CVS Health Corp (NYSE:CVS) stock is trading higher on Thursday after the company reported better-than-expected Q2 earnings and raised its annual guidance.
The company reported second-quarter sales of $98.90 billion on Thursday, beating the consensus of $94.85 billion.
Total revenues increased 8.4% year over year, driven by revenue growth across all segments.
Adjusted earnings of $1.81 per share also beat the analyst estimate of $1.46.
GAAP earnings of $0.80 per share decreased from $1.41 in the prior year, reflecting the impact of two litigation charges associated with CVS’s past business practices.
Operating income decreased 21.8% to $2.38 billion primarily due to $833 million in litigation charges related to two court decisions associated with the company’s past business practices, partially offset by a decrease in acquisition-related integration costs.
Adjusted operating income increased 1.7% to $3.81 billion, driven by increases in the Health Care Benefits and Pharmacy & Consumer Wellness segments, primarily offset by a decline in the Health Services.
The company announced that it would commit $20.0 billion over the next decade to simplify the U.S. healthcare system for American consumers.
Revenues in the Health Care Benefits segment increased 11.6% to $36.26 billion, primarily driven by increases in the Government business, mainly due to the impact of the Inflation Reduction Act on the Medicare Part D program.
The MBR increased to 89.9% compared to 89.6% a year ago, driven by the $471 million (140 basis points) premium deficiency reserve recorded as health care costs described above, primarily offset by the favorable year-over-year impact of changes to the company’s individual exchange business risk adjustment estimates.
Medical membership, at 26.7 million as of June 30, 2025, decreased by 358,000 members compared with March 31, 2025, reflecting the previously announced membership declines in the individual exchange product line.
Health Services segment (offering pharmacy benefit management) sales increased 10.2% to $46.42 billion, primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.
The Pharmacy & Consumer Wellness segment’s sales increased 12.5% to $33.58 billion, driven by a favorable pharmacy drug mix and higher prescription and front-store volume, partially offset by continued pressure on pharmacy reimbursement.
Prescriptions filled increased by 4.2% to 438.1 million, driven by increased utilization.
“We are encouraged by a second consecutive quarter of solid 2025 results, while we continue to navigate a dynamic environment,” said Brian Newman, CFO of CVS Health.
Guidance: CVS Health raises its fiscal 2025 adjusted earnings from $6.00-$6.20 per share to $6.30-$6.40 compared to the consensus of $6.13.
Price Action: CVS stock is up 5.38% at $65.56 at the last check on Thursday.
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