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CVS Health rides improving Medicare
business to better-than-expected first quarter
[May 02, 2025]
By TOM MURPHY
CVS Health
hiked its 2025 forecast above Wall Street’s expectations after improving
Medicare benefits contributed to a better-than-expected first quarter.
The health care giant said Thursday that it also got a boost from better
star ratings for its Medicare Advantage plans, which are privately run
versions of the federal government coverage program. |
The exterior view of a CVS branch is shown on Tuesday, May 16, 2023, in
Pasadena, Calif. (AP Photo/Marcio Jose Sanchez) |
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CVS
Health and other health insurance providers have been struggling
for several quarters now with rising costs from their Medicare
Advantage customers. The company’s report Thursday comes a few
weeks after rival UnitedHealth slashed its 2025 forecast after
dealing with a bigger-than-expected spike in care use.
Overall, CVS Health booked adjusted earnings of $2.25 per share
as the company’s profit soared 60% to $1.78 billion in the
year’s first quarter. Total revenue climbed 7% to $94.59
billion.
Analysts expect earnings of $1.70 per share on $93.66 billion in
revenue for the first quarter, according to the data firm
FactSet.
For the full year, CVS Health now expects adjusted earnings to
range from $6 to $6.20 per share.
The company forecast in February adjusted earnings of $5.75 to
$6 per share. Analysts expect $5.92.
The guidance hike was unexpected so early in the year, Leerink
Partners analyst Michael Cherny said in a research note. He
added that the company's results showed positive signs across
all business segments.
CVS Health Corp., based in Woonsocket, Rhode Island, runs one of
the nation’s largest drugstore chains and a huge pharmacy
benefit management business that operates prescription drug
coverage for employers, insurers and other big clients. It also
covers 27 million people through its Aetna insurance arm.
The company also said Thursday that it would leave the
Affordable Care Act’s individual marketplaces next year. It
currently covers about a million people in that market across 17
states. CEO David Joyner told analysts the company saw no near
or long-term path to improving this business after dealing with
“continued underperformance.”
Aetna had previously left the ACA’s marketplace in 2017 before
eventually returning.
Company shares jumped more 8% to $72.14 at the start of trading
Thursday, while broader indexes rose slightly.
The stock has already climbed more than 48% so far in 2025 after
sinking over 40% last year. CVS Health’s rough 2024 included
several guidance cuts and the resignation of former CEO Karen
Lynch.
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