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 energy in its insurance coverage unit and retail pharmacy enterprise.
Nonetheless, shares of CVS fell greater than 3% in premarket buying and selling Wednesday as the corporate posted a web loss through the quarter, which displays a $5.7 billion goodwill impairment cost associated to the well being care providers phase’s well being care supply reporting unit.
The quarterly outcomes cap David Joyner’s first full yr as CEO of the corporate, which struggled to drive greater income and enhance its inventory efficiency beneath its final high govt, Karen Lynch. Joyner’s aggressive efforts to show the flailing drugstore chain round – from govt reshuffling to value cuts – 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 comfortable 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 components, together with restoration in Aetna, the corporate’s insurer. Aetna and different insurers have grappled with higher-than-expected medical prices over the past 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, corresponding to UnitedHealthcare, seem like changing into higher outfitted to navigate the difficulty transferring ahead.
Joyner additionally highlighted a “actually good gross sales season” for its pharmacy profit supervisor, Caremark, and the goodwill impairment cost associated to the well being care supply reporting unit.
This is what CVS reported for the third quarter in contrast with what Wall Avenue 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 earnings 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 well being care supply reporting unit, which has “continued to expertise challenges which have impacted its capability to develop the enterprise on the fee beforehand estimated.” The corporate made a number of modifications to that phase’s administration crew and finalized strategic modifications, together with plans to scale back the variety of major care clinics it will open in 2026 and past.
“We have successfully made the choice this quarter to each gradual the clinic development and in addition shut among the underperforming clinics,” Joyner mentioned. He famous that CVS has introduced that it’s going to shut 16 areas of major care supplier Oak Avenue Well being.
However Joyner mentioned “this doesn’t change our views of value-based care,” noting that Oak Avenue Well being is “truly performing based on plan.”
Excluding sure objects, corresponding to amortization of intangible belongings, restructuring expenses and capital losses, adjusted earnings have 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 Avenue did not anticipate CVS to succeed in quarterly gross sales of greater than $100 billion till the fourth quarter, based on StreetAccount estimates.
Development throughout enterprise models
All three of CVS’ enterprise models beat Wall Avenue’s income expectations for the third quarter, with notable enhancements within the insurance coverage enterprise.
The insurance coverage phase’s medical profit ratio – a measure of whole medical bills paid relative to premiums collected – decreased to 92.8% from 95.2 % a yr earlier. A decrease ratio sometimes signifies that an organization collected extra in premiums than it paid out in advantages, leading to greater profitability.
That ratio is barely greater than the 92.4% that analysts had anticipated, based on StreetAccount.
CVS mentioned that was pushed by the “favorable year-over-year influence of premium deficiency reserves recorded as well being care prices” and improved underlying efficiency within the insurance coverage unit’s authorities enterprise, amongst different components. Premium deficiency reserves refers to a legal responsibility that an insurer might have to 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.
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, based on estimates from StreetAccount.
CVS mentioned that development was pushed by will increase within the authorities enterprise, largely as a result of influence 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 greater prescription quantity, together with from the corporate’s acquisition of prescriptions from Ceremony Support, however offset by pharmacy reimbursement strain. 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 offers different pharmacy providers, corresponding to vaccinations and diagnostic testing.
CVS’ well being providers phase 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 put up $45.71 billion in gross sales for the interval, based on StreetAccount.
That unit consists of Caremark, which negotiates drug reductions with producers on behalf of insurance policy and creates lists of medicines, or formularies, which are coated by insurance coverage and reimburses pharmacies for prescriptions.
— CNBC’s Bertha Coombs contributed to this report
