CVS Health ( CVS ) shares tumbled close to 12% in pre-market trading Wednesday after the retail pharmacy giant posted first-quarter results that missed analysts’ estimates and lowered its guidance for the full year.

Revenue, Earnings Miss

CVS reported first-quarter revenue of $88.44 billion, up 3.7% from a year earlier, but below the $89.33 billion analysts expected, according to estimates compiled by Visible Alpha. Net income and diluted earnings per share (EPS) declined from the year-ago period and also missed estimates, with CVS reporting $1.12 billion in profit or 88 cents per share, down from $2.14 billion or $1.65 per share a year ago.

Rising Health Care Costs

Profits were hit as CVS struggled with a rise in Medicare utilization, as well as the impact of a decline in the company’s Medicare Advantage star rating . CVS saw health care costs increase to $27.8 billion in the first quarter, compared to $20.45 billion in the first quarter of 2023.

In its fourth-quarter earnings report earlier this year , CVS said its health care segment was being impacted by having to pay out more to policyholders, as many underwent procedures they may have delayed during the COVID-19 pandemic.

CVS Lowers Full-Year Guidance

The company lowered its projected full-year EPS to at least $5.64, down from at least $7.06 previously.

“The current environment does not diminish our opportunities, enthusiasm, or the long-term earnings power of our company. We are confident we have a pathway to address our near-term Medicare Advantage challenges,” CEO Karen Lynch said in a release.

CVS shares were down 11.5% at $59.92 as of about 8 a.m. ET Wednesday following the release.