CVS Health has delivered a strong performance for the second quarter, surpassing Wall Street’s expectations and prompting the healthcare giant to once again raise its full-year forecast. This marks a turnaround for the company under new leadership, especially after a less favorable 2024. On Thursday, the company highlighted an increase in prescription fills at its drugstores and a robust health insurance segment as key drivers of its quarterly success.
CVS Health now anticipates its adjusted earnings for 2025 to be in the range of $6.30 to $6.40, an optimistic projection after it had already been raised in May. These figures are above the $6.12 per share earnings predicted by analysts, as indicated by the data firm FactSet. Based in Woonsocket, Rhode Island, CVS Health Corp. operates a significant drugstore chain and boasts a substantial pharmacy benefit management business, providing prescription drug coverage to a range of large clients including employers and insurers. Moreover, through its Aetna insurance arm, CVS Health covers nearly 27 million individuals.
Across its business segments, the company experienced revenue growth exceeding 10%. However, in its largest sector, pharmacy benefit management, adjusted operating income fell by over 17%, impacted by price reductions for pharmacy clients. In contrast, income from the health insurance side surged by more than 39% due to adjustments in risk estimates for individual insurance and improvements in government-related business sectors, like Medicaid and Medicare coverage. The company also acknowledged some pressures due to increased utilization of healthcare services, a factor that has affected several health insurers who reported weaker second-quarter earnings due, in part, to a surge in care demand greater than anticipated.
CVS Health reported a 4% increase in the number of prescriptions filled during the quarter at its drugstores. Overall, the company achieved adjusted earnings of $1.81 per share as its revenue climbed 8% to $98.9 billion. Analysts had been forecasting earnings of $1.46 per share on revenues of $94.51 billion. Despite a 42% decrease in net income to $1.02 billion — partly due to $833 million booked in litigation charges — the firm has made significant strides.
Last year, CVS Health had to reduce its forecast several times before the former CEO, Karen Lynch, resigned in the fall. She was succeeded by David Joyner, who brought new executives into the leadership role, helping to steer the company in a promising direction. Reflecting this rejuvenated momentum, CVS Health’s shares surged nearly 8%, or $4.81, rising to $67.12, during premarket trading on Thursday. As of the previous day’s close, the stock had already increased by 39% this year, outpacing the Standard & Poor’s 500 index’s growth of 8% over the same period.