CVS Health Wednesday reported a $4 billion third-quarter loss related to the reduced value of its Oak Street Health primary care facilities, but the company is getting a handle on health costs that have hit its Aetna health insurance business.
CVS Health
CVS Health Wednesday reported a $4 billion third-quarter loss related to the reduced value of its Oak Street Health primary care facilities, but the company is getting a handle on health costs that have hit its Aetna health insurance business.
Despite an impairment charge of nearly $6 billion related to the lower value of the Oak Street business, CVS raised its adjusted earnings per share guidance range to “6.55 to $6.65 from $6.30 to $6.40” due in part to the improving performance of Aetna, the nation’s third-largest health insurer with more than 26 million enrollees.
CVS said its health plans’ medical benefit ratio, which is the percentage of premium revenue that goes toward medical costs, dropped to 92.8% in the third quarter compared to 95.2% in the year-ago period. Though that percentage is still considered high by industry standards, it’s a step in the right direction, analysts said.
“Our leadership team has stabilized operations and is focused on businesses and markets where we can succeed,” CVS Health president and chief executive David Joyner said in a statement included in the company’s third quarter earnings report. “As a result, we are making progress on our journey to be America’s most trusted health care company. Our strong enterprise performance demonstrates the continued focus we have on operational and financial improvement across our businesses.”
Joyner, who replaced Karen Lynch as CEO a year ago, is working on a financial turnaround, which CVS executives have said will take some time. To that end, the company reported a net loss of $3.98 billion, or $3.13 per share in the third quarter thanks to “a $5.7 billion goodwill impairment charge related to the Health Care Delivery reporting unit (that includes Oak Street), partially offset by a gain of $483 million on the deconsolidation of (the company’s long-term care pharmacy) Omnicare, in connection with the initiation of Omnicare’s voluntary Chapter 11 proceedings.”
CVS last week confirmed plans to close 16 Oak Street Health Centers, or 7% of the total number of the senior-focused primary care locations the company operates across the U.S.
CVS paid more than $10 billon for Oak Street two years ago. The Oak Street model is designed to help older adults stay healthy, improve their health outcomes and patient experience all while keeping costs in check.
But the business has “experienced challenges which have impacted its ability to grow the business at the rate previously estimated,” CVS said in its third quarter earnings report.
“The company made a number of changes to its health care delivery management team during 2025 and during the third quarter of 2025, finalized certain strategic changes, including the determination that it would reduce the number of new primary care clinics it would open in 2026 and thereafter,” CVS said. “Upon updating its financial projections to reflect these changes, management determined that there were indicators that the health care delivery reporting unit’s goodwill may have been impaired, and accordingly, an interim goodwill impairment test was performed. The results of the impairment test showed that the fair value of the health care delivery reporting unit was lower than its carrying value, resulting in a $5.7 billion goodwill impairment charge.”
Despite the charge, CVS is performing better on an operating basis while revenues rose nearly 8% in the third quarter to a record $102.9 billion driven by “growth across all operating segments.” Adjusted operating income increased more than 35% to $3.45 billion “driven by an increase in the health care benefits segment, partially offset by declines in the health services and pharmacy & consumer wellness segments,” CVS said.
