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Signage for a CVS pharmacy in Takoma Park, Maryland, US, on Wednesday, July 9, 2025.
Al Drago | Bloomberg | Getty Pictures
CVS Well being on Wednesday reported third-quarter earnings and income that blew previous estimates and raised its adjusted revenue outlook, as the corporate sees enchancment in its insurance coverage unit.
Shares of CVS fell barely on Wednesday.
The quarterly outcomes cap David Joyner’s first full yr as CEO of the corporate, which struggled to drive larger earnings and enhance its inventory efficiency underneath its final high government, Karen Lynch. Joyner is executing aggressive efforts to show the flailing drugstore chain round – from government reshuffling to price cuts – they usually already appear to be paying off, with shares up greater than 85% for the yr.
The corporate now expects fiscal 2025 adjusted earnings of $6.55 to $6.65 per share, up from earlier steering of $6.30 to $6.40 per share. CVS has now hiked its outlook for 3 consecutive quarters.
“[I] could not be extra glad about the truth that that is three quarters the place we have had a beat and lift and clearly, wanting into This fall, we really feel actually, actually good about our capability to shut out the yr favorably,” Joyner mentioned in an interview.
He pointed to a number of elements, together with restoration in Aetna, the corporate’s insurer. Aetna and different insurers have grappled with higher-than-expected medical prices during the last yr as extra Medicare Benefit sufferers return to hospitals for procedures they delayed through the pandemic. Whereas medical prices stay excessive, Aetna and different insurers, similar to UnitedHealthcare, look like changing into higher geared up to navigate the difficulty shifting ahead.
The corporate’s “transformation is clearly seen inside our Aetna enterprise the place, after a difficult 2024, there may be renewed vigor and optimism in regards to the future,” Joyner mentioned Wednesday on an earnings.
In an interview forward of the outcomes, Joyner additionally highlighted a “actually good gross sales season” for its pharmacy profit supervisor, Caremark, and a $5.7 billion goodwill impairment cost associated to the health-care companies section’s health-care supply reporting unit.
This is what CVS reported for the third quarter in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: $1.60 adjusted vs. $1.37 anticipated
- Income: $102.87 billion vs. $98.85 billion anticipated
The corporate posted web lack of $3.99 billion, or $3.13 per share, for the third quarter. That compares with web revenue of $71 million, or 7 cents per share, for a similar interval a yr in the past.
In a launch, CVS mentioned the loss displays the goodwill impairment cost associated to the health-care supply reporting unit, which has “continued to expertise challenges which have impacted its capability to develop the enterprise on the price beforehand estimated.” The corporate made a number of modifications to that section’s administration staff and finalized strategic modifications, together with plans to scale back the variety of primary-care clinics it might open in 2026 and past.
“We have successfully made the choice this quarter to each gradual the clinic progress and likewise shut a few of the underperforming clinics,” Joyner mentioned. He famous that CVS has introduced that it’s going to shut 16 places of primary-care supplier Oak Road Well being.
However Joyner mentioned “this doesn’t change our views of value-based care,” noting that Oak Road Well being is “truly performing in keeping with plan.”
Excluding sure gadgets, similar to amortization of intangible property, restructuring fees and capital losses, adjusted earnings had been $1.60 per share for the quarter.
CVS booked gross sales of $102.87 billion for the third quarter, up 7.8% from the identical interval a yr in the past as all three of its enterprise segments grew. Wall Road did not count on CVS to succeed in quarterly gross sales of greater than $100 billion till the fourth quarter, in keeping with StreetAccount estimates.
Development throughout enterprise models
All three of CVS’ enterprise models beat Wall Road’s income expectations for the third quarter, with notable enhancements within the insurance coverage enterprise.
The insurance coverage section’s medical profit ratio – a measure of complete medical bills paid relative to premiums collected – decreased to 92.8% from 95.2 % a yr earlier. A decrease ratio usually signifies that an organization collected extra in premiums than it paid out in advantages, leading to larger profitability.
That ratio is barely larger than the 92.4% that analysts had anticipated, in keeping with StreetAccount.
CVS mentioned that was pushed by the “favorable year-over-year impression of premium deficiency reserves recorded as well being care prices” and improved underlying efficiency within the insurance coverage unit’s authorities enterprise, amongst different elements. Premium deficiency reserves refers to a legal responsibility that an insurer could must cowl if future premiums should not sufficient to pay for anticipated claims and bills.
Aetna’s authorities enterprise serves plans together with Medicare Benefit and Medicare prescription drug, or Half D, plans.
“Medical price tendencies within the quarter remained elevated throughout all merchandise however had been modestly favorable relative to our expectations,” mentioned CVS CFO Brian Newman on the earnings name Wednesday.
The insurance coverage enterprise booked $35.99 billion in income through the quarter, up greater than 9% from the third quarter of 2024. Analysts anticipated the unit to absorb $34.48 billion for the interval, in keeping with estimates from StreetAccount.
CVS mentioned that progress was pushed by will increase within the authorities enterprise, largely due to the impression of the Inflation Discount Act on the Medicare Half D program. Provisions of that regulation have contributed to will increase in some Medicare Half D premiums.
CVS’ pharmacy and shopper wellness division posted $36.21 billion in gross sales for the third quarter, up 11.7% from the identical interval a yr earlier.
CVS mentioned the rise got here partly from larger prescription quantity, together with from the corporate’s acquisition of prescriptions from Ceremony Support, however offset by pharmacy reimbursement stress. Analysts anticipated gross sales of $35.6 billion for the quarter, StreetAccount mentioned.
That unit dispenses prescriptions in CVS’ greater than 9,000 retail pharmacies and supplies different pharmacy companies, similar to vaccinations and diagnostic testing.
“As soon as once more this quarter, CVS Pharmacy delivered strong efficiency, together with pharmacy share features,” Joyner mentioned on the earnings name. “It is a testomony to the power and scalability of our mannequin, in addition to the dedication of our engaged colleagues.”
“We’re inspired by our sturdy efficiency this yr and count on this momentum to proceed into subsequent yr,” Newman mentioned on the decision, referring to the pharmacy enterprise.
CVS’ well being companies section generated $49.27 billion in income for the quarter, up 11.6% in contrast with the identical quarter in 2024. Analysts anticipated the unit to publish $45.71 billion in gross sales for the interval, in keeping with StreetAccount.
That unit consists of Caremark, which negotiates drug reductions with producers on behalf of insurance coverage and creates lists of medicines, or formularies, which might be coated by insurance coverage and reimburses pharmacies for prescriptions.
— CNBC’s Bertha Coombs contributed to this report.
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