CVS Health's latest financial results surpassed Wall Street's estimates, sending shares up more than 6% in premarket trading. The company's impressive performance came despite challenges faced by its insurance unit, which saw a rise in the medical benefit ratio to 94.8% from 88.5% a year earlier. In the fourth quarter, all three of CVS' business segments exceeded expectations, showcasing the company's resilience amidst a challenging healthcare landscape.
For the fourth quarter, CVS recorded net income of $1.64 billion, or $1.30 per share, a decrease from the $2.05 billion, or $1.58 per share, reported during the same period in the previous year. The company achieved adjusted earnings of $1.19 per share for the quarter when excluding certain items. This performance reflects the company's ability to navigate through rising medical costs and operational challenges.
CVS Health's revenue for the fourth quarter reached $97.19 billion, marking a 4.2% increase compared to the previous year. The company's pharmacy business and insurance unit were key contributors to this growth. In particular, CVS' pharmacy and consumer wellness division generated sales of $33.51 billion, up more than 7% year-over-year. Meanwhile, the insurance business posted revenue of $32.96 billion, reflecting a significant increase of over 23% from the fourth quarter of 2023.
Despite these gains, CVS' health services segment experienced a decline, with revenue totaling $47.02 billion for the quarter, down more than 4% compared to the same period in 2023. The division processed 499.4 million pharmacy claims during the quarter, a decrease from 600.8 million in the previous year.
As part of its broader turnaround plan, CVS Health underwent a management reshuffle and announced a strategic initiative to reduce costs by $2 billion over the next several years. This move is aimed at enhancing operational efficiency and positioning the company for sustainable growth in an evolving healthcare market.
Medicare Advantage has historically been a major growth driver for insurers, and CVS Health continues to leverage this privately run health insurance plan contracted by Medicare to bolster its financial performance. The company remains committed to expanding its offerings and improving its services to meet the growing demand for healthcare solutions.
Looking ahead, CVS Health issued a full-year 2025 adjusted profit outlook of $5.75 to $6.00 per share, aligning with Wall Street's expectations. This forecast underscores the company's confidence in its ability to maintain strong financial performance and deliver value to shareholders despite potential challenges in the healthcare sector.