CVS Health (NYSE:CVS) highlighted what executives described as a year of operational and financial progress during the company’s fourth-quarter 2025 earnings call, while also addressing industry cost pressures, Medicare Advantage funding concerns, and the evolving regulatory backdrop for pharmacy benefit managers.
Quarterly and full-year results
CVS reported fourth-quarter adjusted operating income of $2.6 billion and adjusted earnings per share (EPS) of $1.09, according to CEO David Joyner. CFO Brian Newman said quarterly revenue was over $105 billion, up more than 8% from the prior-year period, driven by growth across all operating segments. Newman added that results, while ahead of internal expectations, represented modest declines from the prior year quarter, primarily due to an expected decline in the healthcare benefits segment tied to Medicare Part D seasonality changes stemming from the Inflation Reduction Act.
- Revenue of over $400 billion
- Adjusted EPS of $6.75
- Operating cash flow of $10.6 billion
Joyner said adjusted EPS exceeded initial expectations by roughly 15%. Newman said fourth-quarter operating cash flow was approximately $3.4 billion.
Segment performance: benefits pressured, services and retail grew
Healthcare Benefits revenue was over $36 billion in Q4, up over 10% year over year, driven largely by the government business and the IRA’s impact on Medicare Part D. CVS ended the year with about 26.6 million medical members, down slightly sequentially and about 500,000 lower than the prior year, driven by declines in individual exchange and government businesses, partially offset by growth in commercial fee-based membership.
The segment posted an adjusted operating loss of $676 million, which Newman attributed primarily to Medicare Part D seasonality changes. He also cited a deterioration in the company’s risk-adjustment position in the individual exchange business and a provision for increased flu activity observed late in the quarter. The medical benefit ratio (MBR) was 94.8% for the quarter, and Newman said certain Q4 items (including Medicaid pass-throughs, updated risk adjustment, and flu provision) had an approximately 20-basis-point impact on full-year MBR, which was 91.2%.
Health Services revenue was over $51 billion, up 9%, driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements. Adjusted operating income was approximately $1.9 billion, up over 9%, primarily due to improved purchasing economics. Newman said healthcare delivery results were broadly in line with expectations, with revenue up about 21% year over year excluding the impact of CVS’s exit from its accountable care business, driven by patient growth at Oak Street Health.
Pharmacy & Consumer Wellness revenue was nearly $38 billion, up over 12%, driven by pharmacy drug mix and higher prescription volume, including incremental volume from the Rite Aid transaction. Same-store revenue increased 16%, with same-store pharmacy sales up over 19% and same-store prescription volumes up nearly 10%. CVS said retail pharmacy script share rose to over 29%. The segment produced adjusted operating income of over $1.9 billion, up nearly 9%. On a full-year basis, adjusted operating income exceeded $6 billion, up more than 4.5%.
Medicare Advantage rates and margin recovery
Joyner spent part of his prepared remarks discussing the 2027 Medicare Advantage Advanced Rate Notice, calling the proposed rate insufficient relative to industry medical cost trends. He said CVS was advocating for “more appropriate funding” to ensure access and program stability, while reiterating that the company’s commitment to margin recovery at Aetna was unchanged.
In the Q&A, executives said the notice affects Aetna more than Oak Street Health, given Oak Street’s smaller share of the enterprise. Aetna President Steve Nelson said the company has engaged with CMS and intends to continue providing data ahead of a final notice. Nelson also said Aetna exited the annual enrollment period with “modest contraction” in line with expectations, but with a stronger geographic and product mix, and that the company maintained a leading Stars position.
Oak Street Health CEO Dr. Sree Chaguturu said CVS was “pleased” that in-home provider visits were maintained in the proposed policy framework, pointing to Signify’s role in delivering in-home evaluations. He added that CVS will continue assessing the rate notice and sharing insights with CMS, and said the company has “a clear line of sight” to improved Oak Street performance in 2026.
PBM strategy, regulation, and branded drug pricing pressure
Joyner emphasized ongoing pressure from branded drug pricing, stating that brand-list price increases have outpaced inflation by an average of 4% per year since 2012. He also said that, so far in 2026, branded manufacturers have made more than 750 drug price increases, which he said added $25 billion of cost to the healthcare system “with no added value.”
Joyner positioned Caremark’s PBM role as a counterbalance, pointing to tools including competition among manufacturers, a “transparent PBM model,” specialty pharmacy capabilities, and CVS’s position in biosimilars. He said CVS supports legislation that increases transparency and allows savings to be seen directly at the pharmacy counter, while not impairing the ability to create competition in the supply chain. On regulatory questions related to the FTC, Joyner said he could not comment while discussions were ongoing.
Caremark President Ed DeVaney said TrueCost was designed for transparency, durability, and stable margins, and that the company believes recent legislation could accelerate adoption. Joyner and DeVaney both said they expect PBM margins to remain “durable” and “similar” over time, while acknowledging the market and profit pools evolve.
2026 guidance and cash flow outlook
CVS reaffirmed its full-year 2026 adjusted EPS guidance range of $7.00 to $7.20 and reiterated an expectation for 2026 revenue of at least $400 billion. Newman said medical cost trends remain elevated but were broadly in line with the assumptions underpinning guidance.
The company updated its 2026 operating cash flow outlook to at least $9 billion, reflecting certain payments that shifted from 2026 into late 2025. Newman said that, combined with higher 2025 cash flow, CVS’s cumulative cash flow expectation across 2025 and 2026 increased by over $1.5 billion. He also said CVS ended 2025 with approximately $2.8 billion of cash at the parent and unrestricted subsidiaries and a leverage ratio of approximately four times, improving from the prior year.
Management also discussed continued technology and AI investments across the enterprise, including the Open Engagement Platform referenced at the company’s investor day. CVS said it plans to provide updates on product launches and partnership announcements in coming quarters.
About CVS Health (NYSE:CVS)
CVS Health Corporation is a diversified healthcare company that operates a large network of retail pharmacies, pharmacy benefit management services and health care solutions. Headquartered in Woonsocket, Rhode Island, the company traces its roots to the early 1960s and has grown into an integrated provider of prescription drugs, over‑the‑counter products, clinical services and health insurance offerings. Its operating model combines retail pharmacy locations and in‑store clinics with broader pharmacy and health plan capabilities.
Key business activities include CVS Pharmacy retail operations, MinuteClinic walk‑in medical clinics and HealthHUB locations that offer expanded clinical services.
