CVS's full-year results show the turnaround in action

CVS stock has risen 40% over the last 12 months, vastly outperforming the major indexes and posting returns that rival Nvidia’s, at least in percentage terms. It’s not what you’d expect from a chain of pharmacies where you’re liable to get sticker shock from the price of shampoo and M&Ms. So, what’s the story?

For much of the past few years, CVS was treated as a problem stock. In fact, the upward bounce in the stock, year over year, is best explained by the price lows of 2024 and early 2025. Investors were worried then about rising medical costs at the company’s Aetna insurance unit, structural issues within the pharmacy business, and more generally, whether CVS’s sprawling, vertically integrated healthcare model actually worked.

At its lows, the stock traded at a steep discount to the market, priced as if CVS's problems would only get worse. Management promised a turnaround, as management teams are wont to do, but the market wasn’t prepared to take it on faith.

The quarterly and annual results released Tuesday morning show the turnaround actually happening. For the fourth quarter, CVS reported revenue of $105.7 billion, up 8.2% year over year. For full-year 2025, revenue rose nearly 8% to top $400 billion — a new record for the company. Growth came from all three major segments, including insurance, pharmacy services, and CVS’s best-known business, its retail pharmacy. Adjusted earnings per share rose to $6.75 for the year, up from $5.42 in 2024. Operating cash flow for the year climbed north of $10 billion.

Results from Aetna continued to be noisy and somewhat difficult to parse, with some business trends improving and others looking to be more persistent problems.

In short, quarterly results remain choppy — reflecting Medicare seasonality and regulatory changes. Medical cost trends, for instance, continue to be elevated, if broadly in line with Wall Street’s expectations, but adjusted operating income from the unit increased by nearly $3 billion. Essentially, the unit did a better job of pricing medical risk and getting compensated for services.

Meanwhile, CVS’s pharmacy middleman and health services arm delivered modest but steady performance, while retail pharmacy volumes rose by dramatic double digits — nearly 20% in the quarter, suggesting CVS’s sheer scale might actually be a strength and not a weakness.

On that point: Throughout the earnings report and presentation, management said its goal is to “be America’s most trusted health care company." It's worth asking: Is the superlative itself a necessarily muted claim, given America’s health care context? The American health care system is adversarial as a matter of structure, and thus a case study in opposing interests. The "most trusted" company in the space may not be one that anyone really trusts.

Of course, it's still true that the goal of improving the U.S. health care experience is a worthy one. Whether scale and vertical integration are the answer remains unclear. CVS’s turnaround, if nothing else, shows a company doing a better job of finding its way within the existing labyrinth.