Home News CVS beats estimates, but cuts full-year profit outlook due to higher medical costs

CVS beats estimates, but cuts full-year profit outlook due to higher medical costs

by SuperiorInvest

Key takeaways

  • CVS reported fourth-quarter earnings of $2.12 per share, up 4% from a year ago and above Wall Street estimates.
  • The company reduced its guidance for 2024 due to an increase in insurance payments.
  • Americans are taking advantage of the post-Covid quiet in hospitals to undergo elective procedures, a trend CVS expects to continue.

Shares of CVS Healthcare (CVS) gained ground Wednesday after the company reported better-than-expected earnings but lowered its 2024 guidance due to an increase in insurance payments.

Adjusted earnings of $2.12 per share were 4% higher than a year ago and beat Wall Street estimates. Revenue grew 11.9% year over year to $93.8 billion.

However, health insurance groups are seeing an increase in payments to policyholders as more Americans use medical facilities after pandemic restrictions were lifted. CVS said its medical benefit rate rose 2.7 percentage points from a year earlier, to 88.5% in the fourth quarter.

The company provided 2024 earnings per share guidance of $8.30 per share, down from a previous forecast of $8.50 per share. Cash flow is expected to be between $12 billion and $12.5 billion.

CVS said rising medical costs were expected to continue, noting that “the guidance revision follows a review of its recently completed medical cost trend analysis for the fourth quarter of 2023 and potential implications for the trends.” high medical costs in 2024″.

CVS shares rose 1.9% to $75.17 around 2:00 p.m. ET on Wednesday. The stock has lost about 13% over the past year.

Source Link

Related Posts