Company Reports

Democrats won control of both houses of Congress in the US midterm elections, and shares of many managed care organizations, caregivers, and medical suppliers rose materially in intraday trading on Nov. 4 on the news. For example, shares rose 10% at HCA, 8% at Centene, and 6% at Baxter.

On Nov 4, CVS announced plans to split into two publicly traded companies in early 2028. CVS Health will include its medical insurance, pharmacy benefit management, specialty, and caregiving operations, while CVS Pharmacy will include its retail pharmacy and other medication dispensers.

After spending two decades positioning itself as a vertically integrated managed care leader, CVS has announced plans to split into two publicly traded companies in a tax-free move for shareholders that is scheduled for early 2028. After that, CVS Health will include its medical insurance, pharmacy benefit management, specialty, and caregiving operations, while CVS Pharmacy will include its retail pharmacy chain and other medication dispensers. This strategic move is the biggest under the new management team led by David Joyner that took the helm in late 2024 when CVS was reeling from weak Medicare Advantage performance and facing a bloated balance sheet after major acquisitions like the Oak Street caregiving deal.

On Oct. 8, the Centers for Medicare and Medicare Services released Medicare Advantage star ratings, including composite figures and ratings for each plan. Humana rose 13% in after-hours trading while other MCO shares were much less volatile.

After several years of elevated utilization that has not been fully offset by rate increases yet, covered MCO shares have risen about 35% on average since our last managed care industry report in September 2025, in anticipation of rising profits in at-risk medical insurance plans.

CVS reported second-quarter results including 7% revenue growth and over 40% adjusted earnings per share growth to $2.58, or above FactSet consensus of $1.85. On these stronger-than-expected results, management raised its 2026 outlook. It also gave initial 2027 commentary.

CVS aims to be the most trusted health company in the United States. It has spent over a decade positioning itself as a managed care leader, with the acquisitions of pharmacy benefit manager Caremark (2007), insurance provider Aetna (2018), and healthcare service provider Oak Street Health (2023) defining its strategic direction. CVS' top-tier retail pharmacy, health insurer, and PBM franchises create the potential to improve health outcomes and even bend the healthcare cost curve for its clients, especially if it can align incentives through its healthcare service operations.

CVS reported first-quarter results that included 6% revenue growth, 12% adjusted operating income growth, and adjusted EPS growth of 14%. Management also raised its guidance for the full year. Shares rallied over 6% in midday trading May 6 on this news.

CVS aims to be the most trusted health company in the United States. It has spent over a decade positioning itself as a managed care leader, with the acquisitions of pharmacy benefit manager Caremark (2007), insurance provider Aetna (2018), and healthcare service provider Oak Street Health (2023) defining its strategic direction. CVS' top-tier retail pharmacy, health insurer, and PBM franchises create the potential to improve health outcomes and even bend the healthcare cost curve for its clients, especially if it can align incentives through its healthcare service operations.

After hours on April 6, the Centers for Medicare & Medicaid Services released its final rate notice for the 2027 Medicare Advantage program, which included a 2.5% overall increase, compared with a flat initial rate notice in late January.

CVS aims to be the most trusted health company in the United States. It has spent over a decade positioning itself as a managed care leader, with the acquisitions of pharmacy benefit manager Caremark (2007), insurance provider Aetna (2018), and healthcare service provider Oak Street Health (2023) defining its strategic direction. CVS' top-tier retail pharmacy, health insurer, and PBM franchises create the potential to improve health outcomes and even bend the healthcare cost curve for its clients, especially if it can align incentives through its healthcare service operations.

In the fourth quarter, CVS turned in 8% sales growth and 8% adjusted EPS decline, or slightly higher than consensus. The firm largely confirmed targets given at its December investor day, too, albeit trimming its operating cash flow outlook to $9 billion from $10 billion after a big beat in 2025.

After hours on Jan. 26, the Centers for Medicare & Medicaid Services released its initial rate notice for the 2027 Medicare Advantage program, which included a flat overall rate increase rather than the 5% increase in 2026. Most of that differential is related to new risk assessment-related changes.

CVS highlighted several financial goals at its Dec. 9 analyst day, causing the shares to rise about 3%. For 2025, it increased its earnings per share guidance range by a nickel to $6.60-$6.70. For 2026, it expects adjusted EPS of $7.00-$7.20. It aims for midteens earnings growth through 2028.

CVS aims to be the most trusted health company in the United States. It has spent over a decade positioning itself as a managed care leader, with the acquisitions of pharmacy benefit manager Caremark (2007), insurance provider Aetna (2018), and healthcare service provider Oak Street Health (2023) defining its strategic direction. CVS' top-tier retail pharmacy, health insurer, and PBM franchises create the potential to improve health outcomes and even bend the healthcare cost curve for its clients, especially if it can align incentives by owning healthcare service providers, as well.

On Nov. 9, the US Senate agreed to terms that would reopen the US federal government after a record shutdown period. However, the solution did not include a plan to extend federal subsidies on the individual exchanges.

CVS' third-quarter results included 8% revenue growth and 47% adjusted EPS growth, as margins improved at its medical insurer from a very weak 2024. Those results led to a third consecutive guidance increase for 2025, and management gave an initial outlook for midteens adjusted EPS growth in 2026.

In the second quarter, CVS turned in 8% revenue growth, 2% adjusted operating profit growth, and roughly flat adjusted earnings per share of $1.81. Management increased its 2025 adjusted EPS outlook to $6.30-$6.40 from $6.00-$6.20 and its operating cash flow estimate by 7%.

CVS aims to be the most customer-centric health company in the United States. It has spent over a decade positioning itself as a managed care leader, with the acquisitions of pharmacy benefit manager Caremark (2007), insurance provider Aetna (2018), and healthcare service provider Oak Street Health (2023) defining its strategic direction. CVS' top-tier retail pharmacy, health insurer, and PBM franchises create the potential to improve health outcomes and even bend the healthcare cost curve for its clients, especially if it can align incentives by owning healthcare service providers, as well.

On May 11 and 12, Republicans revealed updated regulatory stances that included plans to lower drug prices and pull back on Medicaid spending by about $715 billion over the next 10 years versus $880 billion expected previously.