CVS Health reports stronger than expected second quarter
By Josh White
Date: Thursday 31 Jul 2025
(Sharecast News) - CVS Health reported stronger-than-expected second quarter earnings on Thursday, driven by a recovery in its Aetna insurance unit and growth across its retail pharmacy and pharmacy benefit management operations.
The company raised its full-year adjusted earnings guidance, sending shares up in early trading.
Revenue for the quarter rose 8.4% year-on-year to $98.92bn, surpassing analysts' expectations of $94.5bn.
Adjusted earnings per share came in at $1.81, well ahead of the $1.46 expected.
Net income for the quarter was $1.02bn, or 80 cents per share, down from $1.41 a year earlier on a GAAP basis.
CEO David Joyner credited the performance to "a significant and durable recovery at Aetna, strong retention at CVS Caremark, and growth and momentum at CVS Pharmacy".
He added that CVS was delivering "better access, greater affordability and aligned advocacy" to the 185 million people it served.
Aetna's medical benefit ratio - an industry measure of profitability - stood at 89.9%, better than analysts' forecasts of 90.6%.
The unit's revenue climbed more than 11% to $36.26bn, despite a $471m charge for a premium deficiency reserve tied to 2025 Medicare Advantage losses.
Joyner noted that higher costs in Medicare Advantage were "accurately anticipated" and said the company planned to reprice around half of those plans for 2026.
The retail pharmacy and consumer wellness division generated $33.58bn in revenue, up 12.5%, aided by higher prescription volumes and front-of-store sales.
Same-store sales rose 15.4% year-on-year.
CVS had been closing underperforming locations as part of a $2bn cost-cutting programme, but said it was continuing to expand selectively in underpenetrated regions like the Pacific Northwest.
The company also acquired certain Rite Aid prescription files and store locations during the quarter.
Its health services segment, which includes pharmacy benefit management giant Caremark, brought in $46.45bn in revenue, a 10.2% increase from a year earlier.
CVS attributed the growth to a more favorable drug mix and strong renewals from existing clients.
Despite the robust performance, CVS cut its full-year GAAP earnings forecast to a range of $3.84 to $3.94, down from a prior range of $4.23 to $4.43, while lifting its adjusted earnings per share guidance to between $6.30 and $6.40, up from $6.00 to $6.20.
It also raised its cash flow from operations forecast to at least $7.5bn.
The results marked CVS's third consecutive quarterly earnings beat under Joyner's leadership, following a difficult 2024 marked by rising medical costs and pressure on pharmacy margins.
"Nothing is a surprise to us this quarter," Joyner told Reuters, citing progress in CVS's broader turnaround plan.
At 0735 EDT (1235 BST), shares in CVS Heath Corporation were up 7.61% in premarket trading in New York, at $67.05.
Reporting by Josh White for Sharecast.com.
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