CVS Sheds Low-Performing Assets, Raises Profit Outlook
- CVS Health's Q3 2025 earnings ($1.60/share) and $102.9B revenue exceeded forecasts by $0.24/share and $4.07B, prompting third consecutive guidance hikes to $6.55-$6.65 adjusted EPS. - Aetna's improved medical benefit ratio (92.8% vs 95.2%) and Rite Aid pharmacy integration drove 11.7% segment growth, while Oak Street Health's $5.7B impairment led to 16 clinic closures by 2026. - Despite goodwill charges, $7.2B year-to-date operating cash flow reinforced resilience, with shares up 30% since CEO Joyner's 2
CVS Health Corp. (CVS) delivered third-quarter 2025 results that beat Wall Street forecasts, fueled by robust growth in its insurance and pharmacy divisions, and increased its annual earnings outlook for the third straight quarter. The company reported non-GAAP earnings per share (EPS) of $1.60, topping projections by $0.24, while revenue climbed 7.8% year-over-year to $102.9 billion, exceeding expectations by $4.07 billion,
The stronger performance was largely due to a rebound in CVS’s Aetna insurance business, which saw its medical benefit ratio drop to 92.8% from 95.2% a year earlier, indicating improved cost controls and more favorable premium reserves,
On the downside, CVS took a $5.7 billion goodwill impairment charge tied to its Oak Street Health primary care clinics, which it now plans to scale back. Joyner announced that 16 clinics will close by February 2026, with no additional clinics opening that year, as the division failed to meet expectations, Bloomberg reported. Nevertheless,
Shares initially slipped 1.5% in premarket trading after the earnings announcement, but the longer-term outlook remains optimistic. Analysts have raised their ratings, with a consensus "Outperform" recommendation, and CVS stock has gained nearly 30% since Joyner became CEO in 2024, Bloomberg reported. The updated guidance and improved operational efficiency have further bolstered investor sentiment, with the price-to-earnings ratio rising to 12 from 11 in the previous quarter, Finimize noted.
CVS’s results highlight its strategic pivot toward higher-margin insurance and pharmacy operations while shedding less profitable businesses. By emphasizing cost management and integrating Rite Aid’s assets, the company is working to strengthen its leadership in the changing healthcare sector.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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