• Revenue: Nearly $95 billion, a 7% increase over the prior year quarter.
• Adjusted Operating Income: Approximately $4.6 billion.
• Adjusted EPS: $2.25.
• Cash Flow from Operations: Approximately $4.6 billion.
• Health Care Benefits Revenue: Nearly $35 billion, an 8% increase over the prior year.
• Medical Membership: Approximately 27.1 million, flat sequentially.
• Medical Benefit Ratio: 87.3%, a decrease of 310 basis points from the prior year.
• Health Services Revenue: Over $43 billion, an increase of nearly 8% year over year.
• Pharmacy Claims Processed: Over 464 million.
• Pharmacy and Consumer Wellness Revenue: Nearly $32 billion, an increase of over 11% versus the prior year quarter.
• Same-Store Pharmacy Sales Growth: Nearly 18% versus the prior year.
• Same-Store Prescription Volumes Increase: Nearly 7%.
• Retail Pharmacy Script Share: Approximately 27.6%, an increase of approximately 70 basis points from the same period last year.
• Full Year 2025 Adjusted EPS Guidance: Increased to a range of $6 to $6.20.
• Full Year Cash Flow Guidance: Updated to approximately $7 billion.

• Warning! GuruFocus has detected 11 Warning Signs with CVS.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CVS Health Corp (NYSE:CVS) reported strong financial results for Q1 2025, with adjusted earnings per share of $2.25 and adjusted operating income of $4.6 billion.
• The company increased its full-year 2025 adjusted EPS guidance to a range of $6 to $6.20, reflecting confidence in its business performance.
• CVS Health Corp (NYSE:CVS) announced a partnership with Novo Nordisk to increase access to Wegovy at a more affordable price, demonstrating its commitment to addressing cost pressures in healthcare.
• The company is making significant strides in digital health, using AI-powered recommendations to improve customer health outcomes and experiences.
• CVS Health Corp (NYSE:CVS) continues to innovate in pharmacy services, with a focus on improving medication adherence and streamlining the prior authorization process to enhance customer satisfaction.

Negative Points

• CVS Health Corp (NYSE:CVS) is facing challenges in its individual exchange business, leading to a decision to exit this market by 2026 due to continued underperformance.
• The company is experiencing elevated medical cost trends, particularly in its Medicare Advantage group business, which remains a concern.
• CVS Health Corp (NYSE:CVS) is dealing with legislative challenges, such as the Arkansas bill that could limit access to its pharmacies, potentially impacting patient care and increasing costs.
• There are pressures in the Oak Street Health segment related to medical cost trends, which the company is monitoring closely.
• The potential impact of tariffs on the pharmaceutical supply chain and consumer sentiment towards vaccines could affect CVS Health Corp (NYSE:CVS)'s operations and financial performance.

Q & A Highlights

Q: Can you provide more details on the trends you're seeing in Medicare Advantage and how they compare to your guidance? A: J. David Joyner, President and CEO, noted that while there are early signs of stabilization in Medicare Advantage trends, they remain elevated. The company has been focusing on creating operating stability and improving forecasting and pricing. Steve Nelson added that the company is seeing progress in Medicare Advantage through rationalizing geographies and product mix, and strong execution around total cost of care. However, the group Medicare Advantage business is still experiencing elevated trends, particularly in inpatient and outpatient categories.

Q: Can you elaborate on the partnership with Novo Nordisk for Wegovy and its impact on coverage and pricing? A: Prem Shah, Executive Vice President, explained that the partnership with Novo Nordisk aims to increase access to Wegovy at a more affordable price by taking a formulary action to prefer Wegovy. This will be available to tens of millions of lives on their largest commercial template. The partnership is expected to drive competition and affordability, addressing the high cost of GLP-1s, which are a significant pharmacy trend driver for clients.

Q: What are the implications of the prior year development and revenue adjustments on your guidance? A: Thomas Cowhey, CFO, stated that the prior year development occurred across all business lines, with the majority in Medicare. The net impact of these developments and revenue adjustments is approximately $400 million, which contributed to the increased guidance. The individual exchange business is expected to incur variable losses of $350 million to $400 million for the full year 2025.

Q: How are you addressing the potential impact of tariffs on your business? A: J. David Joyner mentioned that the company is monitoring the situation closely. The majority of front store items are sourced from American-based companies, minimizing tariff impact. For the pharmaceutical supply chain, the impact will depend on country of origin and product type. The company is planning for potential impacts on their 2026 Medicare bids.

Q: Can you provide more details on the pressures you're seeing at Oak Street Health? A: Prem Shah noted that while the healthcare delivery business is performing in line with expectations, there are early signs of pressure in medical cost trends at Oak Street Health. The company is monitoring claims development closely and will provide updates as more data becomes available.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.