CVS Health topped fourth-quarter earnings estimates, but still saw profit slide 38% from a year ago. However, the pharmacy chain, which has a new CEO, offered a 2025 outlook that envisions a return to growth. Though the earnings outlook is below what analysts had penciled in, it was strong enough to make CVS stock the No. 1 performing S&P 500 name in Wednesday's early action.
"We have continued to see growth in key areas of our business, including the Pharmacy and Consumer Wellness segment, while we address the industrywide challenges that have impacted our Health Benefits segment," CEO David Joyner said in a statement.
CVS Earnings
Results: Adjusted earnings per share tumbled 44% to $1.19, but easily beat forecasts of 92 cents. Revenue rose 4.2% to $97.71 billion.
CVS said it completed a three-year store closure plan, but will further optimize its footprint in 2025.
Outlook: CVS Health expects adjusted EPS of $5.75 to $6 a share, up from $5.42 in 2024. The midpoint is just above the FactSet consensus $5.86. However, anther estimate aggregator had a $5.97 consensus.
CVS said that the low end of its EPS outlook would represent about 10% growth vs. 2024, after adjusting for an 18-cent gain related to reserves held for benefit payments.
Revenue should be "at least" $385.9 billion vs. $372.8 billion in 2024 and a FactSet consensus of $385.9 billion.
Political Uncertainty
In December, it seemed like CVS was near the center of a political storm, as Congress nearly advanced legislation to rein in pharmacy benefit managers (PBMs) including CVS Caremark. Bipartisan legislation was introduced to go much further, requiring PBMs divest their pharmacies.
For now, though, aggressive PBM reform may be on the back burner, while other areas of health care like Medicaid are on the hot seat for potential spending cuts.
Republicans are generally seen as supportive of Medicare Advantage, a focus of the CVS health benefits business. One of the outgoing Biden administration's last moves was to propose a bigger-than-expected rate increase for Medicare Advantage in 2026.
CVS Stock
CVS stock leapt 14.4% to 62.87 in early Wednesday stock market action. The move carried CVS past its 200-day moving average, with a clear break above its 10-month trend line.
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