CVS Health (CVS) Third Quarter 2025 Earnings

CVS Health On Wednesday it reported third-quarter earnings and revenue that beat estimates and raised its adjusted earnings outlook as the company sees improvement in its insurance unit.

CVS shares fell slightly on Wednesday.

The quarterly results cap David Joyner's first full year as CEO of the company, which struggled to generate higher profits and improve stock performance under its last top executive, Karen Lynch. Joyner is executing aggressive efforts to turn around the ailing pharmacy chain – from executive reorganizations to cost cuts – and they already appear 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 raised its outlook for three consecutive quarters.

“[I] “We couldn't be happier about the fact that these are three quarters where we've performed better and obviously looking ahead to the fourth quarter, we feel very, very good about our ability to close the year favorably,” Joyner said in an interview.

He pointed to several factors, including the recovery of Aetna, the company's insurer. Aetna and other insurers have grappled with higher-than-expected medical costs over the past 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 UnitedHealthcarethey appear to be better equipped to deal with the problem in the future.

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 of its earnings.

In a pre-earnings interview, Joyner also highlighted a “really good sales season” for its pharmacy benefits manager, Caremark, and a $5.7 billion goodwill impairment charge related to the Healthcare Services segment's healthcare delivery reporting unit.

Here's what CVS reported for the third quarter compared to what Wall Street expected, according to 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 a net loss of $3.99 billion, or $3.13 per share, in 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 statement, CVS said the loss reflects the goodwill impairment charge related to the healthcare delivery reporting unit, which has “continued to experience challenges that 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 have effectively made the decision this quarter to slow clinic growth and also to close some of the underperforming clinics,” Joyner said. He noted that CVS has announced it will close 16 locations of primary care provider Oak Street Health.

But Joyner said “this doesn't change our view of value-based care,” noting that Oak Street Health is “actually operating 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 posted sales of $102.87 billion for the third quarter, up 7.8% from the same period a year earlier, as its three business segments grew. Wall Street didn't expect CVS to hit quarterly sales of more than $100 billion until the fourth quarter, according to StreetAccount estimates.

All three 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 generally indicates that a company collected more in premiums than it paid in profits, resulting in higher profitability.

That proportion is slightly higher than the 92.4% that analysts expected, according to StreetAccount.

CVS said this was driven by the “favorable year-over-year impact of premium deficiency reserves recorded as healthcare costs” and better underlying performance in the insurance unit's government business, among other factors. Premium deficiency reserves refer to a liability that an insurer may need to cover if future premiums are not sufficient to pay anticipated claims and expenses.

Aetna's government business offers plans including Medicare Advantage and Medicare prescription drug plans, or Part D.

“Medical cost trends in the quarter remained elevated across all products, but were modestly favorable relative to our expectations,” CVS Chief Financial Officer Brian Newman said on Wednesday's earnings call.

The insurance business posted $35.99 billion in revenue during the quarter, up more than 9% from the third quarter of 2024. Analysts expected the unit to gross $34.48 billion during the period, according to StreetAccount estimates.

CVS said the growth was driven by increases in government business, largely due to 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 during the third quarter, up 11.7% from the same period a year earlier.

CVS said the increase was due in part to higher prescription volume, including the company's acquisition of Rite Aid prescriptions, but was offset by reimbursement pressure from pharmacies. Analysts were expecting sales of $35.6 billion for the quarter, StreetAccount said.

That unit dispenses prescriptions at more than 9,000 CVS retail pharmacies and provides other pharmacy services, such as vaccinations and diagnostic tests.

“Once again this quarter, CVS Pharmacy delivered strong performance, including gains in pharmacy stocks,” Joyner said on the earnings conference call. “This is a testament to the robustness and scalability of our model, as well as the commitment of our dedicated colleagues.”

“We are encouraged by our strong performance this year and expect this momentum to continue next year,” Newman said on the call, referring to the pharmaceutical business.

CVS' health services segment generated $49.27 billion in revenue during the quarter, up 11.6% compared to the same quarter in 2024. Analysts expected the unit to post $45.71 billion in sales during the period, according to StreetAccount.

That unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans and creates lists of drugs, or formularies, that are covered by insurance and reimburses pharmacies for prescriptions.

— CNBC's Bertha Coombs contributed to this report.