CVS Health (CVS) Q4 2025 earnings

CVS Health on Tuesday reported fourth-quarter earnings and revenue that beat estimates and reaffirmed 2026 earnings 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,” Brian Newman, CVS’s chief financial officer, said in an interview.

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

Neumann 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 whether those estimates account for all the headwinds Neumann mentioned.

He said the guidance includes $20 billion in headwinds, about half of which was driven by the company’s move to exit the Affordable Care Act’s single exchange market this year. The other half reflects the company’s retail business adjusting to lower drug prices following President Donald Trump’s “most favored nation” deals with more than a dozen drug companies in recent months, Newman said.

CVS said last week that nearly 9,000 pharmacies accept debit cards from the president’s newly launched direct-to-consumer platform, TrumpRx, for eligible patients. CVS shares the Trump administration’s goal of cutting costs, Newman said. He added that the lower prices establish a new starting point from which Caremark, the company’s pharmacy benefits manager, can negotiate lower costs for its customers, “so we don’t see it as some sort of adversarial relationship.”

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

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

Investors rewarded CVS last year as CEO David Joyner, who took over the role in late 2024, moved forward with a sweeping restructuring aimed at reversing years of poor performance. The company has cut costs, reshaped leadership and exited weaker markets, helping its shares surge nearly 40% over the past year.

Here’s what CVS reported for the fourth quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:

• EPS: $1.09 was revised down from an expected 99 cents
• profit: $105.69 billion compared to $103.59 billion expected

The company reported net income of $2.92 billion, or $2.30 per share, for the fourth quarter. This compares to net income of $1.62 billion, or 1.30 cents per share, for the same period last year.

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

CVS reported sales of $105.69 billion for the fourth quarter, up 8.2% from the same period last year, with all three of its business segments showing growth.

The insurance business generated revenue of $36.29 billion during the quarter, an increase of 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 of privately run Medicare plans “continues on track toward target margins” of 3% to 4% by 2028, he said.

Aetna and other insurers have faced higher-than-expected medical costs over the past year as more Medicare Advantage patients returned to hospitals for procedures they had delayed during the pandemic. While medical costs are still high, Aetna and other insurers, like UnitedHealthcare, appear to be better equipped to deal with this issue going forward.

However, Newman said, “We will continue with higher trends… I don’t think it’s too early to assume anything other than a prudent outlook.”

The insurance sector’s medical benefits ratio – a measure of total medical expenses paid compared to premiums collected – remained steady from the previous year at 94.8%. A lower ratio usually indicates that the company collected more in premiums than it paid in interest, resulting in increased profitability.

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

In a statement, CVS also said improved performance in the unit’s government business was offset by shifts in the timing of Medicare drug costs following changes under the Inflation Reduction Act, which changed the usual seasonal pattern of prescription spending.

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

He added that CVS began a dialogue with the Centers for Medicare and Medicaid Services before the agency finalized the price notice at the beginning of April.

CVS’s Pharmacy and Consumer Wellness division reported sales of $37.66 billion for the fourth quarter, up 12.4% from the same period a year earlier.

CVS said the increase came in part from higher prescription volume, including 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.

This unit dispenses prescriptions at more than 9,000 CVS retail pharmacies and provides other services, such as vaccines and diagnostic tests.

CVS’s Health Services segment generated revenue of $51.24 billion for the quarter, up 9% compared to the same quarter in 2024.

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