CVS Health (CVS) Q3 2025 earnings

CVS Health On Wednesday, it reported third-quarter earnings and revenue that beat previous estimates and raised its revised earnings forecast, as the company sees strength in its insurance unit and retail pharmacy business.

The quarterly results cap David Joyner’s first full year as CEO of the company, which struggled to achieve higher profits and improve its stock performance under its last CEO, Karen Lynch. And Joyner’s aggressive efforts to turn around the struggling pharmacy chain — from executive reshuffles to cost-cutting — appear to be paying off already.

The company now expects fiscal 2025 adjusted earnings to be between $6.55 to $6.65 per share, up from previous guidance of $6.30 to $6.40 per share. CVS has now raised its forecasts for three straight quarters.

“[I] “I couldn’t be happier about the fact that these are the three quarters where we’ve had a win and a lift, and obviously looking at the fourth quarter, we feel really good about being able to end the year on a positive note,” Joyner said in an interview.

He pointed to several factors, including the recovery at Aetna, the company’s insurer. Aetna and other insurers have faced higher-than-expected medical costs over the past year as more Medicare Advantage patients returned to hospitals for procedures they had delayed during the pandemic.

Joyner also highlighted a “really good sales season” for pharmacy benefits manager, Caremark, and a $5.7 billion goodwill impairment charge during the third quarter related to its healthcare delivery reporting unit, which falls within the company’s healthcare services segment.

Here’s what CVS reported for the third quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:

• EPS: $1.60 was revised from $1.37 expected
• profit: $102.87 billion versus $98.85 billion expected

The company reported a net loss of $3.99 billion, or $3.13 per share, in the third quarter. That compares to net income of $71 million, or 7 cents per share, for the same period last year.

In a statement, CVS said the loss reflects goodwill impairment charges related to its health care delivery reporting unit, which “continued to experience challenges that impacted its ability to grow the business at the previously estimated rate.” The company has made several changes to its sector management team and finalized strategic changes, including plans to reduce the number of primary care clinics it will open in 2026 and beyond.

“We made the decision effectively this quarter to slow clinic growth as well as close some of the underperforming clinics,” Joyner said. He noted that CVS announced it would close 16 locations of primary care provider Oak Street Health.

But “this doesn’t change our views on value-based care,” Joyner said, noting that Oak Street Health is “actually working according to plan.”

Excluding certain items, such as amortization of intangible assets, restructuring charges and capital losses, adjusted earnings were $1.60 per share during the quarter.

CVS reported sales of $102.87 billion for the third quarter, up 7.8% from the same period last year as its three business segments grew. Wall Street doesn’t expect CVS to reach quarterly sales of more than $100 billion until the fourth quarter, according to StreetAccount estimates.

CVS’s three business units beat Wall Street revenue expectations for the third quarter, with notable improvements in its insurance business.

The insurance sector’s medical benefits ratio — a measure of total medical expenses paid compared to premiums collected — fell to 92.8% from 95.2% the previous year. A lower ratio usually indicates that the company collected more in premiums than it paid in interest, resulting in increased profitability.

This percentage is slightly higher than the 92.4% that analysts expected, according to StreetAccount.

CVS said this was driven by “the positive year-over-year impact of premium shortfall reserves recorded as health care costs” and improved underlying performance in the insurance unit’s government business, among other factors. Premium shortfall reserves refer to the liability an insurance company may need to cover if future premiums are insufficient to pay expected claims and expenses.

The insurance business generated revenue of $35.99 billion 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 StreetAccount estimates.

CVS said the growth was driven by increases in government business, largely due to the impact of the inflation-reducing law on the Medicare Part D program.

CVS’s Pharmacy and Consumer Wellness division generated sales of $36.21 billion for the third quarter, up 11.7% from the same period a year earlier.

CVS said the increase came in part from higher prescription volume, including the company’s acquisition of prescriptions from Rite Aid, but was offset by pharmacy reimbursement pressure. StreetAccount said analysts expected sales of $35.6 billion for the quarter.

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

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

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

— CNBC’s Bertha Combs contributed to this report