CVS Q3 2025: $5.7B Goodwill Impairment Pushes Health Giant to a $4B Loss

CVS Health is a cornerstone of the American healthcare landscape, operating everything from local pharmacies and retail stores (Pharmacy & Consumer Wellness segment) to one of the nation's largest pharmacy benefit managers, or PBMs (Health Services segment via Caremark), and a major health insurer (Health Care Benefits segment via Aetna). To understand the health of this giant, we're diving into its latest quarterly financial report for the third quarter of 2025. The filing reveals a story of impressive revenue growth overshadowed by a significant write-down that pushed the company into a deep quarterly loss.

CVS posted strong top-line numbers, with total revenues climbing 7.8% to $102.9 billion for the quarter, up from $95.4 billion in the same period last year. This growth was broad-based, with its Health Services, Pharmacy & Consumer Wellness, and Health Care Benefits segments all contributing.

A visual breakdown of the company's revenue streams and how they flow through to the bottom line for the quarter is shown below.

The flow diagram above shows "Unallocated" revenue and cost of revenues, which represent "Intersegment Eliminations". These reflect revenue/costs generated from transactions between CVS's different business segments—for example, when the Health Care Benefits segment (Aetna) pays the Health Services segment (Caremark) for pharmacy benefits. These are removed from the consolidated total to avoid double-counting revenue and costs.

Despite the healthy revenue growth, the bottom line tells a different story. CVS reported a net loss of nearly $4.0 billion, a stark reversal from the $71 million net income in Q3 2024. The main culprit? A massive $5.7 billion goodwill impairment charge.

The $5.7 Billion Impairment

Goodwill is an intangible asset recorded on the balance sheet after an acquisition, representing the premium paid over the fair value of the assets acquired. When a company determines that the asset's value has declined, it must record an impairment—a non-cash charge that reduces its earnings.

According to the filing, this impairment relates to the "Health Care Delivery reporting unit within the Health Services segment." This strongly suggests a revaluation of recent strategic acquisitions, such as Oak Street Health, which are central to CVS's push into providing direct patient care. This charge, along with an $83 million charge for clinic closures, indicates CVS is actively restructuring and rightsizing this part of its business.

A Look at Segment Profitability

Beneath the headline loss, the performance of CVS's core segments was mixed.

• Health Care Benefits (Aetna): This segment showed a strong turnaround. Its adjusted operating income was $314 million, a significant improvement from a loss of $924 million a year ago. A key metric, the Medical Benefit Ratio (MBR)—which measures how much of premium revenue is spent on medical claims—improved from 95.2% to 92.8%. A lower MBR is generally favorable for an insurer's profitability.
• Health Services (Caremark): This segment houses the PBM and the newly acquired healthcare delivery assets. While the goodwill impairment led to a GAAP operating loss of $3.9 billion, its adjusted operating income was $2.05 billion, down a modest 7% from the prior year. This shows the underlying business remains profitable, but the write-down casts a shadow.
• Pharmacy & Consumer Wellness (Retail): The retail arm saw revenues climb 11.7%, fueled by a 6.9% increase in prescriptions filled and a 16.8% jump in same-store pharmacy sales. However, adjusted operating income fell 7.4% to $1.5 billion, which the company attributes to "continued pharmacy reimbursement pressure."

The Road Ahead

CVS Health's third-quarter results paint a complex picture. The company continues to demonstrate its ability to grow revenue across its vast and integrated healthcare platform. However, the substantial goodwill impairment is a clear signal that the path to integrating and profiting from its ambitious move into healthcare delivery is facing significant hurdles. While the insurance business is showing signs of recovery, pressure on pharmacy reimbursements remains a persistent headwind. For investors, the key will be watching whether CVS can stabilize its healthcare delivery assets and translate its massive scale into sustained, profitable growth.