CVS Health’s shares jumped in trade prior to the market on Thursday after the health care giant and the pharmacy declared better than expected profits in the second quarter and raised its annual forecasts, marking its third consecutive quarter of the estimates of Wall Street.
The stock increased by more than 8% during prior hours.
The company posted an adjusted profit of $ 1.81 per share for the three months finished in June, beating the average estimate of $ 1.46 of analysts interviewed per factset.
Revenues increased to $ 98.9 billion, also ahead of the expectations of $ 94.5 billion.
Failed by solid results, CVS increased its orientations on annual profits to $ 6.30 and $ 6.40 per share, from the previous range of $ 6 to $ 6.20.
The company has also increased its projection of cash flow for 2025 to at least $ 7.5 billion, compared to around $ 7 billion.
CEO Joyner Flags Price and disciplined operations
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David Joyner, who was appointed CEO at the end of 2024, said that the quarter had not surprised and suggested that the challenges of Medicare Advantage of CVS had been planned and better managed this time.
“Nothing is a surprise for us this quarter,” said Joyner in an interview with Reuters.
He said AETNA has experienced higher costs in its health insurance plans sold through groups such as employers or retirees, but these costs were expected with precision.
He added that Andna would reproduce half of these group plans for 2026 to better reflect medical costs.
The company has also seen improved performance both in its pharmacy benefits management operations and in its national pharmacy channel.
“CVS has had one of the cleanest prints we have seen this season of gains so far,” said Elizabeth Anderson, Analyst of Evercore Isi.
The performance of the segment shows signs of recovery
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CVS operates in three primary segments: the benefits of health care (which includes Aetna), health services (which cover the activity management activity of the pharmacy) and its retail and consumer well-being chain.
The division of health care services said a medical cost ratio of 89.9%, slightly better than 90.5% of analysts expected.
This metric follows the percentage of premium income spent on patient care – a key profitability measure for insurers.
Although the company continues to navigate the increase in health care costs, especially in its health insurance offers, it is not alone.
Unitedhealth and Humana also faced opposite winds in the same segment.
Investors find trust after an approximate patch
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CVS shares climbed 8.6% to $ 67.66 in exchange for pre-commercial on Thursday.
The company’s shares have increased by 39% so far this year, considerably surpascing the wider S&P 500 health care sector, which is down 2%.
It is a striking turnaround for a company that saw its stock lose more than half of its value between the beginning of 2022 and the end of 2024.
During this period, CVs experienced low performance in its retail pharmacy, increased costs in your insurance arm and increased regulatory attention on its pharmacy service manager.
The latest results added to a budding rally that started with the fourth revenues of the company in 2024 and gained land in May when CVS again exceeded estimates for the first quarter.
Despite the earnings, the stock remains almost 40% below its peak at the end of 2021.
It remains to be seen if CVS can maintain its recovery, but the results of Thursday gave investors a renewed reason to believe in the history of recovery of the company.
