CVS Health (CVS) reported second quarter earnings that beat Wall Street expectations Thursday, marking the second quarter of growth after a rough 2024, sending the stock up more than 7% in premarket trading.

The healthcare giant reported $98.9 billion in revenue, compared to estimates of $94.6 billion, up 8.4% year over year. The adjusted earnings per share of $1.81 were above estimates of $1.46. The company also raised its guidance slightly for the year, from $138 billion to $139 billion for 2025.

“We are encouraged by a second consecutive quarter of solid 2025 results, while we continue to navigate a dynamic environment,” CFO Brian Newman said in a statement. “As we execute against our strategic priorities, we remain focused on delivering on our financial commitments and advancing initiatives that create long-term value for our stakeholders.”

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The beat is a bright spot in what has been a tough past year for the company and the industry as a whole. Like other insurers, CVS has been facing increased scrutiny in a number of its business segments, including the higher cost pressures in Medicare Advantage, the role of pharmacy benefit managers (PBMs) in Washington, D.C., and ongoing softness on the retail front.

Trade-offs for growth

CVS served as a bellwether for insurers last year because it severely underestimated costs for the senior population and had to lower guidance three times in 2024. The company will soon be the only remaining standalone pharmacy giant to be publicly traded, as competitor Walgreens (WBA) prepares to go private this year.

CEO David Joyner told Yahoo Finance that the company is marking its second strong quarter this year and hopes to continue a slow return to its prior pace of growth.

"We declared [previously] that our focus at the moment was margin recovery, and it was going to come at the expense of growth," Joyner said. "And that's hard to do in this business because there are trade-offs."

Still, the company reported a medical loss ratio (MLR) — the amount of premiums it paid out versus collected — in line with peers who are pressured this quarter. CVS reported an MLR of 89.9%, compared to 89..6% in the same quarter last year. And the company expects its full-year MLR to be 91% at the lower end.

"You can only make so much progress in one year's time. It was always planned to be a multiyear recovery," Joyner said.

Higher tech, lower cost?

The higher cost trend in the industry has been attributed to changes in the way the Centers for Medicare and Medicaid (CMS) reimburses the Medicare Advantage population. But it also comes at a time when the aging US population is increasing, meaning more older and sicker people are in need of greater care. And that trend is set to accelerate over the next decade.