CVS Health books $1.2 bn in restructuring charges with new CEO comments in focus

CVS Health (NYSE:CVS ) said during the third quarter it finalized a company-wide restructuring push designed to streamline the business and ratchet down costs.

In an earnings release on Wednesday, which came after a preliminary report last month, the healthcare group added it had recorded charges linked to the overhaul of around $1.2 billion in the three months ended on Sept. 30.

The expenses included a $607 million impairment charge for additional retail pharmacy locations it plans to close next year, $293 million associated with sweeping headcount reductions, and $269 million linked to the discontinuation of "certain non-core assets."

CVS previously said in October that it had carried out a strategic review of its operations that included layoffs, write-downs and the closure of 271 retail stores.

The decisions come as CVS, which owns the health insurance provider Aetna, has been grappling with spiking costs in its Medicare Advantage plans for people aged 65 and older. More patients have been choosing to visit the doctor and carry out elective surgeries than during the COVID-19 pandemic, driving up reimbursement payments.

CVS scrapped its 2024 earnings forecast and provided a preliminary forecast for its third-quarter returns that disappointed investors.

Adjusted profit-per share during the period was seen at between $1.05 and $1.10, well below the $1.70 consensus estimate. The figure ultimately came in at $1.09.

Analysts will now be looking for comments on the turnaround effort from David Joyner, who replaced Karen Lynch as Chief Executive of CVS three weeks ago.

Shares, which have fallen by more than 31% so far this year, rose in premarket US trading on Wednesday.

Total (EPA:TTEF ) revenues climbed 6.3% versus the year-ago period to $95.43 billion, while adjusted operating income sank by 43% year-on-year $2.55 billion.

Source: Investing.com