CVS Health’s CVS Health Care Benefits segment recorded a medical benefit ratio (MBR) of 92.8% in the third quarter of 2025 compared with 95.2% in the prior year. The metric shows the percentage of premium revenues spent on medical benefits for the Insured members. Management uses MBR to assess the underlying business performance and underwriting of its insurance products, compare actual results with expected results and identify the trends across reporting periods.
The improvement in the quarter was driven by the year-over-year impact of premium deficiency reserves (PDR) recorded as healthcare costs. During the third quarter of 2024, CVS recorded approximately $1.1 billion in PDR, which did not repeat this time, while $174 million of PDR recorded during the first half of 2025 was utilized. Additionally, higher favorable prior-period development and better underlying performance in the Government business drove the improvement.
However, the decrease in MBR was partially offset by changes in the seasonality of the Medicare Part D program due to the impact of the Inflation Reduction Act, as well as higher acuity in the individual exchange product line. MBR was impacted by approximately 100 basis points from provider liabilities for matters dating back to 2018 and worsening individual exchange risk adjustment expectations, with both contributing roughly the same.
CVS Health continues to expect full-year 2025 MBR at approximately 91% at the low end of the Health Care Benefits adjusted operating income guidance range. This outlook takes into account a “thoughtful and prudent view” on medical cost trends through the rest of the year.
CVS Health’s Peer Updates
The Cigna Group’s CI health benefits division has launched Clearity by Cigna Healthcare — a new copay-only health plan designed to bring greater transparency, predictability and simplicity to the care experience. Leveraging Cigna Healthcare’s new AI-powered digital tools, the Clearity plan empowers customers to make confident, informed healthcare decisions with upfront pricing, verified patient reviews, and a user-friendly digital experience designed for simplicity and trust.
Cencora COR announced plans to invest $1 billion through 2030 to bolster and expand its U.S. pharmaceutical distribution network. The investments — headlined by the opening of its second national distribution center in Ohio and an expanded presence in Alabama and California — will increase Cencora’s capacity, improve efficiency and enhance the resilience of its national distribution network, strengthening the company’s ability to support its customers’ evolving needs.
CVS Stock Performance, Valuation and Estimates
In the past six months, CVS Health shares have risen 27.2% compared with the industry’s 11.4% growth.
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CVS Health is trading at a forward five-year price/sales (P/S) ratio of 0.24, lower than the industry average of 0.49.
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Analysts remain bullish on CVS Health, supported by their rising earnings estimates for 2025 and 2026.
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CVS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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