CVS Health Lifts Adjusted EPS Outlook: What's Driving It?

CVS Health CVS posted a strong third quarter, delivering a 47% year-over-year increase in adjusted earnings per share (EPS) to $1.60. Revenues reached a record $103 billion, up roughly 8% from last year, driven by revenue growth across all segments. The retail healthcare giant has raised its full-year 2025 adjusted EPS guidance for the third consecutive time, now projecting between $6.55 and $6.65 compared to the earlier range of $6.30-$6.40.

Several trends are shaping the company’s path to deliver on its targets. Health Care Benefits performance continued to be led by the government business, largely reflecting the impact of the Inflation Reduction Act on the Medicare Part D program. The division’s adjusted operating income was approximately $314 million, a significant turnaround from the operating loss recorded in the prior year quarter. The medical benefit ratio was 92.8%, a decrease of 240 basis points year over year. Further, CVS continues to make progress across all lines of Aetna business, supporting its return to target margins and regaining its industry leadership position.

The Pharmacy & Consumer Wellness segment is also expected to continue its strong momentum, closing out this year. Revenues increased nearly 12%, mainly due to pharmacy drug mix and increased prescription volume, including incremental volume resulting from CVS’ Rite Aid prescription file acquisitions. Retail pharmacy script share also grew to approximately 28.9%, reflecting the company’s emphasis on operational excellence and superior customer experiences, enabling it to benefit from pharmacy market disruption.

Updates From CVS Health’s Peers

Amazon’s AMZN third-quarter 2025 net sales increased 13% to $180.2 billion, with AWS segment sales growing 20.2% year over year, its largest growth rate in 11 quarters.  Operating income came in at $17.4 billion, taking into account charges related to a legal settlement with the Federal Trade Commission and severance costs for role eliminations. For the fourth quarter, Amazon expects net sales between $206.0 billion and $213.0 billion, representing 10%-13% growth compared to the fourth quarter of 2024. The outlook includes an estimated 190 basis points tailwind from foreign exchange rates.

Elevance Health ELV reported third-quarter 2025 operating revenues of $50.1 billion, up 12% year over year. This was mainly driven by higher premium yields in the company’s Health Benefits segment, recently closed acquisitions and growth in Medicare Advantage membership. Elevance Health has reaffirmed its 2025 adjusted EPS of approximately $30 and continues to view $27 as the appropriate earnings baseline, excluding $3 of discrete, non-recurring items. The company is refining its pricing, accelerating digitization and automation initiatives and embedding value-based care principles across the enterprise.

CVS Stock Performance, Valuation and Estimates

In the past year, CVS Health shares have rallied 43.5% against the industry’s 5.5% fall.  

CVS Health is trading at a forward five-year price/sales (P/S) ratio of 0.23, lower than the industry average of 0.45.

See how the analysts are projecting CVS Health’s 2025 and 2026 earnings.

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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