CVS Health Corp (CVS)

CVS Health Corp (CVS) stock plunged by 16.84% following the release of disappointing first-quarter earnings and revised guidance for the year. The company's diversified portfolio in pharmacy and health insurance faced challenges, leading to a significant market reaction.

• Revenue Analysis: Total revenue for CVS Health Corp increased by 3.7% year over year to $88.4 billion, falling short of analyst expectations. While revenue from the pharmacy and consumer wellness segment saw a modest increase of 2.9% to $28.7 billion, revenue from health services, including the pharmacy benefit manager, declined by 9.7% to $40.3 billion. Notably, the healthcare benefits segment experienced a 24.6% revenue increase to $32.2 billion. However, escalating costs due to heightened Medicare utilization and declining Medicare Advantage star ratings eroded profitability.
• Medicare Challenges: The surge in Medicare costs and a decline in star ratings significantly impacted CVS's healthcare benefits segment. The medical benefit ratio rose from 84.6% to 90.4%, resulting in a substantial decrease in adjusted operating income. Adjusted earnings per share plummeted from $2.20 in Q1 2023 to $1.31, significantly missing analysts' expectations.
• Guidance Adjustment: Management revised its adjusted earnings per share forecast for the full year from at least $8.30 to at least $7, well below analysts' consensus forecast of $8.28. This downward revision, coupled with trimmed revenue guidance, intensified market concerns about the company's profitability and bottom-line weakness.

CVS Health Corporation Stock (CVS) dropped by 2.21% from $70.61 to $69.05 in the trading on Friday October 20, 2023. The reason why CVS stock down today is due to medicine removal. The pharmacy chain said it would remove some over-the-counter allergy and cold medicines after a U.S. Food and Drug Administration committee said a main ingredient, phenylephrine, was ineffective when taken orally.