CVS Health's Q4 Earnings Relieve Investor Concerns But Lowers 2024 Profit Guidance Citing Elevated Medical Cost Trends

On Wednesday, CVS Health Corp CVS reported fourth-quarter adjusted EPS of $2.12, beating the consensus of $1.99, up from $2.04 a year ago.

Highlighting investors’ concerns about rising healthcare costs for insurers, Bloomberg noted that the worst was feared for CVS Health, like its peers Humana Inc HUM and UnitedHealth Group Inc UNH.

CVS’s recent results indicate that its insurance unit effectively handled the escalating costs, contributing to positive quarterly performance.

The pharmacy chain reported sales of $93.81 billion, up 11.9% Y/Y, beating the consensus of $90.36 billion.

Health Care Benefits segment, the company’s insurance unit, reported sales of $26.73 billion, up 16.1%.

The medical benefit ratio was 88.5% in the fourth quarter, up from 85.8% a year ago.

Total Medical Membership increased by 5.2% to 25.7 million, reflecting broad-based growth in Individual Exchange, Medicare, and Commercial products.

Guidance: CVS Health revised its fiscal year 2024 adjusted EPS guidance to at least $8.30 from earlier guidance of at least $8.50 versus the consensus of $8.47, reflecting the impact of higher-than-expected Medicare Advantage utilization observed at the end of 2023.

The company forecasts fiscal year 2024 sales of at least $371.3 billion, up from at least $366.0 billion expected earlier versus consensus of $362.99 billion.

Cash flow from operations will be at least $12 billion, down from an earlier outlook of at least $12.5 billion.

The company expects sales of at least $125.1 billion for the Healthcare Benefit segment, compared to at least $119.8 billion expected earlier, and a Medical Benefits Ratio of ~87.7% versus ~87.2% (prior). Sees Total Medical Membership of ~26.9 million.

Also Read: CVS Health Adapts to Market Shifts With Pharmacy Shutdowns Within Target Stores.

Price Action: CVS shares are up 3.17% at $76.10 on the last check Wednesday.

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