CVS Gains in Pharmacy & Consumer Wellness Despite Reimbursement Woes

CVS Health’s CVS Pharmacy & Consumer Wellness (“PCW”) unit includes its retail and long-term care pharmacy operations and related pharmacy services, as well as its retail front store operations. It also provides pharmacy fulfillment services to support the Health Services segment’s specialty and mail order pharmacy offerings. For several quarters, the segment’s main challenge has been the continued pharmacy reimbursement pressure stemming from managed care organizations, pharmacy benefit managers (PBMs) and governmental and other third-party payors working to reduce their prescription drug costs, often by using restrictive networks.

Despite this, PCW reported solid results for the second quarter of 2025, with revenues up 12% year over year. Same-store basis increased more than 15%, while same-store prescription volumes jumped nearly 7%. CVS Health attributed the performance to its ability to anticipate market dynamics and act accordingly to lead the industry. It invested in technology and staffing to bolster its operations and service, while also aiming to be the preferred employer in the pharmacy market.

The front store business gained momentum as the company expanded its customer base and gained retail share. CVS continues to source and negotiate generic pharmaceutical supply contracts through Red Oak, its joint venture with Cardinal Health, and extend those savings with its payer partners via CVS CostVantage. The new reimbursement model is designed to remove the traditional market reliance on cross-subsidization caused by market basket approaches, offering greater clarity and allowing CVS Pharmacy to set prices and contracts aligned with current market conditions while preparing for future changes.

Further, the company is advancing the next stage of pharmacy reimbursement model evolution, shifting its government business to cost-based pricing models for 2026.

Updates From CVS’ Pharmacy & Consumer Wellness Rivals

Elevance Health ELV and the National Association of Community Health Centers (“NACHC”) recently announced the integration of Food as Medicine (FAM) programming with primary care Community Health Centers (“CHCs”). The initiative expands Elevance Health’s existing regional Nourished Well program serving Medicaid individuals by training primary care provider teams within CHCs on the effectiveness of FAM for patients and families. Built on a shared commitment to whole health and community-centered innovation, the step marks an important advancement in addressing food/nutrition insecurity and diet-related chronic conditions through clinical integration.

The Kroger Co. KR achieved identical sales without fuel growth of 3.2%, excluding adjustment items, in the first quarter of 2025. This was driven by strong pharmacy, e-commerce, and fresh sales. The quarter also marked the seventh consecutive period where Kroger’s Our Brands outpaced national brands, led by Simple Truth and Private Selection. Notably, Simple Truth will soon introduce 80 new protein products, ranging from bars and powders to shakes, all from a natural and organic brand that customers trust.

CVS’ Price Performance, Valuation and Estimates

Year to date, CVS Health shares have risen 59.1% compared with the industry’s modest 0.2% growth. 

CVS’ shares are trading at a forward three-year price-to-sales ratio of 0.23, lower than the 0.41 industry average. The stock has a Value Score of A.

The consensus estimate for the company’s 2025 earnings is showing a bullish trend. 

CVS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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