Updated at 7:48 am EST
CVS Health (CVS) – Get a free report Shares rose on Tuesday after the group raised its quarterly dividend, while forecasting better-than-expected 2024 sales. The healthcare and pharmacy group is looking to rationalize its wider business amid fresh rumors of consolidation in the health insurance sector.
CVS sees overall revenue of at least $366 billion next year, firmly above LSEG's forecast of about $346 billion, with adjusted earnings of about $8.51 per share.
The group also reiterated its 2023 guidance for adjusted earnings of between $8.50 and $8.70 per share, as well as cash flows from its overall business of between $12.5 billion and $13.5 billion.
CVS increased its quarterly dividend by 10%, to 66.5 cents per share, payable on February 1 to holders of record on January 22.
“We are successfully executing on our strategy to advance the future of healthcare while unlocking new value for consumers,” said CEO Karen Lynch. “The combination of our businesses and the key growth areas in which we have invested drive our ability to reduce the total cost of care, improve health outcomes and deliver on our commitments to our customers, consumers and shareholders.”
CVS shares rose 2.95% in premarket trading to indicate an opening price of $70.50 each, a move that would push the stock into positive territory over the past six months.
CVS changes the name of its health services division
The Woonsocket, RI group, one of the nation's largest pharmacy benefit managers, also revealed plans to rebrand its Health Services segment under the name CVS Healthspire. That division will include a number of its current units, including Oak Street Health, Signify and its MinuteClinic.
“Providing care in a more integrated way, especially for complex patients with chronic illnesses, improves health outcomes and the patient experience,” said Oak Street Health Interim President Mike Pykosz.
Related: Cigna Falls on Reports of Humana Merger Talks; The FTC is already investigating PBMs
Late last month, the Wall Street Journal first reported that CVS rivals Cigna (IC) – Get a free report and human (HUM) – Get a free report had entered early-stage merger talks that would create one of the nation's largest health insurers and challenge UnitedHealth's market dominance (UNH) – Get a free report.
However, a major impediment to any potential tie-up between Cigna and Humana would likely come from the Federal Trade Commission, which has taken a much more active role in challenging megamergers under the leadership of Lina Khan.
In fact, the FTC has warned the three largest pharmacy benefit managers (CVS's Caremark, Cigna's Express Scripts, and UnitedHealth's OptumRx) about potential changes to broader industry regulation.
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