Is CVS Health's Pharmacy & Consumer Wellness Poised for a Stronger Q3?

The Pharmacy & Consumer Wellness segment at CVS Health CVS is showing strong momentum, driven by the company’s focus on operational excellence and technological upgrades that improve the customer experience. In the first half of 2025, revenues rose 11.8%, fueled by a pharmacy drug mix and higher prescription volume. Despite ongoing pharmacy reimbursement pressure, CVS has demonstrated resilience through consistent execution across its 9,000 local community health destinations, led by more than 200,000 workforce staff. With the third-quarter 2025 results due this week, the segment could emerge as a key contributor to the overall financial performance.   

The front store business, which covers over-the-counter drugs, consumer health products, beauty products, personal care products and other general merchandise products, is showing steady improvement from an expanding customer base and continued retail share gains. Further, CVS Pharmacy recently completed the acquisition of select Rite Aid assets nationwide and acquired the prescription files of 626 former Rite Aid and Bartell Drugs pharmacies across 15 states. The company already saw early impact from the scripts in the previous quarter, which are likely to continue in the upcoming report.

2025 has also been a transition year for the CVS CostVantage pharmacy reimbursement model, with all of the commercial scripts now shifted and performing in line with the company’s expectations. The model addresses the industry-wide challenge of cross-subsidization across brands and generics, creating more stable and predictable margins while passing the value back to payors in a more transparent manner. 

That said, CVS continues to maintain a prudent outlook for possible changes in the vaccine market demand and a softening consumer environment. The Zacks Consensus Estimate for CVS’ Pharmacy & Consumer Wellness segment revenues indicates a 7.4% improvement year over year in the third quarter.

CVS Health’s Peer Updates

Walmart WMT is set to report fiscal 2026 third-quarter earnings results on Nov. 20. The company has just announced the highly anticipated Black Friday and Cyber Monday event plans, with the first event starting Nov. 14. Walmart is dropping up to 60% off top brands and offering thousands of deals under $20, differentiating itself in terms of prices. Further, Walmart teamed up with Avery Dennison to advance the use of radio-frequency identification (RFID) technology for fresh categories to improve inventory accuracy and reduce food waste.

Amazon AMZN is gearing up to report third-quarter 2025 results on Oct. 30.The company’s cloud computing platform, Amazon Web Services and Accenture recently expanded collaboration to deliver new digital services to public sector, defense and national security organizations. Amazon also launched Amazon Grocery, a new private-label brand featuring more than 1,000 high-quality food items at low, competitive prices.

CVS Stock Performance, Valuation and Estimates

In the past year, CVS Health shares have risen 46.5% against the industry’s 3.1% decline. 

CVS Health is trading at a forward five-year price/sales (P/S) of 0.25X, which is discounted from the industry’s 0.48X P/S.

The Zacks Consensus Estimate for CVS Health’s 2025 EPS has moved up 3.9% in the past 90 days. However, estimates are showing a mixed trend for 2026.

CVS currently carries a Zacks Rank #3 (Hold). 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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