CVS Health Forecasts 10% Earnings Growth For 2025, Citing Aetna's 'Meaningful Recovery'

CVS Health Corp. CVS reported a better-than-expected fourth-quarter earnings result and issued an optimistic guidance for the fiscal year 2025 stemming from the expected recovery in its insurance business — Aetna’s turnaround.

What Happened: The company provided an initial full-year 2025 guidance for adjusted earnings per share (EPS) in the range of $5.75 to $6 per share, which was over 10% above its 2024 full-year EPS of $5.42.

“Our initial expectations reflect a meaningful recovery in our Aetna business, particularly in Medicare Advantage, as well as continued growth in Health Services,” said the executive vice president and CEO, David Joyner during the company’s earnings call.

The CVS Health Aetna business offers health insurance plans, services, and support to individuals, employers, and communities. Whereas, Aetna Medicare Advantage plans, available through Federal Employees Health Benefits, combine Medicare Parts A and B with extra benefits.

“Our deliberate approach to our 2025 Medicare Advantage bids, combined with our improved Star ratings will improve margins this year and are part of our ongoing commitment to restore this business to target margins of 3% to 5%,” added Joyner.

Joyner highlighted his observations and priorities during his first 100 days as CEO. It includes a focus on Aetna turnaround, pharmacy transformation, and leadership team development.

Why It Matters: The company beat fourth-quarter sales expectations and came in at $97.71 billion. However, the adjusted EPS fell to $1.19, from $2.12 in the same period a year ago, exceeding estimates of $0.93. The EPS decline reflects pressure on healthcare benefits due to utilization and lower Medicare Advantage star ratings.

CVS also guided $6.5 billion in cash flow from operations for 2025.

Price Action: CVS Health rose by 14.95% on Wednesday and advanced by 0.36% in after-hours. The exchange-traded fund tracking the S&P 500 index, SPDR S&P 500 ETF Trust SPY fell by 0.32%.

CVS shares have gained 42.97% on a year-to-date basis, whereas it was down by 17.46% over the last year.

The average price target among 28 analysts tracked by Benzinga is $143 with a ‘Buy' rating. The estimates range from $58 to $143 apiece. Recent ratings from Evercore ISI Group, Truist Securities, and Deutsche Bank suggest a $63.67 target, implying a potential upside of 0.34%.