Shares of CVS Health (CVS +0.70%) have been declining recently as a potentially lower-than-expected increase in Medicare Advantage rates has investors worried about companies with exposure to health insurance. For CVS, health insurance is indeed a large part of its business as it owns Aetna, which serves millions of people throughout the country.
Is CVS Health stock worth buying right now, on weakness, despite some concerning developments in the healthcare sector, or is it too risky to add it to your portfolio today?
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Medicare Advantage rates are only one problem for CVS Health
The Trump administration has proposed minimal changes to Medicare Advantage rates for 2027, calling for an increase of just 0.09% (analysts were expecting a growth rate between 4% and 6%). More than one-third of CVS' revenue comes from its healthcare benefits segment, which includes Aetna. Potentially crippling its growth in such a significant segment can be particularly problematic for a healthcare company such as CVS, which generally doesn't grow at a fast rate to begin with. In 2024, the company generated nearly $373 billion in revenue, but its year-over-year growth rate was just over 4%.
Another problem for the business is that medical costs have been rising, and chipping away at its margins in the process. CVS typically generates single-digit profit margins, leaving little room for error. If costs continue to creep up and there isn't a material increase in sales, then that can spell disaster for its bottom line. In its most recently reported quarter, which ended on Sept. 30, 2025, CVS incurred a net loss of just under $4 billion due to goodwill impairment charges, which totaled $5.7 billion.
NYSE: CVS
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Why I'd avoid CVS Health stock today
In 2025, shares of CVS Health rose a staggering 77%, as investors were bullish on the company's turnaround efforts under new CEO David Joyner, who took over in October 2024. But with multiple potential headwinds to worry about, this is not a stock I'd feel comfortable holding on to. The health insurance industry is coming under pressure, and CVS' pharmacy business isn't all that exciting either, especially as consumers have more ways to buy pharmaceutical products online these days.
The stock may seem like a cheap buy, trading at a forward price-to-earnings multiple of 10 (based on analyst expectations), but the broader macroeconomic issues are too concerning to ignore. Without much better margins or at least more appealing growth prospects, CVS simply doesn't make for an enticing buy right now. As of Monday, the stock was down 5% since the start of the year, and I wouldn't be surprised to see it fall further in the weeks and months ahead.
