CVS Health and UnitedHealth: Comparing Crisis Management Strategies

CVS Health and UnitedHealth are two of the largest health insurance providers in the US, with CVS serving 37 million people and UnitedHealth serving over 140 million. Despite their similarities, UnitedHealth's recovery from the COVID-19 pandemic has been more successful, driven by its diversified business model and strong balance sheet. CVS Health, on the other hand, has faced challenges due to the pandemic and its acquisition of Aetna.

CVS Health and UnitedHealth are two of the largest health insurance providers in the United States, with CVS serving approximately 37 million people and UnitedHealth serving over 140 million. Despite their similarities, the recovery trajectories of these two companies post-COVID-19 pandemic have diverged significantly, driven by their respective business models and financial health.

UnitedHealth's recovery has been more successful, largely due to its diversified business model and strong balance sheet. The company reported revenues of $445 billion to $448 billion and an operating profit of $21.55 billion to $22.15 billion in 2025, as per its reinstated guidance for the year CVS Health Vs. UnitedHealth: Companies In Crises - Back United's Recovery^[1]. UnitedHealth's share price has been up 17% over the past five years, but it has experienced a significant downturn of over 30% year-to-date. The company's Medicare Advantage (MA) business, which had been a major contributor to its profitability, faced challenges due to CMS rate cuts, leading to a decline in earnings from operations.

CVS Health, on the other hand, has faced challenges due to the pandemic and its acquisition of Aetna. The company experienced a crisis in 2024, with its share price falling from over $80 to below $45. CVS has since recovered, with its share price rising over 15% in the past month to $74, its highest value since April 2024 CVS Health Vs. UnitedHealth: Companies In Crises - Back United's Recovery^[1]. However, CVS's business is perceived as riskier due to its three failing business divisions and the external pressure from activist investors.

Both companies have adopted a strategy of exiting unprofitable MA plans and will benefit from the CMS raising rates in 2025. UnitedHealth's MCR (Medical Care Ratio) was 89.4% in Q2 2025, while CVS's MBR (Medical Benefit Ratio) was 89.9%, indicating that both companies are working towards improving their profitability CVS Health Vs. UnitedHealth: Companies In Crises - Back United's Recovery^[1].

In terms of valuation, CVS's current price-to-earnings ratio based on 2025 guidance is ~12x, while UnitedHealth's is ~22x, nearly twice as high. This suggests that investing in UnitedHealth offers a higher reward with greater risk, while investing in CVS is less risky but has more limited upside potential.

However, it is important to note that both companies face external pressures and have adopted a value-based care approach to healthcare, which has been a major contributor to their suffering share prices. The recent recovery in share prices for both companies may indicate that value-based care can work, but the long-term success of this approach remains to be seen.