A pedestrian walks by a CVS store in Greenbrae, California, on July 31, 2025.
Justin Sullivan | Getty Images
CVS Health on Tuesday reported fourth-quarter earnings and revenue that beat estimates and reaffirmed the 2026 profit guidance that impressed investors, signaling steady progress in the health-care giant’s turnaround plan.
“’24 was a tough year for the company. So ’25 righted the ship,” CVS CFO Brian Newman said in an interview.
CVS, which operates one of the largest pharmacy chains in the U.S., sees full-year profit coming in between $7 to $7.20 per share. That’s 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, though it’s unclear if those estimates account for all of the headwinds Newman cited.
He said that guidance includes $20 billion in headwinds, roughly half of which is driven by the company’s move to exit the Affordable Care Act individual exchange market this year. Newman said the other half reflects the company’s retail business adjusting to lower drug prices after the “most favored nation” deals that President Donald Trump struck with more than a dozen pharma companies in recent months.
CVS last week said its roughly 9,000 pharmacies are accepting discount cards from the president’s newly launched direct-to-consumer platform, TrumpRx, for eligible patients. Newman said CVS shares the Trump administration’s goal of reducing costs. He added that the lower prices set a new starting point from which Caremark, the company’s pharmacy benefit manager, can negotiate even lower costs for its clients, “so we don’t see these as kind of adversarial relationships.”
CVS previously said it expects growth this year to be driven by the return to target margins at its recovering Aetna insurance business, led by privately run Medicare Advantage plans, and Caremark.
Newman added that primary-care provider Oak Street Health is “improving its profitability” this year. That comes after CVS moved to close 16 underperforming Oak Street locations. For the retail pharmacy business, Newman said the company has several tailwinds, such as new technological investments and the locations and new customers CVS acquired from Rite Aid last year after it filed for bankruptcy.
Investors rewarded CVS last year as CEO David Joyner, who stepped into the role in late 2024, pressed ahead with a sweeping restructuring aimed at reversing years of underperformance. The company has cut costs, reshuffled leadership and exited weaker markets, helping fuel a roughly 40% stock rise over the past year.
Here’s what CVS reported for the fourth quarter compared with what Wall Street was expecting, based on 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 posted net income of $2.92 billion, or $2.30 per share, for 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 booked 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.
Growth across business units
The insurance business brought in $36.29 billion in revenue during the quarter, up more than 10% from the fourth quarter of 2024.
Newman said the unit delivered a “very strong” quarter and that he expects another year of margin improvement, primarily driven by Medicare Advantage. The company’s business for those privately run Medicare plans is “continuing the path towards 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 to be becoming better equipped to navigate the issue moving forward.
Still, Newman said “we will continue the elevated trends. … I don’t think it’s too early to assume anything other than a prudent outlook.”
The insurance segment’s medical benefit ratio — a measure of total medical expenses paid relative to premiums collected — remained consistent from the prior year, at 94.8%. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability.
Newman said the biggest driver of that ratio in the fourth quarter was Medicaid pass-through payments that hit in late December.
In a release, CVS also said improved performance in the unit’s government business was offset by shifts in Medicare drug cost timing 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 in January after the Trump administration proposed nearly flat government payment rates to those plans in 2027. Newman said he does not believe that the proposed rate reflects medical cost trends.
CVS has started a dialogue with the Centers for Medicare and Medicaid Services before the agency finalizes the rate notice in the beginning of April, he added.
CVS’ pharmacy and consumer wellness division posted $37.66 billion in sales for the fourth quarter, up 12.4% from the same period a year earlier.
CVS said the increase came partly from higher prescription volume, including from the company’s acquisition of prescriptions from Rite Aid, but was offset by pharmacy reimbursement pressure and the impact of some generic drugs entering the market.
That unit dispenses prescriptions in CVS’ more than 9,000 retail pharmacies and provides other services, such as vaccinations and diagnostic testing.
CVS’ health services segment generated $51.24 billion in revenue for the quarter, up 9% compared with the same quarter in 2024.
That unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans, creates lists of medications, or formularies, that are covered by insurance, and reimburses pharmacies for prescriptions.
