CVS Health (CVS) earnings Q4 2025
A pedestrian walks past 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 2026 profit guidance that impressed investors, signaling steady progress in the healthcare giant’s turnaround plan.
“’24 was a tough year for the company. So ’25 turned things around,” CVS CFO Brian Newman said in an interview.
CVS, which operates one of the largest drugstore chains in the U.S., projects full-year profit of $7 to $7.20 per share. That’s in line with the $7.17 per share analysts were expecting, according to LSEG.
Newman also said that the company maintains its 2026 revenue target at at least $400 billion. Analysts are expecting revenue of $409.77 billion, according to LSEG, but it’s unclear whether those estimates take into account all the headwinds Newman mentioned.
It said the guidance includes $20 billion in headwinds, roughly half of which are driven by the company’s operations. Take action to opt out of the Affordable Care Act Individual foreign exchange market this year. Newman said the other half reflects the company’s retail industry’s alignment to lower drug prices following President Donald Trump’s “most preferred nation” deals with more than a dozen drug companies in recent months.
Last week, CVS said nearly 9,000 pharmacies were 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. The lower prices create a new starting point from which Caremark, the company’s pharmacy benefits manager, can negotiate even lower costs for its customers, he added, “so we don’t view these as adversarial relationships.”
CVS had previously said it expected growth this year It will be driven by a return to target margins in the recovering Aetna insurance business, led by privately operated Medicare Advantage plans and Caremark.
Newman added that primary care provider Oak Street Health has “improved its profitability” this year. This comes after CVS moved to close 16 underperforming Oak Street locations. Newman said the company has several downsides for its retail pharmacy business, including new technology investments and new customers and locations it acquired from Rite Aid after CVS filed for bankruptcy last year.
Investors have rewarded CVS for moving forward with a sweeping restructuring aimed at reversing years of underperformance under CEO David Joyner, who takes office in late 2024. The company cut costs, changed leadership and emerged from weak markets, helping its shares rise nearly 40% last year.
Here’s what CVS reported in the fourth quarter compared to Wall Street’s expectations, based on a survey of LSEG analysts:
- Earnings per share: $1.09 adjusted, versus 99 cents expected
- Revenues: 105.69 billion dollars, while the expectation was 103.59 billion dollars
The company reported fourth-quarter net income of $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 a year ago.
Excluding certain items such as restructuring expenses and capital losses, adjusted earnings for the quarter were $1.09 per share.
CVS posted sales of $105.69 billion in the fourth quarter, up 8.2% from the same period a year ago, as all three business segments showed growth.
Growth across business units
The insurance business generated $36.29 billion in revenue in the quarter, up more than 10% from the fourth quarter of 2024.
Newman said the unit had a “very strong” quarter and expects another year of margin growth, primarily driven by Medicare Advantage. He said the company’s business for privately operated Medicare plans “remains on track for target margins” of 3% to 4% by 2028.
Aetna and other insurers have grappled with higher-than-expected medical costs last year as more Medicare Advantage patients returned to hospitals for procedures they had postponed during the pandemic. As medical costs remain high, Aetna and other insurance companies UnitedHealthcare appears to be becoming better equipped to navigate the issue moving forward.
Still, Newman said, “We will continue the upward trends. … I don’t think it’s too early to assume anything other than a cautious outlook.”
The insurance segment’s medical aid rate (a measure of total healthcare expenses paid based on premiums collected) remained consistent with the prior year at 94.8%. A lower ratio generally indicates that a company collected more premiums than it paid out, leading to higher profitability.
The biggest driver of that rate in the fourth quarter was the Medicaid direct payments that occurred in late December, Newman said.
CVS also said in a statement that improved performance in the unit’s government business was offset by changes in Medicare drug cost timing following changes under the Inflation Reduction Act that altered the usual seasonal pattern of prescription spending.
Shares of Medicare Advantage insurers took a hit in January after the Trump administration last month proposed nearly flat government payment rates for those plans in 2027. Newman said he does not believe the proposed rate reflects medical cost trends.
The official added that CVS opened a dialogue with the Centers for Medicare and Medicaid Services before the agency finalized its rate filing in early April.
CVS’s pharmacy and consumer health division reported sales of $37.66 billion in the fourth quarter, up 12.4% from the same period a year ago.
CVS said the increase was due in part to higher prescription volume, including the company’s purchase of prescriptions from Rite Aid, but was offset by pharmacy reimbursement pressure and the entry of some generic drugs into the market.
The unit dispenses prescriptions and provides other services, such as vaccines and diagnostic tests, at CVS’s more than 9,000 retail pharmacies.
CVS’s healthcare segment generated $51.24 billion in revenue this quarter, up 9% from the same quarter in 2024.
The unit includes Caremark, which negotiates drug discounts with manufacturers on behalf of insurance plans, creates lists or formularies of covered drugs, and reimburses pharmacies for prescriptions.
