Key Highlights

  • CVS Health shares were trading down 12.21% at $80.25, against a prior close of $91.41.
  • Volume ran near 23 million shares, versus an average of about 8 million.
  • The company plans to split into two public companies by the first half of 2028.
  • Third-quarter Revenue of $108.4 billion beat the $104.7 billion estimate, with adjusted EPS of $2.09.
  • 2026 adjusted EPS guidance was raised to at least $8.20, and 2027 is guided to at least $8.65.

A Two-Company Split Dominates a Strong Quarter

CVS Health (NYSE:CVS) shares were trading down 12.21% at $80.25 on Wednesday, on heavy Volume of about 23 million shares against an average near 8 million. The company plans to separate into two independent public companies by the first half of 2028. One would be CVS Health, holding Aetna, Caremark, Oak Street and Signify, and the other would be CVS Pharmacy, with about 9,000 stores.

The selloff is stock-specific. The Dow Jones Industrial Average gained about 2.9% and the broader health group was higher, with Elevance Health (NYSE:ELV) and Cigna (NYSE:CI) both trading up. Investors appear focused on separation costs, lost synergies, execution risk and political scrutiny of pharmacy benefit managers after the Democratic midterm wins.

Revenue of $108.4 Billion and Adjusted EPS of $2.09 Beat Estimates

Third-quarter revenue reached $108.4 billion, ahead of the $104.7 billion estimate. Adjusted Operating Income was about $4.2 billion, and adjusted EPS of $2.09 rose more than 30% year over year, well above the $1.62 estimate.

The medical benefit ratio in the insurance segment was 91.3%, improved by about 150 basis points, with Medicare performance modestly ahead of expectations. Year-to-date Operating Cash Flow was $15.3 billion.

Raised 2026 Outlook and a 2027 Floor of $8.65 Per Share

Management raised its 2026 outlook to adjusted EPS of at least $8.20, from a prior $7.90 to $8.10, with revenue of at least $420 billion, enterprise adjusted operating income of at least $17.05 billion and cash flow from operations of at least $15.5 billion.

For 2027, adjusted EPS is expected to be at least $8.65, about 13% growth, assuming repurchases only offset dilution. Share repurchases resume in the fourth quarter, and the Leverage target was reached ahead of schedule. BofA and Raymond James have described valuation as attractive.

CVS has a market Capitalization of $102.64 billion, trades at 9.59 times forward Earnings and 9.35 times trailing earnings, and reported trailing EPS of $7.84. The Dividend Yield is 3.31%, and the 52-week range runs from $69.51 to $110.68.

Separation Costs and Execution Risk Set the Bar for the Next Update

Management described dissynergies and one-time separation costs as manageable and said more 2027 detail will come on the fourth-quarter call. Until then, investors are weighing a stronger-than-expected quarter against a multiyear separation with execution risk.