Tear Sheet: CVS Health Corp. Lowered 2024 Guidance Speaks To Higher Medical Costs

Prior to these earnings, we expected more than $25 billion in S&P Global Ratings-adjusted EBITDA for fiscal 2024. We revised that figure to under $23 billion, and we now forecast S&P Global Ratings-adjusted debt to EBITDA in the mid-3x range for 2024. This is up from our prior expectation of the low-3x range. We believe elevated medical cost trends will continue to impact the business through 2024. However, these headwinds could potentially improve in 2025 due to company efforts like the CVS CostVantage model to help address reimbursement pressures in retail pharmacy, as well as more adoption of biosimilars to improve affordability of specialty drugs. S&P Global Ratings-adjusted EBITDA margins declined to 6% in 2023 from 7.1% in 2022. We

...March 12, 2024 We revised down our sales and profit forecasts for CVS after 2023 results came in below our expectations. Prior to these earnings, we expected more than $25 billion in S&P Global Ratings- adjusted EBITDA for fiscal 2024. We revised that figure to under $23 billion, and we now forecast S&P Global Ratings-adjusted debt to EBITDA in the mid-3x range for 2024. This is up from our prior expectation of the low-3x range. We believe elevated medical cost trends will continue to impact the business through 2024. However, these headwinds could potentially improve in 2025 due to company efforts like the CVS CostVantage model to help address reimbursement pressures in retail pharmacy, as well as more adoption of biosimilars to improve affordability of specialty drugs. We believe the company's efforts to diversify into a health care company will help keep margins fairly stable over the coming year. S&P Global Ratings-adjusted EBITDA margins declined to 6% in 2023 from 7.1% in 2022. We...

Full Report