| COMPANY |
CVS Health Corporation |
| COURT |
United States District Court for the Southern District of New York |
| CASE NUMBER |
24-cv-05303 |
| JUDGE |
The Hon. Margaret M. Garnett |
| CLASS PERIOD |
May 3, 2023, through April 30, 2024 |
| SECURITY TYPE |
Securities |
LEAD PLAINTIFF DEADLINE IS SEPTEMBER 10, 2024.
If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.
Case Background:
On August 2, 2023, CVS issued a press release announcing the company’s results for the quarter ended June 30, 2023, which revealed that CVS was revising its diluted earnings-per-share (“EPS”) guidance range to $6.53 to $6.75 from $6.90 to $7.12. In addressing these results, CVS stated that operating income, which has a direct impact on EPS, “decreased $1.4 billion, or 30.7%, in the three months ended June 30, 2023 compared to the prior year primarily due to declines in the Health Care Benefits segment[.]” On this news, CVS’s stock price fell $2.04 per share, or 2.73%, to close at $72.32 per share on August 3, 2023.
Then, on February 7, 2024, CVS issued a press release announcing the company’s results for the year ended December 31, 2023 and revealed that CVS was revising its diluted EPS guidance range to at least $7.06 from at least $7.26, its adjusted EPS guidance range to at least $8.30 from at least $8.50, and its cash flow from operations guidance to at least $12.0 billion from at least $12.5 billion. In addressing these results, CVS stated that, while operating income increased in 2023 compared to 2022, “[t]hese increases in operating income were partially offset by declines in the Health Care Benefits segment.” Moreover, in a conference call held with investors and analysts that same day to discuss the company’s 2023 results, CVS’s CFO stated, in relevant part, “we now expect adjusted operating income for the Healthcare Benefit segment to be at least $5.4 billion, a decrease of $370 million from our prior estimates.” On this news, CVS’s stock price fell $0.96 per share, or 1.27%, to close at $74.36 per share on February 8, 2024.
Finally, on May 1, 2024, CVS issued a press release reporting its results for the quarter ended March 31, 2024 and revising its full-year 2024 guidance. Among other items, CVS reported $88.4 billion in revenue, missing expectations of $89 billion. CVS stated that higher utilization of healthcare services, meaning more insurance dollars spent, weighed on its results in addition to Medicare reimbursement rate cuts that will continue to pressure CVS for the remainder of the year. Accordingly, CVS issued revised full-year 2024 guidance, including “[r]evised GAAP diluted EPS guidance to at least $5.64 from at least $7.06”; “[r]evised Adjusted EPS guidance to at least $7.00 from at least $8.30”; and “[r]evised cash flow from operations guidance to at least $10.5 billion from at least $12.0 billion.” Further, CVS stated that operating income decreased $1.2 billion, or 34.1% “in in the three months ended March 31, 2024, primarily due to increased Medicare utilization, the unfavorable impact of the previously disclosed decline in the Company’s 2024 Medicare Advantage star ratings and a year-over-year unfavorable impact from development of prior-years’ health care cost estimates in the Health Care Benefits segment.” On this news, CVS’s stock price fell $11.40 per share, or 16.84%, to close at $56.31 per share on May 1, 2024.
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the forecasts CVS used to determine plan premiums were ineffective at accounting for medical cost trends and health care utilization patterns; (2) as a result, CVS was likely to incur significant expenses to cover cost increases that were not accounted for in the company’s forecasts and thus not covered by plan premiums; (3) accordingly, CVS had overstated the profitability of its Health Care Benefits segment; (4) contrary to Defendants’ assurances, the revenues generated from the company’s other primary segments were insufficient to offset the negative financial impact of the increasing expenditures within the Health Care Benefits segment; and (5) as a result, the company’s public statements were materially false and misleading at all relevant times.
What is a Lead Plaintiff?
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.