CVS Health stock tumbles as earnings, guidance miss expectations

CVS Health (NYSE:) reported a decline in first-quarter profits and slashed its full-year earnings outlook, sending shares down more than 11% premarket as both earnings and revenue fell short of Wall Street expectations. The healthcare giant posted adjusted earnings per share (EPS) of $1.33 for the quarter, which was significantly below the analysts’ consensus of $1.71. Revenue for the quarter was $88.4 billion, also missing the consensus estimate of $89.33 billion.

The company’s first-quarter revenue saw a 3.7% increase compared to the same period last year, driven by growth in the Health Care Benefits and Pharmacy & Consumer Wellness segments. However, this was partially offset by a decline in the Health Services segment. Despite the revenue growth, CVS Health’s adjusted EPS of $1.31 represented a substantial decrease from $2.20 in the prior year, primarily due to a decline in the Health Care Benefits segment’s operating results, which faced utilization pressure in the company’s Medicare business.

CVS Health’s President and CEO, Karen S. Lynch, commented on the results, stating, “The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company. We are confident we have a pathway to address our near-term Medicare Advantage challenges.” She emphasized the company’s commitment to its strategy and belief in its assets to deliver value despite near-term pressures.

Looking ahead, CVS Health has revised its full-year 2024 guidance, now expecting a minimum adjusted EPS of $7.00, which is below the previous analysts’ consensus of $8.28. This revision reflects the company’s expectation that the utilization pressure observed in the Health Care Benefits segment during the first quarter will continue throughout the year.

The stock’s significant drop following the earnings release indicates investor concerns over the company’s revised earnings forecast and current quarter performance. CVS Health’s guidance adjustment and the first-quarter results have set a cautious tone for the company’s financial outlook for the remainder of the year.