Updated at 7:48 AM EST
CVS Health (CVS) – Get Free Report shares jumped Tuesday after the group boosted its quarterly dividend, while forecasting stronger-than-expected 2024 sales. The health-care and drugstore group looks to streamline its broader business amid renewed talk of consolidation in the health-insurance sector.
CVS sees overall revenue of at least $366 billion next year, firmly ahead of the LSEG forecast of around $346 billion, with adjusted profit coming in at around $8.51 per share.
The group also reiterated its 2023 forecasts for adjusted profit in the region of $8.50 to $8.70 a share as well as cash flows from its overall business to come in between $12.5 billion to $13.5 billion.
CVS lifted its quarterly dividend by 10%, to 66.5 cents a share, payable Feb. 1 to holders of record Jan. 22.
“We are successfully executing on our strategy to advance the future of health care while unlocking new value for consumers,” said CEO Karen Lynch. “The combination of our businesses, and the key growth areas we have invested in, drive our ability to lower the total cost of care, improve health outcomes, and deliver on our commitments to our customers, consumers, and shareholders.”
CVS shares were marked 2.95% higher in premarket trading to indicate an opening bell price of $70.50 each, a move that would nudge the stock into positive territory for the past six months.
CVS rebrands health services division
The Woonsocket, R.I., group, one of the country’s biggest pharmacy-benefits managers, also unveiled plans to rebrand its Health Services segment under the name CVS Healthspire. That division will include a host of its current units, including Oak Street Health, Signify and its MinuteClinic.
“Delivering care in a more integrated way — especially for complex patients with chronic health conditions — improves health outcomes and the patient experience,” said Oak Street Health’s interim president, Mike Pykosz.
Related: Cigna tumbles on Humana merger talk reports; FTC already probing PBMs
Late last month, the Wall Street Journal first reported that CVS rivals Cigna (CI) – Get Free Report and Humana (HUM) – Get Free Report had entered early-stage merger talks that would create one of the largest health insurers in the country and challenge the market dominance of UnitedHealth (UNH) – Get Free Report.
A big impediment to any potential tie-up between Cigna and Humana, however, would likely come from the Federal Trade Commission, which has taken a far more active role in challenging megamergers under the leadership of Lina Khan.
The FTC has, in fact, cautioned the three largest pharmacy-benefit mangers – CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth’s OptumRx – of likely changes to the industry’s broader regulation.
Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
