CVS Health (CVS) earnings Q1 2025

CVS Health on Thursday reported first-quarter earnings and revenue that topped estimates and hiked its guidance, as its troubled insurance business showed some improvement in the course of the period. 

Shares of CVS closed 4% higher Thursday.

The corporate now expects full-year adjusted earnings of $6 to $6.20 per share, up from a previous guidance of $5.75 to $6 per share.

But the corporate revised its GAAP diluted EPS guidance to be lower, which incorporates charges related to a legal battle involving its pharmacy services provider subsidiary, Omnicare. A jury this week found Omnicare responsible for dishing out drugs without valid prescriptions to elderly and disabled individuals in assisted living and long-term care facilities. CVS plans to appeal.

The corporate didn’t provide a revenue forecast for the 12 months. CVS said it’s “maintaining a cautious view for the rest of the 12 months” in light of continued higher medical costs and “the potential for macro headwinds.”

“We got smarter in regards to the markets that we wanted and the lives that we desired to compete for, and so we even have planned and budgeted for the elevated trends,” CVS CEO David Joyner said in an interview with CNBC, referring to markets that the insurance unit operates in and better medical costs

“So I believe why you are not seeing a surprise on our part is because we actually plan for elevated trends going into this 12 months,” he added.

Joyner said the corporate is looking forward to the potential impact from President Donald Trump’s planned tariffs on pharmaceuticals imported into the U.S.

“On the pharmacy side, I believe it is extremely depending on what happens in the subsequent week or two after they announce the implications of tariffs on the manufacturers,” he told CNBC. Joyner added that the overwhelming majority of the corporate’s retail products on the front of stores are sourced within the U.S., “which needs to be a profit for us.”

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

• Earnings per share: $2.25 per share adjusted vs. $1.70 per share expected
• Revenue: $94.59 billion vs. $93.64 billion expected

The corporate’s insurer, Aetna, and its rivals have been dogged by higher-than-expected medical costs over the past 12 months as more Medicare Advantage patients return to hospitals for procedures they delayed in the course of the pandemic. But for the primary time in several quarters, CVS’ insurance business appeared to point out some signs of improvement.

The unit’s medical profit ratio — a measure of total medical expenses paid relative to premiums collected — decreased to 87.3% from 90.4% a 12 months earlier. A lower ratio typically indicates that an organization collected more in premiums than it paid out in advantages, leading to higher profitability.

CVS said the move partly reflects stronger underlying performance in its Medicare business and improved Medicare Advantage star rankings for the 2025 payment 12 months. Those rankings help patients compare the standard of Medicare health and drug plans.

“I believe that investment and talent that allowed us to give attention to each the execution and the operation … actually helped establish the performance that you just’re seeing,” Joyner said, referring to an executive reshuffling last 12 months that tapped a brand new leader for the insurance unit and other parts of the business.

The outcomes cap off the second full quarter with Joyner, a longtime CVS executive, as chief executive of the retail drugstore chain. Joyner succeeded Karen Lynch in mid-October, as CVS struggled to drive higher profits and improve its stock performance.

The corporate underwent a management reshuffle as a part of a broader turnaround plan that features $2 billion in cost cuts over the subsequent several years.

Still, CVS’ performance was partially offset by a charge of $431 million from so-called premium deficiency reserves within the insurance unit, which is expounded to anticipated losses within the 2025 coverage 12 months. That refers to a liability that an insurer may have to cover if future premiums aren’t enough to pay for anticipated claims and expenses.

The corporate posted net income of $1.78 billion, or $1.41 per share, for the primary quarter. That compares with net income of $1.12 billion, or 88 cents per share, for the year-earlier period. 

Excluding certain items, akin to amortization of intangible assets, restructuring charges and capital losses, adjusted earnings were $2.25 per share for the quarter.

CVS booked sales of $94.59 billion for the primary quarter, up 7% from the identical period a 12 months ago as a consequence of growth across all three of its business segments. 

But sales in the corporate’s retail pharmacy segment missed Wall Street’s expectations for the quarter, in accordance with StreetAccount. That business has been pressured by softer consumer spending and lower reimbursements for prescribed drugs.