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New: Introducing “Why Is It Moving?” - lightning-fast, AI-driven explanations of stock moves
On Thursday, the Centers for Medicare & Medicaid Services (“CMS”) released the 2026 Star Ratings for Medicare Advantage Prescription Drug (“MAPD”) plans. The five-star rating system evaluates Medicare health care and drug plans to ensure they meet CMS’ quality standards, with plans rated four stars or higher qualifying for bonus payments. CVS Health’s CVS insurer, Aetna, continues to rank among the top tier of large, publicly traded companies, supported by high-quality performance across several of its largest Medicare Advantage contracts. More than 81% of Aetna MA members are in plans rated 4.0 stars or higher, with more than 63% of members in a 4.5-star plan for 2026.
CVS’ key rivals, Humana HUM and UnitedHealth Group UNH, had previously reported preliminary 2026 Star Ratings data. Humana has nearly 20% of its members enrolled in plans rated 4 stars and above, with 14% of members in 4.5-star plans. The company’s average Star rating of 3.61 is consistent with last year’s levels. On the other hand, UnitedHealth Group estimated that it would have approximately 78% of its members in four-star or higher plans. According to Reuters, citing Oppenheimer analysts, both insurers’ final star ratings were in line with their prior expectations.
CVS shares opened 1.6% higher on Oct. 10 following the after-hours announcement and ended the session at $77.90. The stock’s impressive year-to-date run now extends to 73.5%, outpacing both the industry’s 1.5% decline and the Medical sector’s modest 0.1% gains. In the same time frame, Humana shares rose 10.4%, while UnitedHealth stock declined 29.9%.
CVS shares are now trading above the 50-day and 200-day moving averages, indicating a bullish trend.
Aetna has unveiled the 2026 MA Plans centering around three key elements — access, simplicity and care. The company’s 2026 MADP plans will be available across 43 states and Washington, D.C., covering nearly 57 million Medicare-eligible beneficiaries. Key highlights include a $2,100 maximum annual out-of-pocket for covered prescription drugs and affordable SilverScript prescription drug plan coverage.
In every county where plans are available, Aetna provides a $0 monthly premium plan. These also come with $0 copays for Tier 1 drugs at in-network pharmacies and include dental, vision and hearing benefits, along with a SilverSneakers fitness membership. Aetna estimates that 82% of the Medicare-eligible beneficiaries will have access to a $0 premium MA plan.
Further, eligible members can use the Extra Benefits Card, powered by CVS Health’s OTC Health Solutions, on certain services and products at CVS stores and at more than 70,000 additional participating locations. Aetna offers certain in-network services at no additional costs, including $0 copays for annual physicals, colonoscopies, mammograms, routine eye and hearing exams, and $0 copays for primary care visits and labs for some plans. All MA plans include an annual Healthy Home Visit from a licensed Signify Health clinician at no extra cost.
In 2026, Aetna is broadening its Special Needs Plans (SNPs), which provide additional targeted benefits to eligible members. Chronic Condition SNPs (C-SNPs) will expand to 18 states, including 16 new ones. Dual Eligible (D-SNPs) will grow to 119 new counties, with all members receiving a monthly allowance on an Extra Benefits Card for approved over-the-counter products.
Earlier this year, Aetna introduced an approach to bundling approvals for prior authorizations for certain cancer-related scans and tests, making it one upfront approval instead of multiple approvals over months. The move builds on CVS’ years-long effort to simplify and reduce unnecessary complexities in health care to make critical medications available more quickly. Currently, Aetna has one of the shortest lists of treatments and procedures that require prior authorization, approving more than 95% eligible requests within 24 hours.
In addition, Aetna’s Clinical Collaboration program is on track to be implemented in 10 hospitals by the end of 2025. The program helps reduce the standard 30-day readmission rates and emergency room visits while easing the administrative load on hospitals and clinical personnel. As part of CVS Health’s $20 billion multi-year digital health care investment, Aetna rolled out Aetna Care Paths, a first-to-market care option available within the Aetna Health app.
CVS currently trades at a forward five-year price/earnings (P/E) of 11.17X, below the industry average of 14.95X, UnitedHealth Group’s 20.71X and Humana’s 19.62X. However, the valuation appears premium in comparison to CVS’ five-year median of 9.73X.
The company’s retail pharmacy, specialty pharmacy and long-term care pharmacy (LTC) operations are facing ongoing reimbursement pressures from competition, client demands for lower prices, generic drug pricing, earlier-than-expected generic drug introductions and network reimbursement challenges. Increased utilization trends are also expected to continue exerting pressure on CVS’ Healthcare Benefits segment and its healthcare delivery assets throughout the remainder of 2025.
Additionally, legal issues are mounting for CVS Health. A federal court ordered its pharmacy benefit manager (PBM), Caremark, to pay nearly $290 million in damages following a decade-long allegation of overcharging Medicare for prescription drugs. More recently, the Omnicare LTC business filed for Chapter 11 bankruptcy after receiving a $949 million federal penalty related to fraudulent billing of drugs.
Aetna’s latest Star Ratings success emphasizes its focus on improving health outcomes for its MA members. Its 2026 MA plans aim to provide access to affordable, personalized care. Innovations to simplify the healthcare journey further strengthen CVS’ long-term outlook. Though ongoing reimbursement challenges and legal setbacks could affect results, the stock’s impressive YTD gains and attractive valuation make it a solid hold for existing CVS investors. However, prospective buyers should wait for a better entry point.
CVS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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