CVS beats Q4 estimates, reaffirms 2026 profit outlook as turnaround gains traction

CVS Health reported fourth-quarter results on Feb. 10, 2026, that topped Wall Street estimates and the company reaffirmed 2026 profit guidance of $7.00 to $7.20 per share. The results, led by gains across its insurance, pharmacy and health services businesses, reinforced management’s message that a restructuring begun after a difficult 2024 is producing measurable progress. CFO Brian Newman told investors the company expects at least $400 billion in revenue for 2026 while acknowledging roughly $20 billion of headwinds. Investors have rewarded the recovery strategy that began under CEO David Joyner in late 2024, after a year of aggressive cost cuts and market exits.

Key Takeaways

• Adjusted EPS for Q4 was $1.09, beating the $0.99 consensus from LSEG.
• Revenue for the quarter was $105.69 billion, above the $103.59 billion expected and up 8.2% year over year.
• Net income was $2.92 billion, or $2.30 per share, compared with $1.62 billion, or $1.30 per share, in Q4 2024.
• Full-year profit guidance stands at $7.00 to $7.20 per share, in line with the LSEG analyst mean of $7.17.
• Management maintains 2026 revenue guidance of at least $400 billion; analysts’ street estimate sits near $409.77 billion per LSEG.
• The company said its 2026 guidance embeds about $20 billion in headwinds, roughly half tied to exiting the ACA individual exchange market and half to lower drug price baselines from recent federal deals.
• Segment growth: insurance revenue $36.29 billion (+>10%), pharmacy & consumer wellness $37.66 billion (+12.4%), and health services $51.24 billion (+9%).
• CVS cited retail tailwinds from Rite Aid prescription intake and technology investments, while Oak Street Health shows improving profitability after 16 location closures.

Background

CVS entered 2025 with priorities to stabilize margins and simplify operations after a challenging 2024, which management has characterized as a reset year. David Joyner took over as CEO in late 2024 and quickly moved to cut costs, reshuffle leadership and exit underperforming markets, steps investors credited for the stock’s roughly 40% gain over the past year. The company is a major operator across three interlinked businesses: Aetna insurance, Caremark pharmacy benefits management, and the retail pharmacy and consumer health storefronts that include more than 9,000 locations.

Policy changes and industry dynamics are important context. The Biden-to-Trump policy shift toward negotiating lower drug prices with manufacturers, and the administration’s new direct-to-consumer platform (TrumpRx), have altered pharmacy pricing baselines this year. CVS said it is accepting TrumpRx discount cards at its stores for eligible patients and described the lower prices as a new starting point for Caremark negotiations rather than an adversarial development. Separately, CVS plans to leave the Affordable Care Act individual exchange market in 2026, a move management says will reduce near-term revenue but improve long-term margin clarity.

Main Event

On Feb. 10, 2026 CVS reported adjusted earnings per share of $1.09 for Q4, beating the LSEG-surveyed consensus of $0.99. Revenue came in at $105.69 billion, a rise of 8.2% year over year and above the $103.59 billion analysts expected. The company recorded net income of $2.92 billion, or $2.30 per share, compared with $1.62 billion, or $1.30 per share, in the same quarter a year earlier.

CFO Brian Newman said the company is reaffirming full-year profit guidance of $7.00 to $7.20 per share and holding to a revenue floor of $400 billion for 2026. He noted that the guidance already contemplates about $20 billion of headwinds, with roughly half attributable to the planned exit from the ACA individual exchanges and the other half reflecting the effect of lower drug price benchmarks established by recent federal pricing agreements.

The insurance business produced $36.29 billion in revenue during the quarter, rising more than 10% year over year, and Newman described the quarter as very strong. He said Aetna is progressing back toward target margins, driven largely by privately run Medicare Advantage plans and continued improvement in government business flows. The medical benefit ratio for the insurance segment was 94.8% in Q4, roughly flat with the prior year, with late-December Medicaid pass-through payments cited as a primary driver.

Pharmacy and consumer wellness generated $37.66 billion in sales, up 12.4% from Q4 2024, aided by higher prescription volume and the addition of scripts acquired from Rite Aid after that chain’s bankruptcy. Health services, which includes Caremark, posted $51.24 billion in revenue, a 9% increase versus the prior year, reflecting stronger PBM activity and other services.

Analysis & Implications

CVS’s quarter shows a business increasingly able to convert scale into improved financial results, but material headwinds remain. The affirmed profit guidance of $7.00 to $7.20 per share signals management confidence in margin recovery, notably at Aetna and Caremark; hitting those targets will depend on continued cost management and the ability to negotiate downward on drug costs despite industry disruption. Caremark’s negotiating leverage may be strengthened by lower published list prices, but rebate and reimbursement dynamics remain complex and could pressure retail pharmacy receipts.

The planned exit from the ACA individual exchange market removes a volatile revenue stream that management said was weighing on margin visibility. While that should simplify earnings comparisons over time, the near-term effect is included as part of the $20 billion headwinds, and execution risk exists around member transitions and potential regulatory responses. Separately, proposals from the Centers for Medicare & Medicaid Services for nearly flat Medicare Advantage payment rates in 2027 have rattled the sector; CVS has opened a dialogue with CMS ahead of the agency’s rate notice in April.

For investors, the juxtaposition of a firm operational turnaround and substantial external policy-driven pressures creates a mixed, but manageable, risk profile. The company’s retail pharmacy business benefits from higher prescription volumes, Rite Aid script intake and technology investments, providing offsetting growth to reimbursement compression. However, long-term upside depends on CVS’s ability to sustain Aetna margin improvement toward targets of 3% to 4% by 2028 and to translate Caremark’s scale into durable client savings.

Comparison & Data

The table highlights the quarter-over-quarter improvement in key headline metrics and segment-level growth. Revenue and net income showed notable acceleration versus the prior year, with all three business units contributing. Analysts’ consensus figures from LSEG served as the benchmark for expectations; management emphasized the embedded $20 billion headwind when discussing revenue trajectories.

Reactions & Quotes

Management framed the quarter as confirmation that restructuring efforts are taking hold, while also stressing that external policy shifts require careful navigation.

’24 was a tough year for the company. So ’25 righted the ship.

Brian Newman, CFO, CVS Health

Newman emphasized prudence on cost trends and the need to remain cautious about medical cost dynamics in Medicare Advantage.

We will continue the elevated trends. I don’t think it’s too early to assume anything other than a prudent outlook.

Brian Newman, CFO, CVS Health

Investor response has been positive since the management changes in late 2024, but analysts will be watching execution on margin targets and the outcome of CMS rate-setting for Medicare Advantage.

Unconfirmed

• It is not yet clear whether the $409.77 billion analyst revenue expectations fully account for the $20 billion of headwinds CVS cites.
• The long-term volume impact from CVS accepting TrumpRx discount cards for eligible patients is not yet measurable and remains uncertain.
• The final CMS decision on Medicare Advantage payment rates for 2027 is pending and could materially affect insurers’ margin trajectories.

Bottom Line

CVS’s Q4 results validate parts of the turnaround story: improved profitability, broad-based segment growth and management discipline. The reaffirmed 2026 profit range and maintained $400 billion revenue floor indicate confidence, but the company explicitly factors in sizable policy and pricing headwinds that could complicate upside beyond those targets.

Investors should view the quarter as progress rather than completion. Execution on Aetna margin improvement, Caremark negotiating outcomes and the market response to policy shifts will determine whether CVS can sustain the recovery and meet its multi-year margin objectives.

Sources

• CNBC — News report (media)
• CVS Health Investor Relations — company release (official)
• LSEG — analyst data provider (market data)
• Centers for Medicare & Medicaid Services — federal agency (official)