CVS raises 2026 EPS guidance to $7.90-$8.10 as Aetna margins recover

CVS Health raised its full-year adjusted EPS guidance to $7.90-$8.10 from $7.30-$7.50 after second-quarter profit of $2.58 per share beat the $1.85 consensus, driven by margin recovery in its Aetna insurance unit.

"Our CVS Health colleagues build trust every day in communities across our country by making healthcare easier for millions of customers, patients and members," David Joyner, chairman and CEO of CVS Health, said.

Total revenues rose 7.3 percent to $106.1 billion in the three months ended June 30, up from $98.9 billion a year earlier and above the $100.11 billion analysts expected. The Health Care Benefits segment, which houses Aetna, posted adjusted operating income of $2.4 billion, up 85.5 percent, as the medical loss ratio — the share of premiums spent on medical care — improved to 87.4 percent from 89.9 percent, beating the 90.03 percent analysts had projected. The company also lifted its cash flow from operations guidance to at least $11.5 billion from at least $9.5 billion.

The results mark CVS's sixth consecutive quarterly beat of Wall Street estimates, a sharp reversal from 2024 when Aetna missed targets for several quarters and the company's stock fell to multi-year lows. The guidance raise reflects continued execution on the Health Care Benefits segment margin recovery plan, though management maintained a cautious view for the remainder of the year given elevated cost trends and potential macro headwinds. The segment's improvement was also aided by the absence of a $471 million premium deficiency reserve recorded in the prior year's Group Medicare Advantage product line, and by favorable prior-year health care cost estimates of $1.2 billion.

The Health Services segment, which includes the CVS Caremark pharmacy benefits manager, generated adjusted operating income of $1.7 billion, up 10 percent, helped by improved purchasing economics and pharmacy drug mix. Pharmacy claims processed held steady at 473 million on a 30-day equivalent basis. The Pharmacy & Consumer Wellness segment posted adjusted operating income of $1.5 billion, up 10.2 percent, with prescriptions filled rising 4.3 percent to 457 million, boosted by the Rite Aid asset acquisitions completed in the third quarter of 2025. Medical membership stood at 26 million as of June 30, consistent with the prior quarter, with the company having exited the individual exchange business in 2026. Days claims payable stood at 41.7 days.

GLP-1 push and AI investments

CVS launched a full GLP-1 support program across its pharmacy and MinuteClinic locations, including a $29 virtual visit for eligible adults seeking weight-loss drug evaluations. The company also participates in the CMS Medicare GLP-1 Bridge program, offering eligible beneficiaries certain GLP-1 medications for $50 per month. CVS Caremark expanded GLP-1 options on its most common commercial formularies, building on its efforts to help patients access FDA-approved weight management medications at affordable cost.

The company is deploying agentic AI to streamline call center interactions for Aetna and CVS Caremark members and providers, and launched the second generation of its Aetna Claims Assist Manager, an AI-powered claims advisor that reduces processing time by over 20 percent for complex claims requiring manual review.

The stock rose 6.6 percent in pre-market trading following the announcement. The results align with rival UnitedHealth, which lifted its forecast in July on improved medical cost controls, raising the bar for health insurers this earnings season. Health insurers have faced persistently high costs for three years due to increased utilization across government-backed plans, prompting them to raise prices, cut benefits, and exit less profitable products. CVS's decision to exit the individual exchange business in 2026 reflects this broader industry trend, while its participation in the Medicare GLP-1 Bridge program positions the company to capture demand for weight-loss drugs among the 65-and-older population. The company also said it is slowing expansion of its Oak Street primary care business and plans to close 16 underperforming locations.

This article is for informational purposes only and does not constitute investment advice.