01—Abstract
Summary
Summary of the 8-K filed February 10, 2026. Cited figures are marked; the original filing is the authoritative source.
CVS Health reported fourth-quarter and full-year 2025 results on February 10, 2026, with total revenues reaching a record $402.1 billiona for the year, up 7.8%, and fourth-quarter revenues of $105.7 billion, up 8.2%.
Full-year GAAP diluted EPS fell to $1.39b from $3.66 in 2024, driven largely by a $5.7 billion goodwill impairment on the Health Care Delivery reporting unit and roughly $1.2 billion of legacy litigation charges. Adjusted EPS rose to $6.75 from $5.42, and adjusted operating income grew 20.6% to $14.4 billion, led by a sharp recovery in the Health Care Benefits segment, where adjusted operating income improved by $2.6 billion on better underlying Government business performance and favorable prior-year reserve development. Fourth-quarter GAAP diluted EPS was $2.30, but this was inflated by a roughly $1.9 billion tax benefit from a worthless stock deduction tied to a subsidiary's 2025 bankruptcy, which is excluded from Adjusted EPS.
Adjusted EPS of $1.09c declined from $1.19 a year earlier, as Health Care Benefits posted an adjusted operating loss of $676 million, reflecting Medicare Part D seasonality changes under the Inflation Reduction Act and unfavorable premium deficiency reserves. Medical membership fell to 26.6 million, down 504,000 year over year, with declines in individual exchange and Government lines. Management reaffirmed 2026 guidance of GAAP diluted EPS of $5.94 to $6.14 and Adjusted EPS of $7.00 to $7.20, but lowered its cash flow from operations outlook to at least $9.0 billion from at least $10.0 billion.
Full-year operating cash flow was $10.6 billiond, and the company returned $3.4 billion in dividends with no share repurchases in 2025. Investors should weigh the strong underlying Government business recovery against the cash flow guidance cut, ongoing pharmacy reimbursement pressure, and the Oak Street clinic closures planned for 2026.
02—Key points
Key Highlights
- Full-year 2025 total revenues hit a record $402.1 billion (+7.8%), while Q4 revenues rose 8.2% to $105.7 billion, driven by growth across all segments.
- Full-year Adjusted EPS rose 24.5% to $6.75 from $5.42, while GAAP diluted EPS fell to $1.39 from $3.66 due to a $5.7 billion goodwill impairment and about $1.2 billion in legacy litigation charges.
- Q4 GAAP diluted EPS of $2.30 benefited from a roughly $1.9 billion tax benefit from a worthless stock deduction; Q4 Adjusted EPS fell to $1.09 from $1.19.
- Health Care Benefits adjusted operating income improved by $2.6 billion to $2.9 billion for the year, with the MBR improving 130 basis points to 91.2%, though Q4 showed an adjusted operating loss of $676 million.
- 2026 guidance reaffirmed for GAAP diluted EPS ($5.94–$6.14) and Adjusted EPS ($7.00–$7.20), but operating cash flow guidance was cut to at least $9.0 billion from at least $10.0 billion.
- Medical membership declined 504,000 year over year to 26.6 million, reflecting exchange and Government attrition, partly offset by Commercial ASC growth.
- Full-year 2025 operating cash flow was $10.6 billion, up from $9.1 billion, while no share repurchases were made in 2025 versus $3.0 billion in 2024.
03—Questions
Frequently Asked Questions
Why did GAAP EPS fall so sharply for the full year while Adjusted EPS rose?
GAAP diluted EPS dropped to $1.39 from $3.66 mainly because of a $5.7 billion goodwill impairment on the Health Care Delivery reporting unit and about $1.2 billion of legacy litigation charges, which are non-cash or one-time items excluded from Adjusted EPS. Adjusted EPS increased to $6.75 from $5.42 because adjusted operating income grew 20.6%, led by Health Care Benefits' improved Government business performance and favorable prior-year reserve development. The 2024 comparison also included a $1.2 billion restructuring charge that did not recur.
Why did Q4 GAAP EPS rise while Adjusted EPS declined?
Q4 GAAP diluted EPS of $2.30 (versus $1.30) was boosted by a roughly $1.9 billion tax benefit from a worthless stock deduction tied to a subsidiary that filed for bankruptcy in 2025. Management excludes this benefit from Adjusted EPS, which fell to $1.09 from $1.19 because Health Care Benefits swung to an adjusted operating loss of $676 million, reflecting Medicare Part D seasonality changes under the Inflation Reduction Act and unfavorable premium deficiency reserves.
Why was the 2026 operating cash flow guidance lowered?
The filing states that cash flow from operations guidance was updated to at least $9.0 billion from at least $10.0 billion, but it does not provide a detailed explanation. Investors should review the earnings call and the full 2025 Form 10-K for management's reasoning, which may relate to working capital, timing of Medicare Part D cash flows, or litigation payments.
How did the Omnicare bankruptcy affect CVS's 2025 results?
In September 2025, the Omnicare entities voluntarily filed for Chapter 11, and CVS deconsolidated them, recording a $483 million gain on deconsolidation. The subsidiary's worthless stock deduction produced the large tax benefit that boosted GAAP results. Omnicare was also part of the legacy False Claims Act litigation that produced a $387 million charge in Q1 and a $542 million charge in Q2 2025.
Is the Health Care Benefits recovery sustainable heading into 2026?
The full-year improvement was driven by better underlying performance in the Government business and favorable prior-year development of $2.0 billion, which is non-recurring in nature. Medical membership declined 504,000 year over year and Q4 showed an adjusted operating loss, so investors should watch whether the 2026 Adjusted EPS guidance of $7.00 to $7.20 depends on continued Government margin improvement and stable Part D seasonality.
04—Continue