Can CVS Sustain Pharmacy & Consumer Wellness Gains Through Year-End?

CVS Health’s CVS Pharmacy and Consumer Wellness (“PCW”) segment has seen steady growth in recent months, with revenues up 11.1% year over year in the first quarter of 2025. Performance was supported by seasonal trends, including the impact of high vaccine demand and a longer-than-usual flu season. The key question now is whether CVS can hold this momentum through the rest of fiscal 2025.

The company is likely to continue benefiting from a favorable pharmacy drug mix, boosted by the rising demand for high-cost branded GLP-1 medications. A key development is CVS Pharmacy’s inclusion in Novo Nordisk’s NovoCare pharmacy network, enabling it to expand Wegovy’s access at more than 9,000 community health locations nationwide. Further, the implementation of its pharmacy reimbursement model, CostVantage, positions the PCW business for improved future results by eliminating some of the cross-subsidization that exists in the market. Effective Jan. 1, 2025, all commercial prescriptions dispensed through CVS Pharmacy are now processed through CostVantage.

Rising pharmacy same-store sales and same-store prescription volume are expected to boost adjusted operating income in CVS Health’s PCW business. Moreover, retail pharmacy remains a vital part of this business, backed by demographic trends and market trends, including growing prescription drug use and the introduction of pharmaceutical products.

In December 2024, CVS completed its three-year plan to close 900 stores as part of its omnichannel health strategy. Despite a smaller footprint, the company achieved a strong retail pharmacy script share of 27.6% in the first quarter, up nearly 70 basis points year over year. As CVS continues to close more locations, its consistent execution, quality services and commitment to pharmacy access are expected to help maintain this position.

However, ongoing pharmacy reimbursement pressure remains a headwind for the PCW segment’s growth. CVS Health is also closely tracking signs of a softening consumer environment, potential tariff impacts and evolving consumer sentiment toward vaccines that could influence market demand.

Updates From CVS’ Pharmacy & Consumer Wellness Rivals

U.S. retailer, Walmart WMT, had a strong start to fiscal 2026, highlighting the strength of its business and the impact of its omnichannel strategy in a rapidly changing environment. Walmart’s health and wellness sales rose in the high teens in the first quarter, driven by higher prescription volumes and over-the-counter sales. Impressively, for Walmart US, the number of deliveries in less than three hours grew 91% year over year.

Walgreens Boots Alliance WBA, currently awaiting the completion of its merger deal with Sycamore Partners, posted 7.8% year-over-year sales growth in the U.S. Retail Pharmacy segment in the fiscal 2025 third quarter. Following a strategic and operational review completed last year, Walgreens is pushing forward with its retail-pharmacy-led turnaround strategy underpinned by a sustainable economic model. Walgreens’ Footprint Optimization Program aims to realign its store base with evolving demographic trends and shifting consumer habits. 

CVS’ Price Performance, Valuation and Estimates

In the past year, CVS Health shares have rallied 18.9% against the industry’s 14.6% fall.

CVS shares are trading at a forward 12-month earnings multiple of 10.18X, discounted than the industry average of 14.07X. The stock carries a Value Score of A.

Here’s how consensus estimates for CVS Health’s 2025 and 2026 earnings are shaping up.   

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research