CVS · Q4 2025 Earnings

Cautious

CVS Health

Reported February 10, 2026

30-second summary

Q4 revenue grew 8.2% to $105.7B with adjusted EPS of $1.09 and GAAP EPS of $2.30; full-year adjusted EPS landed at $6.75 (above the $6.55–$6.65 raised guide) on revenue of $402.1B. Q4 GAAP EPS includes a $1.51/share tax benefit from a worthless-stock deduction tied to the Omnicare Chapter 11 deconsolidation, which explains GAAP coming in above adjusted this quarter. Management reaffirmed FY2026 adjusted EPS of $7.00–$7.20 and GAAP EPS of $5.94–$6.14 — both confirmed from the December Investor Day — while lowering FY2026 operating cash flow guidance to "at least $9.0B" from the prior "at least $10.0B." Management framed the $1.0B reduction as reflecting payments that shifted from 2026 into late 2025, noting cumulative 2025–2026 OpCF expectations have risen by over $1.5B.

Headline numbers

EPS

Q4 FY2025

$1.09

Revenue

Q4 FY2025

$105.70B

+8.2% YoY

Operating margin

Q4 FY2025

2.0%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$105.70B	+8.2%	$102.87B	+2.8%
EPS	$1.09	—	$1.60	-31.9%
Operating margin	2.0%	—	-3.1%	+510bps

Guidance

CVS raised FY2026 Adjusted EPS guidance by 5–8% while lowering cash flow outlook, reflecting operational improvement but cash generation headwinds.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY2026(prior guide for FY2025)	$6.55 to $6.65	$7.00 to $7.20	+$0.35 to $0.55 at midpoint (+5.3% to +8.4%)	Raised
GAAP diluted EPS	FY2026(prior guide for FY2025)	$(0.34) to $(0.24)	$5.94 to $6.14	swing from loss to $6.04 midpoint profit	Raised
Cash flow from operations	FY2026(prior guide for FY2025)	$7.5 billion to $8.0 billion	at least $9.0 billion	+$1.0 to $1.5B at the low end; actual FY2025 result was $10.6B	Lowered

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Health Care Benefits	$36.3B	+10.1%
Health Services	$51.2B	+9.0%
Pharmacy & Consumer Wellness	$37.7B	+12.4%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Medical Benefit Ratio (MBR)	94.8%
Medical Membership	26.6 million
Pharmacy Claims Processed	491.9 million (30-day equivalent)
Prescriptions Filled	473.8 million (30-day equivalent)
Days Claims Payable	38.9 days
Prior Authorization Approval Rate	>95% within 24 hours
Operating Cash Flow	$10.6 billion (full-year)

Management tone

Narrative arc: Q2 Aetna recovery → Q3 stabilization and rationalization → Q4 execution confidence.

The Q3-to-Q4 tone shift is from "stabilizing operations" and "businesses and markets where we can succeed" — Q3's footprint-trimming language — to FY2026 guidance that reaffirms the mid-teens growth pathway management sketched at December's Investor Day. The press release phrase "well positioned to achieve our ambition to be the most trusted health care company in America" replaces the more defensive Q3 language. The shift from "progress on journey" to "ambition" tracks with reaffirming the December Investor Day framing.

That said, the cash flow guide is the discordant note. Management lowered FY2026 OpCF to "at least $9.0B" from "at least $10.0B" disclosed in December, framing the reduction as partly reflecting payments that shifted from 2026 into late 2025. Cumulative 2025–2026 OpCF expectations are up over $1.5B vs prior framing, but the standalone 2026 step-down on a floor-format guide is the kind of disclosure choice that warrants flagging.

The Medicare Advantage 2027 rate notice was characterized as "disappointing" but explicitly carved out from the December enterprise guidance. Management's willingness to publicly call the rate notice disappointing — rather than spin it — is consistent with the Q3 disclosure choice on Caremark drug-mix. That is credibility-positive, but it does mean the 2028 Aetna target margin and the mid-teens-through-2028 enterprise guide now rely on stars, group MA repricing, and Oak Street improvement absorbing a rate headwind.

PBM tone hardened. Ed Devaney's framing of TrueCost as "built for transparency, durability, and stable margins" and David Joyner's characterization of recent commercial-market regulatory changes as "manageable, particularly given the timeline for implementation" reflect a more confident posture than Q3's defensive clarification that headwinds were drug-mix-driven not TrueCost-driven. The 850bps embedded seasonal MBR swing between Q1 and Q4 2026 — disclosed in Brian Newman's prepared remarks and slightly steeper than 2025 — is the operational hook investors should anchor on.

Q&A highlights

Justin Lake · Wolf Research

Impact of preliminary 2027 Medicare Advantage rates on Aetna's margin recovery trajectory (expected 2028 target). Will MA margins still improve in 2027 despite lower rates? How do these rates affect the mid-teens enterprise earnings growth target through 2028 communicated at Investor Day?

Management stated the advanced rate notice is disappointing but does not change the commitment to margin recovery at Aetna. David Chernow emphasized they do not expect the rate impact to affect the long-term enterprise guidance provided in December. Steve Nelson noted the business is well-positioned with a strong foundation built in 2025, successful execution on bids and AEP, and a leading stars position entering 2027. Sri Rao (healthcare delivery) confirmed continued focus on improving performance at Oak Street Health in 2026. Management expressed confidence in returning the business to target margins despite the rate headwind.

Aetna commitment to margin recovery remains unchanged despite 2027 rate noticeLong-term enterprise guidance from December investor day is not expected to be impactedLeading stars position entering 2027 will be helpful to margin improvement50% of group Medicare Advantage block renewed in 2026 with positive rate execution

Lisa Gill · JPMorgan

Three-part PBM question: (1) Does current FTC proposal impact CVS's ability to negotiate/create supply chain competition, and why hasn't a settlement been reached? (2) Will transparency-based model become the new default in the marketplace? (3) What is the long-term margin outlook for the PBM business given 2026 guaranteed rebate headwinds?

David Chernow emphasized the PBM value proposition remains intact and CVS will continue to earn fair margins for the value delivered. He noted PBM role is more important than ever given 750 drug price increases in 2026 alone adding $25B in costs. On FTC: stated CVS cannot elaborate on ongoing conversations but the legislative pathway is clear and they know how to operate. Ed Devaney reinforced that TrueCost was designed for transparency, durability, and stable margins, and legislation will accelerate adoption. Management positioned guaranteed rebates as a manageable 2026 headwind, not a long-term structural change.

750 drug price increases in 2026 adding $25 billion of costs to healthcare systemMedian launch price over $350,000 demonstrates ongoing need for PBM negotiationTrueCost designed for transparency, durability, and stable marginsPBM margins expected to remain durable despite regulatory changes

Michael Cherney · Leerink Partners

CVS Pharmacy and Consumer Wellness (PCW) market positioning for 2026: How does full-year Cost-Advantage implementation, continued Rite Aid script ramp, and integrated omnichannel pharmacy-health model position CVS for continued share gains? Competitive dynamics assessment given the integrated model advantage?

Len Shankman highlighted PCW delivered strong 2025 results with prescription growth from market disruption (Rite Aid acquisition) and pharmacy innovation. Successfully onboarded 9 million patients and 3,500 colleagues from Rite Aid. Completed cost-based reimbursement transition performing in line with expectations. Front store grew 4 consecutive quarters driven by value, localized assortment, and customer service. For 2026, positioned to expand role in everyday health, drive continued script growth, maintain front store momentum through innovation and adherence, and leverage technology/AI for operational efficiency. David Chernow reinforced the integrated model creates competitive advantage no one else can replicate.

9 million new patients welcomed from Rite Aid acquisition3,500 new colleagues integrated from Rite AidCost-based reimbursement transition completed across commercial, Medicare, Medicaid4 consecutive quarters of front store comp growth

Andrew Mock · Barclays

Medical membership revision upward by 200,000 members despite AEP results described as consistent with expectations. What drove this overperformance? Also seeking expectations for commercial group and ASO membership growth and implications for commercial rebate dynamics.

Steve Nelson attributed commercial membership overperformance to better-than-expected retention and innovative products resonating with sophisticated purchasers. Aetna now serves 18 million commercial members, the highest level in a decade. Fully insured remains under pressure due to disciplined pricing approach, but offset by self-funded growth. Highlighted product innovation, clinical innovation, and reduced friction (prior authorization efficiency) as key selling points that are resonating with employers and brokers.

18 million commercial members served—highest in a decadeBetter-than-expected retention driving membership growthFully insured declining due to disciplined pricing; offset by self-funded growthPrior authorizations: ~50% fewer than nearest competitor; 95% approved within 24 hours

George Hill · Deutsche Bank

Directional MLR trends by business line for 2026: Seek color on where MLRs will improve, where they will worsen, and identify big moving pieces across Medicare, Medicaid, commercial, and other lines of business given the 850 basis point seasonal swing guidance for 2026.

Brian Henrich and Steve Nelson provided directional guidance: Medicare expected to see margin improvement from disciplined pricing on individual/PDP products and repricing of group MA business. Medicaid expected to maintain cautious outlook and stable margins given high industry-wide trends in line with expectations. Commercial expected to maintain strong performance with discipline pricing despite high-trend environment. Steve Nelson emphasized cultural alignment of 50,000+ colleagues around margin recovery and consumer-solutions mindset as underlying driver beyond fundamentals. Both executives highlighted momentum into 2026.

Medicare: margin improvement expected in 2026 and 2027Medicaid: stable margins expected; cautious outlook maintained; trends in line with expectationsCommercial: strong performance and stable margins despite high-trend environment850 basis point seasonal MBR swing embedded in 2026 guidance (slightly steeper than 2025)

Answers to last quarter's watch list

Oak Street pre-tax operating losses — Not quantified in the Q4 print. Q&A referenced a "clear line of sight to improve Oak Street Health performance in 2026" but no explicit pre-tax loss figure, clinic-count reduction sizing, or unit-economics framing was disclosed on this release.

Continue monitoring

MBR Q4 print and full-year exit rate — Q4 MBR came in at 94.8%, flat YoY, with full-year HCB MBR of 91.2% (down 130bps YoY). Brian Newman attributed Q4 specifics to PDR utilization, Medicaid pass-throughs, individual exchange risk-adjustment deterioration, and a late-quarter flu provision — together ~20bps on FY MBR. Management explicitly stated medical cost trends remained elevated but broadly in line with expectations. Status: Resolved (with caveats around individual exchange)

2026 EPS baseline confirmation — FY2026 adjusted EPS of $7.00–$7.20 reaffirmed from December Investor Day. The Q3 implied math held.

Resolved positively

Caremark contract repricing duration — No quantification of duration or offsets disclosed in the Q4 release. Q&A reaffirmed TrueCost framing and characterized recent regulatory changes as manageable given implementation timing, but did not provide a contract-cycle timeline.

Continue monitoring

Further GAAP-vs-adjusted gap expansion — Q4 GAAP EPS of $2.30 vs adjusted of $1.09 — GAAP is higher than adjusted this quarter, driven by a $1.51/share tax benefit from a worthless-stock deduction tied to the Omnicare Chapter 11 deconsolidation. FY2026 GAAP guide of $5.94–$6.14 vs adjusted $7.00–$7.20 implies a more normal ~$1.00 gap going forward.

Resolved positively

What to watch into next quarter

FY2026 operating cash flow path against the "at least $9.0B" floor — guide was lowered from at-least-$10.0B in December, framed partly as a timing shift of payments into late 2025. Watch Q1 print for working-capital direction and whether management converts the floor to a range.

Q1 2026 MBR vs. the 850bps embedded seasonal swing — Brian Newman flagged in prepared remarks that the expected swing between Q1 and Q4 MBR is approximately 850bps, slightly steeper than 2025. A Q1 print materially above the implied band would suggest HCB margin recovery is taking longer than the guide assumes.

MA 2027 rate notice — final-rule downside or stars offsets — management called preliminary rates "disappointing" but held the 2028 target. Watch the final 2027 rate notice (typically April) and any quantification of how the "leading stars position entering 2027" offsets rate pressure.

Individual exchange risk adjustment — Q4 reflected a deterioration in the individual exchange risk adjustment position. Watch Q1 for whether this stabilizes or extends.

Oak Street 2026 pre-tax loss disclosure — Q&A flagged "clear line of sight to improve" but no quantified target. Watch for explicit pre-tax loss reduction or path-to-breakeven framing at Q1 or the next investor event.

Caremark 2026 selling-season net wins — Q3 disclosed $6B in new client wins; Q4 release referenced "significant customer wins and strong retention" but did not refresh the figure. Watch Q1 for updated full-cycle Caremark win/loss disclosure with TrueCost adoption rates.

Sources

CVS Health Q4 FY2025 press release (SEC 8-K, Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/64803/000006480326000009/cvs_ex99x1q4-25.htm
CVS Health Q4 FY2025 earnings call prepared remarks and Q&A.
CVS Health Q3 FY2025 brief (Tapebrief, prior-quarter reference for baseline math and watch list).
CVS Health Q2 FY2025 brief (Tapebrief, prior-quarter reference).

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