In this articleCVSFollow your favorite stocksCREATE FREE ACCOUNTA person walks by a CVS Pharmacy store in Manhattan, New York, on Nov. 15, 2021.Andrew Kelly | ReutersCVS Health on Wednesday reported mixed third-quarter results as higher medical costs squeezed its bottom line. The earnings report is CEO David Joyner’s first at the helm of the troubled retail drugstore chain. The company expects elevated medical costs to continue to pressure its performance this year, “and as a result we are not providing a formal outlook at this time,” a spokesperson told CNBC. CVS will provide commentary on what it expects “directionally” during its earnings call, the spokesperson said. “Establishing credibility and earning the trust of our investors is one of my top priorities as the new leader of CVS Health,” Joyner said in a statement. “To achieve that, any guidance we provide should be achievable, with clear opportunities for outperformance. This is a core principle for me.”Wall Street’s confidence in CVS has soured this year after three straight quarters of full-year guidance cuts, prompting pressure from an activist investor to turn the business around.Shares of the company are down nearly 27% for the year as higher medical costs in its health insurance unit, Aetna, eat into its profits, reflecting seniors who are returning to hospitals to undergo procedures they had delayed during the Covid-19 pandemic.”While the entire industry has seen elevated utilization coming out of the pandemic, we have been more acutely impacted than others,” Joyner said. “Our immediate priority remains ensuring stability of the business.”Also on Wednesday, CVS named a new president for Aetna, effective immediately: Steve Nelson, the former CEO of healthcare giant UnitedHealthcare, a division of UnitedHealth Group. Joyner and Nelson are tasked with convincing investors that CVS can get back on track and better manage the higher-than-expected costs.Meanwhile, longtime company executive Prem Shah will take on a new, expanded role that oversees the company’s retail pharmacy, pharmacy benefits and health care delivery businesses, CVS said.Shares of CVS rose nearly 6% in premarket trading Wednesday.Here’s what CVS reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: $1.09 adjusted vs. $1.51 expectedRevenue: $95.43 billion vs. $92.75 billion expected On Oct. 18, when CVS announced Joyner had replaced former CEO Karen Lynch, the company also said it had conducted a strategic review that included layoffs, write-downs and the closure of 271 more retail stores. Those actions were in addition to a plan announced in August to cut $2 billion in expenses over the next several years, which includes cutting nearly 3,000 jobs, or less than 1% of its workforce.CVS reported sales of $95.43 billion for the third quarter, up 6.3% from the same period a year ago due to growth in its pharmacy business and insurance unit. The company posted net income of $71 million, or 7 cents per share, for the third quarter. That compares with net income of $2.27 billion, or $1.75 per share, for the year-earlier period. Excluding certain items, such as amortization of intangible assets, restructuring charges and capital losses, adjusted earnings per share were $1.09 for the quarter. That’s consistent with the estimate the company provided last month.Adjusted and unadjusted earnings also included a charge of 63 cents per share, or $1.1 billion, from so-called “premium deficiency reserves” in its insurance business related to anticipated losses in the fourth quarter of 2024. That refers to a liability that an insurer may need to cover if future premiums are not enough to pay for anticipated claims and expenses. Premium deficiency reserves “are effectively an acceleration of future losses, shifting the earnings cadence between” the third quarter and fourth quarter, a spokesperson told CNBC.CVS expects those premium defi …
