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CVS Health topped second-quarter expectations, but the health care giant’s profit sank as pricing pressure hurt its drugstore business and rising medical costs hit the health insurance side.
The company also booked a $496 million, pretax restructuring charge in the quarter and reaffirmed a forecast for the year that it had cut in May. CVS Health said it developed a company-wide restructuring plan to cut costs and improve efficiency in the quarter.
The company is still digesting a couple of multibillion-dollar acquisitions that aim to improve its ability to deliver more care and manage customer health.
In the second quarter, growth from the CVS Health’s largest business, pharmacy benefits management, softened hits the company took from both its insurance and drugstore segments.
CVS Health runs prescription drug plans through one of the nation’s largest pharmacy benefits management businesses. Its Aetna insurance arm coves more than 25 million people, and the company has a retail drugstore chain with nearly 10,000 locations.
Adjusted operating income sank 20% on the health insurance side, as Aetna saw a jump in outpatient care use from customers on Medicare Advantage plans. Those are privately run versions of the government’s Medicare program mainly for people age 65 and older. Medicare Advantage is a key growth focus for Aetna.
Total health insurance enrollment jumped 5%, helped in part by Medicare Advantage growth.
The drugstore side saw adjusted operating income fall 17% as it dealt with tight reimbursement for prescriptions and a drop in COVID-19 vaccinations and testing.
Overall, CVS Health’s net income plunged 37% to $1.9 billion. Adjusted earnings totaled $2.21 per share in the quarter. Total revenue grew 10% to $88.92 billion.
Analysts expected earnings of $2.12 per share on $86.41 billion in revenue, according to FactSet.
The company said it still expects adjusted earnings this year to range between $8.50 and $8.70 per share.
Analysts forecast earnings of $8.58 per share.
Shares of Woonsocket, Rhode Island-based CVS Health Corp. rose nearly 2% to $75.40 in premarket trading Wednesday.
