CVS Health (CVS) Q4 2025 Earnings

CVS Health on Tuesday reported better-than-expected fourth-quarter profits and sales, reaffirming its 2026 profit outlook that impressed investors and showing steady progress in the health care giant’s turnaround plan.

“2024 was a tough year for the company, so 2025 righted the ship,” CVS Chief Financial Officer Brian Newman said in an interview.

CVS, which operates one of the largest pharmacy chains in the United States, expects full-year earnings to be between $7 and $7.20 per share. This is in line with analysts’ expectations of $7.17 per share, according to LSEG.

Neumann also said the company maintains its 2026 revenue outlook of at least $400 billion. Analysts are forecasting revenue of $409.77 billion, according to LSEG, but it’s unclear whether that forecast takes into account all of the headwinds cited by Neumann.

He said the guidance includes $20 billion in headwinds, about half of which is driven by the company’s move to exit the Affordable Care Act retail exchange market this year. Neumann said the other half reflects the company’s retail business adjusting to lower drug prices in the wake of “most-favored-nation” agreements that President Donald Trump has struck with more than a dozen drug companies in recent months.

CVS announced last week that more than 9,000 pharmacies are now accepting discount cards from TrumpRx, the president’s newly launched direct-to-consumer platform, for eligible patients. Newman said CVS shares the Trump administration’s goal of reducing costs. He added that the price reduction is a new starting point for Caremark, the company’s pharmacy benefit management company, to negotiate even lower costs for its customers. “So we don’t view this as some kind of adversarial relationship.”

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

Newman added that primary care provider Oak Street Health has “improved profitability” this year. This comes after CVS moved to close 16 underperforming Oak Street stores. Newman said the company has several tailwinds in its retail pharmacy business, including new technology investments and the footprint and new customers it acquired from Rite Aid after CVS filed for bankruptcy last year.

Investors rewarded CVS last year as CEO David Joyner, who takes over in late 2024, pushed through a sweeping restructuring aimed at reversing years of poor performance. The company has cut costs, reorganized its management team and exited struggling markets, helping its stock price rise about 40% over the past year.

Below is a comparison of what CVS reported in the fourth quarter to Wall Street expectations, based on a survey of analysts by LSEG.

Earnings per share: $1.09 adjusted, 99 cents expected Earnings: $105.69 billion, $103.59 billion expected

The company’s fourth-quarter net income was $2.92 billion, or $2.30 per share. This compares with net income of $1.62 billion, or 1.30 cents per share, in the same period last year.

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

CVS’ fourth-quarter sales increased 8.2% year over year to $105.69 billion, with all three business segments showing growth.

Insurance business revenue for the quarter was $36.29 billion, an increase of more than 10% from the fourth quarter of 2024.

Mr. Newman said the division had a “very strong” quarter and expected further margin improvement, primarily driven by Medicare Advantage. He said the company’s business for private Medicare plans “continues on track to target margins” of 3% to 4% by 2028.

Aetna and other insurers have grappled with higher-than-expected medical costs over the past year as Medicare Advantage patients return to hospitals for procedures delayed during the pandemic. Although health care costs remain high, other insurers such as Aetna and UnitedHealthcare appear poised to move forward on this issue.

Still, Newman said, “We will continue our upward trend. … I don’t think it’s too early to assume anything other than a cautious outlook.”

The insurance sector’s medical benefit ratio (a measure of the total amount of medical expenses paid relative to premiums collected) remained unchanged from the previous year at 94.8%. A low ratio usually indicates that the company is collecting more premiums than it is paying out in benefits and is therefore more profitable.

Newman said the biggest factor driving the ratio up in the fourth quarter was Medicaid pass-through payments that began in late December.

CVS also said in the release that the improved performance in the segment’s government business was offset by changes in the timing of Medicare drug costs associated with changes under the Inflation Control Act that changed the normal seasonal pattern of prescription spending.

Shares of insurer Medicare Advantage fell last month after the Trump administration proposed nearly flat government payment rates for the company’s health insurance plans in 2027. Newman said he does not believe the proposed rates reflect trends in health care costs.

CVS began a dialogue with the Centers for Medicare and Medicaid Services before the agency finalized its rate notice in early April, he added.

CVS’ Pharmacy and Consumer Health division had sales of $37.66 billion in the fourth quarter, an increase of 12.4% from the same period last year.

CVS said the increase was partially due to higher prescription volumes, including as the company acquired prescriptions from Rite Aid, but was offset by pharmacy reimbursement pressures and the impact of some generic drugs entering the market.

The division fills prescriptions at CVS’ more than 9,000 retail pharmacies and provides other services such as vaccinations and diagnostic testing.

CVS’ Medical Services segment generated revenue of $51.24 billion in the quarter, an increase of 9% compared to the same quarter in 2024.

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