CVS Health (CVS) Q4 2025 Earnings

CVS Health on Tuesday reported fourth-quarter earnings and revenue that beat estimates and reaffirmed 2026 profit guidance that impressed investors, signaling steady progress in the healthcare giant's turnaround plan.

“The 24th was a tough year for the company. So the 25th righted the ship,” CVS Chief Financial Officer Brian Newman said in an interview.

CVS, which operates one of the largest drugstore chains in the United States, forecast full-year earnings of between $7 and $7.20 per share. This is in line with the $7.17 per share that analysts were expecting, according to LSEG.

Newman also said the company is maintaining its 2026 revenue guidance of at least $400 billion. Analysts expect revenue of $409.77 billion, according to LSEG, although it's unclear whether those estimates account for all of the headwinds Newman cited.

He said that guidance includes $20 billion in headwinds, about half of which are driven by the company's decision to exit the Affordable Care Act's individual exchange market this year. Newman said the other half reflects the adjustment of the company's retail business to lower drug prices after “most favored nation” deals President Donald Trump struck with more than a dozen pharmaceutical companies in recent months.

CVS said last week that its more than 9,000 pharmacies are accepting discount cards from the president's recently launched direct-to-consumer platform, TrumpRx, for eligible patients. Newman said CVS shares the Trump administration's goal of cutting costs. He added that the lower prices establish a new starting point from which Caremark, the company's pharmacy benefits manager, can negotiate even lower costs for its customers, “so we don't see them as sort of adversarial relationships.”

CVS previously said it expects growth this year to be driven by a return to target margins in its turnaround of the Aetna insurance business, led by private Medicare Advantage and Caremark plans.

Newman added that primary care provider Oak Street Health is “improving profitability” this year. This comes after CVS decided to close 16 underperforming locations on Oak Street. For the retail pharmacy business, Newman said the company has several tailwinds, such as new technology investments and the locations and new customers CVS acquired from Rite Aid last year after it filed for bankruptcy.

Investors rewarded CVS last year when CEO David Joyner, who takes over at the end of 2024, pressed ahead with a sweeping restructuring aimed at reversing years of underperformance. The company cut costs, reorganized its leadership and exited weaker markets, helping fuel a roughly 40% rise in its stock over the past year.

Here's what CVS reported for the fourth quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:

• Earnings per share: $1.09 adjusted vs. 99 cents expected
• Revenue: $105.69 billion vs. $103.59 billion expected

The company reported net income of $2.92 billion, or $2.30 per share, in the fourth quarter. That compares with net income of $1.62 billion, or 1.30 cents per share, for the same period a year ago.

Excluding certain items, such as restructuring charges and capital losses, adjusted earnings were $1.09 per share for the quarter.

CVS posted sales of $105.69 billion for the fourth quarter, up 8.2% from the same period a year ago, as all three of its business segments showed growth.

The insurance business generated $36.29 billion in revenue during the quarter, up more than 10% from the fourth quarter of 2024.

Newman said the unit had a “very strong” quarter and that he expects another year of margin improvement, driven primarily by Medicare Advantage. The company's business for privately administered Medicare plans is “continuing on track toward target margins” of 3% to 4% by 2028, he said.

Aetna and other insurers have grappled with higher-than-expected medical costs over the past year as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic. While medical costs remain high, Aetna and other insurers, such as UnitedHealthcare, appear better equipped to deal with the problem in the future.

Still, Newman said, “we'll continue the elevated trends. … I don't think it's too early to take anything more than a cautious outlook.”

The insurance segment's medical benefit ratio (a measure of total medical expenses paid relative to premiums collected) remained constant from the prior year, at 94.8%. A lower ratio generally indicates that a company collected more in premiums than it paid in profits, resulting in higher profitability.

Newman said the biggest driver of that ratio in the fourth quarter was Medicaid transfer payments that arrived in late December.

In a statement, CVS also said better performance in the unit's government business was offset by changes to the Medicare drug cost schedule following changes under the Inflation Reduction Act, which altered the usual seasonal pattern of prescription spending.

Last month, shares of Medicare Advantage insurers took a hit after the Trump administration proposed nearly flat government payment rates for those plans in 2027. Newman said he doesn't believe the proposed rate reflects medical cost trends.

CVS has begun a dialogue with the Centers for Medicare and Medicaid Services before the agency finalizes the rate notice in early April, he added.

CVS' pharmacy and consumer wellness division posted $37.66 billion in sales during the fourth quarter, up 12.4% from the same period a year earlier.

CVS said the increase was due in part to higher prescription volume, including the company's acquisition of Rite Aid prescriptions, but was offset by reimbursement pressure from pharmacies and the impact of some generic drugs entering the market.

That unit dispenses prescriptions at CVS's more than 9,000 retail pharmacies and provides other services, such as vaccinations and diagnostic tests.

CVS' health services segment generated $51.24 billion in revenue for the quarter, up 9% compared to the same quarter in 2024.

That unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans, creates lists of drugs or formularies that are covered by insurance, and reimburses pharmacies for prescriptions.