CVS Health delivered better-than-expected fourth-quarter revenue and profit, even as rising medical costs in its insurance segment continued to weigh on performance.
The company also provided a full-year 2025 adjusted earnings outlook of $5.75 to $6.00 per share, aligning with Wall Street’s projections.
The earnings report marked the first full quarter under new CEO David Joyner, a longtime CVS executive who took over in October amid efforts to improve profitability and stabilize stock performance. The company has embarked on a $2 billion cost-cutting initiative as part of a broader turnaround plan.
For the fourth quarter, CVS reported:
- Adjusted earnings per share (EPS): $1.19 vs. the expected $0.93
- Revenue: $97.71 billion, surpassing estimates of $97.19 billion
Following the earnings announcement, CVS shares climbed over 10% in premarket trading, reflecting investor confidence in the company’s ability to navigate financial pressures.
While all three of CVS’ business segments exceeded Wall Street’s revenue expectations, the company’s insurance arm, Aetna, faced notable challenges. The unit generated $32.96 billion in revenue, up more than 23% from the previous year, but reported an adjusted operating loss of $439 million—down from an adjusted operating income of $676 million in the prior-year quarter. The decline was attributed to increased medical costs and lower Medicare Advantage star ratings, which influence government reimbursements.
The medical benefit ratio, a key measure of insurance profitability, rose to 94.8% from 88.5% a year earlier, indicating that a larger share of premium revenue was spent on patient care. Although this figure was slightly better than analysts’ expectations, it underscores ongoing financial strain within the insurance segment.
Other Business Segments and Strategic Moves
- Health services segment: Generated $47.02 billion in revenue, outperforming analyst estimates despite a year-over-year decline in pharmacy claims processed.
- Pharmacy and consumer wellness division: Reported $33.51 billion in sales, a 7% increase from the previous year, driven by higher prescription volumes.
Looking ahead, CVS faces pressure from activist investor Glenview Capital Management, which has called for reductions in company debt.
CNBC, Bloomberg, and Market Watch contributed to this report.
