CVS Health books strong 3Q but the health care giant preaches caution on next year
CVS Health beat third-quarter forecasts thanks partially to its growing pharmacy benefits management side, but the health care giant is cautious about next year
CVS Health beat third-quarter forecasts thanks partially to its growing pharmacy benefits management side, but the health care giant is cautious about next year.
Interim Chief Financial Officer Tom Cowhey told analysts Wednesday that it would be “prudent for investors to ground their expectations” for adjusted earnings at the low end of a range of $8.50 to $8.70 per share. That's also what the company expects for full-year earnings this year.
CVS Health operates one of the nation’s largest drugstore chains with more than 9,000 locations. It runs prescription drug plans for big clients like insurers and employers through a large pharmacy benefit management business.
It also provides health insurance for more than 25 million people through its Aetna arm.
Company leaders often give some initial thoughts on what they expect in the next year during third-quarter earnings calls. Cowhey said CVS Health should see growth from its core business in 2024 and reap savings from a previously announced cost-cutting program.
But a decline in ratings for its Medicare Advantage health insurance plans will hurt that business, which also will continue to see rising care use.
Medicare Advantage plans are privately run versions of the federal government's Medicare program mostly for people age 65 and older. More seniors appear to be getting surgeries and other health care procedures now that the COVID-19 pandemic has faded, Edward Jones analyst John Boylan said in a research note.
Other insurers like UnitedHealthcare started highlighting that trend earlier this year.
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