In the first quarter, CVS Health reported a 48% drop in net income to $1.11 billion, with adjusted earnings of $1.31 per share on total revenue of $88.4 billion. This was significantly lower than analysts had anticipated, who had predicted earnings of $1.69 per share on $89.33 billion in revenue for the quarter.
The company cited rising costs from care use in its Medicare Advantage business as a challenge, including increasing use of outpatient care and supplemental benefits, as well as pressure from inpatient care. Additionally, CEO Karen Lynch blamed a cyberattack on Change Healthcare, operated by rival UnitedHealth Group, for impairing visibility into trends during the quarter. Change Healthcare provides technology for submitting and processing insurance claims for various insurers.
Despite this setback in its Medicare Advantage business, CVS Health expects to maintain profitability in its commercial insurance business, which includes plans sold to employers and on individual insurance exchanges. However, the company has revised its 2024 expectations to at least $7 compared to the previous forecast of at least $8.30 due to rising costs in Medicare Advantage earlier in the year. This revision was more significant than anticipated by analysts who had predicted earnings of $8.27 per share.
