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CVS Health raised its full-year 2026 profit forecast on Wednesday after first-quarter results topped Wall Street estimates, driven by improved medical cost controls at its Aetna insurance unit.
For the full year, CVS now targets adjusted earnings per share between $7.30 and $7.50, compared with previous guidance of $7.00 to $7.20. Full-year revenue guidance was raised to at least $405 billion from at least $400 billion. Cash flow from operations guidance also increased to at least $9.5 billion from at least $9.0 billion.
First-quarter revenue reached $100.4 billion, a 6.2% year-over-year increase, with CVS reporting adjusted earnings of $2.57 per share. Wall Street had penciled in adjusted earnings of $2.20 per share and revenue of $95.09 billion, based on analyst surveys cited by CNBC.
With the results, CVS extended its run of topping Street expectations to five straight quarters, according to Reuters. A CEO change had come in 2024, a year when the company repeatedly fell short of Wall Street expectations.
The clearest sign of progress came from Aetna, CVS's health insurance segment. Aetna's medical benefit ratio, which tracks how much of collected premiums go toward paying claims, came in at 84.6%, down from 87.3% in the prior-year period. When that figure declines, it indicates the insurer is retaining more of its premium revenue after covering medical expenses. Analysts had expected a ratio of 86.3%, according to CNBC. Adjusted operating income for the segment rose 52.6% to $3.04 billion.
CFO Brian Newman pointed to better internal forecasting tools and structural changes inside Aetna as key reasons for the improved results. "We're improving our capability of forecasting, so the cost trend did not surprise me," Newman told Reuters. While medical costs have not come down, Newman said the company is deploying internal initiatives aimed at trimming operational expenses.
Newman told CNBC that Aetna's momentum — which he described as "the tailwinds we're seeing" — accounts for the bulk of the raised revenue target, even as the company keeps a careful eye on persistently high medical costs for the remainder of the year.
Revenue from the health services segment, home to pharmacy benefit manager Caremark, totaled $48.24 billion, an 11% jump compared with the same quarter last year. A more profitable mix of drugs boosted earnings at Caremark, Newman said.
Sales at the pharmacy and consumer wellness division, covering roughly 9,000 store locations, came to $31.99 billion, little changed from the year-ago quarter. Adjusted operating income in that segment dropped 8.8%, as the unit absorbed headwinds from tighter pharmacy reimbursements, government-mandated drug pricing adjustments, a lighter flu season, and temporary closures caused by winter weather, CVS said.
On a GAAP basis, quarterly earnings came to $2.94 billion, or $2.30 per diluted share, up from $1.78 billion, or $1.41 per share, in the first quarter of 2025.
CVS stock rose about 6% before the opening bell on Wednesday.