CVS Health's Rupture and Rebuild

The story

2023: a confident, diversified company

Through 2023, CVS Health was a confident company. It reaffirmed its annual guidance for three consecutive quarters, and management spoke on earnings calls about "the power of our diversified model." That year, CVS acquired Oak Street Health (primary-care clinics) and Signify Health for a combined roughly $18 billion, and its 10-K named both companies explicitly as "new risks" — there was no reason to hide anything yet. The year closed with adjusted EPS of $8.74, near the top of guidance.

2024: everything unraveled in three quarters

Then 2024 arrived, and everything started shaking. On the Q1 call, CFO Tom Cowhey admitted directly, "Clearly, this is a disappointing result," and annual adjusted EPS guidance was cut in stages over three months — from the $8.30 range, to $7.00, to the $6.40 range. In August, CEO Karen Lynch fired the head of the insurance segment on the spot. By the Q3 call in November, the company abandoned formal guidance altogether, offering only a worst-case scenario in which Q4 loss ratios could deteriorate by more than 700 basis points. That same day, Karen Lynch stepped down and David Joyner became the new CEO.

The company's response was as much about language as numbers

The FY2023 10-K had named "Oak Street Health and Signify Health acquisitions" explicitly as new risks. In the FY2024 10-K — filed exactly as those businesses started causing real problems — that language was softened to a generic "our health care delivery businesses face unique risks," with no names attached. Almost exactly a year later, in Q3 2025, that same Health Care Delivery business (Oak Street Health) took a $5.7 billion goodwill impairment. Notably, the FY2025 10-K — filed the same fiscal year as that impairment — was the first to add two new risk factors: that CVS's "own acquisitions may fail," and that "insufficient premium rate increases" could worsen loss ratios. The company had, in effect, formally codified the exact mechanism of its 2024 crisis into its own risk disclosures after living through it.

2025-2026: a sharp reversal

Management's current outlook is a completely different picture. Guidance was raised four consecutive quarters in 2025 ($5.75 → $6.00 → $6.30 → $6.55), and the company actually closed the year at $6.75. Into 2026, guidance has already been raised twice more, most recently by 8% to $7.90-8.10. On the Q2 FY2026 call, management even pulled forward 2027 commentary a full quarter earlier than usual — a confidence score that bottomed at 3 (Q1-Q3 FY2024) has since climbed to 9.

Guidance scorecard

2023 showed the classic "guide conservatively, then beat" pattern; 2024 broke that pattern completely, with three deep cuts culminating in a full withdrawal; 2025-2026 have returned to the old "guide low, raise every quarter" playbook — though it's worth remembering that recovery started from a starting line set much lower than before the crisis.

Source: earnings call transcripts, Q3 2023 through Q2 2026, guidance commentary each quarter (FY2024 actual EPS estimated by summing four quarterly reported figures).

Timeline

• Mar–May 2023Signify Health and Oak Street Health acquisitions close (~$18B combined); explicitly named as new risks in the 10-K.
• May 2024Q1 results: adjusted EPS of $1.31, called "a disappointing result"; annual guidance cut from $8.30 to $7.00.
• Aug 2024Head of the insurance segment fired on the spot; guidance cut again to the $6.40 range.
• Oct 17, 2024CEO transition: Karen Lynch departs, David Joyner becomes CEO; Q3 call withdraws formal guidance entirely.
• May 2025Announces full exit from individual ACA exchange business by 2026; new CFO Brian Newman joins.
• Oct 2025$5.7B goodwill impairment in Health Care Delivery (Oak Street Health) — occurring the same quarter as a third consecutive guidance raise.
• Dec 9, 2025Investor Day sets initial FY2026 guidance at $7.00-7.20 adjusted EPS.
• Aug 2026Q2 results: guidance raised sharply (EPS +$0.60, cash flow +$2B); 2027 outlook pulled forward.

Our read

CVS's last three years compress into a single arc: a diversified insurance-and-pharmacy giant underestimated its own members' medical costs, paid for it with a CEO change and a guidance withdrawal, and has since rebuilt confidence through a string of guidance raises. The notable detail is that the company's own filings didn't just move on — they formally added the exact mechanisms of the 2024 crisis (bad acquisitions, insufficient premium increases) to their permanent list of acknowledged risks. Whether the current recovery is structural or simply a rebound from an unusually low base is the open question the next Medicare rate cycle should help answer.

What we still don't know

• Whether the 2025-2026 guidance-raising streak reflects genuine structural recovery or a base effect from 2024's deeply lowered starting point is hard to separate from this data alone.
• Why Caremark's PBM membership has declined every year — whether from voluntary contract reductions or competitive losses — isn't explained in the filings.
• How the actual 2027 Medicare Advantage rate negotiations will resolve, after CVS already stated the preliminary rate notice was "insufficient," remains unknown.