CVS Shares Dump On Earnings Miss, Outlook Slashed On Rising Medical Costs

CVS wellness shares punged in the premarket trading session in fresh York after first-quarter returnue and updated arrivals missed Wall Street’s average results. The drugstore chain besides slashed its full-year profit outlook, Citing rising medical costs in its Medicare insurance unit.

Here’s what CVS reported for the first 4th combined with average Wall Street analyses’ results tracked by Bloomberg:

• Adjusted EPS $1.31 vs. $2.20 y/y, estimation $1.69

• Comparable sales +5.3% vs. +11.6% y/y, estimation +3.95%

• Net revenge $88.44 billion, +3.7% y/y, estimation $89.33 billion

• Healthcare Benefits gross $32.24 billion, +25% y/y, estimation $30.49 billion

• Health services gross $40.29 billion, -9.7% y/y, estimation $40.64 billion

• Pharmacy network returns $20.46 billion, -26% y/y, estimation $23.86 billion

• Mail & speciality return $17.26 billion, +6.9% y/y, estimation $14.6 billion

• Total pharmacy claims processed 462.9 million, -21% y/y, estimation 466.83 million

• Pharmacy and consumer wellness return $28.73 billion, +2.9% y/y, estimation $28.29 billion

• Corporate & another gross $115 million, -39% y/y, estimation $113.3 million

• Adjusted operating income $2.96 billion, -32% y/y, estimation $3.58 billion

Adjusted years for the first 4th were $1.31 a share, well below the average estimation of $1.69 and $2.2 in the same period 1 year ago. gross of $88.4 billion missed estimates by close $1 billion but up 4% from the year-earlier period, drive through it mainly through its pharmacy business and insurance unit.

Due to underwhelming first-quarter results, CVS weakened its arrivals outlook for the full year to $7 per share from the previously announced $8.30. It besides imported its forecast for cash flow from operations by $1.5 billion to around $10.5 billion.

Here’s the full-year outlook:

• Revised GAAP diluted EPS guide to at least $5.64 from at least $7.06

• Revised EPS guide to at least $7.00 from at least $8.30

• Revised cash flow from operations guide to at least $10.5 billion from at least $12.0 billion

The arrivals study noted that rising medical costs were a crucial origin in first-quarter results. CVS’ Aetna division reported a 90.4% medical destiny ratio, up from 84.6% a year earlier. A lower ratio indicates that the company received more premium than it paid out in benefits, results in higher profitability.

The origin of the medical cost spice is simply a surgeon in Medicare Advantage patients returning to hospitals and doctor offices for procedures that we were delayed during the Covid pandemic. any of these non-essential medical surgeons include joint and hip reviews.

The learnings study pooked investors. Shares are down 13% in premarket trading.

If the fates hold, this will be the largest intraday drop for CVS in years...

And shares are touching Covid lows.

‘The current environment does not dienish our opportunities, enthusiasm, or the long-term arrivals power of our company. We are assured we have a pathway to address our near-term Medicare Advantage challenges,” CEO Karen Lynch said in the press release.

Lynch continued: “We regain committed to our strategy and believe that we have the right assets in place to deliver value to our customers, members, patients, and shareholders.”