CVS Health exceeded Wall Street expectations in the first quarter, posting net income of $2.96 billion ($2.30 per share) compared with $1.78 billion ($1.41 per share) a year earlier. The pharmacy and insurance giant upgraded its full-year projections, adding to a streak of stronger results from health insurers across the sector.

Much of the improvement stemmed from the turnaround at its Aetna insurance unit, which like other insurers is benefiting from efforts to squeeze costs and improve payment rates, particularly in Medicare plans. CFO Brian Newman said medical costs remained elevated but were tracking in line with expectations. "I'm not getting a lot of surprises from the Aetna team," he noted in an interview.

Shares of CVS and its health insurance rivals have climbed in recent weeks as reports of improved margins and cost controls gave Wall Street hope the sector is emerging from a period of financial strain. Investors were also encouraged by news that next year's Medicare payment rates will be higher than the government initially proposed.