CVS forecasts 2024 revenue above estimates on health services demand
(Reuters) -CVS Health on Tuesday forecast 2024 revenue above Wall Street estimates as the company expects to benefit from its expansion into healthcare services and strength in its insurance business.
Shares of the U.S. healthcare conglomerate rose nearly 3% in premarket trading.
The company will bring its portfolio of health services such as doctors clinics and pharmacies under an umbrella brand called CVS Healthspire.
The rebranding will encompass businesses the company built over the last few years such as the biosimilar unit, Cordavis, launched in August and recently acquired healthcare services firms Signify Health and Oak Street Health.
CVS also launched a new pharmacy reimbursement model called CVS CostVantage. It will use a transparent formula with a fixed markup and fees to define drug cost and related reimbursement with contracted insurers and pharmacy benefit managers (PBMs), the company said.
The announcement comes as PBMs like CVS' Caremark, which work as middlemen between insurers and drugmakers, have come under heightened scrutiny over their role in surging healthcare costs in the U.S. The Federal Trade Commission is also investigating their practices.
CVS on Tuesday forecast revenue of at least $366 billion, ahead of analysts' average estimate of $345.81 billion, according to LSEG data.
The company, which last month tempered its 2024 profit forecast, said it was counting on CostVantage, better margins under its government-supported Medicare Advantage insurance plans for older adults and other healthcare services to boost its earnings.
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