CVS Health’s third quarter was shaped by strong top-line momentum across its core businesses, notably pharmacy and health insurance, with management attributing results to improved execution in retail pharmacy, market share gains, and early progress on Aetna’s operational turnaround. CEO David Joyner emphasized that CVS’s “diversified business and progress on becoming the most trusted health care company” helped offset reimbursement pressures and challenges in Health Care Delivery. The company’s decision to slow Oak Street Health clinic expansion and focus on closing underperforming clinics also featured prominently, as did continued investment in technology and customer service.

Is now the time to buy CVS? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From CVS Health’s Q3 Earnings Call

• Lisa Gill (JPMorgan) asked about PBM profit headwinds from the TrueCost transition and future PBM economics. CEO David Joyner and CFO Brian Newman responded that near-term pressures are expected but emphasized the model’s long-term value and high client retention.
• Justin Lake (Wolfe Research) inquired about growth drivers in the pharmacy and consumer wellness segment, including Rite Aid integration and immunization trends. Prem Shah, Chief Pharmacy Officer, cited operational improvements, technology investments, and growing customer base as key contributors.
• Elizabeth Anderson (Evercore) sought clarification on provider liabilities and their impact on medical benefit ratio. CFO Brian Newman explained these stemmed from prior years and were partly offset by favorable risk adjustment data.
• Andrew Mok (Barclays) asked about Oak Street Health’s recontracting efforts and path to profitability. Prem Shah highlighted improved contracting terms, focus on clinic-level membership growth, and continued technology enhancements.
• George Hill (Deutsche Bank) questioned the timeline for retail pharmacy margin stabilization and CostVantage’s role. Joyner and Shah detailed progress on payer transitions and reiterated that CostVantage aims to align earnings growth with prescription volume over time.

Catalysts in Upcoming Quarters

In future quarters, our analysts will closely watch (1) progress on PBM contract transitions and the financial impact of the TrueCost model, (2) continued improvement in Aetna’s Medicare Advantage margins and enrollment, and (3) stabilization in retail pharmacy profitability as CostVantage expands. Updates on Oak Street Health’s operational improvements and integration of Rite Aid assets will also be important to monitor.

CVS Health currently trades at $78.39, down from $82.19 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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