CVS Health reported fourth-quarter earnings on February 12, 2025, showing revenue and profit that exceeded analyst expectations. The results come amid ongoing challenges in its insurance business, which has faced rising medical costs.
- CVS Health reported strong fourth-quarter earnings.
- 2025 adjusted earnings outlook aligns with expectations.
- David Joyner is new CEO of CVS.
- Insurance unit faces rising medical costs.
- Pharmacy sales increased despite reimbursement pressures.
- Management reshuffle aims for $2 billion cost cuts.
CVS Health’s fourth-quarter performance reflects a complex landscape for the company. The retail drugstore chain, now led by CEO David Joyner, reported a net income of $1.64 billion, or $1.30 per share, down from $2.05 billion, or $1.58 per share, in the same quarter last year. The company is navigating higher medical costs in its insurance unit, Aetna, and pressures in its retail pharmacy business.
Key financial highlights include:
- Earnings per share: $1.19 adjusted vs. 93 cents expected
- Revenue: $97.71 billion vs. $97.19 billion expected
Despite the challenges, all three business segments of CVS exceeded Wall Street’s expectations. The insurance unit generated $32.96 billion in revenue, up over 23% from the previous year, although it reported an adjusted operating loss of $439 million. The medical benefit ratio for this segment rose to 94.8%, indicating increased medical expenses relative to premiums collected.
The health services segment, which includes Caremark, contributed $47.02 billion in revenue, down more than 4% year-over-year. This decline was attributed to the loss of a significant client and ongoing pressures in pharmacy reimbursements. Conversely, the pharmacy and consumer wellness division saw sales increase to $33.51 billion, driven by higher prescription volume.
In summary, CVS Health’s fourth-quarter results highlight both successes and ongoing challenges. While the company has exceeded revenue and earnings expectations, it continues to face pressures from rising medical costs and changing market dynamics.
