Raphael Stevens

Pfizer reported first-quarter revenue that beat expectations and hiked its full-year profit outlook, benefiting from its broad cost-cutting program and strong sales of its non-Covid products.
The pharmaceutical giant’s quarterly results also benefited from a smaller-than-feared drop in sales for its Covid antiviral pill Paxlovid.
The results come as Pfizer tries to regain its footing after the rapid decline of its Covid business.

Jakub Porzycki | Nurphoto | Getty Images

Pfizer on Wednesday reported first-quarter revenue that beat expectations and hiked its full-year profit outlook, benefiting from its broad cost-cutting program, a smaller-than-feared drop in sales of its Covid antiviral pill Paxlovid and strong non-Covid product sales.
The company now expects to book adjusted earnings of $2.15 to $2.35 per share for the fiscal year, up from its prior guidance of $2.05 to $2.25 per share. Pfizer reiterated its previous revenue forecast of $58.5 billion and $61.5 billion, which it first outlined in mid-December. 

The pharmaceutical giant said its new profit guidance accounts for its “confidence” in its business and its ability to slash costs. Pfizer said it is on track to deliver at least $4 billion in savings by the end of the year.
The results come as Pfizer tries to regain its footing after the rapid decline of its Covid business. Demand for those products has plunged to new lows, and they transitioned to the commercial market in the U.S. last year. As revenue suffers, the company is trying to improve its bottom line and shore up investor confidence through its cost cuts and a renewed focus on treating cancer after its $43 billion acquisition of Seagen last year. 
Here’s what Pfizer reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: 82 cents adjusted, it was not immediately clear if it is comparable to the 52 cents expected.
Revenue: $14.88 billion vs. $14.01 billion expected.

Pfizer recorded first-quarter revenue of $14.88 billion, down 20% from the same period a year ago, primarily because of the plunge in sales of its Covid products.
For the first quarter, Pfizer booked net income of $3.12 billion, or 55 cents per share. That compares with net income of $5.54 billion, or 97 cents per share, during the same period a year ago. 

Excluding certain items, the company posted earnings per share of 82 cents for the quarter. 
Notably, the company said its adjusted and nonadjusted profit got an 11 cents per share boost from a $771 million final adjustment to the estimated $3.5 billion revenue reversal recorded in the fourth quarter, reflecting 5.1 million courses of Paxlovid returned by the U.S. government by Feb. 29. 
Paxlovid booked $2 billion in revenue for the quarter, down 50% from the same period a year ago. That decline was mainly because of lower deliveries around the world as the product transitioned to commercial market sales, along with lower demand in China. 
Meanwhile, Pfizer’s Covid vaccine generated $354 million in sales, down 88% from the year-earlier period. That drop was also driven by lower contract deliveries and demand in international markets, as well as lower U.S. volumes, partly reflecting the seasonality of demand for vaccinations.
Shares of Pfizer fell roughly 40% in 2023 as demand for Paxlovid and its vaccine against the virus dried up, causing the company to dramatically slash its full-year revenue forecast and record multibillion-dollar charges related to inventory write-offs. Pfizer also disappointed the Street with an underwhelming launch of a new RSV shot and a twice-daily weight loss pill that fell short in clinical trials. 

Non-Covid product strength

Excluding Covid products, Pfizer said revenue for the first quarter rose 11%.
The company said that growth was partly fueled by Seagen’s products, which brought in $742 million in revenue for the quarter. That includes a targeted treatment for bladder cancer called Padcev and another drug that treats certain lymphomas. 
Pfizer completed its acquisition of the drugmaker in December. 
The company said revenue also got a boost from strong sales of Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.14 billion in sales, up 66% from the first quarter of 2024.
Analysts surveyed by FactSet had expected that group of drugs to rake in $909.1 million for the quarter. 
Pfizer also said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, helped drive revenue growth. The drug posted $2.04 billion in revenue for the quarter, up 9% from the same period a year ago. 

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Analysts had expected Eliquis to take in $1.95 billion in sales, according to FactSet.
A group of shots to protect against pneumococcal pneumonia brought in $1.69 billion in sales for the first quarter, up 6% from the year-ago period. That growth was driven by uptake among children in the U.S. and government purchases, among other factors. 
Analysts had expected that group of shots to book $1.63 billion in sales for the quarter, FactSet estimates said.
Meanwhile, Pfizer’s new vaccine against respiratory syncytial virus, or RSV, saw $145 million in revenue, primarily driven by uptake among older adults. The shot, known as Abrysvo, entered the market during the third quarter for seniors and expectant mothers who can pass on protection to their fetuses. 
The vaccine fell short of analysts’ estimate of $360 million in revenue for the first quarter, according to FactSet.
Pfizer’s medication for certain breast cancers, Ibrance, generated $1.05 billion in revenue for the period, down 8% from the same period a year ago. The decline came as the drug faced competitive pressure and price decreases in certain international markets.  
Revenue from that drug was roughly in line with what analysts were expecting. 

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CVS Health on Wednesday reported first-quarter revenue and adjusted earnings that missed expectations.
The company also lowered its full-year profit outlook, citing higher medical costs that are dogging the broader U.S. insurance industry.
Insurers have been seeing medical costs spike as an increasing number of Medicare Advantage patients return to hospitals to undergo procedures they had delayed during the pandemic.

CVS Health on Wednesday reported first-quarter revenue and adjusted earnings that missed expectations and slashed its full-year profit outlook, citing higher medical costs that are dogging the U.S. insurance industry.
Shares of the company dropped 10% in premarket trading.

The drugstore chain expects 2024 adjusted earnings of at least $7 per share, down from a previous guidance of at least $8.30 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $8.28 per share. 
CVS also cut its unadjusted earnings guidance to at least $5.64 per share, down from at least $7.06 per share. 
The company said its new outlook assumes that higher medical costs in its insurance business during the first quarter will persist throughout the year. CVS owns health insurer Aetna. 
Still, CVS CEO Karen Lynch said in a statement that the “the current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company.” CVS is confident “we have a pathway to address our near-term Medicare Advantage challenges,” she added.
Insurers such as Humana and UnitedHealth Group have seen medical costs spike as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic, such as joint and hip replacements. 

Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a key source of growth and profits for the insurance industry. But investors have become more concerned about the runaway costs associated with those plans, which cover more than half of all Medicare beneficiaries. 
Here’s what CVS reported for the first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $1.31 adjusted vs. $1.69 expected
Revenue: $88.44 billion vs. $89.21 billion expected

CVS reported net income of $1.12 billion, or 88 cents per share, for the first quarter. That compares with net income of $2.14 billion, or $1.65 per share, for the same period a year ago. 
Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $1.31 for the quarter.
CVS booked sales of $88.44 billion for the quarter, up nearly 4% from the year-earlier period. That increase was driven by its pharmacy business and insurance unit. 
Meanwhile, CVS said sales in its health services segment, which includes the pharmacy benefit manager Caremark, declined during the period. That was mainly due to the loss of a large unnamed client, the company noted. 
In January, Tyson Foods said it had dropped CVS’ Caremark and instead chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting this year. That came months after Blue Shield of California, one of the largest insurers in the nation’s most populous state, also dropped Caremark and instead partnered with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs company. 
Those decisions add to an upheaval in the health-care industry, as startups promising lower costs and transparency challenge the largest PBMs and pressure them to change their own business models. 
The first-quarter results come as CVS pushes to transform from a major drugstore chain into a large health-care company. CVS deepened that push over the last year with its nearly $8 billion acquisition of health-care provider Signify Health and a $10.6 billion deal to buy Oak Street Health, which operates primary-care clinics for seniors.

Pressure on insurance unit

CVS’ health insurance segment generated $32.24 billion in revenue during the quarter, a more than 24% increase from the first quarter of 2023. The division includes plans by Aetna for the Affordable Care Act, Medicare Advantage and Medicaid, as well as dental and vision.
Sales blew past analysts’ estimate of $30.69 billion for the period, according to StreetAccount. 
But the insurance division reported adjusted operating income of just $732 million for the first quarter. That is well below analysts’ expectation of $1.19 billion, according to FactSet. 

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The segment’s medical benefit ratio — a measure of total medical expenses paid relative to premiums collected — increased to 90.4% from 84.6% a year earlier. A lower ratio typically indicates that the company collected more in premiums than it paid out in benefits, resulting in higher profitability.
Analysts had expected that ratio to be 88.4%, according to FactSet estimates. 
CVS said the rise was mainly driven by increased utilization of Medicare Advantage and the “unfavorable impact” of the company’s Medicare Advantage star ratings. Those ratings help Medicare patients compare the quality of Medicare health and drug plans. 
CVS added that an additional day in 2024 due to the leap year also contributed to the higher medical benefit ratio. 

Health services, pharmacy businesses miss

A workers stocks the shelves in a CVS pharmacy store on February 07, 2024 in Miami, Florida. 
Joe Raedle | Getty Images

The company’s health services segment generated $40.29 billion in revenue for the quarter, a nearly 10% drop compared with the same quarter in 2023. 
The division includes CVS Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans, along with health-care services delivered in medical clinics, through telehealth and at home.
Those sales were in line analysts’ estimate of $40.29 billion in revenue for the period, according to FactSet. 
CVS said the decline was driven in part by the loss of the unnamed client and “continued pharmacy client price improvements.” The decrease was partially offset by growth in Oak Street Health, Signify Health and specialty pharmacy services, which help patients who are suffering from complex disorders and require specialized therapy. 
The health services division processed 462.9 million pharmacy claims during the quarter, down from the 587.3 million during the year-ago period. 
CVS’ pharmacy and consumer wellness division booked $28.73 billion in sales for the first quarter, up almost 3% from the same period a year earlier. That segment dispenses prescriptions in CVS’ more than 9,000 brick-and-mortar retail pharmacies and provides other pharmacy services, such as diagnostic testing and vaccination. 
Analysts had expected the division to bring in $29.5 billion in sales, according to FactSet. 
The company said the rise was primarily driven by heightened prescription volume, including increased contributions from vaccinations. Pharmacy reimbursement pressure, the launch of new generic drugs and decreased front-store volume, among other factors, weighed on the division’s sales. 

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Johnson & Johnson said it will pay $6.5 billion to settle nearly all of the thousands of lawsuits in the U.S. claiming its talc-based products caused ovarian cancer.
The deal would allow J&J to resolve the lawsuits through a third bankruptcy filing of a subsidiary company, LTL Management. 
J&J said the remaining pending lawsuits relate to a rare cancer called mesothelioma and will be addressed outside of the new settlement plan. 

Johnson & Johnson on Wednesday said it will pay $6.5 billion to settle nearly all of the thousands of lawsuits in the U.S. claiming its talc-based products caused ovarian cancer.
The deal would allow J&J to resolve the lawsuits through a third bankruptcy filing of a subsidiary company, LTL Management. 

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It will begin a three-month voting period for claimants, in hopes of reaching a consensus on a settlement of all current and future ovarian cancer claims. About 99% of the talc-related lawsuits filed against J&J and its subsidiaries stem from ovarian cancer. 
J&J said the remaining pending lawsuits relate to a rare cancer called mesothelioma and will be addressed outside of the new settlement plan. 
The pharmaceutical giant said it has already resolved 95% of mesothelioma lawsuits filed to date.

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Ford is launching a new training platform for its franchised dealers on Wednesday that uses artificial intelligence for employee coaching evaluations and emulates Netflix and YouTube interfaces.
Ford says the goals of the new “Ford University” program are to improve customer service, better engage employees and provide dealers and the company with more data to assist business.
Automakers have long touted the idea that better dealer experiences lead to happier customers who are more likely to become repeat customers.

Ford Mustang on display at the NY Auto Show, April 6, 2023.
Scott Mlyn | CNBC

DEARBORN, Mich. — Ford Motor is launching a new training program for more than 3,000 U.S. franchised dealers on Wednesday that uses artificial intelligence for employee coaching evaluations and emulates Netflix and YouTube interfaces more than the automaker’s traditional training courses.
Ford says the main goals of the “Ford University” platform are to improve customer service, better engage employees — especially younger ones who are accustomed to binge-watching videos — and provide dealers and the company with more data to assist business.

“This will help make sure that we’re actually creating a training that can be most impactful and is actually going to drive in a measurable way the skills of the individual employees,” Abby Vietor, global director of dealer training and productivity, said during a media briefing. “This is data that we’ve not had to date. So, this is a rich area for us.”
Vietor, who joined Ford in March 2023 after leading global games learning for Amazon Web Services, will oversee Ford University. She declined to disclose how much the company has spent on the new training.
Dealership employees, who are independently employed by dealers, are crucial to the company’s sales, performance and customer engagement and satisfaction. Automakers have long touted the idea that better dealer experiences lead to happier customers who are more likely to become repeat customers.

Abby Vietor, Ford global director of dealer training and productivity and head of Ford University.

Such employees also are viewed as critical to educate mainstream consumers on electrified vehicles, including all-electric models.
The platform, including mobile versions, is the most significant change in Ford’s dealership employee training since it switched from physical handbooks to digital ones in the early 2000s, according to Ford archivist Ted Ryan.

Ford University also includes more traditional, print-based training resources, company officials said. But word-based training will be phased out and replaced with a mix of modules, including “AI supported missions, video and learning tools,” according to Ford.

EV education

The new training heavily relies on videos rather than written words for employee education as well as “gamification,” or game-like learning, to assist in engagement and retention.
“It much more fits today’s society and the way people learn today,” said Peter Battle, a corporate coach and veteran dealer general manager of Pat Milliken Ford in Michigan. “They don’t learn by opening an owner’s manual and reading what their car does.”

An example of videos on Ford University’s platform, inspired by streaming services.

Many of the new Ford University videos available at launch are focused on electrified vehicles, including all-electric models such as the Ford F-150 Lightning and Mustang Mach-E. There also will be general topics such as education about EV charging and installation.
Lack of understanding around EVs is one of several problems identified by automakers that’s contributing to the slower-than-expected adoption of the vehicles. Cost and infrastructure also play a role.
“EV is definitely a part of our focus for the training that will be available,” Vietor said. “It’s an area where the customer conversation is evolving and changing. We want to make sure all the employees are prepared to speak to it.”

AI

Ford University will use AI coaching designed to improve employee knowledge and communication skills — a new AI tool as automakers experiment with best use cases for the emerging technology.
For example, employees could have a practice conversation with the AI or be asked to submit a video describing themselves, their position and certain key facts about a product.
The AI tool would then evaluate the employee on their enthusiasm, mannerisms and knowledge, among other potential targets. Based on those results, as well as viewing history and specific areas for improvement, the platform could then suggest additional videos or information for the employee — much like Netflix and other streaming services do after a viewer watches a program.
“We’re going to be able to scale this for everyone with AI,” said Kathy Munoz, Ford manager of dealer training and productivity. “The whole point of the platform is practice, practice, practice.”
The AI was developed by Ford using generative pre-trained transformers, or GPT, and Microsoft’s Azure Copilot.
Ford University will first be rolled out for front-of-house employees such as salespeople, but is eventually expected to expand to service workers and other more technical departments. More

Yum Brands’ quarterly earnings and revenue missed Wall Street’s estimates.
KFC and Pizza Hut reported same-store sales declines, while Taco Bell’s same-store sales rose just 1%.
Yum said its digital sales accounted for more than 50% of sales for the first time.

A Pizza Hut store is seen on November 01, 2023 in Austin, Texas.
Brandon Bell | Getty Images

Yum Brands on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations as Pizza Hut and KFC struggled to attract customers.
Shares of the company fell more than 4% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.15 adjusted vs. $1.20 expected
Revenue: $1.6 billion vs. $1.71 billion expected

Yum reported first-quarter net income of $314 million, or $1.10 per share, up from $300 million, or $1.05 per share, a year earlier.
Excluding investment losses and other items, the company earned $1.15 per share.
Net sales dropped 3% to $1.6 billion. Yum’s global same-store sales also fell 3% in the quarter, missing StreetAccount estimates of 0.2% same-store sales growth.
Across Yum’s three largest brands, only Taco Bell reported same-store sales growth. The metric rose 1% during the quarter at the Mexican-inspired chain. Taco Bell’s U.S. locations reported same-store sales growth of 2%, while its international business posted a decline of 2%.

KFC’s same-store sales fell 2% in the quarter. The bigger decline came in the U.S., where they shrank 7%. However, the chicken chain’s international division saw same-store sales decrease just 2%, thanks to growth in China, its largest market. A year ago, KFC’s quarterly same-store sales rose 9%.
Pizza Hut reported same-store sales dropped 7%, as demand lagged both in its home market and internationally. The pizza chain’s U.S. restaurants reported a decrease of 6%, while its international division posted an 8% decline. The chain faced tough comparisons to the year-ago period, when Pizza Hut reported 7% same-store sales growth, fueled by its new Melts.
The company’s digital business was one of the few bright spots this quarter. Yum said its digital sales accounted for more than 50% of sales for the first time.
Yum’s global footprint grew 6% in the quarter, thanks to 808 new restaurant openings. More