CVS raises annual profit forecast on improved drug revenues

CVS Health raised its 2026 annual profit forecast to $7.90-$8.10 per share, surpassing analysts' expectations of $7.45, driven by a more profitable pharmacy business and bonus payments.

CVS Health on Wednesday raised its annual ‌profit ​forecast to reflect a better-than-expected second quarter marked by a more profitable mix of drugs in its pharmacy business and bonus payments for its highly rated government health plans.

The company forecast 2026 adjusted profit per share in ‌the range of $7.90 to $8.10 compared to prior expectations of $7.30 to $7.50. Analysts expect full-year earnings per share of $7.45, according to data compiled by LSEG. On a quarterly basis, CVS, which operates a retail pharmacy, an insurer and a pharmacy benefits manager, topped analysts' earnings per share estimates of $1.85, recording adjusted second-quarter profit of $2.58 per share.

CVS also announced ‌that its MinuteClinic, which provides walk-in and virtual care services, will offer $29 appointments for adults seeking weight-loss drug appointments for medicines including Novo Nordisk's Wegovy and ‌Eli Lilly's Foundayo and Zepbound. The financial report marks CVS' sixth consecutive quarterly beat of Wall Street estimates and reflects progress in restoring investor confidence, particularly in its Aetna insurance business, where it had missed targets for several quarters in 2024.

Aetna reported a quarterly medical loss ratio, or the percentage of premiums spent on medical care, of 87.4% from 89.9% a year ago, compared to ⁠estimates of ​90.03%. "We’ve continued to make progress on ⁠our multi-year margin recovery in Aetna, and this has been boosted by our multi-year industry-leading Star ratings, a measurement of member outcomes and experience," a spokesperson for CVS Health said.

In the Medicare ⁠program for adults aged 65 and older, the government rewards plans with high ratings, called Star ratings, with bonus payments. CVS increased operating profits at the company's health services unit, ​which also includes clinics, by 10% to $1.73 billion from $1.58 billion, driven by changes to how the company operates its Oak Street primary care business. The ⁠company this year said it decided to slow expansion plans for Oak Street, which provides services to older adults, and plans to close 16 underperforming locations.

CVS first raised its guidance this year ⁠after ​beating first-quarter estimates and controlling medical costs. The company has said medical costs in its Aetna health insurance business are above historical levels. The results from the company were broadly in line with rival UnitedHealth. Its peer lifted its forecast in July on improved medical cost controls, raising the bar for ⁠health insurers this earnings season.

Health insurers have faced persistently high costs for the last three years due to increased use of healthcare services across the government-backed plans. ⁠They have been raising prices, cutting benefits ⁠and pulling less profitable plans from the market. CVS said that while it was raising its outlook for the year, it remained cautious in light of continued elevated cost trends and the potential for a difficult macroeconomic environment.

Revenue on ‌a quarterly basis rose ‌to $106.1 billion from $98.9 billion, compared to expectations of $100.11 billion.