CVS Health (CVS) earnings Q3 2025
Sign for CVS pharmacy in Takoma Park, Maryland, USA on Wednesday, July 9, 2025.
Take Drago | Bloomberg | Getty Images
CVS Health on wednesday reported Third-quarter earnings and revenue beat estimates as the company saw improvement in its insurance unit, raising its adjusted profit outlook.
CVS shares rose slightly on Wednesday.
The quarterly results cover David Joyner’s first full year as CEO of the company, which has struggled to generate higher profits and improve stock performance under the management of its last chief executive, Karen Lynch. Joyner has been making aggressive efforts to turn around the shaky pharmacy chain (from a management change to cost cuts), and those efforts already appear to be paying off; Its shares are up more than 85% for the year.
The company now expects fiscal 2025 adjusted earnings to be between $6.55 and $6.65 per share; The previous estimate was $6.30 to $6.40 per share. CVS has raised its outlook for three consecutive quarters.
“[I] We couldn’t be happier with the fact that we got a win and an increase three quarters of the way through that and obviously looking at Q4, we feel really good about our ability to close out the year on a positive note,” Joyner said in an interview.
He noted several factors, including the improvement in the company’s insurer, Aetna. Aetna and other insurers have grappled with higher-than-expected medical costs last year as more Medicare Advantage patients returned to hospitals for procedures they had postponed during the pandemic. As medical costs remain high, Aetna and other insurance companies UnitedHealthcareappears to be becoming better equipped to steer the issue forward.
“The company’s transformation is evident in our Aetna business, where there is renewed strength and optimism for the future after a challenging 2024,” Joyner said in an earnings call Wednesday.
In an interview ahead of the results, Joyner highlighted a “really good sales season” for pharmacy benefits manager Caremark and a $5.7 billion goodwill impairment charge related to the healthcare segment’s healthcare reporting unit.
Here’s what CVS reported for the third quarter compared to Wall Street’s expectations, based on a survey of analysts by LSEG:
- Earnings per share: $1.60 vs expected $1.37
- Revenues: 102.87 billion dollars compared to the expectation of 98.85 billion dollars
The company reported a third-quarter net loss of $3.99 billion, or $3.13 per share. This compares with net income of $71 million, or 7 cents per share, in the same period a year ago.
CVS said in a statement that the loss reflected a goodwill impairment charge related to its healthcare delivery reporting unit, which “continues to face challenges that impact its ability to grow the business at a previously anticipated rate.” The company has made several changes to this segment’s management team and completed strategic changes, including plans to reduce the number of primary care clinics it will open in 2026 and beyond.
“We made the impactful decision this quarter to both slow clinic growth and close some of the underperforming clinics,” Joyner said. He noted that CVS has announced that primary care provider Oak Street Health will close 16 of its locations.
But Joyner said Oak Street Health “actually performed according to plan,” adding, “That doesn’t change our views on value-based care.”
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 in the third quarter, up 7.8% from the same period a year ago, as all three business segments grew. Wall Street didn’t expect CVS to top $100 billion in quarterly sales until the fourth quarter, according to StreetAccount estimates.
Growth across business units
All three of CVS’s business units beat Wall Street’s revenue expectations in the third quarter, with significant improvements in its insurance business.
The insurance division’s medical aid rate (a measure of total medical expenses paid based on premiums collected) fell to 92.8% from 95.2% the previous year. A lower ratio generally indicates that a company collected more premiums than it paid out, leading to higher profitability.
That’s slightly above the 92.4% analysts expected, according to StreetAccount.
CVS said it was driven by, among other factors, “the positive year-over-year impact of premium deficiency reserves recorded as health care costs” and improved underlying performance in its insurance unit’s government business. Premium deficiency reserves represent a liability that the insurer may be required to cover if future premiums are not sufficient to cover anticipated claims and expenses.
Aetna’s government business serves plans that include Medicare Advantage and Medicare prescription drug or Part D plans.
“Medical cost trends in the quarter remained elevated across all products but were modestly positive relative to our expectations,” CVS CFO Brian Newman said on Wednesday’s earnings call.
The insurance business generated $35.99 billion in revenue during the quarter, an increase of over 9% from the third quarter of 2024. Analysts expected the unit to generate $34.48 billion in revenue for the period, according to StreetAccount estimates.
CVS said the growth was driven by increases in government business, largely due to the Inflation Reduction Act’s impact on the Medicare Part D program. Provisions of that law have contributed to increases in some Medicare Part D premiums.
CVS’s pharmacy and consumer health division reported sales of $36.21 billion in the third quarter, up 11.7% from the same period a year ago.
CVS said the increase was driven in part by higher prescription volume, including the company’s purchase of prescriptions from Rite Aid, but was offset by pharmacy reimbursement pressure. StreetAccount said analysts expected sales of $35.6 billion this quarter.
The unit dispenses prescriptions and provides other pharmacy services, such as vaccines and diagnostic tests, at CVS’s more than 9,000 retail pharmacies.
“CVS Pharmacy once again delivered solid performance this quarter, including pharmacy share gains,” Joyner said in the earnings release. “This is a testament to the power and scalability of our model, as well as the commitment of our colleagues involved.”
“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 pharmacy business.
CVS’s healthcare segment generated $49.27 billion in revenue in the quarter, up 11.6% from the same quarter in 2024. Analysts expected the unit to generate $45.71 billion in sales for the period, according to StreetAccount.
The unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans, creates lists or formularies of covered drugs, and reimburses pharmacies for prescriptions.
— CNBC’s Bertha Coombs contributed to this report
