- CVS reported fourth-quarter earnings of $2.12 per share, 4% higher than a year ago, and ahead of Wall Street estimates.
- The company lowered its guidance for 2024 due to a rise in insurance payouts.
- Americans are using the post-Covid quiet in hospitals to undergo elective procedures, which is a trend that CVS expects to continue.
CVS Healthcare (CVS) shares gained ground on Wednesday after the company reported better-than-expected earnings but lowered its 2024 guidance due to an increase in insurance payouts.
Adjusted profit of $2.12 per share was 4% higher than a year ago and was ahead of Wall Street estimates. Revenue grew 11.9% year-over-year to $93.8 billion.
However, health insurance groups are suffering from a rise in payouts to policyholders as more Americans are utilizing medical facilities after the pandemic restrictions were lifted. CVS said its medical benefit ratio rose by 2.7 percentage points from a year ago, to 88.5% in the fourth quarter.
CVS said the rise in medical costs was expected to continue, noting that the “guidance revision follows a review of its recently finalized medical cost trend analysis for the fourth quarter of 2023 and the potential implications for elevated medical cost trends in 2024.”
CVS shares were up 1.9% at $75.17 at about 2:00 p.m. ET Wednesday. The stock has lost about 13% over the past year.