(Reuters) -CVS Health Corp on Wednesday raised its annual profit forecast after topping quarterly estimates on strong performance at its health insurance and pharmacy benefit management businesses, sending its shares up 3% in premarket trade.
CVS' health insurance business benefited from a slow recovery in elective procedures and a fall in COVID cases, which kept costs in check, as did peers Elevance Health and UnitedHealth.
The insurance business' medical benefit ratio, or spending on claims against premiums earned, was 83.5%, compared with 85.8% a year earlier when COVID cases had surged due to the Delta wave.
Revenue from the insurance and pharmacy benefit management businesses rose around 10% each, while its retail and pharmacy business sales were up about 7%.
Pharmacy benefits managers serve as intermediaries among drug manufacturers, health insurers and pharmacies, and help negotiate prescription drug prices.
The healthcare company now expects 2022 adjusted earnings per share between $8.55 and $8.65, compared with $8.40 to $8.60 forecast earlier.
The strong revenue growth helped the company's profit beat estimates. Excluding some one-off items, CVS Health reported a profit of $2.09 per share, compared with analysts' average estimate of $1.99 per share.
In the third quarter, the company also recorded a pre-tax charge of $5.2 billion related to the estimated liability for opioid-related claims.
The charge is part of its settlement to resolve thousands of U.S. state and local government lawsuits accusing companies including CVS of mishandling opioid painkillers. The proposed settlement calls for CVS to pay $5 billion over 10 years.
(Reporting by Leroy Leo and Nandhini Srinivasan in Bengaluru;Editing by Vinay Dwivedi)