Wall Street appears to like CVS (CVS) CEO David Joyner's conservative approach to the company's 2025 financial outlook, rewarding the stock with a nearly 15% bump by market close Wednesday. Joyner also used the opportunity to defend his pharmacy benefit manager unit, which, along with others in the business, has been under fire. 

The company reported a beat on earnings, with $372.8 billion in full-year 2024 revenues and $97.7 billion in fourth quarter earnings — more than Wall Street's expected $96.8 billion. But for 2025, CVS didn't provide full-year revenue guidance. It did, however, estimate adjusted earnings per share at $5.75 to $6.

Joyner just completed his second full quarter at the helm of the $80 billion market cap healthcare giant and ended the full year 2024 by beating Wall Street estimates, despite several headwinds pressuring the company throughout the year, resulting in weaker earnings throughout the first nine months.

Joyner told Yahoo Finance he chose to be conservative in order to regain confidence from the Street after the company's health insurance business slowed amid higher-than-expected utilization by seniors last year — a problem all Medicare Advantage players struggled with.

"We did not create a lot of confidence in our ability to predict both the margins or the operating income, and, for that matter, even some of the revenues. So I have been cautious and prudent, and also guiding what I believe we're going to be able to hit. So that's the most important thing from an investment standpoint," Joyner said. 

Wall Street agreed, even though it did not get revenue guidance for full-year 2025 from the company.

"We reiterate our positive view on CVS post-4Q as the company introduced guidance that was ahead of buyside expectations and displays a degree of conservatism from new CEO David Joyner," JPMorgan analyst Lisa Gill wrote in a note to clients Wednesday. 

Joyner has started off the year strong but acknowledged that the problems from last year have not disappeared with the start of a new year. Despite a new administration under President Donald Trump, the company is still facing pressure for its pharmacy benefit manager and the role it plays in the US healthcare system. 

Congress is eager to curb what it deems to be middlemen who are driving health costs higher by keeping savings meant to help reduce costs for patients and setting reimbursements of prescription drugs that squeeze smaller pharmacies. Prior to the departure of his predecessor, Karen Lynch, in October last year, Joyner oversaw CVS's PBM business, Caremark. 

During the earnings call Wednesday, Joyner defended the role of PBMs in the healthcare system, as he had done in his previous role.  

REUTERS / Reuters

"No one has demonstrated more success than the PBMs that are driving down drug prices. Perfect example is the prior administration's negotiated maximum fair price, or MFP, for the first 10 drugs selected as part of the Inflation Reduction Act," Joyner said. 

He added, "Not only have PBMs kept the rate of drug inflation in Medicare Part D at 1.3% per annum over the last 18 years, CVS Caremark specifically negotiated rates that contributed to a $1 billion improvement better than MFP. More importantly, if we don't continue to negotiate further discounts beyond MFP, the lost savings will go directly into the pockets of drug manufacturers." 

Still, the company has started to pivot away from the traditional system of negotiating drug prices and keeping a portion of rebates, instead adopting a similar strategy to Mark Cuban's Cost Plus Drugs, which focuses on a flat rate plus a small markup fee for prescriptions.

Joyner said the company believes that combining the new PBM strategy with its healthcare services is going to create a more efficient system.

"This will be a bold statement, but I believe we changed the market. We are driving changes and rationalizing the pricing formulas in this marketplace. So this is not a one-off. This is truly where I believe the marketplace is going," he told Yahoo Finance.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on social media platforms X, LinkedIn, and Bluesky @AnjKhem.

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