CVS shares dip despite strong results and raised profit outlook
CVS Health reported third-quarter results that surpassed Wall Street expectations on both earnings and revenue, while also lifting its full-year profit outlook for the third consecutive quarter.
Still, shares of CVS fell more than 3% in premarket trading Wednesday as the company posted a net loss during the quarter, which reflects a $5.7 billion goodwill impairment charge related to the health care services segment’s health care delivery reporting unit, News.Az reports, citing CNBC.
The quarterly results cap David Joyner’s first full year as CEO of the company, which struggled to drive higher profits and improve its stock performance under its last top executive, Karen Lynch. Joyner is executing aggressive efforts to turn the flailing drugstore chain around – from executive reshuffling to cost cuts – and they already seem to be paying off, with shares up more than 85% for the year.
The company now expects fiscal 2025 adjusted earnings of $6.55 to $6.65 per share, up from previous guidance of $6.30 to $6.40 per share. CVS has now hiked its outlook for three consecutive quarters.
″[I] couldn’t be more happy about the fact that this is three quarters where we’ve had a beat and raise and obviously, looking into Q4, we feel really, really good about our ability to close out the year favorably,” Joyner said in an interview.
He pointed to several factors, including recovery in Aetna, the company’s insurer. Aetna and other insurers have grappled with higher-than-expected medical costs over the last year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic. While medical costs remain high, Aetna and other insurers, such as UnitedHealthcare, appear to be becoming better equipped to navigate the issue moving forward.
Joyner also highlighted a “really good sales season” for its pharmacy benefit manager, Caremark, and the goodwill impairment charge related to the health care delivery reporting unit.
Here’s what CVS reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
Earnings per share: $1.60 adjusted vs. $1.37 expected
Revenue: $102.87 billion vs. $98.85 billion expected
The company posted net loss of $3.99 billion, or $3.13 per share, for the third quarter. That compares with net income of $71 million, or 7 cents per share, for the same period a year ago.
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