CVS Health Corporation has released its financial results for the second quarter of 2025, showing an increase in revenues but a drop in operating income due to significant litigation costs. The company has also revised its full-year guidance for 2025.
For the three months ending June 30, CVS reported total revenues of $36.3 billion, marking an 8.4% increase compared to the same period in 2024. However, operating income fell by 21.8%, largely because of $833 million in litigation charges related to past business practices.
Despite the decline in operating income, adjusted operating income rose by 1.7%, driven by growth in the healthcare benefits segment, even as the health services segment saw a decrease. The company also faced a $31 million increase in interest expenses, a result of higher debt levels from long-term debt issued in December 2024.
CVS Health plans to invest $20 billion over the next decade to improve the U.S. health system. This initiative aims to enhance collaboration among patients, caregivers, and healthcare providers, ultimately aiming to improve patient outcomes.
During the quarter, CVS made significant executive appointments. Brian Newman became the new executive vice president and chief financial officer, previously holding the same position at UPS. Amy Compton-Phillips, MD, was appointed executive vice president and chief medical officer, coming from Press Ganey.
David Joyner, president and CEO of CVS Health, highlighted the company’s strong performance, emphasizing improvements across various business segments, particularly Aetna, CVS Caremark, and CVS Pharmacy.
In other news, CVS confirmed its exit from the Affordable Care Act individual exchange market due to ongoing underperformance and limited profitability in that sector. This decision adds pressure to its Health Care Benefits business.
Aetna, a subsidiary of CVS, continues to hold an A (Excellent) rating from AM Best, reflecting its financial strength in providing health plan services. However, the company is facing increased medical costs and lower Medicare star ratings, which are impacting profitability.
In the healthcare benefits segment, revenue reached $36.3 billion in the second quarter, up from $32.5 billion a year earlier. Adjusted operating income for the segment rose to $1.3 billion, compared to $938 million in the previous year. The medical benefit ratio was slightly higher at 89.9%, and medical membership decreased to 26.7 million from 27.0 million.
For the first half of 2025, total revenue for the healthcare benefits segment was $71.1 billion, up from $64.7 billion in 2024. Adjusted operating income for this period rose to $3.3 billion from $1.7 billion, with the medical benefit ratio improving to 88.6% from 90.0%.
As CVS Health continues to adapt to market changes and challenges, its focus remains on financial improvement and operational efficiency across its diverse business segments.