CVS Health (NYSE:CVS) reported second-quarter results that exceeded its expectations, citing earnings growth across all operating segments and raising its full-year outlook for adjusted earnings per share and operating cash flow.
Chair and Chief Executive Officer David Joyner said the company generated adjusted operating income of $5.2 billion and adjusted earnings per share of $2.58 during the quarter. Revenue exceeded $106 billion, up more than 7% from the prior-year quarter, while adjusted operating income increased 35% and adjusted EPS rose more than 40%, Chief Financial Officer Brian Newman said.
Health Benefits results supported by Medicare performance
CVS’ Health Care Benefits segment, which includes Aetna, generated more than $37 billion in quarterly revenue, up over 3% from the prior year. Adjusted operating income was about $2.4 billion, while the medical benefit ratio was 87.4%.
Newman said results reflected continued margin recovery as well as approximately $500 million, or 140 basis points, of benefit from changes in the company’s individual exchange risk-adjustment position for the 2025 plan year and favorable prior-year development. Excluding those items, CVS said underlying performance still exceeded expectations, led by its Medicare business.
Medical membership totaled roughly 26 million at quarter-end, flat sequentially and down approximately 700,000 from the prior year. The year-over-year decline primarily reflected CVS’ exit from the individual exchange business, partly offset by growth in commercial fee-based membership.
Steve Nelson, executive vice president of CVS Health and president of Aetna, said the company’s Medicare business has benefited from changes to its geographic footprint, product mix, annual enrollment execution, pricing discipline, favorable member mix and medical-cost management. Nelson said Aetna expects to continue progressing toward target margins in 2027.
For the full year, CVS now expects Health Care Benefits adjusted operating income of $5.03 billion to $5.37 billion, an increase of more than $1 billion from its earlier forecast. It expects a full-year medical benefit ratio of 89.75%, plus or minus 25 basis points.
Pharmacy services and retail businesses post growth
The Health Services segment produced nearly $52 billion in revenue, up more than 11%, and adjusted operating income of more than $1.7 billion, up 10%. Revenue growth was driven by pharmacy drug mix and brand inflation, partly offset by pharmacy client price improvements.
Newman said the segment benefited from improved purchasing economics, pharmacy mix and modest improvement in the health care delivery business. CVS also cited higher specialty generic penetration rates. However, the company experienced pressure in its 340B business, which it said remains subject to a changing environment. CVS also said some value originally expected in the second half was pulled forward into the second quarter.
Prem Shah, executive vice president and group president of CVS Health, said restrictions imposed by pharmaceutical manufacturers on covered entities contributed to the 340B pressure. The company expects 340B to become a headwind in 2027, although management said it remains confident in its 2026 Health Services outlook.
CVS expects Caremark membership to decline next year, citing a more disciplined approach to contract underwriting and renewals, as well as product actions and market exits by some health-plan customers. Shah said the company expects its specialty pharmacy business, including generic opportunities, to partially offset those pressures.
The Pharmacy and Consumer Wellness segment reported nearly $34 billion in revenue and nearly $1.5 billion in adjusted operating income, with operating income rising more than 10% year over year. Same-store pharmacy sales increased approximately 3%, supported by a 7% increase in same-store prescription volume. Same-store front-store sales improved 100 basis points from the prior-year period.
CVS raised its full-year Pharmacy and Consumer Wellness adjusted operating income expectation by $220 million to at least $6.4 billion. Newman said results were supported by core pharmacy strength and contributions from the Rite Aid transaction completed last year.
GLP-1 access and technology investments remain strategic priorities
Joyner highlighted CVS’ efforts to serve patients using GLP-1 therapies for weight loss through both benefit-plan and cash-pay channels. He said MinuteClinic’s virtual weight-management offering connects eligible patients with licensed clinicians for $29, while eligible patients may obtain GLP-1 therapies for as little as $149 through cash-pay options.
CVS plans to expand a partnership with Eli Lilly later this year, allowing eligible Zepbound and Mounjaro patients to access cash-pay pricing for same-day pickup through the CVS Health app or stores. The company also has an existing relationship with Novo Nordisk to dispense oral and injectable Wegovy.
Management also emphasized investments in artificial intelligence and technology. Joyner said CVS has committed to invest more than $20 billion in technology efforts over the next decade. The company said its AI-enabled Claims Assist Manager is expected to reduce claims-processing time by more than 20% and accelerate payment on hundreds of millions of claims annually.
Newman said CVS has generated more than $1 billion in operating-expense savings over the last several years through technology efficiencies and AI. He said ongoing investments are incorporated into the company’s updated 2026 outlook and its preliminary expectations for 2027.
Early view of 2027
CVS said it remains confident in its target of mid-teens adjusted EPS compound annual growth from 2025 through 2028. While it will provide formal 2027 guidance later, Newman said adjusted EPS of at least $8.44 appears reasonable based on current conditions. That would represent approximately 13% growth from an adjusted $7.46 baseline, which excludes prior-year development and prior-year items related to the individual exchange business CVS has exited.
The company ended the quarter with approximately $2.7 billion of cash at the parent and unrestricted subsidiaries, a leverage ratio of about 3.5 times, and year-to-date operating cash flow of approximately $10.6 billion. CVS returned more than $1.7 billion to shareholders through dividends during the first half and said its outlook does not assume share repurchases this year.
About CVS Health (NYSE:CVS)
CVS Health Corporation is a diversified healthcare company that operates a large network of retail pharmacies, pharmacy benefit management services and health care solutions. Headquartered in Woonsocket, Rhode Island, the company traces its roots to the early 1960s and has grown into an integrated provider of prescription drugs, over‑the‑counter products, clinical services and health insurance offerings. Its operating model combines retail pharmacy locations and in‑store clinics with broader pharmacy and health plan capabilities.
Key business activities include CVS Pharmacy retail operations, MinuteClinic walk‑in medical clinics and HealthHUB locations that offer expanded clinical services.
