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CVS vs. ALHC: Which Medicare Advantage Stock Is the Better Pick Now?
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Key Takeaways
CVS is advancing Aetna's turnaround, with first-half 2026 adjusted operating income up more than $2 billion.
Alignment Healthcare grew membership 31.5% to 294,100, while higher medical needs pressure its outlook.
CVS trades at a forward P/E of 10.41 versus ALHC's 25.43, with rising 2026 earnings estimates.
The global Medicare Advantage (“MA”) market is projected to expand at a CAGR of 10.1% through 2026-2034, according to a Market Reports World analysis. It is the fastest-growing segment of the U.S. health insurance industry, with more than 34.1 million beneficiaries in 2025, representing 54% of all Medicare-eligible individuals. The market is also evolving, with recent trends pointing to a shift toward specialization, digital integration and expanded benefits. CVS Health (CVS - Free Report) and Alignment Healthcare (ALHC - Free Report) are two established names competing in this space.
CVS Health offers MA plans through its Health Care Benefits segment, led by Aetna. For the third consecutive year, Aetna ranked among the highest-performing large, publicly traded MA organizations in the Centers for Medicare & Medicaid Services’ (CMS) 2027 Star Ratings, with more than 69% of its members enrolled in plans rated 4 Stars or higher.
Alignment Healthcare also earned strong ratings. Six of its seven eligible contracts received 4 Stars or higher, including three rated 4.5 Stars. These contracts cover Arizona, California, Nevada, North Carolina and Texas, reflecting the company’s focus on coordinated, culturally responsive care. Its California H3815 HMO contract received a 3.5-Star Rating for 2027.
Both stocks have posted sharply different returns over the past year. CVS Health has risen 9.9%, while Alignment Healthcare has plummeted 50.8%.
Image Source: Zacks Investment Research
Let’s dive deeper to see which company offers the stronger investment outlook today.
The Case for CVS
CVS Health is working to restore Aetna’s target margins through a multi-year effort focused on disciplined pricing, medical cost management, clinical programs and operational changes. Progress was evident in the first half of 2026, when Health Care Benefits adjusted operating income rose by more than $2 billion from a year earlier. Medicare results also exceeded expectations, supported by disciplined pricing and better control of medical costs.
Operational initiatives are also supporting this effort. Aetna’s Claims Assist Manager aims to reduce processing time by more than 20% for complex claims requiring manual review. Its Aetna Clinical Collaboration program is expanding to strengthen coordination with providers. On Sept. 1, Aetna broadened prior authorization bundles to include all cancer types for members in eligible Medicaid states. The company plans to extend the program to all lines of business in 2027. During the initial rollout, nearly 25% of eligible members received a bundled prior authorization, meaning their services were approved in advance to help accelerate access to care.
Health Services is benefiting from pharmacy drug mix, brand inflation, purchasing economics and a gradual recovery in Health Care Delivery. CVS Health is also investing in technology to improve provider connectivity and data sharing, using AI and analytics capable of analyzing more than one billion pages of clinical records. Caremark continues to take formulary actions aimed at making GLP-1 weight-loss drugs available at lower costs. CVS Specialty’s adherence rate remains above 90%, ahead of the 80% industry standard.
The company’s Pharmacy & Consumer Wellness business continues to benefit from higher prescription volumes, aided by the Rite Aid prescription file acquisitions and better underlying pharmacy economics.
The Case for ALHC
Alignment Healthcare continues to benefit from the structural growth of the MA market while consistently gaining market share. In the second quarter of 2026, total membership rose 31.5% year over year to about 294,100, supported by new additions and high retention. The Alignment Health Plan also announced its 2027 MA portfolio, aiming to expand into 10 new counties across California, Nevada, North Carolina and Texas, adding major provider organizations and introducing new plan options designed to deliver more coordinated, culturally connected care.
Technology investments are improving efficiency and targeting clinical interventions. Second-quarter adjusted selling, general & administrative (SG&A) expenses declined to 8.6% of revenues, down 20 basis points (bps) year over year. The ratio improved 40 bps in the first half and more than 300 bps in three years despite investments in claims processing, clinical systems and scalable back-office workflows. The latest AVA (Alignment’s Virtual Application) stratification model identifies the 10% of members expected to account for nearly 70% of hospital admissions over the next 30 days, helping Care Anywhere teams target high-risk members.
The 2026 mix remains weighted toward members with complex medical needs. Inpatient admissions improved sequentially to the mid-150s per 1,000 members, but new members have more acute needs than a year earlier. Alignment expects a seasonally higher third-quarter medical benefit ratio (MBR) due to this mix, a flatter Part D cost slope and additional Care Anywhere investment.
The V28 risk model affects revenue development and final sweep economics. Alignment Healthcare books new-member revenues at paid Monthly Member Revenues until final reconciliation, limiting forecast risk but delaying recognition. The second-quarter final sweep benefit was about $6 million, or roughly 40 bps of adjusted MBR. The per-member benefit was lower than a year earlier, partly because of V28 and the risk-sharing mix.
How Do Zacks Estimates Compare for CVS & ALHC?
The Zacks Consensus Estimate for CVS Health’s 2026 EPS implies year-over-year growth of 18.8% to $8.02. Estimates have jumped 1.8% in the past 60 days.
Image Source: Zacks Investment Research
Meanwhile, the consensus mark for Alignment Healthcare’s 2026 EPS stands at 14 cents compared to breakeven results a year ago. The estimate has dropped 17.6% in the past seven days.
Image Source: Zacks Investment Research
CVS & ALHC’s Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, CVS Health shares currently trade at 10.41, while Alignment Healthcare shares trade at 25.43.
Image Source: Zacks Investment Research
Conclusion
Both CVS’ Aetna and Alignment Healthcare earned strong CMS Star Ratings for 2027, reflecting strong clinical outcomes. CVS is making progress in its Aetna turnaround while benefiting from continued growth in Health Services and Pharmacy & Consumer Wellness. Meanwhile, ALHC is growing membership and improving efficiency, but higher medical needs among newer members and a lower final-sweep benefit per member remain as key factors to watch.
In terms of price performance, CVS has outpaced ALHC over the past 12 months. CVS Health also holds the valuation edge, with its shares trading at a substantially lower forward P/E than ALHC. CVS has also benefited from upward revisions to its 2026 earnings estimates, unlike ALHC. Given these factors, existing CVS shareholders may want to retain their positions for potential long-term gains. Meanwhile, ALHC investors may want to reassess their stake.
CVS carries a Zacks Rank #3 (Hold), while ALHC has a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
Image: Bigstock
CVS vs. ALHC: Which Medicare Advantage Stock Is the Better Pick Now?
Key Takeaways
The global Medicare Advantage (“MA”) market is projected to expand at a CAGR of 10.1% through 2026-2034, according to a Market Reports World analysis. It is the fastest-growing segment of the U.S. health insurance industry, with more than 34.1 million beneficiaries in 2025, representing 54% of all Medicare-eligible individuals. The market is also evolving, with recent trends pointing to a shift toward specialization, digital integration and expanded benefits. CVS Health (CVS - Free Report) and Alignment Healthcare (ALHC - Free Report) are two established names competing in this space.
CVS Health offers MA plans through its Health Care Benefits segment, led by Aetna. For the third consecutive year, Aetna ranked among the highest-performing large, publicly traded MA organizations in the Centers for Medicare & Medicaid Services’ (CMS) 2027 Star Ratings, with more than 69% of its members enrolled in plans rated 4 Stars or higher.
Alignment Healthcare also earned strong ratings. Six of its seven eligible contracts received 4 Stars or higher, including three rated 4.5 Stars. These contracts cover Arizona, California, Nevada, North Carolina and Texas, reflecting the company’s focus on coordinated, culturally responsive care. Its California H3815 HMO contract received a 3.5-Star Rating for 2027.
Both stocks have posted sharply different returns over the past year. CVS Health has risen 9.9%, while Alignment Healthcare has plummeted 50.8%.
Image Source: Zacks Investment Research
Let’s dive deeper to see which company offers the stronger investment outlook today.
The Case for CVS
CVS Health is working to restore Aetna’s target margins through a multi-year effort focused on disciplined pricing, medical cost management, clinical programs and operational changes. Progress was evident in the first half of 2026, when Health Care Benefits adjusted operating income rose by more than $2 billion from a year earlier. Medicare results also exceeded expectations, supported by disciplined pricing and better control of medical costs.
Operational initiatives are also supporting this effort. Aetna’s Claims Assist Manager aims to reduce processing time by more than 20% for complex claims requiring manual review. Its Aetna Clinical Collaboration program is expanding to strengthen coordination with providers. On Sept. 1, Aetna broadened prior authorization bundles to include all cancer types for members in eligible Medicaid states. The company plans to extend the program to all lines of business in 2027. During the initial rollout, nearly 25% of eligible members received a bundled prior authorization, meaning their services were approved in advance to help accelerate access to care.
Health Services is benefiting from pharmacy drug mix, brand inflation, purchasing economics and a gradual recovery in Health Care Delivery. CVS Health is also investing in technology to improve provider connectivity and data sharing, using AI and analytics capable of analyzing more than one billion pages of clinical records. Caremark continues to take formulary actions aimed at making GLP-1 weight-loss drugs available at lower costs. CVS Specialty’s adherence rate remains above 90%, ahead of the 80% industry standard.
The company’s Pharmacy & Consumer Wellness business continues to benefit from higher prescription volumes, aided by the Rite Aid prescription file acquisitions and better underlying pharmacy economics.
The Case for ALHC
Alignment Healthcare continues to benefit from the structural growth of the MA market while consistently gaining market share. In the second quarter of 2026, total membership rose 31.5% year over year to about 294,100, supported by new additions and high retention. The Alignment Health Plan also announced its 2027 MA portfolio, aiming to expand into 10 new counties across California, Nevada, North Carolina and Texas, adding major provider organizations and introducing new plan options designed to deliver more coordinated, culturally connected care.
Technology investments are improving efficiency and targeting clinical interventions. Second-quarter adjusted selling, general & administrative (SG&A) expenses declined to 8.6% of revenues, down 20 basis points (bps) year over year. The ratio improved 40 bps in the first half and more than 300 bps in three years despite investments in claims processing, clinical systems and scalable back-office workflows. The latest AVA (Alignment’s Virtual Application) stratification model identifies the 10% of members expected to account for nearly 70% of hospital admissions over the next 30 days, helping Care Anywhere teams target high-risk members.
The 2026 mix remains weighted toward members with complex medical needs. Inpatient admissions improved sequentially to the mid-150s per 1,000 members, but new members have more acute needs than a year earlier. Alignment expects a seasonally higher third-quarter medical benefit ratio (MBR) due to this mix, a flatter Part D cost slope and additional Care Anywhere investment.
The V28 risk model affects revenue development and final sweep economics. Alignment Healthcare books new-member revenues at paid Monthly Member Revenues until final reconciliation, limiting forecast risk but delaying recognition. The second-quarter final sweep benefit was about $6 million, or roughly 40 bps of adjusted MBR. The per-member benefit was lower than a year earlier, partly because of V28 and the risk-sharing mix.
How Do Zacks Estimates Compare for CVS & ALHC?
The Zacks Consensus Estimate for CVS Health’s 2026 EPS implies year-over-year growth of 18.8% to $8.02. Estimates have jumped 1.8% in the past 60 days.
Image Source: Zacks Investment Research
Meanwhile, the consensus mark for Alignment Healthcare’s 2026 EPS stands at 14 cents compared to breakeven results a year ago. The estimate has dropped 17.6% in the past seven days.
Image Source: Zacks Investment Research
CVS & ALHC’s Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, CVS Health shares currently trade at 10.41, while Alignment Healthcare shares trade at 25.43.
Image Source: Zacks Investment Research
Conclusion
Both CVS’ Aetna and Alignment Healthcare earned strong CMS Star Ratings for 2027, reflecting strong clinical outcomes. CVS is making progress in its Aetna turnaround while benefiting from continued growth in Health Services and Pharmacy & Consumer Wellness. Meanwhile, ALHC is growing membership and improving efficiency, but higher medical needs among newer members and a lower final-sweep benefit per member remain as key factors to watch.
In terms of price performance, CVS has outpaced ALHC over the past 12 months. CVS Health also holds the valuation edge, with its shares trading at a substantially lower forward P/E than ALHC. CVS has also benefited from upward revisions to its 2026 earnings estimates, unlike ALHC. Given these factors, existing CVS shareholders may want to retain their positions for potential long-term gains. Meanwhile, ALHC investors may want to reassess their stake.
CVS carries a Zacks Rank #3 (Hold), while ALHC has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.