CVS Health (NYSE:CVS) reported first-quarter results that surpassed Wall Street expectations and raised its outlook for the full year, sending shares more than 4% higher in premarket trading.
The healthcare group posted adjusted earnings of $2.57 per share, beating analyst forecasts of $2.21 by $0.36.
Revenue increased 6.2% year over year to $100.4 billion, ahead of consensus estimates of $95.02 billion.
Health Care Benefits division drives earnings improvement
The company’s strongest performance came from its Health Care Benefits segment, where adjusted operating income surged 52.6% to $3.0 billion.
CVS said the improvement reflected continued progress in its margin recovery efforts.
The segment’s medical benefit ratio improved to 84.6%, down from 87.3% a year earlier, supported by stronger underlying performance in the Government business.
Company raises earnings and cash flow guidance
CVS increased its full-year 2026 adjusted earnings-per-share guidance to a range of $7.30 to $7.50, compared with previous guidance of $7.00 to $7.20.
The midpoint of the updated forecast exceeded analyst expectations of $7.16 per share.
The company also lifted its operating cash flow guidance to at least $9.5 billion, up from its prior forecast of at least $9.0 billion.
Shares gained 4.1% following the announcement.
“Our positive performance is driven by strong execution across our enterprise,” said David Joyner, chairman and chief executive officer of CVS Health.
“We will continue to build momentum through delivering on our strategy and a steadfast focus on our purpose – to simplify health care one person, one family and one community at a time.”
Other business segments face margin pressure
Despite the strong overall results, CVS reported weaker profitability in several other business units.
Adjusted operating income in the Health Services division fell 7.1% to $1.5 billion, primarily due to ongoing pricing improvements for pharmacy clients.
Meanwhile, the Pharmacy & Consumer Wellness segment recorded an 8.8% decline in adjusted operating income to $1.2 billion, as pharmacy reimbursement pressures continued to weigh on margins.