CVS Health (NYSE:CVS) has been on a nice roll since providing lower-than-expected full-year 2019 guidance in February. The healthcare giant beat expectations in the first quarter and increased its outlook for the rest of the year.

Investors were looking for more good results when CVS Health reported its Q2 update before the market opened on Wednesday -- and they weren't disappointed. Here are the highlights from CVS Health's second-quarter results. 

Female CVS pharmacist handing a customer a prescription

Image source: CVS Health.

CVS Health results: The raw numbers

Metric 

Q2 2019 

Q2 2018 

Change

Revenue

$63.4 billion $46.9 billion

35.2%

Net income 

$1.9 billion ($2.6 billion)

N/A

Adjusted earnings per share (EPS)

$1.89 $1.69

11.8%

Data source: CVS Health. N/A = not applicable.

What happened with CVS Health this quarter?

CVS Health's 2018 acquisition of Aetna served as the primary driver of the company's revenue growth. Without Aetna, CVS Health's revenue would have increased by less than 5% year over year. However, that growth rate excluding the Aetna transaction is still pretty good.

The company reported pharmacy services segment revenue of $34.8 billion, up 4.2% year over year. This growth was driven by higher brand drug prices and increased pharmacy claims volume.

Retail/pharmacy segment revenue in the quarter totaled $21.4 billion, a year-over-year increase of 3.7%. Front-store sales were boosted by a longer cough and cold season and the impact of the Easter holiday falling in the second quarter of 2019 instead of Q1 (as it did in 2018). Overall segment revenue growth was driven by increased prescription volume and brand drug price inflation.

Revenue for CVS Health's healthcare benefits segment, which primarily consists of its Aetna business, slipped from $17.9 billion in the first quarter to $17.4 billion in Q2. While Medicare and Medicaid membership increased, the company experienced declining sales for some of its commercial products.

CVS Health's year-over-year bottom-line improvement as reported under generally accepted accounting principles (GAAP) wasn't as impressive as it might look at first glance. The company's GAAP loss in the prior-year period stemmed from a big goodwill impairment of $3.9 billion. 

However, CVS Health easily topped its second-quarter adjusted EPS guidance of between $1.68 and $1.72. The company's GAAP EPS of $1.49 increased to an adjusted EPS of $1.89 thanks to adjustments including the addition of $0.45 per share for amortization of intangible assets and $0.08 per share for acquisition-related costs, partially offset by $0.13 per share related to an income tax benefit.

What management had to say

CEO Larry Merlo said, "We posted strong second-quarter results, with all of our businesses performing at or above expectations. These results demonstrate our ability to execute on our strategic priorities to accelerate enterprise growth as we seek to fundamentally transform the consumer health experience."

He added, "We made meaningful advancements on each of the priorities we outlined at our Investor Day in early June to differentiate, transform and modernize the delivery of care. While still early, we remain confident that we will be able to realize the potential of our innovative and powerful new business model to deliver enhanced value to our clients and the consumers we serve."

Looking forward

CVS Health raised and narrowed its full-year earnings guidance. The company now expects GAAP diluted EPS from continuing operations will be between $4.93 and $5.04, up from its previous outlook of $4.90 to $5.05. It also narrowed its adjusted EPS guidance range for 2019 to between $6.89 and $7.00, up from the earlier range of $6.75 to $6.90.

In addition, the company stated that it projects third-quarter GAAP diluted EPS from continuing operations will be between $1.16 and $1.20. Adjusted EPS for Q3 is expected to be between $1.75 and $1.79.