| Court: | United States District Court for the Southern District of New York |
| Case Number: | 1:24-cv-05303-MMG |
| Class Period: | 02/09/2022 - 04/30/2024 |
| Case Leaders: | Salvatore J. Graziano, Katherine M. Sinderson, Abe Alexander |
| Case Team: | Jonathan G. D’Errico, Prachi Patel |
BLB&G, together with co-lead counsel, represents plaintiffs Louisiana Sheriffs’ Pension & Relief Fund, Southeastern Pennsylvania Transportation Authority, and City of Miami Fire Fighters’ and Police Officers’ Retirement Trust (collectively, the “Pension Funds”) in this securities class action brought on behalf of investors that purchased CVS Health Corporation (“CVS” or “the Company”) common stock during the Class Period. The action asserts claims against CVS and certain of its senior executives for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
CVS is a healthcare company that offers Medicare and other health insurance plans through its Health Care Benefits segment. Throughout the Class Period, CVS and its senior executives represented that the Company’s Health Care Benefits segment would continue to benefit from increased Medicare Advantage and Commercial membership growth. In reality, these statements misrepresented CVS’s ability to effectively account for medical cost trends and healthcare utilization patterns, as well as the extent to which such trends would impact CVS’s profitability.
The truth began to emerge on August 2, 2023, when CVS announced earnings for the second quarter of 2023 and revealed that its operating income had declined $1.4 billion, or 30.7%, compared to the prior year. CVS attributed its reduced operating income to declines in the Health Care Benefits segment and higher medical cost trends in Medicare Advantage for the remainder of 2023. CVS falsely assured investors that it was able to offset the pressures with the Company’s health services segment and that its Health Care Benefits segment would benefit from continued membership growth in Commercial. Despite the assurances, Company’s stock price dropped by $2.04 per share, or nearly 3%, on August 3, 2023.
On February 7, 2024, CVS announced earnings results for 2023 and cut its diluted earnings-per-share (“EPS”) guidance range for 2024 from $7.26 to $7.06. CVS continued to downplay the true extent of the cost and utilization pressures facing the Company. On February 8, 2024, CVS’s stock price continued to decline by $0.96 per share, or nearly 1.3%.
The truth about CVS’s instability emerged in early May 2024. On May 1, 2024, CVS announced earnings for the first quarter of 2024, revealing that its diluted EPS for the quarter had declined by nearly 47% over the prior year (down to $0.88 from $1.65). CVS primarily attributed this decline to increased utilization in the Company’s Medicare business. CVS further reduced its diluted EPS guidance and cut its cash flow from operations guidance from $12 billion to $10.5 billion. In response, the price of CVS dropped by $11.40 per share, or nearly 17%, closing at $56.31 per share on May 1, 2024.
On December 5, 2024, the Honorable Margaret M. Garnett appointed the Pension Funds as Lead Plaintiff and appointed BLB&G as Co-Lead Counsel. BLBG’s investigation is ongoing. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Amy Bitkower of BLB&G at 212-554-1936, or via e-mail at amy@blbglaw.com.