CA - CVS Health Stock: Free-Falling After Major Earnings Miss Blame Game Begins
2024-05-02 10:50:50 ET
Summary
- CVS Health Corporation misses revenue and earnings expectations for Q1 2024, leading to a 17% drop in stock value.
- Medicare Advantage utilization pressures and rising healthcare costs are major contributors to the disappointing performance.
- The CMS's refusal to raise rates and increased competition in the MA market pose challenges for CVS Health's profitability.
- This was a rough quarter for CVS, but management is determined to see its "value-based care" and Medicare Advantage bets pay off.
- CVS stock is a polarizing investment opportunity - optimists may want to buy at 5-year low prices, while pessimists may feel this is the beginning of a longer period of underperformance.
Investment Overview
CVS Health Corporation ( CVS ), the healthcare and health insurance giant, missed Wall Street's expectations for first quarter 2024 revenue and earnings by a long way, it was revealed yesterday. Company CEO Karen Lynch was not in the mood to sugar coat matters - speaking on the company's earnings call with analysts, Lynch commented:
CVS Health Stock: Free-Falling After Major Earnings Miss, Blame Game Begins
This morning, we announced first-quarter results that were burdened by utilization pressures in Medicare Advantage, which materially impacted our healthcare benefit segment.
We generated adjusted EPS of $1.31, which fell short of our expectations. As a result of this performance, as well as our updated expectations for the rest of 2024, we are lowering our full-year 2024 guidance for adjusted EPS to at least $7.