CVS Health Corp has revised its 2024 profit forecast downward, citing rising medical costs in its health insurance unit.

The updated earnings per share (EPS) guidance now ranges from $4.95 to $5.20, a significant drop from the previous estimate of at least $5.64.

In response to the poor performance of its Aetna health insurance division, CVS Health CEO Karen S. Lynch will take direct control of the unit.

As part of the restructuring, Brian Kane, who led the health care benefits unit, has departed the company after less than a year.

The company's medical benefit ratio (MBR) increased nearly 6% year-over-year in the first quarter, driven by higher Medicare usage and the impact of its Medicare Advantage star ratings.

This updated outlook reflects ongoing challenges in the health insurance segment, including increased medical costs and the effects of Medicare Advantage star ratings.

Despite the challenges, CVS's health services segment generated over $42 billion in revenue, bolstered by strong performance in its Pharmacy Services business.

However, CVS's net income fell nearly 9% to $1.77 billion in the second quarter, primarily due to a significant drop in adjusted operating income in its health care benefits segment.

In light of these challenges, CVS has announced a multiyear $2 billion cost-savings initiative aimed at optimizing operations and rationalizing its business portfolio.

The company has also processed approximately 100,000 biosimilar prescriptions through its Cordavis product, resulting in nearly $400 million in savings for clients.

As CVS continues to grapple with high medical costs, its profit margins may face further pressure, which could impact investor confidence.

Looking ahead, CVS anticipates continued pressure in its Health Care Benefits segment but projects improvements in Medicare Advantage margins for 2025.