CVS Health (CVS +0.81%) will release its latest quarterly results and provide guidance updates pre-market on Tuesday, Feb. 10. Over the past four quarters, the healthcare giant has delivered earnings results that finished well ahead of sell-side estimates. Yet even if CVS delivers a revenue and earnings beat in Q4, don't assume that what comes next is a post-earnings rally.
Instead, it's possible that updates to 2026 guidance, affected by the recent proposed Medicare Advantage payment rates for this year, will lead to a negative response among investors.
This comes even as this healthcare stock has already been subject to near-term volatility on the Medicare news, falling by double-digit percentages upon its announcement late last month.
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CVS Health earnings preview
For Q4 2025, sell-side consensus calls for non-GAAP earnings of $0.99 per share. This represents a moderate decline from Q4 2024, when the company reported non-GAAP earnings of $1.19 per share. That said, walked-back expectations could give way to yet another earnings beat for CVS.
Then again, it may not be the results themselves that Wall Street focuses on with the earnings report coming next week. Instead, much as with other major healthcare stocks, investors may place greater focus on CVS' 2026 guidance.
They may particularly be looking at the effect of the aforementioned Medicare Advantage payment rates on this guidance. UnitedHealth (UNH 2.52%), which released earnings the same day the U.S. government proposed raising Medicare Advantage payment rates by only 0.9%, released an underwhelming outlook for the coming year.
Even as CVS shares, which fell by over 14% on the Medicare Advantage news, may seem to already price in the effect of lower-than-expected payment increases on revenue and profitability, that may not necessarily be the case. That said, even if shares, which have started to bounce back from the recent sell-off, trend lower again, don't assume this shatters CVS' long-term bull case.
NYSE: CVS
Key Data Points
Long-term positives to consider if CVS experiences further near-term turbulence
CVS shares may have sold off sharply on the Medicare Advantage news, but the company's future prospects may be more promising than UnitedHealth's. While UnitedHealth is primarily an insurance company, CVS' Aetna unit makes up a smaller portion of its overall business.
CVS' retail pharmacy chain, plus its pharmacy benefits management (PBM) unit, generate a far greater portion of the company's overall revenue and earnings. The proposed Medicare Advantage payment rates may have a relatively lesser effect on the company's bottom line. The same may apply to another potential headwind, increased scrutiny by regulators and lawmakers.
CVS' ongoing turnaround efforts in its pharmacy segment could help offset headwinds in its insurance segment. While UnitedHealth trades at 16 times forward earnings, higher than most health insurance stocks, CVS trades at less than 11 times forward earnings, a far more reasonable multiple.
Higher expectations about future growth remain baked into UnitedHealth's valuation, leaving it at risk of additional declines if subsequent results underwhelm. However, with greater skepticism incorporated into CVS Health's valuation, the stock could rally on "better than feared" results. Hence, while you may want to be careful with CVS ahead of earnings, the long-term bull case may remain intact.
