CVS blows past Q2 estimates, lifts full-year profit outlook

CVS Health blew past second-quarter earnings and revenue estimates Wednesday and raised its 2026 guidance, as its insurance unit Aetna showed further signs of recovery from a two-year stretch of elevated medical costs.

CVS now sees full-year adjusted profit between $7.90 and $8.10 a share, up from a prior range of $7.30 to $7.50. Revenue for the year should come in at least $414 billion, compared with an earlier forecast of at least $405 billion.

Shares rose 6% in premarket trading.

The results added to a solid second quarter for the broader health insurance sector, where several large carriers have reported improving medical cost trends. CVS is also in the middle of a broader turnaround plan that has involved cutting $2 billion in costs, closing underperforming stores, shuffling leadership and reducing its exposure in Medicare Advantage plans.

All three business segments – insurance, pharmacy and health services – surpassed Wall Street's revenue expectations. But Aetna has been the main focus for investors. High medical costs in privately run Medicare plans have hammered several major health insurers for the last two years.

Aetna's medical benefit ratio, a measure of total medical expenses paid relative to premiums collected, fell to 87.4% from 89.9% a year earlier. A lower ratio means the company collected more in premiums than it paid out in benefits, boosting profitability. Analysts had expected a ratio of 89.8%, according to StreetAccount.

The insurance business brought in $37.54 billion in revenue during the quarter, up about 3.5% from the second quarter of 2025. That topped the $35.66 billion analysts expected, StreetAccount data showed.

CVS said the year-over-year improvement came from strength in its government plans and the absence of a so-called premium deficiency reserve recorded in the same period last year. That refers to a liability an insurer may need to cover if future premiums are not enough to pay for anticipated claims and expenses. Medical membership stood at 26 million as of June 30, roughly flat from March 31.

The pharmacy and consumer wellness division posted $33.82 billion in sales, slightly ahead of the $33.16 billion analysts expected. That unit dispenses prescriptions across CVS's more than 9,000 retail pharmacies and provides vaccinations and diagnostic testing.

The health services segment, which includes pharmacy benefits manager Caremark, generated $51.8 billion in revenue, up 11.5% from a year earlier and well above the $47.78 billion Wall Street expected.

CVS also announced a new collaboration with Eli Lilly that will make its obesity injection Zepbound and the new weight loss pill Foundayo available to eligible patients through the CVS Health app. The offering, available early in the fourth quarter, will cover both insured and cash-pay patients.

For the second quarter, CVS reported net income of $2.98 billion, or $2.31 a share, compared with $1.02 billion, or 80 cents a share, a year earlier. Adjusted earnings, excluding restructuring charges and capital losses, came in at $2.58 a share. Revenue totaled $106.10 billion, up about 7%.

CVS's Alpha Score is 52 out of 100, a Mixed rating.

In its guidance release, CVS said the higher profit outlook reflects gains in insurance and retail pharmacy, but noted it is maintaining a "cautious view" for the rest of the year amid high medical costs and potential economic headwinds.