CVS Health (CVS, Financial) saw its stock price fall by over 7%, trading at $58.80. The decline followed the company's release of preliminary third-quarter earnings, which showed adjusted earnings per share ranging from $1.05 to $1.10, falling short of the market expectation of $1.70. In response, CVS withdrew its 2024 earnings guidance and cautioned investors about the ongoing pressure from rising healthcare benefit costs.
The company revealed that its healthcare benefits segment is experiencing challenges, with a medical loss ratio expected to be 95.2% for the third quarter, significantly above Wall Street's estimates. Additionally, the data reflected an $1.1 billion charge for insufficient premium reserves to cover excess medical expenses.
In an effort to restructure, CVS Health announced a change in leadership. David Joyner has been appointed as the new CEO, officially taking over from former CEO Karen Lynch. Joyner, a longtime executive at CVS, assumed the position to guide the company through its current challenges.
