CVS Health reported net income of $2 billion thanks to double-digit percentage growth in the company’s healthcare benefits and services businesses that included contributions from a big boost in Obamacare enrollment.
The giant drugstore chain, which spent more than $20 billion last year, adding senior primary care centers via its acquisition of Oak Street Health and a homecare company, Signify Health, said total revenues rose 11.9% to $93.8 billion in the fourth quarter compared to prior year.
For all of last year, CVS revenues increased 10.9% to $357.8 billion and profits nearly doubled in 2023 to $8.3 billion compared to $4.3 billion in 2022.
“With a focus on delivering care and value, we had a strong fourth quarter and full year in 2023 as we build a world of health around every consumer,” CVS Health president and chief executive Karen S. Lynch said. ”We will continue to drive affordable access to care when, where, and how people want, while we improve transparency throughout the health care system.”
In its health care services business, total revenues increased 12.3% to $49.1 billion in the fourth quarter “compared to the prior year primarily driven by pharmacy drug mix, growth in specialty pharmacy, brand inflation and the acquisitions of Oak Street Health and Signify Health,” CVS said in its earnings report.
Meanwhile, CVS saw a boost of 1.3 million new health plan members to 25.7 million. CVS, which owns the nation’s third largest health insurer in Aetna, said the increase in membership reflected increases in the commercial and Medicare product lines, “including an increase of 1.3 million members related to the individual exchange business within the Commercial product line.” In recent years, CVS has expanded its sales of individual coverage under the Affordable Care Act, also known as Obamacare.
Despite the growth in CVS’s Medicare business and earnings that beat Wall Street’s expectations, CVS warned of rising healthcare costs that will dampen profits in 2024. CVS lowered its 2024 forecast for adjusted profit to “at least $8.30 per share” compared to an earlier forecast of “at least $8.50 per share” thanks to “elevated medical cost trends in 2024.”
CVS and rival health insurers operating Medicare Advantage plans for seniors have been warning of a big spike in medical care costs. Medicare Advantage plans contract with the federal government to provide benefits and services to seniors.