On Wednesday, February 12, CVS Health published information about its earnings for the fourth quarter of 2024, which exceeded preliminary expectations, although this company still continues to face problems in its insurance business, seeing higher medical costs.
The mentioned firm’s revenue for the last three months of the past year was recorded at the $97.71 billion mark. For the same period in 2023, the corresponding figure amounted to $93.81 billion. At the same time, LSEG’s preliminary forecast stipulated that the company’s revenue for the fourth quarter of last year would be fixed at the $97.19 billion mark.
Adjusted earnings per share amounted to $1.19. The preliminary forecast of LSEG provided that this indicator would be fixed at the 93 cents mark for the mentioned period.
After the information about the company’s earnings for the fourth quarter of 2024 was published, the value of its shares showed an increase of 15% in early trading.
CVS Health predicts that its adjusted earnings per share for 2025 will range from $5.76 to $6. It is worth noting that this range of indicators corresponds to the preliminary expectations of the LSEG. At the same time, the company has not published a revenue forecast for the current year.
In this case, the first full quarter ended with David Joyner, a longtime CVS executive, as chief executive officer of the troubled retail drugstore chain. He succeeded Karen Lynch in mid-October.
The company has undergone a management reshuffle as part of a broader restructuring plan that calls for $2 billion in cost reductions over the next few years. The firm faced increased costs in its Aetna insurance unit and retail pharmacy business, which were under pressure from factors such as softer consumer spending and lower reimbursements for prescription drugs.
CVS Health and other insurers such as UnitedHealth Group and Humana have recorded a spike in medical costs over the past year. The corresponding dynamic is related to the fact that more and more patients under the Medicare Advantage program are returning to hospitals for procedures. The relevant procedures were delayed by many during the coronavirus pandemic.
Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a kind of growth and profit driver for insurers. At the same time, concerns are circulating among investors about the excessive costs associated with these plans. It is worth noting that the corresponding program covers more than half of all Medicare beneficiaries.
The company’s net income for the fourth quarter of 2024 was recorded at the $1.64 billion mark. For the same period in 2023, this figure amounted to $2.05 billion.
CVS Health said its earnings for the fourth quarter of 2024 reflect higher medical costs in its insurance business and lower Medicare Advantage star ratings for the past payment year.
David Joyner said the company’s integrated model allows it to uniquely deliver a simpler, connected experience that saves time, saves money, and improves health. He also stated that the firm has continued to see growth in the main areas of its business, including the Pharmacy and Consumer Wellness segment.
As we have reported earlier, Qualcomm Tops Estimates for Earnings.
