It has been about a month since the last earnings report for CVS Health (CVS). Shares have added about 8.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CVS Health due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CVS Health Tops Q1 Earnings and Revenue Estimates
CVS Health Corporation delivered first-quarter 2026 adjusted earnings of $2.57 per share, up 14.2% from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $2.21 by 16.38%.
Total revenues rose 6.2% year over year to $100.43 billion, topping the consensus mark of $94.37 billion by 6.41%. Operating execution improved across the enterprise, while days claims payable ended the quarter at 42.9 days.
CVS Posts Higher Revenues on Broad Segment Gains
CVS generated revenue growth across all three operating segments in the first quarter. Health Services remained the largest contributor, with segment revenues of $48.24 billion, up 11% year over year, reflecting pharmacy drug mix and brand inflation.
Health Care Benefits revenues increased 3.3% to $35.97 billion, supported by strength in the Government business. Pharmacy & Consumer Wellness revenues were essentially flat at $31.99 billion, as prescription growth and mix benefits were largely offset by regulatory-related price reductions and reimbursement pressure.
CVS Health Expands Consolidated Margins on Operating Leverage
CVS Health’s consolidated profitability improved as operating income rose faster than the top line. Operating income increased 38.7% year over year to $4.68 billion, supported by higher segment contributions and the absence of items recorded in the prior-year period.
From a margin standpoint, gross profit (total revenues less cost of products sold and health care costs) increased to $15.62 billion from $14.40 billion a year ago. Gross margin expanded 40 basis points (bps) to 15.6%, while operating margin improved 110 bps to 4.7%.
Adjusted operating income rose 12.5% to $5.15 billion. Adjusted operating margin also improved 30 bps year over year, reaching 5.1%, aided by lower operating expenses of $10.94 billion compared with $11.02 billion last year.
CVS Health’s Cash Build Offsets Ongoing Debt Obligations
CVS Health ended the quarter with cash and cash equivalents of $9.54 billion, up from $8.45 billion at year-end 2025. Net cash provided by operating activities was $4.25 billion in the first quarter, supporting capital returns and balance sheet actions.
During the quarter, the company repaid $1.52 billion of long-term debt and paid $847 million in dividends. Long-term debt stood at $60.53 billion as of March 31, 2026, leaving continued deleveraging and disciplined capital deployment as important watch items alongside the operating recovery underway across the portfolio.
CVS Raises 2026 Outlook as Costs Stay Elevated
Management raised full-year 2026 targets following the quarter’s performance. CVS lifted its GAAP diluted earnings per share outlook to a range of $6.24-$6.44 (previously $5.94-$6.14) and boosted adjusted earnings guidance to the band of $7.30-$7.50 (earlier $7.00-$7.20). Going by the Zacks Consensus Estimate, adjusted earnings per share for 2026 is forecasted at $7.14.
Meanwhile, revenues for the year are projected to be at least $405 billion. The Zacks Consensus Estimate for the same stands at $406.01 billion.
The company also increased its cash flow from operations outlook to at least $9.5 billion (earlier at least $9.0 billion). CVS said that the update reflects increases in the Health Care Benefits and Pharmacy & Consumer Wellness segments while maintaining a cautious view for the remainder of the year, given elevated cost trends and potential macro headwinds.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, CVS Health has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise CVS Health has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
CVS Health is part of the Zacks Medical Services industry. Over the past month, Avantor, Inc. (AVTR), a stock from the same industry, has gained 14.6%. The company reported its results for the quarter ended March 2026 more than a month ago.
Avantor reported revenues of $1.58 billion in the last reported quarter, representing no change year over year. EPS of $0.17 for the same period compares with $0.23 a year ago.
Avantor is expected to post earnings of $0.19 per share for the current quarter, representing a year-over-year change of -20.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.7%.
Avantor has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).