CVS Health Stock Climbs About 5% as Turnaround Appears to Be Working

TLDR

• CVS reported adjusted earnings per share (EPS) of $2.57, surpassing the analyst projection of $2.18, marking its fifth consecutive quarter exceeding expectations.
• Revenue reached $100.4 billion, significantly exceeding Wall Street’s forecast of $95 billion.
• The medical benefit ratio improved to 84.6%, a decrease from 87.3% recorded a year prior.
• Full-year 2026 adjusted EPS guidance was increased to a range of $7.30–$7.50, up from the previous range of $7.00–$7.20.
• CVS shares rose by 4.9% in premarket trading subsequent to the announcement of these results.

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(SeaPRwire) –   Shares of CVS Health surged by 4.9% in premarket trading on Wednesday, following the company’s robust first-quarter performance and an upward revision of its full-year outlook.

CVS Health Corporation, CVS

Adjusted earnings reached $2.57 per share, exceeding the analyst consensus of $2.18. Furthermore, revenue totaled $100.4 billion, surpassing Wall Street’s expectation of $95 billion.

This represents CVS’s fifth consecutive quarter of outperforming estimates. The company has adopted a conservative stance on its guidance as it navigates a comprehensive turnaround initiative after a challenging 2024.

$CVS Q1’26 EARNINGS HIGHLIGHTS

Revenue: $100.4B (Est. $95.02B) ; +6.2% YoY
Adj. EPS: $2.57 (Est. $2.21)
Adjusted Operating Income: $5.15B; +12.5% YoY
Health Care Benefits MBR: 84.6%
Operating Cash Flow: $4.2B

FY 2026 Guide:
Adj. EPS: $7.30-$7.50 (Est.… pic.twitter.com/DIU4tJqgUD

— Wall St Engine (@wallstengine) May 6, 2026

CVS elevated its adjusted EPS forecast for the full year 2026 to between $7.30 and $7.50, an increase from the prior range of $7.00 to $7.20. Additionally, the company increased its target for cash flow from operations to a minimum of $9.5 billion, up from at least $9 billion.

Prior to Wednesday, the stock had seen a modest year-to-date gain of only 1.7%, lagging behind the S&P 500’s 6% increase.

Medical Costs Improve at Aetna

A notable figure was the medical benefit ratio within its Aetna insurance division, which stood at 84.6%. This was considerably lower than the 87.58% analysts had anticipated and represented a decrease from 87.3% reported a year earlier.

This ratio indicates the proportion of premium revenue allocated to actual medical services. A reduced ratio signifies that the insurer retains a larger share. Chief Financial Officer Brian Newman attributed the enhancement to improved forecasting and stringent cost management.

UnitedHealth and Humana similarly surpassed estimates for this metric in the first quarter, suggesting a wider positive trend among Medicare Advantage providers.

In April, the U.S. government announced an average increase of 2.48% in 2027 payments to Medicare Advantage insurers. Newman noted that this increase remains insufficient to cover anticipated cost escalations for the upcoming year, potentially requiring CVS to modify its pricing or benefits.

PBM Revenue Climbs, Pharmacy Profits Slip

CVS’s health services division, encompassing its Caremark pharmacy benefit manager, recorded an 11% rise in revenue, reaching $48.2 billion. Operating income for the segment was $1.34 billion, aligning with projections.

According to Newman, a more advantageous drug mix contributed to Caremark’s improved performance. Analyst Michael Cherny from Leerink had previously highlighted that achieving $1.3 billion in adjusted operating income for this segment would be crucial for re-establishing investor confidence in the unit.

Pharmacy benefit managers (PBMs) have been under continuous scrutiny from legislators and regulatory bodies regarding drug pricing methods. CVS is currently involved in a pending FTC settlement concerning accusations that its PBM inflated insulin prices, claims which the company has refuted.

Furthermore, CVS is opposing a Tennessee bill that seeks to prohibit PBMs from owning pharmacies within the state. This legislation has cleared the legislature and awaits the governor’s decision.

The retail pharmacy segment saw a 5% revenue increase in 2025, following the integration of pharmacies from Rite Aid and the addition of 9 million customers. However, the unit’s operating income declined by 8.8% year-over-year in the first quarter.

CVS attributed the pressures on its pharmacy business to several factors, including regulatory adjustments impacting specific drug prices, reduced cold and flu prevalence, and weather-related disruptions, such as store closures caused by snow.