With an adjusted earnings per share of $2.25, CVS Health significantly exceeded expectations in the first quarter – analysts had, on average, expected $1.70. The management then raised the forecast for the full year: the new range is $6.00 to $6.20 per share (previously: $5.75–$6.00). This was rewarded on the stock market: the share rose by over 7% on Thursday morning.
A significant driver of the results was the turnaround at the insurance subsidiary Aetna. The segment increased its adjusted operating profit from $732 million in the previous year's quarter to around $2 billion. Nevertheless, CVS announced it would withdraw from the Obamacare policies business from 2026. Aetna is currently active in 17 states, with around one million people insured there. However, the business consistently incurs losses, according to CEO David Joyner: "I don't see a realistic way to reverse this trend in the medium term.
Parallel, CVS is intensifying its strategy in the field of pharmaceutical supply. The company's own Pharmacy Benefit Manager unit, CVS Caremark, was able to prevail in price negotiations with Novo Nordisk and will preferentially include Wegovy in its lists starting July 1. The GLP-1 active ingredient for weight reduction is among the most expensive drugs on the market - the deal therefore promises significant savings potential for employers and insurers who manage their drug costs through Caremark.
For self-payers, CVS will also offer the drug directly in its approximately 9,000 pharmacies in the future – at a reduced price of $499 per month. In doing so, the company is taking up the offer from Novo Nordisk, which previously offered this price only through its own online platforms such as Hims & Hers or Ro. CVS expects increased demand as access to alternative GLP-1 products manufactured by pharmacies themselves becomes increasingly restricted.
The reported net income was $1.78 billion or $1.41 per share. A legal dispute with the long-term care subsidiary Omnicare (provision: $387 million) and a loss of $247 million from the sale of a healthcare services business segment had a negative impact. Additionally, the management warned of potential declines in vaccinations, especially against Covid-19 – consumer behavior and changed government recommendations could dampen demand.
