Here's How CVS' Improving Balance Sheet Supports Deleveraging

CVS Health CVS maintained a strong balance sheet throughout the first half of 2026, supported by robust cash generation and disciplined capital deployment.

The company has generated approximately $10.6 billion in operating cash flow year to date, reflecting strong earnings and improvements in working capital. It ended the second quarter with roughly $2.7 billion of cash at the parent company and unrestricted subsidiaries. The company reported a leverage ratio of approximately 3.5 times in the second quarter and expects the ratio to improve further as it executes against its 2026 outlook. CVS raised its full-year operating cash flow outlook to at least $11.5 billion, providing additional capacity to reduce leverage and strengthen financial flexibility. 

CVS also remains committed to shareholder returns, having distributed more than $1.7 billion through dividends year to date. However, the company is maintaining a cautious approach toward share repurchases. Its current 2026 outlook assumes no share buybacks, with additional capital deployment opportunities to be evaluated as leverage improves.

This trend extends into 2027, with repurchases assumed to be limited to offsetting share dilution rather than supporting incremental buybacks. This suggests that balance-sheet improvement remains a near-term capital allocation priority.

Peer Update

With no debt on Align Technology’s ALGN balance sheet, it looks quite comfortable from the liquidity point of view. The company’s cash and cash equivalents totaled $1.10 billion at the end of second-quarter 2026. Second-quarter operating cash flow totaled $192.8 million, while free cash flow was $157.1 million after $35.7 million of capital expenditures. ALGN repurchased about 393,400 shares for $67 million during the quarter at an average price of $169.45. As of June 30, $733.3 million remained under the $1 billion authorization announced in April 2025.

Cardinal Health CAH ended fiscal 2026 with $4.9 billion of cash and $5.0 billion of adjusted free cash flow. The company repurchased about $1.4 billion of shares during the year and received a $5.0 billion increase to its repurchase authorization. This liquidity supports ongoing investment, tuck-in acquisitions and shareholder returns while preserving financial flexibility.

CVS’ Price Performance, Valuation and Estimates

Over the past year, CVS Health shares have risen 31.1% compared with the industry’s 10.8% growth. 

Image Source: Zacks Investment Research

CVS shares are trading at a forward five-year price-to-sales ratio of 0.29, lower than the industry average of 0.50. The stock has a Value Score of A.

Image Source: Zacks Investment Research

The consensus estimate for the company’s 2026 earnings has been showing a bullish trend. 

Image Source: Zacks Investment Research

CVS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research