CVS beat Wall Street’s expectations in the fourth quarter, but investors — unhappy that the healthcare giant didn’t change its outlook for 2026 — still sent CVS’ stock down after the company released results early Tuesday morning.
Executives defended CVS’ 2026 guidance as achievable and indicative of the success of the company’s turnaround plan during a difficult time for insurers. The financial growth CVS outlined contrasts with some of its managed care peers, which expect revenue and earnings to contract this year.
CEO David Joyner also said that CVS is in talks with the Federal Trade Commission in the agency’s high-profile lawsuit against major pharmacy benefit managers, following the FTC’s recent settlement with Cigna.
CVS’ solid Q4
CVS beat analysts’ expectations on revenue and earnings in the fourth quarter, reporting a topline of $105.7 billion, up more than 8% year over year. CVS’ net income of $2.9 billion was up 80% year over year, thanks to lower estimated tax liability in the quarter.
All three of CVS’ reporting segments — Aetna health insurance, health services, and pharmacy and consumer wellness — posted adjusted operating income ahead of expectations.
Aetna, which covers 26.6 million members, reported revenue of $36.3 billion, up 10% year over year. The division posted an adjusted operating loss of $676 million, larger than the $439 million loss logged same time last year.
On a Tuesday morning call with investors, CVS executives chalked the higher fourth-quarter loss up to changes in when Medicare prescription drug costs are absorbed, due to provisions in the 2022 Inflation Reduction Act.
Aetna’s risk adjustment position also deteriorated relative to its peers in the Affordable Care Act exchanges.
Still, Aetna’s operations “dramatically improved” in 2025 compared to 2024, when the insurer was slammed with higher medical costs, Joyner said. For the full year, Aetna brought in $2.9 billion in adjusted operating income, compared to just $307 million in 2024.
CVS’ health services division, which includes its massive PBM Caremark, reported revenue of $51.2 billion in the fourth quarter, up 9% year over year. Adjusted operating income of $1.9 billion was up 9% year over year.
Finally, CVS’ pharmacy and consumer wellness segment brought in revenue of $37.7 billion, up 12% year over year, and adjusted operating income of $1.9 billion, up 9% year over year. CVS pharmacies filled more prescriptions in the quarter, thanks to CVS’ acquisition of pharmacy assets from bankrupt rival Rite Aid in October.
The Rite Aid deal has brought 9 million new patients into CVS pharmacies, Len Shankman, the president of CVS’ pharmacy segment, said on the call.
CVS has also successfully transferred its pharmacy contracts over to a cost-based reimbursement model, executives said. CVS finished moving its commercial payers over to the new model at the beginning of last year, but has now transferred its Medicare and Medicaid lines of business over, too.
Looking to 2026
Following the results, CVS reiterated 2026 guidance that it initially provided at the end of last year.
CVS expects total revenue of more than $400 billion this year, in line with the $402.1 billion it brought in in 2025 — an all-time high for the company, CVS said.
CVS expects diluted earnings per share of between $5.94 and $6.14 this year, a notable jump over 2025’s $1.39. Similarly, CVS’ adjusted earnings per share guidance range, of between $7 and $7.20, is compared to $6.75 last year.
Despite the favorable year-over-year comparison, reiterated earnings guidance “may be a bit of a letdown” for investors expecting a raise, Leerink analyst Michael Cherny wrote in a note Tuesday morning.
Still, “we also aren't surprised to see a level of prudence given the magnitude of moving pieces across the business/markets,” Cherny said.
CVS’ stock was down in premarket trading after the results were released, which analysts said was due to some investors expecting CVS to bump its 2026 outlook after the fourth-quarter outperformance. CVS’ stock rebounded after the market open.
CVS expects its Medicare Advantage membership to be modestly lower in 2026, but that should juice better margins out of the privatized Medicare program, CFO Brian Newman said on the call. CVS, like its peers in MA, rejigged its MA business for 2026 in a bid to resuscitate flagging profits in the once-lucrative government program.
2026 should be another year of MA margin improvement, Newman said. But earnings targets farther into the future are now in doubt, thanks to a flat 2027 rate notice the Trump administration proposed in late January that insurers have been excoriating on earnings calls this season.
“We obviously don’t believe that the rates are sufficient,” Joyner said. Though, the CEO noted CVS is supportive of the CMS’ proposal to revamp the MA risk adjustment system by aligning the diagnoses insurers document for their members with the actual care their members receive.
CVS’ PBM Caremark has also been facing turmoil, as legislators and antitrust regulators in Washington ramp up scrutiny of the influential drug middlemen. A particular concern has been the FTC’s lawsuit against the so-called “Big Three” — Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — accusing the companies of inflating the cost of insulin.
Earlier this month, Express Scripts agreed to a sweeping settlement with the agency. The settlement includes big reforms to Express Scripts’ drug pricing practices. Though, the Cigna subsidiary was already enacting many of the changes — and now it can avoid protracted litigation, a tempting offer for PBMs looking to get out of the public eye.
When asked whether CVS is exploring a settlement on the call, Joyner declined to comment on specifics. But “we are in conversations,” the CEO said.
Moreover, legislation passed earlier this month requiring more transparency and delinking compensation from drug prices in Medicare’s prescription drug benefit is manageable, and could lead to greater adoption of Caremark’s rebate-free model, Joyner said.
“What we’ve seen now is more clarity in terms of where the reform is coming from. The good news is, we know at least with the legislation how to operate and how to run our business,” Joyner said. “At least consistent with the PBM legislation, the tools that we’ve seen are essentially leaning into what we’ve been doing over the last couple years.”
