CVS Earnings Beat Estimates, Guidance Holds
CVS earnings beat Q4 forecasts and affirmed 2026 adjusted EPS while trimming cash-flow to at least $9.0 billion, pressuring sector positioning.
KEY TAKEAWAYS
- Q4 revenue was $105.7 billion and adjusted EPS $1.09, both beating consensus.
- Affirmed 2026 adjusted EPS guidance of $7.00 to $7.20 while trimming cash flow to at least $9.0 billion.
- Health Care Benefits had an adjusted operating loss of $676 million linked to Medicare Part D seasonality.
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CVS Health (CVS) beat fourth-quarter revenue and adjusted-profit forecasts on Feb. 10, 2026, affirming 2026 adjusted-EPS guidance while trimming its full-year cash-flow outlook. The company cited Medicare Part D seasonality and a weak Medicare Advantage rate outlook as key factors affecting results.
Results Beat While Guidance Holds Amid Cash-Flow Cut
CVS reported fourth-quarter 2025 revenue of $105.7 billion, up 8.2% year over year, and adjusted EPS of $1.09, both exceeding consensus estimates. Full-year revenue rose 7.8% to $402.1 billion, with adjusted EPS of $6.75 and GAAP diluted EPS of $1.39. Cash flow from operations reached $10.6 billion.
The company affirmed 2026 adjusted EPS guidance of $7.00 to $7.20 and a GAAP diluted EPS range of $5.94 to $6.14. However, it lowered its cash-flow-from-operations target to at least $9.0 billion from a prior goal of $10.0 billion or more. This revision reflects changes in Medicare Part D and the impact of the Inflation Reduction Act. The outlook assumes execution of a turnaround plan under Chief Executive David Joyner, who was appointed in late 2024. Joyner said, “Our fourth quarter and full-year results demonstrate the progress we are making in transforming the health care experience with our unique collection of businesses.”
Retail and PBM Drive Growth Despite Health Care Benefits Pressure
Retail Pharmacy revenue rose 12.4% year over year to $37.7 billion in the quarter, with same-store sales up 15.0%. Health Services revenue increased 9.0% to $51.2 billion. The company completed a transition to cost-based reimbursement across Commercial, Third-Party Discount, Medicare, and Medicaid channels. Aetna approved more than 95% of eligible prior authorizations within 24 hours.
The Health Care Benefits segment generated $36.3 billion in revenue, up 10.1% year over year, but recorded an adjusted operating loss of $676 million. CVS attributed the loss to Medicare Part D seasonality and the Inflation Reduction Act’s effects. The full-year medical benefit ratio stood at 91.2%.
On Jan. 27, 2026, the Centers for Medicare & Medicaid Services (CMS) proposed a 0.09% average Medicare Advantage payment increase for 2027, well below historical increases and analyst expectations. CMS’s rate outlook and risk-scoring reforms will affect Aetna’s reimbursement profile and add near-term pressure to Health Care Benefits results. The company linked these factors to its lowered cash-flow forecast.
The combination of Medicare Part D seasonality and the CMS rate outlook is central to CVS’s trimmed cash-flow projection and will materially influence near-term Health Care Benefits results and cash-generation assumptions.
