On Friday, CFS health Inc (NYSE:CVS) appointed long-term director David Joyner as the new president and CEO, replacing him Karen Lynch amid the company’s ongoing financial problems.
Joyner, previously president of CVS Caremark and executive vice president at the company, serves in this leadership role as Roger Farahthe chairman of CVS, will assume the position of executive chairman.
The company warned that its upcoming third-quarter earnings, due Nov. 6, will miss Wall Street projections.
The company reported preliminary adjusted earnings per share for the third quarter of 2024 of $1.05-$1.10, compared to the consensus of $1.70. Analysts expect revenue of $92.73 billion.
Third quarter results included record premium deficiency reserve (PDR) charges, primarily related to the company’s Medicare and Individual Exchange businesses within the Health Care Benefits segment, of approximately $1.1 billion, reducing adjusted earnings per year. stock fell $0.63 in Q3 2024.
In the third quarter of 2024, CVS continued to experience medical cost trends that were higher than expected in its prior guidance.
The Medical Benefit Ratio for the third quarter is currently expected to be approximately 95.2%, including a 220 basis point impact from the PDRs.
The company added: “In light of continued high medical cost pressure in the healthcare benefits segment, investors should no longer rely on the company’s previous guidance.”
The pharmacy giant is also withdrawing from its fiscal year 2024 estimate, issued during the release of its second-quarter earnings results.
The company reported second-quarter revenue of $91.23 billion, missing the $91.51 billion consensus. Adjusted earnings per share of $1.83 fell from $2.21 last year, surpassing the consensus of $1.73.
In terms of second-quarter earnings, CVS Health revised its 2024 adjusted earnings per share to a minimum of $7.00 from $6.40-$6.65, versus a consensus of $6.98.
CVS Health forecast 2024 revenue of $369.0 billion – $372.0 billion, versus a consensus of $368.876 billion on previous expectations of at least $369 billion.
The company expected a medical benefit ratio of 90.6% – 90.8%, versus ~89.8% previously expected.
The company is already struggling as the Federal Trade Commission (FTC) has filed a formal complaint against three major pharmacy benefit managers (PBMs): CVS Health’s Caremark, Cigna Corp (NYSE:CI) Express Scripts, and UnitedHealth Group Inc (NYSE:UNH) Optum – for allegedly engaging in unfair and anti-competitive practices that increased the list price of insulin medications.
CVS Health is also considering a major restructuring that would involve separating its retail and insurance businesses, according to an October report.
These discussions with financial advisors are exploring how a potential breakup would work, although no final decisions have been made yet.
Price promotion: At last check on Friday, CVS shares were down 12.30% to $55.87 during the premarket session.
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This article Pharmacy Retailer CVS Health Withdraws From Annual Forecast, Names New CEO originally appeared on Benzinga.com
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