CVS Health reports hike in Q4, full year revenue

In the face of industry wide challenges that have impacted its health care benefits segment, CVS Health saw growth in its pharmacy and consumer wellness segment, said David Joyner, president and CEO, in delivering the company’s fourth quarter and full year results. 

"Our integrated model allows us to uniquely deliver a simpler, connected experience that saves time, saves money, and improves health, Joyner said. “We have continued to see growth in key areas of our business, including the Pharmacy and Consumer Wellness segment, while we address the industry-wide challenges that have impacted our Health Care Benefits segment. Through the continued dedication of our colleagues, we will be positioned for strong performance in 2025 as we deliver simply better care for consumers while improving outcomes and reducing costs.”

CVS Health’s fourth quarter GAAP diluted EPS of $1.30 decreased from $1.58 in the prior year and adjusted EPS of $1.19 decreased from $2.12 in the prior year, primarily due to a decline in the health care benefits segment's operating results, which reflect continued utilization pressure and the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year, the retailer said.

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The Woonsocket, R.I.-based company's total revenues increased 4.2% in both the quarter and year ended Dec. 31, 2024 compared to the prior year driven by growth in the health care benefits and pharmacy and consumer wellness segments. The increase was partially offset by a decline in the health services segment, CVS Health said.

The company’s operating income decreased 29.8% in the quarter compared to the prior year primarily due to a decrease in adjusted operating income. The decrease was partially offset by an increase in net realized capital gains and lower acquisition-related integration costs compared to the prior year, CVS Health said.

The retailer’s operating income decreased 38% for the year compared to the prior year primarily due to a decrease in adjusted operating income and an increase in restructuring charges compared to the prior year. These decreases in operating income were partially offset by an increase in net realized capital gains, the absence of a $349 million loss on assets held for sale related to the write-down of the company's Omnicare long-term care business recorded in the prior year, as well as lower acquisition-related transaction and integration costs, CVS Health said.

Adjusted operating income decreased 35.5% and 31.7% in the quarter and year ended Dec. 31, 2024. 

Health care benefits segment:

CVS Health’s health care benefits segments’ total revenues increased 23.3% and 23.7% for the quarter and year, respectively, compared to the prior year, primarily driven by growth in the Medicare and individual exchange product lines.

During the quarter, the health care benefits segment had an adjusted operating loss of $439 million compared to adjusted operating income of $676 million in the prior year. The change was primarily driven by increased utilization, the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year and the impact of higher acuity in Medicaid following the resumption of redeterminations. These decreases were partially offset by the acceleration of anticipated losses related to the fourth quarter of 2024 recorded in the third quarter of 2024 in connection with a premium deficiency reserve, higher favorable prior-period development compared to the prior year, as well as an increase in net investment income, the company said.

During the year ended Dec. 31, 2024, the health care benefits segment had an adjusted operating income of $307 million compared to adjusted operating income of $5,577 million in the prior year. The change was primarily driven by increased utilization, the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year and higher acuity in Medicaid. These decreases were partially offset by an increase in net investment income and improved fixed cost leverage across the business due to membership growth, the retailer said.

The MBR increased from 88.5% to 94.8% in the quarter compared to the prior year driven by increased utilization, the unfavorable impact of the previously disclosed decline in the company's Medicare Advantage star ratings for the 2024 payment year and the impact of higher acuity in Medicaid. These increases were partially offset by the impact of the premium deficiency reserve recorded in the third quarter of 2024 described above and higher favorable prior-period development.

The MBR increased from 86.2% to 92.5% in the year ended Dec. 31, 2024 compared to the prior year primarily driven by increased utilization, the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year and higher acuity in Medicaid.

Medical membership as of Dec. 31, 2024 of 27.1 million remained relatively consistent compared with Sept. 30, 2024. Medical membership as of Dec. 31, 2024 of 27.1 million increased 1.4 million members compared with the prior year period, reflecting increases in the Medicare and individual exchange product lines.

Health services segment:

CVS Health’s health services segments’ total revenues decreased 4.3% and 7.1% for the three months and year ended Dec. 31, 2024, respectively, compared to the prior year primarily driven by the previously announced loss of a large client and continued pharmacy client price improvements. These decreases were partially offset by pharmacy drug mix, increased contributions from the company's health care delivery assets and growth in specialty pharmacy, CVS Health said.

CVS Health’s health services segments’ adjusted operating income decreased 5.3% for the quarter compared to the prior year primarily driven by continued pharmacy client price improvements, the previously announced loss of a large client and the impact of higher healthcare costs in the company's healthcare delivery assets, largely offset by improved purchasing economics and increased volume at Signify Health.

The company’s health services segments’ adjusted operating income decreased .9% for the year ended Dec. 31, 2024 compared to the prior year primarily driven by continued pharmacy client price improvements and the previously announced loss of a large client, largely offset by improved purchasing economics.

Pharmacy claims processed decreased 16.9% and 18.2% on a 30-day equivalent basis for the three months and year, respectively, compared to the prior year reflecting the previously announced loss of a large client.

Pharmacy and consumer wellness segment:

CVS Health’s pharmacy and consumer wellness segment’s total revenues increased 7.5% and 6.6% for the quarter and year ended Dec. 31, 2024, respectively, compared to the prior year primarily driven by pharmacy drug mix and increased prescription volume. These increases were partially offset by continued pharmacy reimbursement pressure, the impact of recent generic introductions and decreased front store volume, including the impact of a decrease in store count. Total revenues for the year ended Dec. 31, 2024 also reflect the impact of increased contributions from vaccinations and lower contributions from COVID-19 over-the-counter test kits since the expiration of the public health emergency in May 2023, CVS Health said.

The company’s pharmacy and consumer wellness segment’s adjusted operating income decreased 13.3% for the quarter compared to the prior year primarily driven by continued pharmacy reimbursement pressure and decreased front store volume. The decrease was partially offset by improved drug purchasing, CVS Health said.

CVS Health's pharmacy and consumer wellness segment’s adjusted operating income decreased 3.2% for the year ended Dec. 31, 2024 compared to the prior year primarily driven by continued pharmacy reimbursement pressure and decreased front store volume, including lower contributions from COVID-19 OTC test kits. The decrease was largely offset by increased prescription volume, including increased contributions from vaccinations, as well as improved drug purchasing.

Prescriptions filled increased 3.3% and 4% on a 30-day equivalent basis for the quarter  and year ended Dec. 31, 2024, respectively, compared to the prior year primarily driven by increased utilization.

Same store prescription volume increased 5.9% and 6.8% on a 30-day equivalent basis for the quarter and year, respectively, compared to the prior year.

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CVS Health issued its full-year 2025 GAAP diluted EPS guidance range of $4.58 to $4.83 and its 2025 adjusted EPS guidance range of $5.75 to $6.00. The company also issued its full-year 2025 cash flow from operations guidance of approximately $6.5 billion.

The adjustments between full-year 2025 GAAP diluted EPS and adjusted EPS include amortization of intangible assets, acquisition-related integration costs, office real estate optimization charges and the corresponding income tax benefit or expense related to the items excluded from adjusted income attributable to CVS Health.