09:05 AM EST, 11/06/2024 (MT Newswires) -- CVS Health ( CVS ) reported mixed third-quarter results on Wednesday as earnings declined and trailed market estimates, while revenue increased and topped analyst expectations.

The healthcare company posted adjusted earnings of $1.09 per share for the September quarter, down from $2.21 the year before and trailing the Capital IQ-polled consensus of $1.46. The company saw a decline in its health care benefits segment operations, due to continued utilization pressure and premium deficiency reserves of $1.1 billion related to anticipated losses in the current quarter within the company's Medicare and individual exchange businesses.

Last month, CVS Health ( CVS ) announced it expected to report adjusted EPS of $1.05 to $1.10 for the third quarter.

Revenue amounted to $95.43 billion for the three-month period ended Sept. 30, rising from $89.76 billion a year earlier. The Street's view was for revenue of $92.69 billion. Shares of the company advanced about 11% in premarket activity.

"Our third-quarter results reflect strong performance in the health services and pharmacy and consumer wellness segments, and also highlight the continued need to work across our enterprise and address macro challenges to the health care benefits segment," Chief Executive David Joyner said in a statement. Joyner, who previously served as the firm's executive vice president, was promoted to the top role in October.

Sales in the health care benefits segment jumped 26% to nearly $33 billion, buoyed by growth across the Medicare and commercial product lines. The division's medical benefits ratio, which is used to measure medical costs as a percentage of premium revenue, deteriorated to 95.2% from 85.7% on an annual basis due to increased utilization and $670 million of premium deficiency reserves recorded as costs, among other factors. A lower ratio likely indicates higher profitability.

Health services revenue fell 5.9% to $44.13 billion due to the loss of a "large client" and continued pharmacy client price improvements, according to the company. Pharmacy and consumer wellness sales gained 12% to $32.43 billion, amid increased prescription volume and pharmacy drug mix.

Total operating costs widened to $94.6 billion from $86.07 billion year-on-year. During the quarter, CVS Health ( CVS ) recorded charges of about $1.2 billion related to its restructuring program to streamline the organization and reduce costs. The charges consisted of an impairment expense of $607 million for the additional retail pharmacy stores the company the company plans to close next year.

In a separate statement, CVS Health ( CVS ) announced that it appointed Steve Nelson as president of its Aetna business, effective Wednesday. Nelson's previous roles include working as chief executive of UnitedHealth Group's (UNH) UnitedHealthcare division. The company also named Prem Shah group president.

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