CVS Health (NYSE:CVS) delivered better-than-expected fourth-quarter results, sending its stock soaring more than 14% intra-day today as the company pushes forward with a strategic overhaul under new CEO David Joyner.
After a 28% stock decline over the past year, CVS has been under pressure due to missed profit targets and the withdrawal of its annual forecast. The healthcare giant has also faced rising medical costs, as more patients resumed elective surgeries that were postponed during the pandemic. With CVS enrolling the highest number of new Medicare members, these rising costs have had an outsized impact compared to industry peers.
Joyner’s turnaround strategy, which includes cost-cutting measures and operational restructuring, has become a key focus for investors. The latest results show strength in its pharmacy and consumer wellness segment, helping to offset broader industry challenges in its health insurance division.
Health services revenue totaled $47.02 billion, while pharmacy network sales reached $25.20 billion, both surpassing analyst projections. Overall revenue climbed 4.2% year-over-year to $97.71 billion, exceeding the expected $97.21 billion.
A key industry metric, the medical benefit ratio, which tracks the percentage of premiums spent on patient care, improved slightly to 94.8% from a record 95.2% in the prior quarter. However, it remained well above the 88.5% level from a year ago, highlighting continued pressure on the health insurance business.
Despite these challenges, adjusted earnings per share came in at $1.19, down from $2.12 a year earlier, but well ahead of estimates of $0.92.