A pedestrian walks by a CVS retailer in Greenbrae, California, on July 31, 2025.
Justin Sullivan | Getty Photographs
CVS Well being on Tuesday reported fourth-quarter earnings and income that beat estimates and reaffirmed the 2026 revenue steerage that impressed traders, signaling regular progress within the health-care large’s turnaround plan.
“’24 was a tricky 12 months for the corporate. So ’25 righted the ship,” CVS CFO Brian Newman stated in an interview.
CVS, which operates one of many largest pharmacy chains within the U.S., sees full-year revenue coming in between $7 to $7.20 per share. That is according to the $7.17 per share that analysts had been anticipating, in line with LSEG.
Newman additionally stated the corporate is sustaining its 2026 income steerage of at the very least $400 billion. Analysts count on income of $409.77 billion, in line with LSEG, although it is unclear if these estimates account for the entire headwinds Newman cited.
He stated that steerage consists of $20 billion in headwinds, roughly half of which is pushed by the corporate’s transfer to exit the Reasonably priced Care Act particular person change market this 12 months. Newman stated the opposite half displays the corporate’s retail enterprise adjusting to decrease drug costs after the “most-favored-nation” offers that President Donald Trump struck with greater than a dozen pharma firms in latest months.
CVS final week stated its greater than 9,000 pharmacies are accepting low cost playing cards from the president’s newly launched direct-to-consumer platform, TrumpRx, for eligible sufferers. Newman stated CVS shares the Trump administration’s purpose of lowering prices. He added that the decrease costs set a brand new place to begin from which Caremark, the corporate’s pharmacy profit supervisor, can negotiate even decrease prices for its shoppers, “so we do not see these as sort of adversarial relationships.”
CVS beforehand stated it expects progress this 12 months to be pushed by the return to focus on margins at its recovering Aetna insurance coverage enterprise, led by privately run Medicare Benefit plans, and Caremark.
Newman added that primary-care supplier Oak Avenue Well being is “bettering its profitability” this 12 months. That comes after CVS moved to shut 16 underperforming Oak Avenue areas. For the retail pharmacy enterprise, Newman stated the corporate has a number of tail winds, comparable to new technological investments and the areas and new clients CVS acquired from Ceremony Assist final 12 months after it filed for chapter.
Traders rewarded CVS final 12 months as CEO David Joyner, who stepped into the position in late 2024, pressed forward with a sweeping restructuring geared toward reversing years of underperformance. The corporate has minimize prices, reshuffled management and exited weaker markets, serving to gasoline a roughly 40% inventory rise over the previous 12 months.
This is what CVS reported for the fourth quarter in contrast with what Wall Avenue was anticipating, primarily based on a survey of analysts by LSEG:
- Earnings per share: $1.09 adjusted vs. 99 cents anticipated
- Income: $105.69 billion vs. $103.59 billion anticipated
The corporate posted internet earnings of $2.92 billion, or $2.30 per share, for the fourth quarter. That compares with internet earnings of $1.62 billion, or $1.30 cents per share, for a similar interval a 12 months in the past.
Excluding sure objects, comparable to restructuring costs and capital losses, adjusted earnings had been $1.09 per share for the quarter.
CVS booked gross sales of $105.69 billion for the fourth quarter, up 8.2% from the identical interval a 12 months in the past, as all three of its enterprise segments confirmed progress.
Development throughout enterprise models
The insurance coverage enterprise introduced in $36.29 billion in income in the course of the quarter, up greater than 10% from the fourth quarter of 2024.
Newman stated that the unit delivered a “very robust” quarter and that he expects one other 12 months of margin enchancment, primarily pushed by Medicare Benefit. The corporate’s enterprise for these privately run Medicare plans is “persevering with the trail in direction of goal margins” of three% to 4% by 2028, he stated.
Aetna and different insurers have grappled with higher-than-expected medical prices over the previous 12 months as extra Medicare Benefit sufferers return to hospitals for procedures they delayed in the course of the pandemic. Whereas medical prices stay excessive, Aetna and different insurers, comparable to UnitedHealthcare, look like changing into higher geared up to navigate the difficulty transferring ahead.
Nonetheless, Newman stated, “we are going to proceed the elevated traits. … I do not assume it is too early to imagine something aside from a prudent outlook.”
The insurance coverage section’s medical profit ratio — a measure of whole medical bills paid relative to premiums collected — remained constant from the prior 12 months, at 94.8%. A decrease ratio usually signifies that an organization collected extra in premiums than it paid out in advantages, leading to greater profitability.
Newman stated the largest driver of that ratio within the fourth quarter was Medicaid pass-through funds that hit in late December.
In a launch, CVS additionally stated improved efficiency within the unit’s authorities enterprise was offset by shifts in Medicare drug value timing following modifications underneath the Inflation Discount Act, which altered the standard seasonal sample of prescription spending.
Final month, shares of Medicare Benefit insurers took a success after the Trump administration proposed practically flat authorities fee charges to these plans in 2027. Newman stated he doesn’t consider that the proposed charge displays medical value traits.
CVS has began a dialogue with the Facilities for Medicare & Medicaid Providers earlier than the company finalizes the speed discover at first of April, he added.
CVS’ pharmacy and shopper wellness division posted $37.66 billion in gross sales for the fourth quarter, up 12.4% from the identical interval a 12 months earlier.
CVS stated the rise got here partly from greater prescription quantity, together with from the corporate’s acquisition of prescriptions from Ceremony Assist, however was offset by pharmacy reimbursement stress and the impression of some generic medicine coming into the market.
That unit dispenses prescriptions in CVS’ greater than 9,000 retail pharmacies and offers different providers, comparable to vaccinations and diagnostic testing.
CVS’ well being providers section generated $51.24 billion in income for the quarter, up 9% in contrast with the identical quarter in 2024.
That unit consists of Caremark, which negotiates drug reductions with producers on behalf of insurance coverage, creates lists of medicines, or formularies, which can be lined by insurance coverage, and reimburses pharmacies for prescriptions.
