On February 12, 2025, CVS Health Corp (CVS, Financial) released its 8-K filing detailing its financial performance for the fourth quarter and full-year 2024. CVS Health, a leading provider of healthcare services, operates over 9,000 retail pharmacy locations in the U.S., manages a large pharmacy benefit manager, and offers health insurance through Aetna. The company also recently expanded into primary care services with the acquisition of Oak Street.
Performance Overview and Challenges
CVS Health Corp reported a 4.2% increase in total revenues for both the fourth quarter and full-year 2024, reaching $97.7 billion and $372.8 billion, respectively. Despite this revenue growth, the company faced significant challenges, particularly in its Health Care Benefits segment, which experienced a decline in operating results due to increased utilization and unfavorable Medicare Advantage star ratings.
The company's GAAP diluted earnings per share (EPS) for the fourth quarter was $1.30, falling short of the analyst estimate of $0.52. The adjusted EPS was $1.19, also below the prior year's $2.12. For the full year, GAAP diluted EPS was $3.66, and adjusted EPS was $5.42, both reflecting a decrease from the previous year.
Financial Achievements and Industry Impact
Despite the earnings decline, CVS Health's revenue growth is noteworthy in the healthcare plans industry, driven by the Pharmacy and Consumer Wellness segment. The company's integrated model aims to deliver a connected healthcare experience, which is crucial in an industry focused on improving health outcomes and reducing costs.
Key Financial Metrics
| Metric | Q4 2024 | Q4 2023 | Change |
|---|---|---|---|
| Total Revenues | $97.7 billion | $93.8 billion | +4.2% |
| Operating Income | $2.37 billion | $3.37 billion | -29.8% |
| GAAP Diluted EPS | $1.30 | $1.58 | -17.7% |
| Adjusted EPS | $1.19 | $2.12 | -43.9% |
Income Statement and Balance Sheet Insights
CVS Health's operating income decreased by 29.8% in the fourth quarter and 38.0% for the full year, primarily due to a decline in adjusted operating income and increased restructuring charges. The company's net income for the year was $4.59 billion, down from $8.37 billion in 2023. The effective income tax rate for the full year increased slightly to 25.4%.
Cash Flow and Guidance
CVS Health generated $9.1 billion in cash flow from operations in 2024. For 2025, the company projects a GAAP diluted EPS range of $4.58 to $4.83 and adjusted EPS between $5.75 and $6.00, with expected cash flow from operations of approximately $6.5 billion.
Our integrated model allows us to uniquely deliver a simpler, connected experience that saves time, saves money, and improves health. We have continued to see growth in key areas of our business, including the Pharmacy and Consumer Wellness segment, while we address the industry-wide challenges that have impacted our Health Care Benefits segment. Through the continued dedication of our colleagues, we will be positioned for strong performance in 2025 as we deliver simply better care for consumers while improving outcomes and reducing costs. - David Joyner, CVS Health President and CEO
Analysis and Outlook
CVS Health's revenue growth amidst declining earnings highlights the company's resilience in a challenging healthcare environment. The focus on expanding its integrated healthcare model and addressing segment-specific challenges will be crucial for future performance. The company's guidance for 2025 suggests a cautious optimism, with expectations for improved earnings and operational cash flow.
Explore the complete 8-K earnings release (here) from CVS Health Corp for further details.
