CVS Health Raises Guidance, Sees Mid-Teens Earnings Growth Through 2028

CVS Health delivered good news to investors this week, raising its 2025 guidance and outlining an ambitious earnings growth trajectory through 2028. The update suggests the healthcare giant's transformation strategy is gaining traction.

The New Numbers

CVS raised its 2025 revenue guidance to at least $400 billion, up from a previous forecast of $397.3 billion. The company also increased its adjusted earnings per share guidance range to $6.60-$6.70, up from $6.55-$6.65.

Looking further ahead, CVS announced 2026 targets:

• Total revenues of at least $400 billion
• Adjusted EPS of $7.00-$7.20
• Mid-teens adjusted EPS compound annual growth rate (CAGR) through 2028

CFO Brian Newman said the company is "closing out 2025 with meaningful momentum across our businesses" and expects "another year of strong earnings growth in 2026."

What's Driving the Improvement

CVS's improved outlook reflects progress across its three main business segments:

Health Services (Caremark): The pharmacy benefit management business continues winning contracts and managing prescription drug costs for employers and insurers.

Pharmacy & Consumer Wellness: Retail pharmacies remain essential healthcare access points. CVS operates roughly 9,000 locations nationwide.

Health Care Benefits (Aetna): The insurance business, acquired in 2018, provides diversification and cross-selling opportunities.

Management highlighted "best-in-class innovation and technology" as key drivers of growth, suggesting investments in digital health services and data analytics are paying off.

Analysts React

Wall Street responded positively to the guidance raise:

• Leerink Partners: Raised price target from $86 to $95 with "outperform" rating
• Raymond James: Raised target from $75 to $90
• TD Cowen: Raised target from $99 to $100 with "buy" rating

CVS shares climbed 3% in early Tuesday trading on the news.

The Goodwill Impairment

One cautionary note: CVS disclosed expected goodwill impairment of $5,725 million for 2025. This non-cash charge reflects a writedown of acquisition-related assets, likely tied to the Aetna deal or subsequent acquisitions.

While impairments sound alarming, they don't affect cash flow or the company's operational performance. They do reduce GAAP earnings, which is why CVS's GAAP EPS guidance turned negative even as adjusted earnings grow.

The Integrated Healthcare Bet

CVS's strategy centers on becoming an integrated healthcare company—not just a pharmacy or insurer, but a comprehensive health services provider.

The vision: Use 9,000 retail locations as healthcare access points, leverage Aetna's insurance relationships to manage populations, and employ Caremark's scale to control drug costs.

If successful, CVS can capture more healthcare spending while improving outcomes—a potentially lucrative combination as the U.S. grapples with rising healthcare costs.

Risks to Watch

Several challenges could derail the growth story:

Pharmacy reimbursement pressure: Continued squeezes from PBMs and insurers could pressure pharmacy margins.

Medicare Advantage competition: The health insurance market remains intensely competitive, with UnitedHealth and Humana as formidable rivals.

Amazon's healthcare ambitions: Amazon Pharmacy and Amazon Clinic represent potential long-term disruption to CVS's retail model.

Integration execution: Coordinating three large business segments is operationally complex. Missteps could undermine the integrated strategy.

What It Means for Your Portfolio

CVS offers a defensive healthcare play with growth characteristics. The stock trades at roughly 11x forward earnings—cheap compared to the broader market—reflecting lingering skepticism about the integrated model.

For income investors, CVS's dividend yields approximately 3%, well above the S&P 500 average. The company has maintained its dividend through recent challenges.

The guidance raise suggests management sees a clearer path to sustainable growth. If the mid-teens EPS growth materializes through 2028, the stock could rerate significantly higher.

The Bottom Line

CVS Health's improved guidance reflects operational momentum and growing confidence in its integrated healthcare strategy. While challenges remain, the company appears to be executing on its transformation.

For investors seeking healthcare exposure with value characteristics and income, CVS merits consideration. The next few years will reveal whether the integrated model can deliver on its ambitious promise.