CVS Health's Stock Tumbles 10.5% After Company Again Lowers Guidance And Names New CEO -- MarketWatch

MarketWatch · 10/18 10:41

CVS Health Corp.'s stock (CVS) tumbled 10.5% early Friday, after the healthcare company named longtime executive David Joyner as new CEO, replacing Karen Lynch, who is stepping down. Current Chairman Roger Farah will become executive chair, the company said, confirming an earlier story in the Wall Street Journal. CVS also offered guidance for third-quarter adjusted per-share earnings of $1.05 to $1.10, which is below the FactSet consensus of $1.69. The company is slated to report earnings on Nov. 6. CVS has repeatedly cut guidance this year, causing the stock to fall 19% year-to-date and attracting attention from hedge fund Glenview Capital. A board review of strategy included the option of breaking the company up, a plan it is now scrapping. CVS also owns health insurer Aetna, pharmacy-benefits manager CVS Caremark and treats senior patients at its Oak Street clinics. The latest guidance includes a $1.1 billion charge, equal to 63 cents, for premium deficiency reserves, or PDRs, mostly related to the company's Medicare and Individual Exchange businesses in the healthcare benefits segment. The company is withdrawing the guidance it offered on Aug. 7. "In the third quarter of 2024, the Company has continued to experience medical cost trends in excess of those projected in its prior outlook. The Medical Benefit Ratio ("MBR") for the third quarter is currently expected to be approximately 95.2%, which includes a 220-basis point impact from the PDRs," said CVS.

-Ciara Linnane

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October 18, 2024 06:41 ET (10:41 GMT)

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