CVS Health exceeded profit expectations, boosting investor confidence and causing its shares to surge.
CVS Health reported better-than-expected profits in the fourth quarter, easing investor concerns and sending shares up more than 15% in early trading. The strong results mark a positive turnaround in the company’s first full quarter under new CEO David Joyner.
After a tough year in which CVS missed earnings targets in three consecutive quarters and withdrew its forecast, the latest performance indicates the company may be turning a corner. Like its peers, CVS has had to grapple with rising costs in its Medicare plans, but the impact was greater because of a higher number of new enrollees.
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Looking ahead, CVS forecast annual profits of between $5.75 and $6.00 per share, in line with market expectations. Analysts had forecast $5.96 per share. “With the right assets, the right leadership and the right strategy, we have strong momentum going into 2025,” Joyner told analysts.
The company’s medical loss ratio improved to 94.8% from a record-high 95.2% in the previous quarter. CVS expects the ratio to drop even further in 2025, projecting it to fall to 91.5%. Experts believe the outlook is conservative and could possibly be beaten. “This outlook is a welcome change from the overly optimistic forecasts of the past,” said James Harlow, senior vice president at Novare Capital Management. CVS’s turnaround is seen as a promising start for Joyner’s leadership, signaling a renewed focus on operational efficiency and sustainable growth.
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