CVS second-quarter profit beats estimates, helped by medical cost oversight
The company also flagged improved performance in its national pharmacy chain and pharmacy benefit management businesses.
CVS reported an adjusted quarterly profit of $1.81 per share, above the average analyst estimate of $1.46 per share, according to LSEG data.
For full-year 2025, the insurer raised its profit outlook to $6.30 to $6.40 per share, compared with an average analyst estimate of $6.12 as compiled by LSEG. It attributed the raised forecast to its second-quarter performance.
CVS previously had expected full-year earnings per share of $6.00 to $6.20.
CVS Health's Aetna insurance business reported a medical loss ratio, or the percentage of premiums spent on medical services, of about 89.9% in the second quarter. Analysts expected a ratio of 91.16%, according to LSEG estimates.
It was the third quarter in a row that CVS beat earnings targets as the company works on a turnaround after having missed financial targets repeatedly last year. Those problems had stemmed from an unexpected sharp rise in medical costs in its Medicare Advantage plans for people aged 65 and older or with disabilities, and struggles with its pharmacies.
"Nothing is a surprise to us this quarter," said CEO David Joyner in an interview with Reuters.
Joyner, who joined the company last October, said the Aetna business experienced higher costs in its Medicare Advantage plans sold through groups such as employers or retiree organizations, but those costs were accurately anticipated. Aetna aims to reprice half of those plans for 2026, he added.
CVS plans to close 250 brick-and-mortar pharmacies this year in an effort to cut costs, and the company is reducing its government-sponsored health insurance plans.
Rivals including UnitedHealth (UNH.N), opens new tab, Elevance (ELV.N), opens new tab and Centene (CNC.N), opens new tab have detailed higher-than-expected medical costs for the second quarter due to a sicker patient profile and mismatched government payment rates, primarily in Medicaid plans for low-income people.
Government payment pressure in Medicare Advantage plans has also squeezed insurer margins this year, with the Centers for Medicare and Medicaid Services changing its calculations of how to reimburse plans for their sickest members.
Joyner said CVS's primary care unit for seniors, Oak Street Health, is impacted by these regulatory changes, but the changes are manageable.
Revenue for CVS's health services segment, which houses its Caremark pharmacy benefit manager, rose 10.2%, due to a more favorable drug mix and plan renewals from existing clients, the company said. Revenue for the retail-pharmacy and drug-infusion business increased by 12.5% during the second quarter, which Joyner said was aided by increases in prescription volumes filled.
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