical services of the insurance unit – a measure of the total of medical expenses paid compared to the bonuses collected – increased to 94.8% against 88.5% a year earlier. A lower ratio generally indicates that a company has collected more premiums than it has paid into services, resulting in higher profitability.
The fourth quarter ratio was less than 95.9% to which analysts were waiting, said stretaccount estimates.
The CVS health services segment generated $ 47.02 billion in the quarter, down more than 4% compared to the same quarter in 2023. Analysts expected the unit 44 , $ 06 billion in sales for the period, according to Streetaccount.
This unit includes Caremark, one of the largest pharmacy services in the country. Caremark negotiates discounts on drugs with manufacturers on behalf of insurance plans and creates lists of medication, or forms, which are covered by insurance pharmacies and reimburses for prescriptions.
The CVS health services division processed 499.4 million claims in pharmacies during the quarter, against 600.8 million in the period of the previous year due to the loss of a large anonymous customer. Tyson Foods CNBC said in January 2024 that he had abandoned CVS as a pharmacy service manager for around 140,000 employees, but it is not clear if other companies have stopped working with CVS during the ‘year.
The division of the pharmacy and the well-being of CVS consumers reserved $ 33.51 billion in sales for the fourth quarter, up more than 7% compared to the same period a year earlier. Analysts expected sales of $ 33.03 billion for the quarter, Streetaccount said.
This unit distributes prescriptions in more than 9,000 retail pharmacies for CVS and provides other pharmacy services, such as vaccinations and diagnostic tests.
The increase was partly drawn by a higher prescription volume, said CVS. The pharmacy reimbursement pressure, the launch of new generic drugs and the lower volume from stores in front of stores such as pantry wounds and toiletries, including the number of stores decreased, weighed on sales of unity.
