CVS Health lowered its full-year profit forecast again and unveiled a plan to cut $2 billion in expenses over several years as rising medical costs impact the company and the broader U.S. insurance industry. The plan aims to streamline operations, increase AI and automation use, and “rationalize” its business portfolio. During an earnings call, executives revealed that Aetna President Brian Kane would leave the company immediately, with CVS CEO Karen Lynch and CFO Thomas Cowhey stepping in to oversee the insurance unit.
The company expects 2024 adjusted earnings to be between $6.40 to $6.65 per share, down from the previous guidance of at least $7 per share, and reduced its unadjusted earnings guidance to $4.95 to $5.20 per share. This marks the third consecutive quarter that CVS has lowered its profit guidance. The new outlook accounts for continued pressure on the health insurance segment, including higher medical costs and unfavorable Medicare Advantage star ratings.
CVS’s second-quarter results showed adjusted earnings per share of $1.83, exceeding Wall Street expectations of $1.73, and revenue of $91.23 billion, slightly below the expected $91.5 billion. Net income for the quarter was $1.77 billion, down from $1.90 billion a year earlier. The company attributed revenue growth to its pharmacy business and insurance unit, though noted a decline in its health services segment due to pricing improvements for pharmacy clients and the loss of a large unnamed client.
