In the first quarter, CVS Health reported lower-than-expected earnings and revised its 2024 outlook. The company’s shares plummeted after it revealed that rising costs from care use in its Medicare Advantage business were still a challenge. This was more than a dollar below Wall Street’s forecast.
The CEO, Karen Lynch, attributed this to a cyberattack on Change Healthcare, operated by rival UnitedHealth Group, which provides technology for submitting and processing insurance claims for various insurers. However, CVS Health had already revised its 2024 expectations earlier in the year to address rising costs in Medicare Advantage.
While the company is not facing the same pressure in its commercial insurance business, including plans sold to employers and on individual insurance exchanges, CVS Health now expects adjusted earnings for 2024 to be at least $7, compared to the previous forecast of at least $8.30. This revision was more significant than anticipated by analysts, who had predicted earnings of $8.27 per share.
In the first quarter, CVS Health’s net income dropped 48% to $1.11 billion, with adjusted earnings of $1.31 per share on total revenue of $88.4 billion. Analysts had anticipated earnings of $1.69 per share on $89.33 billion in revenue for the quarter. The company operates a large drugstore chain and pharmacy benefit management business as well as providing health insurance through Aetna to over 26 million individuals