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CVS Health reported second-quarter earnings that topped expectations but slashed its full-year profit outlook, citing higher medical costs that have been squeezing the U.S. insurance industry. 
The drugstore chain expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from a previous guidance of at least $7 per share.
It marks the third consecutive quarter that the company has lowered its 2024 profit guidance. 

The CVS pharmacy logo is displayed on a sign above a CVS Health Corp. store in Las Vegas, Nevada on Feb. 7, 2024.
Patrick T. Fallon | AFP | Getty Images

CVS Health on Wednesday reported second-quarter earnings that topped expectations, but slashed its full-year profit outlook, citing higher medical costs that have been squeezing the U.S. insurance industry. 
The retail drugstore chain also said Aetna President Brian Kane, the top executive at the CVS-owned insurance unit, will leave the company immediately based on the current performance and outlook for the segment.

CVS CEO Karen Lynch will take over management of the business and CFO Thomas Cowhey will also help to oversee it. Katerina Guerraz, CVS Health’s chief strategy officer and head of enterprise affairs, will also become the insurance unit’s chief operating officer.
The company expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from previous guidance of at least $7 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $6.97 per share. 
CVS also cut its unadjusted earnings guidance to a range of $4.95 to $5.20 per share, down from at least $5.64 per share. 
It marks the third consecutive quarter that the company has lowered its 2024 profit guidance. 
CVS said its new outlook reflects continued pressure on its health insurance segment, which is seeing increased medical costs 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 owns health insurer Aetna. The company’s insurance division includes plans by Aetna for the Affordable Care Act, Medicare Advantage and Medicaid, as well as dental and vision.
Insurers such as UnitedHealth Group, Humana and Elevance Health 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 the federal Medicare program, has long been a driver of growth and profits for the insurance industry. But Wall Street has 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 second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $1.83 adjusted vs. $1.73 expected
Revenue: $91.23 billion vs. $91.5 billion expected 

The company posted net income of $1.77 billion, or $1.41 per share, for the second quarter. That compares with net income of $1.90 billion, or $1.48 per share, for the year-earlier period. 
Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $1.83 for the quarter.
CVS reported sales of $91.23 billion for the quarter, up 2.6% from the same period a year ago due to growth in its pharmacy business and insurance unit. 
The company noted that sales in its health services segment, which includes its pharmacy benefit manager Caremark, declined during the second quarter. CVS cited price improvements for pharmacy clients and the loss of a large unnamed client.  

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Caremark negotiates drug discounts with manufacturers on behalf of insurance plans and creates lists of medications — or formularies — that are covered by insurance and reimburses pharmacies for prescriptions.
Tyson Foods in January said it had dropped CVS Caremark and instead chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting in 2024. Months earlier, Blue Shield of California, one of the largest insurers in the most populous U.S. state, also dropped Caremark to partner with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs company. 
Those decisions represent a larger upheaval in the health-care industry, as startups and the government work to increase transparency and lower costs for U.S. patients. 

Pressure on insurance unit

CVS’ insurance segment generated $32.48 billion in revenue during the quarter, a more than 21% increase from the second quarter of 2023.
Sales were in line with analysts’ estimate of $32.37 billion for the period, according to StreetAccount. 
But the division reported adjusted operating income of just $938 million for the second quarter. That is below analysts’ expectation of $962 million for the period, StreetAccount said. 
The insurance unit’s medical benefit ratio — a measure of total medical expenses paid relative to premiums collected — increased to 89.6% from 86.2% a year earlier. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability.
That ratio came in lower than the 90.1% that analysts had expected, according to StreetAccount. 

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

CVS’ health services segment generated $42.17 billion in revenue for the quarter, down nearly 9% compared with the same quarter in 2023. 
Those sales were above analysts’ estimate of $41.25 billion for the period, according to StreetAccount. 
The health services division processed 471.2 million pharmacy claims during the quarter, down from 576.6 million during the year-ago period. 
CVS’ pharmacy and consumer wellness division booked $29.84 billion in sales for the first quarter, up more than 3% from the same period a year earlier. That unit dispenses prescriptions in CVS’ more than 9,000 retail pharmacies and provides other pharmacy services, such as vaccinations and diagnostic testing. 
Analysts had expected the division to bring in $30.22 billion in sales, according to StreetAccount.
The rise was partly driven by increased prescription volume, CVS said. Pharmacy reimbursement pressure, the launch of new generic drugs and decreased front-store volume, among other factors, weighed on the unit’s sales. 

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Rivian Automotive beat Wall Street’s top- and bottom-line expectations for the second quarter.
The electric vehicle maker, which is still losing thousands of dollars for every vehicle it makes, has been focused on reducing costs.

Workers assemble second-generation R1 vehicles at electric auto maker Rivian’s manufacturing facility in Normal, Illinois, U.S. June 21, 2024. 
Joel Angel Juarez | Reuters

Rivian Automotive beat Wall Street’s top- and bottom-line expectations for the second quarter as the electric vehicle maker continues to take costs out of its business.
Here is how the company did, compared to estimates from analysts polled by LSEG:

Earnings per share: Loss of $1.13 adjusted vs. loss of $1.21 expected
Automotive revenue: $1.16 billion vs. $1.14 billion expected

The company’s net losses widened during the second quarter to $1.46 billion, or a loss of $1.46 per share, compared with a year earlier of $1.2 billion, or a loss of $1.27 per share.
Its adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA was about level from the same period as a year ago at a loss of $860 million.
Rivian on Tuesday reaffirmed its 2024 guidance of 57,000 total units of production, a loss of $2.7 billion in adjusted EBITDA and $1.2 billion in capital expenditures. It also said it remains on track for a positive gross profit during the fourth quarter.
Through the first six months of the year Rivian produced about 23,600 vehicles, including only 9,162 during the second quarter due to downtime at the company’s plant to retool and reduce costs.
Rivian said a majority of the vehicles sold during the second quarter were from inventory prior to the production cost cuts, meaning most efficiency gains were not realized during that time.

The second-quarter results come more than a month after Rivian held an investor day that focused on cost-cutting efforts, efficiency gains and in-house technologies and software. The event came days after Rivian announced plans for Volkswagen to invest up to $5 billion in the EV startup, starting with an initial investment of $1 billion.
Shares of Rivian are off 37% this year amid slower-than-expected demand for EVs as well as Rivian’s significant cash burn. The stock closed Tuesday at $14.80, up 1.3%.
Rivian, which is still losing thousands of dollars for every vehicle it makes, has been focused on reducing costs. Rivian CEO RJ Scaringe said in June that efficiencies earlier this year in products and manufacturing are expected to lead to 20% material cost reductions in its current vehicles, followed by 45% targeted reductions in its upcoming “R2” vehicles, which are projected to begin production in early 2026.
Rivian’s expenditures through the first half of the year were $537 million, including $283 million during the second quarter.
Rivian ended the second quarter with $9.18 billion in total liquidity, including $7.87 billion in cash, cash equivalents and short-term investments.
Correction: Rivian’s net loss during the second quarter was $1.46 billion. This amount was incorrectly stated in a previous version of the article. More

Boeing and its fuselage supplier Spirit AeroSystems are facing a two-day safety hearing that started Tuesday.
The NTSB released more than 3,000 pages of documents, including transcripts of interviews with Boeing and Spirit AeroSystems employees, as well as from pilots, flight attendants and executives.
A Boeing safety executive said the company is working on a design change to avoid a repeat of the midair blowout.

Jennifer Homendy, Chair of the National Transportation Safety Board, speaks during investigative hearing, into the blowout of a left mid exit door plug on a Boeing 737-9 MAX during Alaska Airlines Flight 1282 flight on January 5, 2024, at the National Transportation Safety Board headquarters in Washington D.C. United States on August 6, 2024. (Photo by Bryan Olin Dozier/Anadolu via Getty Images)
Bryan Olin Dozier | Anadolu | Getty Images

A Boeing safety executive told a federal safety hearing on Tuesday that the company is working on design changes to avoid a repeat of the near catastrophic blowout of a door plug from a practically new 737 Max 9 at the start of the year.
The National Transportation Safety Board — the body in charge of aviation accident investigations in the U.S. — released more than 3,000 pages of documents ahead its full two-day hearing about Flight 1282, including interviews with employees at Boeing and its beleaguered fuselage maker Spirit AeroSystems, some of which pointed to rework.

“I just want a word of caution here, this is not a PR campaign for Boeing,” NTSB Chair Jennifer Homendy said. “This is an investigation on what happened on Jan. 5. Understand?”
Bolts that were meant to hold the door in place weren’t attached, according to preliminary investigation results. While there were no serious injuries, the accident put the spotlight back on Boeing’s safety procedures and a series of manufacturing flaws that required changes at the company’s factories, including what led up to the door plug getting removed, but not secured last year.
“They are working on some design changes that will allow the door, the plug, to not be closed if there is any issue, until it is firmly secure,” said Elizabeth Lund, who heads safety for Boeing’s commercial airplane unit. The changes would be implemented within the year, Lund said.

An exhibit displayed during an investigative hearing by the National Transportation Safety Board (NTSB) in Washington, DC, US, on Tuesday, Aug. 6, 2024. 
Al Drago | Bloomberg | Getty Images

The blowout plunged Boeing back into crisis mode and prompted a management shakeup, including the appointment of a new CEO, Robert “Kelly” Ortberg, an aerospace veteran who previously headed Rockwell Collins. He starts on Thursday.
The accident has also delayed deliveries of new planes to customers, further eroding the iconic U.S. manufacturer’s relationship with airlines — and with regulators.

Outgoing CEO Dave Calhoun has said Boeing is working to stamp out so-called traveled work, where defective components of the plane need to be fixed, out of sequence, before the aircraft are handed over to customers. Boeing is in the process of buying back Spirit AeroSystems, a move the company says will give it a closer eye on quality.
“We’ve been put in uncharted waters to where … we were replacing doors like we were replacing our underwear, forward doors, cargo doors, E/E bay doors,” said one Boeing worker, whose name was redacted from testimony. “The planes come in jacked up every day.”

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Athletic Brewing Company is teaming up with Arsenal, becoming the English soccer team’s first nonalcoholic beer partner.
Arsenal will feature Athletic Brewing’s Run Wild IPA at Emirates Stadium for both men’s and women’s matches, and Athletic Brewing will launch a marketing campaign and a series of promotions in return.
Sales of no- and low-alcoholic beer are rising in the U.K., surging 38% on match days this summer.

Athletic Brewing Company is the official nonalcoholic beer partner of Arsenal F.C.
Courtesy: Athletic Brewing Co.

Athletic Brewing Company has scored a partnership with Arsenal, becoming the English soccer team’s first official nonalcoholic beer partner.
Arsenal will feature Athletic Brewing’s Run Wild IPA at Emirates Stadium for both men’s and women’s matches, and Athletic Brewing will launch a marketing campaign and a series of promotions in return, according to a press release.

Run Wild IPA is less than 0.5% alcohol by volume, or ABV.
The deal represents an opportunity for America’s largest nonalcoholic brewery to expand in the U.K.

Athletic Brewing Company is the official nonalcoholic beer partner of Arsenal F.C.
Courtesy: Athletic Brewing Co.

“Our international footprint is expanding, and alcohol moderation is sweeping the globe, specifically among the next generation of consumers,” Bill Shufelt, co-founder and CEO of Athletic, said in the release. “This partnership represents an exciting milestone in our journey to revolutionize the way the world drinks.”
Sales of no- and low-alcoholic beer are rising in the U.K., surging 38% on match days this summer, and there are similar trends in the U.S. with off-premise sales of nonalcoholic beer up nearly 30% year to date, according to the release.
Arsenal is the latest sports entity to embrace nonalcoholic beer. Guinness 0.0 is the official nonalcoholic beer partner of the Premier League, and Formula 1 promotes Heineken 0.0.
“New partners like Athletic are vital in supporting our growth so we can continue to invest in our teams and compete for major trophies,” Arsenal’s Chief Commercial Officer Juliet Slot said in the release.

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President Joe Biden speaks during an event at the National Institutes of Health in Bethesda, Maryland, Dec. 14, 2023.
Chris Kleponis | Bloomberg | Getty Images

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Good afternoon! The first round of Medicare drug price negotiations has come to an end – but we still don’t know the final prices that the U.S. government and pharmaceutical companies have agreed on. 

Medicare will disclose the new negotiated prices for 10 drugs at the beginning of September. Those prices will then go into effect in 2026. 
Still, drugmakers appear to be less concerned about the impact of those new negotiated prices on their businesses than in recent months, at least in the short term. They all maintain that Medicare drug price negotiations are a long-term threat to the pharmaceutical industry’s drug innovation and profits, but the immediate dust has somewhat settled. 
That’s based on executive commentary during the recent quarterly earnings calls of Bristol Myers Squibb and Johnson & Johnson, among other companies. 
President Joe Biden’s Inflation Reduction Act gave Medicare the power to directly hash out drug prices with manufacturers for the first time in the federal program’s nearly 60-year history. The process aims to make expensive medications more affordable for older Americans. 
On July 26, Bristol Myers Squibb CEO Christopher Boerner confirmed that the company received the government’s final price for its blood thinner Eliquis, which it shares with Pfizer. 

He said now that the company has seen that price, it is “increasingly confident in our ability to navigate the impact” of Medicare drug price negotiations on the treatment. Bristol Myers will provide more details about the expected impact on its investor relations website once Medicare publicly discloses the final prices, according to Boerner. 
Meanwhile, AbbVie CEO Robert Michael said a day earlier that the drugmaker has included the expected sales hit to its top-selling leukemia drug, Imbruvica, in its financial forecasts. 
“We’ve come out and said that even with modeling that impact in, that we still expect to deliver on our long-term outlook,” Michael said on the company’s earnings call. 
On July 17, J&J Worldwide Chairman Jennifer Taubert similarly said the company’s long-term growth outlook “still looks very good to us today” after seeing the negotiated prices for its blood thinner Xarelto and psoriasis treatment Stelara. 
Novartis CEO Vasant Narasimhan said on July 18 that the short-term impact from Medicare drug price negotiations “might be manageable on our first set of drugs.” The company’s heart failure drug, Entresto, is among those selected for negotiations. 
But Narasimhan said the policy in the long-term is “really not good for innovation [or] good for patients” in the U.S.
“I think it’s very important to say the policy is not a good one. It’s bad for American patients, it’s bad for innovation and [I] sincerely hope that it gets corrected,” he said. 
Executives at each of the drugmakers similarly emphasized their opposition to Medicare drug price negotiations on their respective earnings calls. 
“We continue to believe that arbitrary price setting by the government on life-saving medicines is not good public policy,” Bristol Myers Squibb’s Boerner said on the company’s earnings call. “Irrespective of short-term dynamics, we remain very concerned about the long-term implications of IRA on innovation.”
Lawsuits brought by Merck and Novartis against the negotiations are awaiting decisions from district courts. Each case brings claims that overlap with suits from Novo Nordisk, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, J&J and industry trade groups that have been rejected in recent months. 
Feel free to send any tips, suggestions, story ideas and data to Annika at [email protected].

Latest in health-care technology

Health care goes Hollywood (sort of)
Lights, camera, action!
If you’re like me, health care is probably not the first thing you associate with the entertainment industry. Unless, of course, we’re talking about the hit medical drama “Grey’s Anatomy.” 
But Northwell Health, the largest health system in the state of New York, is breaking new ground in the entertainment world. In late July, it launched a TV and film production studio called Northwell Studios. 
The goal is not to turn the studio into a money-making machine, said Ramon Soto, chief marketing officer at Northwell Health. The health system actually plans to ensure most projects remain cost neutral. 
Instead, Soto said the studio was created to help raise awareness about Northwell, especially since it operates within a competitive and saturated market. The New York metropolitan area is teeming with prestigious health systems and academic medical centers, and it’s Soto’s job to cut through the noise. 
Northwell has dabbled with entertainment projects in the past. It participated in the Netflix docu-drama series “Lenox Hill” as well as an Academy Award-shortlisted Covid-19 documentary and a documentary about mental health with HBO. 
Soto said Northwell Studios is meant to help the health system carry out these kinds of projects more regularly. 
“The intention behind Northwell Studios is not, ‘Hey, we’re going to show up, it’s showbiz and get our name in lights.’ It’s really to create a bit more of an infrastructure to do this on a regular basis,” Soto told CNBC in an interview. “I’m not building a soundstage, I’m not building a studio, but I have millions of square feet and 21 hospitals and 88,000 employees, caregivers, storytellers.”
Soto said there are already five projects in development, though not all of them will necessarily come to completion. He said unscripted content has been Northwell’s “bread and butter” so far, and there’s an extensive consent process in place for the patients and employees who opt in. 
Northwell Studios is also exploring opportunities to produce scripted content, but patients shouldn’t expect to see actors and camera crews running through the halls.
“We’re a health system, we can’t disrupt our operations or patient flows,” Soto said. “We’ll figure out the least disruptive, most impactful way to capture this content.”
Feel free to send any tips, suggestions, story ideas and data to Ashley at [email protected]. More

Starting mid-October, most plans for Disney+, Hulu and ESPN+ will cost $1 to $2 more per month.
The price hikes come as Disney continues to push its customers toward bundles to get a bigger bang for their buck.

The atmosphere at the Disney Bundle Celebrating National Streaming Day at The Row in Los Angeles on May 19, 2022.
Presley Ann | Getty Images Entertainment | Getty Images

Disney is raising prices on its streaming platforms.
Starting mid-October, most plans for Disney+, Hulu and ESPN+ will cost $1 to $2 more per month, according to a press release Tuesday. The most expensive plans for Hulu, which include live TV, will cost $6 more per month.

Disney+ basic and premium will be priced at $9.99 and $15.99, respectively. Hulu with ads will cost $9.99 monthly, while Hulu without adds will cost $18.99 per month. ESPN+, which features ads, will cost $11.99 per month.
The price hikes come as Disney continues to push its customers toward bundles to get a bigger bang for their buck.
For some time, Disney has offered a bundle of its own services, either Hulu and Disney+, or the two streaming services plus ESPN+. The existing bundle of Disney+ and Hulu, with ads, will also get a price hike this fall, up $1 to $10.99 per month. The same bundle without ads won’t see any price increase from the current rate of $19.99 per month.
Disney has also partnered with Warner Bros. Discovery to offer a bundle, which will include Disney+, Hulu and Max. In July, the companies announced the bundle would be available for $16.99 with ads, and $29.99 commercial free, noting “a savings of 38% compared with the price of the services purchased separately.”
Disney also aims to entice subscribers with ABC News Live and a playlist featuring preschool content, available to all subscribers starting Sept. 4, according to the release Tuesday. The company plans to introduce four more curated playlists for premium subscribers.

“Playlists are the latest example of how we’re providing the best value and experience for our subscribers every time they open Disney+,” Alisa Bowen, president of the streaming platform, said in the news release.
Disney reports its fiscal third-quarter earnings before the bell on Wednesday.

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Amid the 286-page judgment, issued after nearly four years of trial proceedings and petabytes of evidence, four words stand out. “Google is a monopolist,” wrote Amit Mehta, the judge of a district court in America, adding that “it has acted as one.” His ruling, handed down on August 5th, could lead to big changes for the multi-billion-dollar search market—and for the wider tech industry. More

Charles Barkley said in a statement Tuesday he is not retiring and will stay with TNT Sports.
Barkley said in June he planned to retire after next year’s NBA season.
Barkley signed a 10-year deal with TNT Sports in 2022.

NBA analyst Charles Barkley talking on set before the New York Knicks game against the Cleveland Cavaliers at the then-Quicken Loans Arena in Cleveland, Ohio, on Oct. 25, 2016.
David Dow | National Basketball Association | Getty Images

Charles Barkley is not retiring and he is not leaving TNT Sports.
The star broadcaster and National Basketball Association Hall of Famer said Tuesday that he plans to stay with Warner Bros. Discovery’s TNT Sports even if the company does not emerge with NBA media rights.

“I’m looking forward to continuing to work with [TNT Sports] both on the shows we currently have and new ones we develop together in the future,” Barkley said in a statement. “This is the only place for me. I have to say … I’ve been impressed by the leadership team who is fighting hard and have been aggressive in adding new properties to TNT Sports, which I am very excited about. I appreciate them and all of my colleagues for their continued support, and most importantly our fans. I’m going to give my all as we keep them entertained for years to come.” 
Barkley’s future has become hazy given the NBA’s potential move away from TNT after next season.
Warner Bros. Discovery sued the NBA last month to forcibly invoke the company’s matching rights on a package of games earmarked to go to Amazon Prime Video as part of the league’s new media rights deal. The NBA rejected Warner Bros. Discovery’s match as invalid because the league claimed Amazon’s games are for a streaming-only service. While Warner Bros. Discovery would stream the games on Max, it would also air them on TNT.
TNT Sports owns the media rights to numerous different sports, including Major League Baseball, the NCAA Men’s Basketball Championship, the National Hockey League and the United States Soccer Federation. Beginning next year, the company will add NASCAR, The French Open and more than 65 regular-season Big East basketball games.
Warner Bros. Discovery will be the home of some college football playoff games beginning this year. Barkley will play a role in the coverage of some of the events.

“It’s fantastic to have Charles for this journey as we develop new content ideas and shows for our fans,” TNT Sports Chairman and CEO Luis Silberwasser said in a statement.
Barkley is one of the stars of the popular NBA studio show “Inside the NBA,” which debuted after TNT acquired NBA rights during the 1989-90 season. He said in June he planned to retire after next season as a broadcaster.
“I ain’t going nowhere other than TNT,” Barkley said on June 14. “But I have made the decision myself that, no matter what happens, next year is going to be my last year on television.”
Barkley seemed to waver on his decision to retire during a recent appearance on “The Dan Patrick Show” in late July.
“Everything is on the table,” Barkley said of his future job opportunities.
Barkley signed a 10-year deal with TNT Sports in 2022 and is entering his 25th year with the company. In May, Barkley said he had an opt-out clause in the contract in case TNT lost NBA rights. That is incorrect, according to a person with knowledge of the contractual language. Barkley said last month his deal is worth $210 million over 10 years.
Barkley’s commitment to TNT Sports likely closes the door on recreating “Inside the NBA” for another network if Warner Bros. Discovery does not emerge with a package of games as an outcome of its NBA lawsuit.

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