On Friday, CVS Health Inc (NYSE:CVS) appointed longtime executive David Joyner as its new president and CEO, replacing Karen Lynch amid the company’s ongoing financial struggles.
Joyner, previously president of CVS Caremark and an executive vice president at the company, steps into this leadership role as Roger Farah, CVS’s board chairman, assumes the executive chair position.
The company warned that its upcoming third-quarter earnings, set for release on November 6, will miss Wall Street projections.
The company revealed preliminary third-quarter 2024 adjusted EPS of $1.05-$1.10, compared to the consensus of $1.70. Analysts expect sales of $92.73 billion.
Results for the third quarter include charges to record premium deficiency reserves (PDRs), primarily related to the company’s Medicare and Individual Exchange businesses inside its Health Care Benefits segment, of approximately $1.1 billion, which lowered third quarter 2024 Adjusted EPS by $0.63.
In the third quarter of 2024, CVS continued to experience medical cost trends over those projected in its prior outlook.
The Medical Benefit Ratio for the third quarter is currently expected to be approximately 95.2%, which includes a 220-basis point impact from the PDRs.
The company added, ” In light of continued elevated medical cost pressures in the Health Care Benefits segment, investors should no longer rely on the company’s previous guidance.”
The pharmacy giant is also backing away from the fiscal year 2024 issued during the second-quarter earnings release.
The company reported second-quarter sales of $91.23 billion, missing the consensus of $91.51 billion. Adjusted EPS of $1.83 decreased from $2.21 in the prior year, beating the consensus of $1.73.
In Q2 earnings, CVS Health revised its 2024 adjusted EPS guidance to $6.40-$6.65 from at least $7.00 versus consensus of $6.98.
CVS Health forecasted 2024 sales of $369.0 billion—$372.0 billion versus a consensus of $368.876 billion at prior guidance of at least $369 billion.
The company expected a medical benefits ratio of 90.6% – 90.8% versus ~89.8% expected earlier.
The company is already struggling as the Federal Trade Commission (FTC) filed a formal complaint against three major pharmacy benefit managers (PBMs)—CVS Health’s Caremark, Cigna Corp’s (NYSE:CI) Express Scripts, and UnitedHealth Group Inc’s (NYSE:UNH) Optum—for allegedly engaging in unfair and anti-competitive practices that have inflated the list price of insulin medications.
As per an October report, CVS Health is also considering a major restructuring that could involve separating its retail and insurance businesses.
These talks with financial advisers explore how a potential breakup would work, although no final decisions have been made yet.
Price Action: At last check on Friday, CVS stock was down 12.30% at $55.87 during the premarket session.
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This article Pharmacy Retailer CVS Health Backs Away From Annual Forecast, Names New CEO originally appeared on Benzinga.com
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