CVS Snatches CalPERS Pharmacy Contract from UnitedHealth
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Notably, CalPERS (California Public Employees' Retirement System) is the largest public pension fund in the U.S., serving over 2 million public employees, retirees, and their families in California.
More Details About the Deal
CalPERS is moving from OptumRx, a UnitedHealth subsidiary, to CVS Caremark, citing CVS's more competitive pricing. The pension fund also noted that CVS stood out among other bidders for its strong commitment to managing pharmacy costs and upholding high clinical standards. CVS will take over this role starting January 1, 2026.
Under the agreement, CVS is required to meet specific cost and quality goals; failing to do so could cost the company up to $250 million in performance-based penalties.
Meanwhile, the five-year deal will give outpatient prescription drug coverage to around 587,000 CalPERS members, or about 40% of those receiving health benefits through the system.
CVS vs. UnitedHealth
CVS Health has made a strong comeback in 2025 after facing several tough years. Year-to-date, CVS stock has gained over 40%.
Additionally, CVS Health reported strong first-quarter results for 2025 in May, with revenue rising 7% year over year and adjusted earnings per share jumping to $2.25, up from $1.31 the previous year. The company also raised its full-year adjusted EPS forecast to $6.00–$6.20, up from a prior range of $5.75–$6.00, and now expects to generate about $7 billion in cash flow.
On the other hand, UnitedHealth has been struggling with multiple challenges. In April, the company reported unexpectedly high medical costs in its Medicare division. By May, it suspended its full-year financial forecast, and CEO Andrew Witty stepped down suddenly for personal reasons. So far this year, UnitedHealth shares have fallen more than 40%.
Which Healthcare Stock Is a Strong Buy, According to Analysts?
Using the TipRanks Stock Comparison tool, we compared these healthcare stocks. Among these companies, CVS stock has earned a Strong Buy rating from analysts, while UNH carries a Moderate Buy. In terms of share price appreciation, CVS' average stock price target of $81.27 offers an upside potential of 27% from current levels.
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