CVS Health posted strong second-quarter results and raised its full-year guidance following strong performances in its Aetna and pharmacy segments, but its healthcare delivery segment remains under pressure, executives said during the company’s second-quarter earnings call on July 31, according to a transcript published by investing.com.
CVS reported $98.9 billion in revenue for the quarter, up 8% year over year, while adjusted operating income increased 2% to $3.8 billion.
“We are encouraged by our enterprise performance and revised outlook, especially in this very dynamic environment,” CVS President and CEO David Joyner said. “At the same time, we continue to maintain a prudent and respectful outlook for the remainder of the year with clear opportunities for outperformance.”
The healthcare benefits segment saw a nearly 40% year-over-year increase in adjusted operating income, reaching $1.3 billion. Revenue in the segment increased 11% to $36.3 billion, driven primarily by growth in government programs and adjustments tied to the Inflation Reduction Act.
However, CVS’ healthcare delivery segment — which includes Oak Street Health and Signify Health — continues to face headwinds.
“While we are pleased with the improvements we are seeing at Aetna, we continue to see pressure in our healthcare delivery business driven by higher medical benefit ratios at Oak Street,” Mr. Joyner said. “As we look ahead, we will maintain this intense focus, continuing to diligently execute against our margin recovery plan.”
The pressure on CVS’ provider business was partially offset by the strong performance of its home health business, Signify Health, in the quarter, according to company executives.
“Value based care remains a critical component of our Medicare Advantage strategy as we know that it delivers better clinical outcomes, better patient experiences, and a lower total cost of care,” Mr. Joyner said. “We are working with urgency to further strengthen this business and ensure seniors can benefit from this industry leading model.”
Those actions include leadership changes, technology investments and operational improvements.
Despite challenges in care delivery, the pharmacy segment is performing well. Caremark, its pharmacy benefit manager, is seeing strong retention and wins for the 2026 selling season, according to the company.
“Our PBM is saving consumers and clients billions of dollars a year on drug costs, but we must continue to innovate and drive more savings,” Mr. Joyner said. “For example, our clients needed a solution as they experienced the impact of the rapid growth and the use of GLP ones. Spend in this category for our employer clients has nearly doubled over the last two years and now represents 15% of their pharmacy costs.”
To address this, CVS launched a formulary strategy on July 1 targeting weight loss drugs, which led to more than 95% of eligible members adopting a preferred product. The company also offers a weight management program that combines drug therapy with behavioral support.
Retail pharmacy also delivered solid growth in the second quarter, with same-store prescription volumes rising over 6% year over year and front store sales increasing more than 3%.
“PCW delivered another strong quarter despite persistent reimbursement pressures. Our performance is a direct result of our ability to anticipate market dynamics and take the right actions to lead the industry,” Mr. Joyner said. “Our front store business continues to improve as we grow our customer base and gain retail share.”
As part of a long-term strategy, CVS is shifting commercial scripts to its CostVantage model — launched in January — which ties reimbursement more closely to the cost of dispensing. The company also plans to move its government business into similar cost-based pricing by 2026.
Looking ahead, executives reaffirmed their commitment to financial discipline and continued transformation.
“We are also taking on the largest challenges in healthcare, affordability, access and inconsistent care coordination,” Mr. Joyner said.”The breadth of these problems means that they can’t be addressed with a fragmented piecemeal approach.”
Executive Vice President and CFO Brian Newman said CVS expects full-year adjusted earnings per share to range from $6.30 to $6.40, up from its previous guidance of $6 to $6.20. Cash flow from operations is projected to reach at least $7.5 billion.
Mr. Newman added that CVS’ group Medicare Advantage business remains under pressure but noted upcoming contract renewals will allow the company to reprice roughly half of its group MA revenue in 2026.
“We expect to make progress on margin recovery in our group MA book over the next few years as contracts come due for renewal, including the opportunity to reprice approximately half of our group MA revenue in 2026,” Mr. Newman said.
