By Josh Nathan-Kazis and Mackenzie Tatananni

CVS Health shares jumped early Wednesday after the company suggested its earnings growth in 2026 could be a bit better than current Wall Street estimates indicate.

The news came as the company reported higher revenue and profit than Wall Street had expected. Third-quarter adjusted earnings were $1.60 per share, better than the $1.37 per share FactSet consensus estimate. Revenue was $102.9 billion, while Wall Street had penciled in $98.8 billion.

Shares dipped early in the morning in response to concern about the company's quarterly medical loss ratio. The metric tracks the proportion of premiums paid out to cover patients' health expenses.

CVS reported a medical loss ratio of 92.8% for the quarter, compared with the 92.4% FactSet consensus estimate. Higher-than-expected medical spending, particularly by seniors in Medicare Advantage plans, has been a problem for the insurance industry since the pandemic. It was a major factor behind the earnings crisis that hit CVS in 2024.

On an 8 a.m. Eastern investor call, however, CVS CFO Brian Newman offered projections that appear to have reversed the brief selloff. Newman stopped short of laying out financial forecasts for next year, which he said the company will present at an investor day in December. But he said that the company believes "a reasonable starting point for our 2026 adjusted EPS guidance to reflect mid-teens growth."

That suggests a stronger outlook than Wall Street expected before Newman spoke. CVS raised its forecast for 2025 adjusted earnings to between $6.55 and $6.65 per share. Mid-teens growth from there would imply 2026 adjusted earnings of around $7.50 per share, above the current $7.18 per share consensus estimate.

CVS shares rose during the call. They were trading 3.9% higher after Newman's comments.

CVS has had had a remarkable year. The stock is up more than 80% in 2025 after suffering steep drops in 2023 and 2024.

As of the start of the year, shares were down 60% from their peak in February of 2022. Now they're down only 25% from that high-water mark.

Significant questions remain about the stock's continued recovery. CVS earnings fell to $5.42 per share in 2024 from $8.74 per share in 2023 amid rising medical costs for the company's Medicare Advantage plans, declining profits from its pharmacy chain, and other issues. The company replaced its CEO late in 2024, and sentiment around the stock has improved.

The revised 2025 guidance, for adjusted earnings of between $6.55 and $6.65 per share, compares with its prior estimate of between $6.30 and $6.40 per share. The current FactSet consensus estimate is $6.38 per share.

The guidance bump came despite a $5.7 billion goodwill impairment charge the company took related to Oak Street Health, the chain of primary care clinics serving Medicare Advantage patients the company bought for $10.6 billion in 2023.

In notes published after the earnings release but before the call, analysts said that the report hadn't quite matched expectations. "This Q was not clean and expectations were high, but we see more positives than negatives on the print ahead of the 8AM call," Leerink Partners analyst Michael Cherny wrote.

The call appears to have firmly reversed sentiment.

CVS's report comes at a difficult moment for the health insurance industry. Subsidies for plans offered on the Affordable Care Act marketplaces, now a matter of fierce partisan debate, are set to expire imminently, and premiums are spiking for 2026. For Medicaid plans, the One Big Beautiful Bill Act is set to impose new work rules that could limit enrollment.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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October 29, 2025 09:31 ET (13:31 GMT)

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