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CVS' Q2 EPS Gains From Improved Health Care Benefits Profitability
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Key Takeaways
CVS Health's Q2 EPS rose more than 40%, driven mainly by improved Health Care Benefits profitability.
CVS' Health Care Benefits AOI improved by more than $2 billion year over year so far in 2026.
CVS now expects 2026 Health Care Benefits AOI of $5.03B-$5.37B, over $1B above prior guidance.
In the second quarter of 2026, CVS Health (CVS - Free Report) delivered adjusted earnings per share (EPS) of $2.58, up more than 40% from the prior-year quarter. The strong earnings growth was mainly driven by improved adjusted operating income in the Health Care Benefits segment.
The division generated more than $37 billion in revenues, rising more than 3% year over year, as growth in the government business more than offset some of the impact of CVS’ planned exit from the Individual Exchange business in 2026. Medical membership was approximately 26 million at quarter end, flat sequentially but down roughly 700,000 from the prior-year quarter. The decline mainly reflected CVS’ Individual Exchange exit, partly offset by gains in commercial fee-based membership.
Adjusted operating income (AOI) came in at approximately $2.4 billion, while the medical benefit ratio (MBR) was 87.4%. Both improved meaningfully from the prior-year quarter as CVS continued executing its margin recovery plan.
CVS Health is beginning to see the results of actions taken at Aetna over the past two years. The company has strengthened its clinical programs, improved operations and maintained a disciplined approach to cost management and pricing. Those efforts have helped drive more than $2 billion in year-over-year AOI improvement so far this year.
The quarter’s results also included the impact of changes in the Individual Exchange risk adjustment position for the 2025 plan year and favorable prior-year development. These items contributed approximately 140 basis points to the MBR. Even excluding these items, CVS Health’s core performance came in ahead of expectations, driven largely by Medicare, owing to strong medical cost management and disciplined pricing. Medicaid and Commercial businesses performed in line with expectations.
Management now expects Health Care Benefits AOI of $5.03 billion to $5.37 billion for 2026, more than $1 billion above its previous guidance.
Key Developments Among CVS Health’s Peers
The Cigna Group (CI - Free Report) delivered total revenues of $71.7 billion and adjusted EPS of $7.78 in the second quarter of 2026, up 7% and 8.1%, respectively. Specialty and Care Services benefited from secular tailwinds, along with strength at Accredo and its broader specialty pharmacy services. Cigna Healthcare also delivered results ahead of expectations, supported by customer growth in the U.S. employer business, disciplined pricing and execution, including in the stop-loss business.
Walmart (WMT - Free Report) completed the acquisition of Vibe.co, a leading self-service streaming TV advertising platform, earlier this month. The addition will help the company’s U.S. commerce media business, Walmart Connect, bring to market new and distinct ways for advertisers to plan, buy and measure streaming TV advertising.
CVS’ Price Performance, Valuation and Estimates
Over the past year, CVS Health shares have risen 38.4% compared with the industry’s 12.2% growth.
Image Source: Zacks Investment Research
In terms of valuation, CVS shares are trading at a forward sales multiple of 0.29 over the past five years compared with its 0.52 industry average.
Image Source: Zacks Investment Research
Here’s how estimates for the company’s earnings have been shaping up.
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CVS' Q2 EPS Gains From Improved Health Care Benefits Profitability
Key Takeaways
In the second quarter of 2026, CVS Health (CVS - Free Report) delivered adjusted earnings per share (EPS) of $2.58, up more than 40% from the prior-year quarter. The strong earnings growth was mainly driven by improved adjusted operating income in the Health Care Benefits segment.
The division generated more than $37 billion in revenues, rising more than 3% year over year, as growth in the government business more than offset some of the impact of CVS’ planned exit from the Individual Exchange business in 2026. Medical membership was approximately 26 million at quarter end, flat sequentially but down roughly 700,000 from the prior-year quarter. The decline mainly reflected CVS’ Individual Exchange exit, partly offset by gains in commercial fee-based membership.
Adjusted operating income (AOI) came in at approximately $2.4 billion, while the medical benefit ratio (MBR) was 87.4%. Both improved meaningfully from the prior-year quarter as CVS continued executing its margin recovery plan.
CVS Health is beginning to see the results of actions taken at Aetna over the past two years. The company has strengthened its clinical programs, improved operations and maintained a disciplined approach to cost management and pricing. Those efforts have helped drive more than $2 billion in year-over-year AOI improvement so far this year.
The quarter’s results also included the impact of changes in the Individual Exchange risk adjustment position for the 2025 plan year and favorable prior-year development. These items contributed approximately 140 basis points to the MBR. Even excluding these items, CVS Health’s core performance came in ahead of expectations, driven largely by Medicare, owing to strong medical cost management and disciplined pricing. Medicaid and Commercial businesses performed in line with expectations.
Management now expects Health Care Benefits AOI of $5.03 billion to $5.37 billion for 2026, more than $1 billion above its previous guidance.
Key Developments Among CVS Health’s Peers
The Cigna Group (CI - Free Report) delivered total revenues of $71.7 billion and adjusted EPS of $7.78 in the second quarter of 2026, up 7% and 8.1%, respectively. Specialty and Care Services benefited from secular tailwinds, along with strength at Accredo and its broader specialty pharmacy services. Cigna Healthcare also delivered results ahead of expectations, supported by customer growth in the U.S. employer business, disciplined pricing and execution, including in the stop-loss business.
Walmart (WMT - Free Report) completed the acquisition of Vibe.co, a leading self-service streaming TV advertising platform, earlier this month. The addition will help the company’s U.S. commerce media business, Walmart Connect, bring to market new and distinct ways for advertisers to plan, buy and measure streaming TV advertising.
CVS’ Price Performance, Valuation and Estimates
Over the past year, CVS Health shares have risen 38.4% compared with the industry’s 12.2% growth.
Image Source: Zacks Investment Research
In terms of valuation, CVS shares are trading at a forward sales multiple of 0.29 over the past five years compared with its 0.52 industry average.
Image Source: Zacks Investment Research
Here’s how estimates for the company’s earnings have been shaping up.
Image Source: Zacks Investment Research
CVS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.