CVS Health cut its earnings guidance for 2024 based on rising medical costs.
CVS Health reported $1.1 billion in net income in the first quarter of 2024, according to its latest earnings documents, published May 1. The results were below investors' expectations, The Wall Street Journal reported.
The healthcare giant revised its 2024 earnings per-share guidance to at least $5.64 from at least $7.06. This is the second time CVS has cut its earnings guidance this year based on rising medical cost trends, especially among the Medicare Advantage population.
"The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company," CVS CEO Karen Lynch said. "We are confident we have a pathway to address our near-term Medicare Advantage challenges."
CVS Health
Total revenues in the first quarter were $88.4 billion, a 3.7% increase year over year.
Operating income in the first quarter was $2.3 billion, down from $3.4 billion last year.
Net income was $1.1 billion in the first quarter, down from $2.1 billion year over year.
Healthcare benefits segment (Aetna)
Total revenues in the first quarter were $32.2 billion, up 25% year over year.
The medical benefit ratio was 90.4% in the first quarter, compared to 84.6% during the same period last year. The increase was partly driven by increased Medicare Advantage utilization, according to the earnings report.
Medical membership as of March 31 was 26.8 million, an increase of 1.3 million members since the same time last year. CVS added members in its Medicare and commercial business, which were partially offset by losses of Medicaid members due to redeterminations.
At the end of the first quarter, Aetna had 18.8 million commercial members, 4.2 million Medicare Advantage members, 1.3 million supplement members, 2 million Medicaid members and 4.9 million Medicare Part D plan members.
Health services segment (formerly pharmacy services)
Total revenues in the first quarter were $40.3 billion, down 9.7% year over year.
Adjusted operating income was $1.4 billion in the first quarter, down 18.9% year over year. According to the earnings report, the decrease was due to the loss of its pharmaceutical benefit contract with Centene and pharmacy client price improvements. The decreases were partially offset by specialty pharmacy growth and the acquisitions of Oak Street Health and Signify Health, the company said.
Total pharmacy claims processed decreased 21.2% on a 30-day equivalent basis. The decrease was driven by the loss of the Centene contract, CVS said.
Pharmacy and consumer wellness segment (formerly retail)
Total revenues in the first quarter were $28.7 billion, up 2.9% year over year.
Adjusted operating income was $1.2 billion, up 3.8% since the same period last year. The increase was primarily due to increased prescription volume.
Prescriptions filled on a 30-day equivalent basis increased 3.2% year over year to 417.6 million.