WOONSOCKET, R.I. — CVS Health easily beat analysts' projections for third-quarter sales and earnings.
The company's adjusted earnings per share of $1.60 topped Wall Street's forecast of $1.37, while revenue of $102.87 billion exceeded the predicted $98.85 billion.
The company had a net loss of $3.99 billion, or $3.13 per share, for the three months ended September 30, compared to net income of $71 million, or 7 cents per share, for the year-ago period. The loss resulted from a $5.7 billion goodwill impairment charge for rolling back planned growth for the Oak Street Health clinic business.
For the third quarter in a row, CVS raised its full year profit outlook. The company now projects fiscal 2025 adjusted earnings of $6.55 to $6.65 per share, up from the previous guidance of $6.30 to $6.40.
“CVS Health uniquely delivers what the people we serve want the most: a connected, simpler experience that improves health and simplifies care," said president and CEO David Joyner. "Our leadership team has stabilized operations and is focused on businesses and markets where we can succeed. As a result, we are making progress on our journey to be America’s most trusted health care company. Our strong enterprise performance demonstrates the continued focus we have on operational and financial improvement across our businesses.”
An operating loss of $3.2 billion compared to operating income of $832 million in the prior year. The difference was primarily driven by the $5.7 billion goodwill impairment charge, partially offset by the absence of approximately $1.2 billion of restructuring charges recorded in the prior year and an increase in adjusted operating income.
Adjusted operating income increased 35.8% driven by an increase in the Health Care Benefits segment, partially offset by declines in the Health Services and Pharmacy & Consumer Wellness segments.
Interest expense increased $32 million, or 4.3%, due to higher debt in the quarter, primarily as a result of long-term debt issued in December of 2024 and August of 2025.
The effective income tax rate was (14.6)% compared to 32.4% in the prior year primarily due to the goodwill impairment charge, which was not deductible for income tax purposes.
During 2025, CVS said the Health Care Delivery reporting unit (clinic business) within the Health Services segment has continued to experience challenges which have impacted its ability to grow the business at the rate previously estimated. A number of changes were made to the Health Care Delivery management team, and the company during the third quarter finalized certain strategic changes, including the determination that it would reduce the number of new primary care clinics it would open in 2026 and thereafter. Upon updating its financial projections to reflect these changes, management determined that there were indicators that the unit’s goodwill may be impaired and, accordingly, an interim goodwill impairment test was performed. The results of the impairment test showed that the fair value of the unit was lower than its carrying value, resulting in the $5.7 billion goodwill impairment charge.
Health Care Benefits segment
• Total revenues increased 9.1% compared to the prior year primarily driven by increases in the Government business, largely due to the impact of the Inflation Reduction Act (“IRA”) on the Medicare Part D program.
• The segment had adjusted operating income of $314 million compared to an adjusted operating loss of $924 million in the prior year. The change was primarily driven by the favorable year-over-year impact of premium deficiency reserves, higher favorable prior period development and improved underlying performance in the Government business. These increases were partially offset by changes in the seasonality of the Medicare Part D program due to the impact of the IRA and the impact of higher acuity in the individual exchange product line.
• The MBR decreased to 92.8% compared to 95.2% in the prior year driven by the favorable year-over-year impact of premium deficiency reserves recorded as health care costs, higher favorable prior period development and improved underlying performance in the Government business. These decreases were partially offset by changes in the seasonality of the Medicare Part D program due to the impact of the IRA and the impact of higher acuity in the individual exchange product line.
• Medical membership as of September 30 of 26.7 million remained consistent compared with June 30.
• Prior years’ health care costs payable estimates developed favorably by $1.9 billion during the nine months ended September 30. This development is reported on a basis consistent with the prior years’ development reported in the health care costs payable table in the company’s annual audited financial statements and does not directly correspond to an increase in 2025 operating results.
Days claims payable were 42.5 days as of September 30, an increase of 1.6 days compared to June 30.
Health Services segment
• Total revenues increased 11.6%, primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.
• Adjusted operating income decreased 7.0%, primarily driven by continued pharmacy client price improvements, partially offset by improved purchasing economics.
• Pharmacy claims processed decreased 1.8% on a 30-day equivalent basis.
Pharmacy & Consumer Wellness segment
• Total revenues increased 11.7%, primarily driven by pharmacy drug mix and increased prescription volume, including incremental volume resulting from the Rite Aid prescription file acquisitions, partially offset by continued pharmacy reimbursement pressure.
• Adjusted operating income decreased 7.4%, primarily driven by continued pharmacy reimbursement pressure and increased investments in the segment’s colleagues and capabilities, partially offset by increased prescription volume.
• Prescriptions filled increased 6.9% on a 30-day equivalent basis, primarily driven by increased utilization and incremental volume resulting from the Company’s Rite Aid prescription file acquisitions.
• Same store prescription volume(6)(11) increased 8.9% on a 30-day equivalent basis.
