CVS Health’s second quarter results surpassed Wall Street’s expectations, with management attributing the outperformance primarily to operational improvements in its Aetna business and continued momentum in pharmacy operations. CEO J. David Joyner highlighted technology-driven process enhancements at Aetna and a focus on customer experience across pharmacy and consumer wellness as key contributors. The company also benefited from market disruption caused by competitor pharmacy closures and successful integration of new prescription volume, which drove higher same-store sales. CFO Brian Newman noted that, despite ongoing reimbursement pressures in retail pharmacy, strategic investments and execution allowed CVS to deliver a solid quarter.
Is now the time to buy CVS? Find out in our full research report (it’s free).
CVS Health (CVS) Q2 CY2025 Highlights:
- Revenue: $98.92 billion vs analyst estimates of $94.11 billion (8.4% year-on-year growth, 5.1% beat)
- Adjusted EPS: $1.81 vs analyst estimates of $1.46 (23.9% beat)
- Adjusted EBITDA: $4.27 billion vs analyst estimates of $3.86 billion (4.3% margin, 10.5% beat)
- Management raised its full-year Adjusted EPS guidance to $6.35 at the midpoint, a 4.1% increase
- Operating Margin: 2.4%, in line with the same quarter last year
- Locations: 8,983.9 at quarter end, down from 9,220 in the same quarter last year
- Same-Store Sales rose 15.4% year on year (6.4% in the same quarter last year)
- Market Capitalization: $83.09 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CVS Health’s Q2 Earnings Call
- Lisa Gill (JPMorgan): asked about CVS Health’s visibility and confidence in sustaining Aetna’s improvement. CEO J. David Joyner pointed to ongoing operational enhancements and innovation initiatives, while CFO Brian Newman noted a cautious stance given recent one-time benefits and elevated medical trends.
- Stephen Baxter (Wells Fargo): inquired if Group Medicare Advantage contracts can return to target margins in a single renewal cycle. Steven Hale Nelson, President of Aetna, replied that while target margins are the goal, achieving them may require more than one contract cycle due to industry dynamics.
- George Hill (Deutsche Bank): questioned the sustainability of recent pharmacy segment gains and the impact of Rite Aid file acquisitions. Chief Pharmacy Officer Prem S. Shah emphasized long-term strategy, technology investments, and market disruption benefits, with management remaining cautious on future consumer trends.
- Elizabeth Anderson (Evercore): sought clarity on the reimbursement landscape as CVS transitions to cost-based models for government programs. Shah stated that CostVantage should bring more stability and transparency, but noted ongoing contract negotiations and the need for continued progress.
- Andrew Mok (Barclays): asked about the disconnect between strong Medicare results in Aetna and ongoing challenges at Oak Street Health. Management explained differences in patient mix and plan design, highlighting ongoing investments in leadership and technology to address Oak Street’s elevated costs.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be focused on (1) signs of continued margin recovery and operational improvement in Aetna, (2) measurable progress in expanding the cost-based pharmacy model to government segments, and (3) stabilization of medical cost trends in value-based care delivery. Developments in pharmacy benefit management innovation and the pace of front store retail recovery will also be important signals for assessing CVS Health’s execution against its strategy.
CVS Health currently trades at $65.50, up from $62.32 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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