UPDATED: 1 p.m. ET
CVS Health executives said Wednesday that while the final 2027 Medicare Advantage rate notice falls short of the realities of the program, it's still on track for planned margin improvements by 2028.
CVS has focused over the past several quarters on improving operations at Aetna and saw that work bear fruit in Q1, as the insurance arm was a major factor in its rising revenue. Shares in the company jumped Wednesday morning and were up by 7.4% at about 12:30 p.m. ET.
CEO David Joyner said on the company's earnings call that while the Aetna team has buckled down, rates from the Centers for Medicare & Medicaid Services have not kept pace.
"As you know, the rates have not been supportive of the elevated medical trends, and I think our team has proven, at least now in two consecutive years, that we've been able to manage, prioritizing margin over growth," Joyner said.
"I couldn't be more proud of the team in terms of their focus on making sure that they're restoring the performance of this business," he continued.
Steve Nelson, executive vice president of CVS Health and president of Aetna, said during the call that Aetna has had a consistently strong rapport and partnership with CMS in discussing reimbursement and other key regulatory matters.
He said that the team "appreciated" the progress made between the proposed Advance Notice and the final rule, such as the agency's decision to delay further changes to the risk adjustment model that aimed to build on the foundation of the V28 overhaul.
But beyond conferring with regulatory agencies, the team at Aetna has put a focus on "disciplined" execution that supported its improvements. For example, taking that approach to its 2026 bids and the annual enrollment period led to a favorable geographic, product and membership mix, he said.
Aetna has also invested in improvements to its star ratings over the past several years, which will also carry into the 2027 plan year, Nelson said.
"We're gonna take the same disciplined approach going into 2027, and feel confident that we can continue the momentum and again, make meaningful progress towards target margins in 2027," Nelson said. "I'll just reaffirm our confidence in hitting target margins in 2028."
PUBLISHED: 7:30 a.m. ET
CVS Health beat the Street on both earnings and revenue in Q1, posting $2.9 billion in profit for the quarter.
That's up from the $1.8 billion the healthcare giant earned in the prior-year quarter, according to its earnings report released Wednesday morning. Revenues also grew year over year, rising to $100.4 billion from the $94.6 billion reported in Q1 2025.
Both results surpassed Wall Street analysts' expectations, per Zacks Investment Research.
The company also reported an 84.6% medical loss ratio in the quarter, which declined from the 87.3% rate posted a year ago. CVS said in the report that this was due in part to improvements in the performance of Aetna's government plans, which had particularly felt the sting of rising medical costs.
Given these results, and much like its peers, CVS said it would boost its 2026 guidance and now expects earnings per share between $7.30 and $7.50. Previously, it set a range of $7 to $7.20.
"Our positive performance is driven by strong execution across our enterprise," CEO David Joyner said in the press release. "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."
CVS said it will boost its guidance, citing improved performance in its insurance and pharmacy divisions, but is still bracing itself for elevated medical costs to continue and for other headwinds to crop up as the year continues.
At Aetna, revenues were $35.97 billion in the quarter, up from $34.8 billion in Q1 2025. That's even as membership decreased from 27.1 million to 26 million, according to the report.
The company attributed most of the membership decrease largely to its decision to exit the individual marketplaces, though said that was partially offset by growth in self-insured commercial plans.
At Caremark, meanwhile, revenues increased 11% year-over-year, rising from $43.5 billion to $48.2 billion. The news release did not include figures on pharmacy benefit management membership.
Revenues were also up at CVS Pharmacy, increasing from $31.9 billion to $32 billion, according to the earnings report. The company filled 451.2 million prescriptions in the first quarter of 2026, including contributions from Rite Aid assets purchased late last year.