NEW YORK, August 18, 2026, 11:04 EDT
- Costco gained 1.9% during U.S. trading hours on Tuesday.
- A collaboration with SCAN would evaluate Medicare products in three different states.
- Approximately 5 million Medicare enrollees are included in the target markets.
Shares of Costco Wholesale Corporation NASDAQ:COST climbed 1.9% to $971.61 on Tuesday morning, as investors evaluated a forthcoming Medicare collaboration with SCAN Group, a nonprofit insurer. By 10:59 a.m. EDT, the stock’s trading range stood between $955.03 and $971.38.
Costco-branded Medicare Advantage plans are set for a restricted launch in two states, while a Medicare supplement plan is planned for introduction in a third state. The combined regions cover around 5 million Medicare participants, but the company has not identified the specific states or provided a rollout timeline. The plans are still awaiting regulatory clearance.
For investors, the key issue is achieving scale. Each additional percentage point of penetration in that population translates to 50,000 plan members. This figure amounts to nearly 9% of SCAN’s current member base. It serves as a significant operational milestone, even before any financial details are disclosed.
| Rollout measure | Verified detail |
|---|---|
| Medicare Advantage | Offered in two states |
| Medicare supplement | Available in one state |
| Target-market Medicare population | Approximately 5 million individuals |
| SCAN current membership | Roughly 560,000 enrolled |
| Costco membership bundled | Not bundled, in line with federal regulations |
Costco plans to offer the insurance plans in stores, via its website, and through agents. The insurance product will not include a Costco membership. This restriction is significant. The business potential could depend more on member participation and increased visits to the pharmacy, rather than combining the product with a loyalty program.
SCAN begins the trial with around 560,000 members. The company currently provides Medicare Advantage plans in Arizona, Nevada, New Mexico, Texas, and Washington, in addition to its main market in Southern California. Costco and SCAN have previously partnered on senior health and pharmacy events.
Costco pharmacy executive Richard Stephens stated in October 2025, “Costco has a long history of partnering with SCAN as a preferred network pharmacy.” The previous initiative included 50 Costco sites spanning five states. SCAN partnership announcement
| Target-market capture | Plan members | Share of SCAN’s current base |
|---|---|---|
| 1% | 50,000 | 8.9% |
| 5% | 250,000 | 44.6% |
| 10% | 500,000 | 89.3% |
The scenarios show volume figures rather than profits. Costco and SCAN have not made their financial arrangements or risk-sharing details public. Margins for Medicare plans may vary widely depending on geography, the benefits offered, and the health status of enrollees. As a result, investors still cannot directly link enrollment numbers to Costco’s potential earnings.
Costco’s current approach illustrates the strategy. The retailer relies on membership fees to offset thin merchandise margins and encourage frequent returns. Introducing a Medicare product could strengthen relationships with senior customers and boost revenue in pharmacy, vision, hearing, and over-the-counter categories. Costco characterizes its strategy as emphasizing high sales volumes, quick turnover, and a narrow product assortment.
| Costco operating indicator | Latest reported value | Change |
|---|---|---|
| Net sales for fiscal Q3 | $69.15 billion | +11.6% |
| Membership fees for fiscal Q3 | $1.37 billion | +10.7% |
| Net income for fiscal Q3 | $2.19 billion | +15.2% |
| Adjusted U.S. comparable sales for fiscal Q3 | — | +6.8% |
| Adjusted digital comparable sales for fiscal Q3 | — | +20.8% |
| Net sales for July | $23.12 billion | +10.7% |
The main business began the test period with strong performance. Membership fee revenue for the fiscal third quarter grew by 10.7% to $1.37 billion. Net income advanced 15.2% to $2.19 billion. Adjusted digitally enabled comparable sales were up 20.8%.
July delivered further upbeat results, with net sales climbing 10.7% to $23.12 billion for the four weeks ending August 2. Adjusted comparable sales for the company advanced 8.9%, and digitally enabled sales rose 17.7%.
The stock’s valuation already factors in significant execution. On Tuesday, shares traded at a market capitalisation around $431 billion and a trailing price-to-earnings ratio of 48.9. Analysts’ average target stood at $1,101.44, representing roughly a 13% premium to the morning price. The lowest available target was $781.
| Analyst / firm | Recommendation | Target | Date |
|---|---|---|---|
| Bill Kirk / Roth MKM | Sell | $781 | Aug. 6 |
| Greg Melich / Evercore ISI | Buy | $1,100 | Aug. 6 |
| Zhihan Ma / Bernstein | Buy | $1,194 | Aug. 6 |
| Kate McShane / Goldman Sachs | Buy | $1,159 | Aug. 5 |
| Edward Kelly / Wells Fargo | Hold | $1,000 | Aug. 5 |
| 21-analyst consensus | 13 Buy / 7 Hold / 1 Sell | Average $1,101.44 | Last three months |
The debate centers on that spread. Supporters can cite steady fee increases and strong member participation. Critics may question the potential profit a regulated insurance program could bring to a retailer already trading at a premium.
Risks: The proposals are subject to regulatory clearance. Specifics on markets, timing, and financials have not been revealed. Insufficient sign-ups or operational setbacks may impact Costco’s image, and with shares trading at a premium, expectations are high.
Key signals still needed are concrete details. Investors await information on launch timing, approval schedule, pricing, and Costco’s share of the revenue. For now, the 5 million enrolled marks the scale of the opportunity, though its value remains unclear.
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