Signage for a CVS pharmacy in Takoma Park, Maryland, US, on Wednesday, July 9, 2025.
Al Drago | Bloomberg | Getty Images
CVS Health on Wednesday reported third-quarter earnings and revenue that blew past estimates and raised its adjusted profit outlook, as the company sees improvement in its insurance unit.
Shares of CVS fell slightly on Wednesday.
The quarterly results cap David Joyner’s first full year as CEO of the company, which struggled to drive higher profits and improve its stock performance under its last top executive, Karen Lynch. Joyner is executing aggressive efforts to turn the flailing drugstore chain around – from executive reshuffling to cost cuts – and they already seem to be paying off, with shares up more than 85% for the year.
The company now expects fiscal 2025 adjusted earnings of $6.55 to $6.65 per share, up from previous guidance of $6.30 to $6.40 per share. CVS has now hiked its outlook for three consecutive quarters.
“[I] couldn’t be more happy about the fact that this is three quarters where we’ve had a beat and raise and obviously, looking into Q4, we feel really, really good about our ability to close out the year favorably,” Joyner said in an interview.
He pointed to several factors, including recovery in Aetna, the company’s insurer. Aetna and other insurers have grappled with higher-than-expected medical costs over the last year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic. While medical costs remain high, Aetna and other insurers, such as UnitedHealthcare, appear to be becoming better equipped to navigate the issue moving forward.
The company’s “transformation is clearly visible within our Aetna business where, after a challenging 2024, there is renewed vigor and optimism about the future,” Joyner said Wednesday on an earnings.
In an interview ahead of the results, Joyner also highlighted a “really good sales season” for its pharmacy benefit manager, Caremark, and a $5.7 billion goodwill impairment charge related to the health-care services segment’s health-care delivery reporting unit.
Here’s what CVS reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $1.60 adjusted vs. $1.37 expected
- Revenue: $102.87 billion vs. $98.85 billion expected
The company posted net loss of $3.99 billion, or $3.13 per share, for the third quarter. That compares with net income of $71 million, or 7 cents per share, for the same period a year ago.
In a release, CVS said the loss reflects the goodwill impairment charge related to the health-care delivery reporting unit, which has “continued to experience challenges which have impacted its ability to grow the business at the rate previously estimated.” The company made several changes to that segment’s management team and finalized strategic changes, including plans to reduce the number of primary-care clinics it would open in 2026 and beyond.
“We’ve effectively made the decision this quarter to both slow the clinic growth and also close some of the underperforming clinics,” Joyner said. He noted that CVS has announced that it will close 16 locations of primary-care provider Oak Street Health.
But Joyner said “this does not change our views of value-based care,” noting that Oak Street Health is “actually performing according to plan.”
Excluding certain items, such as amortization of intangible assets, restructuring charges and capital losses, adjusted earnings were $1.60 per share for the quarter.
CVS booked sales of $102.87 billion for the third quarter, up 7.8% from the same period a year ago as all three of its business segments grew. Wall Street didn’t expect CVS to reach quarterly sales of more than $100 billion until the fourth quarter, according to StreetAccount estimates.
Growth across business units
All three of CVS’ business units beat Wall Street’s revenue expectations for the third quarter, with notable improvements in the insurance business.
The insurance segment’s medical benefit ratio – a measure of total medical expenses paid relative to premiums collected – decreased to 92.8% from 95.2 % a year earlier. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability.
That ratio is slightly higher than the 92.4% that analysts had expected, according to StreetAccount.
CVS said that was driven by the “favorable year-over-year impact of premium deficiency reserves recorded as health care costs” and improved underlying performance in the insurance unit’s government business, among other factors. Premium deficiency reserves refers to a liability that an insurer may need to cover if future premiums are not enough to pay for anticipated claims and expenses.
Aetna’s government business serves plans including Medicare Advantage and Medicare prescription drug, or Part D, plans.
“Medical cost trends in the quarter remained elevated across all products but were modestly favorable relative to our expectations,” said CVS CFO Brian Newman on the earnings call Wednesday.
The insurance business booked $35.99 billion in revenue during the quarter, up more than 9% from the third quarter of 2024. Analysts expected the unit to take in $34.48 billion for the period, according to estimates from StreetAccount.
CVS said that growth was driven by increases in the government business, largely because of the impact of the Inflation Reduction Act on the Medicare Part D program. Provisions of that law have contributed to increases in some Medicare Part D premiums.
CVS’ pharmacy and consumer wellness division posted $36.21 billion in sales for the third quarter, up 11.7% from the same period a year earlier.
CVS said the increase came partly from higher prescription volume, including from the company’s acquisition of prescriptions from Rite Aid, but offset by pharmacy reimbursement pressure. Analysts expected sales of $35.6 billion for the quarter, StreetAccount said.
That unit dispenses prescriptions in CVS’ more than 9,000 retail pharmacies and provides other pharmacy services, such as vaccinations and diagnostic testing.
“Once again this quarter, CVS Pharmacy delivered solid performance, including pharmacy share gains,” Joyner said on the earnings call. “This is a testament to the strength and scalability of our model, as well as the commitment of our engaged colleagues.”
“We are encouraged by our strong performance this year and expect this momentum to continue into next year,” Newman said on the call, referring to the pharmacy business.
CVS’ health services segment generated $49.27 billion in revenue for the quarter, up 11.6% compared with the same quarter in 2024. Analysts expected the unit to post $45.71 billion in sales for the period, according to StreetAccount.
That unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans and creates lists of medications, or formularies, that are covered by insurance and reimburses pharmacies for prescriptions.
— CNBC’s Bertha Coombs contributed to this report.
