Financial Data and Key Metrics Changes - In Q4 2025, CVS Health reported adjusted operating income of $2.6 billion and adjusted earnings per share (EPS) of $1.09, with full year adjusted EPS of $6.75 and operating cash flow of $10.6 billion, exceeding initial expectations by approximately 15% [4][5][24] - Full year revenue for 2025 was over $400 billion, with Q4 revenue exceeding $105 billion, an increase of over 8% year-over-year [23][24] Business Line Data and Key Metrics Changes - The healthcare benefits segment generated over $36 billion in revenue for Q4, a 10% increase year-over-year, but reported an adjusted operating loss of $676 million due to changes in the Medicare Part D program [25][26] - The health services segment saw revenues of over $51 billion, a 9% year-over-year increase, with adjusted operating income of approximately $1.9 billion [28] - The pharmacy and consumer wellness segment generated nearly $38 billion in revenue, a 12% increase year-over-year, with same-store pharmacy sales growing over 19% [30][31] Market Data and Key Metrics Changes - The company ended 2025 with approximately 26.6 million medical members, a slight decline from the previous year, primarily due to losses in individual exchange and government businesses [25] - The Medical Benefit Ratio (MBR) for Q4 was 94.8%, consistent with the prior year, but impacted by elevated medical cost trends [26] Company Strategy and Development Direction - CVS Health aims to simplify the healthcare experience and improve affordability, with a commitment to becoming America's most trusted healthcare company [4][5] - The company is focused on improving margins in its Medicare business while advocating for better funding in the Medicare Advantage program [6][7] - CVS Health is leveraging its integrated capabilities across Aetna, Caremark, and CVS Specialty to enhance consumer engagement and drive cost savings [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum entering 2026, expecting another year of meaningful progress despite elevated medical cost trends [33][34] - The company remains committed to its long-term earnings growth targets, with a reaffirmation of 2026 adjusted EPS guidance in the range of $7-$7.20 [5][34] Other Important Information - CVS Health's Aetna business received the inaugural Press Ganey Health Plan of the Year award, recognizing its high-quality offerings and technological innovation [6] - The company has successfully transitioned to a cost-based reimbursement model, enhancing transparency in the pharmacy market [14] Q&A Session Summary Question: Impact of Medicare Advantage rates on margins - Management acknowledged the Advanced Rate Notice's impact on Aetna but remains committed to improving Medicare Advantage margins and does not foresee a significant impact on long-term guidance [40][42] Question: Regulatory impacts on PBM negotiations - Management indicated that while they cannot discuss specifics due to ongoing conversations with the FTC, they believe the PBM value remains intact and that they are well-positioned to adapt to regulatory changes [50][52] Question: Drivers behind medical membership changes - Management noted that commercial membership has reached its highest level in a decade, driven by better retention and innovative products, while the self-funded business continues to grow [67][70] Question: Medicaid rates and expectations for 2026 - Management reported that the Medicaid business is performing in line with expectations, with a focus on maintaining adequate rates and providing clinical excellence [73][75]

Fourth Quarter Highlights Full-Year Highlights Operational Highlights ® 2026 Full-Year Guidance CEO Commentary "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. From lowering drug prices, to improving navigation of health care, to being the front door of care across our country, we are well positioned to achieve our ambition to be the most trusted health care company in America." - David Joyne ...

Core Viewpoint - CVS Health Corporation is highlighted as a strong blue-chip stock for investment in 2026, with a consistent dividend history and positive market outlook from analysts [1][2]. Dividend Announcement - CVS Health's board approved a quarterly dividend of $0.665 per share, to be paid on February 2, 2026, to shareholders of record as of January 22, marking the 55th consecutive year of dividend payments [1]. Analyst Ratings and Price Target - Cantor Fitzgerald has reiterated CVS Health as a preferred stock for Medicare Advantage exposure, citing a favorable regulatory environment [2]. - Bernstein raised its price target for CVS from $86 to $87, maintaining a Market Perform rating, attributing the increase to the successful execution of a turnaround strategy [3]. Business Overview - CVS Health is a major U.S. healthcare company that integrates retail pharmacies, health insurance through Aetna, and pharmacy benefits management via CVS Caremark, providing a comprehensive health experience [4].

Core Insights - CVS Health reported total revenues of $102.9 billion for the third quarter of 2025, a 7.8% increase from $95.4 billion in the same period of 2024, driven by growth across all operating segments [3][7][18] - The company incurred a GAAP diluted loss per share of $3.13, which includes a $5.7 billion goodwill impairment charge related to the Health Care Delivery reporting unit [3][7][9] - Adjusted EPS for the third quarter was $1.60, up from $1.09 in the prior year, primarily due to improved adjusted operating income in the Health Care Benefits segment [3][7][18] Financial Highlights - Total revenues for the three months ended September 30, 2025, were $102.9 billion, compared to $95.4 billion in 2024, reflecting a change of $7.4 billion [3][5] - Operating income for the third quarter was a loss of $3.2 billion, down from an income of $832 million in the prior year, primarily due to the goodwill impairment charge [3][5][8] - Adjusted operating income increased by 35.8% to $3.5 billion, driven by the Health Care Benefits segment [3][8] - Year-to-date cash flow from operations was reported at $7.2 billion [7] Operational Highlights - Aetna achieved industry-leading Medicare Advantage Star Ratings, with over 81% of members in plans rated 4 stars or higher [7][8] - The company launched its annual vaccination campaign, offering updated flu and COVID-19 vaccines at CVS Pharmacy and MinuteClinic locations nationwide [7][8] - Caremark secured contract wins totaling nearly $6.0 billion, with high retention rates, emphasizing its commitment to value and transparency [7][8] Segment Performance Health Care Benefits Segment - Total revenues for the Health Care Benefits segment were $36.0 billion for the third quarter, up from $33.0 billion in 2024 [10][18] - Adjusted operating income improved to $314 million from a loss of $924 million in the prior year, with a medical benefit ratio of 92.8%, down from 95.2% [10][18] Health Services Segment - The Health Services segment reported revenues of $49.3 billion, an increase from $44.1 billion in 2024 [12][18] - Adjusted operating income decreased to $2.1 billion from $2.2 billion in the prior year, with pharmacy claims processed decreasing by 1.8% [12][19] Pharmacy & Consumer Wellness Segment - Total revenues for this segment increased to $36.2 billion, up from $32.4 billion in 2024, driven by pharmacy drug mix and increased prescription volume [14][18] - Prescriptions filled increased by 6.9% on a 30-day equivalent basis compared to the prior year [15][16] Guidance Updates - The company updated its full-year 2025 guidance, reflecting third-quarter performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments, while noting a decrease in the Health Services segment [4][7] - GAAP diluted earnings per share guidance was revised to a range of $(0.34) to $(0.24), while adjusted EPS guidance was raised to $6.55 to $6.65 [7][8]