CVS Health gains after Q2 beat despite rising medical costs

CVS Health (NYSE:CVS) added ~8% in the premarket on Thursday after the managed care giant exceeded Street forecasts with its Q2 2025 financials as its insurance segment outperformed despite an industrywide trend of rising medical costs.

UnitedHealth (UNH), the leading health insurer in the U.S., lost ~7% on Tuesday after its earnings for Q2 2025 fell short of analysts’ expectations amid a sharp increase in its medical care ratio during the quarter.

While CVS Health (NYSE:CVS) added $98.9B in revenue for the quarter with ~9% YoY growth, exceeding the consensus by $4.33B, its medical benefit ratio in the Health Care Benefits segment, which houses its health insurer Aetna, rose 30 bps to 89.9%.

However, the company attributed the strong Q2 results to the Health Care Benefits segment and its Pharmacy & Consumer Wellness division, which includes its pharmacy operations.

“The Company’s financial results reflect improved operating performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments, largely offset by a decline in the Health Services segment,” CVS said.

While the Health Care Benefits segment added $36.2B to the topline with ~12% YoY growth, its Pharmacy & Consumer Wellness segment recorded $33.6B in revenue during the period as prescriptions filled increased 4.2% on a 30-day equivalent basis.

CVS’ Health Services segment, which operates the company’s pharmacy benefit manager Caremark, added $46.4B in revenue with ~10% YoY growth, mainly due to pharmacy drug mix and brand inflation.

However, the company’s adjusted earnings remained relatively unchanged from the prior year at $1.81 while exceeding the consensus by $0.35.

Citing the outperformance of its Health Care Benefits and Pharmacy & Consumer Wellness segments, CVS (NYSE:CVS) lifted its full-year guidance for adjusted earnings per share to $6.30 – $6.40 from $6.00 – $6.20 compared to $6.12 projected by analysts.