CVS Health Sees Q3 Earnings Below Market, Names David Joyner CEO; Stock Down In Pre-market

CVS Health

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(RTTNews) - Shares of CVS Health Corp. (CVS) were losing more than 12 percent in pre-market activity on the NYSE after the company Friday said it sees third-quarter adjusted earnings below market estimates. The health solutions company also announced the appointment of David Joyner as President and Chief Executive Officer, effective October 17.

Joyner replaces Karen Lynch, who stepped down from her position in agreement with the company's Board of Directors. In addition, current Chairman of the Board, Roger Farah, will now be Executive Chairman.

CVS noted that Joyner holds 37 years of health care and pharmacy benefit management experience. He was most recently executive vice president, CVS Health, and president, CVS Caremark.

He began his career at Aetna as an employee benefit representative before joining Caremark Prescription Services as a regional sales manager.

For the third quarter, the company projects earnings per share of $0.03 to $0.08, including charges to record premium deficiency reserves or PDRs, primarily related to the company's Medicare and Individual Exchange businesses inside its Health Care Benefits segment, of around $1.1 billion.

The latest results also include a restructuring charge of around $1.2 billion, related to incremental store closures in 2025, as well as cost reduction actions.

Adjusted earnings per share is projected to be $1.05 to $1.10. The one-time impact reduced adjusted earnings per share by $0.63 per share.

Analysts on average expect the company to report earnings of $1.70 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

The PDRs are expected to be substantially released during the fourth quarter of 2024, benefiting results in that period.

CVS Health noted that it continued to experience further medical cost trends than projected in its third quarter. The Medical Benefit Ratio or MBR for the third quarter is currently expected to be approximately 95.2 percent, which includes a 220-basis point impact from the PDRs.

In light of continued elevated medical cost pressures in the Health Care Benefits segment, the company urged investors not to rely on its previous guidance provided on its second quarter 2024 earnings call.

In pre-market activity on the NYSE, CVS shares were trading at $56.00, down 12.05 percent.