CVS Health's Q2 Earnings on Deck: How Should You Play the Stock?

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The diversified healthcare company has a solid earnings surprise history. Its bottom-line surpassed estimates in each of the trailing four quarters, the average beat being 16.8%.

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Q2 Earnings Whispers for CVS

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is exactly the case here.

Earnings ESP: CVS Health has an Earnings ESP of +1.42%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks Rank #1 stocks here.

Trends Likely to Have Influenced CVS Health’s Q2 Performance

The Health Care Benefits segment’s second-quarter performance is likely to have sustained momentum in the Government business. However, this may have been partially offset by CVS Health’s exit from the Individual Exchange business in 2026. Growth in commercial fee-based membership has likely helped reduce the impact of the decline in total medical membership resulting from this exit.

The segment’s operating performance may have benefited from the continued execution of Aetna's margin recovery initiatives. In May, Aetna launched the second-generation Aetna Claims Assist Manager, an AI-powered agentic claims advisor platform designed to streamline claims processing and improve payment accuracy. It is part of CVS Health’s $20 billion multi-year digital investment focused on simplifying the U.S. healthcare system and improving the consumer experience.

The first-quarter Medical Benefit Ratio exceeded expectations, supported by favorable prior-year development and disciplined medical cost management. These factors are likely to have continued to support the metric in the second quarter.

The Zacks Consensus Estimate for the Health Care Benefits segment's revenues indicates a 1.6% year-over-year decrease. 

In the Health Services segment, the performance is expected to have been supported by a favorable pharmacy drug mix and brand drug inflation. These gains, however, may have been partially offset by continued pharmacy client price improvements.

CVS Health is also likely to have continued to execute on its operational plans in the Health Care Delivery business to improve health care access across the country. Second-quarter revenue growth is expected to have been led by Oak Street Health.

CVS Caremark pharmacy benefit manager ("PBM") continues to strengthen its value proposition by driving meaningful savings and the lowest net cost for its clients and members. During the quarter, Caremark announced a comprehensive approach to GLP-1 support across more than 9,000 CVS Pharmacy locations and MinuteClinic, with virtual access available in nearly all states. New offerings include expanded pharmacy support to help patients access and stay on these treatments, along with a new $49 MinuteClinic virtual visit for eligible adults seeking GLP-1 therapy.

Effective June 1, 2026, Caremark has removed the new-to-market block on Foundayo (orforglipron), a new oral GLP-1 therapy from Eli Lilly and Company, where approved for coverage by plans.

The Zacks Consensus Estimate projects a 3.9% year-over-year increase in Health Services revenues. 

Lastly, the Pharmacy & Consumer Wellness segment may have made a strong contribution to the quarter’s revenues, driven by pharmacy drug mix and brand inflation.Higher prescription volumes, including contributions from CVS Health’s Rite Aid asset acquisitions, are also expected to have supported growth.

However, similar to the prior quarter, the gains may have been largely offset by the impact of regulatory-related price reductions on select drugs, recent generic drug introductions and pharmacy reimbursement pressure.

The Zacks Consensus Estimate expects Pharmacy & Consumer Wellness revenues to stay flat year over year. 

CVS: Price Performance & Valuation

Year to date, CVS shares have rallied 31.6%, significantly outpacing the industry’s modest 0.1% growth and the 0.9% decline of the Zacks Medical sector. The stock has also performed better than its peers, UnitedHealth Group UNH and Elevance Health ELV, over the same period.

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CVS is trading at a forward 12-month Price/Sales (P/S) of 0.32X, lower than the industry average of 0.52X. The stock sits with a Value Score of A at present. 

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Meanwhile, UnitedHealth Group and Elevance Health currently have a P/S of 0.83X and 0.41X, respectively.

CVS Health: Investment Consideration

CVS has maintained solid momentum in 2026. One of the company's top priorities is to return Aetna to its target margins and regain its leadership position. Aetna now has the fewest medical services subject to prior authorization in the industry, with more than 95% of eligible prior authorizations completed within 24 hours and more than 80% approved in real time. In the Centers for Medicare & Medicaid Services' 2026 Star Ratings, Aetna ranked among the top national payers with more than 81% of its Medicare Advantage members in plans rated 4 stars or higher.  More than 63% were enrolled in 4.5-star plans.

At the same time, CVS is rolling out innovations that simplify the pharmacy experience, accelerate biosimilar adoption and improve cost predictability. Effective July 1, 2026, it replaced the brand Stelara with lower-cost biosimilars across its commercial template formularies. Management expects to use the same playbook that drove the successful Humira transition, converting more than 90% of eligible patients. The goal is to achieve similar conversion rates and zero out-of-pocket costs for most customers.

Technology also remains another strategic focus. Later this year, CVS plans to launch Health100, an AI-native, technology and service platform that allows any payer, PBM, pharmacy or provider to seamlessly connect. The Health100app is designed to give consumers a fully integrated health care experience, regardless of the banner on their pharmacy or the brand of their benefit card.

Endnote

CVS Health’s upcoming second-quarter 2026 results are expected to reflect continued progress at Aetna, alongside favorable contributions from Health Services and Pharmacy & Consumer Wellness segments. Improved profitability in Health Care Benefits is also expected to have supported the company's bottom-line performance. So far this year, CVS has stood out by outpacing its industry, broader sector and close peers. The company also looks poised to build on its solid earnings surprise track record. Supported by its cheaper valuation, the stock appears to be a worthwhile investment option for now.

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

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