Investing.com -- CVS Health (NYSE:CVS) reported better-than-expected profit and revenue in the second quarter, but higher medical costs and a sweeping restructuring push led the healthcare giant to lower its 2024 earnings outlook and scrap its 2025 guidance.
Adjusted earnings per share during the three months until the end of June slipped to $2.21 from $2.53 last year, but still beat consensus estimates of $2.13. Meanwhile, revenue rose 10.3% to $88.92 billion, topping forecasts of $86.41B.
"Our diversified business model delivered strong results this quarter," Chief Executive Officer Karen S. Lynch said in a statement. "We continue to execute on our strategy to expand access to health services across our care delivery channels and strengthen our engagement with consumers to improve their health and well-being."
According to Reuters, the Rhode Island-based pharmacy chain said that it would slash about 5,000 non-customer-facing roles in order to control expenses following a string of acquisitions. CVS recently purchased home health care services firm Signify Health for $8B and primary care provider Oak Street Health for $10.6B in a bid to expand the scope of the business beyond health insurance and pharmacies.
The group booked a restructuring charge of $496 million that was linked to the layoffs and other impairments, Reuters added.
Meanwhile, CVS backed its 2023 adjusted earnings guidance of $8.50 to $8.70. However, it expects its medical benefit ratio -- a ratio of claims paid to premium collected -- to come in at the higher end of its outlook of 84.7%, plus or minus 50 basis points. The number, which is used by CVS to gauge the performance of its insurance unit, has come under scrutiny following a post-COVID surge in demand for elective surgeries that were delayed during the pandemic.
The company also cut its 2024 adjusted income outlook, citing the impact of both the strategic overhaul and the elevated medical expenses. Chief Financial Officer Shawn Guertin said in a conference call that the firm now sees profit next year at between $8.50 to $8.70 a share, down from the prior forecast of $9 per share. Its 2025 adjusted earnings per share guidance of $10 was also withdrawn.