CVS Health Corp (NYSE:CVS) stock fell 3.49% (As on November 7, 10:28:25 AM UTC-4, Source: Google Finance) after the company reported mixed third-quarter results and failed to provide forward guidance. CVS hailed year-to-date cash flow from operations of $7.2 billion, though net debt seems to have crept above $65 billion. During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and reduce costs. In connection with this restructuring plan, during the three months ended September 30, 2024, the Company recorded restructuring charges of approximately $1.2 billion, comprised of a $607 million store impairment charge for additional retail pharmacy stores it plans to close in 2025, $293 million of costs associated with corporate workforce optimization, including severance and employee-related costs, and $269 million of other asset impairments and related charges associated with the discontinuation of certain non-core assets.
CVS in the third quarter of FY 24 has reported the adjusted earnings per share of $1.09, missing the analysts’ estimates for the adjusted earnings per share of $1.55. This is primarily due to a decline in the Health Care Benefits segment’s operating results, which reflect continued utilization pressure and premium deficiency reserves of approximately $1.1 billion recorded in the third quarter of 2024, related to anticipated losses in the fourth quarter of 2024 within the Medicare and individual exchange product lines. The company had reported the adjusted revenue growth of 6.3 percent to $95.4 billion in the third quarter of FY 24, beating the analysts’ estimates for revenue of $92.7 billion. As a result, adjusted operating income decreased 42.8%.
Moreover, Health Care Benefits segment total revenues increased 25.5% for the three months ended September 30, 2024 compared to the prior year driven by growth in the Medicare and Commercial product lines. Health Services segment total revenues decreased 5.9% for the quarter. Pharmacy & Consumer Wellness segment total revenues increased 12.3%.
The company did not provide an outlook, with a spokesperson telling media that CVS expects elevated medical costs to continue weighing on performance this year, “and as a result we are not providing a formal outlook at this time”.
CVA also announced some senior appointments, promoting pharmacies chief Prem Shah to group president, responsible for “operational performance and integrated value creation” across its services and pharmacies divisions, and the hiring Steve Nelson from UnitedHealth to head up its Aetna insurance wing.