CVS Health Stock Jumps After Mixed Q3 Earnings, Takes $1.2 Billion Restructuring Charges Hit

CVS Health Corp CVS reported third-quarter sales of $95.43 billion, beating the consensus of $92.75 billion. 

Total revenues increased 6.3%, primarily driven by growth in the Health Care Benefits and Pharmacy & Consumer Wellness segments, partially offset by a decline in the Health Services segment.

Adjusted EPS of $1.09 (inline with preliminary guidance of $1.05-$1.10) decreased from $2.21 in the prior year, missing the consensus of $1.53. The fall was primarily due to a decline in the Health Care Benefits segment’s operating results, which reflects continued utilization pressure and premium deficiency reserves of approximately $1.1 billion, related to anticipated losses in the fourth quarter of 2024 within the Medicare and individual exchange product lines.

Adjusted operating income decreased 77.5% to $2.55 billion.

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During the third quarter of 2024, CVS Health finalized its restructuring plan and recorded restructuring charges of approximately $1.2 billion, including store impairment charges for additional retail pharmacy stores it plans to close in 2025.

Revenues in the Health Care Benefits segment increased 25.5% to $32.99 billion. The Medical benefit ratio increased to 95.2% from 85.7% a year ago. Medical membership reached 27.1 million.

Health Services segment revenues decreased 5.9% to $44.13 billion. Pharmacy claims processed decreased 16.5%.

Concurrently, CVS Health announced that Prem Shah will be Group President and responsible for the operational performance across CVS Caremark, CVS Pharmacy, and the company’s Healthcare Delivery businesses.

In addition, the company appointed Steve Nelson as President of Aetna. Both appointments are effective today.

Pharmacy & Consumer Wellness segment revenues increased 12.3% to $32.42 billion, primarily driven by increased prescription volume, including increased contributions from vaccinations and pharmacy drug mix.

In October, CVS Health appointed David Joyner as its new president and CEO, replacing Karen Lynch amid the company’s ongoing financial struggles.

The company also withdrew the 2024 guidance provided in the second-quarter earnings release.

Price Action: CVS stock is up 11.30% at $61.60 at the last check on Wednesday.

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