By Sriparna Roy
(Reuters) – CVS Health Investors will closely examine this week’s recovery initiatives, the management of the new CEO David Joyner and their impact on cost pressure in his health insurance activity.
The health care conglomerate, which reports its fourth quarter results on Wednesday, missed profuses for the last three quarters and withdrew its annual forecasts, which caused its shares in 2024 more than 40%.
“Unfortunately for CVS, we believe that each sector of activity has gradually become more difficult,” said George Hill George Hill, Deutsche Bank analyst.
CVS has a pharmacy service manager, a large insurance unit and one of the largest retail pharmacy chains in the United States.
The challenges with higher costs will probably continue and accelerate, said Leerink Partners Michael Cherny analyst.
CVS, like its peers, has faced high costs in its Medicare plans for people aged 65 and over, but the blow was more pronounced because the company has scored the greatest number of new members within the framework of Plans.
He pointed out a medical loss ratio – a percentage of premiums spent on medical care – at a record level of 95.2% in October, as a reddetermination of MEDICAIDI admissibility by states after the end of a policy From the pandemic period added to the costs of insurers.
But investors are now hoping for a change.
CVS, which has undergone a reshuffle of management since the appointment of Joyner in October, established major costs of cost reduction in November.
Management credibility
Investors are strongly awaiting the forecasts of 2025 and ensures comments on the trends in health care demand, the adjustments of Medicaid rates as well as the annual performance of registration and pharmacy companies.
In recent years, CVS has reduced its annual forecasts on several occasions after having issued too optimistic objectives, which have damaged the credibility of its management and Nui to its actions, said James Harlow, Vice-President Director of Novare Capital Management .
Analysts expect an average of $ 5.96 per share, according to data compiled by LSEG.
The Unitedhealth and Elevance peers warned of high costs to persist in 2025.
“I do not think the bar is so high, but people just want to see that it is not worse than what they were initially expected,” said Jefferies analyst Brian Tanquilut.
(Report by Sriparna Roy in Bengaluru; edition by Shinjini Ganguli)
