Shares of CVS Health jumped in premarket trading Thursday after the healthcare and pharmacy giant reported better-than-expected second-quarter earnings and lifted its full-year forecast, marking its third consecutive quarter of outperforming Wall Street estimates.
The stock was up by more than 8% during premarket hours.
The company posted adjusted earnings of $1.81 per share for the three months ended June, beating the $1.46 average estimate of analysts surveyed by FactSet.
Revenue climbed to $98.9 billion, also ahead of expectations of $94.5 billion.
Buoyed by the strong results, CVS raised its full-year earnings guidance to between $6.30 and $6.40 a share, from the prior range of $6 to $6.20.
The company also increased its cash flow projection for 2025 to at least $7.5 billion from roughly $7 billion.
CEO Joyner flags disciplined pricing and operations
David Joyner, who was named CEO in late 2024, said the quarter came with no surprises and suggested that past challenges in CVS’s Medicare Advantage plans had been anticipated and better managed this time.
“Nothing is a surprise to us this quarter,” Joyner said in an interview with Reuters.
He 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.
He added that Aetna would reprice half of those group plans for 2026 to better reflect medical cost trends.
The company also saw improved performance in both its pharmacy benefit management operations and its nationwide pharmacy chain.
“CVS had one of the cleanest prints we have seen so far this earnings season,” said Evercore ISI analyst Elizabeth Anderson.
Segment performance shows signs of recovery
CVS operates across three primary segments: health care benefits (which includes Aetna), health services (which covers the pharmacy benefit management business), and its retail pharmacy and consumer wellness chain.
The health care benefits division reported a medical cost ratio of 89.9%, slightly better than the 90.5% analysts had expected.
That metric tracks the percentage of premium revenue spent on patient care — a key profitability measure for insurers.
Although the company continues to navigate rising healthcare utilization costs, especially in its Medicare Advantage offerings, it is not alone.
UnitedHealth and Humana have also faced headwinds in the same segment.
Investors regain confidence after rough patch
Shares of CVS climbed 8.6% to $67.66 in premarket trading Thursday.
The company’s stock has risen 39% so far this year, significantly outperforming the broader S&P 500 Health Care sector, which is down 2%.
That’s a stark turnaround for a company that saw its stock lose over half its value between early 2022 and the end of 2024.
During that period, CVS struggled with weak performance in its retail pharmacy, rising costs in its insurance arm, and heightened regulatory attention on its pharmacy benefit manager.
The latest results add momentum to a budding rally that began with the company’s fourth-quarter 2024 earnings beat and gained further traction in May when CVS again surpassed estimates for Q1.
Despite the gains, the stock remains nearly 40% below its late-2021 peak.
Whether CVS can sustain its recovery remains to be seen, but Thursday’s results have given investors renewed reason to believe in the company’s turnaround story.
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