CVS Health's Q4 Performance Surpasses Expectations, Confirms 2026 Profit Projections
A CVS store in Greenbrae, California, on July 31, 2025. Justin Sullivan | Getty Images
CVS Health (https://www.cnbc.com/quotes/CVS/) reported fourth-quarter earnings and revenue that exceeded estimates, reinforcing its 2026 profit guidance and signaling steady progress in its turnaround strategy. This achievement comes after a challenging 2024, as noted by CFO Brian Newman.
CVS, a leading pharmacy chain in the U.S., anticipates full-year profits of $7 to $7.20 per share, aligning with analysts' expectations of $7.17 per share, as per LSEG data.
Newman also confirmed the company's 2026 revenue guidance of at least $400 billion, though it remains uncertain if these estimates fully account for the headwinds mentioned. These headwinds include a $20 billion impact, with half driven by the company's exit from the Affordable Care Act individual exchange market and the other half reflecting retail business adjustments due to lower drug prices post-Trump administration deals.
CVS recently announced that its 9,000 pharmacies accept discount cards from President Trump's direct-to-consumer platform, TrumpRx, for eligible patients. Newman emphasized CVS's alignment with the Trump administration's cost-reduction goals, enabling Caremark to negotiate lower costs for clients. This approach avoids adversarial relationships.
CVS anticipates growth this year, driven by Aetna's insurance business, particularly Medicare Advantage plans, and Caremark. Oak Street Health, a primary-care provider, is also expected to improve profitability after CVS's strategic closures of underperforming locations.
Retail pharmacy business benefits from technological investments, new locations, and customers acquired from Rite Aid's bankruptcy. CEO David Joyner's restructuring efforts, initiated in late 2024, have led to a 40% stock rise over the past year, despite initial challenges.
CVS's Q4 performance:
- Earnings per share: $1.09 adjusted, surpassing the expected $0.99
- Revenue: $105.69 billion, exceeding the anticipated $103.59 billion
- Net income: $2.92 billion, or $2.30 per share, compared to $1.62 billion and $1.30 per share in Q4 2024
Excluding certain items, adjusted earnings were $1.09 per share. Sales reached $105.69 billion, an 8.2% increase year-over-year, with all business segments showing growth.
Business Unit Growth:
- Insurance: $36.29 billion in revenue, a 10%+ increase
- Pharmacy & Consumer Wellness: $37.66 billion in sales, a 12.4% increase
- Health Services: $51.24 billion in revenue, a 9% increase
The insurance segment's medical benefit ratio remained stable at 94.8%, indicating higher profitability. Medicaid pass-through payments in late December were the primary driver, while shifts in Medicare drug costs post-Inflation Reduction Act affected prescription spending patterns.
