Bank of America resets future estimates for CVS post earnings

CVS Health’s latest 4th fourth and afloat twelvemonth 2025 net report, announced connected Feb 11, gave investors immoderate respite arsenic they struggled with the government’s outgo signals and rising aesculapian costs, keeping them considerably connected edge.

In its Q4, the wellness security supplier reported $105.7 cardinal successful revenue, up 8.2% twelvemonth implicit year, and GAAP diluted EPS of $2.30 and adjusted EPS of $1.09, exceeding expectations.

For the afloat year, CVS reported a grounds $402.1 cardinal gross with a GAAP diluted EPS of $2.30 and adjusted EPS of $6.75. The security supplier besides generated $10.6 cardinal successful currency travel from operations.

While not raising its 2026 outlook, CVS reiterated its adjusted EPS guidance scope of $7 and $7.20. In presumption of guidance, it trimmed its expected currency travel to $9 billion, driven by a displacement successful definite 2026 payments into precocious 2025.

The net telephone was much focused connected CVS’s multi-year betterment program amid increasing scrutiny of Medicare Advantage (MA) and pharmacy payment managers (PBM).

"Our 4th fourth and full-year results show the advancement we are making successful transforming the wellness attraction acquisition with our unsocial postulation of businesses. From lowering cause prices to improving navigation of wellness care, to being the beforehand doorway of attraction crossed our country, we are well-positioned to execute our ambition to beryllium the astir trusted wellness attraction institution successful America." David Joyner, CVS Health President and CEO.

CEO David Joyner framed 2025 arsenic a twelvemonth of “progress for CVS Health” connected the net call. The twelvemonth marked organizational repairs aimed astatine driving the institution to improved fiscal performance.

In a enactment shared by Bank of America, the slope argues that CVS has “multiple levers” to support net increasing successful 2026 and besides offset the 2027 MA preliminary complaint notice.

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But earlier we caput into the details, let's recognize what Medicare Advantage is and however it impacts CVS.

Medicare Advantage is the security program that CVS sells done Aetna and is mostly funded by authorities payments acceptable annually by the Centers for Medicare & Medicaid Services (CMS).

If these payments, however, bash not support gait with ostentation oregon rising aesculapian costs, it instantly affects the premiums consumers (the bulk of whom are seniors) pay.

Meanwhile, the institution is forced to either tighten networks, chopped benefits, oregon summation premiums, thereby impacting the carrier's wide growth.