MW CVS books a $5.7 billion loss in its health-services business, tarnishing upbeat earnings

By Tomi Kilgore

Revenue for each business segment rose above expectations, adjusted profit beat forecasts and the outlook was raised, but the stock dropped

CVS Health's stock falls as a large charge to write off the value of an underperforming business takes the shine off an otherwise strong earnings report.

Shares of CVS Health Corp. slumped in early Wednesday trading after the healthcare-services and drug-selling company wrote off billions in value from its underperforming healthcare-delivery unit, overshadowing an otherwise upbeat third-quarter earnings report.

The troubled unit, which operates primary care centers serving Medicare patients and provides in-home screenings, has been hurt by "persistent elevated utilization levels," which have plagued others in the healthcare business. As a result, CVS $(CVS)$ decided to reduce the number of primary-care clinics it would open in 2026, and close certain Oak Street Health clinics.

Since those decisions changed the unit's growth trajectory, the company booked a $5.7 billion impairment charge to adjust the unit's projected value. With that charge, CVS swung to a third-quarter net loss of $3.98 billion, from net income of $87 million in the same period a year ago.

The stock fell 2.1% in premarket trading. On Tuesday, the stock had closed just 1% shy of the 21/2-year closing high $83.04 reached on Oct. 21.

Other than the impairment charge, CVS's earnings report was stellar.

Excluding the charge, adjusted earnings per share jumped to $1.60 from $1.09, beating the average analyst EPS estimate compiled by FactSet of $1.37.

Total revenue climbed 7.8% to a record $102.87 billion - well above the FactSet consensus of $98.81 billion.

The company's health-services business, which includes the healthcare-delivery unit, saw revenue grow 11.6% to $49.27 billion to top expectations of $45.89 billion, helped by pharmacy drug mix and price increases.

Revenue for the pharmacy and consumer-wellness business increased 11.7% to $36.21 billion - above the FactSet consensus of $35.85 billion - as increased prescription volume helped offset continued pharmacy reimbursement pressure.

Revenue for the healthcare-benefits business rose 9.1% to $35.99 billion, but came up shy of the FactSet consensus of $35.06 billion.

For 2025, the company raised its guidance range for adjusted EPS to $6.55 to $6.65 from $6.30 to $6.40. Cash flow from operations is now expected to be $7.5 billion to $8 billion, compared with a previous outlook of at least $7.5 billion.

The stock has soared 83.1% in 2025 through Tuesday, which puts it in the top 20 of the S&P 500 index's SPX best performers this year. The S&P 500 has gained 17.2% in 2025.

-Tomi Kilgore

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October 29, 2025 07:51 ET (11:51 GMT)

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