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The company saw more than $11.6 billion wiped off its market value by 11:30 a.m. ET. The stock has fallen more than 13% this year.
CVS led a decline in other health insurers, with Centene (NYSE:CNC) Corp, UnitedHealth Group (NYSE:UNH) and Cigna Corp (NYSE:CI) down between 1% and 7%.
The lower rating means the plan, which includes more than 1.9 million members, is ineligible for performance-based bonus payments from the government in 2024 and is likely to impact CVS earnings.
“CVS will not reduce benefits to offset the impact, meaning the company will fully absorb the 5% margin hit from lost quality bonus payments,” J.P. Morgan analysts said.
Year-over-year declines in Star Ratings were expected due to expiry of the one-time COVID-specific disaster relief program, Oppenheimer analysts said, adding that CVS and Cigna were among the biggest decliners.
