CVS Health Updates Outlook After Mixed Quarter

CVS Health reported second-quarter 2025 GAAP diluted earnings per share (EPS) of $0.80, down from $2.86 in the first quarter and $1.41 in the same quarter last year, in their Q2 earnings call this morning.

The company attributed the decline to $833 million in litigation charges tied to legacy business practices, including pre-acquisition dispensing activities by Omnicare, now part of CVS Health, and past PBM remuneration reporting methods—both of which were challenged under the False Claims Act.

Although earnings declined, adjusted EPS was $1.81—up from $1.67 in the first quarter and close to $1.83 from the same time last year. Total revenue grew 8.4% compared to a year ago, reaching $98.9 billion.

CVS Health reports Q2 earnings decline due to litigation charges but boost adjusted EPS guidance, highlighting transformation and growth in healthcare services. © CVS Health

During the call, it was shared that CVS Health delivered an adjusted operating income of $3.8 billion and adjusted earnings per share of $1.81. The company again increased their full-year 2025 adjusted EPS guidance to a range of $6.30 to $6.40, up from their previous range of $6 to $6.20.

CVS did, however, revise its GAAP EPS guidance downward to a range of $3.84 to $3.94, compared to the prior estimate of $4.23 to $4.43. The company also raised its full-year revenue forecast to at least $391.5 billion and expects to generate over $7.5 billion in cash flow from operations.

CVS Health president and CEO J. David Joyner framed the company’s financial performance as part of a larger transformation strategy.

"We are pleased to report another consecutive quarter of solid results as we execute against our ambition of becoming America’s most trusted healthcare company,” Joyner said in the call. “We are seeing the impact of our intense focus on execution within our Aetna and pharmacy businesses while managing incremental pressure in healthcare delivery.”

He highlighted that CVS Health’s scale and integration position it to address the most pressing challenges in U.S. healthcare.

“The breadth of these problems means that they can’t be addressed with a fragmented, piecemeal approach,” he said. “Instead, it requires holistic solutions implemented by companies with the necessary reach, capabilities, and focus to execute on them.”

Joyner also acknowledged the early signs of improvement in their health insurance provider, Aetna, particularly after efforts to streamline operations and enhance customer experience.

“We realigned the organization and strengthened our talent with a clear focus on creating distinction in the marketplace,” he said. “We’re starting to see the results of these efforts, delivering better experiences while also allowing us to better navigate this elevated utilization environment.”

Chief Financial Officer Brian Newman spoke on his first earnings call with CVS after being appointed to the role in April 2025.

Newman noted the resilience of CVS’s diverse business model, even when costs rise.

“Adjusted operating income rose nearly 2% from the prior year quarter, driven by increases in our Health Care Benefits and Pharmacy & Consumer Wellness segments,” he said. “That was partially offset by a decline in our Health Services segment.”

The Health Services segment, which includes pharmacy benefit manager CVS Caremark and Oak Street Health, experienced earnings pressure from a higher medical benefit ratio. Still, Newman highlighted the long-term potential of those assets.

“We are working with urgency to further strengthen this business and ensure seniors can benefit from this industry-leading model,” he said.

Cash flow also remained a bright spot.

“We generated cash flows from operations of approximately $6.5 billion in the first half of the year,” Newman said. “While our leverage ratio remains above our long-term targets, it has improved meaningfully since year-end 2024.”

Looking ahead, Joyner said the company is focused on evolving pharmacy reimbursement models and simplifying care delivery.

“We are working tirelessly to be the source of stability as we ensure the communities we serve across America maintain access to their medications,” he said. “We’ve taken a leading role in the industry’s initiative to improve prior authorization and deliver a better experience for providers and patients.”

Joyner said CVS is gaining momentum in a fast-changing environment and remains focused on building trust and setting realistic expectations.

Despite any setbacks, CVS executives expressed confidence in hitting their targets and continuing to push forward with business transformation.

Newman concluded the call by stating that CVS is delivering on its commitments and continues to make clear progress toward realizing the company's embedded earnings power.