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- **Q3 Strong Performance**: Adjusted EPS of $1.60, 8% revenue growth, and 240bps MBR improvement in Aetna. Full year EPS guidance raised to $6.55-$6.65.
- **Strategic Adjustments**: $5.7B goodwill impairment in Health Care Delivery, exit of individual exchange business, and $6B new PBM wins.
- **2026 Outlook**: Mid-teens EPS growth driven by Aetna margin recovery, PBM contract recontracting, and 3% script growth in retail pharmacy.
- **Key Risks**: PBM market basket contract pressures ($240M impact), Oak Street clinic closures, and Medicare Advantage enrollment trends.
- **Innovation**: TrueCost model adoption, IVF therapy partnership with admin, and CostVantage front-store growth (2.7% trips YoY).

**【CEO Summary Section】**
- **Q3 Financial Highlights**: Adjusted operating income of $3.5 billion, adjusted EPS of $1.60, and total revenue of $103 billion (8% YoY growth). Full year 2025 EPS guidance raised to $6.55-$6.65.
- **Segment Performance**: 
  - **Aetna**: 81% of Medicare Advantage members in 4+ star plans, 63% in 4.5-star plans. Medical benefit ratio improved to 92.8% (down 240bps YoY).
  - **Health Care Delivery**: $5.7 billion goodwill impairment due to Oak Street clinic growth slowdown. Focus on closing underperforming clinics and renegotiating payer contracts.
  - **Pharmacy & Consumer Wellness**: 28.9% script share, 17% same-store pharmacy sales growth, and 150bps front-store sales increase.
- **Strategic Moves**: Acquisition of Rite Aid assets, exit of individual exchange business, and launch of TrueCost model for PBM transparency.
- **Future Outlook**: 2026 adjusted EPS expected to reflect mid-teens growth, driven by Aetna margin recovery and PBM contract recontracting.

**【CFO Financial Commentary】**
- **Q3 Financials**: GAAP net income $420 million, non-GAAP EPS $1.60 (vs. $1.35 prior guidance). Year-to-date cash flow $7.2 billion.
- **Segment Adjustments**: 
  - **Health Care Benefits**: $2.72 billion adjusted operating income (up $300 million YoY). 
  - **Health Services**: $7.1 billion adjusted operating income (down $240 million YoY due to PBM contract pressures). 
  - **Pharmacy & Consumer Wellness**: $5.95 billion adjusted operating income (up $270 million YoY). 
- **2026 Outlook**: Low single-digit growth in Health Services, mid-teens EPS growth driven by Aetna margin expansion and PBM model transition.

**【Q&A Key Highlights】**
- **PBM Headwinds**: $240 million impact from market basket-based contract guarantees. Transition to TrueCost model expected to mitigate long-term risks. 2026 PBM growth outlook revised to modestly lower due to recontracting.
- **Retail Pharmacy Growth**: 3% Q4 script growth guidance, driven by Rite Aid integration and CostVantage adoption. Front-store comps improving with 2.6% customer base growth.
- **Medicare Advantage Margins**: 2026 target for MA margin expansion, with 81% of members in 4+ star plans and disciplined plan design.
- **Oak Street Health**: Pretax operating losses not disclosed, but focus on closing underperforming clinics and renegotiating payer contracts for 2026.


CVS Health Corporation (CVS) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CVS

CVS fundamentals

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