WOONSOCKET, R.I. — CVS Health beat Wall Street's forecast for second quarter revenue and earnings, with gains driven by strength in its retail business and a rebound at Aetna.
Sales of $98.92 billion exceeded analysts' expected $94.50 billion, while adjusted earnings per share of $1.81 adjusted topped the predicted $1.46 per share.
Shares of CVS vaulted more than 9% in premarket trading Thursday, as the company raised its full-year outlook for adjusted earnings to $6.30 to $6.40 per from $6 to $6.20.
“What people want most — a connected, simpler health care experience — is what CVS Health uniquely provides," said president and CEO David Joyner. "For the 185 million people we serve, we deliver better access, greater affordability and aligned advocacy. Our strong performance demonstrates the continued focus we have on operational and financial improvement across our businesses, led by a significant and durable recovery at Aetna, strong retention at CVS Caremark and growth and momentum at CVS Pharmacy.”
The company reported net income of $1.02 billion, or 80 cents per share, for the for the three months ended June 30, down from $1.77 billion, or $1.41 per share, for the year-ago period. The decline reflected the impact of two litigation charges associated with past business practices. The adjusted EPS of $1.81 remained relatively consistent compared to the prior year.
The overall results reflect improved operating performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments, largely offset by a decline in the Health Services segment.
“We are encouraged by a second consecutive quarter of solid 2025 results, while we continue to navigate a dynamic environment,” said CFO Brian Newman. “As we execute against our strategic priorities, we remain focused on delivering on our financial commitments and advancing initiatives that create long-term value for our stakeholders.”
The revised full-year guidance reflects second quarter performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments, partially offset by a decrease in the Health Services segment.
Quarterly revenues increased 8.4%, driven by growth across all operating segments.
Operating income decreased 21.8% primarily due to $833 million in litigation charges related to two court decisions associated with the past business practices, partially offset by a decrease in acquisition-related integration costs compared to the prior year and the increase in adjusted operating income.
Adjusted operating income increased 1.7% driven by increases in the Health Care Benefits and Pharmacy & Consumer Wellness segments, largely offset by a decline in the Health Services segment.
Interest expense increased $31 million, or 4.2%, due to higher debt, primarily as a result of long-term debt issued in December 2024.
The effective income tax rate increased to 38.5% compared to 24.3% primarily due to the impact of non-deductible litigation charges.
In the Health Care Benefits segment, revenues increased 11.6%, primarily driven by increases in the government business, largely due to the impact of the Inflation Reduction Act on the Medicare Part D program.
Adjusted operating income increased 39.4%, primarily driven by the favorable year-over-year impact of changes to the individual exchange business risk adjustment estimates, improved underlying performance in the government business and higher favorable prior period development. These increases were partially offset by the premium deficiency reserve described below.
in light of continued utilization pressure, the vompany recorded a premium deficiency reserve of $471 million to health care costs in its Group Medicare Advantage product line related to anticipated losses for the remainder of the 2025 coverage year.
The MBR increased to 89.9% compared to 89.6% a year ago, driven by the $471 million (140 basis points) premium deficiency reserve recorded as health care costs described above, largely offset by the favorable year-over-year impact of changes to the vompany’s individual exchange business risk adjustment estimates.
Medical membership as of June 30 of 26.7 million was down by 358,000 members from March 31, reflecting the previously announced membership declines in the individual exchange product line.
Prior years’ health care costs payable estimates developed favorably by $1.9 billion during the six months ended June 30. This development is reported on a basis consistent with the prior years’ development reported in the health care costs payable table in annual audited financial statements and does not directly correspond to an increase in 2025 operating results.
Days claims payable were 40.9 days as of June 30, a decrease of 2.3 days compared to March 31. The decline was primarily driven by a higher mix of pharmacy costs, partially offset by the impact of the Group Medicare Advantage premium deficiency reserve recorded as health care costs in the second quarter of 2025 discussed above.
In the Health Services segment, revenues increased 10.2% for the three months ended June 30, 2025 compared to the prior year primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.
Adjusted operating income decreased 17.8% for the three months ended June 30, 2025 compared to the prior year primarily driven by continued pharmacy client price improvements and the impact of a higher medical benefit ratio in the company’s health care delivery business, partially offset by improved purchasing economics and pharmacy drug mix.
Pharmacy claims processed remained relatively consistent on a 30-day equivalent basis for the three months ended June 30, 2025 compared to the prior year.
In the Pharmacy & Consumer Wellness segment, revenues increased 12.5% for the three months ended June 30, 2025 compared to the prior year primarily driven by pharmacy drug mix and increased prescription and front store volume, partially offset by continued pharmacy reimbursement pressure.
Adjusted operating income increased 7.6% for the three months ended June 30, 2025 compared to the prior year primarily driven by increased prescription and front store volume, partially offset by continued pharmacy reimbursement pressure.
Prescriptions filled increased 4.2% on a 30-day equivalent basis, primarily driven by increased utilization.
Same store prescription volume(6)(11) increased 6.4% on a 30-day equivalent basis.
