CVS Health Reports Smaller-Than-Expected Profit Drop in Q4
Healthcare conglomerate CVS Health (CVS) announced a smaller-than-anticipated decline in fourth-quarter profit due to decelerating medical cost increases and strong pharmacy business revenue.
Earnings
Adjusted fourth-quarter earnings per share stood at $1.19, lower than the previous year's $2.12 but surpassing analysts' estimates of 93 cents.
Revenue
Pharmacy and consumer wellness segment revenue increased by 7.5% to $33.51 billion, attributed to higher prescription drug sales.
Healthcare Benefits Division
The healthcare benefits division reported a quarterly loss of $439 million, compared to a profit of $676 million in the previous year. Increased medical service utilization, changes in Medicare Advantage ratings, and enrollment of sicker members in Medicaid plans contributed to the loss.
Medical Loss Ratio
The medical loss ratio, which represents the portion of premiums spent on patient care, rose to 94.8% from 88.5% in the same period last year. Analysts had expected a 95.46% loss ratio.
Cost-Cutting Measures
CVS implemented significant cost-cutting initiatives in November, including a top management reshuffle under CEO David Joyner.
Outlook
For the full year, CVS projects earnings per share between $5.75 and $6.00, slightly below the estimated $5.96.