CVS Chops 2024 Forecast As Costs Of Its Care Business Soar

CVS Health missed first-quarter expectations and chopped its 2024 outlook more than a dollar below Wall Street’s forecast.

CVS Health said it now expects adjusted earnings for 2024 to be at least $7, down its previous forecast of at least $8.30. I Photo: hattiesburgmemory

Shares of the healthcare giant plunged Wednesday morning after the company said it was still struggling with rising costs from care use in its Medicare Advantage business, Tom Murphy reported for the Associated Press (AP).

Company leaders told analysts they were still dealing with the rising use of outpatient care and supplemental benefits.

The company also saw some new pressure from inpatient care.

CEO Karen Lynch said the company’s visibility into trends during the quarter was impaired by the cyberattack on Change Healthcare, which is operated by rival UnitedHealth Group.

Change provides technology used to submit and process insurance claims for several insurers.

CVS Health said it now expects adjusted earnings for 2024 to be at least $7, down from its previous forecast of at least $8.30. Analysts had been forecasting earnings of $8.27 per share, according to FactSet.

The guidance reduction was much more significant than expected, according to Leerink analyst Michael Cherny.

He said in a research note that it raises questions about the company’s path to reaching its previously stated goal of double-digit growth in earnings per share next year. In the first quarter, CVS Health’s net income plunged 48% to $1.11 billion.

It booked adjusted earnings of $1.31 per share on total revenue of $88.4 billion.