CVS Q2 Earnings Call Pairs Aetna Recovery With 2027 PBM Risks

CVS Raises 2026 Outlook on Aetna Recovery

Chairman and chief executive officer David Joyner said every operating segment grew earnings and exceeded internal expectations. CVS raised adjusted earnings guidance to $7.9-$8.1.

Chief financial officer Brian Newman increased the revenue outlook to at least $414 billion and operating cash flow guidance to at least $11.5 billion. Enterprise adjusted operating income is now projected at $16.58-$16.92 billion.

Health Care Benefits drove the revision. Its adjusted operating income outlook rose by more than $1 billion to $5.03-$5.37 billion, while the full-year medical benefit ratio is expected at 89.75%, plus or minus 25 basis points.

CVS Health Flags 2027 PBM Pressure

Newman pulled forward preliminary 2027 commentary, calling adjusted earnings of at least $8.44 reasonable. That represents about 13% growth from a $7.46 baseline and assumes only dilution-offsetting repurchases.

A Leerink analyst pressed management on 340B and Caremark’s selling season. Executive vice president and group president Prem Shah said retention is tracking below historical levels but closer to industry norms, while customer market exits will also reduce membership.

A Barclays analyst asked what was driving 340B pressure. Shah cited manufacturer restrictions on covered entities and large specialty drugs becoming generic. Broader Caremark performance offset the pressure in the quarter, but management expects a headwind in 2027.

CVS Defends Medicare and Retail Durability

Health Care Benefits produced $2.426 billion of adjusted operating income and an 87.4% medical benefit ratio. About $500 million, or 140 basis points, came from risk-adjustment changes and favorable prior-year development, though Newman said core performance still exceeded expectations.

A JPMorgan analyst asked about 2027 Medicare bids. Aetna president Steven Nelson cited lower-than-expected membership contraction, strong star scores and disciplined medical-cost management. Group Medicare Advantage has renewed about 75% of its book.

A Wolfe Research analyst questioned retail durability as Rite Aid-related prescription gains normalize. Shah said CVS CostVantage is helping move the business toward a more consistent margin profile, while improved service should support above-market prescription growth across 9,000 stores.

CVS Health Expands GLP-1 Access Strategy

Joyner framed GLP-1s as an enterprise opportunity spanning funded benefits through Aetna and Caremark and cash-pay access through CVS Pharmacy and MinuteClinic.

Shah acknowledged CVS was slightly slow entering the direct-to-patient market but said the company has repositioned the offering. MinuteClinic weight-management visits are moving from $49 to $29, while cash-pay therapy access starts at $149 for eligible patients.

Shah said the strategy contributed to Pharmacy and Consumer Wellness strength and should support the second half. Management also highlighted expanded formularies, Medicare Bridge and patient support from nearly 30,000 pharmacists.

CVS Puts AI Behind Savings and Growth

A Morgan Stanley analyst asked about technology spending and returns. Joyner said CVS is moving toward a consumer-based health care technology model while keeping human interaction and privacy central to deployment.

Nelson said Aetna’s claims platform cuts processing time by more than 20%. AI reduced advocate case preparation from 90 minutes to two minutes, while 83% of prior authorizations are approved in real time and more than 95% within 24 hours.

Shah said conversational AI removed hundreds of millions of pharmacy calls and redirected 1 million pharmacist hours toward patient care. Newman said technology and AI contributed to more than $1 billion of operating-expense savings.

CVS Health Maintains a Disciplined Posture

Management’s tone was confident on 2026 and candid about 2027 trade-offs. Executives emphasized pricing, contracting discipline and measured capital deployment rather than pursuing membership without adequate returns.

The stated path combines Aetna margin recovery, retail execution, specialty pharmacy growth and technology investment while preparing for 340B pressure and Caremark membership declines.

Zacks Signals Favor Value and Momentum

CVS carries a Zacks Rank #2 (Buy), with a Value Score of A, Momentum Score of A, Growth Score of B and a VGM Score of A. Zacks methodology views Rank #1 (Strong Buy) and 2 stocks with an A or B Style Score as having a more favorable near-term performance profile.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The A VGM Score reflects strength across the combined style factors. The Zacks Rank can change as earnings estimates are revised following the reported results.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research