The news: CVS Health reported revenue and profit growth in its Q4 earnings report.

• Q4 revenues increased 8.2% YoY, eclipsing $105 billion.
• Q4 net income reached $2.9 billion, up 80% YoY.

Driving the news: CVS is stabilizing operations within its Aetna subsidiary after higher medical costs among members weighed on the company’s bottom line:

• Aetna recorded $2.9 billion in adjusted operating income for the full-year 2025, a whopping 857% increase of over $2.6 billion from the year prior.
• While medical costs are still elevated in Medicare and Medicaid, executives said Aetna is managing expenses more effectively and moving toward target margins.
• Aetna also improved its YoY medical benefit ratio—the share of premium revenue spent on medical care.

Elsewhere, CVS posted 9% YoY growth in Q4 adjusted operating income in its pharmacy and consumer wellness segment, alongside 12% revenue growth. CVS cited increased prescription volume, fueled by its recent acquisition of Rite Aid store locations and customers.

Why it matters: Recent profit and revenue growth at CVS Health should strengthen the company’s position amid broader turmoil in the health insurance and pharmacy benefit manager (PBM) space. Still, a few critical junctures this year will determine whether CVS has fully turned the corner, including forthcoming government payment rates for Medicare Advantage plans in 2027 and the outcome of the FTC’s ongoing lawsuit against Caremark over alleged drug-price inflation tactics.

Implications for healthcare companies: The era of easy growth for healthcare’s "companies that do everything" is facing a reckoning. For years, giants like UnitedHealth Group and CVS thrived by vertically integrating doctors, insurers, and pharmacies under one roof, while getting generous Medicare Advantage payouts from the government.

However, that model is now being tested by a strategic reset as regulatory oversight tightens and medical costs spike unexpectedly. While UnitedHealth is currently navigating the thick of this transition, CVS appears to have weathered the worst of it. Moving forward, these conglomerates must trade aggressive expansion for financial discipline, focusing on better predicting patient costs and avoiding the regulatory crosshairs.

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