CVS Health What to Know: 2Q26 Follow-Up with Management

Research evidence excerpt

J P M O R G A N

North America Equity Research

05 August 2026

CVS Health

What to Know: 2Q26 Follow-Up with Management

Overweight

CVS, CVS US

Price (04 Aug 26):$104.42

Managed Care and Facilities

Post the earnings call this morning, we caught up with David Joyner, CEO, Brian

Newman, CFO, Prem Shah, Group President, and Laurence McGrath, Chief

Strategy Officer. We reiterate our positive view on CVS, with the company

increasing its 2026 outlook but prudently managing expectations into 2027,

reminding investors that it does not guide to PYD. Within the quarter, we found the

HCB commentary to be positive, with Medicare appearing to be ahead of schedule

and management expecting momentum to persist into 2027. Similarly, we see

continued PCW growth above the company's long-term target as a positive, as CVS

continues to increase its market share with +MSD% profit growth guidance for

2026. On HSS, we think the update around 340B is worth monitoring, and while

we appreciate that expectations were high for CVS, we point to strong core HSS

performance helping the segment mitigate this headwind in 2026 (hence the

reaffirmed segment guidance) and to the $8.44 floor indicating that the company

has levers to grow into next year. At the risk of repeating ourselves from recent

quarters, management has emphasized the importance of credible guidance that the

company can reasonably achieve, with opportunities for outperformance, and we

see 2Q as continuing that trend, with the 2027 commentary still embedding ~13%

growth from CVS's ~$7.46 ex-PYD run-rate (and CVS does not guide to PYD). We

are hosting an investor call with Thomas Zoltowski (Vice President, Investor

Relations) and Laurence McGrath (Chief Strategy Officer) tomorrow at 9am

Eastern; reach out to your J.P. Morgan sales rep for registration details. For a

summary of the quarter, see our note here.

Early 2027 commentary set a floor at the current consensus of $8.44, with

management reminding investors that the company excludes PYD,

implying a 2026 run-rate of $7.46 and ~13% y/y growth into 2027. CVS

reiterated its confidence in the mid-teens adjusted EPS CAGR framework it

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