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CVS' Health Care Delivery Arm Likely to See Better Financial Results

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Key Takeaways

  • CVS Health's Health Care Delivery revenues rose about 25% year over year, excluding a prior business exit.
  • CVS recorded a $5.7B goodwill charge after reviewing and closing underperforming Oak Street clinics.
  • CVS targets better Health Care Delivery results via tech investments, new leadership and payer contracts.

CVS Health (CVS - Free Report) reported third-quarter 2025 results last week, wherein the performance of the Health Care Delivery business was broadly in line with the company’s expectations. Revenues rose roughly 25% year over year, excluding the impact of the exit from the CVS Accountable Care business earlier this year. The increase was mainly driven by patient growth at Oak Street and increased volumes at Signify Health.

The company has been focused on improving the business’ financial performance, particularly by addressing the market dynamics and strengthening Oak Street. The unit continued to face pressure from persistently high medical costs, member mix, and more robust benefit and supplemental benefit offerings that plans provided to their members.

During the third quarter, CVS implemented some strategic changes, including the decision to scale back the number of new Oak Street clinics planned to open over the next several years. This triggered a goodwill impairment charge of approximately $5.7 billion. Following a comprehensive review of the Oak Street clinic footprint, the company also took the decision to close underperforming clinics that lacked a reasonable path to sustainable margins.

Value-based care continues to be a critical component of CVS’ Medicare strategy. The company expects the recent actions to support improved financial performance starting next year. CVS continues to strengthen the Health Care Delivery business through investments in technology, a new leadership team, and fair and equitable contracts with its payer clients.

Updates From CVS Health Peers

UnitedHealth Group (UNH - Free Report) reported total revenues of $113.2 billion in the third quarter of 2025, up 12% year over year. This was driven by domestic membership expansion of more than 780,000 lives year to date. UNH’s adjusted earnings per share (EPS) of $2.92 were down 59.2% year over year. Meanwhile, the third-quarter medical care ratio (MCR) of 89.9% compares to 85.2% in the same quarter last year, with the full year trending toward the lower end of the projections the company offered in the previous quarter.

The Cigna Group (CI - Free Report) also posted strong results for the third quarter of 2025, with revenues up 9.5% year over year to $69.75 billion. This was mainly driven by Evernorth Health Services and includes the growth of existing client relationships and strong specialty pharmacy growth. Meanwhile, adjusted EPS of $7.83 were up 4% from the prior year’s quarter. The Cigna Healthcare MCR was 84.8% compared to 82.8% in the third quarter of 2024, driven by an updated view of risk adjustment in the individual exchange business.

CVS Stock Performance, Valuation and Estimates

Year to date, CVS Health shares have surged 74.1% compared with the industry’s 2.5% growth. 

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CVS Health is trading at a forward five-year price/sales (P/S) ratio of 0.24, lower than the industry average of 0.46.

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See how the analysts are projecting CVS Health’s 2025 and 2026 earnings.

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CVS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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