CVS Health Q2 Earnings and Revenues Top Estimates, Stock Climbs

Following the announcement, CVS shares climbed 1% in the pre-market session today.

CVS’ Segment Performance Reflects Broad-Based Improvement

Health Care Benefits revenues increased 3.5% year over year to $37.54 billion. The rise was driven by growth in the Government business, partly offset by the company’s exit from the individual exchange business in 2026.

Health Services revenues rose 11.5% to $51.80 billion. The improvement was supported by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.

Pharmacy & Consumer Wellness revenues jumped 0.7% to $33.82 billion. Growth from pharmacy drug mix, higher prescription volume, Rite Aid asset contributions and brand inflation was largely offset by regulatory-related price reductions, generic drug introductions and reimbursement pressure.

CVS Health’s Margin Performance Improves

CVS Health’s gross profit, calculated as total revenues less cost of products sold and health care costs, came in at $15.75 billion, up 15.9% year over year. Gross margin expanded 110 basis points (bps) year over year to 14.8%.

Operating income surged 97.5% to $4.70 billion, outpacing revenue growth. The improvement reflected higher adjusted operating income across all operating segments and the absence of $833 million in legacy litigation charges recorded in the prior-year quarter. Operating margin expanded 200 bps to 4.4%.

Adjusted operating income rose 35.4% to $5.16 billion. Adjusted operating margin improved 100 bps to 4.9%, aided by operating expenses declining to $11.05 billion from $11.21 billion in the year-ago quarter.

CVS Health’s Liquidity and Capital Position Improve

CVS Health ended the quarter with cash and cash equivalents of $11.33 billion, up from $9.54 billion at March-end. Long-term debt stood at $59.45 billion, down from $60.53 billion at the end of first quarter. 

Cumulative net cash provided by operating activities was $10.59 billion compared with $6.45 billion in the prior-year period.

CVS Health also paid $1.73 billion in dividends during the first half of 2026. Continued debt reduction and disciplined capital returns remain important watch items as the company advances its operating recovery.

CVS Health Raises 2026 Guidance

Management raised its full-year 2026 targets following the quarter’s performance. CVS lifted its GAAP diluted EPS outlook to a range of $6.84-$7.04 from $6.24-$6.44 and boosted adjusted earnings guidance to $7.90-$8.10 from $7.30-$7.50. The Zacks Consensus Estimate expects 2026 adjusted EPS to be $7.46.

Revenues for the year are projected to be at least $414 billion, up from the earlier projection of at least $405 billion. The Zacks Consensus Estimate for the same stands at $409.0 billion.

The company also increased its cash flow from operations outlook to at least $11.5 billion from at least $9.5 billion. CVS said the update reflects improved expectations for the Health Care Benefits and Pharmacy & Consumer Wellness segments while maintaining a cautious view for the remainder of the year, given elevated cost trends and potential macroeconomic headwinds.

Our Take on CVS Stock

CVS Health exited the second quarter with earnings and revenues beating respective estimates. Health Care Benefits performance was supported by strength in the Government business. Health Services also maintained solid top-line momentum, aided by pharmacy drug mix and brand inflation. Within Pharmacy & Consumer Wellness, prescription growth benefited from incremental volume tied to CVS Health’s Rite Aid asset acquisitions. The raised top and bottom-line guidance for the year is highly encouraging.

Among the key developments are the introduction of a comprehensive approach to GLP-1 support across the CVS Pharmacy and MinuteClinic locations. Aetna launched its second-generation Aetna Claims Assist Manager, an AI-powered agentic claims advisor platform designed to streamline claims processing and improve payment accuracy.

CVS’ Zacks Rank & Other Key Picks

CVS Health currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader medical space are Labcorp Holdings LH, Quest Diagnostics DGX and Medpace MEDP.

Labcorp, carrying a Zacks Rank #2, reported second-quarter 2026 adjusted EPS of $4.99, which surpassed the Zacks Consensus Estimate by 4.18%. Revenues of $3.73 billion beat the Zacks Consensus Estimate by 0.36%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LH has an earnings yield of 5.9% compared with the industry’s 4.1% yield. The company's earnings beat estimates in each of the trailing four quarters, the average surprise being 3.09%.

Quest Diagnostics, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $3.12, exceeding the Zacks Consensus Estimate by 11%. Revenues of $3.04 billion topped the Zacks Consensus Estimate by 2.1%.

DGX has an earnings yield of 4.7%, almost in line with the industry’s yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.77%.

Medpace, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $4.25, exceeding the Zacks Consensus Estimate by 4.17%. Revenues of $707.3 million outperformed the consensus mark by 1.12%.

MEDP has an historical five-year earnings growth rate of 30.5% compared with the industry’s 5.6% growth. In the trailing four quarters, the company delivered an average earnings beat of 10.16%.

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This article originally published on Zacks Investment Research (zacks.com).

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