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CVS (CVS) reported first quarter earnings Thursday, beating Wall Street's expectations. The company also raised its full-year 2025 guidance, with adjusted earnings per share now expected in the range of $6 to $6.20, up from $5.75 to $6.
CVS reported adjusted earnings per share of $2.25 compared to Wall Street's consensus of $1.69. Revenue came in at $94.6 billion, compared to estimates of $93.6 billion.
The company's stock was up nearly 7% in premarket trading on Thursday.
The Street had been concerned about Medicare Advantage players, like CVS's Aetna, after UnitedHealth Group's (UNH) miss, in part related to higher-than-expected utilization of Medicare Advantage, which would have extended a concerning trend last year.
But with the improvement in medical loss ratio (MLR) — the ratio of premiums received to claims paid out, mandated to be at 85% by the Affordable Care Act — CVS has helped show the hit to UnitedHealth was a one-off.
CVS reported an MLR of 87.3%, in line with peer Humana (HUM), and a 3% drop from the same period in 2024, when the company reported 90.4%.
The company attributed the improvement to its plans' increased star ratings, awarded last year, which resulted in increased Medicare payments. In addition, CVS has exited the ACA marketplace, which gave it more control over cost management.
Read more about CVS's stock moves and today's market action.
Weight-loss boost
CVS announced two key developments in the hot weight-loss market Thursday, marking a shift from insurers that are ending coverage and employers that have put restrictions on access and coverage.
The first development was placing Novo Nordisk's (NVO) blockbuster GLP-1 drug Wegovy as a preferred drug on its formulary, to the exclusion of competitor Eli Lilly's (LLY) Zepbound, for $499 per month.
"Now that there's adequate supply of both of these GLP-1s, CVS Caremark was able to negotiate Wegovy against Zepbound to determine which manufacturer of these clinically similar products could deliver the greatest overall value and lowest net cost for our clients that choose to participate on our standard commercial formularies," a spokesperson told Yahoo Finance in a statement Thursday.
That means patients will be steered to Wegovy if they are prescribed a weight-loss drug and have CVS Caremark as their pharmacy benefit manager (PBM).
CVS "is taking a formulary action on July 1, 2025 to prefer Wegovy for its members. The company will enhance the value of these new medications by combining them with additional lifestyle clinical support as part of the CVS Weight Management program offered to clients through CVS Caremark," the company said in a statement.