Lawsuit filed for Investors who lost money with shares of CVS Health Corporation (NYSE: CVS)

An investor, who purchased shares of CVS Health Corporation (NYSE: CVS), filed a lawsuit over alleged violations of Federal Securities Laws by CVS Health Corporation in connection with certain allegedly false and misleading statements made between May 3, 2023 and April 30, 2024.

Investors who purchased shares of CVS Health Corporation (NYSE: CVS) have certain options and for certain investors are short and strict deadlines running. Deadline: September 10, 2024. NYSE: CVS investors should contact the Shareholders Foundation at mail@shareholdersfoundation.com or call +1(858) 779 - 1554.

Woonsocket, RI based CVS Health Corporation is a healthcare company that operates through three primary segments: Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. The Health Care Benefits segment purportedly offers "a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, [prescription drug plans] and Medicaid health care management services." The Health Care Benefits segment's revenues consist almost entirely of insurance premiums paid by customers.
The pricing and other terms of the Company's private health insurance plans are typically determined in advance of a plan's policy period, which is typically one year. CVS Health Corporation determines premiums for these plans based on internal forecasts that consider historical data and the profitability of which are dependent on the Company's ability to accurately model, among other things, medical cost trends and health care utilization patterns. Generally, a fixed premium rate is determined at the beginning of the policy period. To the extent that unmodeled-for increases in the costs of health care and other benefits arise during a given policy period, CVS is ultimately responsible for the payment of those costs. Accordingly, the profitability of the Health Care Benefits segment is particularly sensitive to the accuracy of its cost forecasts.

On August 2, 2023, CVS Health Corporation announced the Company's results for the quarter ended June 30, 2023, which revealed that the Company was revising its diluted earnings-per-share ("EPS") guidance range to $6.53 to $6.75 from $6.90 to $7.12. In a Quarterly Report filed on Form 10-Q the United States Securities and Exchange Commission ("SEC") that same day, 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[.]"

Then, on November 1, 2023, CVS Health Corporation announced the Company's results for the quarter ended September 30, 2023, which revealed that the Company was again reducing its diluted EPS guidance range to $6.37 to $6.61 from $6.53 to $6.75. In a Quarterly Report filed on Form 10-Q with the SEC that same day, CVS stated that while operating income increased "in the nine months ended September 30, 2023 compared to the prior year [. . .] [t]hese increases in operating income were partially offset by declines in the Health Care Benefits segment."

Then, on February 7, 2024, CVS Health Corporation announced the Company's results for the year ended December 31, 2023 which revealed that the Company 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 an Annual Report filed on Form 10-K with the SEC that same day reporting the Company's financial and operational results for the year ended December 31, 2023, 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 Chief Financial Officer Defendant Thomas F. Cowhey 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."

Finally, on May 1, 2024, CVS Health Corporation reported 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. The Company 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, in a Quarterly Report filed on Form 10-Q with the SEC that same day, 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."

Shares of CVS Health Corporation (NYSE: CVS) declined from $83.25 per share on January 08, 2024, to as low as $52.77 per share on May 29, 2024.

The plaintiff claims that between May 3, 2023 and April 30, 2024, the Defendants made false and/or misleading statements and/or failed to disclose tha the forecasts CVS used to determine plan premiums were ineffective at accounting for medical cost trends and health care utilization patterns, that 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, that accordingly, CVS had overstated the profitability of its Health Care Benefits segment, that 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 that as a result, the Company's public statements were materially false and misleading at all relevant times.

Those who purchased shares of CVS Health Corporation (NYSE: CVS) have certain options and should contact the Shareholders Foundation.

Contact:
Michael Daniels
Shareholders Foundation, Inc.
3111 Camino Del Rio North
Suite 423
San Diego, CA 92108
Tel: +1-(858)-779-1554
E-Mail: mail@shareholdersfoundation.com

About Shareholders Foundation, Inc.
The Shareholders Foundation, Inc. is a professional portfolio monitoring and settlement claim filing service, and an investor advocacy group, which does research related to shareholder issues and informs investors of securities lawsuits, settlements, judgments, and other legal related news to the stock/financial market. Shareholders Foundation, Inc. is in contact with a large number of shareholders and offers help, support, and assistance for every shareholder. The Shareholders Foundation, Inc. is not a law firm. Referenced cases, investigations, and/or settlements are not filed/initiated/reached and/or are not related to Shareholders Foundation. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.

This release was published on openPR.