CVS Exceeds Quarterly Estimates, Confirms Profit Forecast with Turnaround Plan Progress

• Q4 earnings of $1.09 per share (adjusted) beat estimates on revenue of $105.69 billion vs. $103.59 billion expected, with growth across all three business segments.
• The company faces $20 billion in revenue headwinds for 2026, roughly half from exiting the individual exchange market and half from lower drug prices due to Trump's 'most favored nation' deals with pharmaceutical companies.
• Aetna insurance unit showed strong performance with medical benefit ratio holding at 94.8%, as Medicare Advantage business continues path toward target margins of 3% to 4% by 2028.

CVS Exceeds Quarterly Estimates, Confirms Profit Forecast with Turnaround Plan Progress

Key Financial Results:

CVS Health reported strong Q4 2024 results, beating Wall Street expectations with revenue of $105.69 billion versus $103.59 billion expected, marking an 8.2% year-over-year increase. Adjusted earnings reached $1.09 per share, while net income totaled $2.92 billion ($2.30 per share).

Profit Guidance:

The company reaffirmed its 2025 full-year profit outlook of $7 to $7.20 per share and maintained 2026 revenue guidance of at least $400 billion. However, management cited $20 billion in headwinds, with half stemming from reduced exposure to the individual exchange market and half from lower drug prices due to President Trump's "most favored nation" deals with pharmaceutical companies.

Business Segment Performance:

• Insurance (Aetna): Revenue rose 10% to $36.29 billion, with the medical benefit ratio holding steady at 94.8%. Medicare Advantage margins continue progressing toward 3-4% targets by 2028.
• Pharmacy & Consumer Wellness: Sales increased 12.4% to $37.66 billion, driven by higher prescription volumes including Rite Aid acquisitions, though offset by reimbursement pressures.
• Health Services (Caremark): Revenue grew 9% to $51.24 billion.

Turnaround Progress:

Under CEO David Joyner, who assumed leadership in late 2024, CVS's restructuring efforts include cost cuts, leadership changes, and market exits. The company closed 16 underperforming Oak Street Health locations while improving profitability. CVS stock has risen approximately 40% over the past year.

Market Positioning:

CVS's 9,000 pharmacies now accept TrumpRx discount cards, positioning the company within the administration's drug pricing initiatives.