CVS Health's 2025 Q2 Earnings Call: Key Contradictions Unveiled on Medicare Advantage and Oak Street Performance

Medicare Advantage margin expectations, Oak Street Health performance, Medicare Advantage margins and trend assumptions, Part D performance and trend assumptions, PDR expectations for Medicare Advantage are the key contradictions discussed in CVS Health's latest 2025Q2 earnings call.



Revenue and Segment Performance:
- CVS Health reported revenues of nearly $99 billion for the second quarter of 2025, an increase of approximately 8% over the prior year quarter.
- Growth was driven by revenue increases across all segments, with notable contributions from Health Care Benefits and Pharmacy and Consumer Wellness.

Health Care Benefits Performance:
- The Health Care Benefits segment generated over $36 billion in revenue, an increase of over 11% from the prior year quarter.
- The segment's adjusted operating income rose to approximately $1.3 billion, an increase of nearly 40% from the prior year, primarily attributed to favorable year-over-year impacts on changes to individual exchange risk adjustment estimates and higher favorable prior period development.

Pharmacy and Consumer Wellness Growth:
- The Pharmacy and Consumer Wellness segment's revenues exceeded $33 billion, reflecting an increase of over 12% versus the prior year quarter.
- This increase was driven by pharmacy drug mix, increased prescription and front store volume, and the integration of a portion of Rite Aid scripts.

HCD Segment Challenges:
- The Health Services segment's adjusted operating income decreased approximately 18% from the prior year quarter, primarily due to continued pharmacy client price improvements and a higher medical benefit ratio in the health care delivery business.
- Despite this, pharmacy drug mix and brand inflation contributed to revenue growth in this segment.