CVS reported mixed results for Q3: sales exceeded forecasts, but profits fell - Tokenist
CVS Health Corporation (NYSE: CVS) announced financial results for Q3 2024: total revenue increased, but profits fell. Total revenue for the quarter reached $95.4 billion, up 6.3% year-over-year.
the revenue growth came mainly from the Health Benefits and Pharmacy & Consumer Health sectors, although the Health Services sector saw a decline. However, operating income decreased significantly, down 77.5% to $832 million compared to $3.69 billion last year. The decline was mainly due to restructuring charges and a significant decrease in adjusted operating profit.
Adjusted earnings per share (EPS) for CVS Health was $1.09, down from $2.21 a year earlier. The decline was primarily due to challenges facing the health insurer's business, including increased utilization and premium underutilization provisions of approximately US$1.1 billion. These reserves were created in anticipation of losses on Medicare and individual exchange products in the fourth quarter of 2024.
CVS Health's GAAP diluted earnings per share were $0.07, down significantly from $1.75 in the prior year, and CVS Health's operating cash flow for the year was $7.2 billion, reflecting ongoing financial challenges and strategic adjustments to address them.
Compared to expectations, CVS Health's third-quarter results came in below expectations. Analysts expected earnings per share of $1.55, but actual adjusted earnings per share came in at $1.09, well below expectations. The shortfall in earnings was due to operational challenges faced by the company in the health insurance industry, where higher utilization and provisions for premium shortfalls affected overall profitability.
The company's total revenue of $BTC 4 billion also exceeded forecasts of $92.7 billion, reflecting strong earnings despite the weak performance.
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