CVS Stock Plunges as Medicare Advantage Costs Spike
CVS Health came up short of Q1 earnings estimates and slashed its full-year outlook as medical costs surged. Here's what you need to know.

CVS Health (CVS) stock plummeted more than 18% at the start of Wednesday's trading session after the pharmacy chain disclosed weaker-than-expected earnings and revenue for its first quarter and slashed its full-year outlook.
In the three months ended March 31, CVS reported revenue of $88.4 billion, an increase of 3.7% from the year-ago period. The gain was driven by 24.6% top-line growth in the company's Health Care Benefits segment, to $32.2 billion.
However, earnings per share (EPS) decreased 40.5% year-over-year to $1.31. This was due primarily to a declines in operating income for its Health Care Benefits business as a result of rising medical costs associated with its Medicare Advantage plans.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company," CVS CEO Karen Lynch said in a statement. "We are confident we have a pathway to address our near-term Medicare Advantage challenges."
The quarterly results fell well short of analysts' expectations. According to CNBC, Wall Street was calling for revenue of $89.2 billion and earnings of $1.69 per share.
As a result of the weak performance in the first quarter and the company "recognizing the potential for continued elevated medical cost trends in the remainder of 2024," CVS lowered its full-year outlook. It now anticipates earnings per share of at least $7.00, down from its previous guidance of at least $8.30 per share. Cash flow from operations is forecast to be at least $10.5 billion, down from its previous guidance of at least $12 billion.
"We remain committed to our strategy and believe that we have the right assets in place to deliver value to our customers, members, patients, and shareholders," Lynch said.
Is CVS stock a buy, sell or hold?
The earnings-related setback has yet to phase analysts who are very bullish on the healthcare stock.
According to S&P Global Market Intelligence, the consensus analyst target price for CVS stock is $87.96, representing implied upside of more than 56% to current levels. Additionally, the consensus recommendation is Buy.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Eli Lilly Stock Rises After Profit, Outlook Top Expectations
Eli Lilly stock is higher Thursday after the pharma giant beat fourth-quarter profit expectations and issued strong 2025 guidance. Here's what you need to know.
By Joey Solitro Published
-
Trump Wants You Out of the IRS, But You'll Have to Wait Until May
IRS Some IRS employees won’t be able to resign using the buyout offer until the end of tax season.
By Gabriella Cruz-Martínez Published
-
Eli Lilly Stock Rises After Profit, Outlook Top Expectations
Eli Lilly stock is higher Thursday after the pharma giant beat fourth-quarter profit expectations and issued strong 2025 guidance. Here's what you need to know.
By Joey Solitro Published
-
Qualcomm Stock Drops After Its Earnings Beat. Here's Why
Qualcomm stock is lower Thursday even after the chipmaker reported strong earnings and gave an encouraging outlook. This is what investors need to know.
By Joey Solitro Published
-
The Best ROI? Investing in Yourself This Year
If personal growth is something you invest in only after taking care of all other priorities, it's time to turn that mindset on its head. Here's how to start.
By Frank J. Legan Published
-
The Four Worst Mistakes to Make When Selling Your Business
From ignoring potential buyers to failing to consider what you'll do once you've stopped working, here are the key mistakes to avoid when selling a business.
By Evan T. Beach, CFP®, AWMA® Published
-
Stock Market Today: Stocks Waver as Big Tech Slumps on Spending Concerns
Markets seesawed amid worries over massive costs for artificial intelligence and mixed economic news.
By Dan Burrows Published
-
Is Disney Stock Still a Buy After Earnings?
Walt Disney stock is down Wednesday after the entertainment and media company beat fiscal 2025 first-quarter expectations. Here's what you need to know.
By Joey Solitro Published
-
Why Uber Stock Is Falling After Earnings
Uber stock is lower Wednesday as the ride-hailing firm's soft first-quarter outlook offsets its strong fourth-quarter results. Here's what you need to know.
By Joey Solitro Published
-
AMD Stock Falls Despite Earnings Beat: What to Know
Advanced Micro Devices beat expectations for its fourth quarter but AMD stock is still tumbling Wednesday. Here's why.
By Joey Solitro Published