After a challenging 2024, CVS Health is making a remarkable comeback in 2025. The company’s stock has surged by more than 45% in early 2025, signaling renewed investor confidence. This turnaround comes after a year of financial struggles, missed earnings expectations, and challenges within its insurance division, Aetna. Now, with a new CEO in place and strategic cost-cutting measures underway, CVS is showing promising signs of recovery.

CVS Health faced significant setbacks in 2024, with its stock dropping by 40% due to higher-than-expected medical costs in its insurance business and pressures on pharmacy reimbursements. The uncertainty caused by the company’s decision to withdraw its annual forecast only added to investor concerns. However, as the company entered 2025, fresh momentum and strong fourth-quarter earnings helped restore optimism. Analysts have taken notice, with Michael Cherny of Leerink Partners upgrading CVS’s stock rating based on its improved operational performance. Cantor Fitzgerald analysts also see strong recovery potential for the company.

A key factor in CVS’s revival has been the leadership of newly appointed CEO David Joyner. Within his first 100 days, Joyner has focused on restructuring Aetna and implementing cost-cutting strategies. The company has closed underperforming retail locations and made adjustments to its insurance business to stabilize profits. Its 2025 profit forecast now projects adjusted earnings of $5.75 to $6 per share, a target analysts believe is achievable given the current strategic direction.

One of the biggest challenges CVS continues to face is its Medicare Advantage business. Rising healthcare costs for seniors forced CVS to exit unprofitable plans and increase premiums in 2024. However, potential relief could be on the way, as the Biden administration has proposed a 2.2% increase in Medicare Advantage reimbursements for 2026. Analysts at Cantor Fitzgerald estimate this increase could range between 2% and 2.8%, providing CVS with some financial stability. Industry rivals like Humana are also restructuring their Medicare offerings, signaling an industry-wide effort to regain profitability in this sector.

What sets CVS apart from competitors such as Walgreens, UnitedHealth Group, and Cigna is its vertically integrated business model. The company not only operates a nationwide retail pharmacy chain but also owns Aetna, a prominent insurance provider, and Caremark, a leading pharmacy benefit manager. This structure allows CVS to maintain greater control over healthcare costs and services. Jefferies analyst Brian Tanquilut highlights that while UnitedHealth and Cigna operate PBMs, they lack a retail pharmacy division, making CVS’s integrated model a key competitive advantage.

As CVS continues to implement strategic adjustments, early signs suggest that its financial struggles may be behind it. With analysts growing more optimistic and investors showing renewed confidence, CVS is positioning itself as a stronger competitor in both the retail pharmacy and healthcare industries. The challenge ahead will be balancing cost reductions while maintaining high-quality service, particularly within the Medicare insurance sector.

If CVS stays on track with its current strategies, 2025 could mark the beginning of a new period of growth for the company. With leadership changes, financial stabilization efforts, and industry-tailored adjustments, CVS appears to be on the right path toward long-term success.