UPDATE: This article has been updated with recent stock price information.
Key Takeaways
- CVS shares tumbled Wednesday following the release of first-quarter results that missed analysts’ expectations.
- The retail pharmacy giant also lowered its full-year guidance for earnings per share.
- Profits were hit as health care costs rose and CVS said Medicare utilization increased.
- CVS has struggled with having to pay out more to policyholders of its health insurance businesses as many people underwent procedures they may have delayed during the pandemic.
CVS Health (CVS) shares plunged Wednesday after the retail pharmacy giant posted first-quarter results that missed analysts’ estimates and lowered its guidance for the full year.
The stock was down 18% at $55.48 at around 2:20 p.m. ET Wednesday, after falling as low as $54.00 early in the session. The stock is trading at a four-year low.
Revenue, Earnings Miss
CVS reported first-quarter revenue of $88.44 billion, up 3.7% from a year earlier, but below the $89.33 billion analysts expected, according to estimates compiled by Visible Alpha. Net income and diluted earnings per share (EPS) declined from the year-ago period and also missed estimates, with CVS reporting $1.12 billion in profit or 88 cents per share, down from $2.14 billion or $1.65 per share a year ago.
Rising Health Care Costs
Profits were hit as CVS struggled with a rise in Medicare utilization, as well as the impact of a decline in the company’s Medicare Advantage star rating. CVS saw health care costs increase to $27.8 billion in the first quarter, compared to $20.45 billion in the first quarter of 2023.
In its fourth-quarter earnings report earlier this year, CVS said its health care segment was being impacted by having to pay out more to policyholders, as many underwent procedures they may have delayed during the COVID-19 pandemic.
CVS Lowers Full-Year Guidance
The company lowered its projected full-year EPS to at least $5.64, down from at least $7.06 previously.
“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,” CEO Karen Lynch said in a release.