The Rise of Medication Adherence Solutions in Medicare: A Lucrative Opportunity in Aging Demographics and Value-Based Care

The U.S. healthcare landscape is undergoing a seismic shift, driven by two unstoppable forces: the aging of the baby boomer generation and the transition from fee-for-service models to value-based care. At the intersection of these trends lies a critical challenge—medication non-adherence among seniors—and a growing opportunity for companies that can solve it. For investors, the stakes are high. By 2030, Medicare Advantage (MA) enrollment is projected to surpass 30 million beneficiaries, representing a $1 trillion market. Yet, as the data shows, 50% of seniors fail to take their medications as prescribed, leading to preventable hospitalizations and spiraling costs. This is where companies like SelectQuote (SLQT) and Clover Health (CLOV) are stepping in, deploying personalized, high-touch pharmacy services to not only improve health outcomes but also to capture a significant share of this expanding sector.

The Problem and the Promise of Value-Based Care

Medication adherence is the linchpin of value-based care. When seniors miss doses of medications for chronic conditions like diabetes, hypertension, or cholesterol, the consequences are dire: $300 billion in annual healthcare costs are attributed to non-adherence, according to the Centers for Disease Control and Prevention. For MA plans, which are incentivized to reduce hospital readmissions and manage chronic care, this is a ticking time bomb. But it's also an opportunity. By investing in adherence solutions, MA plans can improve HEDIS Star ratings, secure higher reimbursement rates, and build loyalty among beneficiaries.

Clover Health, a digital health company with deep roots in MA, has recognized this and is pioneering a community-based approach. In collaboration with IPC Digital Health, it has launched a pilot in New Jersey that integrates real-time prescription monitoring with local pharmacies. The program uses AI to flag adherence gaps and connects patients with pharmacists, doctors, and care teams to address barriers. This localized model is a departure from Clover's traditional data-driven strategies, reflecting a broader trend: the realization that technology alone isn't enough. Success in MA requires human touchpoints.

Meanwhile, SelectQuote, a long-standing player in Medicare insurance and healthcare services, is doubling down on its SelectRx pharmacy platform. Its new concierge-like medication adherence program, which achieved over 90% adherence rates in a pilot with a regional health plan, exemplifies this hybrid approach. By combining clinical pharmacist support with logistical conveniences like timely delivery and easy-to-use packaging, SelectQuote is addressing both the emotional and practical challenges of medication management. The results? Improved HEDIS metrics for chronic conditions and a 54% year-over-year increase in SelectRx membership, as of December 2024.

Financials and Market Dynamics

The financials tell a compelling story. SelectQuote's SelectRx segment generated $183.4 million in revenue for the second quarter of 2025, contributing to 64% year-over-year growth. With a revenue-to-CAC multiple of 5.3X, the unit is not just scalable but highly profitable. This efficiency is critical in a sector where margins are often thin. For Clover Health, the expansion into New Jersey and Pennsylvania—with plans to offer enhanced wellness benefits and dental coverage—signals a strategic pivot toward differentiation. In a crowded MA market, such value-adds are essential for attracting beneficiaries and retaining providers.

Investors should also note the broader macroeconomic tailwinds. The shift to value-based care is accelerating, with CMS tightening Star rating criteria and penalizing plans that fail to meet quality metrics. This creates a virtuous cycle: adherence solutions improve outcomes, which in turn boost Star ratings and reimbursement. For companies like SelectQuote and Clover Health, this is a self-reinforcing business model.

The Investment Case: Growth, Innovation, and Scalability

SelectQuote's recent $350 million strategic investment from Bain Capital and Morgan Stanley Private Credit underscores its potential. The infusion of capital will fuel expansion in pharmacy and chronic care management, areas where the company already has a proven track record. Meanwhile, Clover Health's pilot in New Jersey is a test of its ability to scale community-based care—a capability that could become its defining strength in a sector increasingly reliant on localized trust.

For investors, the key question is: How do these companies compare to traditional MA players? The answer lies in their agility and focus on outcomes. While giants like UnitedHealth Group (UNH) and Humana (HUM) dominate the MA market, they are often constrained by legacy systems. SelectQuote and Clover Health, by contrast, are built for speed and innovation. Their adherence solutions are not just incremental improvements but transformative shifts in how care is delivered to seniors.

The Road Ahead

The coming years will be pivotal. SelectQuote plans to roll out its medication adherence program across its SelectRx platform by 2026, while Clover Health is set to expand its MA footprint into new markets. Both companies are also exploring partnerships with telehealth providers and chronic care management firms, further integrating their services into the broader healthcare ecosystem.

For the aging demographic, this is more than a business story—it's a lifeline. For investors, it's a clear signal: the future of Medicare Advantage belongs to those who can marry technology with compassion. SelectQuote and Clover Health are not just solving a problem; they're building a blueprint for the next era of healthcare.

Investment Takeaway
The medication adherence market in Medicare is a goldmine for companies that can combine data-driven insights with human-centered care. SelectQuote's SelectRx and Clover Health's community pharmacy pilot are early-stage wins in a sector poised for exponential growth. With SelectQuote's stock trading at a discount to its growth potential and Clover Health's AI-driven model gaining traction, both present compelling long-term opportunities. For investors with a five-year horizon, the key is to act before the sector's valuation catches up to its fundamentals.