CVS Health lowers its 2024 forecast for the third time due to challenges in insurance sector

CVS Health has revised its 2024 projection for a third time as the health care giant continues to grapple with its health insurance business.

The head of that division, Executive Vice President Brian Kane, has departed from the organization, CVS announced on Wednesday, with CEO Karen Lynch assuming control.

The company’s adjusted operating income from that sector dropped 39% in the quarter to $938 million, contributing to the decline in the company’s overall earnings. CVS Health has been facing challenges with increasing claims in its Medicare Advantage business and a decrease in quality ratings for those plans, impacting government funding for them.

CVS Health also addressed higher expenses from individuals covered by the state and federally funded Medicaid program.

In total, the company’s earnings decreased by more than 7% to $1.77 billion in the quarter.

CVS Health reported adjusted earnings of $1.83 per share on $91.2 billion in revenue. Analysts had predicted earnings of $1.73 per share on $91.41 billion in revenue.

CVS Health now anticipates adjusted per-share earnings for the year to range between $6.40 and $6.65. In May, the company had reduced its per-share projections to at least $7.

According to FactSet, Wall Street had expected per-share earnings of $6.96.

CVS Health Corp. operates one of the country’s largest pharmacy chains and a significant pharmacy benefit management business that administers prescription drug coverage for major clients such as insurers and employers. It also provides health insurance to over 26 million individuals through its Aetna arm.

The shares of the Rhode Island-based company dropped 2% to $56.99 in premarket trading.

The stock has already lost a quarter of its value this year while the Standard & Poor’s 500 index has risen by approximately 10%.