Battle of Benefits: Will UNH Deliver the Bigger Dose or CVH?

In a healthcare landscape defined by scale, integration and data-driven care, UnitedHealth Group Incorporated UNH and CVS Health Corporation CVS stand out as two of the most powerful players in the industry. Both companies bring together health insurance, pharmacy services and care delivery resources, allowing them to have a broader reach across the U.S. healthcare ecosystem.

UNH operates through two main segments: UnitedHealthcare, its vast insurance benefits division and Optum, which covers virtual care, behavioral health, various health care services, pharmacy solutions and physician-led care. On the other hand, CVS operates across Aetna (insurance), Caremark (pharmacy benefit management) and retail pharmacy segments. This combination creates a strong community presence, payer capabilities and effective service delivery.

Even though UNH and CVS have similar goals, they are taking distinct paths to achieve their growth. Let’s dive deep and closely compare the fundamentals to determine which one is the stronger investment today.

The Case for UnitedHealth

UNH, with a market cap of $296.2 billion, is making waves, standing strong with its unique dual-engine approach. The company’s ability to blend clinical data, digital platforms and large-scale care delivery gives it a moat. Its UnitedHealthcare business catered to 50.1 million people as of Sept. 30, 2025, which grew 1.6% year over year.

The company’s total revenue rose 12% year over year in the third quarter of 2025, with 16% growth at UnitedHealthcare and 8% growth at Optum, aided by growth in domestic commercial membership and strength witnessed in Optum Rx. The Optum brand continues to be a long-term growth driver. However, the Department of Justice is reportedly investigating the company for Medicare billing practices, reimbursement policies and OptumRx pharmacy benefits operations.

Financially, UnitedHealth is in a solid position. It ended the third quarter of 2025 with $30.6 billion in cash and short-term investments — sufficient to cover its short-term borrowings and current portion of long-term debt, which stands at $7.7 billion. Its total debt-to-capital of 41.6% is below CVS’s 47.4% and the industry’s 44.3%.

However, rising medical utilization has squeezed profit margins, especially in the MA business. In the third quarter of 2025, the company’s medical care ratio rose to 89.9%, compared to 85.2% the previous year, indicating that rising medical costs are eating into the premiums collected. Medical costs surged 21.2% year over year in the quarter; we expect them to rise 18.5% in 2025.

It missed earnings estimates twice in the past four quarters and beat on the other occasions. Nevertheless, the new CEO of UNH, Steve Hemsley, began his return to leadership with a clear focus on enhancing performance and setting the stage for sustainable and rapid growth in 2026 and beyond.

UnitedHealth Group Incorporated Price, Consensus and EPS Surprise

UnitedHealth Group Incorporated price-consensus-eps-surprise-chart | UnitedHealth Group Incorporated Quote

The Case for CVS

CVS Health, with a market cap of $99.6 billion, is increasingly focusing on hybrid care services, digital engagement and value-based insurance programs. It aims to provide innovative solutions through both mobile and web channels. As of Sept. 30, 2025, its Health Care Benefits unit’s medical membership was 26.7 million. Based on the current membership, the company expects over 81% of its Medicare Advantage members will be in plans rated 4 Stars or higher, with over 63% of them in 4.5 Star plans for 2026.

The company’s total revenues rose 7.8% year over year to $102.9 billion in the third quarter of 2025, driven by strong performance in Health Services, Pharmacy & Consumer Wellness and Health Care Benefits segments. In the quarter, CVS’s adjusted operating income reached approximately $3.5 billion, up 35.8% year over year, mainly due to Health Care Benefits improvements. The medical benefit ratio (MBR) of 92.8% improved 240 basis points year over year in the same period.

It ended the third quarter of 2025 with $9.1 billion in cash and cash equivalents, more than sufficient to cover its short-term debt and current portion of operating lease liabilities, which stand at $1.2 billion and $1.9 billion, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 26.5%.

CVS Health Corporation Price, Consensus and EPS Surprise

CVS Health Corporation price-consensus-eps-surprise-chart | CVS Health Corporation Quote

However, CVS Health’s retail pharmacy, specialty pharmacy and LTC pharmacy operations have been affected by reimbursement pressure. Its total operating costs rose 12.1% year over year in the quarter. As part of its 2025 strategy, CVS plans to close an additional 271 retail stores, targeting more than $500 million in cost savings.

How the Rest of the Year Looks for UNH & CVS

UNH expects revenues to be in the range of $445.5-$448 billion in 2025, up from $400.3 billion in 2024. Adjusted net EPS is now expected to be at least $16.25 for 2025, up from the previous guided figure of $16. Full-year net earnings are projected to be at least $14.9 billion, up from the 2024 level of $14.4 billion.

CVS Health, keeping a prudent outlook on medical cost trends and macro factors, now expects revenues of at least $397.3 billion for 2025, up from the previous guided figure of at least $391.5 billion. Adjusted EPS is expected to be between $6.55 and $6.65, up from the prior $6.30-$6.40 range. Full-year adjusted operating income is projected to be within $14.1 billion-$14.3 billion. Furthermore, the company’s updated cash flow from operations guidance is in the range of $7.5-$8 billion, up from at least $7.5 billion earlier.

How Do Zacks Estimates Compare for UNH & CVS?

Estimates are in favor of CVS at this stage. The Zacks Consensus Estimate for CVS’s 2025 earnings indicates a 22.1% increase from a year ago, while the same for revenues suggests 7% growth. On the other hand, the consensus estimate for UNH’s 2025 revenues indicates 11.9% year-over-year growth but the same for EPS signals a massive 41.1% decline due to higher utilization.

Valuation: UNH vs. CVS

Valuation also favors CVS. While UNH trades at a forward P/E of 18.68X, CVS trades at a more modest 11.07X. This valuation gap gives CVS Health a more attractive risk-reward profile. In contrast, UNH’s premium pricing could limit near-term upside unless it delivers clear margin improvements.

Price Performance Comparison

Over the year-to-date period, UNH faced selloffs tied to medical costs and investigation concerns. Its shares plunged 35.5% during the same time. Meanwhile, CVS shares have jumped 74.8%, outperforming the broader industry and the S&P 500 Index, supported by stronger earnings momentum and clearer guidance.

Conclusion

UnitedHealth continues to be a powerhouse in the healthcare sector, boasting an impressive scale and a robust services engine. However, it is currently facing challenges like rising medical costs, increased utilization pressures and heightened regulatory scrutiny, which are clouding its short-term outlook.

On the flip side, CVS Health is making noticeable strides. Its profit margins are on the mend, it consistently beats earnings expectations, and its efforts to control costs are beginning to show results. With positive revisions to earnings estimates and a much more appealing valuation, CVS presents a more favorable risk-reward scenario in today's market.

For investors seeking current upside potential and a better value play, CVS Health clearly holds the edge, even though both companies currently have 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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