CVS Health (CVS) delivered a much-needed jolt to investors on Wednesday, posting better-than-expected earnings and revenue for the fourth quarter.
Shares skyrocketed nearly 15% in morning trading, marking the stock’s largest single-day gain since 2008. The surge comes after a brutal 2024, during which CVS stock tumbled more than 40% amid rising costs and struggles in its health insurance division.
The company reported adjusted earnings of $1.19 per share, easily surpassing Wall Street’s consensus estimate of 91 cents. Revenue also came in stronger than expected at $97.7 billion, above analysts' projections of $97.1 billion. The earnings beat and optimistic 2025 guidance have provided investors with renewed confidence that CVS is on the path to stabilization under new CEO David Joyner.
The company reported adjusted earnings of $1.19 per share, easily surpassing Wall Street’s consensus estimate of 91 cents. Revenue also came in stronger than expected at $97.7 billion, above analysts' projections of $97.1 billion. The earnings beat and optimistic 2025 guidance have provided investors with renewed confidence that CVS is on the path to stabilization under new CEO David Joyner.
Addressing Challenges in the Insurance Segment
CVS has been particularly hard-hit by surging medical costs, with its insurance arm, Aetna, facing mounting pressures. The company enrolled the highest number of new Medicare Advantage members, exposing it to higher-than-anticipated healthcare utilization costs. As a result, its medical benefit ratio—a key measure of insurance profitability—remained elevated at 94.8%, though it showed slight improvement from the previous quarter’s record high of 95.2%.
To address these issues, Joyner has laid out a plan focused on cutting costs, improving efficiency, and stabilizing Aetna’s margins. The company expects its health benefits segment to generate between $1.5 billion and $1.95 billion in operating income in 2025—an improvement from the disastrous $307 million posted in 2024. CVS also plans to shrink its Medicare Advantage membership to help manage rising medical expenses and improve profitability.
CVS has been particularly hard-hit by surging medical costs, with its insurance arm, Aetna, facing mounting pressures. The company enrolled the highest number of new Medicare Advantage members, exposing it to higher-than-anticipated healthcare utilization costs. As a result, its medical benefit ratio—a key measure of insurance profitability—remained elevated at 94.8%, though it showed slight improvement from the previous quarter’s record high of 95.2%.
To address these issues, Joyner has laid out a plan focused on cutting costs, improving efficiency, and stabilizing Aetna’s margins. The company expects its health benefits segment to generate between $1.5 billion and $1.95 billion in operating income in 2025—an improvement from the disastrous $307 million posted in 2024. CVS also plans to shrink its Medicare Advantage membership to help manage rising medical expenses and improve profitability.
Looking Ahead: A Return to Growth?
Despite the recent rally, CVS still trades well below its 2023 levels, underscoring the work ahead. For 2025, the company has projected adjusted earnings of $5.75 to $6.00 per share, in line with analyst expectations. Revenue is expected to exceed $385.9 billion, reflecting moderate growth.
Joyner’s strategy includes leveraging technology—particularly artificial intelligence—to streamline operations and improve customer experiences. The company is also focusing on making healthcare more affordable while maintaining a disciplined approach to capital allocation. CVS remains committed to its dividend, which currently yields 4.2%, a reassuring sign for income-focused investors.
While risks remain—particularly regulatory scrutiny on pharmacy benefit managers (PBMs) and uncertainty around healthcare costs—Wednesday’s earnings report suggests CVS may finally be turning a corner. If Joyner’s turnaround plan delivers results, the stock’s recent surge could be the beginning of a sustained recovery rather than a short-lived rally.
Despite the recent rally, CVS still trades well below its 2023 levels, underscoring the work ahead. For 2025, the company has projected adjusted earnings of $5.75 to $6.00 per share, in line with analyst expectations. Revenue is expected to exceed $385.9 billion, reflecting moderate growth.
Joyner’s strategy includes leveraging technology—particularly artificial intelligence—to streamline operations and improve customer experiences. The company is also focusing on making healthcare more affordable while maintaining a disciplined approach to capital allocation. CVS remains committed to its dividend, which currently yields 4.2%, a reassuring sign for income-focused investors.
While risks remain—particularly regulatory scrutiny on pharmacy benefit managers (PBMs) and uncertainty around healthcare costs—Wednesday’s earnings report suggests CVS may finally be turning a corner. If Joyner’s turnaround plan delivers results, the stock’s recent surge could be the beginning of a sustained recovery rather than a short-lived rally.
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