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CVS Heath (CVS) Q4 2023 earnings


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CVS beats estimates, but cuts full-year profit outlook on higher medical costs

CVS Health on Wednesday reported fourth-quarter revenue and adjusted earnings that topped expectations, but the company cut its full-year profit outlook, citing higher medical costs that are dogging the broader insurance industry.

The company lowered its 2024 adjusted earnings forecast to at least $8.30 per share, down from a previous guidance of at least $8.50 per share. Analysts surveyed by LSEG were expecting full-year adjusted earnings of $8.49 per share. 

CVS also cut its unadjusted earnings guidance to at least $7.06 per share, down from at least $7.26 per share. 

The company said its new guidance follows a review of its medical cost trend analysis for the fourth quarter and a recognition of the “potential implications” for elevated medical cost trends in 2024. CVS owns health insurer Aetna

“Our guidance prudently assumes that the elevated medical cost trends we observed in the fourth quarter will carry forward into 2024,” CVS Chief Financial Officer Tom Cowhey said on an earnings call Wednesday.

Insurers such as Humana have been seeing medical costs spike as an increasing number of older adults return to hospitals to undergo procedures they had delayed during the pandemic, such as joint and hip replacements. 

Here’s what CVS reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.12 adjusted vs. $1.99 expected
  • Revenue: $93.81 billion vs. $90.41 billion expected

Shares of CVS closed 3% higher Wednesday.

CVS booked sales of $93.81 billion for the quarter, up almost 12% from the same period a year ago. That increase was mainly driven by strength in its health services business.

While CVS beat earnings expectations, its profit shrank from the prior year

The company reported net income of $2.05 billion, or $1.58 per share, for the fourth quarter. That compares with net income of $2.33 billion, or $1.77 per share, for the same period a year ago. 

Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $2.12 for the quarter.

The fourth-quarter results come two months after CVS said it will revamp how it prices prescription drugs and scrap a complex model that typically sets how much pharmacies get reimbursed and what patients pay for those medications. The company plans to launch a new model, called CostVantage, for how payors will reimburse its pharmacies. That model will first apply to commercial payors starting in 2025.

The results also come as CVS pushes to transform from a major drugstore chain into a large health-care company. CVS deepened that push over the last year with its nearly $8 billion acquisition of health-care provider Signify Health and a $10.6 billion deal to buy Oak Street Health, which operates primary-care clinics for seniors.

Strength in health services business

The company’s health services segment generated $49.15 billion in revenue for the quarter,…



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CVS Heath (CVS) Q4 2023 earnings

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