UNH vs CVS — which stock performed better?

UnitedHealth Group Incorporated (UNH) versus CVS Health Corporation (CVS), Healthcare, on 2026-07-01.

Result

UnitedHealth Group Incorporated (UNH) performed better on 2026-07-01. UNH moved 2.700%, CVS moved 0.930%.

Why these two companies

UnitedHealth and CVS Health are the two largest integrated healthcare companies in the United States, each combining insurance, pharmacy benefits management, and health services under one roof — yet their recovery trajectories, valuations, and risk profiles in 2026 could not be more different. UNH has staged a 40%-plus rally from its March lows on improving medical cost trends and analyst upgrades, while CVS has surged 77% from its 52-week low on a Q1 earnings beat and a strategic pivot around GLP-1 drugs and AI-driven claims processing. The investment debate is live: does UNH's premium valuation and Optum franchise justify the price, or does CVS's steeper discount and faster revenue growth make it the better risk-adjusted bet heading into Q2 earnings season?

The research

UnitedHealth Group and CVS Health are the two most vertically integrated healthcare companies in America, each controlling insurance, pharmacy benefits management, and health services within a single corporate structure. That shared architecture makes them natural rivals — and yet their 2026 stories have diverged sharply, creating a genuine investment debate about which model is better positioned for the years ahead.

UnitedHealth Group is the larger of the two by a wide margin, with a market capitalisation near $378 billion and annual revenues exceeding $450 billion. Its competitive advantage lies in Optum, the health services and pharmacy subsidiary that generates revenues above $60 billion annually at margins significantly higher than the insurance segment. Optum Health operates physician groups, surgical centres, and home care services; Optum Rx is one of the three largest pharmacy benefit managers in the country; and OptumInsight sells data and analytics to hospitals and health systems. This vertical integration gives UnitedHealth pricing power and data advantages that pure-play insurers cannot easily replicate. In Q1 2026, the company reported adjusted EPS of $7.23 against a consensus of $6.76, and raised full-year guidance to greater than $18.25. The medical care ratio — the percentage of premiums paid out as claims — fell to 83.9%, down 90 basis points from Q1 2025, signalling that the elevated utilisation cycle that punished margins through 2024 and 2025 is beginning to moderate.

CVS Health operates across three distinct segments: pharmacy retail (roughly 9,000 stores), Caremark (one of the three largest PBMs in the country), and Aetna (a major managed-care insurer with approximately 25 million members). The company's Q1 2026 results were a turning point: revenue of $100.4 billion beat consensus by more than 5%, adjusted EPS of $2.57 exceeded estimates of $2.20, and management raised full-year 2026 adjusted EPS guidance to $7.30–$7.50. The Aetna division, which had been the source of margin compression through 2024 and 2025, showed meaningful improvement in medical cost controls. CVS also made a significant strategic move by reinstating coverage for Eli Lilly's obesity drug Zepbound on Caremark commercial formularies, effective October 1 — positioning itself to capture a larger share of the fast-growing GLP-1 drug category, which represents the biggest shift in pharmacy spending in a decade.

The competitive dynamics between UnitedHealth's OptumRx and CVS's Caremark are intensifying as PBM regulation accelerates. The Federal Trade Commission filed suit against all three major PBMs — Caremark, Express Scripts, and OptumRx — over insulin pricing practices, and multiple states have passed laws restricting PBM pharmacy ownership. Tennessee's law, effective January 2026, bars PBM-owned pharmacies from operating in the state; CVS is currently suing to block it. These regulatory headwinds affect both companies, but CVS is arguably more exposed given that its retail pharmacy network is a direct extension of its PBM business. UnitedHealth's Optum Rx operates differently, focusing more on specialty pharmacy and mail-order dispensing.

The risk profiles of the two companies diverge most sharply around Medicare Advantage. UnitedHealth exited Medicare Advantage plans in 109 counties and is projecting membership losses of 1.3 to 1.4 million MA members in 2026, a deliberate decision to shed unprofitable plans. CVS's Aetna faces a similar challenge: management has stated that 2027 Medicare Advantage reimbursement rates, raised 2.48% by CMS, remain insufficient to cover medical cost trends. For both companies, the 2028 Medicare Advantage star ratings — which CMS typically releases in late 2026 — are a critical medium-term catalyst. A downgrade in star ratings reduces reimbursement and member retention; an upgrade can add hundreds of millions in revenue. The Q2 2026 earnings reports — UNH on July 16 and CVS on August 5 — will be the next major data points on whether the margin recovery is holding.

For investors choosing between the two, the core question is valuation versus growth. UnitedHealth trades at approximately 31x trailing earnings and 22x forward earnings, reflecting its scale, Optum's premium margins, and the market's confidence in its long-term earnings power. CVS trades at roughly 14x forward earnings — a steep discount that reflects higher debt (net debt to EBITDA of 3.6x), thinner margins, and the ongoing Aetna turnaround risk. CVS's revenue growth of 6.1% year-over-year outpaces UnitedHealth's 2.0%, and the stock's 77% recovery from its 52-week low suggests the market is beginning to price in a genuine operational inflection. But UnitedHealth's Optum franchise, AI investment of $1.5 billion, and track record of compounding earnings at double-digit rates over a decade make it the more proven compounder. The debate is whether CVS's discount is a value opportunity or a fair reflection of its higher risk.