CVS Health reported profits and income of the second quarter that overcame estimates and increased their adjusted profits, since he sees strength in his retail pharmacy business and some improvements in his insurance unit.
Pharmacy retail chain shares increased more than 1% on Thursday.
The company now expects adjusted profits of the fiscal year 2025 from $ 6.30 to $ 6.40 per share, compared to the previous guide of $ 6 to $ 6.20 per share. CVS also reduced its GAAP gain guide, without revealing additional details.
In an interview, the CVS CEO, David Joyner, said that the quarterly increase in beats and guidance is partly “a tribute to work and effort within Aetna”, the company's insurer. He referred to a “recovery effort of several years” In Aetna, who has been dealing with higher medical costs in private Medicare plans such as the rest of the insurance industry.
Joyner added that the CVS retail pharmacy business is “working really well”, demonstrating the company's efforts to introduce new technologies that improve pharmacy operations and drive efficiency. He also pointed out the company's investments and its new model of prescription drug prices, which has benefited the payers and “separated the Pharmacy from La Manada.”
But the launch of the company said that the strength in these two business units was compensated for a decrease in its segment of health services.
The results limit the third complete quarter with Joyner, a CVS executive for a long time, as executive director of the pharmacy retail chain. Joyner happened to Karen Lynch in mid -October, since CVS fought to generate greater profits and improve their stock performance.
This is what CVS reported for the second quarter compared to what Wall Street expected, based on a LSEG analysts survey:
- Profit per action: $ 1.81 adjusted compared to $ 1.46 per expected action
- Revenue: $ 98.92 billion compared to $ 94.50 billion expected
The company registered net income of $ 1.02 one billion, or 80 cents per share, for the second quarter. That is compared to the net income of $ 1.77 billion, or $ 1.41 per share, for the period of year and more.
Excluding certain elements, such as intangible assets, restructuring charges and capital losses, adjusted profits were $ 1.81 per share for the quarter.
CVS reserved sales of $ 98.92 billion for the second quarter, 8.4% more than the same period a year ago due to growth in its three commercial segments.
As part of a broader response plan, the company pursues $ 2 billion in cost cuts in the coming years. Joyner told CNBC that the company still has to close some more locations as part of achieving that goal.
But he said that CVS is also “focusing on being in the right geography”, noting that the company is still buying stores in the northwest of the Pacific because it does not have a great footprint there.
Pressure in the insurance unit
The three commercial segments of CVS exceed the income expectations of Wall Street for the second quarter. But the company's insurance unit is still under pressure.
Aetna and other insurers have dealt with higher medical costs than expected during the last year as more patients with Medicare advantage return to hospitals for the procedures that delayed during the pandemic.
The Medical Benefits Index of the Insurance Unit, a measure of the total medical expenses paid in relation to the premiums collected, increased to 89.9% from 89.6% of the previous year. A lower relationship generally indicates that a company collected more on premiums than it paid for benefits, resulting in greater profitability.
The company said the increase was promoted by a charge of $ 471 million of a so -called Premium deficiency reserve, which is related to early losses in the year of coverage 2025. That refers to a responsibility that an insurer may need to cover if future premiums are not enough to pay claims and anticipated expenses.
The relationship of the second quarter was lower than the 90.6% that analysts expected, according to Streetacount estimates.
The insurance business reserved $ 36.26 billion in revenues during the quarter, more than 11% since the second quarter of 2024. Analysts expected the unit to raise $ 34.59 billion for the period, according to Streetacount estimates.
The CVS consumer pharmacy and well -being division reserved $ 33.58 billion in sales for the second quarter, more than 12% of the same period of the previous year. The company said the increase was partly driven by a greater volume in the pharmacy and the front of the store, but compensated by the pharmacy reimbursement pressure.
Analysts were waiting for sales of $ 31.98 billion for the quarter, said Streetacount.
This unit dispenses the prescriptions in the more than 9,000 retail pharmacies of CVS and provides other pharmacy services, such as vaccines and diagnostic tests.
The CVS health services segment generated $ 46.45 billion in revenues for the quarter, more than 10% compared to the same quarter in 2024. Analysts expected the unit to publish $ 43.37 billion in sales for the period, according to Streetacount.
That unit includes CaMark, one of the largest pharmacy benefits managers in the country. Caremark negotiates discounts on medications with manufacturers in the name of insurance plans and create lists of medicines or forms, which are covered by safe and reimburse pharmacies for recipes.
