CVS Health Thursday reported $1 billion in second quarter net income as the company begins to get a handle on the health benefit costs that have dogged its Aetna health insurance business as well as industry rivals.
Though the company’s medical benefit ratio, which is the percentage of premium revenue that goes toward medical costs, is still considered high by industry standards, it rose only slightly in the second quarter to 89.9% compared to 89.6% in the year ago period. And for the six-month period, the medical benefit ratio was 88.6% compared to 90% for the first six months of last year.
“We are encouraged by a second consecutive quarter of solid 2025 results while we continue to navigate a dynamic environment,” said CVS Health’s chief financial officer, Brian Newman.
CVS’ net income fell to $1.02 billion, or 80 cents a share, compared to $1.77 billion, or $1.41 a share, in the second quarter of last year. CVS net income was hurt in the quarter by the impact of litigation charges that include penalties against the company’s Omnicare long-term care pharmacy over allegations the unit billed the government for false claims.
Still, CVS said adjusted earnings per share of $1.81 “remained relatively consistent” compared to the prior year’s $1.83 adjusted earnings per share. “The company’s financial results reflect improved operating performance in the Health Care Benefits and Pharmacy & Consumer Wellness segments, largely offset by a decline in the Health Services segment,” CVS said in its earnings report.
CVS, which has more than 26 million members in its Aetna brand health insurance plans, said total membership decreased 358,000 since March 31, “reflecting the previously announced membership declines in the individual exchange product line.”
CVS said earlier this year it would be exiting the individual business under the Affordable Care Act effective with the 2026 benefit year. CVS has about 1 million people in its Aetna brand individual health insurance plans spread across 17 states.
Total revenues in the company’s health care benefits segment increased 11.6% to nearly $36.3 billion in the second quarter “compared to the prior year primarily driven by increases in the Government business, largely due to the impact of the Inflation Reduction Act on the Medicare Part D program,” CVS said. “Adjusted operating income increased 39.4% (to $1.3 billion) for the three months ended June 30, 2025 compared to the prior year primarily driven by the favorable year-over-year impact of changes to the Company’s individual exchange business risk adjustment estimates, improved underlying performance in the Government business and higher favorable prior period development.”
CVS, which also operates about 9,000 retail pharmacy locations, more than 1,000 MinuteClinics in its drugstores and one of the nation’s largest pharmacy benefit companies known as Caremark, said total company revenues increased 8.4% to $98.9 billion compared to $91.2 billion in the year-ago period, “driven by revenue growth across all operating segments,” CVS said in its earnings report.
“What people want most — a connected, simpler health care experience — is what CVS Health uniquely provides. For the 185 million people we serve, we deliver better access, greater affordability and aligned advocacy. Our strong performance demonstrates the continued focus we have on operational and financial improvement across our businesses, led by a significant and durable recovery at Aetna, strong retention at CVS Caremark and growth and momentum at CVS Pharmacy.”
In the company’s pharmacy and wellness segment, total revenues increased 12.5% to $33.58 billion compared to the prior year “primarily driven by pharmacy drug mix and increased prescription and front store volume, partially offset by continued pharmacy reimbursement pressure,” CVS said. Adjusted operating income increased 7.6% to $1.33 billion “compared to the prior year primarily driven by increased prescription and front store volume, partially offset by continued pharmacy reimbursement pressure.”
