Written by Amina Nias and Sirbarna Roy
(Reuters) – CVS Health defeated Wall Street’s estimates for profits in the fourth quarter on Wednesday and made annual expectations that meet expectations to a large extent, which hints to improve performance in the first quarter of it under the new CEO David Joyner.
The results reduce the investor’s fears and the shares sent more than 15 % in early trading. They fell more than 40 % last year, as the company missed the profits targets for the first three quarters of 2024 and then withdrew its expectations.
Like their peers, the healthcare group has faced high costs through medical care plans for people between the ages of 65 years, older or handicapped. However, the effect was more clear to the CV as the largest number of new members registered under plans.
CVS expects an annual profit between $ 5.75 and $ 6.00 per share. An average analysts expected $ 5.96 per share, according to the data collected by LSEG.
“We have a strong momentum heading to 2025, we have the right assets, the correct leadership and the correct strategy in force,” Gwenner said in a call with analysts.
James Harlo, the first vice president of Novar Capital Management, said, unlike the past few years, as the company has put optimistic expectations and then cut them.
The company’s medical loss, or the percentage of premiums spent on patient care, has deteriorated to 94.8 % of 88.5 % in an annual period, but improved from the record number of 95.2 % in the previous quarter.
Analysts expected the company to report 95.46 %, according to the consensus estimates collected by Brokerage Deutsche Bank. The company believes that 2025 is 91.5 % at the low end.
“The medical trends remain high, although what we witnessed in the fourth quarter was less severe than what we assumed,” said Thomas Kawah, Director of Financial in this call.
Insurance companies usually aim to about 80 % of the installments collected for spending on claims, but in the last chapters, CVS and competitors witnessed higher domains.
“The results are” a solid first step in the right direction, “said Michael Ha, an analyst, adding that a few quarters of positive performance were needed in 2025 to gain the comfort that CVS wiped Aqaba.
Pharmaceutical supports
CVS has developed plans to reduce costs in November and named a new insurance president as part of Joyner’s efforts to transport the company.
The company’s health care features unit recorded a quarterly loss of $ 439 million compared to $ 676 million a year ago.
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