CVS Health reported fourth-quarter earnings and revenue that exceeded analyst estimates, while also reaffirming its 2026 profit guidance. This indicates ongoing progress in the company's turnaround strategy.
Financial Performance
CVS projects full-year profit for the current fiscal year to be between $7 and $7.20 per share, which aligns with analyst expectations. The company also confirmed its 2026 revenue guidance of at least $400 billion.
The 2026 guidance includes approximately $20 billion in anticipated headwinds. Roughly half of these headwinds are attributed to CVS's decision to exit the Affordable Care Act (ACA) individual exchange market this year. The other half reflects adjustments in the retail business due to lower drug prices following "most favored nation" agreements established by the Trump administration with various pharmaceutical companies.
Strategic Adjustments
CVS pharmacies are now accepting discount cards from the Trump administration's direct-to-consumer platform, TrumpRx, for eligible patients.
CVS stated its alignment with the goal of reducing healthcare costs, noting that these lower prices establish a new baseline for its pharmacy benefit manager, Caremark, to negotiate further cost reductions for clients.
Expected growth for the year is anticipated to come primarily from the Aetna insurance business, particularly its Medicare Advantage plans, and the Caremark segment. Additionally, primary-care provider Oak Street Health is showing improved profitability, following the closure of 16 underperforming locations. The retail pharmacy business is supported by factors such as new technological investments and new locations acquired from Rite Aid.
Fourth Quarter Results
For the fourth quarter, CVS Health reported results that surpassed Wall Street expectations:
- Adjusted Earnings Per Share: $1.09 (vs. 99 cents expected)
- Revenue: $105.69 billion (vs. $103.59 billion expected)
The company's net income for the fourth quarter was $2.92 billion, or $2.30 per share, an increase from $1.62 billion, or $1.30 per share, in the same period a year prior. Total sales for the quarter reached $105.69 billion, an 8.2% increase year-over-year, with all three business segments contributing to growth.