CVS Shares Pop 15% on Big Earnings Beat, even as high medical costs drag down insurance unit

Cvs health On Wednsday Reported Fourth-Quarter Revenue and Profit that Topped Estimates, even as it Troubled Insurance Business Continued to see Higher Medical Costs.

The company also issued a full-year 2025 adjusted earnings outlook of $ 5.75 to $ 6 per share, which was in line with wall street’s expectations. But cvs did not provide a revenue forecast for the year.

It caps off the first full Quarter with David joynerA longtime cvs executive, as ceo of the Troubled retail drugstore chain. Joyner successed karen lynch in mid-suber, as cvs struggled to drive higher rights and improve its stock performance.

The company underwent a management resuffle as part of a broader turning plan that incines $ 2 billion in cost Cuts over the next Several Years. CVS has grappled with rising costs in its insurance unit, aetna, and a retail pharmacy business pressure pressured by softer consumer spending and lower reimbursments for prescription DRGS.

Here’s what cvs reported for the fourth quarter compared with what wall street was expecting, based on a survey of analysts by lseg:

• Earnings per share: $ 1.19 per share adjusted vs. 93 cents per share expected
• Revenue: $ 97.71 billion vs. $ 97.19 billion expected

The company’s shares closed 15% higher on wedding.

Cvs and other insurers such as UnitedHealth Group and Humana Have seen medical costs spike over the last year

Medicare Advantage, A Privately Run Health Insurance Plan Contracked by Medicare, Has Long Been a Driver of Growth and Profits for Insurers. But investors have become concurned about the run -the -plans, which covers more than half of all medicine.

CVS Booked Sels of $ 97.71 billion for the fourth quality, up 4.2% from the same period a year ago due to growth in its Pharmacy business and insurance unit.

The company posted net income of $ 1.64 billion, or $ 1.30 per share, for the fourth Quarter. That compares with network of $ 2.05 billion, or $ 1.58 per share, for the year-earlier period.

EXCLUDING CERTAIN Items, Such as Amortization of Intangible Assets, Restructuring Charges and Capital Losses, Adjusted Earnings Were $ 1.19 per share for the Quarter.

Cvs Said Its Fourth-Quarter Earnings Reflect Higher Medical Costs in Its Insurance Business and Lower Medicare Advantage Star Rating for the 2024 Payment Year, BOTH OF The Quarter. Thos star ratings help medicine patients compare the quality of medicine health and drug plans.

But Cvs Expects to Improve Margins in Its Medicare Advantage Business in 2025, Partly by Shrinking Its Membership in that plans by a “High Single-Digit Percentage” From the End of 2024, Call on Wednsday. He added that the company has improved medicine advantage star ratings for the year.

“Our focus remains on deliverying on our commitments to our medicine advantage members while creating a viable path to approprite margins,” Joyner said.

Companies can Decide to Stop Covering Patients in Markets that they determine are unprofitable, and patients who lose insuction can enroll in a new medicine or advantage plan or join tradational

The Insurance Unit’s Medical Benefit Ratio – A Measure of Total Medical Expenses Paid Relative to Premiums Colleted – Increased to 94.8% from 88.5% a year earlier. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher Profitability.

The fourth -Quarter ratio was lower than the 95.9% that analysts was expecting, streetaccount estimates said.

“Medical trends remain elevated, although what we experienced in the fourth Quarter was lesse seeds

CVS ‘Health Services Segment Zenrated $ 47.02 Billion in Revenue For The Quarter, Down more than 4% compared with the same Quarter in 2023. Analysts expected the unit to post $ 44.06 billion in Ording to Streetaccount.

That Unit Includes Caremark, One of the Nation’s Larget Pharmacy Benefit Manners. Caremark Negotiates Drug Discounts With Manufacturers on Behalf of Insurance Plans and Creates Lists of Medications, Or forms, that are covered by insurance and reimburses.

CVS ‘Health Services Division Processed 499.4 Million Pharmacy Claims during the Quarter, Down From 600.8 Million during the year -go period due to the loss of an unnamed worker client. Tyson foods Told CNBC in January 2024 That It dropped cvs As the pharmacy benefit manager for its roughly 140,000 employers, but it is unchary if any other companies stopped work with cvs during the year, as well.

CVS ‘Pharmacy and Consumer Wellness Division Booked $ 33.51 Billion in Sales for the Fourth Quarter, Up more than 7% from the same period a year earlier. Analysts Expected Sales of $ 33.03 Billion for the Quarter, Streetaccount Said.

That unit dispenses prescriptions in cvs’ more than 9,000 retail pharmacies and provides other pharmacy services, such as vaccinations and diagnostic testing.

The Increase was partly Driven by Higher Prescription Volume, Cvs Said. Pharmacy reimbursment pressure, the launch of new general drugs and lower volume from from Front-up-Store Items Like Pantry Food and Toiletries, toiletries, Including from Decreaced store counte, weling