CVS Health (NYSE:CVS) shares faded in price on Wednesday, after the drugstore chain reported first-quarter revenue and adjusted earnings that missed expectations and slashed its full-year profit outlook, citing higher medical costs that are dogging the U.S. insurance industry.
The chain expects 2024 adjusted earnings of at least $7 per share, down from previous guidance of at least $8.30 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $8.28 per share.
CVS also cut its unadjusted earnings guidance to at least $5.64 per share, down from at least $7.06 per share.
The company said its new outlook assumes that higher medical costs in its insurance business during the first quarter will persist throughout the year. CVS owns health insurer Aetna.
Still, CVS CEO Karen Lynch said the “the current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company.” The company is confident “we have a pathway to address our near-term Medicare Advantage challenges,” she added.
Insurers such as Humana and UnitedHealth Group have seen medical costs spike as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic, such as joint and hip replacements.
CVS shares stumbled $12.26, or 18.3%, to begin Wednesday at $55.45.
