CVS Health Reports Q3 Earnings Beat, Raises Outlook Despite Net Loss
CVS Health on Wednesday reported third-quarter earnings and revenue that exceeded expectations and increased its adjusted profit outlook, driven by improvements in its insurance business, though a significant impairment charge resulted in a net loss.
The company’s quarterly results mark the first full year under CEO David Joyner, who has been implementing turnaround efforts following a period of sluggish performance under his predecessor, Karen Lynch. Shares of CVS fell more than 3% in premarket trading despite being up over 85% for the year overall. CVS now anticipates fiscal 2025 adjusted earnings of $6.55 to $6.65 per share, a raise from its previous guidance of $6.30 to $6.40. “I couldn’t be more happy about the fact that this is three quarters where we’ve had a beat and raise and obviously, looking into Q4, we feel really, really good about our ability to close out the year favorably,” Joyner stated in an interview.
The reported net loss of $3.99 billion, or $3.13 per share, was largely attributed to a $5.7 billion goodwill impairment charge related to the health care services segment’s health care delivery reporting unit. This write-down reflects challenges in growing that part of the business at the previously estimated rate, prompting CVS to slow clinic growth and close underperforming locations, including 16 Oak Street Health sites. However, Joyner emphasized that this does not diminish the company’s commitment to value-based care models. Revenue reached $102.87 billion, surpassing Wall Street’s estimate of $98.85 billion, with all three business segments contributing to the growth. The positive results come as the healthcare industry continues to navigate rising medical costs and evolving patient needs.
Improvements in Aetna, CVS’s insurance unit, were a key driver of the positive results, with the medical benefit ratio decreasing to 92.8% from 95.2% a year earlier. Aetna’s government business, including Medicare Advantage plans, benefited from factors including the impact of the Inflation Reduction Act. The pharmacy and consumer wellness division also saw an 11.7% increase in sales, partially due to the acquisition of prescriptions from Rite Aid.
Joyner indicated the company is confident in its ability to finish the year strongly and continue its positive trajectory, focusing on strategic adjustments and improved performance across its business segments.
