CVS
Cvs Health CORP
NYSE
8-K: CVS Health Reports Mixed Q4 and Full-Year 2024 Results; Issues 2025 Guidance
Sentiment:
Earnings Release
12 February 2025 6:32 AM
CVS Health's Q4 results show revenue growth but a decline in earnings, with full-year results reflecting similar trends and the company issuing its 2025 financial guidance.
Worse than expected
The company's GAAP and Adjusted EPS decreased compared to the prior year, indicating worse than expected profitability.
The Health Care Benefits segment reported an adjusted operating loss, which is worse than the operating income in the prior year.
Summary
- CVS Health Corporation announced its Q4 and full-year 2024 operating results on February 12, 2025.
- Total revenues for Q4 2024 increased by 4.2% to $97.7 billion compared to the prior year.
- GAAP diluted EPS for Q4 was $1.30, while Adjusted EPS was $1.19.
- Full-year 2024 total revenues also increased by 4.2% to $372.8 billion.
- Full-year GAAP diluted EPS was $3.66, and Adjusted EPS was $5.42.
- The company generated $9.1 billion in cash flow from operations for the full year.
- CVS Health issued its full-year 2025 guidance, projecting a GAAP diluted EPS range of $4.58 to $4.83 and an Adjusted EPS range of $5.75 to $6.00.
- The company expects approximately $6.5 billion in cash flow from operations in 2025.
- The Health Care Benefits segment experienced an adjusted operating loss of $439 million in Q4 2024, compared to a $676 million profit in the prior year.
- The Health Services segment saw revenues decrease by 4.3% in Q4 2024.
- The Pharmacy & Consumer Wellness segment's revenues increased by 7.5% in Q4 2024.
Sentiment
Score: 5
Explanation: The sentiment is neutral. While revenue increased, earnings decreased, and the company faces challenges in its Health Care Benefits segment. The 2025 guidance provides some optimism, but overall, the results are mixed.
Highlights
- CVS Health's total revenues increased by 4.2% to $97.7 billion in Q4 2024.
- Full-year 2024 total revenues reached $372.8 billion, a 4.2% increase.
- The company's full-year 2025 Adjusted EPS guidance is set between $5.75 and $6.00.
- Cash flow from operations for 2024 was $9.1 billion.
- The Health Care Benefits segment had an adjusted operating loss of $439 million in Q4 2024.
- Pharmacy claims processed decreased by 16.9% in the Health Services segment for Q4 2024.
- Prescriptions filled increased by 3.3% in the Pharmacy & Consumer Wellness segment for Q4 2024.
Positives
- Total revenues increased by 4.2% for both Q4 and the full year 2024.
- The Pharmacy & Consumer Wellness segment saw a 7.5% increase in revenues for Q4 2024.
- Prescriptions filled increased by 3.3% in the Pharmacy & Consumer Wellness segment for Q4 2024.
- The company anticipates generating approximately $6.5 billion in cash flow from operations in 2025.
- Same store prescription volume increased 5.9% and 6.8% on a 30-day equivalent basis for the three months and year ended December 31, 2024, respectively, compared to the prior year.
Negatives
- GAAP diluted EPS decreased in Q4 2024 to $1.30 from $1.58 in the prior year.
- Adjusted EPS decreased in Q4 2024 to $1.19 from $2.12 in the prior year.
- The Health Care Benefits segment reported an adjusted operating loss of $439 million in Q4 2024.
- Operating income decreased 29.8% in the three months ended December 31, 2024 compared to the prior year.
- Pharmacy claims processed decreased 16.9% and 18.2% on a 30-day equivalent basis for the three months and year ended December 31, 2024, respectively, compared to the prior year reflecting the previously announced loss of a large client.
- Adjusted operating income decreased 13.3% for the three months ended December 31, 2024 compared to the prior year primarily driven by continued pharmacy reimbursement pressure and decreased front store volume, partially offset by improved drug purchasing.
Risks
- The Health Care Benefits segment is facing increased utilization and the unfavorable impact of Medicare Advantage star ratings.
- The Health Services segment is experiencing revenue declines due to the loss of a large client and pharmacy client price improvements.
- The Pharmacy & Consumer Wellness segment is facing continued pharmacy reimbursement pressure and decreased front store volume.
- Interest expense increased due to higher debt levels.
Future Outlook
CVS Health anticipates a GAAP diluted EPS range of $4.58 to $4.83 and an Adjusted EPS range of $5.75 to $6.00 for the full year 2025, with cash flow from operations expected to be approximately $6.5 billion.
Management Comments
- David Joyner, CVS Health President and CEO, stated that the integrated model allows the company to deliver a simpler, connected experience that saves time, money, and improves health.
- He noted growth in key areas like the Pharmacy and Consumer Wellness segment while addressing industry-wide challenges impacting the Health Care Benefits segment.
- Management believes the company will be positioned for strong performance in 2025.
Industry Context
The results reflect the ongoing trends in the healthcare industry, including increased utilization, reimbursement pressures, and the shift towards integrated healthcare models. CVS Health is navigating these challenges while focusing on growth in key segments and cost management.
Comparison to Industry Standards
- CVS Health's performance can be compared to other major players in the healthcare and pharmacy benefits management space, such as UnitedHealth Group, Cigna, and Walgreens Boots Alliance.
- UnitedHealth Group, for example, has also been focused on expanding its integrated healthcare offerings and managing medical costs.
- Walgreens has been focusing on its pharmacy and retail operations, similar to CVS Health's Pharmacy & Consumer Wellness segment.
- Cigna is a major competitor in the Health Care Benefits segment.
- Benchmarking against these companies would provide a more comprehensive view of CVS Health's relative performance.
Stakeholder Impact
- Shareholders may be concerned about the decrease in earnings and the challenges in the Health Care Benefits segment.
- Employees may be affected by the restructuring plan and store closures.
- Customers may experience changes in service offerings as the company focuses on its integrated model.
- Suppliers may see shifts in demand as the company optimizes its operations.
Next Steps
- The company will hold a conference call to discuss the results.
- Management will focus on addressing challenges in the Health Care Benefits segment and driving growth in other areas.
- The company plans to close additional retail stores in 2025 as part of its restructuring plan.
Key Dates
- February 12, 2025: Date of the earnings release and earliest event reported.
- December 31, 2024: End of the fourth quarter and full year for which results are reported.
Keywords
CVS Health, Financial Results, Earnings, Revenue, EPS, Guidance, Health Care Benefits, Pharmacy, Consumer Wellness
CVS
Cvs Health CORP
NYSE
Sector: TBD
Filings with Classifications
Delay expected
4 April 2025 4:03 PM
Definitive Proxy Statement
- The Health Services segment results fell below expectations, primarily due to a one quarter delay in the full rollout of our Cordavis biosimilars business.
Worse than expected
4 April 2025 4:03 PM
Definitive Proxy Statement
- The company did not meet threshold 2024 PSU Adjusted EPS performance for the 2022-2024 PSUs, resulting in a 0% payout.
- MIP Adjusted Operating Income metric achieved below threshold performance.
Delay expected
14 March 2025 5:02 PM
SEC Filing Form 4
- The gift of shares by the reporting person to a donor-advised charitable family foundation on November 18, 2022 was not timely reported due to an administrative error.
Worse than expected
12 February 2025 6:47 AM
Annual Results
Worse than expected
12 February 2025 6:32 AM
Earnings Release
- The company's GAAP and Adjusted EPS decreased compared to the prior year, indicating worse than expected profitability.
- The Health Care Benefits segment reported an adjusted operating loss, which is worse than the operating income in the prior year.
Capital raise
10 December 2024 4:33 PM
Debt Issuance Announcement
- CVS Health Corporation issued $2.25 billion of 7.000% Fixed-to-Fixed Rate Series A Junior Subordinated Notes due 2055.
- CVS Health Corporation issued $750 million of 6.750% Fixed-to-Fixed Rate Series B Junior Subordinated Notes due 2054.
Capital raise
9 December 2024 7:08 AM
Debt Tender Offer Announcement
- CVS Health will fund the purchase of the tendered notes with proceeds from the issuance of 7.000% Series A Junior Subordinated Notes due 2055 and 6.750% Series B Junior Subordinated Notes due 2054.
Capital raise
4 December 2024 6:53 PM
Debt Offering Announcement
- CVS Health is raising $3 billion through the issuance of junior subordinated notes.
- The offering is split into two series: $2.25 billion in Series A notes and $750 million in Series B notes.
- The net proceeds are expected to be approximately $2,963,075,700 after deducting underwriter discounts and estimated offering expenses.
Capital raise
2 December 2024 9:50 AM
Debt Tender Offer Announcement
- CVS Health plans to issue new subordinated debt securities to fund the cash tender offers.
- The amount of the new debt issuance is expected to be sufficient to cover the purchase of all tendered notes, accrued interest, and fees associated with the tender offers.
Worse than expected
6 November 2024 6:35 AM
Quarterly Report
- The company's net income and operating income were significantly lower than expected due to restructuring charges and increased healthcare costs.
- The Health Care Benefits segment's performance was worse than expected due to increased utilization and premium deficiency reserves.
- The company's medical benefit ratio (MBR) was higher than expected, indicating higher healthcare costs.
Worse than expected
6 November 2024 6:33 AM
Quarterly Report
- The company's GAAP and adjusted EPS were significantly lower than the previous year due to a decline in the Health Care Benefits segment and premium deficiency reserves.
- Operating income decreased by 77.5% due to the decline in adjusted operating income and restructuring charges.
- Adjusted operating income decreased by 42.8% due to the Health Care Benefits segment's performance.
Worse than expected
18 October 2024 6:46 AM
Leadership Change and Preliminary Quarterly Results
- The company's preliminary Q3 2024 results are worse than expected due to higher medical costs and significant charges for premium deficiency reserves and restructuring.
- The company has withdrawn its previous financial guidance, indicating a significant deviation from prior expectations.
Worse than expected
7 August 2024 6:35 AM
Quarterly Report
- The company's operating income and net income decreased year-over-year, indicating worse than expected profitability.
- The Health Care Benefits segment experienced a higher medical benefit ratio, indicating higher than expected healthcare costs.
- The Health Services segment saw a decrease in revenue due to the loss of a large client, which was worse than expected.
Worse than expected
7 August 2024 6:33 AM
Quarterly Report
- The company lowered its full-year earnings and cash flow guidance, indicating worse than expected results.
- The Health Care Benefits segment experienced a significant decline in operating results, contributing to the worse than expected performance.
- The adjusted EPS for the second quarter was lower than the prior year, indicating worse than expected profitability.
Capital raise
9 May 2024 4:19 PM
Debt Issuance Announcement
- CVS Health Corporation issued $5 billion in senior notes.
- The notes were sold to investors through an underwriting agreement.
Capital raise
8 May 2024 4:40 PM
Debt Issuance Announcement
- CVS Health is raising approximately $4.95 billion through the issuance of senior notes.
- The funds will be used for general corporate purposes as detailed in the prospectus.
Worse than expected
1 May 2024 6:40 AM
Quarterly Report
- The company's net income and operating income decreased significantly, indicating worse than expected results.
- The medical benefit ratio (MBR) in the Health Care Benefits segment increased substantially, reflecting higher healthcare costs than anticipated.
- The Health Services segment experienced a revenue decrease, which was worse than expected.
Worse than expected
1 May 2024 6:32 AM
Quarterly Report
- The company's earnings per share and cash flow guidance were significantly lowered due to higher than expected medical costs.
- The Health Care Benefits segment experienced a substantial decrease in adjusted operating income, indicating worse than expected performance.
- The medical benefit ratio increased significantly, reflecting higher healthcare costs than anticipated.
Worse than expected
7 February 2024 6:52 AM
Annual Results
- The company's Medicare Advantage plans did not qualify for full level quality bonuses in 2024, which could reduce profit margin.
Worse than expected
7 February 2024 6:33 AM
Quarterly Report
- The company revised its full-year 2024 earnings and cash flow guidance downwards, indicating worse than expected future performance.
- The Health Care Benefits segment experienced a decrease in adjusted operating income due to increased utilization in Medicare Advantage, which was worse than expected.
- The Pharmacy & Consumer Wellness segment saw a decrease in adjusted operating income for the full year due to continued pharmacy reimbursement pressure and decreased COVID-19 related services, which was worse than expected.
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