By Sriparna Roy
(Reuters) – CFS Health Investors will accurately investigate Turnaround initiatives this week led by the new CEO David Joyner and their impact on cost pressure in its health insurance activities.
The conglomerate for health care, which reports its results from the fourth quarter on Wednesday, has missed the profit goals for the past three quarters and withdrew its annual prediction, so that his shares were more than 40% in the trap in 2024.
“Unfortunately for CFS we believe that every business units has become more challenging,” said Deutsche Bank analyst George Hill.
CVS has a pharmacy advantage manager, a large insurance unit and one of the largest American retail apothelial chains.
The challenges with higher costs are likely to continue and accelerate, said Leerink Partners analyst Michael Cherny.
Just like his colleagues, CFS has confronted with increased costs in its Medicare plans for people who are 65 years and older, but the hit was more pronounced when the company registered the highest number of new members under the plans.
The reported a medical loss ratio – a percentage of the premiums spent on medical care – in a record high of 95.2% in October, because medicaid -intent recovery by states after the end of a policy of the pandemic era added to the costs From insurers.
But investors now hope for change.
CVS, who has underwent a recasting top management since the appointment of Joyner in October, explained big plans for cost savings in November.
Management of credibility
Investors are waiting for 2025 prediction and look for comments about the demand trends in health care, adjustments to Medicaid rate and annual performance of the company registration and pharmacy.
In recent years, CFS has reduced its annual predictions a few times after issuing over-optimistic goals, which damaged the credibility of the management and damaged his shares, said James Harlow, senior vice-president at Novare Capital Management.
Analysts expect on average a profit of 2025 of $ 5.96 per share, according to data collected by LSEG.
Peers UnitedHealth and Elevance have warned of increased costs to continue to exist in 2025.
“I don’t think the bar is so high, but people just want to see that it is no worse than what they initially expected,” said Jefferies analyst Brian Tanquilut.
(Reporting by Sriparna Roy in Bengaluru; Edit by Shinjini Ganguli)