CVS Health is intensifying its cost-cutting efforts with a new $2 billion initiative, adding to a previous plan to reduce costs by hundreds of millions.
CVS is planning a multiyear program aimed at saving $2 billion by leveraging AI, automation, and streamlining operations, according to company presentation materials cited by Bloomberg reported prior to CVS' scheduled earnings call Aug. 7.
The Woonsocket, R.I.-based company announced the additional belt-tightening measures Aug. 7 alongside its second quarter earnings, which included another downward revision to its annual outlook — the second in 2024. CVS now forecasts annual adjusted earnings of $6.40 to $6.65 per share, down from at least $7 per share. Cash flow from operations is projected to be around $9 billion, a decrease from the previous estimate of at least $10.5 billion.
The company reported total quarterly revenue of $91.2 billion, up 2.6% from a year ago, driven by growth in its Medicare and commercial insurance sectors. However, increased medical costs and utilization offset much of this gain, resulting in adjusted earnings per share of $1.83 — down 17.2% from the year prior. Its adjusted operating income decreased 16.4% year-over-year to $3.7 billion, primarily due to challenges in the Health Care Benefits and Pharmacy & Consumer Wellness segments.
The $2 billion cost-cutting plan follows last year's initiative to cut up to $800 million in costs, which involved the elimination of 5,000 "non-customer facing positions" and the use of AI.