CVS (CVS) reported fourth quarter and full year 2024 earnings Wednesday, beating Wall Street's expectations and sending its stock up nearly 8% in pre-market trading.
Full year revenue came in at $372.8 billion, while fourth quarter revenue was $97.7 billion compared to Wall Street's expectations of $96.8 billion. The health care benefits segment, which includes its various insurance products, was down slightly, with ongoing Medicare and Medicaid headwinds, which have also impacted its peers, dragging the company's revenue.
Still its retail pharmaceutical business, at a time when the business model is struggling, increased, as well as the health care services segment.
CVS reported its medical loss ratio (MLR), which provides insight into how much the insurance arm is spending compared to the premium dollars it takes in, at 92.5%. That's a slight improvement from the record high it reported in October for third quarter earnings, at 95.2%. The Affordable Care Act mandated insurers spend between 80%-85% of premium dollars, and Wall Street views the lower end of that scale as most favorable.
In addition, even with a new White House administration in place, the company remains exposed to attempts to curb the role of pharmacy benefits managers, which CVS boasts being the largest.
CVS is also coming off a tumultuous year that ended with a new CEO, David Joyner, taking the helm towards the end of the year. In addition to the government insurance business headwinds, CVS also battled an activist investor and weighed breaking up the company. The company's profits continued to trend down, 38% year over year, with a reported $8.5 billion for the full year in 2024 compared to $13.7 billion the prior year.
Shares fell 40% last year, and the company previously withheld 2025 guidance. CVS announced its guidance for 2025 Wednesday, estimating adjusted earnings per share of between $5.75 and $6 — but it didn't provide annual revenue guidance.
"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," Joyner said in a statement Wednesday.
Anjalee Khemlani is the senior health reporter at chof360 Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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