Executive Summary
CVS Health is positioning itself for significant growth in 2026, forecasting double-digit earnings expansion following a remarkable third-quarter performance that exceeded Wall Street expectations. With record-breaking revenue of $102.9 billion and substantial improvements across its Aetna insurance and Caremark pharmacy benefit management divisions, the healthcare giant is demonstrating the strength of its diversified business model despite facing headwinds in certain segments.
Record-Breaking Q3 Performance
Financial Highlights
CVS Health delivered impressive third-quarter results that surpassed analyst expectations across multiple metrics. The company achieved 7.8% revenue growth, reaching an all-time high of $102.9 billion—significantly beating the Street’s estimate of $98.29 billion.
Key financial metrics included:
- Adjusted earnings per share: $1.60, up from $1.09 in the prior year
- Adjusted operating income: $3.5 billion
- Year-to-date cash flow from operations: $7.2 billion
- Average analyst estimate: $1.36 per share (CVS exceeded by 17.6%)
Brian Newman, Executive Vice President and Chief Financial Officer, emphasized the company’s confidence in its strategic direction: “We are encouraged by the year-to-date performance of our diversified enterprise and are confident we are taking the right steps to position us for both near and long-term success.”
2026 Growth Forecast
Perhaps most notably, CVS Health executives announced expectations for mid-teens percentage growth in adjusted earnings per share for 2026, signaling strong momentum heading into the next fiscal year.
Aetna Insurance Business Rebounds
Medicare Advantage Excellence
The healthcare benefits segment, which encompasses the Aetna insurance business, showed remarkable recovery after a challenging 2024. Revenue jumped 9.1% in Q3 to nearly $36 billion, primarily driven by increases in government business related to the Inflation Reduction Act’s impact on the Medicare Part D program.
Aetna’s Q3 Performance:
- Adjusted operating income: $314 million (compared to a loss of $924 million in the prior year)
- Medical benefit ratio: 92.8% (improved from 95.2% in Q3 2024)
- Medical membership: 26.7 million members as of September 30
Industry-Leading Star Ratings
David Joyner, CVS Health President and CEO, highlighted Aetna’s competitive advantage: “Aetna is, once again, the industry leader amongst national payers for 2026 Medicare Advantage stars ratings.”
The numbers speak for themselves:
- 81%+ of Aetna Medicare Advantage members are in plans rated 4 stars or higher for 2026
- 63%+ of members are enrolled in 4.5-star plans
- These ratings demonstrate superior quality and service delivery across the enterprise
Joyner noted: “This result is not just a point of pride, but another proof point that our ability to effectively collaborate across the enterprise allows us to deliver exceptional quality and service, drive down the cost of care and remove friction from the healthcare system.”
Caremark PBM Delivers Strong Results
Robust Selling Season
CVS Health’s pharmacy benefit management business, Caremark, experienced “another strong selling season” with impressive contract wins and retention rates.
Caremark Highlights:
- Contract wins totaling nearly $6 billion
- Retention rate in the high nineties
- Revenue growth of 11.6% to reach $49 billion in the health services segment
TrueCost Pricing Model Innovation
Caremark continues its transition to the TrueCost pricing model, launched two years ago to drive greater transparency in drug pricing. This model guarantees the net cost of individual drugs, providing unprecedented visibility for clients and members.
Prem Shah, Executive Vice President and Group President, explained the strategic importance: “What we’re doing with TrueCost was very deliberate, and it was driving greater transparency and making sure that consumers and clients had the benefit of that transparency, while again maintaining our ability to create the competition and lower the net cost of drugs.”
While the transition creates near-term headwinds, Joyner emphasized his confidence: “I am incredibly bullish about the road ahead, and believe we will continue to lead this industry, given our unique advantages and insights.”
Oak Street Health Challenges
Strategic Adjustments
Despite overall positive performance, CVS Health faces challenges in its Oak Street Health primary care business. The company announced plans to close 16 underperforming clinics amid rising cost pressures.
CVS acquired Oak Street Health in a $10.6 billion deal in 2023 and expanded from 169 to approximately 230 locations. The original goal of reaching 300 locations by 2026 has been tempered.
Goodwill Impairment
The company recorded a substantial $5.7 billion goodwill impairment charge in Q3 related to its healthcare delivery reporting unit. This charge contributed to a quarterly loss of $3.99 billion and diluted loss per share of $3.13.
Newman addressed investors directly: “We made the difficult decision to close underperforming clinics where we do not see a reasonable path to sustainable margins.”
However, Joyner maintained that value-based care remains central to CVS’s strategy: “The reasons to believe in this business have not changed, but the marketplace is evolving, and we are adapting our strategy to get financial performance back in line with our expectations.”
Pharmacy and Consumer Wellness Growth
Retail Pharmacy Strength
CVS Health’s pharmacy and consumer wellness segment demonstrated solid growth with total revenues increasing 11.7% to $26 billion. Growth was driven by:
- Favorable pharmacy drug mix
- Increased prescription volume
- Incremental volume from Rite Aid prescription file acquisitions
- Partially offset by continued pharmacy reimbursement pressure
Strategic Importance
Joyner emphasized the critical role of CVS’s retail presence: “Our 9,000 pharmacies are the front door to our enterprise. They are a differentiator for our business and a force multiplier towards improving the health of the communities that we serve.”
The adjusted operating income in this segment decreased 7.4% in Q3, reflecting ongoing reimbursement pressures affecting the broader pharmacy industry.
2025 Guidance and 2026 Outlook
Updated 2025 Projections
CVS Health significantly raised its full-year 2025 guidance:
- Adjusted EPS range: $6.55 to $6.65 (up from $6.30 to $6.40)
- Cash flow from operations: $7.5 billion to $8 billion (from at least $7.5 billion)
- Expected revenue: $397 billion (up $6 billion from previous guidance of $391 billion)
Looking Ahead to 2026
With the strong Q3 performance and improved outlook, CVS Health is well-positioned for 2026. Joyner struck a balanced tone: “While we are encouraged by our progress, we maintain a disciplined and cautious outlook as we position our business for another year of strong performance in 2026.”
The company’s focus on diversification, transparency, and quality care delivery positions it to capitalize on evolving healthcare dynamics despite near-term challenges in specific business units.
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