CVS Health’s stock (NYSE: CVS) is finally giving investors a reason to breathe easy. After a rocky 2024 marked by profit cuts and underperforming business segments, the company just dropped some seriously bullish news, and Wall Street is listening.
On Thursday, CVS raised its full-year profit forecast, sending its stock surging more than 8% in premarket trading to $72.43. That jump builds on momentum from earlier in the year when February’s earnings beat gave the first hint that a turnaround might be in motion.
So, what’s behind the renewed investor confidence? A mix of tighter cost controls, smarter operational moves, and a clear strategy from new CEO David Joyner, who took charge in October 2024. And if you’re a CVS stockholder, or thinking about becoming one, there’s a lot to unpack.
A Much-Needed Comeback
Let’s not forget, CVS stock plunged over 40% last year, bruised by a string of profit warnings, shaky performance in its pharmacy and insurance segments, and overall investor fatigue. The company’s once-pristine reputation as a healthcare giant was on the ropes.
But now? We’re seeing signs of a controlled rebound. For Q1 2025, CVS posted earnings of $2.25 per share, demolishing analyst estimates of $1.70. The company is now guiding full-year adjusted EPS to $6.00–$6.20, up from a previous range of $5.75–$6.00. That’s a big confidence play, , nd investors are eating it up.
What’s Driving the Rebound?
- Medical Loss Ratio (MLR): One of the biggest wins this quarter was CVS’ medical loss ratio falling to 87.3%, well below Wall Street expectations of 88.9%. In simpler terms: the company is spending less on patient care compared to premiums collected, which directly boosts margins.
- Pharmacy & Health Services Revenue: CVS’ pharmacy segment raked in $31.91 billion, beating forecasts of $30.96 billion. Its health services unit pulled in $43.46 billion, again topping expectations. These segments were major headaches in 2024, so this rebound is a strong signal of restored performance.
- Strategic Streamlining: CVS announced it will exit the Obamacare individual exchange market, calling it a necessary step to streamline operations. Additionally, its pharmacy benefit management (PBM) unit plans to drop Eli Lilly’s weight-loss drug Zepbound in favor of Novo Nordisk’s Wegovy, citing significant client savings. That’s cost-conscious decision-making investors appreciate.
Can CEO David Joyner Deliver?
Since taking over in October, Joyner has wasted no time cleaning house, e-shuffling top leadership and slashing costs. While it’s early, the market clearly believes he’s steering the ship in the right direction. If this earnings trend holds, CVS could finally be climbing out of its slump, and regaining its place as a reliable healthcare bet.
What to Watch Going Forward
- Medicare Advantage Costs: CVS, like other insurers, still faces macro pressure from rising healthcare demand in the Medicare Advantage space. Elevated costs for older patients haven’t gone away entirely.
- PBM Competition: The pharmacy benefits space is heating up, and dropping Zepbound might be a cost win now, but it could raise eyebrows if patient or doctor backlash grows.
- Regulatory Watchdogs: With CVS streamlining and making bold product exclusions, federal scrutiny is always a looming risk.
Final Take: Is CVS Stock a Buy?
The market is reacting like this is the start of a new chapter, and it might be. After months of gloom, CVS stock is finally showing signs of life, with earnings momentum and a proactive CEO at the helm.
While it’s not entirely out of the woods, investors betting on a sustained recovery may find this an opportune entry point, specially if Joyner’s overhaul keeps delivering.
