CVS Health (NYSE:CVS) opened Wednesday on the minus side, on reporting second-quarter earnings that topped expectations, but slashed its full-year profit outlook, citing higher medical costs that have been squeezing the U.S. insurance industry.
The retail drugstore chain also said Aetna President Brian Kane, the top executive at the CVS-owned insurance unit, will leave the company immediately based on the current performance and outlook for the segment.
CVS CEO Karen Lynch will take over management of the business and CFO Thomas Cowhey will also help to oversee it. Katerina Guerraz, CVS Health’s chief strategy officer and head of enterprise affairs, will also become the insurance unit’s chief operating officer.
The company expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from previous guidance of at least $7 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $6.97 per share.
CVS also cut its unadjusted earnings guidance to a range of $4.95 to $5.20 per share, down from at least $5.64 per share.
It marks the third consecutive quarter that the company has lowered its 2024 profit guidance.
CVS said its new outlook reflects continued pressure on its health insurance segment, which is seeing increased medical costs and the “unfavorable impact” of the company’s Medicare Advantage star ratings. Those ratings help Medicare patients compare the quality of Medicare health and drug plans.
CVS shares fell $1.19, or 2%, to $57.15.
