CVS Health Corp. steered through rising costs in its insurance division to handily beat profit expectations on Wall Street.
The drugstore chain and pharmacy benefits manager earned $1.64 billion, or $1.30 per share for the period ended Dec. 31. A year earlier the company earned $2.05 billion, or $1.58 per share.
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Removing one time costs and benefits, earnings were $1.19 per share, easily topping the 89 cents per share that analysts surveyed by Zacks Investment Research predicted.
Shares climbed more than 11% before the market opened Wednesday.
While the profit blew past expectations, it was short of the same period last year, which CVS blamed on increased medical costs in its insurance division, and lower Medicare Advantage star ratings for the 2024 payment year.
CVS Health Corp., based in Woonsocket, runs one of the nation’s largest drugstore chains and a huge pharmacy benefit management business that operates prescription drug coverage for employers, insurers and other big clients. It also covers nearly 27 million people through its Aetna insurance arm.
The health care giant has been hurt by pressure from the Medicaid coverage it manages in several states as well as rising costs from its Medicare Advantage business, which involves privately run versions of the federal government’s coverage program mainly for people age 65 and older.
On the drugstore side, CVS Health is wrapping up a multi-year plan that includes the closure of more than 1,100 stores.
Quarterly revenue totaled $97.71 billion. That beat the $97.06 billion Wall Street was calling for.
Looking ahead, CVS Health foresees full-year adjusted earnings in a range of $5.75 to $6 per share. Analysts polled by FactSet expect $5.86 per share.
CVS Health is trying to move past a rough 2024 in which the company cut its forecast several times and saw its stock price tumble about 43%.
Former CEO Karen Lynch stepped down last October and was replaced by company executive David Joyner.
About a month later, the company added four new board members. They included the CEO of shareholder Glenview Capital Management, a hedge fund that has criticized the company for operating below its potential.
Glenview holds about 1% of the company’s outstanding shares, according to FactSet.
On Feb 4, CVS f field a Worker Adjustment and Retraining Notification notice with R.I. Department of Labor and Training announcing they were shedding 38 jobs. Of the 38 employees, 23 work at CVS corporate headquarters in Woonsocket and the remaining 15 work remotely but report to someone who is based in Rhode Island.
The layoffs will take place June 7, with one remote employee set to be terminated March 29.
This brings the number of workers with Rhode Island ties affected by CVS’ layoff plans to 1,466, including 188 Rhode Island residents.
CVS also notified Connecticut’s Department of Labor and Training Feb. 4 that another 22 employees at its Hartford-based Aetna division are set to be laid off June 7.
This latest round of layoffs in Rhode Island comes after CVS announced it was eliminating 796 positions in November 2024 – and another 632 workers laid off in October 2024 – who report to company headquarters.
