Proactive Investors - CVS Health Corp (NYSE:CVS) shares tanked after the pharmacy chain downwardly revised its full-year profit 2024 guidance amid rising medical costs in its Medicare insurance business.
The company is now expected to report adjusted earnings per share (EPS) of at least $7, down from its prior guidance of at least $8.30 and below the Wall Street estimate of $8.31.
It also lowered its cash flow from operations guidance from at least $12 billion to at least $10.5 billion.
CEO Karen Lynch told investors that the company is confident in its plan to address its near-term Medicare Advantage challenges, which follow the confirmation of lower-than-hoped Medicare reimbursement rates by the US government in April.
"The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company,” Lynch said.
"We remain committed to our strategy and believe that we have the right assets in place to deliver value to our customers, members, patients, and shareholders."
Also weighing on the stock was its first quarter earnings report, which missed estimates on the top and bottom lines.
Revenue grew 3.7% year-over-year to $88.44 billion, below estimates of $89.2 billion.
EPS was down from $2.20 to $1.31, missing the $1.69 expected.
The decrease in revenue was attributed to a decline in CVS’ Health Services segment, while profits were hit by utilization pressure in its Medicare business, part of its Health Care Benefits segment.
Shares of CVS traded down 16.5% at about $56 in the early afternoon on Wednesday.