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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to_________

Commission file number: 001-01011

CVS HEALTH CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			05-0494040
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


One CVS Drive,	Woonsocket,	Rhode Island	02895
(Address of principal executive offices)			(Zip Code)


Registrant’s telephone number, including area code:			(401)			765-1500


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	CVS	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:		None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒

Yes

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐

Yes

☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐

Yes

☒

The aggregate market value of the registrant’s common stock held by non-affiliates was approximately $7486,~~072~~382,~~103~~523,~~405~~283 as of June 30, ~~2024~~2025, based on the closing price of the common stock on the New York Stock Exchange. For purposes of this calculation, only executive officers and directors are deemed to be affiliates of the registrant.

As of February 54, ~~2025~~2026, the registrant had 1,~~260~~272,~~795~~211,063 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The following materials are incorporated by reference into this Form 10-K:

Information contained in the definitive proxy statement for CVS Health Corporation’s ~~2025~~2026 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, ~~2024~~2025 (the “Proxy Statement”), is incorporated by reference in Parts III and IV to the extent described therein.

TABLE OF CONTENTS

		Page
Part I
Item 1:	Business	2
Item 1A:	Risk Factors	3532
Item 1B:	Unresolved Staff Comments	6356
Item 1C:	Cybersecurity	6356
Item 2:	Properties	6457
Item 3:	Legal Proceedings	6558
Item 4:	Mine Safety Disclosures	6558
	Information about our Executive Officers	6659
Part II
Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6760
Item 6:	Reserved	6962
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7063
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk	~~100~~90
Item 8:	Financial Statements and Supplementary Data	~~103~~92
Item 9:	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~192~~174
Item 9A:	Controls and Procedures	~~192~~174
Item 9B:	Other Information	~~192~~174
Item 9C:	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~193~~175
Part III
Item 10:	Directors, Executive Officers and Corporate Governance	~~193~~175
Item 11:	Executive Compensation	~~193~~175
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~193~~175
Item 13:	Certain Relationships and Related Transactions, and Director Independence	~~194~~176
Item 14:	Principal Accountant Fees and Services	~~194~~176
Part IV
Item 15:	Exhibits and Financial Statement Schedules	~~195~~177
Item 16:	Form 10-K Summary	~~200~~182
	Signatures	~~201~~183

Unless the context otherwise requires, references to the terms “we,” “our” or “us” used throughout this Annual Report on Form 10-K (this “10-K”) refer to CVS Health Corporation (a Delaware corporation), together with its subsidiaries (collectively, “CVS Health” or the “Company”). References to competitors and other companies throughout this 10-K, including the information incorporated herein by reference, are for illustrative or comparison purposes only and are not identifying that these companies are the only competitors or closest competitors of the Company or any of the Company’s businesses, products, or services.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a “safe harbor” for forward-looking statements, so long as (1) those statements are identified as forward-looking, and (2) the statements are accompanied by meaningful cautionary statements that identify important factors that could cause actual results to differ materially from those discussed in the statement. We want to take advantage of these safe harbor provisions.

Certain information contained in this 10-K is forward-looking within the meaning of the Reform Act or Securities and Exchange Commission (“SEC”) rules. This information includes, but is not limited to: “~~Outlook~~Trends ~~for~~and ~~2025~~Uncertainties” of Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in Item 7, “Quantitative and Qualitative Disclosures About Market Risk” included in Item 7A, “Government Regulation” included in Item 1, and “Risk Factors” included in Item 1A. In addition, throughout this 10-K and our other reports and communications, we use the following words or variations or negatives of these words and similar expressions when we intend to identify forward-looking statements:

Anticipates

Believes

Can

Continue

Could

Estimates

Evaluate

Expects

Explore

Forecast

Guidance

Intends

Likely

May

Might

Outlook

Plans

Potential

Predict

Probable

Projects

Seeks

Should

View

Will

All statements addressing the future operating performance of CVS Health or any segment or any subsidiary and/or future events or developments, including, but not limited to, statements relating to the Company’s investment portfolio, operating results, cash flows and/or financial condition, statements relating to corporate strategy, statements relating to future revenue, operating income or adjusted operating income, earnings per share or adjusted earnings per share, Health Care Benefits segment business, sales results and/or trends, medical cost trends, medical membership, Medicare Part D membership, medical benefit ratios and/or operations, Health Services segment business, sales results and/or trends and/or operations, Pharmacy & Consumer Wellness segment business, sales results and/or trends and/or operations, incremental investment spending, interest expense, effective tax rate, weighted-average share count, cash flow from operations, net capital expenditures, cash available for debt repayment, statements related to possible, proposed, pending or completed acquisitions, joint ventures, investments or combinations that involve, among other things, the timing or likelihood of receipt of regulatory approvals, the timing of completion, integration synergies, net synergies and integration risks and other costs, enterprise modernization, transformation, leverage ratio, cash available for enhancing shareholder value, inventory reduction, turn rate and/or loss rate, debt ratings and actions taken by ratings agencies, the Company’s ability to attract or retain customers and clients, store development and/or relocations, new product development, and the impact of industry and regulatory developments, as well as statements expressing optimism or pessimism about future operating results or events, are forward-looking statements within the meaning of the Reform Act.

Forward-looking statements rely on a number of estimates, assumptions and projections concerning future events, and are subject to a number of significant risks and uncertainties and other factors that could cause actual results to differ materially from those statements. Many of these risks and uncertainties and other factors are outside our control.

Certain additional risks and uncertainties and other factors are described under “Risk Factors” included in Item 1A of this 10-K; these are not the only risks and uncertainties we face. There can be no assurance that the Company has identified all the risks that may affect it. Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial also may adversely affect the Company’s businesses. If any of those risks or uncertainties develops into actual events, those events or circumstances could have a material adverse effect on the Company’s businesses, operating results, cash flows, financial condition and/or stock price, among other effects.

You should not put undue reliance on forward-looking statements. Any forward-looking statement speaks only as of the date of this 10-K, and we disclaim any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise.

Table of Contents

PART I

Item 1. Business.

Overview

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a leading health solutions company building a world of health around every consumer it serves and connecting care so that it works for people wherever they are. As of December 31, ~~2024~~2025, we had ~~more~~approximately ~~than~~ 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics, and a leading pharmacy benefits manager with approximately 9087 million plan members and expanding specialty pharmacy solutions~~, and a dedicated senior pharmacy care business serving more than 800,000 patients per year~~. We serve an estimated more than 3637 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). We are creating new sources of value through our integrated model allowing us to expand into personalized, technology driven care delivery and health services, increasing access to quality care, delivering better health outcomes and lowering overall health care costs.

The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other.

Business Strategy

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Health Care Benefits Segment

The Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers through its Aetna® operations, serving an estimated more than 3637 million people as of December 31, ~~2024~~2025. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs and Medicaid health care management services. The Health Care Benefits segment’s primary customers, its members, primarily access the segment’s products and services through employer groups, government-sponsored plans or individually. The Health Care Benefits segment also serves customers who purchase products and services that are ancillary to its health insurance products.

Health Care Benefits Products and Services

The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk of medical and dental care costs) as “ASC.” Health Care Benefits segment products and services consist of the following:

•Commercial Medical: The Health Care Benefits segment offers point-of-service (“POS”), preferred provider organization (“PPO”), health maintenance organization (“HMO”) and indemnity benefit (“Indemnity”) plans. Commercial medical products also include health savings accounts (“HSAs”) and consumer-directed health plans that combine traditional POS or PPO and/or dental coverage, subject to a deductible, with an accumulating benefit account (which may be funded by the plan sponsor and/or the member in the case of HSAs). Principal products and services are targeted specifically to large multi-site national, mid-sized and small employers, individual insureds and expatriates. The Company offers medical stop loss insurance coverage for certain employers who elect to self-insure their health benefits. Under medical stop loss insurance products, the Company assumes risk for costs associated with large individual claims and/or aggregate loss experience within an employer’s plan above a pre-set annual threshold. The segment also has a portfolio of additional health products and services that complement its medical products such as dental plans, behavioral health and employee assistance products, provider network access and vision products. The Company also sold Insured plans directly to individual consumers through the individual public health insurance exchanges (“Public Exchanges”) through the year

~~assistance~~ended ~~products~~December 31, ~~provider network access and vision products~~2025. The Company ~~sold~~exited ~~Insured~~the ~~plans~~states ~~directly~~in towhich ~~individual~~Aetna ~~consumers~~operated ~~through~~on the ~~individual public health insurance exchanges (“~~Public Exchanges”) ineffective 17January ~~states as of December 31, 2024~~2026.

•Government Medical: In select geographies, the Health Care Benefits segment offers Medicare Advantage plans, Medicare Supplement plans and prescription drug coverage for Medicare beneficiaries; participates in Medicaid and subsidized Children’s Health Insurance Programs (“CHIP”); and participates in demonstration projects for members who are eligible for both Medicare and Medicaid (“Duals”). These Government Medical products are further described below:

•Medicare Advantage: Through annual contracts with the U.S. Centers for Medicare & Medicaid Services (“CMS”), the Company offers HMO and PPO products for eligible individuals in certain geographic areas through the Medicare Advantage program. Members typically receive enhanced benefits over traditional fee-for-service Medicare coverage (“Original Medicare”), including reduced cost-sharing for preventive care, vision and other services. The Company offered network-based HMO and/or PPO plans in 4644 states and Washington, D.C. in ~~2024~~2025. For certain qualifying employer groups, the Company offers Medicare PPO products nationally. When combined with the Company’s PDP product, these national PPO plans form an integrated national Insured Medicare product for employers that provides medical and pharmacy benefits.

•Medicare PDP: The Company is a national provider of drug benefits under the Medicare Part D prescription drug program. All Medicare eligible individuals are eligible to participate in this voluntary prescription drug plan. Members typically receive coverage for certain prescription drugs, usually subject to a deductible, co-insurance and/or co-payment. The Company offered PDP plans in all 50 states and Washington, D.C. in ~~2024~~2025.

•Medicare Supplement: For certain Medicare eligible members, the Company offers supplemental coverage for certain health care costs not covered by Original Medicare. The products included in the Medicare Supplement portfolio help to cover some of the gaps in Original Medicare, and include coverage for Medicare deductibles and coinsurance amounts. The Company offered a wide selection of Medicare Supplement products in 49 states and Washington, D.C. in ~~2024~~2025.

•Medicaid and CHIP: The Company offers health care management services to individuals eligible for Medicaid and CHIP under multi-year contracts with government agencies in various states that are subject to annual appropriations. CHIP are state-subsidized insurance programs that provide benefits for families with uninsured children. The Company offered these services on an Insured or ASC basis in 1615 states in ~~2024~~2025.

•Duals: The Company provides health coverage to beneficiaries who are dually eligible for both Medicare and Medicaid coverage. These members must meet certain income and resource requirements in order to qualify for this coverage. The Company coordinates 100% of the care for these members and may provide them with additional services in order to manage their health care costs.

The Company also has a portfolio of transformative products and services aimed at creating a holistic and integrated approach to individual health and wellness. These products and services complement the Commercial Medical and Government Medical products and aim to provide innovative solutions, create integrated experience offerings and enable enhanced care delivery to customers.

Health Care Benefits Provider Networks

The Company contracts with physicians, hospitals and other providers for services they provide to the Company’s members. The Company uses a variety of techniques designed to help encourage appropriate utilization of medical services (“utilization”) and maintain affordability of quality coverage. In addition to contracts with providers for negotiated rates of reimbursement, these techniques include creating risk sharing arrangements that align economic incentives with providers, the development and implementation of guidelines for the appropriate utilization and the provision of data to providers to enable them to improve health care quality. At December 31, ~~2024~~2025, the Company’s underlying nationwide provider network had approximately 12.90 million participating providers. Other providers in the Company’s provider networks also include laboratory, imaging, urgent care and other freestanding health facilities.

Health Care Benefits Quality Assessment

CMS uses a 5-star rating system to monitor Medicare health care and drug plans and ensure that they meet CMS’s quality standards. CMS uses this rating system to provide Medicare beneficiaries with a tool that they can use to compare the overall quality of care and level of customer service of companies that provide Medicare health care and drug plans. The rating system considers a variety of measures adopted by CMS, including quality of preventative services, chronic illness management and overall customer satisfaction. See “Health Care Benefits Pricing” below in this Item 1 for further discussion of star ratings. The Company seeks Health Plan accreditation for Aetna Inc. (“Aetna”) HMO plans from the National Committee for Quality

~~Company seeks Health Plan accreditation for Aetna Inc. (“Aetna”) HMO plans from the National Committee for Quality~~ Assurance (“NCQA”), a private, not-for-profit organization that evaluates, accredits and certifies a wide range of health care organizations. Health care plans seeking accreditation must pass a rigorous, comprehensive review and must annually report on their performance.

Aetna Life Insurance Company (“ALIC”), a wholly-owned subsidiary of the Company, has received nationwide NCQA PPO Health Plan accreditation. As of December 31, ~~2024~~2025, all of the Company’s Commercial HMO and all of ALIC’s PPO members who were eligible participated in HMOs or PPOs that are accredited by the NCQA.

The Company’s provider selection and credentialing/re-credentialing policies and procedures are consistent with NCQA and URAC, a health care accrediting organization that establishes quality standards for the health care industry, as well as state and federal, requirements. In addition, the Company is certified under the NCQA Credentials Verification Organization (“CVO”) certification program for all certification options and has URAC CVO accreditation.

Quality assessment programs for contracted providers who participate in the Company’s networks begin with the initial review of health care practitioners. Practitioners’ licenses and education are verified, and their work history is collected by the Company or in some cases by the practitioner’s affiliated group or organization. The Company generally requires participating hospitals to be certified by CMS or accredited by The Joint Commission, the American Osteopathic Association, or Det Norske Veritas Healthcare.

The Company also offers quality and outcome measurement programs, quality improvement programs and health care data analysis systems to providers and purchasers of health care services.

Health Care Benefits Information Systems

The Health Care Benefits segment currently operates and supports an end-to-end suite of information technology platforms to support member engagement, enrollment, health benefit administration, care management, service operations, financial reporting and analytics. Platforms are supported by an integration layer to facilitate the transfer of real-time data. There is continued focus and investment in enterprise data platforms, cloud capabilities, digital products to offer innovative solutions and a seamless experience to the Company’s members through mobile and web channels. The Company is making concerted investments in emerging technology capabilities such as artificial intelligence (“AI”) to further automate, augment and improve its operational capabilities, and to improve the experience for providers, patients, and consumers. The Health Care Benefits segment is utilizing the full breadth of the Company’s assets to build enterprise technology that will help guide our members through their health care journey, provide them a high level of service, enable healthier outcomes and encourage them to take next best actions to lead healthier lives.

Health Care Benefits Customers

Medical membership is dispersed throughout the U.S., and the Company also serves medical members in certain countries outside the U.S. The Company offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, many of which are available nationwide. The Company markets its products and services to employer groups, individuals, college students, part-time and hourly workers, health plans, providers, governmental units, government-sponsored plans, labor groups and expatriates. For additional information on medical membership, see “Health Care Benefits Segment” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”) included in Item 7 of this 10-K.

The Company markets both Commercial Insured and ASC products and services primarily to employers that sponsor the Company’s products for the benefit of their employees and their employees’ dependents. Frequently, larger employers offer employees a choice among coverage options from which the employee makes his or her selection during a designated annual open enrollment period. Typically, employers pay all of the monthly premiums to the Company and, through payroll deductions, obtain reimbursement from employees for a percentage of the premiums that is determined by each employer. Some Health Care Benefits products are sold directly to employees of employer groups on a fully employee-funded basis. In some cases, the Company bills the covered individual directly. The Company also ~~sells~~sold Insured plans directly to individual consumers in certain geographies through the ~~Public~~year ~~Exchanges~~ended December 31, 2025.

The Company offers Insured Medicare coverage on an individual basis as well as through employer groups to their retirees. Medicaid and CHIP members are enrolled on an individual basis. The Company also offers Insured health care coverage to members who are dually-eligible for both Medicare and Medicaid.

Health Care Benefits products are sold through: the Company’s sales personnel; independent brokers, agents and consultants who assist in the production and servicing of business; asand ~~well as~~ private health insurance exchanges (“Private Exchanges”) ~~and Public Exchanges (together with Private Exchanges, “Insurance Exchanges”)~~. For large employers or other entities that sponsor the Company’s products (“plan sponsors”), independent consultants and brokers are frequently involved in employer health plan selection decisions and sales. In some instances, the Company may pay commissions, fees and other amounts to brokers, agents, consultants and sales representatives who place business with the Company. In certain cases, the customer pays the broker for services rendered, and the Company may facilitate that arrangement by collecting the funds from the customer and transmitting them to the broker. The Company supports marketing and sales efforts with an advertising program that may include television, radio, billboards, print media and social media, supplemented by market research and direct marketing efforts.

The U.S. federal government is a significant customer of the Health Care Benefits segment through contracts with CMS for coverage of Medicare-eligible individuals and federal employee-related benefit programs. Other than the contracts with CMS, the Health Care Benefits segment is not dependent upon a single customer or a few customers the loss of which would have a significant effect on the earnings of the segment. The loss of business from any one or a few independent brokers or agents would not have a material adverse effect on the earnings of the Health Care Benefits segment. Health Care Benefits segment revenues from the federal government accounted for 18approximately 20% of the Company’s consolidated total revenues in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023. Contracts with CMS for coverage of Medicare-eligible individuals in the Health Care Benefits segment accounted for approximately 7479%, 7374% and 7473%, respectively, of the Company’s consolidated revenues from the federal government in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023.

Health Care Benefits Pricing

For Commercial Insured plans, contracts containing the pricing and other terms of the relationship are generally established in advance of the policy period and typically have a duration of one year. Fees under ASC plans are generally fixed for a period of one year.

Generally, a fixed premium rate is determined at the beginning of the policy period for Commercial Insured plans. The Company typically cannot recover unanticipated increases in health care and other benefit costs in the current policy period; however, it may consider prior experience for a product in the aggregate or for a specific customer, among other factors, in determining premium rates for future policy periods. Where required by state laws, premium rates are filed and approved by state regulators prior to contract inception. Future operating results could be adversely affected if the premium rates requested are not approved or are adjusted downward or their approval is delayed by state or federal regulators.

The Company has Medicare Advantage and PDP contracts with CMS to provide HMO, PPO and prescription drug coverage to Medicare beneficiaries in certain geographic areas. Under these annual contracts, CMS pays the Company a fixed per member (or “capitation”) payment and/or a portion of the premium, both of which are based on membership and adjusted for demographic and health risk factors. CMS also considers inflation, changes in utilization patterns and average per capita fee-for-service Medicare costs in the calculation of the fixed capitation payment or premium. PDP contracts also provide a risk-sharing arrangement with CMS to limit the Company’s exposure to unfavorable expenses or benefit from favorable expenses. Amounts payable to the Company under the Medicare arrangements are subject to annual revision by CMS, and the Company elects to participate in each Medicare service area or region on an annual basis. Premiums paid to the Company for Medicare products are subject to federal government reviews and audits, which can result, and have resulted, in retroactive and prospective premium adjustments and refunds to the government and/or members. In addition to payments received from CMS, some Medicare Advantage products and all PDP products require a supplemental premium to be paid by the member or sponsoring employer. In some cases, these supplemental premiums are adjusted based on the member’s income and asset levels. Compared to Commercial Medical products, Medicare contracts generate higher per member per month revenues and higher health care and other benefit costs.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) ties a portion of each Medicare Advantage plan’s reimbursement to the plan’s “star ratings.” Plans must have a star rating of 4 or higher (out of 5) to qualify for bonus payments. CMS released the Company’s ~~2025~~2026 star ratings in October ~~2024~~2025. The Company’s ~~2025~~2026 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in ~~2026~~2027. Based on the Company’s membership atas of December ~~31,~~ ~~2024~~2025, 88more than 81% of the Company’s Medicare Advantage members were in plans with ~~2025~~2026 star ratings of at least 4.0 stars, compared to 9188% of the Company’s Medicare Advantage members being in plans with ~~2024~~2025 star ratings of at least 4.0 stars based on the Company’s membership atas of December ~~31,~~ ~~2023~~2024.

Rates for Medicare Supplement products are regulated at the state level and vary by state and plan.

Under Insured Medicaid contracts, state government agencies pay the Company fixed monthly rates per member that vary by state, line of business and demographics; and the Company arranges, pays for and manages the health care services provided to Medicaid beneficiaries. These rates are subject to change by each state, and, in some instances, provide for adjustment for health risk factors. CMS requires these rates to be actuarially sound. The Company also receives fees from customers where it provides services under ASC Medicaid contracts. ASC Medicaid contracts generally are for periods of more than one year, and certain of them contain performance incentives and limited financial risk sharing with respect to certain medical, financial and operational metrics. Under these arrangements, performance is evaluated annually, with associated financial incentive opportunities, and financial risk share obligations are typically limited to a percentage of the fees otherwise payable to the Company. Payments to the Company under Medicaid contracts are subject to the annual appropriation process in the applicable state.5

Under Duals contracts, the rate setting process is generally established by CMS in partnership with the state government agency participating in the demonstration project. Both CMS and the state government agency may seek premium and other refunds under certain circumstances, including if the Company fails to comply with CMS regulations or other contractual requirements.

The Company offers HMO and consumer-directed medical and dental plans to federal employees under the Federal Employees Health Benefits (“FEHB”) Program and the Federal Employees Dental and Vision Insurance Program. Premium rates and fees for those plans are subject to federal government review and audit, which can result, and have resulted, in retroactive and prospective premium and fee adjustments and refunds to the government and/or members.

Health Care Benefits Seasonality

The Health Care Benefits segment’s quarterly operating income progression is impacted by (i) the seasonality of benefit costs which generally increase during the year as Insured members progress through their annual deductibles and out-of-pocket expense limits, (ii) continued changes in product mix between Commercial and Government medical membership and (iii) the seasonality of operating expenses, which are generally the highest during the fourth quarter due primarily to spending to support readiness for the start of the upcoming plan year and marketing associated with Medicare annual enrollment. The Health Care Benefit segment’s quarterly operating income progression may be impacted by exogenous factors, which include regulatory or legal changes, as well as shifting care patterns. During the year ended December 31, 2025, the Health Care Benefits segment’s operating income progression in its Medicare product line was impacted by changes resulting from the Inflation Reduction Act (the “IRA”), which resulted in a shift in the pattern of earnings throughout the year, including lower earnings in the second half of the year compared to the first half of the year.

Health Care Benefits Competition

The health care benefits industry is highly competitive, primarily due to a large number of for-profit and not-for-profit competitors, competitors’ marketing and pricing and a proliferation of competing products, including new products that are continually being introduced into the marketplace. New entrants into the marketplace, as well as consolidation within the industry, have contributed to and are expected to intensify the competitive environment. In addition, the rapid pace of change as the industry evolves towards a consumer-focused retail marketplace, including ~~Insurance~~Private Exchanges and Public Exchanges, and the increased use of technology to interact with members, providers and customers, increase the risks the Company faces from new entrants and disruptive actions by existing competitors compared to prior periods.

The Company believes that the significant factors that distinguish competing health plans include the perceived overall quality (including accreditation status), quality of service, comprehensiveness of coverage, cost (including premium rates, provider discounts and member out-of-pocket costs), product design, financial stability and ratings, breadth and quality of provider networks, ability to offer different provider network options, providers available in such networks, and quality of member support and care management programs. The Company believes that it is competitive on each of these factors. The Company’s ability to increase the number of persons covered by its health plans or to increase Health Care Benefits segment revenues is affected by its ability to differentiate itself from its competitors on these factors. Competition may also affect the availability of services from providers, including primary care physicians, specialists and hospitals.

Insured products compete with local and regional health care benefits plans, health care benefits and other plans sponsored by other large commercial health care benefit insurance companies, health system owned health plans, new entrants into the marketplace and numerous for-profit and not-for-profit organizations operating under licenses from the Blue Cross and Blue Shield Association. The largest competitor in Medicare products is Original Medicare. Additional Health Care Benefits segment competitors include other types of medical and dental provider organizations, various specialty service providers (including pharmacy benefit management (“PBM”) services providers), health care consultants, financial services companies, integrated health care delivery organizations (networks of providers who also coordinate administrative services for and assume insurance risk of their members), third party administrators (“TPAs”) and, for certain plans, programs sponsored by the federal or state governments. Emerging competitors include start up health care benefits plans, provider-owned health

(including PBM services providers), health care consultants, financial services companies, integrated health care delivery organizations (networks of providers who also coordinate administrative services for and assume insurance risk of their members), third party administrators (“TPAs”) and, for certain plans, ~~programs sponsored by the federal or state governments. Emerging competitors include start up health care benefits plans, provider-owned health plans,~~ new joint ventures (including not-for-profit joint ventures among firms from multiple industries), financial services firms that are distributing competing products on their proprietary Private Exchanges, and consulting firms that are distributing competing products on their proprietary Private Exchanges, as well as non-traditional distributors such as retail companies. The Company’s ability to increase the number of persons enrolled in Insured Commercial Medical products also is affected by the desire and ability of employers to self-fund their health coverage.

The Health Care Benefits segment’s ASC plans compete primarily with other large commercial health care benefit insurance companies, numerous for-profit and not-for-profit organizations operating under licenses from the Blue Cross and Blue Shield Association and TPAs.

In addition to competitive pressures affecting the Company’s ability to obtain new customers or retain existing customers, the Health Care Benefits segment’s medical membership has been and may continue to be adversely affected by adverse and/or uncertain economic conditions and reductions in workforce by existing customers due to adverse and/or uncertain general economic conditions, especially in the U.S. and industries where such membership is concentrated.

Health Care Benefits Reinsurance

The Company currently has several reinsurance agreements with non-affiliated insurers that relate to Health Care Benefits insurance policies. The Company entered into these contracts to reduce the risk of catastrophic losses which in turn reduces capital and surplus requirements. The Company frequently evaluates reinsurance opportunities and refines its reinsurance and risk management strategies on a regular basis.

Health Services Segment

The Health Services segment provides a full range of PBM solutions, through its CVS Caremark® operations and delivers health care services in its medical clinics, virtually, and in the home~~, and offers provider enablement solutions~~. PBM solutions include plan design offerings and administration, formulary management, retail pharmacy network management services, and specialty and mail order pharmacy services. In addition, the Company provides clinical services, disease management services, medical spend management and pharmacy and/or other administrative services for providers and federal 340B drug pricing program covered entities (“Covered Entities”). The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants and provides various administrative, management and reporting services to pharmaceutical manufacturers. ~~During~~The ~~2023,~~segment ~~the~~also ~~Company~~works ~~completed~~directly ~~the~~with ~~acquisition~~pharmaceutical ofmanufacturers ~~two~~to ~~key~~commercialize and/or co-produce high quality biosimilar products through its CordavisTM subsidiary. The Health Services segment’s health care delivery assets –include Signify Health, Inc. (“Signify Health”), a leader in health risk assessments, and value-based care ~~and provider enablement services~~, and Oak Street Health, Inc. (“Oak Street Health”), a leading multi-payor operator of value-based primary care centers serving Medicare eligible patients. The ~~Company also launched CordavisTM, a wholly owned subsidiary that works directly with pharmaceutical manufacturers to commercialize and/or co-produce high quality biosimilar products. The~~ Health Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care (“Managed Medicaid”) plans, CMS, plans offered on ~~Insurance~~Private Exchanges and Public Exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities. During the year ended December 31, ~~2024~~2025, the Company’s PBM filled or managed 1.9 billion prescriptions on a 30-day equivalent basis.

Health Services Products and Services

PBM Solutions

The Health Services segment manages prescription drug distribution directly through the Company’s specialty and mail order pharmacies and through pharmacies in its retail network. All prescriptions processed by the Company are analyzed, processed and documented by the Company’s proprietary prescription management systems. These systems provide essential features and functionality to allow plan members to utilize their prescription drug benefits. These systems also streamline the process by which prescriptions are processed by staff and network pharmacists by enhancing review of various items through automation, including plan eligibility, early refills, duplicate dispensing, appropriateness of dosage, drug interactions or allergies, over-utilization and potential fraud.

Plan Design Offerings and Administration

The Company assists its PBM clients in designing pharmacy benefit plans that help improve health outcomes while minimizing the costs to the client. The Company also assists PBM clients in monitoring the effectiveness of their plans through frequent, informal communications, the use of proprietary software, as well as through formal annual, quarterly and sometimes monthly performance reviews. The Company administers pharmacy benefit plans for clients who contract with it to facilitate

The Company makes recommendations to help PBM clients design benefit plans that promote the use of lower cost, clinically appropriate drugs and helps its PBM clients control costs by recommending plan designs that encourage the use of generic equivalents of brand name drugs when such equivalents are available. Clients also have the option, through plan design, to further lower their pharmacy benefit plan costs by setting different member payment levels for different products on their drug lists or “formularies,” which helps guide members to choose lower cost alternatives through appropriate financial incentives.

Formulary Management

The Company utilizes an independent panel of doctors, pharmacists and other medical experts, referred to as the CVS Caremark National Pharmacy and Therapeutics Committee, to review and approve the selection of drugs that meet the Company’s standards of safety and efficacy for inclusion on one of the Company’s template formularies. The Company’s formularies provide recommended products in numerous drug classes to help ensure member access to clinically appropriate drugs with alternatives within a class under the client’s pharmacy benefit plan, while helping to drive the lowest net cost for clients that select one of the Company’s formularies. To help improve clinical outcomes for members and clients, the Company conducts ongoing, independent reviews of all drugs, including those appearing on the formularies and generic equivalent products. Many of the Company’s clients choose to adopt a template formulary offering as part of their plan design. PBM clients are given capabilities to offer real time benefits information for a member’s specific plan design, provided electronically in the Electronic Health Record at the point of prescribing, at the CVS pharmacy and directly to members.

Retail Pharmacy Network Management Services

The Company maintains a national network of approximately 6563,000 retail pharmacies, consisting of approximately 3734,~~000~~500 chain pharmacies (which include CVS pharmacy locations) and approximately 28,~~000~~500 independent pharmacies, in the U.S., including Puerto Rico, the District of Columbia, Guam and the U.S. Virgin Islands. When a customer fills a prescription in a retail pharmacy, the pharmacy sends prescription data electronically to the Company from the point-of-sale. This data interfaces with the Company’s proprietary prescription management systems, which verify relevant plan member data and eligibility, while also performing a drug utilization review to help evaluate clinical appropriateness and safety and confirming that the pharmacy will receive payment for the prescription.

Specialty and Mail Order Pharmacy Services

The Company operates mail order pharmacies, specialty mail order pharmacies and retail specialty pharmacy stores in the U.S. The mail order pharmacies are used primarily for maintenance medications, while the specialty mail order pharmacies and retail specialty pharmacy stores are used for the delivery of advanced medications to individuals with chronic or genetic diseases and disorders. The Health Services segment’s plan members or their prescribers submit prescriptions or refill requests to these pharmacies, and staff pharmacists review these prescriptions and refill requests with the assistance of the Company’s prescription management systems. This review may involve communications with the prescriber and, with the prescriber’s approval when required, can result in interventions designed to help reduce cost and/or improve quality of treatment. The Health Services segment pays an administrative service fee to the Pharmacy & Consumer Wellness segment, in exchange for which the Pharmacy & Consumer Wellness segment provides pharmacy fulfillment and patient management services to support the Health Services segment’s specialty and mail order pharmacy offerings.

The Company’s mail order pharmacies and specialty mail order pharmacies have been awarded Mail Service Pharmacy and Specialty Pharmacy accreditation, respectively, from URAC. Substantially all of the Company’s specialty mail order pharmacies also have been accredited by The Joint Commission and the Accreditation Commission for Health Care (“ACHC”), which are independent, not-for-profit organizations that accredit and certify health care programs and organizations in the U.S. The ACHC accreditation includes an additional accreditation by the Pharmacy Compounding Accreditation Board, which certifies compliance with the highest level of pharmacy compounding standards, and a distinction in Rare Diseases and Orphan Drugs.

Clinical Services

The Company offers multiple clinical programs and services to help clients manage overall pharmacy and health care costs in a clinically appropriate manner. These programs are primarily designed to promote better health outcomes and to help target inappropriate medication utilization and non-adherence to medication, each of which may result in adverse medical events that negatively affect member health and client pharmacy and medical spend. These programs include utilization management (“UM”), medication management, quality assurance, adherence and counseling programs to complement the client’s plan design and clinical strategies. The Company offers an integrated strategy that aims to help decrease the potential for inappropriate opioid use while preserving access for those with genuine chronic pain needs through concurrent and

negatively affect member health and client pharmacy and medical spend. These programs include utilization management (“UM”), medication management, quality assurance, adherence and counseling programs to complement the client’s plan design and clinical strategies. The Company offers an integrated strategy that aims to help decrease the potential for inappropriate opioid use while preserving access for those with genuine chronic pain needs through concurrent and retrospective claims’ review. In addition, this strategy aims to address potential fraud, waste, and abuse across multiple drug classes through surveillance and communications to prescribers and pharmacies. Core medication support products such as Pharmacy Advisor and Drug Savings Review optimize utilization through digital, phone, in-person, and provider-facing outreach to help participating plan members with certain chronic diseases to identify gaps in care, adhere to their prescribed medications, ensure efficient use of those medications, and manage their overall health conditions. The CVS Weight ~~Management~~ManagementTM program optimizes utilization of GLP-1 medication and provides the label-recommended lifestyle support and coaching to maximize and maintain weight loss on these therapies, while addressing new indications (e.g., cardiovascular disease). The Company also has digital connectivity that helps to lower drug costs for patients by providing expanded visibility to lower cost alternatives through enhanced analytics and data sharing.

Disease Management Programs

The Company’s clinical programs and services utilize advanced protocols and offer clients convenience in working with providers and other third parties. The Company’s care management program covers diseases such as rheumatoid arthritis, Parkinson’s disease, epilepsy and multiple sclerosis and is accredited by the NCQA. The Company’s UM program covers similar diseases and is accredited by the NCQA and URAC.

Medical Benefit Management

The Company’s NovoLogix® online preauthorization tool helps identify and capture cost savings opportunities for specialty drugs billed under the medical benefit by identifying outliers to appropriate dosages and costs, and helps to ensure clinically appropriate use of specialty drugs.

Group Purchasing Organization Services

The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants. The Company also provides various administrative, management and reporting services to pharmaceutical manufacturers.

Value-Based Care

In response to rising healthcare spending in the U.S., commercial, government and other payors are shifting away from fee-for-service payment models towards value-based models, including risk-based payment models that tie financial incentives to quality, efficiency and coordination of care. Value-based care (“VBC”) refers to the goal of incentivizing healthcare providers to simultaneously increase quality while lowering the cost of care for patients. More specifically, providers in a VBC model are incentivized to focus on more preventative care, higher quality of care and better coordination of care to create better health outcomes and avoid potentially expensive complications from illnesses that could be managed more conveniently and cost effectively.

The Company is committed to expanding value-based care in the U.S. and delivering higher quality care to patients at a lower overall cost to the industry. The Company primarily operates in value-based care through ~~two~~its ~~primary~~Oak ~~means:~~Street ~~providing~~Health ~~comprehensive~~ primary care ~~through~~centers. ~~its~~ Oak Street Health operates retail-like, community-based centers that provide medical primary care ~~centers~~services and ~~enabling~~support ~~independent~~Medicare ~~health~~eligible ~~systems~~patients ~~transition~~in tothe ~~value-based~~management ~~care~~of ~~through~~chronic ~~contracting~~illnesses and ~~care~~the ~~management~~prevention ~~services~~of unnecessary acute events. The Company’s ~~value-based~~integrates population health analytics, social support services and primary care ~~assets~~into ~~typically~~the ~~contract~~care ~~with~~model ~~payors,~~to ~~primarily~~drive ~~Medicare~~improved ~~Advantage~~patient outcomes. The Company contracts with health plans, and~~/or~~ CMS to generate medical costs savings, assume full financial risk of its patients and realize a return on its investment in primary care.

The Company’s ~~Oak~~clinics ~~Street~~implement ~~Health~~a ~~business~~branded ~~operates~~and ~~retail~~consumer-~~like,~~focused ~~community-based~~design ~~centers~~to ~~that~~create ~~provide~~a ~~medical~~welcoming ~~primary~~environment ~~care~~that ~~services~~engages ~~and support Medicare eligible~~ patients in ~~the~~highly ~~management~~accessible, ofconvenient ~~chronic~~locations ~~illnesses~~close ~~and~~to ~~the~~where ~~prevention~~patients oflive, ~~unnecessary~~work ~~acute~~and ~~events~~shop. ~~The~~As ~~Company~~of ~~integrates~~December 31, ~~population health analytics~~2025, ~~social support services and primary care into~~ the ~~care~~Company ~~model~~operated to246 ~~drive~~centers ~~improved~~across ~~patient~~27 ~~outcomes~~states. ~~The~~During ~~Company~~the ~~contracts~~year ~~with~~ended ~~health~~December 31, ~~plans and CMS to generate medical costs savings~~2025, ~~assume~~the ~~full~~Company’s ~~financial~~centers ~~risk~~provided ofcare ~~its~~for ~~patients~~approximately ~~and~~500,000 ~~realize a return on its investment in primary care~~patients.

~~The~~Prior ~~Company’s~~to ~~clinics~~2025, ~~implement~~the aCompany ~~branded~~also ~~and~~provided ~~consumer-focused~~enablement ~~design~~services to ~~create~~health asystems ~~welcoming~~primarily ~~environment~~through ~~that~~two ~~engages~~programs ~~patients~~administered inby ~~highly~~CMS: ~~accessible,~~the ~~convenient~~Accountable ~~locations~~Care ~~close~~Organization toRealizing ~~where patients live~~Equity, ~~work~~Access and ~~shop.~~Community AsHealth of(“ACO ~~December 31,~~REACH”) ~~2024,~~program and the ~~Company~~Medicare ~~operated~~Shared ~~239~~Savings ~~centers~~Program ~~across 27 states~~(“MSSP”). During the ~~year~~first ~~ended~~quarter ~~December 31,~~of ~~2024~~2025, the Company’s ~~centers~~determined ~~provided~~that ~~care~~it ~~for~~would ~~approximately~~substantially ~~500,000~~exit ~~patients~~both the ACO REACH program and the MSSP.

In addition to its primary care centers, the Company provides enablement services to independent health systems, assisting these groups with their transition to value-based care. The Company’s customers practice value-based care primarily through

two programs administered by CMS, the Accountable Care Organization (“ACO”) Realizing Equity, Access, and Community Health (“REACH”) Model (collectively, “ACO REACH”) and the Medicare Shared Savings Program (“MSSP”), under which the Company served a total of more than 1 million covered lives as of December 31, 2024.

ACOs are networks of healthcare providers and suppliers that work together to invest in infrastructure and redesign delivery processes to attempt to achieve high quality and efficient delivery of services. ACOs that achieve performance standards established by the U.S. Department of Health and Human Services (“HHS”) are eligible to share in a portion of the amounts saved by the Medicare program.

In-Home Health Evaluations

As a complement to its value-based care delivery, the Company operates a large mobile network of credentialed providers in the U.S. through its Signify Health business. These credentialed providers are deployed into the home primarily to conduct in-home health evaluations (“IHEs”) and perform select diagnostic services. IHEs may also be performed virtually or at a healthcare provider facility. During the year ended December 31, ~~2024~~2025, the Company performed more than 3.5 million IHEs. While in the home, providers perform IHEs with the assistance of the Company’s longitudinal patient records and proprietary clinical workflow software with its integrated device hub. The Company’s software guides clinical workflows as well as in-home diagnostic screenings, yielding a rich patient report of hundreds of data points. The Company also offers diagnostic and preventive services and provides comprehensive medication review services while in the home. Through its IHEs, the Company creates a comprehensive, documented record of the clinical, social and behavioral needs of its health plan customers’ medically complex populations and seek to further engage them with the healthcare system.

While in the home, providers perform IHEs with the assistance of the Company’s longitudinal patient records and proprietary clinical workflow software with its integrated device hub. The Company’s software guides clinical workflows as well as in-home diagnostic screenings, yielding a rich patient report of hundreds of data points. The Company also offers diagnostic and preventive services and provides comprehensive medication review services while in the home. Through its IHEs, the Company creates a comprehensive, documented record of the clinical, social and behavioral needs of its health plan customers’ medically complex populations and seeks to further engage these populations with the healthcare system.

The evaluation results of IHEs are provided to individuals’ primary care physicians. The Company believes sharing these results helps to fill gaps in care, while encouraging individuals who have not regularly visited their PCP to schedule a visit. The IHEs also provide health plans with insights into member health without taking members out of the home and contribute to health plans’ ability to effectively participate in value-based and risk-adjusted government programs such as Medicare Advantage. The data gathered during an IHE is also a resource that can be used by health plans to improve their Healthcare Effectiveness Data and Information Set (“HEDIS”) scores and Medicare Advantage star ratings.

MinuteClinic

As of December 31, ~~2024~~2025, the Company operated more than ~~900~~800 MinuteClinic locations in the U.S. The clinics are staffed by nurse practitioners and physician assistants who utilize nationally established guidelines to deliver a variety of health care services, including expanding primary care services. Payors value these clinics because they provide convenient, high-quality, cost-effective care, in many cases offering an attractive alternative to more expensive sites of care. MinuteClinic also offers virtual care services to connect customers with licensed providers to provide access to health services remotely. MinuteClinic is collaborating with the Company’s medical and pharmacy members to help meet the needs of the Company’s health plan and client plan members by offering programs that can improve member health and lower costs. MinuteClinic also maintains relationships with leading hospitals, clinics and physicians in the communities we serve to support and enhance quality, access and continuity of care.

Cordavis

The Company launched Cordavis, a wholly -owned subsidiary that works directly with pharmaceutical manufacturers to commercialize and/or co-produce high quality biosimilar products. Through Cordavis, the Company intends to develop a portfolio of products that will provide broader access to biosimilars in the U.S. As access to biosimilars increases, it is expected to generate more competition in the market which should lead to lower costs and result in higher savings for our clients.

Health Services Information Systems

The Health Services segment’s claim adjudication platform incorporates architecture that centralizes the data generated from adjudicating retail pharmacy, specialty and mail order claims and delivering other solutions to PBM clients. The Health Engagement Engine® technology and proprietary clinical algorithms help connect various parts of the enterprise and serve an essential role in cost management and health improvement, leveraging cloud-native technologies and practices. This capability transforms pharmacy data into actionable interventions at key points of care, including in retail, mail and specialty pharmacies as well as in customer care call center operations, leveraging our enterprise data platform to improve the quality of care. The technology leverages assisted artificial intelligence to deliver insights to the business and bring automation to otherwise manual tasks. Specialty services also connects with our claim adjudication platform and various health plan adjudication platforms with a centralized architecture servicing many clients and members. Operating services, such as Specialty Expedite®, provide an interconnected onboarding solution for specialty medications and branding solutions ranging from fulfillment to total patient management. These services are managed through our new innovative specialty workflow and web platform.

10The Health Services segment’s custom-built proprietary Canopy technology is a key driver of the success of its value-based care model and foundation for patients receiving a consistent, high-quality level of care. Canopy underlies every aspect of the Company’s day-to-day clinical and operational workflows, allowing care teams to tailor care plans to the needs of both the patient and the business.

The Health Services segment’s custom-built proprietary Canopy technology is a key driver of the success of its value-based care model and foundation for patients receiving a consistent, high-quality level of care. Canopy underlies every aspect of the Company’s day-to-day clinical and operational workflows, allowing care teams to tailor care plans to the needs of both the patient and the business. Canopy integrates an immense amount of data about patients from a broad set of sources, including payor claims data, pharmacy data and medical records from hospitals and specialists and provides actionable insights and workflows to accelerate effective clinical management and oversight. Canopy leverages artificial intelligence and machine learning capabilities to create and refine a clinical rules engine (predictive models and prescriptive algorithms) that informs care delivery and addresses hospital admissions and readmissions, medical costs and patient retention.

Through the collaboration of its digital and technical teams, the Company has established critical tools which enable patients to schedule appointments through MinuteClinic.com. Key elements of the offerings include landing pages which highlight services and answer common questions, screening capabilities to determine patient eligibility, service location locator and appointment selection tools to efficiently identify the requested service on a specified date, time, and location and registration pages to collect required patient information, accelerating check-in once at the MinuteClinic. Once scheduled, the tools provide the user with instructions and notifications including SMS text message and email reminders, and also provide digital results and records, enabling patients to view and save their medical records for convenient access at a later point.

Health Services Clients & Customers

The Company’s Health Services clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Managed Medicaid plans, CMS, plans offered on ~~Insurance~~Private Exchanges, and Public Exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities. The Health Services segment’s revenues are primarily generated from the sale and managing of prescription drugs to eligible members in benefit plans maintained by clients. Pharmaceuticals are provided to eligible members in benefit plans maintained by clients and utilize the Company’s information systems, among other things, to help perform safety checks, drug interaction screening and identify opportunities for generic substitution.

The Company’s primary care operations rely on its value-based capitated partnerships with payors and CMS which manage and market Medicare Advantage plans across the U.S. The Company had strategic value-based relationships with over 25 different payors as of December 31, ~~2024~~2025, including each of the top 5 national payors by number of Medicare Advantage patients. These existing contracts and relationships and their understanding of the value of the Company’s model reduces the risk of entering into new markets as the Company typically has payor contracts before entering a new market. Maintaining, supporting and growing these relationships, particularly as the Company enters new geographies, is critical to its long-term success.

The Company’s ~~value-based~~IHE ~~care~~operations ~~arrangements~~customers are primarily ~~directed~~Medicare atAdvantage ~~independent~~ health ~~systems~~plans, ~~including~~making ~~community~~up ~~hospitals,~~approximately ~~physician~~85% ~~practices~~of ~~and~~its ~~clinics,~~total ~~participating~~IHE involume. In 2025, orthe ~~seeking~~Company tohad ~~participate~~IHE contracts with 46 health plans in the U.S., ~~ACOs~~including or24 ~~contract~~of ~~with~~the 50 largest Medicare Advantage plans.

The Company’s IHE operations customers are primarily Medicare Advantage health plans, making up approximately 86% of its total IHE volume. In 2024, the Company had IHE contracts with 51 health plans in the U.S., including 22 of the 50 largest Medicare Advantage plans.

Health Services Seasonality

The majority of the Health Services segment revenues, including revenues generated from its PBM services, are not seasonal in nature.

The Company’s primary care operations experience some variability depending upon the time of year in which they are measured. Typically, a significant portion of the Company’s at-risk patient growth is experienced during the first quarter, after plan enrollment selections made during the fourth quarter of the prior annual enrollment period take effect. Finally, medical costs will vary seasonally depending on a number of factors including the weather, which can be a driver of certain illnesses such as the influenza virus.

Revenues generated from the Company’s IHEs and related services are generally lowest in the fourth quarter of each calendar year. Annually, IHE customers provide a member list, which may be supplemented or amended during the year. Customers generally limit the number of times the Company may attempt to contact their members. Throughout the year, as IHEs are completed and the Company attempts to contact members, the number of members who have not received an IHE and whom the Company is still able to contact declines, typically resulting in fewer IHEs scheduled during the fourth quarter of each calendar year.

the Company is still able to contact declines, typically resulting in fewer IHEs scheduled during the fourth quarter of each calendar year.

Health Services Competition

The Company believes the primary competitive factors in the health services industry include: (i) the ability to negotiate favorable discounts from drug manufacturers as well as to negotiate favorable discounts from, and access to, retail pharmacy networks; (ii) the ability to identify and apply effective cost management programs utilizing clinical strategies, including the development and utilization of preferred formularies; (iii) the ability to market PBM and other health products and services; (iv) the commitment to provide flexible, clinically-oriented services to clients and be responsive to clients’ needs; (v) the ability to attract and retain physicians, nurse practitioners, physician assistants and other medical personnel; (vi) the quality, scope and costs of products and services offered to clients and their members, as well as the care delivered to customers; and (vii) operational excellence in delivering services.

The Health Services segment has a significant number of competitors offering PBM services, including large, national PBM companies (e.g., Prime Therapeutics and MedImpact), PBMs owned by large national health plans (e.g., the Express Scripts business of Cigna Corporation and the Optum Rx business of UnitedHealth Group) and smaller standalone PBMs. The Health Services segment’s MinuteClinic offerings compete with retail health clinics, urgent care and primary care offices. The Company competes for provider solutions and health information technology (“HIT”) business with other large health plans and commercial health care benefit insurance companies as well as information technology companies and companies that specialize in provider solutions and HIT.

The Company’s primary care operations compete with large and medium-sized local and national providers of primary care services and health system affiliated practices, for, among other things, contracts with payors, recruitment of physicians and other medical and non-medical personnel and individual patients. Principal primary care competitors for patients and payor contracts vary considerably in type and identity by market. Because of the low barriers of entry into the primary care business and the ability of physicians to own primary care centers and/or also be medical directors for their own centers, competition for growth in existing and expanding markets is not limited to large competitors with substantial financial resources.

The Company’s ACO operations compete with healthcare risk management providers. Key competitors are companies that work directly with providers to enable them to successfully take risk in value-based care arrangements. Some of these competitors focus on a specific function – like analytics – while others offer more comprehensive services. Some key competitors operate nationally, while other competitors are more geographically focused.11

other medical and non-medical personnel and individual patients. Principal primary care competitors for patients and payor contracts vary considerably in type and identity by market. Because of the low barriers of entry into the primary care business and the ability of physicians to own primary care centers and/or also be medical directors for their own centers, competition for growth in existing and expanding markets is not limited to large competitors with substantial financial resources.

The Company’s IHE and related services operations compete with a wide variety of local and national providers of in-home, virtual and in-person diagnostic and evaluative services. Competitors include pure-play companies whose principal business is providing health risk assessments and similar services, as well as large payors, which may use a variety of different providers to perform health risk assessments across care settings or may perform some or all of their health risk assessments utilizing their own in-house capabilities.

Pharmacy & Consumer Wellness Segment

The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy® retail ~~pharmacies~~locations and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, ~~diagnostic testing~~ and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise. The segment also conducts long-term care pharmacy (“LTC”) operations, which distribute prescription drugs and provide related pharmacy consulting and ancillary services to long-term care facilities and other care settings, and provides pharmacy fulfillment services to support the Health Services segment’s specialty and mail order pharmacy offerings. As of December 31, ~~2024~~2025, the Pharmacy & Consumer Wellness segment operated ~~more~~approximately ~~than~~ 9,000 retail locations, as well as online retail pharmacy websites, ~~LTC pharmacies and on-site pharmacies,~~ retail specialty pharmacy stores, compounding pharmacies and branches for infusion and enteral nutrition services. During the year ended December 31, ~~2024~~2025, the Pharmacy & Consumer Wellness segment filled 1.78 billion prescriptions on a 30-day equivalent basis and dispensed approximately 2728.25% of total retail pharmacy prescriptions in the U.S.

Pharmacy & Consumer Wellness Products and Services

A typical retail store sells prescription drugs and a wide assortment of high-quality, nationally advertised brand name and proprietary brand merchandise. Pharmacy locations may also contract with Covered Entities under the federal 340B drug pricing program. Front store categories include over-the-counter drugs, consumer health products, beauty products, personal care products and other general merchandise products. The Company purchases merchandise from numerous manufacturers and distributors. The Company believes that competitive sources are readily available for substantially all of the products carried in its retail stores and the loss of any one supplier would not likely have a material effect on the Pharmacy & Consumer Wellness segment.

pricing program. Front store categories include over-the-counter drugs, consumer health products, beauty products, personal care products and other general merchandise products. The Company purchases merchandise from numerous manufacturers and distributors. The Company believes that competitive sources are readily available for substantially all of the products carried in its retail stores and the loss of any one supplier would not likely have a material effect on the Pharmacy & Consumer Wellness segment. LTC operations include distribution of prescription drugs and related consulting and ancillary services.

Pharmacy & Consumer Wellness revenues by major product group are as follows:

	Percentage of Revenues
	2024		2023		2022
	2025		2024		2023
Pharmacy (1)	8082.9	%	7880.9	%	7678.9	%
Front store and other (2)	1917.1	%	2119.1	%	2321.1	%
	100.0	%	100.0	%	100.0	%

_____________________________________________

(1)Pharmacy includes ~~LTC~~ sales ~~and sales~~ in pharmacies within Target Corporation (“Target”) and other retail stores. Pharmacy also includes revenues associated with long-term care pharmacy (“LTC”) operations prior to the deconsolidation of Omnicare, LLC (“Omnicare”) and associated subsidiaries in September 2025. See “Subsidiary Bankruptcy” within Note 1 ‘‘Significant Accounting Policies’’ included in Item 8 of this 10-K for additional information.

(2)“Other” represents less than 11% of the “Front store and other” revenue category in all periods presented.

Pharmacy

Pharmacy revenues represented over three-fourths of Pharmacy & Consumer Wellness segment revenues in each of ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023. The Company believes that retail pharmacy operations will continue to represent a critical part of the Company’s business due to industry demographics, e.g., an aging American population consuming a greater number of prescription drugs, prescription drugs being used more often as the first line of defense for managing illness, the introduction of new pharmaceutical products, the need for vaccinations and Medicare Part D growth. The Company believes the retail pharmacy business benefits from investment in both people and technology, as well as innovative collaborations with health plans, PBMs and providers. Given the nature of prescriptions, consumers want their prescriptions filled accurately by professional pharmacists using the latest tools and technology, and ready when promised. Consumers also need medication management programs and better information to help them get the most out of their health care dollars. To assist consumers with these needs, the Company has introduced integrated pharmacy health care services that provide an earlier, easier and more effective approach to engaging consumers in behaviors that can help lower costs, improve health and save lives.

Front Store

Front store revenues reflect the Company’s strategy of innovating with new and unique products and services, using innovative personalized marketing and adjusting the mix of merchandise to match customers’ needs and preferences. A key component of the front store strategy is the ExtraCare® card program, which is one of the largest and most successful retail loyalty programs in the U.S. The ExtraCare program allows the Company to balance marketing efforts so it can reward its best customers by providing them with automatic sale prices, customized coupons, ExtraBucks® rewards and other benefits. The Company also offers a subscription-based membership program, ExtraCare PlusTM, under which members are entitled to a suite of benefits delivered over the course of the subscription period, as well as a promotional reward that can be redeemed for future goods and services. The Company continues to launch and enhance new and exclusive brands to create unmatched offerings and deliver other unique product offerings, including a full range of high-quality proprietary brand products that are only available through CVS stores. The Company currently carries approximately 4,500 proprietary brand products, which accounted for approximately 2120% of front store revenues during ~~2024~~2025.

On-site Pharmacies

The Company also operates a limited number of pharmacies located at client sites, which provide certain health plan members and customers with a convenient alternative for filling their prescriptions and receiving vaccinations.

Specialty and Mail Order Pharmacy Fulfillment Services

The Pharmacy & Consumer Wellness segment provides pharmacy fulfillment services to support the Health Services segment’s specialty and mail order pharmacy offerings, in exchange for which the Health Services segment pays an administrative service fee to the Pharmacy & Consumer Wellness segment.

Long-term Care Pharmacy Operations

The Pharmacy & Consumer Wellness segment ~~provides~~distributed ~~LTC~~prescription ~~pharmacy~~drugs ~~services~~and ~~through~~provided ~~the~~related ~~Omnicare®~~pharmacy ~~business.~~consulting ~~Omnicare’s~~and ~~customers~~ancillary ~~consist~~services ofto ~~skilled~~long-term ~~nursing~~care facilities, ~~assisted~~and ~~living~~other ~~facilities,~~care ~~independent~~settings ~~living~~through ~~communities,~~Omnicare ~~hospitals,~~and ~~correctional~~certain ~~facilities,~~of ~~and~~its ~~other~~subsidiary ~~health~~entities ~~care~~prior ~~service~~to ~~providers.~~the ~~The~~deconsolidation ~~Company~~of ~~provides~~these ~~pharmacy~~subsidiaries ~~consulting,~~in ~~including~~September ~~monthly~~2025. ~~patient~~See ~~drug~~“Subsidiary ~~therapy~~Bankruptcy” ~~evaluations,~~within toNote ~~assist~~1 in‘‘Significant ~~compliance~~Accounting ~~with~~Policies’’ ~~state~~included ~~and~~in ~~federal~~Item ~~regulations~~8 ~~and~~of ~~provide~~this ~~proprietary~~10-K ~~clinical~~for ~~and~~additional ~~health~~ information.

management programs. It also provides pharmaceutical case management services for retirees, employees and dependents who have drug benefits under corporate-sponsored health care programs.

Community Location Development

CVS Health’s community health destinations are an integral part of its ability to meet the needs of consumers and maintain its leadership position in the changing health care landscape. When paired with its rapidly expanding digital presence, the Company’s physical presence in thousands of communities across the country represents a competitive advantage by allowing it to develop deep and trusted relationships through everyday engagement in consumer health. The Company’s community health destinations have played, and will continue to play, a key role in the Company’s continued growth and success. During ~~2024~~2025, the Company opened 3987 new locations, relocated 35 locations and closed ~~299~~243 locations.

The Company’s continuous assessment of its national footprint is an essential component of competing effectively in the current health care environment. On an ongoing basis, the Company evaluates changes in population, consumer buying patterns and future health needs to assess the ability of its existing stores and locations to meet the needs of its consumers and the business. During the ~~fourth~~third quarter of ~~2021~~2024, in connection with an enterprise-wide restructuring plan, the Company completed a strategic review of its retail business and announced ~~its~~ plans to ~~reduce~~close ~~store density in~~ certain ~~locations through the closure of approximately 900~~ retail stores ~~between~~in ~~2022~~2025. ~~and~~During ~~2024.~~the Asyear ofended December 31, ~~2024~~2025, the Company ~~had~~ closed ~~approximately~~221 ~~900~~ retail stores in connection with ~~these~~this ~~actions~~action.

During the third quarter of 2024, in connection with an enterprise-wide restructuring plan, the Company completed a strategic review of its retail business and determined that it plans to close an additional 271 retail stores in 2025.

Pharmacy & Consumer Wellness Information Systems

The Company has continued to invest in information systems to enable it to deliver exceptional customer service, enhance safety and quality, and expand patient care services while lowering operating costs. The proprietary WeCARE Workflow tool supports pharmacy teams by prioritizing work to meet customer expectations, facilitating prescriber outreach, and seamlessly integrating clinical programs. This solution delivers improved efficiency and enhances customer experience, as well as provides a framework to accommodate the evolution of pharmacy practice and the expansion of clinical programs. The Company’s Health Engagement Engine technology and data science clinical algorithms enable the Company to help identify opportunities for pharmacists to deliver face-to-face counseling regarding patient health and safety matters, including medication adherence issues, gaps in care and management of certain chronic health conditions. The Company’s digital strategy is to empower the consumer to navigate their pharmacy experience and manage their condition through integrated online and mobile solutions that offer utility and convenience. The Company has also established tools which enable customers to schedule ~~diagnostic testing and~~ vaccination appointments through CVS.com, provide instructions and notifications to the customer regarding the services, and, following administration, allow customers to access digital results for tests and records for vaccinations.

Pharmacy & Consumer Wellness Customers

The success of the Pharmacy & Consumer Wellness segment’s businesses is dependent upon the Company’s ability to establish and maintain contractual relationships with pharmacy benefit managers and other payors on acceptable terms. Substantially all of the Pharmacy & Consumer Wellness segment’s pharmacy revenues are derived from pharmacy benefit managers, managed care organizations (“MCOs”), government funded health care programs, commercial employers and other third-party payors. No single Pharmacy & Consumer Wellness payor accounted for 10% or more of the Company’s consolidated total revenues in ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023.

Pharmacy & Consumer Wellness Seasonality

The ~~majority of~~ Pharmacy & Consumer Wellness segment’s ~~revenues,~~quarterly ~~particularly~~operating ~~pharmacy~~income ~~revenues,~~progression ~~generally~~may ~~are not seasonal in nature. However, front store revenues tend to~~ be ~~higher~~impacted ~~during the December holiday season. In addition, both pharmacy and front store revenues are affected~~ by (i) the timing and severity of the cough, cold and flu season, most notably during first and fourth quarters, resulting in higher administration of vaccines during those periods., ~~Uncharacteristic~~(ii) orthe ~~extreme~~December ~~weather~~holiday ~~conditions~~season ~~also~~which ~~can~~generally ~~adversely~~results ~~affect~~in ~~consumer~~higher ~~shopping~~volume ~~patterns~~in the front store, and ~~Pharmacy~~(iii) &uncharacteristic ~~Consumer~~or ~~Wellness~~extreme ~~revenues~~weather conditions, ~~expenses~~which ~~and~~may ~~operating~~adversely ~~results~~affect consumer shopping patterns.

Pharmacy & Consumer Wellness Competition

14The retail pharmacy business is highly competitive. The Company believes that it competes principally on the basis of: (i) store location and convenience, (ii) customer service and satisfaction, (iii) product selection and variety, and (iv) price. In the areas it serves, the Company competes with other drugstore chains (e.g., Walgreens), supermarkets, discount retailers (e.g., Walmart), independent pharmacies, restrictive pharmacy networks, online retailers (e.g., Amazon), membership clubs, infusion pharmacies, as well as mail order dispensing pharmacies.

The retail pharmacy business is highly competitive. The Company believes that it competes principally on the basis of: (i) store location and convenience, (ii) customer service and satisfaction, (iii) product selection and variety, and (iv) price. In the areas it serves, the Company competes with other drugstore chains (e.g., Walgreens and Rite Aid), supermarkets, discount retailers (e.g., Walmart), independent pharmacies, restrictive pharmacy networks, online retailers (e.g., Amazon), membership clubs, infusion pharmacies, as well as mail order dispensing pharmacies.

LTC pharmacy services are highly regional or local in nature, and within a given geographic area of operation, highly competitive. The Company’s largest LTC pharmacy competitor nationally is PharMerica. The Company also competes with numerous local and regional institutional pharmacies, pharmacies owned by long-term care facilities and local retail pharmacies. Some states have enacted “freedom of choice” or “any willing provider” requirements as part of their state Medicaid programs or in separate legislation, which may increase the competition that the Company faces in providing services to long-term care facility residents in these states.

Corporate/Other Segment

The Company presents the remainder of its financial results in the Corporate/Other segment, which primarily consists of:

•Management and administrative expenses to support the Company’s overall operations, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources and finance departments, information technology, digital, data and analytics, as well as acquisition-related transaction and integration costs; and

•Products for which the Company no longer solicits or accepts new customers, such as its large case pensions and long-term care insurance products.

Generic Sourcing Venture

The Company and Cardinal Health, Inc. (“Cardinal”) each have a 50% ownership in Red Oak Sourcing, LLC (“Red Oak”), a generic pharmaceutical sourcing entity. Under this arrangement, the Company and Cardinal contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic pharmaceutical supply contracts for both companies through Red Oak. Red Oak does not own or hold inventory on behalf of either company.

Use of AI

The Company recognizes that AI has the potential to reimagine health care, including simplifying care navigation, reducing costs, transforming consumer experience and enhancing the quality of and access to care. The Company uses AI as an augmentative technology to minimize provider/payer friction, enable advanced consumer self-service through AI-assistants while enhancing human touch when desired, offer simplified health and care navigation, expand access, streamline and optimize internal operations and modernize operating platforms. As AI technology advances, CVS Health is committed to doing its part to help ensure the safe, responsible, ethical and consumer-centric use of AI.

Working Capital Practices

The Company funds the growth of its businesses through a combination of cash flow from operations, commercial paper and other short-term borrowings, as well as long-term borrowings. For additional information on the Company’s working capital practices, see “Liquidity and Capital Resources” in the MD&A included in Item 7 of this 10-K. Employer groups, individuals, college students, part-time and hourly workers, health plans, providers, governmental units, government-sponsored plans (with the exception of Medicare Part D services, which are described below), labor groups and expatriates, which represent the vast majority of Health Care Benefits segment revenues, are typically ~~settle~~reconciled inon ~~less than 30 days. As~~ a ~~provider~~monthly ~~of Medicare Part D services~~basis, ~~the~~but ~~Company~~inconsistent ~~contracts annually with CMS. Utilization of services each plan year results in the accumulation of either a receivable from or a payable to CMS. The~~ timing of settlement of the receivable or payable with CMS takes several quarters, which impacts working capital from year to year. The majority of the Pharmacy & Consumer Wellness segment non-pharmacy revenues are paid in cash, or with debit or credit cards. Managed care organizations, pharmacy benefit managers, government funded health care programs, commercial employers and other third-party insurance programs, which represent the vast majority of the Company’s consolidated pharmacy revenues, typically settle in less than 30 days. The remainder of the Company’s consolidated pharmacy revenues are paid in cash, or with debit or credit cards.

payments may cause volatility from time to time. As a provider of Medicare Part D services, the Company contracts annually with CMS. Utilization of services each plan year results in the accumulation of either a receivable from or a payable to CMS. The timing of settlement of the receivable or payable with CMS takes several quarters, which impacts working capital from year to year. The majority of the Pharmacy & Consumer Wellness segment non-pharmacy revenues are paid in cash, or with debit or credit cards. Managed care organizations, pharmacy benefit managers, government funded health care programs, commercial employers and other third-party insurance programs, which represent the vast majority of the Company’s consolidated pharmacy revenues, typically settle in less than 30 days. The remainder of the Company’s consolidated pharmacy revenues are paid in cash, or with debit or credit cards.

Human Capital

Overview

At CVS Health, we share a single, clear purpose: ~~building~~to asimplify ~~world~~health ofcare ~~health~~one ~~around~~person, ~~every~~one ~~consumer~~family and one community at a time. We devote significant time and attention to attract, develop and retain talent who deliver high levels of service to our customers. Our commitment includes a competitive rewards package and programs that support our diverse range of colleagues in rewarding and fulfilling careers. As of December 31, ~~2024~~2025, we employed over 300,000 colleagues primarily in the U.S. including in all 50 states, the District of Columbia and Puerto Rico, approximately 73% of whom were full-time.

We believe engaged colleagues produce stronger business results and are more likely to build a career with the Company. Each year we conduct engagement surveys that provide colleagues the opportunity to share opinions and experiences with respect to their role, their team, and the enterprise to help CVS Health Corporation’s Board of Directors (the “Board”) and our management identify where we can improve colleague experience. These surveys cover a broad range of topics including development and opportunities, recognition, performance, belonging, well-being, compliance, and continuous improvement. In 2025, we conducted engagement surveys in both April and September. More than 200,000 colleagues participated in each survey and overall engagement improved across surveys.

their role, their team, and the enterprise to help CVS Health Corporation’s Board of Directors (the “Board”) and our management identify where we can improve colleague experience. These surveys cover a broad range of topics including development and opportunities, recognition, performance, belonging, well-being, compliance, and continuous improvement. In 2024, we conducted engagement surveys in both April and September. More than 150,000 colleagues participated in each survey and overall engagement stayed consistent across surveys.

The Board, our Chief Executive Officer (“CEO”) and our Chief People Officer provide oversight of our human capital strategy, which consists of the following categories: workforce strategy; total rewards; and health, safety and environment.

Workforce Strategy

At CVS Health, our goal is to attract the most talented and qualified workforce in health care and to develop and retain a work force to support and advance our strategic priorities. We believe that our workforce strategy should be responsive to and reflect the broad and diverse communities whose health care needs we serve.

We are committed to developing a pipeline of critical skills to power CVS Health for the future. We partner with colleges and universities across many professional fields. For example, the CVS Health PharmD tuition assistance program is available to all eligible CVS Pharmacy interns. In addition, CVS Health is creating transformational solutions to workforce development through dynamic community Workforce Innovation and Talent Centers (WITCs), tailored to the specific needs of each community, incorporating education and skill development, as we help advance future leaders.

Training and development provide colleagues the support they need to perform well in their current roles while planning and preparing for future roles and career growth. Our broad training practices include updated, tech-enabled tools and keep our colleagues informed of new developments in our industry that are relevant to their roles. During the year ended December 31, ~~2024~~2025, our colleagues invested approximately 16 million hours in learning and development courses.

~~Respect~~Our ambition is to be America’s most trusted health care company. Achieving that starts with building and sustaining a ~~cornerstone~~culture of trust within our ~~culture,~~organization. That is why trust and arespect ~~centerpiece~~are cornerstones of our culture, the foundation of our workplace strategy. To dosimplify health care and deliver our best when people need us the most, ~~means~~ we strive every day to achieve the highest level of trust and respect from our colleagues, our customers, and ~~our~~the communities we serve. Our ~~Heart~~values Atguide ~~Work behaviors are guiding principles for~~ how we lead and collaborate. We emphasize ~~trust~~care, ~~collaboration~~innovation, accountability, safety and ~~innovation~~quality. Those aspects of our culture show up in our Respect Works Here campaign.

Our ~~comprehensive and well-executed workforce~~ practices have ~~allowed~~earned usnational torecognition, beincluding ~~recognized~~designations as a ~~VETSIndexes~~military-friendly, 3veteran-~~Star~~friendly, ~~Employer~~ and todisability-inclusive ~~earn a 100 percent score on the Disability Equality Index, meaning the Company is recognized as a “Best Place to Work for Disability Inclusion”~~employer.

We disclose more information on our workforce strategy in our annual Impact Report.

Total Rewards

We strive to offer a comprehensive and competitive mix of pay and benefits to meet the varying needs of our colleagues and their families. In addition to competitive wages, the comprehensive list of programs and benefits we offer include annual bonuses, stock awards, 401(k) plans including matching company contributions, no cost comprehensive wellness screenings, tobacco cessation and weight management programs, no cost confidential counseling and no cost financial navigation support, an employee stock purchase plan, health care and insurance benefits, paid time off, flexible work schedules, family leave, dependent care resources, colleague assistance programs and tuition assistance, retiree medical access, and discount programs, among many others, depending on eligibility.

Health, Safety and Environment

We have a strong commitment to providing a safe working environment. We have implemented an environmental health and safety management system to support adherence and monitoring of programs designed to make our various business operations compliant with applicable occupational safety and health regulations and requirements. Our Health, Safety, and Environment Department oversees the implementation and adherence to programs like powered industrial truck training, materials handling and storage, selection of personal protective equipment and fall protection systems.

We utilize a Management Information System to track compliance, analyze data and concentrate on key areas of risk to reduce the chance of workplace incidents. We focus on identifying causes and improving performance when workplace incidents occur. We capture colleague observations and feedback through programs like our Behavior Based Safety and our Safety Hazard and Awareness Reporting Program. We also engage leaders in promoting a culture of safety and measure performance through a comprehensive safety index that leverages both leading and lagging indicators. With safety task forces in place at each distribution center, we empower leaders and safety business partners to identify policies, procedures and processes that could improve their own operations.

Hazard and Awareness Reporting Program. We also engage leaders in promoting a culture of safety and measure performance through a comprehensive safety index that leverages both leading and lagging indicators. With safety task forces in place at each distribution center, we empower leaders and safety business partners to identify policies, procedures and processes that could improve their own operations.

Impact Strategy

Overview

Our Healthy 2030 impact strategy outlines how we are creating a healthier, more ~~equitable~~sustainable ~~health~~future ~~care~~for ~~system~~all ~~and~~as ~~sustainable~~we ~~future.~~work Itto ~~reinforces~~fulfill our ~~company’s~~ambition ~~strategy~~to ~~and~~simplify ishealth ~~embedded~~care inone ~~our~~person, ~~purpose-driven~~one ~~culture.~~family, ~~Healthy~~and ~~2030~~one iscommunity ~~constructed~~at ~~through~~a ~~our~~time. Through four~~-pillar~~ ~~framework~~pillars – Healthy People, Healthy Business, Healthy Community and Healthy Planet. We– ~~are~~we ~~focused~~focus on ~~making~~measurable aactions ~~meaningful,~~that ~~measurable~~improve ~~impact~~health ~~within~~outcomes, ~~each~~strengthen ofcommunities ~~the~~and ~~pillars~~protect ~~outlined~~the ~~below~~environment. WeRooted ~~believe~~in ~~this~~our ~~strategy~~purpose-driven isculture, ~~achievable~~our ~~without~~impact ~~materially~~strategy ~~adversely~~positions ~~affecting~~us ~~our~~to ~~operating~~lead ~~results~~with integrity and~~/or~~ ~~cash~~innovation ~~flows~~to deliver meaningful change while sustaining long-term business performance.

Healthy People

We ~~are~~put ~~building~~health aat ~~world~~the center of ~~health~~everything ~~around~~we ~~every~~do. ~~individual~~By elevating the experience of our customers, we are elevating the very essence of health care. We connect people to the care they need, ~~put~~advance ~~medicine and wellness within reach and drive greater~~ affordability, ~~simplicity~~simplify access, and ~~convenience~~ultimately inhelp ~~everything~~people welive dohealthier lives. ~~Whether~~Our weinvestments ~~are~~in ~~increasing access to~~ health ~~care~~services and ~~services~~programs ordrive ~~making~~outcomes, ~~investments~~reduce tobarriers ~~support our communities~~ to ~~improve~~care ~~health~~and ~~outcomes,~~deliver weinnovative ~~are~~solutions ~~utilizing~~that ~~our~~set ~~expertise~~new ~~and~~standards ~~resources~~for toaccessible, ~~improve~~high-quality ~~people’s health~~care.

Healthy Business

WeOur ~~are~~greatest ~~purpose-driven~~strength –is ~~all~~our ~~of us~~people. WeWith ~~have~~a ~~an opportunity to harness the power of our greatest strength - our~~ talented and diverse workforce of more than 300,000 colleagues ~~- to reimagine health care in America and make health care more affordable~~, ~~accessible,~~we ~~and~~uphold ~~simpler.~~the ~~Together,~~highest westandards ~~set~~of ~~high~~ethics ~~standards~~ and ~~hold~~transparency ~~ourselves~~while tocreating ~~them. We work daily to create~~ value ~~for everyone who trusts~~ and ~~relies~~delivering on usour ~~and~~promises. ~~ensure~~Through ~~every~~education, ~~action~~leadership wedevelopment ~~take is done ethically~~ and ~~transparently.~~workforce Wetraining, ~~support~~we ~~our~~empower colleagues’ ~~education~~ and ~~growth~~strengthen ~~with~~talent ~~scholarships,~~pipelines. ~~promote~~At ~~and~~the ~~develop~~same ~~leadership~~time, ~~skills~~we ~~through~~embed ~~training~~strong ~~and~~governance ~~development courses~~ and ~~continue~~responsible ~~strengthening~~practices ~~our~~across ~~pipeline to~~ our ~~workforce~~supply ~~through~~chain ~~job~~to ~~training~~ensure ~~and~~integrity, ~~skill~~sustainability ~~building programs in our communities. We integrate governance~~ and ~~partnership~~accountability across our ~~business units~~operations.

Healthy Community

We ~~are~~work ~~strengthening~~alongside ~~our~~ communities ~~by addressing the unique barriers~~ to ~~improving~~improve health outcomes ~~locally.~~and Weunlock ~~support~~opportunities ~~organizations~~for ~~centering~~workforce ~~their~~readiness. ~~work~~From onsupporting heart health, mental health, ~~women’s~~and ~~health,~~ healthy aging ~~and~~to addressing climate-related health impacts., Wewe ~~also~~take ~~invest~~a inholistic ~~the~~approach ~~resources needed for communities~~ to ~~take~~create ~~proactive steps toward~~ a healthier future. ~~This~~Our ~~includes~~programs ~~addressing~~tackle food insecurity, ~~improving~~improve access to workforce training and ~~educational~~provide opportunities nationwide. When a natural disaster or other incident affects the communities where we live and work, we swiftly take action to ensure our response addresses our colleagues' and customers' evolving needs. Our colleagues are also making a difference by donating their time and talents with organizations that are meaningful to them. Together, we make a lasting impact by driving a holistic approach and collaboration across these community programs, investments, and organizations.

educational opportunities nationwide. In times of crisis, we respond swiftly to meet evolving needs locally. Our colleagues amplify impact through volunteerism and collaboration in communities where we live and work.

Healthy Planet

We ~~continue~~advance ~~to invest in~~ initiatives ~~and~~to ~~programs~~protect ~~that focus on improving~~ the health of ~~our~~people ~~planet by advancing our sustainability commitments~~ and ~~addressing~~ the ~~environmental~~planet. ~~factors~~We ~~that~~are ~~contribute~~strengthening toour ~~poor~~business ~~health~~to ~~and~~withstand ~~exacerbation~~extreme ofweather ~~chronic~~events, ~~illnesses.~~ensuring Wecontinuity ~~were one~~ of ~~the~~care ~~first~~and ~~companies~~access infor ~~the~~patients ~~world~~when toit ~~have~~matters ~~our~~most. ~~net-zero~~Our ~~targets~~efforts ~~validated~~include bystrengthening ~~the~~environmental ~~Science-Based~~health ~~Targets~~and ~~Initiative’s~~resilience, ~~(SBTi)~~reducing ~~net-zero methodology. We continue to reduce~~ greenhouse gas emissions, ~~and~~sourcing ~~source~~ renewable energy onand ~~the~~driving ~~path~~packaging innovation to ~~achieving~~minimize ~~net-zero~~waste ~~emissions~~and ~~across~~unnecessary ~~our value chain by 2050~~plastics. We ~~also~~lead ~~drive~~with ~~packaging~~purpose ~~innovation and efforts~~ to ~~reduce~~build ~~unnecessary~~a ~~plastics~~healthier ~~and~~world ~~waste~~for ~~across~~generations ~~the~~to ~~enterprise~~come.

Intellectual Property

The Company has registered and/or applied to register a variety of trademarks and service marks used throughout its businesses, as well as domain names, and relies on a combination of copyright, patent, trademark and trade secret laws, in addition to contractual restrictions, to establish and protect the Company’s proprietary rights. The Company regards its intellectual property as having significant value in the Health Care Benefits, Health Services and Pharmacy & Consumer Wellness segments. The Company is not aware of any facts that could materially impact the continuing use of any of its intellectual property.

Wellness segments. The Company is not aware of any facts that could materially impact the continuing use of any of its intellectual property.

Government Regulation

Overview

The Company’s operations are subject to comprehensive federal, state and local laws and regulations and comparable multiple levels of international regulation in the jurisdictions in which it does business. There also continues to be a heightened level of review and/or audit by federal, state and international regulators of the health and related benefits industry’s business and reporting practices. In addition, many of the Company’s PBM clients and the Company’s payors in the Pharmacy & Consumer Wellness segment, including insurers, Medicare plans, Managed Medicaid plans and MCOs, are themselves subject to extensive regulations that affect the design and implementation of prescription drug benefit plans that they sponsor. ~~Similarly, the Company’s LTC clients, such as skilled nursing facilities, are subject to government regulations, including many of the same government regulations to which the Company is subject.~~

The federal, state and local laws, regulations and rules and the international laws and regulations governing the Company’s businesses, the contracts they enter into, and interpretations of those laws, regulations and rules continue to change and expand, grow more complex and become more restrictive each year. The application of these complex legal and regulatory requirements to the detailed operation of the Company’s businesses creates areas of uncertainty. Further, there are numerous proposed health care, financial services and other laws and regulations at the federal, state and international levels, some of which could adversely affect the Company’s businesses if they are enacted. The Company cannot predict whether pending or future federal, state or international legislation or court proceedings will change aspects of how it operates in the specific markets in which it competes or the health care industry generally, but if changes occur, the impact of any such changes could have a material adverse impact on the Company’s businesses, operating results, cash flows and/or stock price. Possible regulatory or legislative changes include the federal or one or more state governments fundamentally restructuring the Commercial, Medicare or Medicaid marketplace; reducing payments to the Company in connection with Medicare, Medicaid, dual eligible or special needs programs; increasing its involvement in drug reimbursement, pricing, purchasing, and/or importation; or changing the laws governing PBMs.

The Company has internal control policies and procedures and conducts training and compliance programs for its employees to help prevent, detect and correct prohibited practices. However, if the Company’s employees or agents fail to comply with applicable laws governing its operations, it may face investigations, prosecutions and other legal proceedings and actions that could result in civil penalties, administrative remedies and criminal sanctions, and any such action could result in reputational harm. Any failure or alleged failure to comply with applicable laws and regulations summarized below, or any adverse applications or interpretations of, or changes in, the laws and regulations affecting the Company and/or its businesses, could have a material adverse effect on the Company’s operating results, financial condition, cash flows and/or stock price. See Item 1A of this 10-K, “Risk Factors—Risks from Changes in Public Policy and Other Legal and Regulatory Risks,” and Item 3 of this 10-K, “Legal Proceedings,” for further information.

The Company can give no assurance that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business, practices or strategy, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations, including the laws and regulations described in this Government Regulation section, as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; or (v) adverse developments in pending or future legal proceedings against or affecting the Company, including qui tam lawsuits, or affecting one or more of the industries in which the Company competes and/or the health care industry generally.

laws or regulations, including the laws and regulations described in this Government Regulation section, as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; or (v) adverse developments in pending or future legal proceedings against or affecting the Company, including qui tam lawsuits, or affecting one or more of the industries in which the Company competes and/or the health care industry generally.

Laws and Regulations Related to Multiple Segments of the Company’s Business

Laws Related to Reimbursement by Government Programs - The Company is subject to various federal and state laws concerning its submission of claims and other information to Medicare, Medicaid and other federal and state government-sponsored health care programs. Potential sanctions for violating these laws include recoupment or reduction of government reimbursement amounts, civil penalties, treble damages, and exclusion from participation in government health care programs. Such laws include the federal False Claims Act (the “False Claims Act”), the federal anti-kickback statute (the “AKS”), state false claims acts and anti-kickback statutes in most states, the federal “Stark Law” and related state laws. In particular, the False Claims Act prohibits intentionally submitting, conspiring to submit, or causing to be submitted, false claims, records, or statements to the federal government, or intentionally failing to return overpayments, in connection with reimbursement by federal government programs. In addition, a claim submitted for government reimbursement is considered false or fraudulent for the purposes of the False Claims Act where it results from a violation of the AKS.

false claims acts and anti-kickback statutes in most states, the federal “Stark Law” and related state laws. In particular, the False Claims Act prohibits intentionally submitting, conspiring to submit, or causing to be submitted, false claims, records, or statements to the federal government, or intentionally failing to return overpayments, in connection with reimbursement by federal government programs. In addition, any claim for government reimbursement also violates the False Claims Act where it results from a violation of the AKS.

The AKS prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, in cash or kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made in whole or in part under federal health care programs, such as Medicare and Medicaid. Some court decisions have held that the statute may be violated even if only one purpose of remuneration is to induce referrals. Certain of the Company’s programs involve arrangements with payments intended to influence behavior relative to Medicare and other federal health care program beneficiaries, including risk sharing and “gainsharing” arrangements. While there is no fixed definition of a gainsharing arrangement, the term typically refers to an arrangement in which a share of cost savings for patient care attributable in part to a physician’s efforts are shared with the physician. The Office of the Inspector General of HHS (the “OIG”) has recognized that there are legitimate interests in enlisting physicians in effort to reduce unnecessary costs from the health care system and, if appropriately structured, such gainsharing arrangements should not violate the AKS. Effective in early 2021, CMS and the OIG established new safe harbors that protect certain value-based arrangements, and the Company has integrated its understanding of these safe harbors into its new and existing programs.

The Stark Law prohibits a physician who has a financial relationship, or who has an immediate family member who has a financial relationship, with entities providing “designated health services” (“DHS”) from referring Medicare patients to such entities for the furnishing of DHS, unless an exception applies. The Stark Law prohibits any entity providing DHS that has received a prohibited referral from presenting, or causing to be presented, a claim or billing for the services arising out of the prohibited referral. Similarly, the Stark Law prohibits an entity from “furnishing” DHS to another entity with which it has a financial relationship when that entity bills for the service. The prohibition applies regardless of the reasons for the financial relationship and the referral. Unlike the AKS, the Stark Law is a strict liability statute where unlawful intent need not be demonstrated. Although uncertainty exists, some federal agencies and some courts have taken the position that the Stark Law also applies to Medicaid. With respect to certain CMS innovation models in which we may participate, the OIG and CMS jointly issued waivers of the Stark Law. In early 2021, CMS established new exceptions to the Stark Law that protect certain value-based arrangements, and the Company has integrated exceptions into its processes and procedures. Various states have enacted similar laws.

Both federal and state false claims laws permit private individuals to file qui tam or “whistleblower” lawsuits on behalf of the federal or state government. Participants in the health and related benefits industry, including the Company, frequently are subject to actions under the False Claims Act or similar state laws and the Stark Law or similar state laws.

The ACA - The ACA significantly increased federal and state oversight of health plans. Among other requirements, it specifies minimum medical loss ratios (“MLRs”) for Commercial and Medicare Insured products, specifies features required to be included in commercial benefit designs, limits commercial individual and small group rating and pricing practices, encourages additional competition (including potential incentives for new participants to enter the marketplace), and includes regulations and processes that could delay or limit the Company’s ability to appropriately increase its health plan premium rates. This in ~~turn could adversely affect the Company’s ability to continue to participate in certain product lines and/or geographies that it serves today.~~

turn could adversely affect the Company’s ability to continue to participate in certain product lines and/or geographies that it serves today.

Although the U.S. Supreme Court dismissed a challenge to the constitutionality of the ACA and issued an opinion preserving the ACA and its consumer protections, there may be continued efforts to invalidate, modify, repeal or replace portions of it. In addition to litigation, parts of the ACA continue to evolve through the promulgation of executive orders, legislation, regulations and guidance at the federal or state level. The Company expects the ACA, including potential changes thereto, to continue to significantly impact its business operations and operating results, including pricing, medical benefit ratios (“MBRs”) and the geographies in which the Company’s products are available.

Medicare Regulation - The Company’s Medicare Advantage, Medicare stand-alone Part D PDP and other Medicare products are highly regulated by CMS. The regulations and contractual requirements applicable to the Company and other private participants in Medicare programs are complex, expensive to comply with and subject to change. Medicare regulations also have the potential to impact products and services used by Medicare beneficiaries, including services provided by Oak Street Health and Signify Health.

The provisions of the ACA significantly increased the Company’s exposure to funding and regulation of, and changes in government policy with respect to and/or funding or regulation of, the various Medicare programs in which the Company participates, including changes in the amounts payable to us under those programs and/or new reforms or surcharges on existing programs. For example, the ACA requires minimum MLRs for Medicare Advantage and Medicare Part D plans of 85%. If a Medicare Advantage or Medicare Part D contract pays minimum MLR rebates for three consecutive years, it will become ineligible to enroll new members. If a Medicare Advantage or Medicare Part D contract pays such rebates for five consecutive years, it will be terminated by CMS. It is possible that certain Medicare Advantage contracts may not meet the 85% MLR for consecutive years.

Payments the Company receives from CMS for its Medicare Advantage and Part D businesses also are subject to risk adjustment based on the health status of the individuals enrolled. Elements of that risk adjustment mechanism continue to be challenged by the U.S. Department of Justice (the “DOJ”), the OIG and CMS itself. For example, CMS made significant changes to the structure of the hierarchical condition category model in version 28, which may impact risk adjustment factor (“RAF”) scores for a larger percentage of Medicare Advantage beneficiaries and could result in changes to beneficiary RAF scores with or without a change in the patient’s health status. CMS continuously evaluates how and where risk adjustment is captured, which from time-to-time has included the capture of diagnosis codes from in home visits and chart reviews. A legislative or regulatory change to the ability of Medicare Advantage plans to use home visits as a means to evaluate and ~~diagnosis~~diagnose their members’ health conditions, or substantial changes in the risk adjustment mechanism, including changes that result from enforcement or audit actions, could: materially affect the amount of the Company’s Medicare reimbursement; require the Company to raise prices or reduce the benefits offered to Medicare beneficiaries; impact the services provided by, or the financial performance of, Oak Street Health and Signify Health; and potentially limit the Company’s (and the industry’s) participation in the Medicare program.

The Company ~~will~~offers ~~continue to offer~~ a wide range of Medicare products across the country to meet the diverse health care needs of its customers, including Individual Medicare Advantage, Group Medicare, Special Needs Plans, Medicare Supplement plans and Prescription Drug Plans.

Additionally, there is growing interest among policymakers in re-evaluating how benchmarks are constructed in Medicare Advantage compared to Medicare Fee-For-Service programs~~, such as MSSP and ACO REACH~~. Policymakers could pursue various strategies including, among other things, re-evaluating benchmark construction, risk adjustment methodology and alignment in quality measures. In addition, the CMS Innovation Center could offer new models or suspend present models that could have a material impact on the success of the Company’s ~~ACO and~~ Oak Street Health ~~businesses~~business. For example, the CMS Innovation Center could mandate or offer participation in certain models that require providers and/or risk-bearing entities to take risk for a geographic population of patients, or it could look to methodologies that infer risk, survey data and non-diagnosis-based data with potential impacts to the Company’s businesses. Uncertainties about how policymakers and CMS may re-evaluate how benchmarks are constructed in Medicare Advantage, including the future of VBC and mandatory participation, could create new considerations for the Company.

The Company has invested significant resources to comply with Medicare standards, and its Medicare compliance efforts will continue to require significant resources. CMS may seek premium and other refunds, prohibit the Company from continuing to market and/or enroll members in or refuse to passively enroll members in one or more of the Company’s Medicare or dual eligible plans, exclude us from participating in one or more Medicare, dual eligible or dual eligible special needs plan programs and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS regulations or its Medicare contractual requirements. The Company’s Medicare Supplement products are regulated at the state level and are subject to similar significant compliance requirements and risks.

Going forward, the Company expects CMS, the OIG, the DOJ, other federal agencies and the U.S. Congress to continue to scrutinize closely each component of the Medicare program (including Medicare Advantage, PDPs, dual eligible plans, broker compensation and marketing, prior authorization, and provider network access and adequacy), modify the terms and requirements of the program and possibly seek to recast or limit private insurers’ roles. Any of the federal agencies noted above or U.S. Congress may also recommend changes or take additional action with respect to the way in which brokers and agents are compensated for selling our Medicare Advantage and Part D plans. For example, CMS finalized new requirements imposing limitations on the amounts and types of payments that brokers and agents can earn for marketing and enrollment services with respect to Medicare Advantage and Part D plans. The effectiveness of these requirements is currently subject to an injunction. If the injunction is lifted or CMS attempts to impose restrictions on broker and agent compensation in the future, the Company will be required to comply with the new restrictions.19

20and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS regulations or its Medicare contractual requirements. The Company’s Medicare Supplement products are regulated at the state level and are subject to similar significant compliance requirements and risks.

InGoing ~~addition~~forward, the ~~Inflation~~Company ~~Reduction~~expects ~~Act~~CMS, ~~enacted in August 2022 (~~the ~~“IRA”)~~OIG, ~~contains changes to~~ the ~~Part~~DOJ, Dother ~~program~~federal ~~that~~agencies ~~took~~and ~~effect~~the inU.S. ~~2023~~Congress ~~and~~to ~~will~~ continue to ~~2032~~scrutinize ~~that~~closely ~~has~~each ~~and~~component ~~will shift more~~ of the ~~claim~~Medicare ~~liability~~program to(including ~~plans~~Medicare ~~and~~Advantage, ~~away~~PDPs, ~~from~~dual ~~the~~eligible ~~government~~plans, ~~including~~broker acompensation ~~complete~~and ~~redesign~~marketing, ofprior ~~the~~authorization, ~~Part~~and Dprovider ~~standard~~network ~~benefit~~access ~~effective~~and ~~in 2025~~adequacy), ~~which~~modify ~~may reduce~~ the ~~Company’s~~terms ~~flexibility~~and torequirements ~~design~~of ~~competitive offerings. Given~~ the ~~significant~~program ~~changes,~~and ~~CMS~~possibly isseek ~~conducting~~to arecast ~~voluntary~~or ~~demonstration~~limit toprivate ~~test~~insurers’ ~~whether~~roles. ~~additional~~Any ~~premium~~of ~~stabilization~~the ~~and~~federal ~~revised~~agencies ~~risk~~noted ~~corridors~~above ~~for~~or ~~stand-alone~~U.S. ~~PDPs~~Congress ~~increase~~may ~~the~~also ~~efficiency~~recommend ~~and~~changes ~~economy~~or oftake ~~services~~additional ~~for~~action ~~Medicare~~with ~~Part~~respect Dto ~~members.~~the ~~The~~way ~~Company~~in ~~has~~which ~~opted~~brokers toand ~~participate~~agents inare ~~the~~compensated ~~demonstration,~~for ~~which~~selling ~~may~~our beMedicare inAdvantage ~~effect~~and ~~for~~Part upD ~~to three years~~plans.

ItIn isaddition, ~~also~~the ~~possible~~Inflation ~~that~~Reduction ~~Congress~~Act, ~~may~~enacted ~~consider~~in August 2022 contains changes to ~~Medicare~~the ~~Advantage~~Part ~~payment~~D ~~policies~~program ~~due~~that tohave ~~recent~~and ~~recommendations~~will byshift more of the ~~Medicare~~claim ~~Payment~~liability ~~Advisory~~to ~~Commission~~plans and toaway ~~reduce~~from the ~~potential~~government, ~~added~~including ~~cost~~a ~~burden~~complete redesign of ~~costly~~the ~~new~~Part ~~benefits~~D standard benefit effective in 2025, orwhich ~~policies~~may ~~that~~reduce ~~impact~~the ~~drug~~Company’s ~~pricing~~flexibility ~~such~~to asdesign ~~price~~competitive ~~controls~~offerings. Given the significant changes and ~~inflationary~~resulting ~~rebates~~increase ~~applied~~in toPart ~~pharmaceutical~~D ~~manufacturers.~~premiums Infrom ~~addition~~plans, ~~states~~CMS ~~are~~instituted ~~increasingly~~a ~~requiring~~voluntary ~~companies~~demonstration in 2025 to ~~offer~~test ~~Medicaid~~whether ~~within~~additional apremium ~~state~~stabilization and ~~conducting~~revised ~~competitive~~risk ~~bid~~corridors ~~processes~~for stand-alone PDPs increase the efficiency and economy of services for Medicare Part D members. The Company has opted to ~~qualify~~participate in the demonstration in 2025 and 2026, and CMS may choose to ~~offer~~continue ~~dual~~the ~~eligible~~demonstration ~~products.~~for 2027.

In addition, the prices for the first ten drugs in the Medicare Drug Negotiation Program (the “Negotiation Program”) take effect in 2026, and the program will grow over time as additional drugs are negotiated by the government each year, with up to 100 total Part B and D drugs selected for the Negotiation Program by 2031. The Negotiation Program mandates direct negotiation by the government of prices for certain drugs in Medicare and negotiated drugs must be covered on all plan formularies.

It is also possible that Congress may consider changes to Medicare Advantage payment policies due to recent recommendations by the Medicare Payment Advisory Commission and to reduce the potential added cost burden of costly new benefits, or policies that impact drug pricing such as price controls and drug price inflationary rebates applied to pharmaceutical manufacturers. In addition, states are increasingly requiring companies to offer Medicaid within a state and conducting competitive bid processes to qualify to offer dual eligible products.

It is not possible to predict the outcome of such regulatory or Congressional activity, any of which could materially and adversely affect the Company.

Medicaid Regulation - The Company is ~~seeking~~exposed to ~~grow its Medicaid, dual eligible and dual eligible special needs plan businesses over the next several years. As a result, the Company is increasing its exposure to~~ changes in government policy with respect to and/or regulation of the various Medicaid, ~~dual eligible~~ and dual eligible ~~special needs~~ plan programs in which the Company participates, including changes in the amounts payable to the Company under those programs.

In addition to a quality rating system that applies to Medicaid and Managed Medicaid plans, federal regulations give states the option to choose to establish a minimum MLR of at least 85% for their Managed Medicaid plans, including those offered by the Company. Regardless of whether a state establishes a minimum MLR, it must use plan-reported MLR data to set future payment rates for managed care, so that its plans will “reasonably achieve” an MLR of at least 85%. For Managed Medicaid products, states may use more stringent definitions of “medical loss ratio” or impose other requirements related to minimum MLR. Minimum MLR requirements and similar actions further limit the level of margin the Company can earn in its Insured Medicaid products while leaving the Company exposed to medical costs that are higher than those reflected in its pricing. The Company also may be subject to significant fines, penalties, premium refunds and litigation if it fails to comply with minimum MLR laws and regulations.

States may also establish their own standards and use discretion in choosing what determines compliance within Medicaid contracts, including, among other provisions, standards for determining provider network adequacy, staffing, service operations, utilization management, beneficiary care management, provider support, data maintenance and reporting and claims payment. States have flexibility related to rate setting and provider network adequacy that could adversely or positively impact the Company’s Medicaid plans.

~~States~~The ~~continue~~“One toBig ~~consider~~Beautiful ~~Medicaid~~Bill ~~expansion;~~Act” ~~however,~~also ~~ten~~known ~~states~~as ~~have~~the ~~not~~“Working ~~yet~~Families ~~expanded~~Tax ~~and~~Cut ~~may~~Act” ~~not~~of do2025 ~~so.~~makes ~~States~~changes ~~may~~to ~~opt~~Medicaid ~~out~~eligibility ofrules ~~the~~and ~~elements~~financing, ofwhich ~~the~~will ~~ACA~~lead ~~requiring~~to ~~expansion~~reduced ofeligibility for Medicaid ~~coverage~~beneficiaries ~~without~~and ~~losing~~reduced ~~their~~state ~~current~~funding, ~~federal~~which will in turn impact Medicaid ~~funding.~~benefits Inand ~~addition,~~payment ~~the~~rates. ~~election~~Given ofthese ~~new~~changes, ~~Governors~~states ~~and/or~~that ~~state~~have ~~legislatures~~not ~~may~~done ~~impact~~so ~~states’~~are ~~previous~~unlikely ~~decisions~~to ~~regarding~~consider Medicaid expansion. ~~Although~~States ~~Congress~~may ~~enacted~~opt ~~incentives~~out ~~for~~of ~~states~~the ~~that~~elements ~~had~~of ~~not~~the ~~yet~~ACA ~~done~~requiring soexpansion toof ~~expand~~ Medicaid, ~~this~~coverage ~~incentive~~without ~~alone~~losing ~~has~~their ~~not~~current ~~persuaded~~federal ~~holdout~~Medicaid ~~states to expand~~funding.

The economic aspects of the Medicaid, dual eligible and dual eligible special needs plan business vary from state to state and are subject to frequent change. Medicaid premiums are paid by each state and differ from state to state. The federal government and certain states also are considering proposals and legislation for Medicaid and dual eligible program reforms or redesigns, including restrictions on the collection of manufacturer’s rebates on pharmaceuticals by Medicaid MCOs and their contracted PBMs, further program, population and/or geographic expansions of risk-based managed care, increasing beneficiary cost-sharing or payment levels, and changes to benefits, reimbursement, eligibility criteria (and redeterminations of eligibility), provider network adequacy requirements (including requiring the inclusion of specified high cost providers in the Company’s networks) and program structure. In some states, current Medicaid and dual eligible funding and premium revenue may not be adequate for the Company to continue program participation. The Company’s Medicaid and dual eligible contracts with states (or sponsors of Medicaid managed care plans) are subject to cancellation by the state (or the sponsors of the managed care plans) after a short notice period without cause (e.g., when a state discontinues a managed care program) or in the event of insufficient state funding.20

The economic aspects of the Medicaid and dual eligible plan business vary from state to state and are subject to frequent change. Medicaid premiums are paid by each state and differ from state to state. The federal government and certain states also are considering proposals and legislation for Medicaid and dual eligible program reforms or redesigns, including restrictions on the collection of manufacturer’s rebates on pharmaceuticals by Medicaid MCOs and their contracted PBMs, further program, population and/or geographic expansions of risk-based managed care, increasing beneficiary cost-sharing or payment levels, and changes to benefits, reimbursement, eligibility criteria (and redeterminations of eligibility), provider network adequacy requirements (including requiring the inclusion of specified high cost providers in the Company’s networks) and program structure. In some states, current Medicaid and dual eligible funding and premium revenue may not be adequate for the Company to continue program participation. The Company’s Medicaid and dual eligible contracts with states (or sponsors of Medicaid managed care plans) are subject to cancellation by the state (or the sponsors of the managed care plans) after a short notice period without cause (e.g., when a state discontinues a managed care program) or in the event of insufficient state funding.

The Company’s Medicaid and dual eligible plan products also are heavily regulated by CMS and state Medicaid agencies, which have the right to audit the Company’s performance to determine compliance with CMS contracts and regulations. The Company’s Medicaid products, dual eligible products and CHIP contracts also are subject to complex federal and state regulations and oversight by state Medicaid agencies regarding the services provided to Medicaid enrollees, payment for those services, network requirements (including mandatory inclusion of specified high-cost providers), and other aspects of these programs, and by external review organizations which audit Medicaid plans on behalf of state Medicaid agencies. The laws, regulations and contractual requirements applicable to the Company and other participants in Medicaid and dual eligible programs, including requirements that the Company submit encounter data to the applicable state agency, are extensive, complex and subject to change. The Company has invested significant resources to comply with these standards, and its Medicaid and dual eligible program compliance efforts will continue to require significant resources. CMS and/or state Medicaid agencies may fine the Company, withhold payments to the Company, seek premium and other refunds, terminate the Company’s existing contracts, elect not to award the Company new contracts or not to renew the Company’s existing contracts, prohibit the Company from continuing to market and/or enroll members in or refuse to automatically assign members to one or more of the Company’s Medicaid or dual eligible products, exclude the Company from participating in one or more Medicaid or dual eligible programs and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS or state regulations or contractual requirements. CMS has proposed requiring that health plans offering certain dual eligible programs must also offer Medicaid programs, which has resulted in the Company refraining from bidding in certain jurisdictions and could impact the Company’s ability to obtain or retain membership in its dual eligible programs.

The Company cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the Medicaid program, nor can it predict the impact those changes will have on its business operations or operating results, but the effects could be materially adverse to the Company.

Medicare and Medicaid Audits - CMS regularly audits the Company’s performance to determine its compliance with CMS’ regulations and its contracts with CMS and to assess the quality of services it provides to Medicare Advantage and PDP beneficiaries. For example, CMS conducts risk adjustment data validation (“RADV”) audits of a subset of Medicare Advantage contracts for each contract year. Since 2011, CMS has selected certain of the Company’s Medicare Advantage contracts for various years for RADV audit, and the number of RADV audits continues to increase. The OIG also is auditing the Company’s risk adjustment data and that of other companies, and the Company expects CMS and the OIG to continue auditing risk adjustment data. The Company also has received Civil Investigative Demands (“CIDs”) from, and provided documents and information to, the Civil Division of the DOJ in connection with investigations of the Company’s identification and/or submission of diagnosis codes related to risk adjustment payments, including patient chart review processes, under Parts C and D of the Medicare program. In May 2025, CMS announced it would audit every Medicare Advantage contract each payment year, with an expedited plan to complete audits for payment years 2018 through 2024 by early 2026. In September 2025, the U.S. District Court, Northern District of Texas vacated CMS’ 2023 RADV Audit Final Rule which eliminated the application of a fee-for-service adjuster in contract-level RADV audits but continued the use of extrapolation in audits of Medicare Advantage Organizations. CMS has appealed this ruling.

In addition, state Medicaid agencies regularly audit, and state officials regularly investigate, the Company’s performance across all areas of its contractual obligations to the state to determine compliance and quality of services. The Company may be subject to, among other penalties, significant fines, sanctions, corrective actions, and enrollment freezes depending on the findings of these audits and reviews. The Company’s ongoing performance and compliance with program requirements can impact our ability to expand and retain Medicaid business. State Medicaid agencies are also increasingly using the audit process

~~The Company’s Medicaid, dual eligible and dual eligible special needs plan products also are heavily regulated by CMS and state Medicaid agencies, which have the right~~ to ~~audit~~challenge the ~~Company’s~~legality performance to determine compliance with CMS contracts and regulations. The Company’s Medicaid products, dual eligible products and CHIP contracts also are subject to complex federal and state regulations and oversight by state Medicaid agencies regarding the services provided to Medicaid enrollees, payment for those services, network requirements (including mandatory inclusion of ~~specified~~PBM ~~high-cost providers)~~practices, ~~and~~such ~~other~~as ~~aspects~~guaranteed ofeffective ~~these~~rate ~~programs,~~reconciliations and by external review organizations which audit Medicaid plans on behalf of state Medicaid agencies. The laws, regulations and contractual requirements applicable to the Company and other participants in Medicaid and dual eligible programs, including requirements that the Company submit encounter data to the applicable state agency, are extensive, complex and subject to change. For example, in April 2024, CMS finalized the Managed Care Rule, which addresses five primary areas: (1) access in managed care, including network adequacy; (2) state directed payments; (3) medical loss ratio standards; (4) in lieu of services and settings and (5) quality and performance assessment. The Company has invested significant resources to comply with ~~these~~retail ~~standards,~~pharmacies and ~~its~~transmission ~~Medicaid and dual eligible program compliance efforts will continue to require significant resources~~fees. CMS and/or state Medicaid agencies may fine the Company, withhold payments to the Company, seek premium and other refunds, terminate the Company’s existing contracts, elect not to award the Company new contracts or not to renew the Company’s existing contracts, prohibit the Company from continuing to market and/or enroll members in or refuse to automatically assign members to one or more of the Company’s Medicaid or dual eligible products, exclude the Company from participating in one or more Medicaid or dual eligible programs and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS or state regulations or contractual requirements. CMS has proposed requiring that health plans offering certain dual eligible programs must also offer Medicaid programs, which has resulted in the Company refraining from bidding in certain jurisdictions and could impact the Company’s ability to obtain or retain membership in its dual eligible programs.

Medicare Star Ratings - A portion of each Medicare Advantage plan’s reimbursement is tied to the plan’s “star ratings.” The ~~Company~~star ~~cannot~~rating ~~predict~~system ~~whether~~considers ~~pending~~a orvariety ~~future~~of ~~federal~~measures oradopted ~~state~~by ~~legislation~~CMS, including quality of preventative services, chronic illness management, compliance and overall customer satisfaction. Only Medicare Advantage plans with an overall star rating of 4 or ~~court~~more ~~proceedings~~stars ~~will~~(out ~~change~~of ~~various~~5 ~~aspects~~stars) are eligible for a quality bonus in their basic premium rates. The Company’s 2026 star ratings were used to determine which of its Medicare Advantage plans have ratings of 4 stars or higher and qualify for bonus payments in 2027. Based on the ~~Medicaid~~Company’s ~~program~~membership as of December 2025, ~~nor~~more ~~can~~than it81% ~~predict~~of the ~~impact~~Company’s ~~those~~Medicare ~~changes~~Advantage members are in 2026 Medicare Advantage plans that are rated 4 stars or higher and more than 63% of the Company’s Medicare Advantage members are in a 4.5-star plan for 2026. CMS also gives PDPs star ratings that affect each PDP’s enrollment. Medicare Advantage and PDP plans that are rated less than 3 stars for three consecutive years are subject to contract termination by CMS. CMS continues to revise its star ratings system to make it harder to achieve 4 or more stars. There can be no assurances that the Company will ~~have~~be onsuccessful in maintaining or improving its ~~business~~star ~~operations~~ratings in future years. Accordingly, the Company’s Medicare Advantage plans may not continue to be or ~~operating~~become ~~results~~eligible for full level quality bonuses, ~~but~~which could adversely affect the ~~effects~~benefits ~~could~~such beplans ~~materially~~can ~~adverse~~offer, reduce membership and/or reduce profit margins.

Medicare ~~and~~Payment ~~Medicaid~~Rates ~~Audits~~ - ~~CMS~~In ~~regularly~~April ~~audits~~2025, ~~the~~CMS ~~Company’s~~issued ~~performance~~its tofinal ~~determine~~notice ~~its~~detailing ~~compliance~~final ~~with~~2026 ~~CMS’~~Medicare ~~regulations~~Advantage ~~and~~payment ~~its~~rates. ~~contracts~~Based ~~with~~on CMS’ ~~and~~notice, toMedicare ~~assess~~Advantage ~~the~~rates ~~quality~~resulted ofin ~~services~~an itexpected ~~provides~~average toincrease in revenue for the Medicare Advantage ~~and~~industry ~~PDP~~of ~~beneficiaries~~7. ~~For example~~16%, ~~CMS~~which ~~conducts~~includes a risk ~~adjustment~~score ~~data~~trend ~~validation~~increase ~~(“RADV”)~~of ~~audits~~2.10%. ofRisk ascores ~~subset~~vary ofamong Medicare Advantage ~~contracts~~plans ~~for~~depending ~~each~~on ~~contract~~the ~~year.~~specific ~~Since~~population ~~2011~~served, ~~CMS~~so ~~has~~this ~~selected~~increase ~~certain~~does ofnot ~~the~~represent ~~Company’s~~an ~~Medicare~~actual ~~Advantage~~guaranteed ~~contracts~~payment ~~for~~increase. ~~various~~Without ~~years~~including ~~for~~the ~~RADV~~risk ~~audit,~~score ~~and~~trend increase, the ~~number~~2026 ofrates ~~RADV~~result ~~audits~~in ~~continues~~an toexpected average increase. ~~The~~in ~~OIG~~revenue ~~also~~for isthe ~~auditing~~Medicare Advantage industry of 5.06%, though the ~~Company’s~~rates ~~risk~~may ~~adjustment~~vary ~~data~~widely ~~and~~depending ~~that~~on ofthe ~~other~~provider ~~companies,~~group and ~~the~~patient ~~Company~~demographics. ~~expects~~On January 26, 2026, CMS ~~and~~issued ~~the~~an ~~OIG~~advance tonotice ~~continue~~detailing ~~auditing~~proposed ~~risk~~2027 ~~adjustment~~Medicare ~~data~~Advantage payment rates. The ~~Company~~2027 ~~also~~Medicare ~~has~~Advantage ~~received~~rates, ~~Civil~~if ~~Investigative~~finalized ~~Demands~~as ~~(“CIDs”) from~~proposed, ~~and~~will ~~provided~~result ~~documents~~in ~~and~~an ~~information~~expected ~~to,~~average ~~the~~increase ~~Civil~~in ~~Division~~revenue offor the ~~DOJ~~Medicare inAdvantage ~~connection~~industry ~~with~~of ~~investigations~~2.54%, ofwhich ~~the~~includes ~~Company’s~~a ~~identification~~risk ~~and/or~~score ~~submission~~trend increase of ~~diagnosis~~2.45%. ~~codes~~Without ~~related~~including tothe risk ~~adjustment~~score ~~payments~~trend increase, ~~including~~the ~~patient~~advance ~~chart~~2027 ~~review~~rates ~~processes~~will result in an expected average increase in revenue for the Medicare Advantage industry of 0.09%, ~~under~~though ~~Parts~~the Crates may vary widely depending on the provider group and Dpatient ofdemographics. CMS intends to publish the ~~Medicare~~final ~~program~~2027 rate announcement no later than April 6, 2026.

On January 30, 2023, CMS released the final rule concerning Part C contract-level Risk Adjustment Data Validation Audits (the “RADV Audit Rule”). The RADV Audit Rule eliminated the application of a fee-for-service adjuster (“FFS Adjuster”) in contract-level RADV audits but continued the use of extrapolation in such audits of Medicare Advantage organizations. The FFS Adjuster that was announced in 2012 was to be used by CMS to determine a permissible level of payment error. By applying the FFS Adjuster, Medicare Advantage organizations would have been liable for repayments only to the extent that their extrapolated payment errors exceeded the error rate in Original Medicare, which could have impacted the extrapolated repayments to which Medicare Advantage organizations are subject. CMS is conducting RADV audits of Medicare Advantage organizations, including the Company’s Medicare Advantage plans, for payment year 2018 and subsequent payment years and may use extrapolation without the application of a FFS Adjuster. The RADV Audit Rule may have potential adverse effects, which could be material, on the Company’s operating results, financial condition, and cash flows. CMS also has announced that it will not conduct RADV audits on all contracts; instead, it will only audit contracts it believes are at the highest risk for overpayments based on its statistical modeling. The RADV Audit Rule is subject to ongoing litigation and the outcome and future impacts are uncertain.

In addition, state Medicaid agencies regularly audit, and state Attorneys General regularly investigate, the Company’s performance across all areas of its contractual obligations to the state to determine compliance and quality of services. The Company may be subject to, among other penalties, significant fines, sanctions, corrective actions, and enrollment freezes depending on the findings of these audits and reviews. The Company’s ongoing performance and compliance with program requirements can impact our ability to expand and retain Medicaid business. State Medicaid agencies are also increasingly using the audit process to challenge the legality of PBM practices, such as guaranteed effective rate reconciliations with retail pharmacies and transmission fees.

Medicare Star Ratings - A portion of each Medicare Advantage plan’s reimbursement is tied to the plan’s “star ratings.” The star rating system considers a variety of measures adopted by CMS, including quality of preventative services, chronic illness management, compliance and overall customer satisfaction. Only Medicare Advantage plans with an overall star rating of 4 or more stars (out of 5 stars) are eligible for a quality bonus in their basic premium rates. The Company’s 2024 star ratings were used to determine which of its Medicare Advantage plans have ratings of 4 stars or higher and qualify for bonus payments in 2025. Based on the 2024 ratings, 88% of the Company’s Medicare Advantage members are in 2025 Medicare Advantage plans that are rated 4 stars or higher. Additionally, more than two out of three of the Company’s Medicare Advantage members are in a 4.5-star plan for 2025. CMS also gives PDPs star ratings that affect each PDP’s enrollment. The Company’s PDP plans were rated 3.5 stars for 2025. Medicare Advantage and PDP plans that are rated less than 3 stars for three consecutive years are subject to contract termination by CMS. CMS continues to revise its star ratings system to make it harder to achieve 4 or more stars. There can be no assurances that the Company will be successful in maintaining or improving its star ratings in future years. Accordingly, the Company’s Medicare Advantage plans may not continue to be or become eligible for full level quality bonuses, which could adversely affect the benefits such plans can offer, reduce membership and/or reduce profit margins.

Medicare Payment Rates - In April 2024, CMS issued its final notice detailing final 2025 Medicare Advantage payment rates. Based on CMS’ notice, Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 3.70%, which includes a risk score trend increase of 3.86%. Risk scores vary among Medicare Advantage plans depending on the specific population served, so this increase does not represent an actual guaranteed payment increase. Without including the risk score trend increase, the 2025 rates result in an expected average decrease in revenue for the Medicare Advantage industry of 0.16%, though the rates may vary widely depending on the provider group and patient demographics. On January 10, 2025, CMS issued an advance notice detailing proposed 2026 Medicare Advantage payment rates. The 2026 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 4.33%, which includes a risk score trend increase of 2.10%. Without including the risk score trend increase, the advance 2026 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 2.23%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2026 rate announcement no later than April 7, 2025.

The Company faces a challenge from the impact of the increasing cost of medical care (including prescription medications), changes to methodologies for determining payments and CMS local and national coverage decisions that require the Company to pay for services and supplies that are not factored into the Company’s bids. The federal government may seek to impose restrictions on the configuration of pharmacy or other provider networks for Medicare Advantage and/or PDP plans, or otherwise restrict the ability of these plans to alter benefits, negotiate prices or establish other terms to improve affordability or maintain viability of products. The Company currently believes that the payments it has received and will receive in the near term are adequate to justify the Company’s continued participation in the Medicare Advantage and PDP programs, although there are economic and political pressures to continue to reduce spending on the program, and this outlook could change.

340B Drug Pricing Program – The 340B Drug Pricing Program, which is overseen by the HHS and the Health Resources and Services Administration (“HRSA”), allows eligible Covered Entities to purchase prescription drugs from manufacturers at a steep discount. InA ~~2020,~~reduction ain ~~number of pharmaceutical manufacturers began programs that limited~~ Covered Entities’ participation in ~~the program through~~ contract ~~pharmacies~~pharmacy arrangements~~. In May 2021~~, ~~HRSA~~a ~~sent~~reduction ~~enforcement~~in ~~letters~~the touse ~~multiple~~of ~~manufacturers~~the toCompany’s ~~curb~~administrative ~~these~~services ~~practices.~~by InCovered ~~September~~Entities ~~2021,~~or ~~HRSA~~a ~~forwarded~~reduction ~~the~~in ~~enforcement~~drug ~~actions~~manufacturers’ toparticipation in the ~~OIG~~program ~~for~~could ~~potential~~result ~~imposition~~from ~~of civil monetary penalties. Those~~ enforcement actions ~~are currently subject to ongoing litigation. In addition~~, ~~several~~rule ~~states~~changes ~~continue~~or tootherwise ~~debate~~and ~~how~~could ~~pharmaceutical~~materially ~~manufacturers must distribute~~ and ~~pay~~adversely ~~rebates~~affect tothe ~~340B covered entities which is currently subject to ongoing litigation~~Company.

In ~~November~~December ~~2022~~2025, ~~HRSA~~the U.S. District Court of Maine issued ~~proposed~~a ~~rules~~preliminary ~~that~~injunction ~~would~~halting ~~overhaul~~the implementation of the 340B ~~Drug~~Rebate ~~Pricing~~Model ~~Programs~~Pilot ~~administrative~~Program ~~dispute~~(the ~~resolution process~~“Pilot”). The ~~revisions~~court ~~are~~held ~~designed~~that tothe ~~make~~Pilot is likely arbitrary and capricious under the ~~process~~Administrative ~~more~~Procedure ~~accessible~~Act bybecause ~~making~~the itPilot’s ~~more~~potential ~~expeditious~~impact ~~and~~on ~~less~~340B ~~formal~~hospitals was not adequately considered; the decision has been appealed to the First Circuit Court of Appeals. Under approved plans under the Pilot, aspharmaceutical ~~well~~manufacturers aswere ~~more~~to ~~equitable~~implement by340B-discounted ~~requiring~~prices ~~fewer~~for ~~resources~~pertinent drugs tied to ~~participate~~the Inflation Reduction Act negotiation program through retrospective rebates rather than upfront discounts that traditionally have been extended on 340B drug purchases. ADrugs ~~reduction~~were into ~~Covered~~be ~~Entities’~~subject ~~participation~~to inthe ~~contract~~Pilot ~~pharmacy~~for ~~arrangements~~at least one year, asstarting aJanuary ~~result~~1, 2026. The Office of Pharmacy Affairs (“OPA”) had stated that it would consider extending the ~~pending~~program ~~enforcement~~to ~~actions~~additional ordrugs. ~~otherwise~~Under the Pilot, aOPA ~~reduction~~would inevaluate the ~~use~~effectiveness of the ~~Company’s~~rebate ~~administrative~~model ~~services~~plans bythrough data reporting from participating manufacturers and feedback from Covered Entities. At this time, orit ais ~~reduction~~uncertain inwhether ~~drug~~the ~~manufacturers~~Pilot will resume, and if it does resume it is uncertain what impacts the Pilot may have on the Company’s ~~participation~~financial inperformance. It is also uncertain whether other changes to the 340B program ~~could~~may ~~materially~~be effected through legislation, regulation, or judicial decision and, ~~adversely~~if ~~affect~~so, what impacts such changes may have on the Company’s financial performance.

Anti-Remuneration Laws - Federal law prohibits, among other things, an entity from knowingly and willfully offering, paying, soliciting or receiving, subject to certain exceptions and “safe harbors,” any remuneration to induce the referral of individuals or the purchase, lease or order of items or services for which payment may be made under Medicare, Medicaid or certain other federal and state health care programs. A number of states have similar laws, some of which are not limited to services paid for with government funds. Sanctions for violating these federal and state anti-remuneration laws may include 22

23Anti-Remuneration Laws - Federal law prohibits, among other things, an entity from knowingly and willfully offering, paying, soliciting or receiving, subject to certain exceptions and “safe harbors,” any remuneration to induce the referral of individuals or the purchase, lease or order of items or services for which payment may be made under Medicare, Medicaid or certain other federal and state health care programs. A number of states have similar laws, some of which are not limited to services paid for with government funds. Sanctions for violating these federal and state anti-remuneration laws may include imprisonment, criminal and civil fines, and exclusion from participation in Medicare, Medicaid and other federal and state government-sponsored health care programs. Companies involved in public health care programs, such as Medicare and/or Medicaid are required to maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject of fraud, waste and abuse investigations and audits. The Company has invested significant resources to comply with Medicare and Medicaid program standards. Ongoing vigorous law enforcement and the highly technical regulatory scheme mean that the Company’s compliance efforts in this area will continue to require significant resources.

~~imprisonment,~~Antitrust ~~criminal~~ and ~~civil~~Unfair ~~fines,~~Competition ~~and~~- ~~exclusion~~The ~~from~~U.S. ~~participation~~Federal inTrade ~~Medicare,~~Commission ~~Medicaid~~(“FTC”) investigates and ~~other~~prosecutes ~~federal~~practices ~~and~~that ~~state~~are ~~government-sponsored~~“unfair ~~health~~trade ~~care~~practices” ~~programs~~or “unfair methods of competition.” ~~Companies~~Numerous ~~involved~~lawsuits inhave ~~public~~been ~~health~~filed ~~care~~throughout ~~programs~~the ~~such~~U.S asagainst ~~Medicare~~pharmaceutical manufacturers, retail pharmacies and/or ~~Medicaid~~PBMs ~~are~~under ~~required~~various tofederal ~~maintain~~and ~~compliance~~state ~~programs~~antitrust toand ~~detect~~unfair ~~and~~competition ~~deter~~laws ~~fraud~~challenging, ~~waste~~among ~~and~~other ~~abuse,~~things: (i) brand name drug pricing and ~~are~~rebate ~~often~~practices of pharmaceutical manufacturers, (ii) the ~~subject~~maintenance of ~~fraud,~~retail ~~waste~~or specialty pharmacy networks by PBMs, and ~~abuse~~(iii) ~~investigations~~various other business practices of PBMs and ~~audits~~retail pharmacies. ~~The~~To ~~Company~~the ~~has~~extent ~~invested~~that ~~significant~~the ~~resources~~Company appears to ~~comply~~have ~~with~~actual ~~Medicare~~or ~~and~~potential ~~Medicaid~~market ~~program~~power ~~standards.~~in ~~Ongoing~~a ~~vigorous~~relevant ~~law~~market ~~enforcement~~or ~~and~~CVS ~~the~~pharmacy, ~~highly~~CVS ~~technical~~specialty ~~regulatory~~or ~~scheme~~MinuteClinic ~~mean~~plays ~~that~~a unique or expanded role in a Health Care Benefits or Health Services segment product offering, the Company’s ~~compliance~~business ~~efforts~~arrangements inand ~~this~~uses ~~area~~of ~~will~~confidential ~~continue~~information may be subject to ~~require~~heightened ~~significant~~scrutiny ~~resources~~from an anti-competitive perspective and possible challenge by state and/or federal regulators and/or private parties.

Antitrust and Unfair Competition - The U.S. Federal Trade Commission (“FTC”) investigates and prosecutes practices that are “unfair trade practices” or “unfair methods of competition.” Numerous lawsuits have been filed throughout the U.S against pharmaceutical manufacturers, retail pharmacies and/or PBMs under various federal and state antitrust and unfair competition laws challenging, among other things: (i) brand name drug pricing and rebate practices of pharmaceutical manufacturers, (ii) the maintenance of retail or specialty pharmacy networks by PBMs, and (iii) various other business practices of PBMs and retail pharmacies. In July 2021, the FTC approved several resolutions that direct agency staff to use compulsory process, such as subpoenas, to investigate seven specific enforcement priorities. Priority targets include, among other businesses, health care businesses, such as pharmaceutical companies, pharmacy benefits managers and hospitals. To the extent that the Company appears to have actual or potential market power in a relevant market or CVS pharmacy, CVS specialty or MinuteClinic plays a unique or expanded role in a Health Care Benefits or Health Services segment product offering, the Company’s business arrangements and uses of confidential information may be subject to heightened scrutiny from an anti-competitive perspective and possible challenge by state and/or federal regulators and/or private parties.

Privacy and Confidentiality Requirements - Many of the Company’s activities involve the receipt, use and disclosure by the Company of personally identifiable information (“PII”) as permitted in accordance with applicable federal and state privacy and data security laws, which require organizations to provide appropriate privacy and security safeguards for such information. In addition to PII, the Company uses and discloses de-identified data for analytical and other purposes when permitted. Additionally, there are industry standards for handling credit card data known as the Payment Card Industry Data Security Standard, which are a set of requirements designed to help ensure that entities that process, store or transmit credit card information maintain a secure environment. Certain states have incorporated these requirements into state laws or enacted other requirements relating to the use and/or disclosure of PII.

The federal Health Insurance Portability and Accountability Act of 1996, as it has been amended from time to time, and the regulations issued thereunder (collectively, “HIPAA”), impose extensive requirements on the way in which health plans, providers, health care clearinghouses ~~(known as “covered entities”)~~ and their business associates use, disclose and safeguard protected health information (“PHI”). Criminal penalties and civil sanctions may be imposed for failing to comply with HIPAA’s privacy and security standards. In 2024, HIPAA was further amended to add additional rules requiring the safeguarding of reproductive health records. The Company is taking appropriate measures to ensure it is in compliance with the obligations created by this new rule.

In addition to HIPAA, state laws apply to the extent they are more protective of individual privacy than is HIPAA, including laws that place stricter controls on the release of information relating to specific diseases or conditions, reproductive health records and requirements to notify members of unauthorized release or use of or access to PHI. States also have adopted regulations to implement provisions of the Financial Modernization Act of 1999 (also known as the Gramm-Leach-Bliley Act (“GLBA”)) which generally require insurers, including health insurers, to provide customers with notice regarding how their non-public personal health and financial information is used and the opportunity to “opt out” of certain disclosures before the insurer shares such information with a non-affiliated third party. Like HIPAA, GLBA sets a “floor” standard, allowing states to adopt more stringent requirements governing privacy protection. Complying with additional state requirements requires us to make additional investments beyond those the Company has made to comply with HIPAA and GLBA.

There is also a continuing trend of states enacting more comprehensive privacy laws and regulations addressing consumer rights to data access, deletion, protection or transparency, such as the California Consumer Privacy Act (“CCPA”). States also are starting to issue regulations and proposed regulations specifically related to cybersecurity, such as the regulations issued by the New York Department of Financial Services, as well as regulating use of artificial intelligence technologies. Complying with conflicting cybersecurity regulations, which may differ from state to state, requires significant resources. In addition, differing approaches to state privacy, cybersecurity and/or artificial intelligence regulation and varying enforcement philosophies may significantly restrict the Company’s ability to standardize its products and services across state lines. Widely-reported large scale cyberattacks in the U.S. and abroad increase the likelihood that additional data security legislation will be considered by additional states or by the federal government. These legislative and regulatory developments will impact the design and operation of the Company’s businesses, its privacy and security strategy and its web-based and mobile assets.

2423

~~Finally,~~considered ~~each~~by ~~Public~~additional ~~Exchange~~states isor ~~required~~by tothe ~~adhere~~federal togovernment. ~~privacy~~These legislative and ~~security~~regulatory ~~standards~~developments ~~with~~will ~~respect~~impact tothe ~~PII,~~design and tooperation ~~impose privacy and security standards that are at least as protective~~ of ~~PII as those~~ the ~~Public~~Company’s ~~Exchange has implemented for itself or non-Public Exchange entities~~businesses, ~~which~~its ~~include~~privacy ~~insurers offering plans through the Public Exchange~~ and ~~their~~security ~~designated~~strategy ~~downstream entities, including PBMs~~ and ~~other~~its ~~business~~web-based ~~associates. These standards may differ from,~~ and bemobile ~~more stringent than, HIPAA~~assets.

See Item 1C of this 10-K, “Cybersecurity,” for more information on the Company’s cybersecurity risk management and governance.

Consumer Protection Laws - The federal government has many consumer protection laws, such as the Federal Trade Commission Act, the Federal Postal Service Act and the Consumer Product Safety Act. Most states also have similar consumer protection laws and a growing number of states regulate subscription programs. In addition, the federal government and most states have adopted laws and/or regulations requiring places of public accommodation, health care services and other goods and services to be accessible to people with disabilities. These consumer protection and accessibility laws and regulations have been the basis for investigations, lawsuits and multistate settlements relating to, among other matters, the marketing of loyalty programs, and health care products and services, pricing accuracy, expired front store products, financial incentives provided by drug manufacturers to pharmacies in connection with therapeutic interchange programs, disclosures related to how personal data is used and protected and the accessibility of goods and services to people with disabilities. As a result of the Company’s direct-to-consumer activities, including mobile and web-based solutions offered to members and to other consumers, the Company also is subject to federal and state regulations applicable to electronic communications and to other general consumer protection laws and regulations. ~~For example, the CCPA became effective in 2020, and additional federal and state regulation of consumer privacy protection may be proposed or enacted in the future.~~ The Company expects these new laws and regulations to impact the design of its products and services and the management and operation of its businesses and to increase its compliance costs.

Transparency inLaws ~~Coverage Rule~~ - InThe October 2020, the HHS, the U.S. Department of Labor (“DOL”) and the U.S. Internal Revenue Service (“IRS,” and together with the HHS and DOL, the “Tri-Departments”) released a final rule, referred to as the Transparency in Coverage Rule, ~~requiring~~requires health insurers to disclose negotiated prices of drugs, medical services, supplies and other covered items. The rule also requires group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request, to a participant, beneficiary, or enrollee and require plans and issuers to publicly disclose in-network provider rates, historical out-of-network allowed amounts and the associated billed charges, and negotiated rates and historical net prices for prescription drugs. Insurers are required to implement a consumer tool and disclose data in a machine readable file. The Transparency in Coverage Rule’s requirements related to prescription drug prices have yet to be implemented, but once implemented, the public disclosure of insurer- or PBM-negotiated price concessions may result in drug manufacturers lowering discounts or rebates, resulting in higher drug costs for patients and impacting the ability of the Company to negotiate drug prices and provide competitive products and services to consumers. In addition, most group health plans and issuers of group or individual health insurance coverage are required to offer an online price comparison tool allowing for personalized pricing information to their participants, beneficiaries, and enrollees, including access by phone, or in paper form, upon request. Cost estimates must be provided in real-time based on cost-sharing information that is accurate at the time of the request.

~~The~~Additional ~~Consolidated Appropriations Act of 2021 was signed into law in December 2020 and contains further~~ transparency ~~provisions~~regulations ~~requiring~~require group health plans and health insurance issuers to report, on an annual basis, certain prescription drug costs, overall spending on health services and prescription drugs, and information about premiums and the impact of rebates and other remuneration on premiums and out-of-pocket costs ~~to the Tri-Departments~~.

Telemarketing and Other Outbound Contacts - Certain federal and state laws, such as the Telephone Consumer Protection Act and the Telemarketing Sales Rule, give the FTC, the Federal Communications Commission and state Attorneys General the ability to regulate, and bring enforcement actions relating to, telemarketing practices and certain automated outbound contacts, such as phone calls, texts or emails. Under certain circumstances, these laws provide consumers with a private right of action. Violations of these laws could result in substantial statutory penalties and other sanctions.

Pharmacy and Professional Licensure and Regulation - The Company is subject to a variety of intersecting federal and state statutes and regulations that govern the wholesale distribution of drugs; operation of retail, specialty, infusion, ~~LTC~~ and mail order pharmacies; licensure of facilities and professionals, including pharmacists, technicians, nurses and other health care professionals; registration of facilities with the U.S. Drug Enforcement Administration (the “DEA”) and analogous state agencies that regulate controlled substances; packaging, storing, shipping and tracking of pharmaceuticals; repackaging of drug products; labeling, medication guides and other consumer disclosures; interactions with prescribers and health care professionals; compounding of prescription medications; dispensing of controlled and non-controlled substances; counseling of patients; transfers of prescriptions; advertisement of prescription products and pharmacy services; security; inventory control; recordkeeping; reporting to Boards of Pharmacy, the U.S. Food and Drug Administration (the “FDA”), the U.S. Consumer Product Safety Commission, the DEA and related state agencies; and other elements of pharmacy practice. Pharmacies are highly regulated and have contact with a wide variety of federal, state and local agencies with various powers to investigate, inspect, audit or solicit information, including Boards of Pharmacy and Nursing, the DEA, the FDA, the DOJ, HHS and others. Many of these agencies have broad enforcement powers, conduct audits on a regular basis, can impose substantial fines and penalties, and may revoke the license, registration or program enrollment of a facility or professional.

25Telehealth Laws - States generally require providers providing professional health care services, whether in person or via telehealth, to a patient residing within the state to be licensed in that state. States have established a variety of licensing and other regulatory requirements around the provision of telehealth services. These requirements vary from state to state. Many states require notification of certain material events be provided to the applicable licensing agency. In addition, there are federal telehealth requirements applicable to Medicare and state program specific requirements applicable to Medicaid. The Company has established systems for ensuring that its providers are appropriately licensed under applicable state law and that their

patients; transfers of prescriptions; advertisement of prescription products and pharmacy services; security; inventory control; recordkeeping; reporting to Boards of Pharmacy, the U.S. Food and Drug Administration (the “FDA”), the U.S. Consumer Product Safety Commission, the DEA and related state agencies; and other elements of pharmacy practice. Pharmacies are highly regulated and have contact with a wide variety of federal, state and local agencies with various powers to investigate, inspect, audit or solicit information, including Boards of Pharmacy and Nursing, the DEA, the FDA, the DOJ, HHS and others. Many of these agencies have broad enforcement powers, conduct audits on a regular basis, can impose substantial fines and penalties, and may revoke the license, registration or program enrollment of a facility or professional. 24

Telehealth Laws - States generally require providers providing professional health care services, whether in person or via telehealth, to a patient residing within the state to be licensed in that state. States have established a variety of licensing and other regulatory requirements around the provision of telehealth services. These requirements vary from state to state. Many states require notification of certain material events be provided to the applicable licensing agency. In addition, there are federal telehealth requirements applicable to Medicare and state program specific requirements applicable to Medicaid. The Company has established systems for ensuring that its providers are appropriately licensed under applicable state law and that their provision of telehealth service to patients with whom we interact occurs in compliance with applicable laws and regulations. Failure to comply with these laws and regulations could result in licensure actions against the providers as well as civil, criminal or administrative penalties against the providers and/or entities engaging the services of the providers.

State Insurance, HMO and Insurance Holding Company Regulation - A number of states regulate affiliated groups of insurers and HMOs, such as the Company under holding company statutes. These laws may, among other things, require prior regulatory approval of dividends and material intercompany transfers of assets and transactions between the regulated companies and their affiliates, including their parent holding companies. The Company expects the states in which its insurance and HMO subsidiaries are licensed to continue to expand their regulation of the corporate governance and internal control activities of its insurance companies and HMOs. Changes to state insurance, HMO and/or insurance holding company laws or regulations or changes to the interpretation of those laws or regulations, including due to regulators’ increasing concerns regarding insurance company and/or HMO solvency due, among other things, to past and expected payor insolvencies, could negatively affect the Company’s businesses in various ways, including through increases in solvency fund assessments, requirements that the Company hold greater levels of capital and/or delays in approving dividends from regulated subsidiaries.

PBM offerings of prescription drug coverage under certain risk arrangements may be subject to laws and regulations in various states. Such laws may require that the party at risk become licensed as an insurer, establish reserves or otherwise demonstrate financial viability. Laws that may apply in such cases include insurance laws and laws governing MCOs and limited prepaid health service plans. In addition, most states require that PBMs become directly registered or licensed with the department of insurance or similar government oversight agency regardless of any arrangements they have with clients. PBM licensure laws may include oversight of certain PBM activities and operations and may include auditing of those activities.

The states of domicile of the Company’s regulated subsidiaries have statutory risk-based capital (“RBC”) requirements for health and other insurance companies and HMOs based on the National Association of Insurance Commissioners’ (the “NAIC”) Risk-Based Capital for Insurers Model Act (the “RBC Model Act”). These RBC requirements are intended to assess the capital adequacy of life and health insurers and HMOs, taking into account the risk characteristics of a company’s investments and products. The RBC Model Act sets forth the formula for calculating RBC requirements, which are designed to take into account asset risks, insurance risks, interest rate risks and other relevant risks with respect to an individual company’s business. In general, under these laws, an insurance company or HMO must submit a report of its RBC level to the insurance department or insurance commissioner of its state of domicile for each calendar year. At December 31, ~~2024~~2025, all of the Company’s insurance and HMO subsidiaries were above the RBC level that would require regulatory action.

For information regarding restrictions on certain payments of dividends or other distributions by the Company’s HMO and insurance company subsidiaries, see Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K.

The holding company laws for the states of domicile of certain of the Company’s subsidiaries also restrict the ability of any person to obtain control of an insurance company or HMO without prior regulatory approval. Under those statutes, without such approval (or an exemption), no person may acquire any voting security of an insurance holding company (such as the Company’s ultimate parent company, CVS Health Corporation) that controls an insurance company or HMO, or merge with such a holding company, if as a result of such transaction such person would control the insurance holding company. Control is generally defined as the direct or indirect power to direct or cause the direction of the management and policies of a person and is presumed to exist if a person directly or indirectly owns or controls 10% or more of the voting securities of another person.

Certain states have laws that prohibit submitting a false claim or making a false record or statement in order to secure reimbursement from an insurance company. These state laws vary, and violation of them may lead to the imposition of civil or criminal penalties.

Government Agreements and Mandates - From time to time, the Company and/or its various affiliates are subject to certain consent decrees, settlement and other agreements, corrective action plans and corporate integrity agreements or heightened scrutiny with various federal, state and local authorities relating to such matters as privacy practices, controlled substances, PDPs, expired products, environmental and safety matters, marketing and advertising practices, PBM, ~~LTC~~ and other pharmacy operations and various other business practices. Certain of these agreements contain ongoing reporting, monitoring and/or other compliance requirements for the Company. Failure to meet the Company’s obligations under these agreements could result in civil or criminal remedies, financial penalties, administrative remedies, and/or exclusion from participation in federal health care programs.

Environmental and Safety Regulation - The Company’s businesses are subject to various federal, state and local laws, regulations and other requirements pertaining to protection of the environment, public health and employee safety, including, for example, regulations governing the management of hazardous substances, the cleaning up of contaminated sites, and the maintenance of safe working conditions in the Company’s retail locations, distribution centers and other facilities. Governmental agencies at the federal, state and local levels continue to focus on the retail and health care sectors’ compliance with such laws and regulations, and have at times pursued enforcement activities. Any failure to comply with these regulations could result in fines or other sanctions by government authorities.

ERISA Regulation - The Employee Retirement Income Security Act of 1974 (“ERISA”), provides for comprehensive federal regulation of certain employee pension and benefit plans, including private employer and union sponsored health plans and certain other plans that contract with us to provide PBM services. In general, the Company assists plan sponsors in the administration of their health benefit plans, including the prescription drug benefit portion of those plans, in accordance with the plan designs adopted by the plan sponsors. In addition, the Company may have fiduciary duties where it has specifically contracted with a plan sponsor to accept limited fiduciary responsibility, such as for the adjudication of initial prescription drug benefit claims and/or the appeals of denied claims under a plan. In addition to its fiduciary provisions, ERISA imposes civil and criminal liability on service providers to health plans and certain other persons if certain forms of illegal remuneration are made or received. These provisions of ERISA are broadly written and their application to specific business practices is often uncertain.25

for example, regulations governing the management of hazardous substances, the cleaning up of contaminated sites, and the maintenance of safe working conditions in the Company’s retail locations, distribution centers and other facilities. Governmental agencies at the federal, state and local levels continue to focus on the retail and health care sectors’ compliance with such laws and regulations, and have at times pursued enforcement activities. Any failure to comply with these regulations could result in fines or other sanctions by government authorities.

ERISA Regulation - The Employee Retirement Income Security Act of 1974 (“ERISA”) provides for comprehensive federal regulation of certain employee pension and benefit plans, including private employer and union sponsored health plans and certain other plans that contract with us to provide PBM services. In general, the Company assists plan sponsors in the administration of their health benefit plans, including the prescription drug benefit portion of those plans, in accordance with the plan designs adopted by the plan sponsors. In addition, the Company may have fiduciary duties where it has specifically contracted with a plan sponsor to accept limited fiduciary responsibility, such as for the adjudication of initial prescription drug benefit claims and/or the appeals of denied claims under a plan. In addition to its fiduciary provisions, ERISA imposes civil and criminal liability on service providers to health plans and certain other persons if certain forms of illegal remuneration are made or received. These provisions of ERISA are broadly written and their application to specific business practices is often uncertain.

Some of the Company’s health and related benefits and large case pensions products and services and related fees also are subject to potential issues raised by judicial interpretations relating to ERISA. Under those interpretations, together with DOL regulations, the Company may have ERISA fiduciary duties with respect to medical members, PBM members and/or certain general account assets held under contracts that are not guaranteed benefit policies. As a result, certain transactions related to those general account assets are subject to conflict of interest and other restrictions, and the Company must provide certain disclosures to policyholders annually. The Company must comply with these restrictions or face substantial penalties.

Preemption - ERISA generally preempts most state and local laws that relate to employee benefit plans, but the extent of the preemption continues to be reviewed by courts, including the U.S. Supreme Court. For example, infederal ~~December~~courts 2020, the U.S. Supreme Court upheld an Arkansas law that, among other things, mandates a particular pricing methodology, establishes an appeals process for a pharmacy when the reimbursement is below the pharmacy’s acquisition cost, permits a pharmacy to reverse and rebill if they cannot procure the drug from its wholesaler at a price equal to or less than the reimbursement rate, prohibits a PBM from reimbursing a pharmacy less than the amount it reimburses an affiliate on a per unit basis, and permits a pharmacy to decline to dispense if the reimbursement is lower than the pharmacy’s acquisition cost. Subsequently, in November 2021, the U.S. Court of Appeals for the Eighth Circuit upheld a North Dakota law that regulates employer-sponsored ERISA health plans and certain PBM practices within Medicare. The U.S. Court of Appeals for the Tenth Circuit overturned a lower district court in Oklahoma and affirmed that the Oklahoma Insurance Department could not enforce a state law against PBMs that contained provisions that alter and limit some of the options that an ERISA plan can use and decided that the Oklahoma law was preempted by ERISA and, in part, by Medicare Part D. ~~The~~Significant ~~Oklahoma~~ERISA ~~Attorney~~preemption ~~General~~litigation ~~has~~is ~~filed~~ongoing in several other federal jurisdictions addressing a ~~writ~~wide range of ~~certiorari~~state ~~with~~laws ~~the~~regulating ~~U.S.~~PBMs ~~Supreme~~including ~~Court~~laws toimposing ~~have~~significant restrictions on the ~~case~~relationships ~~heard~~between ~~during~~PBMs and the ~~next~~employee ~~term~~benefit plans they administer.

Other Legislative Initiatives and Regulatory Initiatives - The U.S. federal and state governments, as well as governments in other countries where the Company does business, continue to enact and seriously consider many broad-based legislative and regulatory proposals that have had a material impact on or could materially impact various aspects of the health care and related benefits system and the Company’s businesses, operating results and/or cash flows. For example:, significant legislative and/or regulatory measures which are or recently have been under consideration include prohibiting pharmacies affiliated with a PBM from acquiring a pharmacy license in a state and other restrictions on affiliated entities. It is uncertain whether the Company can counter the potential adverse effects of such potential legislation or regulation on its operating results or cash flows, including whether it can recoup, through higher premium rates, expanded membership or other measures, the increased costs of mandated coverage or benefits, assessments, fees, taxes or other increased costs, including the cost of modifying its systems to implement any enacted legislation or regulations.

•Under the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012 significant, automatic across-the-board budget cuts (known as sequestration) began in March 2013, including Medicare spending cuts of not more than 2% of total program costs per year through 2024. Since then, Congress has extended and modified the Medicare sequester a number of times. The CARES Act temporarily suspended the Medicare sequester and extended mandatory sequestration to 2030. In July 2022, the 2% Medicare sequester resumed. Significant uncertainty remains as to whether and how the U.S. Congress will proceed with actions that create additional federal revenue and/or with entitlement reform. The Company cannot predict future federal Medicare or federal or state Medicaid funding levels or the impact that future federal or state budget actions or entitlement program reform, if it occurs, will have on the Company’s businesses, operations or operating results, but the effects could be materially adverse, particularly on the Company’s Medicare and/or Medicaid revenues, MBRs and operating results.

•The European Union’s (“EU’s”) General Data Protection Regulation (“GDPR”) began to apply across the EU during 2018.

•Other significant legislative and/or regulatory measures which are or recently have been under consideration include the following:

•Increasing the corporate tax rate.

•Eliminating payment of manufacturer’s rebates on prescription drugs to PBMs, PDPs and Managed Medicaid organizations in connection with federally funded health care programs.

•Imposing requirements and restrictions on the design and/or administration of pharmacy benefit plans offered by the Company’s and its clients’ health plans and/or its PBM clients and/or the services the Company provides to those clients, including prohibiting “differential” or “spread” pricing in PBM contracts; restricting or eliminating the use of formularies for prescription drugs; restricting the Company’s ability to require members to obtain drugs through a home delivery or specialty pharmacy; restricting the Company’s ability to place certain specialty or other drugs in the higher cost tiers of its pharmacy formularies; restricting the Company’s ability to make changes to drug formularies and/or clinical programs; limiting or eliminating rebates on pharmaceuticals; requiring the use of up front purchase price discounts on pharmaceuticals in lieu of rebates; restricting the Company’s ability to configure and reimburse its health plan and retail pharmacy provider networks, including use of CVS pharmacy locations; and mandating client use of PBM compensation structures based on flat, fee-for-service or "bona fide service fee" arrangements instead of value-based designs or eliminating the use of certain drug pricing methodologies.

•Broader application of state insurance- and PBM-related laws to national and multi-state plans that cover residents of that state.

•Increasing federal or state government regulation of, or involvement in, the pricing and/or purchasing of drugs, including Glucagon-like peptide 1 (“GLP-1”) drugs.

•Restricting the Company’s ability to limit providers’ participation in its networks and/or remove providers from its networks by imposing network adequacy requirements or otherwise (including in its Medicare and Commercial Health Care Benefits products).

•Imposing assessments on (or to be collected by) health plans or health carriers that may or may not be passed through to their customers. These assessments may include assessments for insolvency, the uninsured, uncompensated care, Medicaid funding or defraying health care provider medical malpractice insurance costs.

•Mandating coverage by the Company’s and its clients’ health plans for additional conditions and/or specified procedures, drugs or devices (e.g., high cost pharmaceuticals, experimental pharmaceuticals and oral chemotherapy regimens).

•Regulating electronic connectivity.

•Mandating or regulating the disclosure of provider fee schedules, manufacturer’s rebates and other data about the Company’s payments to providers and/or payments the Company receives from pharmaceutical manufacturers.

•Mandating or regulating disclosure of provider outcome and/or efficiency information.

•Prescribing or limiting members’ financial responsibility for health care or other covered services they utilize, including restricting “surprise” bills by providers and by specifying procedures for resolving “surprise” bills.

•Prescribing payment levels for health care and other covered services rendered to the Company’s members by providers who do not have contracts with the Company.

•Assessing the medical device status of home infusion therapy products and/or solutions, mobile consumer wellness tools and clinical decision support tools, which may require compliance with FDA requirements in relation to some of these products, solutions and/or tools.

•Restricting the ability of employers and/or health plans to establish or impose member financial responsibility.

•Proposals to expand benefits under Original Medicare.

•Amending or supplementing ERISA to impose greater requirements on PBMs or the administration of employer-funded benefit plans or limit the scope of current ERISA pre-emption, which would among other things expose the Company and other health plans to expanded liability for punitive and other extra-contractual damages and additional state regulation.

•Amending the Mental Health Parity and Addiction Equity Act to add additional provisions that could significantly increase compliance requirements.

•Eliminating enhanced premium tax credits, which could impact consumers ability to choose individual coverage on the Exchange.

It is uncertain whether the Company can counter the potential adverse effects of such potential legislation or regulation on its operating results or cash flows, including whether it can recoup, through higher premium rates, expanded membership or other measures, the increased costs of mandated coverage or benefits, assessments, fees, taxes or other increased costs, including the cost of modifying its systems to implement any enacted legislation or regulations.

The Company’s businesses also may be affected by other legislation and regulations. The Dodd-Frank Wall Street Reform and Consumer Protection Act creates incentives for whistleblowers to speak directly to the government rather than utilizing internal compliance programs and reduces the burden of proof under the Foreign Corrupt Practices Act of 1977 (the “FCPA”). There also are laws and regulations that set standards for the escheatment of funds to states.

Health savings accounts, health reimbursement arrangements and flexible spending accounts and certain of the tax, fee and subsidy provisions of the ACA also are regulated by the U.S. Department of the Treasury and the IRS.

The Company also may be adversely affected by court and regulatory decisions that expand or revise the interpretations of existing statutes and regulations or impose medical malpractice or bad faith liability. Federal and state courts, including the U.S. Supreme Court, continue to consider cases, and federal and state regulators continue to issue regulations and interpretations, addressing bad faith liability for denial of medical claims, the scope of ERISA’s fiduciary duty requirements, the scope of the False Claims Act and the pre-emptive effect of ERISA and Medicare Part D on state laws.

Contract Audits - The Company is subject to audits of many of its contracts, including its PBM client contracts, its PBM rebate contracts, its PBM network contracts, its contracts relating to Medicare Advantage and/or Medicare Part D, the agreements the Company’s pharmacies enter into with other payors, its Medicaid contracts and its customer contracts. Because some of the Company’s contracts are with state or federal governments or with entities contracted with state or federal agencies, audits of these contracts are often regulated by the federal or state agencies responsible for administering federal or state benefits programs, including those which operate Medicaid fee for service plans, Managed Medicaid plans, Medicare Part D plans or Medicare Advantage organizations.

Federal Employee Health Benefits Program - The Company’s subsidiaries contract with the Office of Personnel Management (the “OPM”) to provide managed health care services under the FEHB program in their service areas. These contracts with the OPM and applicable government regulations establish premium rating arrangements for this program. In addition to other requirements, such as the Transparency in Coverage Rule note above, OPM regulations require that community-rated FEHB plans meet a FEHB program-specific minimum MLR by plan code and market. Managing to these rules is complicated by the simultaneous application of the minimum MLR standards and associated premium rebate requirements of the ACA. The Company also has a contractual arrangement with carriers for the FEHB program, such as the BlueCross BlueShield Association, to provide pharmacy services to federal employees, postal workers, annuitants, and their dependents under the Government-wide Service Benefit Plan, as authorized by the FEHB Act and as part of the FEHB program. Additionally, the Company manages certain FEHB plans on a “cost-plus” basis. These arrangements subject the Company to certain aspects of the FEHB Act, and other federal regulations, such as the FEHB Acquisition Regulation, that otherwise would not be applicable to the Company. The OPM also is auditing the Company and its other contractors to, among other things, verify that plans meet their applicable FEHB program-specific MLR and the premiums established under the OPM’s Insured contracts and costs allocated pursuant to the OPM’s cost-based contracts are in compliance with the requirements of the applicable FEHB program. The OPM may seek premium refunds or institute other sanctions against the Company if it fails to comply with the FEHB program requirements.

29BlueCross BlueShield Association, to provide pharmacy services to federal employees, postal workers, annuitants, and their dependents under the Government-wide Service Benefit Plan, as authorized by the FEHB Act and as part of the FEHB program. Additionally, the Company manages certain FEHB plans on a “cost-plus” basis. These arrangements subject the Company to certain aspects of the FEHB Act, and other federal regulations, such as the FEHB Acquisition Regulation, that otherwise would not be applicable to the Company. The OPM also is auditing the Company and its other contractors to, among other things, verify that plans meet their applicable FEHB program-specific MLR and the premiums established under the OPM’s Insured contracts and costs allocated pursuant to the OPM’s cost-based contracts are in compliance with the requirements of the applicable FEHB program. The OPM may seek premium refunds or institute other sanctions against the Company if it fails to comply with the FEHB program requirements.

Clinical Services Regulation - The Company provides clinical services to health plans, PBMs and providers for a variety of complex and common medical conditions, including arranging for certain members to participate in disease management programs. State laws regulate the practice of medicine, the practice of pharmacy, the practice of nursing and certain other clinical activities. Clinicians engaged in a professional practice in connection with the provision of clinical services must satisfy applicable state licensing requirements and must act within their scope of practice.

Third Party Administration and Other State Licensure Laws - Many states have licensure or registration laws governing certain types of administrative organizations, such as PPOs, TPAs and companies that provide utilization review services. Several states also have licensure or registration laws governing the organizations that provide or administer consumer card programs (also known as cash card or discount card programs).

International Regulation - The Company’s ~~previously~~international ~~held~~operations ~~insurance~~are ~~licenses~~subject into ~~several~~different, ~~foreign~~and ~~jurisdictions~~sometimes ~~(the~~more ~~United~~stringent, ~~Kingdom~~legal and regulatory requirements, ~~Ireland~~which vary widely by jurisdiction, ~~Singapore~~including anti-corruption laws; economic sanctions laws; various privacy, insurance, tax, tariff and ~~Hong~~trade ~~Kong~~laws and regulations; corporate governance, privacy, data protection (including the European Union’s (“EU’s”) ~~but~~General ~~these~~Data ~~have~~Protection ~~been~~Regulation ~~cancelled~~which ~~following~~began to apply across the EU during 2018), data mining, data transfer, labor and employment, intellectual property, consumer protection and investment laws and regulations; discriminatory licensing procedures; compulsory cessions of ~~its~~reinsurance; ~~insurance~~required ~~business~~localization inof ~~those~~records ~~jurisdictions~~and tofunds; ahigher ~~third~~premium ~~party~~and income taxes; limitations on dividends and repatriation of capital; and requirements for local participation in an insurer’s ownership. ~~The~~In ~~Company~~addition, isthe ~~also~~presence of operations in foreign countries potentially increases the ~~process~~Company’s exposure to the anti-bribery, anti-corruption and anti-money laundering provisions of ~~closing~~U.S. ~~down~~law, ~~its~~including ~~remaining~~the ~~insurance~~Foreign ~~operations~~Corrupt ~~outside~~Practices Act of 1977 (the ~~Americas~~“FCPA”), and corresponding foreign laws, including the U. K. Bribery Act 2010 (the “UK Bribery Act”).

~~The~~Anti-Corruption ~~Company’s~~Laws ~~international~~- ~~operations,~~The ~~including~~FCPA ~~its~~prohibits ~~remaining~~offering, ~~international~~promising ~~insurance~~or ~~operations~~authorizing ~~until~~others ~~they~~to ~~are~~give ~~closed~~anything ~~down,~~of ~~are~~value ~~subject~~ to ~~different,~~a ~~and~~foreign ~~sometimes~~government ~~more~~official ~~stringent,~~to ~~legal~~obtain ~~and~~or ~~regulatory~~retain ~~requirements,~~business ~~which~~or ~~vary~~otherwise ~~widely~~secure bya ~~jurisdiction,~~business ~~including~~advantage. ~~anti-corruption~~The ~~laws;~~Company ~~economic~~also ~~sanctions~~is ~~laws;~~subject ~~various~~to ~~privacy,~~applicable ~~insurance,~~anti-corruption ~~tax, tariff and trade~~ laws ~~and~~of ~~regulations; corporate governance, privacy, data protection (including~~ the ~~EU’s~~jurisdictions ~~General~~in ~~Data~~which ~~Protection~~it ~~Regulation~~operates. ~~which~~In ~~began~~many tocountries ~~apply~~outside ~~across~~ the ~~EU during 2018)~~U.S., ~~data~~health ~~mining,~~care ~~data~~professionals ~~transfer,~~are ~~labor~~employed ~~and~~by ~~employment,~~the ~~intellectual~~government. ~~property~~Therefore, ~~consumer~~the ~~protection~~Company’s ~~and~~dealings ~~investment~~with ~~laws~~them ~~and~~are ~~regulations;~~subject ~~discriminatory~~to ~~licensing~~regulation ~~procedures;~~under ~~compulsory~~the ~~cessions~~FCPA. ofViolations ~~reinsurance; required localization~~ of ~~records~~the ~~and~~FCPA ~~funds; higher premium~~ and ~~income~~other ~~taxes;~~anti-corruption ~~limitations~~laws onmay ~~dividends~~result ~~and~~in ~~repatriation~~severe ofcriminal ~~capital;~~ and ~~requirements~~civil ~~for~~sanctions ~~local~~as ~~participation~~well inas another ~~insurer’s ownership. In addition~~penalties, ~~the~~and ~~presence~~there ofcontinues ~~operations in foreign countries potentially increases the Company’s exposure~~ to ~~the~~be ~~anti-bribery,~~a ~~anti-corruption~~heightened ~~and~~level ~~anti-money laundering provisions~~ of ~~U.S. law, including the~~ FCPA, ~~and~~enforcement ~~corresponding~~activity ~~foreign~~by ~~laws, including~~ the ~~U.K.~~SEC ~~Bribery~~and ~~Act 2010 (~~the ~~“UK Bribery Act”)~~DOJ.

Anti-~~Corruption~~Money ~~Laws~~Laundering Regulations - ~~The~~Certain ~~FCPA~~lines ~~prohibits offering, promising or authorizing others to give anything~~ of ~~value to a foreign government official to obtain or retain business or otherwise secure a business advantage. The Company also is subject to applicable anti-corruption laws of~~ the ~~jurisdictions in which it operates. In many countries outside the U.S., health care professionals are employed by the government. Therefore, the~~ Company’s ~~dealings~~businesses ~~with them~~ are subject to ~~regulation under the FCPA. Violations of the FCPA and other~~ anti-~~corruption~~money ~~laws~~laundering ~~may~~regulations. ~~result~~Those inlines ~~severe criminal and civil sanctions as well as other penalties, and there continues to be a heightened level~~ of ~~FCPA~~business ~~enforcement~~have ~~activity~~implemented ~~by the SEC and the DOJ. The UK Bribery Act is an~~ anti-~~corruption~~money ~~law~~laundering ~~that~~policies isdesigned ~~broader in scope than the FCPA and applies~~ to ~~all~~ensure ~~companies~~their ~~with~~compliance ~~a nexus to the United Kingdom. Disclosures of FCPA violations may be shared~~ with the ~~UK authorities, thus potentially exposing companies to liability and potential penalties in multiple jurisdictions~~regulations.

Anti-Money Laundering Regulations - Certain lines of the Company’s businesses are subject to Treasury anti-money laundering regulations. Those lines of business have implemented anti-money laundering policies designed to ensure their compliance with the regulations. The Company also is subject to anti-money laundering laws in non-U.S. jurisdictions where it operates.

Office of Foreign Assets Control - The Company also is subject to regulation by the Office of Foreign Assets Control of the U.S. Department of Treasury (“OFAC”). OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S. In addition, the Company is subject to similar regulations in the non-U.S. jurisdictions in which it operates.

FDA Regulation - The FDA regulates the Company’s compounding pharmacy and clinical research operations. The FDA also generally has authority to, among other things, regulate the manufacture, distribution, sale and labeling of medical devices ~~(including hemodialysis devices such as the device the Company is developing~~ and ~~mobile medical devices) and~~ many products sold through retail pharmacies, including prescription drugs, over-the-counter medications, cosmetics, dietary supplements and certain food items. In addition, the FDA regulates the Company’s activities as a distributor of store brand products.

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Laws and Regulations Related to the Health Care Benefits Segment

In addition to the laws and regulations discussed above that may affect multiple segments of the Company’s business, the Company is subject to federal, state, local and international statutes and regulations, as well as government program contracts, governing its Health Care Benefits segment specifically.

~~Overview~~Required Regulatory Approvals - ~~Differing~~The Company must obtain and maintain regulatory approvals to price, market and administer many of its Health Care Benefits products, and differing approaches to state insurance regulation and varying enforcement philosophies may materially and adversely affect the Company’s ability to standardize its Health Care Benefits products and services across state lines. ~~These~~In ~~laws~~addition, ~~and~~supervisory ~~regulations~~agencies, including ~~the ACA~~CMS, ~~restrict how~~ the ~~Company~~Center ~~conducts~~for ~~its~~Consumer ~~business~~Information and ~~result~~Insurance inOversight ~~additional burdens~~ and ~~costs to~~ the ~~Company.~~DOL, ~~Significant~~as ~~areas~~well ofas ~~governmental~~state ~~regulation include premium rates and rating methodologies~~health, ~~underwriting rules and procedures~~insurance, ~~required~~managed ~~benefits,~~care ~~sales~~ and ~~marketing~~Medicaid ~~activities~~agencies, ~~provider~~have ~~rates~~broad ofauthority ~~payment, restrictions on health plans’ ability~~ to ~~limit~~take ~~providers’~~one ~~participation in their networks and/~~or ~~remove~~more ~~providers~~of ~~from~~the ~~their~~following networks and financial condition (including reserves and minimum capital or risk based capital requirements). These laws and regulations are different in each jurisdiction and vary from product to product.actions:

Each health insurer and HMO must file periodic financial and operating reports with the states in which it does business. In addition, health insurers and HMOs are subject to state examination and periodic license renewal. Applicable laws also restrict the ability of the Company’s regulated subsidiaries to pay dividends, and certain dividends require prior regulatory approval. In addition, some of the Company’s businesses and related activities may be subject to PPO, MCO, utilization review or TPA-related licensure requirements and regulations. These licensure requirements and regulations differ from state to state, but may contain provider network, contracting, product and rate, financial and reporting requirements. There also are laws and regulations that set specific standards for the Company’s delivery of services, payment of claims, fraud prevention, protection of consumer health information, and payment for covered benefits and services.

Required Regulatory Approvals - The Company must obtain and maintain regulatory approvals to price, market and administer many of its Health Care Benefits products. Supervisory agencies, including CMS, the Center for Consumer Information and Insurance Oversight and the DOL, as well as state health, insurance, managed care and Medicaid agencies, have broad authority to take one or more of the following actions:

•Grant, suspend and revoke the Company’s licenses to transact business;

•Suspend or exclude the Company from participation in government programs;

•Suspend or limit the Company’s authority to market products;

•Regulate many aspects of the products and services the Company offers, including the pricing and underwriting of many of its products and services;

•Assess damages, fines and/or penalties;

•Terminate the Company’s contract with the government agency and/or withhold payments from the government agency to the Company;

•Impose retroactive adjustments to premiums and require the Company to pay refunds to the government, customers and/or members;

•Restrict the Company’s ability to conduct acquisitions or dispositions;

•Require the Company to maintain minimum capital levels in its subsidiaries and monitor its solvency and reserve adequacy; and/or

•Regulate the Company’s investment activities on the basis of quality, diversification and other quantitative criteria~~; and/or~~.

•Exclude the Company’s plans from participating in Public Exchanges if they are deemed to have a history of “unreasonable” premium rate increases or fail to meet other criteria set by HHS or the applicable state.

The Company’s operations, current and past business practices, current and past contracts, and accounts and other books and records are subject to routine, regular and special investigations, audits, examinations and reviews by, and from time to time the Company receives subpoenas and other requests for information from, federal, state and international supervisory and enforcement agencies, Attorneys General and other state, federal and international governmental authorities and legislators.

Commercial Product Pricing and Underwriting Restrictions - Pricing and underwriting regulation by states limits the Company’s underwriting and rating practices and those of other health insurers, particularly for small employer groups, and varies by state. In general, these limitations apply to certain customer segments and limit the Company’s ability to set prices for new or renewing groups, or both, based on specific characteristics of the group or the group’s prior claim experience. In some states, these laws and regulations restrict the Company’s ability to price for the risk it assumes and/or reflect reasonable costs in the Company’s pricing.

states, these laws and regulations restrict the Company’s ability to price for the risk it assumes and/or reflect reasonable costs in the Company’s pricing.

The ACA expanded the premium rate review process by, among other things, requiring the Company’s Commercial Insured rates to be reviewed for “reasonableness” at either the state or the federal level. HHS established a federal premium rate review process that generally applies to proposed premium rate increases equal to or exceeding a federally (or lower state) specified threshold. HHS’s rate review process imposes additional public disclosure requirements as well as additional review on filings requesting premium rate increases equal to or exceeding this “reasonableness” threshold. These combined state and federal review requirements may prevent, further delay or otherwise affect the Company’s ability to price for the risk it assumes, which could adversely affect its MBRs and operating results, particularly during periods of increased utilization of medical services and/or medical cost trend or when such utilization and/or trend exceeds the Company’s projections.

The ACA also specifies minimum MLRs of 85% for large group Commercial products and 80% for individual and small group Commercial products. Because the ACA minimum MLRs are structured as “floors” for many of their requirements, states have the latitude to enact more stringent rules governing these restrictions. For Commercial products, states have and may adopt higher minimum MLR requirements, use more stringent definitions of “medical loss ratio,” incorporate minimum MLR requirements into prospective premium rate filings, require prior approval of premium rates or impose other requirements related to minimum MLR. Minimum MLR requirements and similar actions further limit the level of margin the Company can earn in its Insured Commercial products while leaving the Company exposed to medical costs that are higher than those ~~reflected in its pricing. The Company also may be subject to significant fines, penalties, premium refunds and litigation if it fails to comply with minimum MLR laws and regulations.~~

In addition, the Company requested increases in its premium rates in its Commercial Health Care Benefits business for 2025 and expects to request future increases in those rates in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by the federal and state governments, including as a result of the ACA. The Company’s rates also must be adequate to reflect adverse selection in its products, particularly in small group Commercial products. These rate increases may be significant and thus heighten the risks of adverse publicity, adverse regulatory action and adverse selection and the likelihood that the Company’s requested premium rate increases will be denied, reduced or delayed, which could lead to operating margin compression.28

reflected in its pricing. The Company also may be subject to significant fines, penalties, premium refunds and litigation if it fails to comply with minimum MLR laws and regulations.

In addition, from time to time the Company may request increases in its premium rates in its Commercial Health Care Benefits business in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by the federal and state governments, including as a result of the ACA. The Company’s rates also must be adequate to reflect adverse selection in its products, particularly in small group Commercial products. These rate increases may be significant and thus heighten the risks of adverse publicity, adverse regulatory action and adverse selection and the likelihood that the Company’s requested premium rate increases will be denied, reduced or delayed, which could lead to operating margin compression.

Many of the laws and regulations governing the Company’s pricing and underwriting practices also limit the differentials in premium rates insurers and other carriers may charge between new and renewal business, and/or between groups based on differing characteristics. They may also require that carriers disclose to customers the basis on which the carrier establishes new business and renewal premium rates and limit the ability of a carrier to terminate customers’ coverage.

Federal and State Reporting - The Company is subject to extensive financial and business reporting requirements, including penalties for inaccuracies and/or omissions, at both the federal and state level. The Company’s ability to comply with certain of these requirements depends on receipt of information from third parties that may not be readily available or reliably provided in all instances. The Company is and will continue to be required to modify its information systems, dedicate significant resources and incur significant expenses to comply with these requirements. However, the Company cannot eliminate the risks of unavailability of or errors in its reports.

Product Design and Administration and Sales Practices - State and/or federal regulatory scrutiny of health care benefit product design and administration and marketing and advertising practices, including the filing of insurance policy forms, the adequacy of provider networks, the accuracy of provider directories, and the adequacy of disclosure regarding products and their administration, is increasing as are the penalties being imposed for inappropriate practices. Medicare, Medicaid and dual eligible products and products offering more limited benefits in particular continue to attract increased regulatory scrutiny.

Guaranty Fund Assessments/Solvency Protection - Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (in most states up to prescribed limits) for certain obligations of insolvent insurance companies to policyholders and claimants. The life and health insurance guaranty associations in which the Company participates that operate under these laws respond to insolvencies of long-term care insurers as well as health insurers. The Company’s assessments generally are based on a formula relating to the Company’s health care premiums in the state compared to the premiums of other insurers. Certain states allow assessments to be recovered over time as offsets to premium taxes. Some states have similar laws relating to HMOs and/or other payors such as not-for-profit consumer governed health plans established under the ACA. While historically the Company has ultimately recovered more than half of guaranty fund assessments through statutorily permitted premium tax offsets, significant increases in assessments could lead to legislative and/or regulatory actions that limit future offsets.

Laws and Regulations Related to the Health Services Segment

PBM Laws and Regulation - Legislation and/or regulations seeking to regulate PBM activities in a comprehensive manner have been proposed or enacted in a majority of states. This legislation could adversely affect the Company’s ability to conduct business on commercially reasonable terms in states where the legislation is in effect and the Company’s ability to standardize its PBM products and services across state lines. In addition, certain quasi-regulatory organizations, including the National Association of Boards of Pharmacy, the NAIC and the National Council of Insurance Legislators, have issued model regulations or may propose future regulations concerning PBMs and/or PBM activities. Similarly, credentialing organizations such as URAC have established voluntary standards regarding PBM, mail order pharmacy and/or specialty pharmacy activities. While the actions of these quasi-regulatory or standard-setting organizations do not have the force of law, they may influence states to adopt their requirements or recommendations and influence client requirements for PBM, mail order pharmacy and/or specialty pharmacy services. Moreover, any standards established by these organizations could also impact the Company’s health plan clients and/or the services provided to those clients and/or the Company’s health plans.

The Company’s PBM activities also are regulated directly and indirectly at the federal and state levels, including being subject to the False Claims Act and state false claims acts and the AKS and state anti-kickback laws. These laws and regulations govern, and proposed legislation and regulations may govern and/or further restrict, critical PBM practices, including disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers; use of, administration of and/or changes to drug formularies, maximum allowable cost (“MAC”) list pricing, average wholesale prices (“AWP”) and/or clinical programs; the offering to plan sponsors of pricing that includes retail network “differential” or “spread” (i.e., a difference between the drug price charged to the plan sponsor by a PBM and the price paid by the PBM to the dispensing provider); reconciliation to pricing guarantees; disclosure of data to third parties; drug UM practices; the level of duty a PBM owes its customers; configuration of pharmacy networks; the operations of the Company’s pharmacies (including audits of its pharmacies); disclosure of negotiated provider reimbursement rates; disclosure of fees associated with administrative service agreements and patient care programs that are attributable to members’ drug utilization; and registration or licensing of PBMs. Failure by the Company or one of its PBM services suppliers to comply with these laws or regulations could result in material fines and/or sanctions and could have a material adverse effect on the Company’s operating results and/or cash flows.

The Company’s PBM service contracts, including those in which the Company assumes certain risks under performance guarantees or similar arrangements, are generally not subject to insurance regulation by the states. However, state departments of insurance are increasing their oversight of PBM activities due to legislation passing in nearly all states requiring PBMs to register or obtain a license with the department, authorizing agencies to conduct market conduct examinations and other audits of our licensed entities. In addition, rulemaking in a number of states expands the underlying statutory law particularly with respect to the scope of application to pharmacy appeals and reimbursement, transparency reporting, PBM compensation, network design, member cost sharing and pharmacy audits.

Pharmacy Network Access Legislation - Medicare Part D and a majority of states now have some form of legislation affecting the Company’s (and its health plans’ and its health plan clients’) ability to limit access to a pharmacy provider network or remove pharmacy network providers. For example, certain “any willing provider” legislation may require the Company or its clients to admit a nonparticipating pharmacy if such pharmacy is willing and able to meet the plan’s price and other applicable terms and conditions for network participation. These laws could negatively affect the services and economic benefits achievable through a limited pharmacy provider network. Several states apply these laws to the administration of plans that are not typically subject to such laws, e.g. national and multi-state ERISA self-funded plans. Also, a majority of states have some form of legislation affecting the Company’s ability (and the Company’s and its client health plans’ ability) to conduct audits of network pharmacies regarding claims submitted to the Company for payment. These laws could negatively affect the Company’s ability to recover overpayments of claims submitted by network pharmacies that the Company identifies through pharmacy audits. Finally, several states have passed legislation that limits the ability of PBMs and health insurers to provide special benefit structures for use with affiliated pharmacies, which could result in reduced savings to clients and consumers. One state has passed and others are considering legislation prohibiting licensure of pharmacies affiliated with a PBM.

Pharmacy Pricing Legislation - Multiple states have passed legislation regulating the Company’s ability to manage pricing practices, including mandated pharmacy reimbursement rates and the collection of transmission fees. A number of states have also established MACs for generic prescription drugs. MAC methodology is a common cost management practice used by private and public payors (including CMS) to pay pharmacies for dispensing generic prescription drugs. MAC prices specify the allowable reimbursement by a PBM for a particular strength and dosage of a generic drug that is available from multiple manufacturers but sold at different prices. State legislation can regulate the disclosure of MAC prices and MAC price methodologies, the kinds of drugs that a PBM can pay for at a MAC price, and the rights of pharmacies to appeal a MAC price established by a PBM. Some states now require the PBM to reimburse a pharmacy’s actual acquisition cost. These laws could negatively affect the Company’s ability to establish MAC prices for generic drugs. Additionally, some states have passed legislation that would restrict certain types of retroactive reconciliation or recoupment from pharmacies in the network or create a reimbursement benchmark mandate, such as the national average drug acquisition cost and/or the wholesale acquisition cost (“WAC”), plus a set dispensing fee, for pharmacies in the network.

33Formulary and Plan Design Regulation - A number of government entities regulate the administration of prescription drug benefits. HHS regulates how Medicare Part D formularies are developed and administered, including requiring the inclusion of all drugs in certain classes and categories, subject to limited exceptions. Under the ACA, CMS imposes drug coverage requirements for health plans required to cover essential health benefits, including plans offered through federal or state Public Exchanges. Additionally, the NAIC and health care accreditation agencies like NCQA and URAC have developed model acts and standards for formulary development that are often incorporated into government requirements. Many states regulate the scope of prescription drug coverage, as well as the delivery channels to receive prescriptions, for insurers, MCOs and Medicaid managed care plans. The increasing government regulation of formularies could significantly affect the Company’s ability to

private and public payors (including CMS) to pay pharmacies for dispensing generic prescription drugs. MAC prices specify the allowable reimbursement by a PBM for a particular strength and dosage of a generic drug that is available from multiple manufacturers but sold at different prices. State legislation can regulate the disclosure of MAC prices and MAC price methodologies, the kinds of drugs that a PBM can pay for at a MAC price, and the rights of pharmacies to appeal a MAC price established by a PBM. Some states now require the PBM to reimburse a pharmacy’s actual acquisition cost. These laws could negatively affect the Company’s ability to establish MAC prices for generic drugs. Additionally, some states have passed legislation that would restrict certain types of retroactive reconciliation or recoupment from pharmacies in the network or create a reimbursement benchmark mandate, such as the national average drug acquisition cost and/or the wholesale acquisition cost (“WAC”), plus a set dispensing fee, for pharmacies in the network. 30

Formulary and Plan Design Regulation - A number of government entities regulate the administration of prescription drug benefits. HHS regulates how Medicare Part D formularies are developed and administered, including requiring the inclusion of all drugs in certain classes and categories, subject to limited exceptions. Under the ACA, CMS imposes drug coverage requirements for health plans required to cover essential health benefits, including plans offered through federal or state Public Exchanges. Additionally, the NAIC and health care accreditation agencies like NCQA and URAC have developed model acts and standards for formulary development that are often incorporated into government requirements. Many states regulate the scope of prescription drug coverage, as well as the delivery channels to receive prescriptions, for insurers, MCOs and Medicaid managed care plans. The increasing government regulation of formularies could significantly affect the Company’s ability to develop and administer formularies, pharmacy networks and other plan design features. Similarly, some states prohibit health plan sponsors from implementing certain restrictive pharmacy benefit plan design features. This regulation could limit or preclude (i) limited networks, (ii) a requirement to use particular providers, (iii) copayment differentials among providers and (iv) formulary tiering practices.

Accountable Care Organization Regulation - An ACO is a network of health care providers and suppliers that work together to invest in infrastructure and redesign delivery processes to attempt to achieve high quality and efficient delivery of services. Promoting accountability and coordination of care, ACOs are an alternative payment model intended to produce savings as a result of improved quality and operational efficiency. The goals of an ACO are assessed using a set of quality measures and spending benchmarks. Medicare-approved ACOs that achieve performance standards established by HHS are eligible to share in a portion of the amounts saved by the Medicare program. There are several types of ACO programs, including the MSSP and ACO REACH models. The CMS Innovation Center can add models at their discretion that have overlap implications for MSSP and ACO REACH. Overlap policies may impact risks and opportunities within the MSSP and ACO REACH models, including but not limited to attribution methodologies, inclusion and exclusion, provider overlap permissions, and model attrition. Models may be updated at any time in ways that make the model less favorable to participants, and HHS has significant discretion to determine key elements of ACO programs. Certain waivers and exceptions are available from fraud and abuse laws for ACOs. Currently, ACO REACH is set to expire at the end of 2026.

Corporate Practice of Medicine - The Company is subject to various state laws, regulations and legal and administrative decisions that restrict the corporate practice of medicine and fee splitting. The corporate practice of medicine doctrine generally prohibits corporate entities from practicing medicine or employing physicians (and, in some cases, other providers) to provide professional medical services. The doctrine reflects a variety of historical public policy concerns, including concerns that (a) allowing corporations to practice medicine or employ physicians will result in the commercialization of the practice of medicine, (b) a corporation’s obligation to its shareholders may not align with a physician’s obligation to his/her patients and (c) employment of a physician by a corporation may interfere with the physician’s independent medical judgment. While many states have some form of the corporate practice of medicine doctrine, the scope and enforcement varies widely. In those states where the doctrine exists, it typically arises from the state’s medical practice act, but has been shaped over the years by state statutes, regulations, court decisions, attorney general opinions and actions by state medical licensing boards. In addition, some states may have corporate practice restrictions that apply to other providers, such as nurse practitioners and physician assistants.

Historically, the medical profession has recognized an ethical prohibition against physicians (and often other providers) paying professional peers and others for referrals and fee splitting. Fee splitting generally occurs when a physician splits part of the professional fee earned from treating a referred patient with the source of the referral. Among the public policy harms that have been cited in support of fee splitting prohibitions are (a) unnecessary medical services, and (b) incompetent specialists. In response to these legitimate concerns, many states have adopted prohibitions against fee splitting. States have taken a variety of legislative approaches to fee splitting, from near complete bans, to bans with various exceptions, to no prohibition at all. Some of the prohibitions, have a broad reach and also prohibit otherwise legitimate business relationships with entities that are not health care providers, such as billing agencies or management companies.

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Legal structures have been developed to comply with various state corporate practice of medicine and fee splitting laws. The “captive” or “friendly” professional corporation model allows a legal entity (typically a professional corporation or professional limited liability company) whose shareholders are all physicians to employ the physicians (and other providers). The physician entity then contracts with a corporate entity referred to as a management services organization (“MSO”) to provide various management services. The physician entity is kept “friendly” through a stock transfer restriction agreement and/or other relationship between the MSO and the physician owners of the professional corporation. The fees under the management services arrangement must be carefully structured to comply with state fee splitting laws, which in some states may prohibit percentage-based fees.

Retail Medical Clinics - States regulate retail medical clinics operated by nurse practitioners or physician assistants through physician oversight, clinic and lab licensure requirements and the prohibition of the corporate practice of medicine. A number of states have implemented or proposed laws or regulations that impact certain components of retail medical clinic operations, such as physician oversight, signage, third party contracting requirements, bathroom facilities, and scope of services. These laws and regulations may affect the operation and expansion of the Company’s owned and managed retail medical clinics.

Laws and Regulations Related to the Pharmacy & Consumer Wellness Segment

In addition to the laws and regulations discussed above that may affect multiple segments of the Company’s business, the Company is subject to federal, state and local statutes and regulations governing the operation of its Pharmacy & Consumer Wellness segment specifically, including laws and regulations that limit the sale of alcohol, mandate a minimum wage, govern the practices of optometry or audiology, or impact the provision of dietician services and the sale of durable medical equipment, contact lenses, eyeglasses and hearing aids.

Available Information

CVS Health Corporation was incorporated in Delaware in 1996. The corporate office is located at One CVS Drive, Woonsocket, Rhode Island 02895, telephone (401) 765-1500. CVS Health Corporation’s common stock is listed on the New York Stock Exchange under the trading symbol “CVS.” General information about the Company is available through the Company’s website at http://www.cvshealth.com. The Company’s financial press releases and filings with the SEC are available free of charge within the Investors section of the Company’s website at http://investors.cvshealth.com. In addition, the SEC maintains an ~~internet~~Internet site that contains reports, proxy and information statements and other information regarding issuers, such as the Company, that file electronically with the SEC. The address of that website is http://www.sec.gov. The information on or ~~linked to the Company’s website is neither a part of nor incorporated by reference in this 10-K or any of the Company’s other SEC filings.~~

Table of Contents

linked to the Company’s website is neither a part of nor incorporated by reference in this 10-K or any of the Company’s other SEC filings.

In accordance with guidance provided by the SEC regarding use by a company of its websites and social media channels as a means to disclose material information to investors and to comply with its disclosure obligations under SEC Regulation FD, CVS Health Corporation (the “Registrant”) hereby notifies investors, the media and other interested parties that it intends to continue to use its media and investor relations website (http://investors.cvshealth.com/) to publish important information about the Registrant, including information that may be deemed material to investors. The list of social media channels that the Registrant uses may be updated on its media and investor relations website from time to time. The Registrant encourages investors, the media, and other interested parties to review the information the Registrant posts on its website and social media channels as described above, in addition to information announced by the Registrant through its SEC filings, press releases and public conference calls and webcasts.

Item 1A. Risk Factors.

You should carefully consider each of the following risks and uncertainties and all of the other information set forth in this 10-K. These risks and uncertainties and other factors may affect forward-looking statements, including those we make in this 10-K or elsewhere, such as in news releases or investor or analyst calls, meetings or presentations, on our websites or through our social media channels. The risks and uncertainties described below are not the only ones we face. There can be no assurance that we have identified all the risks that affect us. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial also may adversely affect our businesses. Any of these risks or uncertainties could cause our actual results to differ materially from our expectations and the expected results discussed in our forward-looking statements. You should not consider past results to be an indication of future performance.

If any of the following risks or uncertainties develops into actual events or if the circumstances described in the risks or uncertainties occur or continue to occur, those events or circumstances could have a material adverse effect on our businesses, operating results, cash flows, financial condition and/or stock price, among other effects on us. You should read the following section in conjunction with the MD&A, included in Item 7 of this 10-K, our consolidated financial statements and the related notes, included in Item 8 of this 10-K, and our “Cautionary Statement Concerning Forward-Looking Statements” in this 10-K.

operating results, cash flows, financial condition and/or stock price, among other effects on us. You should read the following section in conjunction with the MD&A, included in Item 7 of this 10-K, our consolidated financial statements and the related notes, included in Item 8 of this 10-K, and our “Cautionary Statement Concerning Forward-Looking Statements” in this 10-K.

Summary

The following is a summary of the principal risks we face that could negatively impact our businesses, operating results, cash flows and/or financial condition:

Risks Relating to Our Businesses

•We may not be able to accurately forecast health care and other benefit costs.

•Adverse economic conditions in the U.S. and abroad can materially and adversely impact our businesses, operating results, cash flows and financial condition.

•Each of our segments operates in a highly competitive and evolving business environment.

•A change in our Health Care Benefits product mix may adversely affect our profit margins.

•Our health care delivery businesses face unique risks.

•We can provide no assurance that we will be able to compete successfully and profitably on Public Exchanges.

•Negative public perception of the industries in which we operate can adversely affect our businesses, operating results, cash flows and prospects.

•We must maintain and improve our relationships with our retail and specialty pharmacy customers and increase the demand for our products and services.

•We face risks relating to the availability, pricing and safety profiles of prescription drugs that we purchase and sell.

•The reserves we hold for expected claims in our Insured Health Care Benefits products are based on estimates that involve an extensive degree of judgment and are inherently variable, and any reserve, including a premium deficiency reserve, may be insufficient.

•We ~~are~~may ~~exposed~~pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to ~~risks~~assume ~~relating~~unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to ~~the~~assume ~~solvency~~significant ofdebt, among other ~~insurers~~things.

Risks From Changes in Public Policy and Other Legal and Regulatory Risks

•We are subject to potential changes in public policy, laws and regulations, including reform of the U.S. health care system and entitlement programs.

•If we fail to comply with applicable laws and regulations, or fail to change our operations in line with any new legal or regulatory requirements, we could be subject to significant adverse regulatory actions.

•If our compliance or other systems and processes fail or are deemed inadequate, we may suffer brand and reputational harm and become subject to contractual damages, regulatory actions and/or litigation.

•We routinely are subject to litigation and other adverse legal proceedings, including class actions and qui tam actions. Many of these proceedings seek substantial damages which may not be covered by insurance.

•We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions.

•~~Our~~We ~~risk~~may ~~profile~~face isincreased ~~changing~~regulatory asrisks werelated ~~offer~~to ~~new products and services and expand in business areas beyond~~ our ~~historical~~vertical ~~businesses~~integration strategy, ~~and~~such weas ~~may~~legislation ~~face~~prohibiting ~~increased~~state ~~regulatory~~licensure ~~risks~~of ~~related~~pharmacies toaffiliated ~~our~~with ~~vertical~~a ~~integration strategy~~PBM.

•We face unique regulatory and other challenges in our PBM, ~~Public Exchange,~~ Medicare and Medicaid businesses.

•Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues, and any disruption to funding from the U.S. federal government could adversely impact our revenues and operating results.

•We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, which would have an adverse effect on our revenues, MBRs and operating results, ~~which~~and could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes.

•Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs. Challenges to our minimum MLR rebate methodology and/or reports could adversely affect our operating results.

•Our operating results may be adversely affected by changes in laws and policies governing employers and by union organizing activity.

Risks Associated with Mergers, Acquisitions, and Divestitures

•We may be unable to successfully integrate companies we acquire.

•We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things.

Risks Related to Our Operations

•~~Failure~~Data togovernance ~~meet~~failures, ~~customer~~the ~~and~~failure ~~investor~~or ~~expectations~~disruption of our information technology or infrastructure, ~~including~~a ~~with~~cyberattack ~~respect~~or toother ~~corporate~~information ~~responsibility~~security ~~and~~incident ~~sustainability~~can ~~goals~~adversely affect our reputation, ~~may~~businesses ~~harm~~and ~~our~~prospects. ~~brand~~Our use and ~~reputation~~disclosure of members’, ~~our~~customers’ ~~ability~~and other constituents’ personal information is subject to ~~retain~~complex regulations. The use of AI and ~~grow~~related ~~our~~technology ~~customer~~may ~~base~~also increase exposure to reputational, cybersecurity, data privacy, legal, regulatory and ~~membership~~operational risks.

•A cyberattack or other information security incident could significantly disrupt our operations.

•Data governance failures or the failure or disruption of our information technology or infrastructure can adversely affect our reputation, businesses and prospects. Our use and disclosure of members’, customers’ and other constituents’ personal information is subject to complex regulations.

•Pursuing multiple information technology improvement initiatives simultaneously could make continued development and implementation significantly more challenging.

•Product liability, product recall, professional liability or personal injury issues could damage our reputation.

•We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success.

•Sales of our products and services are dependent on our ability to attract and motivate internal sales personnel and independent third-party brokers, consultants and agents. We may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products.

•Failure of our businesses to effectively collaborate could prevent us from maximizing our operating results.

•We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and disrupt our business operations.

•Both our and our vendors’ operations are subject to a variety of business continuity hazards and risks that could interrupt our operations or otherwise adversely affect our performance and operating results.

Financial Risks

•We would be adversely affected by downgrades or potential downgrades in our credit ratings, should they occur, or if we do not effectively deploy our capital.

•Goodwill and other intangible assets could, in the future, become impaired.

•Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative instruments and other investments.

Risks Related to Our Relationships with Manufacturers, Providers, Suppliers and Vendors

•We face risks relating to the market availability, pricing, suppliers and safety profiles of prescription drugs and other products that we purchase and sell.

•We need to be able to maintain our ability to contract with providers on competitive terms and develop and maintain attractive networks with high quality providers.

•If our suppliers or service providers fail to meet their contractual obligations to us or to comply with applicable laws or regulations, we may be exposed to brand and reputational harm, litigation and/or regulatory action.

•We may experience increased medical and other benefit costs, litigation risk and customer and member dissatisfaction when providers that do not have contracts with us render services to our Health Care Benefits members.

•Continuing consolidation and integration among providers and other suppliers may increase our costs and increase competition.

Risks Relating to Our Businesses

We may not be able to accurately forecast health care and other benefit costs, including as a result of pandemics or disease outbreaks, which could adversely affect our Health Care Benefits segment’s operating results. There can be no assurance that future health care and other ~~benefits~~benefit costs will not exceed our projections.

Premiums for our Insured Health Care Benefits products, ~~which comprised 94% of our Health Care Benefits segment revenues for 2024,~~ are priced in advance based on our forecasts of health care and other benefit costs during a fixed premium period, which is generally twelve months. These forecasts are typically developed several months before the fixed premium period begins, are influenced by historical data (and recent historical data in particular), are dependent on our ability to anticipate and detect medical cost trends and changes in our members’ behavior and health care utilization patterns and medical claim submission patterns and require a significant degree of judgment. For example, our revenue on Individual Medicare policies is based on bids submitted in June of the year before the contract year. Cost increases in excess of our projections cannot be recovered in the fixed premium period through higher premiums. As a result, our profits are particularly sensitive to the accuracy of our forecasts of the increases in health care and other benefit costs that we expect to incur and our ability to anticipate and detect medical cost trends. During periods when health care and other benefit costs, utilization and/or medical costs trends experience significant volatility and medical claim submission patterns are changing rapidly, ~~as they did during the COVID-19 pandemic,~~ accurately detecting, forecasting, managing, reserving and pricing for our (and our self-insured customers’) medical cost trends and incurred and future health care and other ~~benefits~~benefit costs is more challenging. There can be no assurance regarding the accuracy of the health care or other benefit cost projections reflected in our pricing, and whether our health care and other benefit costs will be affected by pandemics, disease outbreaks and other external events over which we have no control. Even relatively small differences between predicted and actual health care and other benefit costs as a percentage of premium revenues can result in significant adverse changes in our Health Care Benefits segment’s operating results.

~~While~~A ~~the~~number ~~public~~of factors contribute to rising health ~~emergency~~care ~~related~~and toother ~~COVID-19~~benefit ~~expired~~costs, including previously uninsured members entering the health care system; Medicare members’ utilization of supplemental benefits; other changes in ~~May~~members’ ~~2023~~behavior, ~~COVID-19~~health ~~still~~care ~~exists~~utilization patterns and itutilization ~~may~~management; turnover in our membership, ~~like~~health ~~many~~care provider and member fraud; additional government mandated benefits or other ~~respiratory~~regulatory ~~viruses~~changes, ~~wax~~including changes to or as a result of the ACA and ~~wane~~IRA; ~~depending~~changes onin ~~geography~~the health status of our members; the aging of the population and ~~seasonality.~~other ~~The~~changing ~~future~~demographic ~~impact~~characteristics; ~~COVID-19~~advances ~~will~~in ~~have~~medical ontechnology; increases in the ~~Company~~number and ~~its~~cost ~~ability~~of prescription drugs (including specialty pharmacy drugs and ultra-high cost drugs and therapies); direct-to-consumer ~~accurately~~marketing ~~forecast~~by drug manufacturers; the increasing influence of social media on our members’ health care utilization and other ~~benefit~~behaviors; ~~costs~~the isshift ~~uncertain,~~to a consumer-driven business model; changes in health care practices and ~~will~~general ~~depend~~economic onconditions ~~geographies~~(such ~~impacted~~as inflation and employment levels); increases in labor costs; pandemics, ~~whether~~epidemics ~~new~~or ~~variants~~disease ~~emerge~~outbreaks; influenza-related health care costs (which may be substantial and ~~their~~higher ~~severity,~~than ~~the~~we ~~availability~~expected); clusters of high-cost cases; natural disasters and ~~costs~~extreme weather events (which may increase in frequency or intensity as a result of ~~testing,~~climate ~~vaccination~~change); and ~~treatment~~numerous other factors that are or may be beyond our control. For example, the length and ~~legal~~severity of the influenza season can have an impact on health care and ~~regulatory~~other ~~actions~~benefit costs. ~~COVID~~In addition, government-19imposed ~~may~~limitations ~~also~~on ~~impact~~Medicare ~~provider~~and ~~behavior,~~Medicaid ~~utilization~~reimbursements ~~trends,~~to ~~membership,~~health plans and ~~overall~~providers ~~economic~~have ~~conditions.~~caused ~~These~~the ~~impacts~~private ~~could~~sector beto ~~adverse~~bear a greater share of increasing health care and ~~material~~other benefit costs over time, and future amendments to the ACA that increase the uninsured population may amplify this issue.

A number of factors contribute to rising health care and other benefit costs, including previously uninsured members entering the health care system; Medicare members’ utilization of supplemental benefits; other changes in members’ behavior, health care utilization patterns and utilization management; turnover in our membership, health care provider and member fraud; additional government mandated benefits or other regulatory changes, including changes to or as a result of the ACA and IRA; changes in the health status of our members; the aging of the population and other changing demographic characteristics; advances in medical technology; increases in the number and cost of prescription drugs (including specialty pharmacy drugs and ultra-high cost drugs and therapies); direct-to-consumer marketing by drug manufacturers; the increasing influence of social media on our members’ health care utilization and other behaviors; the shift to a consumer-driven business model; changes in health care practices and general economic conditions (such as inflation and employment levels); increases in labor costs; pandemics, epidemics or disease outbreaks; influenza-related health care costs (which may be substantial and higher than we expected); clusters of high-cost cases; natural disasters and extreme weather events (which may increase in frequency or intensity as a result of climate change); and numerous other factors that are or may be beyond our control. For example, the length and severity of the influenza season can have an impact on health care and other benefit costs. In 2022-2023 influenza season had an earlier than average start, including as compared to the 2023-2024 influenza season; the 2020-2021 influenza season was impacted by efforts taken to reduce the spread of COVID-19; and the 2019-2020 influenza season maintained a high level of severity for a longer period of time than average. In addition, government-imposed limitations on Medicare and Medicaid reimbursements to health plans and providers have caused the private sector to bear a greater share of increasing health care and other benefits costs over time, and future amendments to the ACA that increase the uninsured population may amplify this issue.

Our Health Care Benefits segment’s operating results and competitiveness depend in large part on our ability to appropriately manage future health care and other benefit costs through underwriting criteria, product design, provider network configuration, negotiation of favorable provider contracts and medical management programs. Our medical cost management programs may not be successful and may have a smaller impact on health care and benefit costs than we expect. The factors described above may adversely affect our ability to predict and manage health care and other benefit costs, which can adversely affect our competitiveness and operating results.

38Furthermore, if we are not able to accurately and promptly anticipate and detect medical cost trends or accurately estimate the cost of incurred but not yet reported claims or reported claims that have not been paid, our ability to take timely corrective actions to limit future health care costs and reflect our current benefit cost experience in our pricing process may be limited, which would further amplify the extent of any adverse impact on our operating results. These risks are particularly acute during

Furthermore, if we are not able to accurately and promptly anticipate and detect medical cost trends or accurately estimate the cost of incurred but not yet reported claims or reported claims that have not been paid, our ability to take timely corrective actions to limit future health care costs and reflect our current benefit cost experience in our pricing process may be limited, which would further amplify the extent of any adverse impact on our operating results. These risks are particularly acute during periods when health care and other benefit costs, utilization and/or medical cost trends experience significant volatility and medical claim submission patterns are changing rapidly, as they did during the COVID-19 pandemic. Such risks are further magnified by the ACA and other existing and future legislation and regulations that limit our ability to price for our projected and/or experienced increases in utilization and/or medical cost trends.34

periods when health care and other benefit costs, utilization and/or medical cost trends experience significant volatility and medical claim submission patterns are changing rapidly. Such risks are further magnified by the ACA and other existing and future legislation and regulations that limit our ability to price for our projected and/or experienced increases in utilization and/or medical cost trends.

Adverse economic conditions in the U.S. and abroad can materially and adversely impact our businesses, operating results, cash flows and financial condition.

Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions, all of which we have experienced over the last number of years, can materially and adversely impact our businesses, operating results, cash flows and financial condition, including:

•In our Health Care Benefits segment, by causing unanticipated increases and volatility in utilization of covered services, increases in fraudulent claims and disputes, changes in medical claim submission patterns and/or increases in medical unit costs and/or provider behavior as hospitals and other providers attempt to maintain revenue levels in response to economic conditions, each of which would increase our costs and limit our ability to accurately detect, forecast, manage, reserve and price for our (and our self-insured customers’) medical cost trends and incurred and future health care and other ~~benefits~~benefit costs; causing customers and potential customers of our Health Care Benefits segment, particularly smaller employers and individuals, to ~~forego~~forgo obtaining or renewing their health and other coverage with us; and also affect our ability to profitably grow and diversify our Health Care Benefits membership.

•In our Health Services segment, by causing drug utilization to decline, reducing demand for PBM services and adversely affecting the financial health of our PBM clients.

•In our Pharmacy & Consumer Wellness segment, by causing drug utilization to decline, changing consumer purchasing power, preferences and/or spending patterns leading to reduced consumer demand for products sold in our stores, potentially increasing levels of theft at our retail locations ~~and adversely affecting the financial health of our LTC pharmacy customers~~.

•By causing our existing customers to reduce workforces (including due to business failures), which would reduce our revenues, the number of covered lives in our PBM clients and/or the number of members our Health Care Benefits segment serves. Reductions in workforce by our customers can also cause unanticipated increases in the health care and other ~~benefits~~benefit costs of our Health Care Benefits segment. For example, our business associated with members who have elected to receive benefits under Consolidated Omnibus Budget Reconciliation Act (known as “COBRA”) typically has an MBR that is significantly higher than our overall Commercial MBR.

•By affecting the ability of our customers to obtain adequate financing, which could result in an inability of our customers to pay timely, or at all, the amounts owed to us.

•By causing both state and federal government payers, as a result of budget deficits or spending reductions, to suspend or seek to reduce their health care expenditures resulting in our customers delaying payments to us or renegotiating their contracts with us.

•By causing our clients and customers and potential clients and customers, particularly those with the most employees or members, and state and local governments, to force us to compete more vigorously on factors such as price and service, including service, discount and other performance guarantees, to retain or obtain their business.

•By causing members and other consumers to decide to postpone, or not to seek, medical treatment which may lead them to incur more expensive medical treatment in the future and/or decrease our prescription volumes.

•By causing an ~~increasing~~increase in the prevalence of high -deductible health plans and health plan designs favoring co-insurance over co-payments.

•By weakening the ability or perceived ability of the issuers and/or guarantors of the debt or other securities we hold in our investment portfolio to perform on their obligations to us, which could result in defaults in those securities and has reduced, and may further reduce, the value of those securities and has created, and may continue to create, net realized capital losses for us that reduce our operating results.

•By causing customers, including self-insured customers in our Health Care Benefits segment, medical members, medical providers and the other companies to be unable to perform their obligations to us which could reduce our operating results.

39•By affecting our ability to obtain necessary financing on acceptable terms, our ability to secure suitable store locations under acceptable terms.

•By affecting our ability to obtain necessary financing on acceptable terms, our ability to secure suitable store locations under acceptable terms and our ability to execute sale-leaseback transactions under acceptable terms.

•By weakening the ability of our former subsidiaries and/or their purchasers to satisfy their lease obligations that we have guaranteed and causing the Company to be required to satisfy those obligations.

•By weakening the financial condition of other insurers, including long-term care insurers and life insurers, which increases the risk that we will receive significant assessments for obligations of insolvent insurers to policyholders and claimants.

•By continuing to cause inflation that could cause interest rates to further increase and thereby further increase our interest expense and reduce our operating results, as well as further decrease the value of the debt securities we hold in our investment portfolio, which would further reduce our operating results and/or adversely affect our financial condition.

Each of our segments operates in a highly competitive and evolving business environment; and operating income in the industries in which we compete may decline.

Each of our segments, Health Care Benefits, Health Services, which includes our PBM business, and Pharmacy & Consumer Wellness, operates in a highly competitive and evolving business environment. Specifically:

•As competition increases in the geographies in which we operate, including competition from new entrants, a significant increase in price compression and/or reimbursement pressures could occur, and this could require us to reevaluate our pricing structures to remain competitive.

•In our Health Care Benefits segment, we must often bid against our competitors in a highly competitive environment to acquire and retain our government customers’ business. Winning bids for Medicaid and dual eligible programs often are challenged successfully by unsuccessful bidders, and may also be withdrawn or ~~cancelled~~canceled by the issuing agency. CMS has proposed requiring that health plans offering certain dual eligible programs must also offer Medicaid programs, which has resulted in the Company refraining from bidding in certain jurisdictions and could further impact the Company’s ability to obtain or retain membership in its dual eligible programs.

•In our Health Care Benefits segment, our customers have considerable flexibility in moving between us and our competitors. We may lose members to competitors with more favorable pricing, or our customers may purchase different types of products from us that are less profitable, adversely affecting our revenues and operating results. In addition, our Medicare, Medicare Advantage, Medicaid and CHIP products may be subject to termination without cause, periodic re-bid, rate adjustment and program redesign, as customers seek to contain their benefit costs, particularly in an uncertain economy. These actions may adversely affect our membership, revenues and operating results.

•WeOur ~~requested increases in our premium rates in our Commercial~~ Health Care Benefits ~~business~~segment’s ~~for~~operating ~~2025~~results and ~~expect~~competitiveness tois ~~request~~heavily ~~future~~impacted, ~~increases~~ in ~~those~~the ~~rates~~case ~~in order to adequately price for projected medical cost trends, required expansions~~ of ~~coverage~~Medicaid ~~and rating limits~~programs, ~~and significant assessments, fees and taxes imposed~~ by ~~federal~~the ~~and~~sufficiency ~~state governments, including as a result~~ of the ~~ACA. Our~~ rates ~~also must be adequate to reflect~~ the ~~risk~~states ~~that~~determine ~~our~~are ~~products~~actuarially ~~will~~sound bebased ~~selected~~on byexperience ~~people~~from ~~with~~previous a higher risk profile or utilization rate than the pool of participants we anticipated when we established pricing for the applicable products (also known as “adverse selection”), particularly in small group Commercial productsyears. ~~These~~Such rate ~~increases~~levels may not be ~~significant~~representative ~~and thus heighten the risks~~ of ~~adverse~~actual ~~publicity~~experience, ~~adverse regulatory action~~ and ~~adverse~~insufficient ~~selection~~rates ~~and~~will ~~the~~negatively ~~likelihood~~impact ~~that~~ our ~~requested~~revenues ~~premium~~and ~~rate increases will be denied, reduced or delayed, which could lead to~~ operating ~~margin compression~~results.

•From time to time we request increases in our premium rates in our Commercial Health Care Benefits business in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by federal and state governments, including as a result of the ACA. Our rates also must be adequate to reflect the risk that our products will be selected by people with a higher risk profile or utilization rate than the pool of participants we anticipated when we established pricing for the applicable products (also known as “adverse selection”), particularly in small group Commercial products. These rate increases may be significant and thus heighten the risks of adverse publicity, adverse regulatory action and adverse selection and the likelihood that our requested premium rate increases will be denied, reduced or delayed, which could lead to operating margin compression.

•The competitive success of our Health Services segment is dependent on our ability to establish and maintain contractual relationships with network pharmacies.

•The competitive success of our Pharmacy & Consumer Wellness segment and our specialty pharmacy operations is dependent on our ability to establish and maintain contractual relationships with PBMs and other payors on acceptable terms as the payors’ clients evaluate adopting narrow or restricted retail pharmacy networks.

•In our PBM business, we maintain contractual relationships with brand name drug manufacturers that provide for purchase discounts and/or rebates on drugs dispensed by pharmacies in our retail network and by our specialty and mail order pharmacies (all or a portion of which may be passed on to clients). Manufacturer’s rebates often depend on a PBM’s ability to meet contractual requirements, including the placement of a manufacturer’s products on the PBM’s formularies. If we lose our relationship with one or more drug manufacturers, or if the discounts or rebates provided by drug manufacturers decline, our operating results, cash flows and/or prospects could be adversely affected.

•If laws or regulations are promulgated that limit the number of PBMs available in a particular business or geography, competition in those businesses and geographies could be amplified and could adversely affect our revenues and operating results.

40•The PBM industry has been experiencing price compression as a result of competitive pressures and increased client demands for lower prices; pricing guarantees; increased revenue sharing, including sharing in a larger portion of payments, including rebates and fees, to PBMs and group purchasing organizations received from drug manufacturers; enhanced

•The PBM industry has been experiencing price compression as a result of competitive pressures and increased client demands for lower prices; increased revenue sharing, including sharing in a larger portion of payments, including rebates and fees, to PBMs and group purchasing organizations received from drug manufacturers; enhanced service offerings and/or higher service levels. Marketplace dynamics and regulatory changes also have adversely affected our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread,” which could adversely affect our future profitability, and we expect these trends to continue.36

~~•Our~~service ~~retail~~offerings ~~pharmacy, specialty pharmacy~~ and/or ~~LTC~~higher ~~pharmacy~~service ~~operations~~levels. ~~have~~Marketplace ~~been~~dynamics ~~affected~~and byregulatory ~~reimbursement~~changes ~~pressure~~also ~~caused~~have byadversely ~~competition,~~affected ~~including~~our ~~client~~ability ~~demands~~to ~~for~~offer ~~lower~~plan ~~prices,~~sponsors ~~generic drug~~ pricing, ~~earlier~~that ~~than~~includes ~~expected~~the ~~generic~~use ~~drug~~of ~~introductions~~retail ~~and~~“differential” ~~network reimbursement pressure. If we are unable to increase our prices to reflect,~~ or ~~otherwise mitigate the impact of~~“spread,” ~~increasing~~which ~~costs,~~could ~~our profitability will be~~ adversely ~~affected.~~affect ~~If we are unable to limit~~ our ~~price~~future ~~increases~~profitability, and we ~~may~~expect ~~lose~~these ~~customers~~trends to ~~competitors with more favorable pricing, adversely affecting our revenues and operating results~~continue.

•Our retail pharmacy and specialty pharmacy operations have been affected by reimbursement pressure caused by competition, including client demands for lower prices, generic drug pricing, earlier than expected generic drug introductions and network reimbursement pressure. If we are unable to increase our prices to reflect, or otherwise mitigate the impact of, increasing costs, our profitability will be adversely affected. If we are unable to limit our price increases, we may lose customers to competitors with more favorable pricing, adversely affecting our revenues and operating results.

•A shift in the mix of our pharmacy prescription volume towards programs offering lower reimbursement rates as a result of competition or otherwise could adversely affect our margins, including the ongoing shift in pharmacy mix towards 90-day prescriptions at retail and the ongoing shift in pharmacy mix towards Medicare Part D prescriptions.

•PBM client contracts often are for a period of approximately three years. However, PBM clients may require early or periodic re-negotiation of pricing prior to contract expiration. PBM clients are generally well informed, can move between us and our competitors and often seek competing bids prior to expiration of their contracts. We are therefore under pressure to contain price increases despite being faced with increasing drug costs and increasing operating costs. If we are unable to increase our prices to reflect, or otherwise mitigate the impact of, increasing costs, our profitability will be adversely affected. If we are unable to limit our price increases, we may lose customers to competitors with more favorable pricing, adversely affecting our revenues and operating results.

•~~The~~Direct-to-consumer ~~operating~~(“DTC”) ~~results~~sales ~~and~~of ~~margins~~prescription ofdrugs ~~our~~by ~~LTC~~pharmaceutical ~~business~~companies ~~are~~is ~~further~~a ~~affected~~growing bytrend in the ~~increased~~United ~~efforts~~States. ofBy ~~health~~implementing ~~care~~DTC ~~payors~~sales toplatforms, ~~negotiate~~pharmaceutical ~~reduced~~companies can advertise, or ~~capitated~~sell, ~~pricing~~their ~~arrangements~~own branded drugs directly to patients, bypassing traditional distribution channels and byintermediaries, including pharmacies and PBMs. DTC platforms may also increase demand for expensive, brand-name drugs that may not provide significant clinical benefit over more cost-effective alternatives. As a result, the ~~financial~~DTC trend may increase overall health ~~of,~~care ~~and~~costs ~~purchases~~for consumers and ~~sales~~adversely impact the performance of, ~~our~~the ~~LTC~~Company’s ~~customers~~Pharmacy & Consumer Wellness and Health Services segments.

In addition, competitors in each of our businesses may offer services and pricing terms that we may not be willing or able to offer. Competition also may come from new entrants and other sources in the future. Unless we can demonstrate enhanced value to our clients through innovative product and service offerings in the rapidly changing health care industry, we may be unable to remain competitive.

Disruptive innovation by existing or new competitors has altered, and is expected to continue to alter, the competitive landscape in the future and require us to accurately identify and assess such alterations and make timely and effective changes to our strategies and business model to compete effectively. For example, decisions to buy our Health Care Benefits and Health Services products and services increasingly are made or influenced by consumers, either through direct purchasing (e.g., Medicare Advantage plans and PDPs) or through ~~Public~~public ~~Exchanges~~exchanges and private health insurance exchanges that allow individual choice. ~~Consumers also are increasingly seeking to access consumer goods and health care products and services locally and through other direct channels such as mobile devices and websites.~~ To compete effectively in the consumer-driven marketplace, we will be required to develop or acquire new capabilities, attract new talent and develop new service and distribution relationships that respond to consumer needs and preferences.

Changes in marketplace dynamics or the actions of competitors or manufacturers, including industry consolidation, the emergence of new competitors and strategic alliances, and decisions to exclude us from new narrow or restricted retail pharmacy networks could materially and adversely affect our businesses, operating results, cash flows and/or prospects.

~~Our~~A change in our Health Care ~~Delivery~~Benefits ~~Businesses~~product ~~Face~~mix ~~Unique~~may ~~Risks~~adversely affect our profit margins.

Our ~~health~~Insured ~~care~~Health ~~delivery~~Care ~~businesses~~Benefits products that involve greater potential risk generally tend to be more profitable than our ASC products, ~~which~~but weASC ~~expanded~~products ~~with~~continue ~~acquisitions~~to rise in popularity. We also serve, and expect to ~~include~~grow ~~health~~our ~~risk~~business ~~assessments~~with, ~~value~~government-~~based~~sponsored ~~care~~programs, including Medicare and ~~provider~~Medicaid, ~~enablement~~that ~~services~~are ~~through~~subject to competitive bids, have lower profit margins than our ~~Signify~~Commercial Insured Health ~~business,~~Care Benefits products and ~~additional~~may ~~senior-focused~~introduce ~~value-based~~volatility ~~primary~~in ~~care~~our ~~services~~cash ~~for~~flows ~~Medicare~~from ~~eligible~~time ~~patients~~to ~~through~~time. ~~our~~A ~~Oak~~continuing ~~Street~~shift of enrollees from more profitable products to less profitable products could have a material adverse effect on the Health ~~business,~~Care ~~face~~Benefits ~~unique~~segment’s ~~risks~~operating results.

Our ~~Signify~~ Health ~~business~~Care ~~faces~~Delivery ~~risks~~businesses ~~which~~face ~~include,~~unique ~~but are not limited to, the following:~~risks.

~~•ability~~Our tohealth ~~recruit~~care delivery businesses, ~~retain~~which ~~and~~include ~~grow~~health ~~its~~risk ~~network~~assessments ofand ~~credentialed~~primary care services, ~~high~~including senior-~~quality~~focused ~~physicians,~~value-based ~~physician~~primary ~~assistants~~care ~~and~~services ~~nurse~~for ~~practitioners~~Medicare toeligible ~~provide~~patients, ~~clinical~~face ~~services~~unique inrisks ~~highly~~which ~~competitive~~include, ~~markets~~but ~~for~~are ~~talent;~~not limited to, the following:

~~•successful challenges to Signify Health’s treatment of health care providers as independent contractors, which could result in increased costs and subject the business to regulatory sanction;~~37

41•ability to recruit, retain and grow a network of credentialed, high-quality physicians, physician assistants and nurse practitioners to provide clinical services in highly competitive markets for talent, especially in light of possible changes to the U.S. immigration policies, rules, laws or orders;

•successful challenges to the treatment of certain health care providers as independent contractors in many states, which could result in increased costs and subject the business to regulatory sanction;

•dependence on a concentrated number of key health plan customers;

•the quality of the information received about plan members of such health plans for whom Signify Health will seek to provide in-home evaluations and other services, and the regulatory restrictions and requirements associated with directly contacting plan members;

•ability to perform and ensure the quality of health risk assessments;

•ability to achieve and receive shared health care cost savings;

•the regulatory and business risks associated with participation in certain government health care programs, ~~including, among others, the MSSP~~ and ~~ACO REACH models, and~~ identification of diagnosis codes related to risk adjustment payments under Part C of the Medicare program;

•health reform initiatives and changes in the rules governing government health care programs, including rules related to the use of in-home health risk assessments for the purpose of capturing individual risk ~~use~~used to calculate an individual’s risk adjustment factor or a change to how patient-level risk is determined for CMS programs;

•participation in CMS Innovation Center models, such as ACO REACH, which are subject to changes annually, generally in ways meant to reduce available payments to participants, including benchmarks that can be changed after the end of the performance year, and which has an end date without a plan for ongoing participation in a model by those participating;

•impacts of fraud or anomalous billing on shared savings in CMS Innovation Center models;

•use of “open source” software in its technology, which may make it easier for others to gain access or compromise its proprietary technology;

•~~success~~ability ~~in large, national ACOs is dependent on the collective efforts and compliance of a wide range of participating clients, and for those clients~~ to beattract ~~able to meet~~ new ~~and~~patients, ~~changing~~including ~~requirements~~Medicare-eligible ~~such~~patients, asin ~~changes~~a tohighly ~~interoperability~~competitive ~~and reporting requirements; and~~market;

•challenges in rural and post-acute reimbursement due to their significant dependence on fee-for-service revenue.

Our Oak Street Health business is subject to additional risks including, but not limited to, the following:

•ability to attract new Medicare-eligible patients and credentialed, high-quality physicians and other providers for senior-focused primary care in a highly competitive market for such patients and providers;

•satisfying the enrollment requirements under government health care programs for physicians and other providers in a timely manner;

•dependence on a significant portion of revenue from Medicare or Medicare Advantage plans, which subjects Oak Street Health to reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program;

•dependence for a significant portion of revenue from agreements with a limited number of key payors with whom Oak Street Health contracts to provide services under terms that may permit a payor to amend the compensation arrangements or terminate the agreements without cause;

•dependence on reimbursements from third-party payors, which can result in substantial delay, and on patients, through copayments and deductibles, which subjects ~~Oak~~the ~~Street~~Company ~~Health~~ to additional reimbursement risk;

•under the fixed fee (or capitated) agreements Oak Street Health enters into with health plans, the assumption of the risk that the actual cost of a service it provides to a patient exceeds the reimbursement provided by the health plan;

•reductions in the quality ratings of Medicare health plans ~~Oak~~the ~~Street~~Company ~~Health~~ serves could result in a shift of patients from, or the termination of, a health plan ~~Oak~~the ~~Street~~Company ~~Health~~ serves;

•submission of inaccurate, incomplete or erroneous data, including risk adjustment data, to health plans and government payors could result in inaccuracies in the revenue ~~Oak~~recorded ~~Street Health records~~ or receipt of overpayments, which may subject itthe Company to repayment obligations and penalties;

•geographic concentration of ~~its~~ primary care centers;

•~~risks~~laws regulating the corporate practice of medicine and the associated agreements entered into with ~~its~~physician ~~existing~~practice ~~legal~~groups ~~proceedings~~restrict the manner in which the Oak Street Health business is able to direct the operations and ~~litigations~~otherwise exercise control of its physician practice groups;

•~~laws~~changes ~~regulating~~in the ~~corporate~~legal ~~practice~~treatment of ~~medicine~~contractual ~~and~~arrangements ~~the associated agreements entered into~~ with physician practice groups ~~restrict~~could ~~the~~impact ~~manner in which~~ the ~~Oak~~ability ~~Street Health business is able~~ to ~~direct~~consolidate the ~~operations~~revenue ~~and otherwise exercise control~~ of ~~its~~these ~~physician practice~~ groups; and

•~~participation~~ability ~~in CMS Innovation Center models, such as ACO REACH, which are subject~~ to ~~changes~~maintain ~~annually,~~and ~~generally~~enhance inreputation ~~ways meant to reduce available payments to participants, including benchmarks that can be changed after the end of the performance year,~~ and ~~which~~brand ~~has an end date without a plan for ongoing participation in a model by those participating;~~recognition.

42The additional risks faced by our health care delivery businesses may also compound, or be heightened by, many of our other risks, including the risks related to adverse economic conditions in the U.S. and abroad, cybersecurity and compliance with applicable laws and regulations, among others.

•changes in the legal treatment of its contractual arrangements with its physician practice groups could impact the ability to consolidate the revenue of these groups; and

•ability to maintain and enhance its reputation and brand recognition.

The additional risks faced by our health care delivery businesses may also compound, or be heightened by, many of our other risks, including the risks related to adverse economic conditions in the U.S. and abroad, cybersecurity, and compliance with applicable laws and regulations, among others.

We can provide no assurance that we will be able to compete successfully on Public Exchanges or that our pricing or other actions will result in the profitability of our Public Exchange products.

To compete effectively on Public Exchanges, we have developed or acquired the technology, systems, tools and talent necessary to interact with Public Exchanges and engage Public Exchange consumers through enhanced consumer-focused sales, marketing channels and customer interfaces. We are also creating new customer service programs and product offerings. To participate on the Public Exchanges, we have to respond to pricing and other actions taken by existing competitors and regulators as well as potentially disruptive new entrants, which could reduce our profit margins. Due to the price transparency provided by Public Exchanges, when we market products we face competitive pressures from existing and new competitors who may have lower cost structures. Our competitors may bring their Public Exchange and other consumer products to market more quickly, have greater experience marketing to consumers and/or may be targeting the higher margin portions of our business. We can provide no assurance that we will be able to compete successfully or profitably on Public Exchanges or that we will be able to benefit from any opportunities presented by Public Exchanges.

In addition, there can be no assurance that our pricing or other actions will result in the profitability of our Public Exchange products in 2025 or any future year. We have set 2025 premium rates for our Public Exchange products based on our projections, including as to the health status and quantity of membership and utilization of medical and/or other covered services by members. The accuracy of the projections reflected in our pricing may be impacted by (i) adverse selection among individuals who require or utilize more expensive medical and/or other covered services, (ii) other plans’ withdrawals from participation in the Public Exchanges we serve, (iii) a rapid increase or decline in membership, and (iv) legislation, regulations, enforcement activity and/or judicial decisions that cause Public Exchanges to operate in a manner different than what we projected in setting our premium rates, including the potential expiration of premium subsidies and enhanced premium tax credits.

A change in our Health Care Benefits product mix may adversely affect our profit margins.

Our Insured Health Care Benefits products that involve greater potential risk generally tend to be more profitable than our ASC products, but ASC products continue to rise in popularity. We also serve, and expect to grow our business with, government-sponsored programs, including Medicare and Medicaid, that are subject to competitive bids and have lower profit margins than our Commercial Insured Health Care Benefits products. A continuing shift of enrollees from more profitable products to less profitable products could have a material adverse effect on the Health Care Benefits segment’s operating results.

Negative public perception of the industries in which we operate, or of our industries’ or our practices, can adversely affect our businesses, operating results, cash flows and prospects.

Our brand and reputation are two of our most important assets, and the industries in which we operate have been and are negatively perceived by the public from time to time. Negative publicity may come as a result of adverse media coverage, litigation against us and other industry participants, the ongoing public debates over drug pricing, PBMs, government involvement in drug pricing and purchasing, changes to the ACA, governmental hearings and/or investigations, actual or perceived shortfalls regarding our industries’ or our own products, including Medicare Advantage plans in general, and/or business practices (including PBM operations, drug pricing and insurance coverage determinations) and social media and other media relations activities. Negative publicity also may come from a failure to meet customer expectations for consistent, high quality and accessible care. This risk may increase as we continue to offer products and services that make greater use of data and as our business model becomes more focused on delivering health care to consumers.

involvement in drug pricing and purchasing, changes to the ACA, governmental hearings and/or investigations, actual or perceived shortfalls regarding our industries’ or our own products, including Medicare Advantage plans in general, and/or business practices (including PBM operations, drug pricing and insurance coverage determinations) and social media and other media relations activities. Negative publicity also may come from a failure to meet customer expectations for consistent, high quality and accessible care. This risk may increase as we continue to offer products and services that make greater use of data and as our business model becomes more focused on delivering health care to consumers.

Negative public perception and/or publicity of our industries in general, or of us or our key vendors, brokers or product distribution networks in particular, can further increase our costs of doing business and adversely affect our operating results and our stock price by:

•adversely affecting our brand and reputation;

•adversely affecting our ability to market and sell our products and/or services and/or retain our existing customers and members;

•requiring us to change our products and/or services;

•reducing or restricting the revenue we can receive for our products and/or services; and/or

•increasing or significantly changing the regulatory and legislative requirements with which we must comply.

We must maintain and improve our relationships with our retail and specialty pharmacy customers and increase the demand for our products and services, including proprietary brands.

The success of our businesses depends in part on customer loyalty, superior customer service and our ability to persuade customers to frequent our retail stores and online sites and to purchase products in additional categories and our proprietary brands. Failure to timely identify or effectively respond to changing consumer preferences, spending patterns and evolving demographic mixes in the communities we serve, including shifts toward online shopping, or failure to maintain desirable selections of merchandise, store environments or ~~guests~~guest experiences could adversely affect our relationship with our customers and clients and the demand for our products and services and could result in excess inventories of products.

We offer our retail customers proprietary brand products that are available exclusively at our retail stores and through our online retail sites. The sale of proprietary products subjects us to unique risks including potential product liability risks, mandatory or voluntary product recalls, potential supply chain and distribution chain disruptions for raw materials and finished products, our ability to successfully protect our intellectual property rights and the rights of applicable third parties, and other risks generally encountered by entities that source, market and sell private-label products. We also face similar risks for the other products we sell in our retail operations, including supply chain and distribution chain disruption risk. Any failure to adequately address some or all of these risks could have an adverse effect on our retail business, operating results, cash flows and/or financial condition. Additionally, an increase in the sales of our proprietary brands may adversely affect our sales of products owned by our suppliers and adversely impact certain of our supplier relationships. Our ability to locate qualified, economically stable suppliers who satisfy our requirements, and to acquire sufficient products in a timely and effective manner, is critical to ensuring, among other things, that customer confidence is not diminished. Any failure to develop sourcing relationships with a broad and deep supplier base could adversely affect our operating results and erode customer loyalty.

We also could be adversely affected if we fail to identify or effectively respond to changes in marketplace dynamics. For example, specialty pharmacy represents a significant and growing proportion of prescription drug spending in the U.S., a significant portion of which is dispensed outside of traditional retail pharmacies. Because our specialty pharmacy business focuses on complex and high-cost medications, many of which are made available by manufacturers to a limited number of pharmacies (so-called limited distribution drugs) that serve a relatively limited universe of patients, the future growth of our specialty pharmacy business depends largely upon expanding our access to key drugs and penetration in certain treatment categories. Any contraction of our base of patients or reduction in demand for the prescriptions we currently dispense could have an adverse effect on our specialty pharmacy business, operating results and cash flows.

We face risks relating to the availability, pricing and safety profiles of prescription drugs that we purchase and sell.

The profitability of our Pharmacy & Consumer Wellness and Health Services segments is dependent upon the utilization of prescription drug products. We dispense significant volumes of brand name and generic drugs from our retail, ~~LTC,~~ specialty and mail order pharmacies, and the retail pharmacies in our PBM’s network also dispense significant volumes of brand name and generic drugs. Our revenues, operating results and cash flows may decline if physicians cease writing prescriptions for drugs or the utilization of drugs is reduced, including due to:

•increased safety risk profiles or regulatory restrictions;

•manufacturing or other supply issues;

•a reduction in drug manufacturers’ participation in federal programs;

•certain products being withdrawn by their manufacturers or transitioned to over-the-counter products;

•future FDA rulings restricting the supply or increasing the cost of products;

•the introduction of new and successful prescription drugs or lower-priced generic alternatives to existing brand name products; or

•inflation in the price of drugs.

44In addition, increased utilization of generic drugs (which normally yield a higher gross profit rate than equivalent brand name drugs) has resulted in pressure to decrease reimbursement payments to retail, mail order and specialty pharmacies for generic drugs, causing a reduction in our margins on sales of generic drugs. Consolidation within the generic drug manufacturing industry and other external factors may enhance the ability of manufacturers to sustain or increase pricing of generic drugs and diminish our ability to negotiate reduced generic drug acquisition costs. Any inability to offset increased brand name or generic prescription drug acquisition costs or to modify our activities to lessen the financial impact of such increased costs could have a significant adverse effect on our operating results.

In addition, increased utilization of generic drugs (which normally yield a higher gross profit rate than equivalent brand name drugs) has resulted in pressure to decrease reimbursement payments to retail, mail order, specialty and LTC pharmacies for generic drugs, causing a reduction in our margins on sales of generic drugs. Consolidation within the generic drug manufacturing industry and other external factors may enhance the ability of manufacturers to sustain or increase pricing of generic drugs and diminish our ability to negotiate reduced generic drug acquisition costs. Any inability to offset increased brand name or generic prescription drug acquisition costs or to modify our activities to lessen the financial impact of such increased costs could have a significant adverse effect on our operating results.

The reserves we hold for expected claims in our Insured Health Care Benefits products are based on estimates that involve an extensive degree of judgment and are inherently variable. Any reserve, including a premium deficiency reserve, may be insufficient. If actual claims exceed our estimates, our operating results could be materially adversely affected, and our ability to take timely corrective actions to limit future costs may be limited.

A large portion of health care claims are not submitted to us until after the end of the quarter in which services are rendered by providers to our members. Our reported health care costs payable for any particular period reflect our estimates of the ultimate cost of such claims as well as claims that have been reported to us but not yet paid. We also must estimate the amount of rebates payable under the MLR rules of the ACA, CMS and the OPM and the amounts payable by us to, and receivable by us from, the U.S. federal government under the ACA’s remaining premium stabilization program.

Our estimates of health care costs payable are based on a number of factors, including those derived from historical claim experience, but this estimation process also makes use of extensive judgment. Considerable variability is inherent in such estimates, and the accuracy of the estimates is highly sensitive to changes in medical claims submission and processing patterns and/or procedures, turnover and other changes in membership, changes in product mix, changes in the utilization of medical and/or other covered services, including prescription drugs, changes in medical cost trends, changes in our medical management practices and the introduction of new benefits and products. We estimate health care costs payable periodically, and any resulting adjustments, including premium deficiency reserves, are reflected in current-period operating results within health care costs. For example, during the ~~third~~first quarter of ~~2024~~2025, we recorded a premium deficiency ~~reserves~~reserve of ~~approximately~~ $~~1.1~~448 million ~~billion~~ related to our ~~Medicare,~~ individual exchange ~~and Medicaid~~ product ~~lines~~line ~~within~~and during the ~~Health~~second ~~Care~~quarter ~~Benefits~~of ~~segment~~2025, ~~primarily~~we ~~related~~recorded toa ~~anticipated~~premium ~~losses~~deficiency ~~for~~reserve ~~the~~of ~~2024~~$471 million ~~coverage~~related ~~year.~~to ~~The~~our ~~Company~~Group ~~did~~Medicare ~~not~~Advantage ~~have~~product ~~any~~line ~~premium~~within ~~deficiency~~the ~~reserves~~Health asCare ofBenefits ~~December 31~~segment, ~~2024.~~primarily ~~The~~related ~~Company~~to ~~did~~anticipated ~~not~~losses ~~establish~~for ~~any~~the ~~premium~~remainder ~~deficiency~~of ~~reserves~~the ~~during~~2025 ~~2023~~coverage ~~or 2022~~year. A worsening (or improvement) of health care cost trend rates or changes in claim payment patterns from those that we assumed in estimating health care costs payable as of December 31, ~~2024~~2025 would cause these estimates to change in the near term, and such a change could be material.

Furthermore, if we are not able to accurately and promptly anticipate and detect medical cost trends or accurately estimate the cost of incurred but not yet reported claims or reported claims that have not been paid, our ability to take timely corrective actions to limit future health care costs and reflect our current benefit cost experience in our pricing process may be limited, which would further exacerbate the extent of any adverse impact on our operating results. These risks are particularly acute during and following periods when utilization of medical and/or other covered services and/or medical cost trends are below recent historical levels and in products where there is significant turnover in our membership each year, and such risks are further magnified by the ACA and other legislation and regulations that limit our ability to price for our projected and/or experienced increases in utilization and/or medical cost trends.

We are exposed to risks relating to the solvency of other insurers.

We are subject to assessments under guaranty fund laws existing in all states for obligations of insolvent insurance companies (including long-term care insurers), HMOs, ACA co-ops and other payors to policyholders and claimants. For example, in the first quarter of 2017, Aetna recorded a discounted estimated liability expense of $231 million pretax for our estimated share of future assessments for long-term care insurer Penn Treaty Network America Insurance Company and one of its subsidiaries. Guaranty funds are maintained by state insurance commissioners to protect policyholders and claimants in the event that an insurer, HMO, ACA co-op and/or other payor becomes insolvent or is unable to meet its financial obligations. These funds are usually financed by assessments against insurers regulated by a state. Future assessments may have an adverse effect on our operating results and cash flows.

Extreme events, or the threat of extreme events, could materially impact our businesses.

The occurrence of natural disasters or extreme weather events, such as hurricanes, tropical storms, floods, wildfires, earthquakes, tsunamis, cyclones, typhoons, extended winter storms, droughts, ~~and~~ tornadoes;, epidemics, pandemics or disease outbreaks and other extreme events and man-made disasters, such as nuclear or biological attacks or other acts of violence, such

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~~outbreaks and other extreme events and man-made disasters, such~~ as ~~nuclear or biological attacks or other acts of violence, such as~~ active shooter situations, whether as a result of war or terrorism or otherwise, can have a material adverse effect on the U.S. economy in general, our industries, our vendors and us specifically. In particular, the long-term effects of climate change are expected to be widespread and unpredictable. The physical effects of climate change, such as an increase in the frequency or intensity of extreme weather events described above and rising sea levels, could adversely affect our operations, including by increasing our energy costs, disrupting our supply chain, negatively impacting our workforce, damaging our facilities and threatening the habitability of the locations in which we operate. Climate change also presents transition risks, including risks posed by regulatory and technology changes and the associated costs as the economy and our business transitions from reliance on carbon-based energy.

Extreme events or the threat of extreme events could result in significant health care costs, including those associated with ~~behavior~~behavioral health offerings, waiving certain medical requirements or assisting with replacement medications or transfer prescriptions, which could also be affected by the government’s actions and the responsiveness of public health agencies and other insurers. For example, during the COVID-19 pandemic, we waived various member cost sharing and prior authorization requirements and expanded support for our members. In addition, some of our employees and our vendors are concentrated in certain large, metropolitan areas which may be particularly exposed to these events. Such events could materially and adversely affect our businesses, operations, operating results and cash flows~~, and, in the event of extreme circumstances, our financial condition or viability, particularly if our responses to such events are less adequate than those of our competitors~~.

Although we have developed procedures for crisis management and disaster recovery and business continuity plans, and we maintain insurance policies that we believe are customary and adequate for our size and industry, our crisis management and disaster recovery procedures and business continuity plans may not be effective and our insurance policies include limits and exclusions and, as a result, our coverage may be insufficient to protect against all potential hazards and risks incident to our businesses. Should any such hazards or risks occur, or should our insurance coverage be inadequate or unavailable, our businesses, operating results, cash flows and financial condition could be adversely affected.

We may be unable to achieve our corporate responsibility and sustainability goals.

We are dedicated to corporate social responsibility and sustainability, and we established certain goals as part of our overall strategy. We face pressures from our colleagues, customers, stockholders and other stakeholders to meet our goals. Achievement of our goals is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may fail to achieve these goals or that our colleagues, customers, stockholders or other stakeholders may not be satisfied with the goals we set or our efforts to achieve them. These risks and uncertainties include, but are not limited to: our ability to set and execute on our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of technological advancements, renewable energy and other materials necessary to meet our goals and expectations; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; the actions of competitors and competitive pressures; and an acquisition of or merger with another company that has not adopted similar goals or whose progress towards reaching its goals is not as advanced as ours. A failure to meet our goals could adversely affect public perception of our business, employee morale or customer or stockholder support.

Further, an increasing percentage of colleagues, customers, stockholders and other stakeholders consider corporate social responsibility and sustainability factors in making employment, consumer health care and investment decisions. If we are unable to meet our goals, we may have difficulty retaining or attracting colleagues, investors, customers, or partners or competing effectively, which would negatively impact our brand and reputation, as well as our business, operating results, and financial condition.

In addition, we could face increased regulatory, reputational and legal scrutiny as a result of our corporate social responsibility and sustainability related commitments and disclosures, and we could also face challenges with managing conflicting regulatory requirements and our various stakeholders’ expectations.

We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things.

We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, as part of our business strategy. Some other risks we may face with respect to acquisitions and other inorganic growth strategies include:

•we may not be able to obtain the required regulatory approval for an acquisition in a timely manner, if at all;

•the acquired, alliance and/or joint venture businesses may not perform as projected;

•the goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued or may become impaired;

•we may assume unanticipated liabilities, including those that were not disclosed to us or which we underestimated;

resources, result in tax costs or inefficiencies and make it difficult to maintain our current business standards, controls, information technology systems, policies, procedures and performance;

•we may finance future acquisitions and other inorganic growth strategies by issuing common stock for some or all of the purchase price, which would dilute the ownership interests of our stockholders;

•we may incur significant debt in connection with acquisitions (whether to finance acquisitions or by assuming debt from the businesses we acquire);

•a proposed or pending transaction may have a negative effect on the Company’s credit ratings;

•we may enter into merger or purchase agreements but, due to reasons within or outside our control, fail to complete the related transactions, which could result in termination fees or other penalties that could be material, cause material disruptions to our businesses and operations and adversely affect our brand, reputation or stock price;

•we may be involved in litigation related to mergers or acquisitions, including for matters that occurred prior to the applicable closing, which may be costly to defend and may result in adverse rulings against us that could be material;

•announcements related to an acquisition could have an adverse effect on the market price of the Company’s common stock and other securities; and

•the integration into our businesses of the businesses and entities we acquire may affect the way in which existing laws and regulations apply to us, including subjecting us to laws and regulations that did not previously apply to us.

Similarly, we may also seek to divest assets that no longer fit into our long-term strategic plan. Such divestitures may take time and, even if such divestitures can be completed, the terms of such divestitures will be subject to market conditions, financing availability and other considerations of potential buyers, and they may have negative short-term financial impacts on us. In addition, joint ventures present risks that are different from acquisitions, including selection of appropriate joint venture parties, initial and ongoing governance of the joint venture, joint venture compliance activities (including compliance with applicable CMS requirements), growing the joint venture’s business in a manner acceptable to all the parties, including other providers in the networks that include joint ventures, maintaining positive relationships among the joint venture parties and the joint venture’s customers, and member and business disruption that may occur upon joint venture termination.

Upon the closing of any acquisition, we need to successfully integrate the products, services and related assets, as well as internal controls into our business operations. If an acquisition is consummated, the integration of the acquired business, its products, services and related assets into our company also may be complex, expensive, and time-consuming and, if the integration is not fully successful, we may not achieve the anticipated benefits, operating and cost synergies and/or growth opportunities of an acquisition. An inability to realize the full extent of the anticipated benefits, operating and cost synergies, innovations and operations efficiencies or growth opportunities of an acquisition, as well as any delays or additional expenses encountered in the integration process, could have a material adverse effect on our businesses and operating results.

Risks From Changes in Public Policy and Other Legal and Regulatory Risks

We are subject to potential changes in public policy, laws and regulations, including reform of the U.S. health care system and entitlement programs, which could have a material adverse effect on our businesses, operations and/or operating results.

The political environment in which we operate remains uncertain. It is reasonably possible that our business operations and operating results could be materially adversely affected by legislative, enforcement, regulatory and public policy changes at the federal or state level, including, but not limited to: changes to the regulatory environment for health care and related benefits, including Medicare, Medicare Advantage, the ACA, and related ~~Public~~regulations; ~~Exchange~~changes ~~regulations~~in the 340B program, including the resumption of the Pilot and any expansion thereof; efforts to amend the ACA and related regulations, including through litigation aimed at challenging the ability to enforce portions of the ACA, such as the preventative services mandate; changes to laws or regulations governing drug reimbursement, pricing, purchasing and/or importation; changes to or adoption of laws or regulations governing PBMs, including those related to prohibiting pharmacy licensure for pharmacies affiliated with a PBM, network restrictions, formulary management, affiliate reimbursement, contractual guarantees and reconciliations, reimbursement mandates, required reporting, compensation, purchase discount and/or rebate arrangements with drug manufacturers and/or other PBM services; changes to the laws and regulations governing PBMs’, PDPs’ and/or Managed Medicaid organizations’ interactions with government funded health care programs; changes to or adoption of laws and/or regulations relating to claims processing and billing; changes to immigration policies; changes to patent laws; changes with respect to tax and trade policies, tariffs and other government regulations affecting trade between the U.S. and other countries; and other public policy initiatives.

46Our businesses, profitability and growth also may be adversely affected by (i) judicial and regulatory decisions that change and/or expand the interpretations of existing statutes and regulations, expand fiduciary obligations, impose medical or bad faith

formulary management, affiliate reimbursement, contractual guarantees and reconciliations, reimbursement mandates, required reporting, compensation, purchase discount and/or rebate arrangements with drug manufacturers and/or other PBM services; changes to the laws and regulations governing PBMs’, PDPs’ and/or Managed Medicaid organizations’ interactions with government funded health care programs; changes to or adoption of laws and/or regulations relating to claims processing and billing; changes to immigration policies; changes to patent laws; changes with respect to tax and trade policies, tariffs and other government regulations affecting trade between the U.S. and other countries; and other public policy initiatives.42

Our businesses, profitability and growth also may be adversely affected by (i) judicial and regulatory decisions that change and/or expand the interpretations of existing statutes and regulations, expand fiduciary obligations, impose medical or bad faith liability, increase our responsibilities under ERISA or the remedies available under ERISA, or reduce the scope of ERISA and Medicare Part D preemption of state law claims or (ii) other legislation and regulations. For example, laws in Arkansas, Louisiana, North Dakota and Oklahoma have attempted to limit PBM practices and have been subject to recent lawsuits. Additional litigation has been filed in several states to challenge ERISA and Medicare Part D preemption.

It is not possible to predict the enactment or content of new legislation or regulations or changes to existing laws or regulations or their enforcement, interpretation or application, or the form they will take (for example, through the use of U.S. Presidential Executive Orders or executive orders by governors or key regulators). If we fail to respond adequately to such changes, including by implementing strategic and operational initiatives, or do not respond as effectively as our competitors, our businesses, operations and operating results may be materially adversely affected. Even if we could predict such matters, it may not be possible to eliminate the adverse impact of public policy changes that would fundamentally change the dynamics of one or more industries in which we compete. Examples of such changes include, but are not limited to: the federal or one or more state governments fundamentally restructuring or reducing the funding available for government programs, increasing its involvement in drug reimbursement, pricing, purchasing and/or importation, changing the laws and regulations governing PBMs’, PDPs’ and/or Managed Medicaid organizations’ interactions with government funded health care programs, changing the tax treatment of health or related benefits, including the expiration of enhanced premium tax credits, or significantly altering the ACA. The likelihood of adverse changes remains high due to state and federal budgetary pressures, and our businesses and operating results could be materially and adversely affected by such changes, even if we correctly predict their occurrence.

There is also uncertainty surrounding potential changes to the health care regulatory environment in the U.S. For example, potential efforts to reform federal government processes and reduce expenditures as well as pressures on and uncertainty surrounding the U.S. federal government’s budget and potential changes in budgetary priorities could adversely affect the funding for individual programs, including government programs, upon which our business depends. Executive orders covering health care and other subjects including immigration, AI, energy and the federal ~~work~~workforce ~~force~~ as well as the ~~work~~workforce ~~force~~ of public and private companies, if implemented through agency action, may also impact the Company. Potential regulatory changes related to tax, trade, economic and monetary policy and heightened diplomatic tensions or political and civil unrest, among other potential changes, could adversely impact the global economy and our operating results.

For more information on these matters, see “Government Regulation” included in Item 1 of this 10-K.

If we fail to comply with applicable laws and regulations, many of which are highly complex, we could be subject to significant adverse regulatory actions, including monetary penalties, or suffer brand and reputational harm.

Our businesses are subject to extensive regulation and oversight by state, federal and international governmental authorities. The laws and regulations governing our operations and interpretations of those laws and regulations, ~~including those related to human capital and climate change,~~ are increasing in number and complexity, change frequently and can be inconsistent or conflict with one another. In general, these laws and regulations are designed to benefit and protect customers, members and providers rather than us or our investors. In addition, the governmental authorities that regulate our businesses have broad latitude to make, interpret and enforce the laws and regulations that govern us and continue to interpret and enforce those laws and regulations more strictly and more aggressively each year. We also must follow various restrictions on certain of our businesses and the payment of dividends by certain of our subsidiaries put in place by certain state regulators.

Certain of our Health Services and Pharmacy & Consumer Wellness operations, products and services are subject to:

•the clinical quality, patient safety and other risks inherent in the dispensing, packaging and distribution of drugs and other health care products and services, including claims related to purported dispensing and other operational errors (any failure by our Health Services and/or Pharmacy & Consumer Wellness operations to adhere to the laws and regulations applicable to the dispensing of drugs could subject us to civil and criminal penalties);

•federal and state anti-kickback and other laws that govern our relationship with drug manufacturers, customers and consumers;

•compliance requirements under ERISA, including fiduciary obligations in connection with the development and implementation of items such as drug formularies and preferred drug listings; and

•federal and state legislative proposals and/or regulatory activity that could adversely affect pharmacy benefit industry practices.

Our Health Care Benefits products are highly regulated, particularly those that serve ~~Public Exchange,~~ Medicare, Medicaid, dual eligible, dual eligible special needs and small group Commercial customers and members. The laws and regulations governing participation in the Public Exchanges, Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.

The scope of the practices and activities that are prohibited by federal and state false claims acts is the subject of pending litigation. Claims under federal and state false claims acts can be brought by the government or by private individuals on behalf of the government through a qui tam or “whistleblower” suit, and we are a defendant in a number of such proceedings. If we are convicted of fraud or other criminal conduct in the performance of a government program or if there is an adverse decision against us under the False Claims Act, we may be temporarily or permanently suspended from participating in government health care programs, including Public Exchange, Medicare Advantage, Medicare Part D, Medicaid, dual eligible and dual eligible special needs plan programs, and we also may be required to pay significant fines and/or other monetary penalties. Whistleblower suits have resulted in significant settlements between governmental agencies and health care companies. The significant incentives and protections provided to whistleblowers under applicable law increase the risk of whistleblower suits.43

Ifin weMedicare ~~fail~~Advantage to(including ~~comply~~dual ~~with~~eligible ~~laws~~special ~~and~~needs ~~regulations that apply to government programs~~plans), we could be subject to criminal fines, civil penalties, premium refunds, prohibitions on marketing or active or passive enrollment of members, corrective actions, termination of our contracts or other sanctions, which could have a material adverse effect on our ability to participate in Public Exchange, Medicare ~~Advantage, Medicare~~ Part D, Medicaid, ~~dual eligible,~~ and ~~dual~~Managed ~~eligible~~Medicaid ~~special needs~~ plans ~~and~~are ~~other programs~~complex, ~~our~~are ~~brand~~subject ~~and~~to ~~reputation,~~interpretation and ~~our~~can ~~operating~~expose ~~results,~~us ~~cash~~to ~~flows~~penalties ~~and~~for ~~financial condition~~non-compliance.

The scope of the practices and activities that are prohibited by federal and state false claims acts is the subject of pending litigation. Claims under federal and state false claims acts can be brought by the government or by private individuals on behalf of the government through a qui tam or “whistleblower” suit, and we are a defendant in a number of such proceedings. If we are convicted of fraud or other criminal conduct in the performance of a government program or if there is an adverse decision against us under the False Claims Act, we may be temporarily or permanently suspended from participating in government health care programs, including Medicare Advantage, Medicare Part D, Medicaid and dual eligible plan programs, and we also may be required to pay significant fines and/or other monetary penalties. Whistleblower suits have resulted in significant settlements between governmental agencies and health care companies. The significant incentives and protections provided to whistleblowers under applicable law increase the risk of whistleblower suits.

In addition, we are subject to assessments under guaranty fund laws existing in all states for obligations of insolvent insurance companies (including long-term care insurers), HMOs, ACA co-ops and other payors to policyholders and claimants. Guaranty funds are maintained by state insurance commissioners to protect policyholders and claimants in the event that an insurer, HMO, ACA co-op and/or other payor becomes insolvent or is unable to meet its financial obligations. These funds are usually financed by assessments against insurers regulated by a state. Future assessments may have an adverse effect on our operating results and cash flows.

If we fail to comply with laws and regulations that apply to government programs, we could be subject to criminal fines, civil penalties, premium refunds, prohibitions on marketing or active or passive enrollment of members, corrective actions, termination of our contracts or other sanctions, which could have a material adverse effect on our ability to participate in Medicare Advantage, Medicare Part D, Medicaid and dual eligible plans and other programs, our brand and reputation, and our operating results, cash flows and financial condition.

For more information on these matters, see “Government Regulation” included in Item 1 of this 10-K.

If our compliance or other systems and processes fail or are deemed inadequate, we may suffer brand and reputational harm and become subject to contractual damages, regulatory actions and/or litigation.

In addition to being subject to extensive and complex laws and regulations, many of our contracts with customers include detailed requirements. In order to be eligible to offer certain products or bid on certain contracts, we must demonstrate that we have robust systems and processes in place that are designed to maintain compliance with all applicable legal, regulatory and contractual requirements. These systems and processes frequently are reviewed and audited by our customers and regulators. If our systems and processes designed to maintain compliance with applicable legal and contractual requirements, and to prevent and detect instances of, or the potential for, non-compliance fail or are deemed inadequate, we may suffer brand and reputational harm and be subject to contractual damages, regulatory actions, litigation and other proceedings which may result in damages, fines, suspension or loss of licensure, suspension or exclusion from participation in government programs and/or other penalties, any of which could adversely affect our businesses, operating results, cash flows and/or financial condition.

We routinely are subject to litigation and other adverse legal proceedings, including class actions and qui tam actions. Many of these proceedings seek substantial damages which may not be covered by insurance. These proceedings are costly to defend, may result in changes in our business practices, harm our brand and reputation and adversely affect our businesses and operating results.

Our businesses are part of highly regulated industries whose participants frequently are subject to litigation and other adverse legal proceedings. We are currently subject to various litigation and arbitration matters, investigations, regulatory audits, inspections, government inquiries, and regulatory and other legal proceedings, both within and outside the U.S. Litigation is increasing as we execute our vertical integration strategy and expand our services along the continuum of health care. In addition, disputes over contracts could lead to litigation or pre-litigation settlements that could materially adversely affect our businesses, operating results and/or cash flows.

Litigation, and particularly securities, derivative, collective or class action and qui tam litigation, is often expensive and disruptive. Many of the legal proceedings against us seek substantial damages (including non-economic or punitive damages and treble damages), and certain of these proceedings also seek changes in our business practices. While we currently have insurance coverage for some potential liabilities, other potential liabilities may not be covered by insurance, insurers may dispute coverage, and the amount of our insurance may not be enough to cover the damages awarded or costs incurred. In

4844

and treble damages), and certain of these proceedings also seek changes in our business practices. While we currently have insurance coverage for some potential liabilities, other potential liabilities may not be covered by insurance, insurers may dispute coverage, and the amount of our insurance may not be enough to cover the damages awarded or costs incurred. In addition, some types of damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or some forms of liability also may become unavailable or prohibitively expensive in the future.

The outcome of litigation and other adverse legal proceedings is always uncertain, and outcomes that are not justifiable by the evidence or existing law or regulation can and do occur, and the costs incurred frequently are substantial regardless of the outcome. In addition, litigation and other adverse legal proceedings outside the U.S. may be subject to greater uncertainty than

within the U.S. Litigation and other adverse legal proceedings could materially adversely affect our businesses, operating results and/or cash flows because of brand and reputational harm to us, the cost of defending such proceedings, the cost of settlement or judgments against us, or the changes in our operations that could result from such proceedings. See Item 3 of this 10-K for additional information.

We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions.

As one of the largest ~~national retail, mail order, specialty and LTC pharmacy, PBM and~~ health care ~~and~~companies ~~related~~in ~~benefits~~the ~~providers~~nation, we frequently are subject to regular and special governmental market conduct and other audits, investigations and reviews by, and we receive subpoenas and other requests for information from, various federal and state agencies, regulatory authorities, Attorneys General, committees, subcommittees and members of the U.S. Congress and other state, federal and international governmental authorities. For example, we have received CIDs from, and provided documents and information to, the Civil Division of the DOJ in connection with a current investigation of our patient chart review processes in connection with risk adjustment data submissions under Parts C and D of the Medicare program. CMS and the OIG also are auditing the risk adjustment-related data of certain of our Medicare Advantage plans. We are also receiving an increasing number of audits related to our PBM network reconciliation processes, and audits related to our use of prior authorization, which could result in reputational risks and changes to policies that may limit our use of prior authorization. The results of any audit may be adverse to us.

Federal and state governments have made investigating and prosecuting health care and other insurance fraud, waste and abuse a priority. Fraud, waste and abuse prohibitions encompass a wide range of activities, including kickbacks for referral of members, billing for unnecessary medical and/or other covered services, improper marketing, including by insurance brokers, and violations of patient privacy rights. The regulations and contractual requirements applicable to us and other industry participants are complex and subject to change, making it necessary for us to invest significant resources in complying with our regulatory and contractual requirements. Ongoing vigorous law enforcement and the highly technical regulatory scheme mean that our compliance efforts in this area will continue to require significant resources. In addition, our medical costs and the medical expenses of our Health Care Benefits ASC customers may be adversely affected if we do not prevent or detect fraudulent activity by providers and/or members.

Regular and special governmental audits, investigations and reviews by federal, state and international regulators could result in changes to our business practices, and also could result in significant or material premium refunds, fines, penalties, civil liabilities, criminal liabilities or other sanctions, including suspension or exclusion from participation in government programs and suspension or loss of licensure. Any of these audits, investigations or reviews could have a material adverse effect on our businesses, operating results, cash flows and/or financial condition or result in significant liabilities and negative publicity for us.

See “Legal and Regulatory Proceedings” in Note 18 ‘‘Commitments and Contingencies’’ included in Item 8 of this 10-K for additional information.

~~Our~~We ~~risk profile is changing as we offer new products and services and expand in business areas beyond our historical businesses, and we~~ may face increased regulatory risks related to our vertical integration strategy.

~~Historically,~~Our wevertical ~~focused~~integration ~~primarily~~strategy onmay ~~providing~~lead ~~products~~to ~~and~~increased ~~services~~regulatory ~~within our Health Care Benefits~~ and ~~Pharmacy~~public &scrutiny ~~Consumer Wellness segments,~~ as ~~well as pharmacy services within our Health Services segment. As~~ a result of ~~our~~consumer ~~vertical~~protection ~~integration strategy~~ and ~~other~~quality ~~innovation~~of ~~initiatives,~~care weconcerns. ~~are~~In ~~expanding~~addition, ~~our~~there ~~presence~~has inbeen ~~the~~some ~~health care space and plan to offer~~ new ~~products~~state ~~and~~legislative ~~services,~~activity ~~including~~around ~~services~~prohibiting ~~provided~~ownership byor ~~Oak~~licensure ~~Street~~of ~~Health~~a ~~and~~pharmacy ~~Signify~~if ~~Health~~it ~~businesses,~~is ~~which~~affiliated ~~present~~with a PBM.

different risk profile than the products and services that we historically have offered and increase our exposure to additional risks. Our vertical integration strategy may also lead to increased regulatory and public scrutiny as a result of consumer protection and quality of care concerns.

We face unique regulatory and other challenges in our Medicare and Medicaid businesses.

We face unique regulatory and other challenges that may inhibit the profitability of our Medicare and Medicaid businesses.

•In April ~~2024~~2025, CMS issued its final notice detailing final ~~2025~~2026 Medicare Advantage payment rates. Based on CMS’ notice, Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 37.7016%, which includes a risk score trend increase of 32.8610%. Risk scores vary among Medicare Advantage plans depending on the specific population served, so this increase does not represent an actual guaranteed payment increase. Without including the risk score trend increase, the 2025 rates result in an expected average decrease in revenue for the Medicare Advantage industry of 0.16%, though the rates may vary widely depending on the provider group and patient demographics. On January 10, 2025, CMS issued an advance notice detailing proposed 2026 Medicare Advantage payment rates. The 2026 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 4.33%, which includes a risk score trend increase of 2.10%. Without including the risk score trend increase, the advance 2026 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 2.23%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2026 rate announcement no later than April 7, 2025. The Company faces challenges from the impact of the increasing cost of medical care (including prescription medications), changes to methodologies for determining payments and CMS local and national coverage decisions that require the Company to pay for services and supplies that are not factored into the Company’s bids. We cannot predict how the rates will be finalized, future Medicare funding levels, the impact of future federal budget actions or ensure that such changes or actions will not have a material adverse effect on our Medicare operating results.

on the specific population served, so this increase does not represent an actual guaranteed payment increase. Without including the risk score trend increase, the 2026 rates result in an expected average increase in revenue for the Medicare Advantage industry of 5.06%, though the rates may vary widely depending on the provider group and patient demographics. On January 26, 2026, CMS issued an advance notice detailing proposed 2027 Medicare Advantage payment rates. The 2027 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 2.54%, which includes a risk score trend increase of 2.45%. Without including the risk score trend increase, the advance 2027 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 0.09%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2027 rate announcement no later than April 6, 2026. The Company faces challenges from the impact of the increasing cost of medical care (including prescription medications), changes to methodologies for determining payments and CMS local and national coverage decisions that require the Company to pay for services and supplies that are not factored into the Company’s bids. In addition, insufficient CMS Medicare rate increases relative to underlying medical cost trends may materially impact the results of our Oak Street Health business. We cannot predict how the rates will be finalized, future Medicare funding levels, the impact of future federal budget actions or ensure that such changes or actions will not have a material adverse effect on our Medicare operating results.

•The organic expansion of our Medicare Advantage and Medicare Part D service area is subject to the ability of CMS to process our requests for service area expansions and our ability to build cost competitive provider networks in the expanded service areas that meet applicable network adequacy requirements. CMS’ decisions on our requests for service area expansions also may be affected adversely by compliance issues that arise each year in our Medicare operations.

•CMS regularly audits our performance to determine our compliance with CMS’s regulations and our contracts with CMS and to assess the quality of the services we provide to our Medicare members, and state regulators are increasingly conducting audits to assess the quality of services we provide to our Medicaid members. As a result of these audits, we may be subject to significant or material retroactive adjustments to and/or withholding of certain premiums and fees, fines, criminal liability, civil monetary penalties, CMS- or state-imposed sanctions (including suspension or exclusion from participation in government programs) or other restrictions on our Medicare, Medicaid and other businesses, including suspension or loss of licensure.

•“Star ratings” from CMS for our Medicare Advantage plans will continue to have a significant effect on our plans’ operating results. Only Medicare Advantage plans with a star rating of 4 or higher (out of 5) are eligible for a quality bonus in their basic premium rates. Based on the ~~2024~~Company’s ~~ratings~~membership as of December 2025, 88more than 81% of the Company’s Medicare Advantage members ~~are~~were in ~~2025~~2026 Medicare Advantage plans that are rated 4 stars or higher and more than 63% of the Company’s Medicare Advantage members were in a 4.5-star plan for 2026. CMS also gives PDPs star ratings that affect each PDP’s enrollment. ~~The Company’s PDP plans were rated 3.5 stars for 2025.~~ Medicare Advantage and PDP plans that are rated less than 3 stars for three consecutive years are subject to contract termination by CMS. CMS continues to change its rating system to make achieving and maintaining a four or higher star rating more difficult, including annual updates to performance measures. If our star ratings fall or remain below four for a significant portion of our Medicare Advantage membership, or do not match the performance of our competitors, or the star rating quality bonuses are reduced or eliminated, our revenues, operating results and cash flows may be significantly adversely affected. In addition, due to uncertainties with CMS cut-points, no Medicare Advantage plan can guarantee their overall star ratings. There can be no assurances that the Company will be successful in maintaining or improving its star ratings in future years.

•Payments we receive from CMS for our Medicare Advantage and Medicare Part D businesses also are subject to risk adjustment based on the health status of the individuals we enroll. Elements of that risk adjustment mechanism continue to be challenged by the DOJ, the OIG and CMS itself. For example, CMS made significant changes to the structure of the hierarchical condition category model in version 28, which may impact RAF scores for a larger percentage of Medicare Advantage beneficiaries and could result in changes to beneficiary RAF scores with or without a change in the patient’s health status. CMS continuously evaluates how and where risk adjustment is captured, which from time-to-time has included the capture of diagnosis codes in home visits. A legislative or regulatory change to the ability of Medicare Advantage plans to use home visits as a means to evaluate and ~~diagnosis~~diagnose their members’ health conditions, or substantial changes in the risk adjustment mechanism, ~~including~~or ~~those~~other changes that may result from enforcement or audit actions, could: materially affect the ~~final~~amount ~~Part~~of Cour ~~contract-level~~Medicare ~~Risk~~reimbursement, ~~Adjustment~~require us to raise prices or reduce the benefits we offer to Medicare beneficiaries, impact the services provided by, or the financial performance of, Oak Street Health and Signify Health and potentially limit our (and the industry’s) participation in the Medicare program.

50•In May 2025, CMS announced it would audit every Medicare Advantage contract each payment year, with an expedited plan to complete audits for payment years 2018 through 2024 by early 2026. The lack of detail provided with respect to how CMS will select claims to audit and the methodology CMS will use may impact future Medicare Advantage bids and result in other implications.

~~Data~~•Our ~~Validation~~Medicare ~~Audits~~Part ~~(“RADV~~D ~~Audit~~operating ~~Rule”)~~results ~~issued~~and inour ~~January~~ability ~~2023~~to orexpand ~~other changes that may result from enforcement or audit actions, could: materially affect the amount of~~ our Medicare ~~reimbursement,~~Part ~~require~~D usbusiness tocould ~~raise~~be ~~prices~~adversely oraffected ~~reduce~~if: the ~~benefits~~cost weand ~~offer~~complexity toof Medicare ~~beneficiaries,~~Part ~~impact~~D ~~the~~exceed ~~services provided by, or the financial performance of, Oak Street Health and Signify Health and potentially limit our (and the industry~~management’s) ~~participation~~expectations inor ~~the~~prevent ~~Medicare~~effective program.

•The RADV Audit Rule creates uncertainty for Medicare Advantage plans. The lack of detail provided with respect to how CMS will select contracts and claims to audit, the methodology CMS will use, and how it will extrapolate as part of the RADV Audit Rule may impact future Medicare Advantage bids and result in other implications. The RADV Audit Rule also permits extrapolation of OIG contract level audits for payment years 2018 forward. The RADV Audit Rule is subject to ongoing litigation and the outcome and future impacts are uncertain.46

~~•Medicare~~implementation ~~Part~~or Dadministration; ~~has~~further ~~resulted~~changes into ~~increased~~the ~~utilization~~regulations ofregarding ~~prescription~~how ~~medications~~drug ~~and~~costs ~~puts~~are ~~pressure~~reported onfor ~~our~~Medicare ~~pharmacy~~Part ~~gross~~D ~~margin~~(including ~~rates~~changes ~~due~~related to ~~regulatory~~the ~~and~~IRA) ~~competitive~~are ~~pressures.~~implemented ~~Further,~~in as a ~~result~~manner ofthat ~~the~~adversely ~~ACA~~affects ~~and changes to~~ the ~~retiree~~profitability ~~drug subsidy rules, clients~~ of our ~~PBM~~Medicare ~~business~~Part ~~could~~D ~~decide~~business; changes to ~~discontinue~~the ~~providing~~applicable ~~prescription~~regulations ~~drug~~impact ~~benefits~~our ability to ~~their~~retain ~~Medicare-eligible~~fees ~~members.~~from Tothird ~~the~~parties ~~extent~~including ~~this~~network ~~phenomenon~~pharmacies; ~~occurs,~~ the ~~adverse~~government ~~effects~~alters ofMedicare ~~increasing~~Part ~~customer~~D ~~migration~~program ~~into~~requirements ~~Medicare~~or ~~Part~~reduces Dfunding ~~may~~because ~~outweigh~~of the ~~benefits~~higher-than-anticipated wecost ~~realize~~to ~~from~~taxpayers ~~growth~~ of ~~our~~ Medicare Part D ~~products.~~or for other reasons; or reinsurance thresholds are reduced.

•~~Our~~The ~~Medicare~~IRA ~~Part~~contains Dsignificant ~~operating~~changes ~~results and our ability~~ to ~~expand our Medicare Part D business could be adversely affected if:~~ the ~~cost and complexity of~~ Medicare Part D ~~exceed management’s expectations or prevent effective~~ program, ~~implementation or administration; further changes to the regulations regarding how drug costs are reported for Medicare Part D (~~including changes ~~related to the IRA) are implemented in a manner~~ that ~~adversely~~shift ~~affects~~more ~~the profitability~~ of ~~our~~the ~~Medicare~~claim ~~Part~~liability ~~D business; changes~~ to ~~the~~plans ~~regulations~~and ~~regarding~~away ~~how~~from ~~drug~~the ~~costs~~government, ~~are~~including ~~reported for Medicare Part D are implemented in~~ a ~~manner~~complete ~~that~~redesign ~~adversely~~of ~~affects~~ the ~~profitability of our~~ Medicare Part D ~~business;~~standard ~~changes~~benefit toeffective ~~the~~in ~~applicable~~2025, ~~regulations~~which ~~impact~~may ~~our~~reduce ~~ability to retain fees from third parties including network pharmacies;~~ the ~~government~~Company’s ~~alters~~flexibility ~~Medicare Part D program requirements or reduces funding because of the higher-than-anticipated cost~~ to ~~taxpayers~~design ofcompetitive ~~Medicare Part D or for other reasons; or reinsurance thresholds are reduced~~offerings.

•~~The~~Further, ~~IRA~~as ~~contains~~a ~~significant~~result of the ACA and changes to the ~~Part~~retiree Ddrug ~~program~~subsidy ~~that~~rules, ~~began~~clients inof ~~2023~~our ~~and~~PBM ~~will~~business ~~continue~~could decide to ~~2032~~discontinue ~~that~~providing ~~shifts~~prescription ~~more~~drug ofbenefits ~~the~~to ~~claim~~their ~~liability~~Medicare-eligible tomembers. ~~plans~~To ~~and~~the ~~away~~extent ~~from~~this ~~the~~phenomenon ~~government~~occurs, ~~including~~the aadverse ~~complete~~effects ~~redesign~~ of ~~the~~increasing customer migration into Medicare Part D ~~standard~~may ~~benefit~~outweigh ~~effective~~the inbenefits ~~2025~~we realize from growth of our Medicare Part D products.

•State Medicaid agencies regularly audit, and state officials regularly investigate, the Company’s performance across all areas of its contractual obligations to the state to determine compliance and quality of services. The Company may be subject to, among other penalties, significant fines, sanctions, corrective actions, and enrollment freezes depending on the findings of these audits and reviews. The Company’s ongoing performance and compliance with program requirements can impact our ability to expand and retain Medicaid business. State Medicaid agencies are also increasingly using the audit process to challenge the legality of PBM practices, such as guaranteed effective rate reconciliations with retail pharmacies and transmission fees.

•We have experienced challenges in obtaining complete and accurate encounter data for our Medicaid products due to difficulties with providers and third-party vendors submitting claims in a timely fashion in the proper format, and with state agencies in coordinating such submissions. As states increase their reliance on encounter data, and some states mandate that certain amounts be included or excluded from encounter data, these difficulties could affect the Medicaid premium rates we receive and how Medicaid membership is assigned to us, which could have a material adverse effect on our Medicaid operating results and cash flows and/or our ability to bid for, and continue to participate in, certain Medicaid programs.

•If we fail to report and correct errors discovered through our own auditing procedures or during a CMS audit or otherwise fail to comply with the applicable laws and regulations, we could be subject to fines, civil monetary penalties or other sanctions, including fines and penalties under the False Claims Act, which could have a material adverse effect on our ability to participate in Medicare Advantage, Medicare Part D or other government programs, and on our operating results, cash flows and financial condition.

•The resumption of Medicaid eligibility redeterminations after being suspended during the COVID-19 pandemic has negatively impacted the number of members eligible for the Company’s Medicaid plans, which could impact our operating results and cash flows from the Medicaid business.

•Certain of our Medicaid contracts require the submission of complete and correct encounter data. The accurate and timely reporting of encounter data is increasingly important to the success of our Medicaid programs because more states are using encounter data to determine compliance with performance standards and, in part, to set premium rates. We have expended and may continue to expend additional effort and incur significant additional costs to collect accurate, or to correct inaccurate or incomplete, encounter data and have been and could be exposed to premium withholding, operating sanctions and financial fines and penalties for noncompliance.

•CMS has proposed requiring that health plans offering certain dual eligible programs must also offer Medicaid programs, which could further impact the Company’s ability to obtain or retain membership in its dual eligible programs. In addition, states are increasingly requiring companies to offer Medicaid within a state and conducting competitive bid processes to qualify to offer dual eligible products.

~~Programs~~•The ~~funded~~“Working inFamilies ~~whole~~Tax orCut inAct,” ~~part~~formerly by the ~~U.S.~~“One ~~federal~~Big ~~government~~Beautiful ~~account~~Bill Act,” of 2025 makes changes to Medicaid eligibility rules and financing which will lead to reduced eligibility for aMedicaid ~~significant~~beneficiaries, ~~portion~~particularly ofexpansion ~~our~~populations, ~~revenues~~and reduced state funding, which will impact Medicaid benefits and wepayment ~~expect~~rates. Given these changes, states that ~~percentage~~have not already done so are unlikely to ~~increase~~consider Medicaid expansion.

51Programs funded in whole or in part by the U.S. federal government are particularly sensitive to reduced government funding and regulatory changes.

~~Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues, and we expect that percentage to increase.~~ As our government funded businesses grow, our exposure to changes in federal and state government policy with respect to and/or regulation of the various government funded programs in which we participate also increases.

The laws and regulations governing participation in ~~Public Exchange,~~ Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance. Federal, state and local governments have the right to cancel or not to renew their contracts with us on short notice without cause or if funds are not available. Funding for these programs is dependent on many factors outside our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and priorities.

The U.S. federal government and our other government customers also may reduce funding for health care or other programs, cancel or decline to renew contracts with us, or make changes that adversely affect the number of persons eligible for certain programs, the services provided to enrollees in such programs, our premiums and our administrative and health care and other benefit costs, any of which could have a material adverse effect on our businesses, operating results and cash flows. When federal funding is delayed, suspended or curtailed, we continue to receive, and we remain liable for and are required to fund, claims from providers for providing services to beneficiaries of federally funded health benefits programs in which we participate. An extended federal government shutdown or a delay by Congress in raising the federal government’s debt ceiling also could lead to a delay, reduction, suspension or cancellation of federal government spending and a significant increase in interest rates that could, in turn, have a material adverse effect on the value of our investment portfolio, our ability to access the capital markets and our businesses, operating results, cash flows and liquidity.47

our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and priorities.

The U.S. federal government and our other government customers also may reduce funding for health care or other programs, or make changes that adversely affect the number of persons eligible for certain programs, the services provided to enrollees in such programs, our premiums and our administrative and health care and other benefit costs, any of which could have a material adverse effect on our businesses, operating results and cash flows. When federal funding is delayed, suspended or curtailed, we continue to receive, and we remain liable for and are required to fund, claims from providers for providing services to beneficiaries of federally funded health benefits programs in which we participate. An extended federal government shutdown or a delay by Congress in raising the federal government’s debt ceiling also could lead to a delay, reduction, suspension or cancellation of federal government spending and a significant increase in interest rates that could, in turn, have a material adverse effect on the value of our investment portfolio, our ability to access the capital markets and our businesses, operating results, cash flows and liquidity.

Possible changes in industry pricing benchmarks and drug pricing generally can adversely affect our PBM and Pharmacy & Consumer Wellness businesses.

It is possible that the pharmaceutical industry, regulators, or federal policymakers may evaluate and/or develop an alternative pricing reference to replace AWP or WAC, which are the pricing references used for many of our PBM ~~and LTC~~ client contracts, drug purchase agreements, retail network contracts, specialty payor agreements and other contracts with third party payors in connection with the reimbursement of drug payments. In addition, many state Medicaid fee-for-service programs have established pharmacy network payments on the basis of Actual Acquisition Cost (“AAC”). The use of an AAC basis in fee for service Medicaid could have an impact on reimbursement practices in Health Care Benefits’ Commercial and other Government products. ~~It is also possible that Congress may enact some limited form of price negotiation for Medicare.~~ In addition, CMS also publishes the National Average Drug Acquisition Cost (“NADAC”) for certain drugs; NADAC pricing, which has exhibited recent volatility, is being adopted in an increasing number of states.

Future changes to the use of AWP, WAC or to other published pricing benchmarks used to establish drug pricing, including changes in the basis for calculating reimbursement by federal and state health care programs and/or other payors, could impact the reimbursement we receive from Medicare and Medicaid programs, the reimbursement we receive from our PBM clients and other payors and/or our ability to negotiate rebates and/or discounts with drug manufacturers, wholesalers, PBMs and retail pharmacies. A failure or inability to fully offset any increased prices or costs or to modify our operations to mitigate the impact of such increases could have a material adverse effect on our operating results. Additionally, any future changes in drug prices could be significantly different than our projections. We cannot predict the effect of these possible changes on our businesses.

We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, which would have an adverse effect on our revenues, MBRs and operating results and could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes.

Premium rates for our Insured Health Care Benefits products often must be filed with state insurance regulators and are subject to their approval, which creates risk for us in the current political and regulatory environment. The ACA generally requires a review by HHS in conjunction with state regulators of premium rate increases that exceed a federally specified threshold (or lower state-specific thresholds set by states determined by HHS to have adequate processes). Rate reviews can magnify the adverse impact on our operating margins, MBRs and operating results of increases in health care and other benefit costs, increased utilization of covered services, and ACA assessments, fees and taxes, by restricting our ability to reflect these increases and/or these assessments, fees and taxes in our pricing. Further, our ability to reflect ACA assessments, fees and taxes in our Medicare, Medicaid and CHIP premium rates is limited.

52Since 2013, HHS has issued determinations to health plans that their premium rate increases were “unreasonable,” and we may experience challenges to appropriate premium rate increases in certain states. Regulators or legislatures in several states have implemented or are considering limits on premium rate increases, either by enforcing existing legal requirements more stringently or proposing different regulatory standards. Regulators or legislatures in several states also have conducted hearings on proposed premium rate increases, which can result, and in some instances have resulted, in substantial delays in implementing proposed rate increases even if they ultimately are approved. Any significant rate increases we may request heighten the risks of adverse publicity, adverse regulatory action and adverse selection and the likelihood that our requested premium rate increases will be denied, reduced or delayed, which could lead to operating margin compression.

~~Since~~We ~~2013,~~anticipate ~~HHS~~continued ~~has~~regulatory ~~issued determinations to health plans that their premium rate increases were “unreasonable,”~~ and welegislative ~~may~~action ~~experience challenges~~ to ~~appropriate~~increase ~~premium~~regulation ~~rate~~of ~~increases in certain states. Regulators or legislatures in several states have implemented or are considering limits on~~ premium ~~rate~~rates ~~increases, either by enforcing existing legal requirements more stringently or proposing different regulatory standards. Regulators or legislatures~~ in ~~several~~our ~~states~~Insured ~~also~~Health ~~have~~Care ~~conducted~~Benefits ~~hearings on proposed premium rate increases, which can result, and in some instances have resulted, in substantial delays in implementing proposed rate increases even if they ultimately are approved~~products. ~~Our~~We ~~plans~~may ~~can~~not be ~~excluded~~able ~~from participating in small group Public Exchanges if they are deemed~~ to ~~have~~obtain arates ~~history of “unreasonable” rate increases. Any significant rate increases we may request heighten the risks of adverse publicity, adverse regulatory action and adverse selection and the likelihood~~ that ~~our~~are ~~requested~~actuarially ~~premium~~justified ~~rate increases will be denied, reduced~~ or ~~delayed,~~that ~~which~~are ~~could~~sufficient ~~lead~~ to ~~operating~~make ~~margin~~our ~~compression.~~policies

We anticipate continued regulatory and legislative action to increase regulation of premium rates in our Insured Health Care Benefits products. We may not be able to obtain rates that are actuarially justified or that are sufficient to make our policies profitable in one or more product lines or geographies. If we are unable to obtain adequate premium rates and/or premium rate increases, it could materially and adversely affect our operating margins and MBRs and our ability to earn adequate returns on Insured Health Care Benefits products in one or more states or cause us to withdraw from certain geographies and/or products.48

profitable in one or more product lines or geographies. If we are unable to obtain adequate premium rates and/or premium rate increases, it could materially and adversely affect our operating margins and MBRs and our ability to earn adequate returns on Insured Health Care Benefits products in one or more states or cause us to withdraw from certain geographies and/or products.

Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs. Challenges to our minimum MLR rebate methodology and/or reports could adversely affect our operating results.

The ACA’s minimum MLR rebate requirements limit the level of margin we can earn in Health Care Benefits’ Commercial Insured business. CMS and state minimum MLR rebate regulations limit the level of margin we can earn in our Medicare Advantage and Medicaid Insured businesses. Certain portions of our Health Care Benefits Medicaid and FEHB program business also are subject to minimum MLR rebate requirements in addition to but separate from those imposed by the ACA. Minimum MLR rebate requirements leave us exposed to medical costs that are higher than those reflected in our pricing. The process supporting the management and determination of the amount of MLR rebates payable is complex and requires judgment, and the minimum MLR reporting requirements are detailed. CMS has also proposed, but not yet finalized, a definition of “prescription drug price concessions” for commercial MLR calculation purposes, which would make additional PBM information available to plans and the HHS, potentially further complicating the MLR calculation process. Federal and state auditors are challenging our Commercial Health Care Benefits business’ compliance with the ACA’s minimum MLR requirements as well as our FEHB plans’ compliance with OPM’s FEHB program-specific minimum MLR requirements. Our Medicare and Medicaid contracts also are subject to minimum MLR audits. If a Medicare Advantage or Medicare Part D contract pays minimum MLR rebates for three consecutive years, it will become ineligible to enroll new members. If a Medicare Advantage or Medicare Part D contract pays such rebates for five consecutive years, it will be terminated by CMS. Additional challenges to our methodology and/or reports relating to minimum MLR and related rebates by federal and state regulators and private litigants are reasonably possible. The outcome of these audits and additional challenges could adversely affect our operating results.

Our operating results may be adversely affected by changes in laws and policies governing employers and by union organizing activity.

Congress and certain state legislatures continue to consider and pass legislation that increases our costs of doing business, including increased minimum wages and requiring employers to provide paid sick leave or paid family leave. In addition, our employee-related operating costs may be increased by the proposed changes to the H-1B and other visa programs, which could limit our and others’ ability to hire skilled individuals. Regarding union organizing activity, ~~and~~ it is possible that the National Labor Relations Board may adopt regulatory changes through re-making or case law that could facilitate union organizing. If we are unable to reflect these increased expenses in our pricing or otherwise modify our operations to mitigate the effects of such increases, our operating results will be adversely affected.

We face international political, legal and compliance, operational, regulatory, economic and other risks that may be more significant than in our domestic operations.

WeOur ~~are in the process of winding down our~~ international ~~insurance~~ operations ~~in 2025. However, our remaining international operations~~ present political, legal, compliance, operational, regulatory, economic and other risks that we do not face or that are more significant than in our domestic operations. These risks vary widely by country and include varying regional and geopolitical business conditions and demands, government intervention and censorship, discriminatory regulation, climate change regulation, nationalization or expropriation of assets and pricing constraints. Our international operations need to meet country-specific legal requirements, including those related to licensing, data privacy, data storage and data protection.

Our international operations increase our exposure to, and require us to devote significant management resources to implement controls and systems to comply with, the privacy and data protection laws of non-U.S. jurisdictions, such as the EU’s GDPR, and the anti-bribery, anti-corruption and anti-money laundering laws of the U.S. (including the FCPA) and the United Kingdom (including the UK Bribery Act) and similar laws in other jurisdictions. Implementing our compliance policies, internal controls and other systems may also require the investment of considerable management time and financial and other resources. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or employees, restrictions or outright prohibitions on the conduct of our business, and significant brand and reputational harm. We must regularly reassess the size, capability and location of our global infrastructure and make appropriate changes, and must have effective change management processes and internal controls in place to address changes in our businesses and operations. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties, and the failure to do so could have a material adverse effect on our brand, reputation, businesses, operating results and/or financial condition.

Our international operations require us to overcome logistical and other challenges based on differing languages, cultures, legal and regulatory schemes and time zones. Our international operations encounter labor laws, standards and customs that can be difficult and make employee relationships less flexible than in our domestic operations and expensive to modify or terminate. In some countries we are required to, or choose to, operate with local business associates, which requires us to manage our relationships with these third parties and may reduce our operational flexibility and ability to quickly respond to business challenges.

In some countries we may be exposed to currency exchange controls or other restrictions that prevent us from transferring funds internationally or converting local currencies into U.S. dollars or other currencies. Fluctuations in foreign currency exchange rates may adversely affect our revenues, operating results and cash flows from our international operations. Some of our operations are, and are increasingly likely to be, in emerging markets where these risks are heightened. Any measures we may implement to reduce the effect of volatile currencies and other risks on our international operations may not be effective.

Risks Associated with Mergers, Acquisitions, and Divestitures

We may be unable to successfully integrate companies we acquire.

Upon the closing of any acquisition, we need to successfully integrate the products, services and related assets, as well as internal controls into our business operations. If an acquisition is consummated, the integration of the acquired business, its products, services and related assets into our company also may be complex, expensive, and time-consuming and, if the integration is not fully successful, we may not achieve the anticipated benefits, operating and cost synergies and/or growth opportunities of an acquisition. Potential difficulties that may be encountered in the integration process include the following:

•Integrating personnel, operations and systems (including internal control environments and compliance policies), while maintaining focus on producing and delivering consistent, high quality products and services;

•Coordinating geographically dispersed organizations;

•Distracting management’s attention from our ongoing business operations;

•Retaining existing customers and attracting new customers;

•Managing inefficiencies associated with integrating our operations; and

•Reconciling post-acquisition costs and liabilities between buyer and seller.

An inability to realize the full extent of the anticipated benefits, operating and cost synergies, innovations and operations efficiencies or growth opportunities of an acquisition, as well as any delays or additional expenses encountered in the integration process, could have a material adverse effect on our businesses and operating results. Furthermore, acquisitions, even if successfully integrated, may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products, services or service areas, and expose us to additional liabilities associated with an acquired business including risks and liabilities associated with litigation involving the acquired business. Any one of these challenges or risks could impair our ability to realize any benefit from our acquisitions after we have expended resources on them.

We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, as part of our business strategy. In addition to the integration risks noted above, some other risks we may face with respect to acquisitions and other inorganic growth strategies include:

•we may not be able to obtain the required regulatory approval for an acquisition in a timely manner, if at all;

•we frequently compete with other firms, some of which may have greater financial and other resources and a greater tolerance for risk, to acquire attractive companies;

•the acquired, alliance and/or joint venture businesses may not perform as projected;

•the goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued or may become impaired;

•we may assume unanticipated liabilities, including those that were not disclosed to us or which we underestimated;

•the acquired businesses, or the pursuit of other inorganic growth strategies, could disrupt or compete with our existing businesses, distract management, result in the loss of key employees, business partners, suppliers and customers, divert resources, result in tax costs or inefficiencies and make it difficult to maintain our current business standards, controls, information technology systems, policies, procedures and performance;

•we may incur significant debt in connection with acquisitions (whether to finance acquisitions or by assuming debt from the businesses we acquire);

•a proposed or pending transaction may have a negative effect on the Company’s credit ratings;

•we may not have the expertise to manage and profitably grow the businesses we acquire, and we may need to rely on the retention of key personnel and other suppliers of businesses we acquire, which may be difficult or impossible to accomplish;

•in order to complete an acquisition, we may be required to divest certain portions of our business, for which we may not be able to obtain favorable pricing;

•announcements related to an acquisition could have an adverse effect on the market price of the Company’s common stock and other securities; and

Risks Related to Our Operations

Failure to meet customer expectations may harm our brand and reputation, our ability to retain and grow our customer base and membership and our operating results and cash flows.

Our ability to attract and retain customers and members is dependent upon providing compliant, cost effective, quality customer service operations (such as call center operations, PBM functions, retail pharmacy ~~and LTC services~~, retail, mail order and specialty pharmacy prescription delivery, claims processing, customer case installation and online access and tools) that meet or exceed our customers’ and members’ expectations, either directly or through vendors. AsWe wedepend ~~seek~~on tothird ~~reduce~~parties ~~general~~for ~~and~~certain ~~administrative~~of ~~expenses~~our customer service, PBM and prescription delivery operations. If we ~~must~~or ~~balance~~our ~~the~~vendors ~~potential~~fail ~~impact~~to ofprovide ~~cost-saving~~compliant ~~measures~~service onthat meets our customers’ and ~~other~~members’ ~~services~~expectations, ~~and~~we ~~performances.~~may Ifhave wedifficulty ~~misjudge~~retaining ~~the~~or ~~effects~~profitably ofgrowing ~~such~~our ~~measures,~~customer ~~customers~~base and/or ~~other~~membership, ~~services~~which ~~may~~could be adversely ~~affected.~~affect Weour ~~depend~~operating results.

on third parties for certain of our customer service, PBM and prescription delivery operations. If we or our vendors fail to provide compliant service that meets our customers’ and members’ expectations, we may have difficulty retaining or profitably growing our customer base and/or membership, which could adversely affect our operating results. For example, noncompliance with any privacy or security laws or regulations or any security breach involving us or one of our third-party vendors could have a material adverse effect on our businesses, operating results, brand and reputation.

We and our vendors have experienced and continue to experience cyberattacks. We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security (including cybersecurity) risks or threats in the future.

We and our vendors have experienced diverse cyberattacks and expect to continue to experience cyberattacks going forward. As examples, the Company and its vendors have experienced attempts to gain access to systems, denial of service attacks, attempted malware infections, account takeovers, scanning activity, and phishing emails. We have also seen an increase in ransomware attacks in our industry. Attacks can originate from external sources (including criminals, terrorists and nation states) or internal actors. The Company is dedicating and will continue to dedicate significant resources and incur significant expenses to maintain and update on an ongoing basis the systems and processes that are designed to mitigate the information security risks it faces and protect the security of its computer systems, software, networks and other technology assets against attempts by unauthorized parties to obtain access to confidential information, disrupt or degrade service, or cause other damage. The impact of known cyberattacks has not been material to the Company’s operations or operating results through December 31, ~~2024~~2025. The Board is regularly informed regarding the Company’s information security policies, practices and status.

A compromise of our information security controls or of those third parties with whom we interact, which results in business disruption or confidential information being accessed, obtained, damaged, or used by unauthorized or improper persons, could harm our reputation and expose us to regulatory actions and claims from customers and clients, financial institutions, payment card associations and other persons, any of which could adversely affect our businesses, operating results and financial condition. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of intrusion, we may be unable to anticipate these techniques or to implement adequate preventative measures. Moreover, a cyberattack could require that we expend significant resources related to our information systems and infrastructure, and could distract management and other key personnel from performing their primary operational duties. We also could be adversely affected by any significant disruption in the systems of third parties we interact with, including key payors and vendors.

The costs of attempting to protect against the foregoing risks and the costs of responding to a cyberattack or other information security incident are significant. Large scale data breaches at other entities increase the challenge we and our vendors face in maintaining the security of our information technology systems and proprietary information and of our customers’, employees’, members’ and other constituents’ personal information. Following an information security incident, our and/or our vendors’ remediation efforts may not be successful, and could result in interruptions, delays or cessation of service, and loss of existing or potential customers and members. In addition, breaches of our and/or our vendors’ security measures and the unauthorized access to or dissemination of personal information, proprietary information or confidential information about us, our customers, our members or other third-parties, could expose our customers’, members’ and other constituents’ information and our customers, members and other constituents to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions, which could have a material adverse effect on our brand, reputation, businesses, operating results and cash flows.

members or other third parties, could expose our customers’, members’ and other constituents’ information and our customers, members and other constituents to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions, which could have a material adverse effect on our brand, reputation, businesses, operating results and cash flows.

See Item 1C of this 10-K, “Cybersecurity,” for more information on the Company’s cybersecurity risk management and governance.

Data governance failures can adversely affect our reputation, businesses and prospects. Our use and disclosure of members’, customers’ and other constituents’ personal information is subject to complex regulations at multiple levels.

Our information systems are critical to the operation of our businesses. We collect, process, maintain, retain, evaluate, utilize and distribute large amounts of personally identifiable, protected health, and financial information (including payment card information) and other confidential and sensitive data about our customers, employees, members and other constituents in the ordinary course of our businesses. Some of our information systems rely upon third party systems, including cloud service providers, to accomplish these tasks. The use and disclosure of such information is regulated at the federal, state and international levels. In some cases, such laws, rules and regulations also apply to our vendors and/or may hold us liable for any violations by our vendors. These laws, rules and regulations are subject to change (and many are rapidly evolving) and in recent years have given rise to increased enforcement activity, litigation, and other disputes. For example, certain of our vendors have experienced incidents that resulted in the unauthorized disclosure of confidential information, including personal information of our members, patients or employees, which has caused us to incur expenses including those related to responding to regulatory inquiries and/or litigation. Some of these expenses are indemnified but others are not. International laws, rules and regulations governing the use and disclosure of these types of information are generally more stringent than U.S. laws and regulations, and they vary from jurisdiction to jurisdiction. Our businesses also depend on our customers’, members’ and other constituents’ willingness to entrust us with their health related and other personal information. Events that adversely affect that trust, noncompliance with applicable privacy or security laws or regulations, or any security breach, information security incident, and any other incident involving the theft, misappropriation, compromise, loss or other unauthorized disclosure of, or access to, customer, member or other constituent information, whether by us, by one of our business associates or vendors or by another third party, could require us to expend significant resources to remediate any damage, could interrupt our operations and could adversely affect our brand and reputation, membership and operating results and also could expose and/or has exposed us to mandatory disclosure requirements, adverse media attention, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, adverse actions against our licenses to do business and/or injunctive relief, any of which could adversely affect our businesses, operating results, cash flows or financial condition.

56There can be no assurance that we have been able to, or will be able to, adequately prevent, detect, and/or remediate such data security incidents.

~~years~~Our ~~have~~business ~~given~~success ~~rise to increased enforcement activity, litigation,~~ and ~~other~~operating ~~disputes.~~results ~~For~~depend ~~example, certain of our vendors have experienced incidents that resulted~~ in ~~the~~part ~~unauthorized~~on ~~disclosure~~effective ~~of confidential~~ information, ~~including~~technology ~~personal~~systems ~~information~~and ofon ~~our~~continuing ~~members,~~to ~~patients~~develop orand ~~employees,~~implement ~~which~~improvements ~~has~~in ~~caused~~technology, ~~us to incur expenses~~ including ~~those~~technology related to ~~responding~~artificial tointelligence ~~regulatory inquiries and/or litigation~~(“AI”). ~~Some~~The offailure ~~these~~or ~~expenses~~disruption ~~are indemnified but others are not. International laws, rules and regulations governing the use and disclosure~~ of ~~these~~our ~~types of~~ information ~~are~~technology ~~generally~~systems ~~more stringent than U.S. laws and regulations, and they vary from jurisdiction to jurisdiction. Noncompliance with applicable privacy~~ or ~~security laws or regulations, or any security breach, information security incident, and any other incident involving~~ the ~~theft,~~failure ~~misappropriation, compromise, loss or other unauthorized disclosure~~ of, orour ~~access to, customer, member or other constituent~~ information, ~~whether~~technology byinfrastructure ~~us, by one of our business associates or vendors or by another third party, could require us~~ to ~~expend~~support ~~significant resources to remediate any damage, could interrupt~~ our ~~operations~~businesses ~~and~~ could adversely affect our ~~brand and~~ reputation, membership and operating results and also could expose and/or has exposed us to mandatory disclosure requirements, adverse media attention, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, adverse actions against our licenses to do business and/or injunctive relief, any of which could adversely affect our businesses, operating results, and cash flows ~~or financial condition~~.

Our businesses depend on our customers’, members’ and other constituents’ willingness to entrust us with their health related and other personal information. Events that adversely affect that trust, including inadequate disclosure to our members or customers of our uses of their information, failing to keep our information technology systems and our customers’, members’ and other constituents’ information secure from significant attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including human error) or that of our business associates, vendors or other third parties, could adversely affect our brand and reputation, membership and operating results and also could expose and/or has exposed us to mandatory disclosure to the media, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, adverse actions against our licenses to do business and/or injunctive relief, any of which could adversely affect our businesses, operating results, cash flows or financial condition. There can be no assurance that awe have or will be able to adequately prevent, detect, and/or remediate such data security incidents.

The failure or disruption of our information technology systems or the failure of our information technology infrastructure to support our businesses could adversely affect our reputation, businesses, operating results and cash flows.

Our information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches (including credit card or personally identifiable information breaches), cyberattacks, vandalism, catastrophic events and human error. If our information systems are damaged, fail to work properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience reputational damage, loss of critical information, customer disruption and interruptions or delays in our ability to perform essential functions and implement new and innovative services. We use third-party vendors to set-up, service, and/or maintain portions of our information technology systems, and our vendors may suffer the same types of issues, which could adversely affect our ability to access and use such systems and the data contained therein, which could result in similar harm. In addition, our efforts to comply with changes in U.S. and foreign laws and regulations, including privacy and information security laws and standards, may cause us to incur significant expense due to increased investment in technology and the development of new operational processes.

Our business success and operating results depend in part on effective information technology systems and on continuing to develop and implement improvements in technology. Pursuing multiple initiatives simultaneously could make this continued development and implementation significantly more challenging.

Many aspects of our operations are dependent on our information systems and the information collected, processed, stored and handled by these systems. We rely heavily on our information and technology systems to manage our ordering, pricing, point-of-sale, pharmacy fulfillment, inventory replenishment, claims processing, customer loyalty and subscription programs, finance, human resources and other processes. Throughout our operations, we collect, process, maintain, retain, evaluate, utilize and distribute large amounts of confidential and sensitive data and information, including personally identifiable information and protected health information, that our customers, employees, members and other constituents provide to purchase products or services, enroll in programs or services, register on our websites, interact with our personnel, or otherwise communicate with us. For these operations, we depend in part on the secure transmission of confidential information over public networks.

We have many different information and other technology systems supporting our different businesses, including technology acquired as part of acquisitions~~, such as Canopy~~. Our businesses depend in large part on these systems to adequately price our products and services; accurately establish reserves, process claims and report operating results; and interact with providers, employer plan sponsors, customers, members, consumers and vendors in an efficient and uninterrupted fashion. In addition, recent trends toward greater consumer engagement in health care require new and enhanced technologies, including more sophisticated

5751

products and services; accurately establish reserves, process claims and report operating results; and interact with providers, employer plan sponsors, customers, members, consumers and vendors in an efficient and uninterrupted fashion. In addition, recent trends toward greater consumer engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices. Certain of our technology systems (including software) are older, legacy systems that are less flexible, less efficient and require a significant ongoing commitment of capital and human resources to maintain, protect and enhance them and to integrate them with our other systems. We must ~~re-engineer~~continuously ~~and~~develop ~~reduce the number of these older, legacy systems to meet changing consumer~~ and vendor preferences and needs, improve our productivity and reduce our operating expenses, and acquired systems may need significant investment in order to meet the ongoing needs of the larger Company. We also need to develop or acquire new technology systems, contract with new vendors or modify certain of our existing systems to support the consumer-oriented and transformational products and services we are developing, operating and expanding and/or to meet current and developing industry and regulatory standards, including to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, and changes to applicable privacy and security laws, rules and regulations. If we fail to achieve these objectives, our ability to profitably grow our business and/or our operating results may be adversely affected.

In addition, information technology and other technology and process improvement projects, including our transformation and enterprise modernization programs, frequently are long-term in nature and may take longer to complete and cost more than we expect and may not deliver the benefits we project once they are complete. If we do not effectively and efficiently secure, manage, integrate and enhance our technology portfolio (including vendor sourced systems), we could, among other things, have problems determining health care and other benefit cost estimates and/or establishing appropriate pricing, meeting the needs of customers, consumers, providers, members and vendors, developing and expanding our consumer-oriented products and services or keeping pace with industry and regulatory standards, and our operating results may be adversely affected.

Our and our vendors’ information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches (including credit card or personally identifiable information breaches), cyberattacks, vandalism, catastrophic events and human error. If our information systems are damaged, fail to work properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and may experience reputational damage, loss of critical information, customer disruption and interruptions or delays in our ability to perform essential functions and implement new and innovative services.

The use of AI and related technology may also increase exposure to reputational, cybersecurity, data privacy, legal, regulatory and operational risks as AI technology rapidly evolves along with public opinion concerning the use of AI and the associated legal and regulatory framework. These risks include, but are not limited to, heightened exposure to cybersecurity incidents or the misuse of data during the integration of AI models and large data sets; increased potential liability and costs associated with complying with rapidly emerging regulatory frameworks; costs and competitive disadvantages associated with the failure to properly integrate AI into existing operations; and reputational harm caused by actual or perceived failures in the performance of AI or AI-related technology.

Product liability, product recall, professional liability or personal injury issues could damage our reputation and have a significant adverse effect on our businesses, operating results, cash flows and/or financial condition.

The products that we sell could become subject to contamination, product tampering, mislabeling, recall or other damage. In addition, errors in the dispensing, packaging or administration of drugs or other products and consuming drugs in a manner that is not prescribed could lead to serious injury or death. Product liability or personal injury claims may be asserted against us with respect to any of the drugs or other products we sell or services we provide. For example, we are a defendant in hundreds of litigation proceedings relating to opioids and the sale of products containing talc. Our businesses also involve the provision of professional services, including by physicians, pharmacists, physician assistants, nurses and nurse practitioners, which exposes us to professional liability claims. Should a product or other liability issue arise, the coverage available under our insurance programs and the indemnification amounts available to us from third parties may not be adequate to protect us against the financial impact of the related claims. We also may not be able to maintain our existing levels of insurance on acceptable terms in the future. Any of the issues discussed above could damage our brand and reputation and have a significant adverse effect on our businesses, operating results and/or financial condition.

We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success, and our failure to do so could adversely affect our businesses, operating results and/or future performance.

Our ability to attract and retain qualified and experienced employees is essential to meet our current and future goals and objectives. There is no guarantee we will be able to attract and retain such employees or that competition among potential employers will not result in increased compensation and/or ~~benefits~~benefit costs. If we are unable to retain existing employees or attract additional employees, or we experience an unexpected loss of leadership, we could experience a material adverse effect on our businesses, operating results and/or future performance.

In addition, our failure to adequately plan for succession of senior management and other key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on our businesses, operating results and/or future performance. The succession plans we have in place and our employment arrangements with certain key executives do not guarantee the services of these executives will continue to be available to us.

results and/or future performance. The succession plans we have in place and our employment arrangements with certain key executives do not guarantee the services of these executives will continue to be available to us.

Sales of our products and services are dependent on our ability to attract and motivate internal sales personnel and independent third-party brokers, consultants and agents. New distribution channels create new disintermediation risk. We may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products.

58Our products are sold primarily through our sales personnel, who frequently work with independent brokers, consultants and agents who assist in the marketing, production and servicing of business. The independent brokers, consultants and agents generally are not exclusively dedicated to us and may frequently recommend and/or market health care benefits products of our competitors. Our sales could be adversely affected if we are unable to attract, retain or motivate sales personnel and third-party brokers, consultants and agents, or if we do not adequately provide support, training and education to this sales network regarding our complex product portfolio, or if our sales strategy is not appropriately aligned across distribution channels.

Our products are sold primarily through our sales personnel, who frequently work with independent brokers, consultants and agents who assist in the marketing, production and servicing of business. The independent brokers, consultants and agents generally are not exclusively dedicated to us and may frequently recommend and/or market health care benefits products of our competitors. Our sales could be adversely affected if we are unable to attract, retain or motivate sales personnel and third-party brokers, consultants and agents, or if we do not adequately provide support, training and education to this sales network regarding our complex product portfolio, or if our sales strategy is not appropriately aligned across distribution channels. This risk is heightened as we develop, operate and expand our consumer-oriented products and services and we expand in the health care space and our business model evolves to include a greater focus on consumers and direct-to-consumer sales, such as competing for sales on Insurance Exchanges.

New distribution channels for our products and services continue to emerge, including Private Exchanges operated by health care consultants and technology companies. These channels may make it more difficult for us to directly engage consumers and other customers in the selection and management of their health care benefits, in health care utilization and in the effective navigation of the health care system. We also may be challenged by new technologies and marketplace entrants that could interfere with our existing relationships with customers and health plan members in these areas.

In addition, there have been several investigations regarding the marketing practices of brokers and agents selling health care and other insurance products and the payments they receive from carriers offering Medicare Advantage, Medicare Part D and Medicare Supplemental Insurance products. These investigations have resulted in enforcement actions against companies in our industry and brokers and agents marketing and selling those companies’ products. These investigations and enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products.

Specifically, CMS, U.S. Congressional committees and state departments of insurance have each increased scrutiny of the marketing practices of brokers and agents who market Medicare products and of the Medicare Advantage organizations that use these organizations to market their products. CMS, other federal agencies or U.S. Congress may also recommend changes or take additional action with respect to the way in which brokers and agents are compensated for selling our Medicare Advantage and Part D plans. For example, CMS finalized new requirements imposing limitations on the amounts and types of payments that brokers can earn for marketing and enrollment services with respect to Medicare Advantage and Part D plans. While these new requirements are currently subject to an injunction, if the injunction is lifted or CMS attempts to impose restrictions on broker and agent compensation in the future, we will need to comply with the new restrictions. In addition, the IRA contains changes to the Part D program that began in 2023 and will continue through 2032 that will shift more of the claim liability to plans and away from the government.

Failure of our businesses to effectively collaborate could prevent us from maximizing our operating results.

To maximize our overall enterprise value, our various businesses need to collaborate effectively. Our businesses need to be aligned to carry out our business strategy, prioritize goals and coordinate the design of new products intended to utilize the offerings of multiple businesses, including implementing our transformation and enterprise modernization programs. In addition, misaligned incentives, information siloes, ineffective product development and failure of our corporate governance policies or procedures, for example significant financial decisions being made at an inappropriate level in our organization, also could prevent us from maximizing our operating results and/or achieving our financial and other projections.

We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to new rules and other requirements and potential liability and may disrupt our business operations.

We accept payments using a variety of methods, including cash, checks, credit cards, debit cards, gift cards, mobile payments and potentially other technologies in the future that may subject us to new and additional risks related to fraud and theft. Acceptance of these payment methods subjects us to rules, regulations, contractual obligations and compliance requirements, including payment network rules and operating guidelines, data security standards and certification requirements, and rules and regulatory requirements governing these payment methods. These requirements may change in the future, which could make compliance more difficult or costly. For certain payment options, including credit and debit cards, we pay interchange and other fees, which could increase periodically thereby raising our operating costs. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, and various other forms of electronic payment we currently use or adopt in the future. If these vendors are unable to provide these services to us, or if their systems are compromised, our operations could be disrupted. The payment methods that we offer also expose us to potential fraud and theft by persons seeking to obtain unauthorized access to, or exploit any weaknesses in, the payment systems we use. If we fail to abide by applicable rules or requirements, or if data relating to our payment systems is compromised due to a breach or misuse, we may be responsible for any costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees. In addition, our reputation and ability to accept certain types of payments could each be harmed resulting in reduced sales and adverse effects on our operating results.

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higher transaction fees. In addition, our reputation and ability to accept certain types of payments could each be harmed resulting in reduced sales and adverse effects on our operating results.

Both our and our vendors’ operations are subject to a variety of business continuity hazards and risks, any of which could interrupt our operations or otherwise adversely affect our performance and operating results.

We and our vendors are subject to business continuity hazards and other risks, including natural disasters and extreme weather events (which may increase in frequency or intensity as a result of climate change), utility and other mechanical failures, acts of war or terrorism, acts of civil unrest, crime, disruption of communications, data security and preservation, disruption of supply or distribution, safety regulation and labor difficulties. The occurrence of any of these or other events to us or our vendors might disrupt or shut down our operations or otherwise adversely affect our operations. We also may be subject to certain liability claims in the event of an injury or loss of life, or damage to property, resulting from such events. Although we have developed procedures for crisis management and disaster recovery and business continuity plans, and we maintain insurance policies that we believe are customary and adequate for our size and industry, our crisis management and disaster recovery procedures and business continuity plans may not be effective and our insurance policies include limits and exclusions and, as a result, our coverage may be insufficient to protect against all potential hazards and risks incident to our businesses. Should any such hazards or risks occur, or should our insurance coverage be inadequate or unavailable, our businesses, operating results, cash flows and financial condition could be adversely affected.

Financial Risks

We would be adversely affected if we do not effectively deploy our capital. Downgrades or potential downgrades in our credit ratings, should they occur, could adversely affect our brand and reputation, businesses, operating results, cash flows and financial condition.

Our operations generate significant capital, and we may from time to time raise additional capital, subject to market conditions. The manner in which we deploy our capital, including investments in our businesses, our operations (such as information technology and other strategic and capital projects), dividends, acquisitions, share and/or debt repurchases, repayment of debt, reinsurance or other capital uses, impacts our financial strength, claims paying ability and credit ratings issued by nationally-recognized statistical rating organizations. Credit ratings issued by nationally-recognized statistical rating organizations are broadly distributed and generally used throughout our industries. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance and ability to meet our debt obligations or obligations to our insureds. We believe our credit ratings and the financial strength and claims paying ability of our principal insurance and HMO subsidiaries are important factors in marketing our Health Care Benefits products to certain of our customers.

The Company’s long-term debt ratings are currently investment grade, though each of the ratings organizations reviews our ratings periodically and there can be no assurance that our current ratings will be maintained in the future. InAs ~~August~~of ~~2024~~December 31, 2025, Moody’s Investor Service, Inc. ~~(“Moody’s”)~~has ~~and~~assigned ~~Standard & Poor’s Financial Services LLC (“S&P”) changed their outlook on~~ the Company’s a long-term debt ~~from~~rating ~~“Stable”~~of to “~~Negative.~~Baa3” ~~In October 2024, Moody’s placed the Company’s long-term debt ratings~~ and ~~the~~a ~~Company’s~~ commercial paper ~~program~~rating onof ~~review~~“P-3” ~~for~~with ~~downgrade.~~a ~~Subsequently,~~“Stable” inoutlook; ~~December~~Standard ~~2024,~~& ~~Moody~~Poor’s ~~downgraded~~Financial Services LLC has assigned the Company’s a long-term debt rating toof “~~Baa3~~BBB” and ~~the~~a ~~Company’s~~ commercial paper rating toof “P3A-2” ~~and~~with ~~changed~~a ~~their outlook on the Company to~~ “~~Stable~~Negative”. Inoutlook; ~~December~~and ~~2024,~~ Fitch Ratings, Inc. ~~(“Fitch”)~~has ~~initiated~~assigned ~~ratings coverage on~~ the Company ~~and assigned~~ a ~~first-time “BBB” rating to the Company’s~~ long-term debt ~~and~~rating aof “F2BBB” ~~rating~~and toa ~~the Company’s~~ commercial paper ~~program~~rating ~~with~~of ~~the~~“F2” ~~outlook~~with ona ~~the Company of~~ “Negative” outlook. Downgrades in our ratings could adversely affect our businesses, operating results, cash flows and financial condition.

Goodwill and other intangible assets could, in the future, become impaired.

~~As of December 31, 2024 and December 31, 2023, we had $118.6 billion and $120.5 billion, respectively, of goodwill and other intangible assets.~~ Goodwill and indefinite-lived intangible assets are subject to annual impairment reviews, or more frequent reviews if events or circumstances indicate that the carrying value may not be recoverable. When evaluating goodwill for potential impairment, we compare the fair value of our reporting units to their respective carrying amounts. We estimate the fair value of our reporting units using a combination of a discounted cash flow method and a market multiple method. If the carrying amount of a reporting unit exceeds its estimated fair value, a goodwill impairment loss is recognized in an amount equal to the excess to the extent of the goodwill balance. Indefinite-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. The Company estimates the fair value of its indefinite-lived trademarks using the relief from royalty method under the income approach. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value. Definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted).

intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of such an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted).

Estimated fair values could change if, for example, there are changes in the business climate, industry-wide changes, changes in the competitive environment, adverse legal or regulatory actions or developments, changes in capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows or market capitalization. Because of the significance of our goodwill and intangible assets, any future impairment of these assets could require material noncash charges to our operating results, which also could have a material adverse effect on our financial condition.

Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative investments and other investments, and our operating results and/or our financial condition.

~~The U.S. and global capital markets, including credit markets, continue to experience volatility and uncertainty.~~ As an insurer, we have a substantial investment portfolio that supports our policy liabilities and surplus and is comprised largely of debt securities of issuers located in the U.S. As a result, the income we earn from our investment portfolio is largely driven by the level of interest rates in the U.S., and to a lesser extent the international financial markets. Volatility, uncertainty and/or disruptions in the global capital markets, particularly the U.S. credit markets, and governments’ monetary policy, particularly U.S. monetary policy, can significantly and adversely affect the value of our investment portfolio, our operating results and/or our financial condition by:

•significantly reducing the value and/or liquidity of the debt securities we hold in our investment portfolio and creating realized capital losses that reduce our operating results and/or unrealized capital losses that reduce our shareholders’ equity;

•lowering interest rates on high-quality short-term or medium-term debt securities and thereby materially reducing our net investment income and operating results as the proceeds from securities in our investment portfolio that mature or are otherwise disposed of continue to be reinvested in lower yielding securities;

•reducing the fair values of our investments if interest rates rise;

•causing non-performance of or defaults on their obligations to us by third parties, including customers, issuers of securities in our investment portfolio, mortgage borrowers and/or reinsurance and/or derivatives counterparties;

•making it more difficult to value certain of our investment securities, for example if trading becomes less frequent, which could lead to significant period-to-period changes in our estimates of the fair values of those securities and cause period-to-period volatility in our net income and shareholders’ equity;

•reducing our ability to issue debt securities at attractive interest rates, thereby increasing our interest expense and decreasing our operating results; and

•reducing our ability to issue other securities.

Although we seek, within guidelines we deem appropriate, to match the duration of our assets and liabilities and to manage our credit and counterparty exposures, a failure to do so adequately could adversely affect our net income and our financial condition and, in extreme circumstances, our cash flows.

Risks Related to Our Relationships with Manufacturers, Providers, Suppliers and Vendors

We face risks relating to the market availability, pricing, suppliers and safety profiles of prescription drugs and other products that we purchase and sell.

Our Pharmacy & Consumer Wellness segment and our mail order and specialty pharmacy operations generate revenues in significant part by dispensing prescription drugs. Our PBM business generates revenues primarily by contracting with clients to provide prescription drugs and related health care services to plan members. As a result, we are dependent on our relationships with prescription drug manufacturers and suppliers. We acquire a substantial amount of our mail order and specialty pharmacies’ prescription drug supply from a limited number of suppliers. Certain of our agreements with such suppliers are short-term and cancellable without cause. In addition, these agreements may allow the supplier to distribute through channels other than us. Certain of these agreements also allow pricing and other terms to be adjusted periodically for changing market conditions or required service levels. A termination or modification to any of these relationships could adversely affect our prescription drug supply and have a material adverse effect on our businesses, operating results and financial condition. Moreover, many products distributed by our pharmacies are manufactured with ingredients that are susceptible to supply shortages. In some cases, we depend upon a single source of supply. Any such supply shortages or loss of any such single source of supply could adversely affect our operating results and cash flows.

prescription drug supply and have a material adverse effect on our businesses, operating results and financial condition. Moreover, many products distributed by our pharmacies are manufactured with ingredients that are susceptible to supply shortages. In some cases, we depend upon a single source of supply. Any such supply shortages or loss of any such single source of supply could adversely affect our operating results and cash flows.

Much of the branded and generic drug product that we sell in our pharmacies, and much of the other merchandise we sell, is manufactured in whole or in substantial part outside of the U.S. In most cases, the products or merchandise are imported by others and sold to us. As a result, significant changes in tax or trade policies, tariffs or trade relations between the U.S. and other countries, such as the imposition of unilateral tariffs on imported products, could result in significant increases in our costs, restrict our access to suppliers, depress economic activity, and have a material adverse effect on our businesses, operating results and cash flows. The current administration has imposed and may further impose, or significantly increase, tariffs on imports to the United States, which could exacerbate many of these issues. In addition, other countries may change their business and trade policies and such changes, as well as any negative sentiments towards the U.S. in response to increased import tariffs and other changes in U.S. trade regulations, including those that are imposed or threatened by the new administration, could adversely affect our businesses.

Our suppliers are independent entities subject to their own operational and financial risks that are outside our control. If our current suppliers were to stop selling prescription drugs to us or delay delivery, including as a result of supply shortages, supplier production disruptions, supplier quality issues, closing or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

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Our operating results may be adversely affected if we are unable to contract with providers on competitive terms and develop and maintain attractive networks with high quality providers.

We are seeking to enhance our health care provider networks by entering into joint ventures and other collaborative risk-sharing arrangements with providers. Providers’ willingness to enter these arrangements with us depends upon, among other things, our ability to provide them with up to date quality of care data to support these value-based contracts. These arrangements are designed to give providers incentives to engage in population health management and optimize delivery of health care to our members. These arrangements also may allow us to expand into new geographies, target new customer groups, increase membership and reduce medical costs and, if we provide technology or other services to the relevant health system or provider organization, may contribute to our revenue and earnings from alternative sources. If such arrangements do not result in the lower medical costs that we project or if we fail to attract providers to such arrangements, or are less successful at implementing such arrangements than our competitors, our medical costs may not be competitive and may be higher than we project, our attractiveness to customers may be reduced, we may lose or be unable to grow medical membership, and our ability to profitably grow our business and/or our operating results may be adversely affected.

While we believe joint ventures, ~~ACOs~~ and other non-traditional health care provider organizational structures present opportunities for us, the implementation of our joint ventures and other non-traditional structure strategies may not achieve the intended results, which could adversely affect our operating results and cash flows. For example, joint ventures require us to, among other things, maintain collaborative relationships with our counterparties, continue to gain access to provider rates that make the joint ventures economically sustainable and devote significant management time to the operation and management of the joint ventures. We may not be able to achieve these objectives in one or more of our joint ventures, which could adversely affect our operating results and cash flows.

IfContinuing ~~our~~consolidation ~~suppliers~~and orintegration ~~service~~among providers ~~fail~~and toother ~~meet~~suppliers ~~their~~may ~~contractual~~increase ~~obligations~~our tomedical usand orother tocovered ~~comply~~benefit ~~with applicable laws or regulations~~costs, wemake ~~may~~it bedifficult ~~exposed~~for us to ~~brand~~compete ~~and~~in ~~reputational~~certain ~~harm,~~geographies ~~litigation~~ and~~/or~~ ~~regulatory~~create ~~action.~~new competitors.

WeHospitals, ~~contract~~other ~~with~~health ~~various~~care ~~third~~providers ~~parties~~and health systems continue to ~~supply~~consolidate usacross ~~with~~the ~~necessary~~health ~~products,~~care ~~perform~~industry. ~~certain~~While ~~functions~~this consolidation could increase efficiency and has the potential to improve the delivery of health care services, it also reduces competition and ~~provide~~the usnumber ~~with~~of potential contracting parties in certain ~~information~~geographies ~~technology~~and ~~systems~~sectors of the health care industry. ~~Our~~Health ~~arrangements~~systems ~~with~~also ~~suppliers~~are ~~and~~increasingly ~~these~~forming ~~third~~and ~~parties~~considering ~~may~~forming ~~expose~~health usplans to ~~public~~directly ~~scrutiny,~~offer ~~adversely~~health ~~affect~~insurance ~~our~~in ~~brand~~competition ~~and~~with ~~reputation~~us, ~~expose~~a usprocess tothat ~~litigation~~has orbeen ~~regulatory~~accelerated ~~action~~by the ACA. In addition, ACOs (including Commercial and ~~otherwise~~Medicaid-only ~~make~~ACOs ~~our~~developed ~~operations~~as ~~vulnerable~~a ifresult weof ~~fail~~state toMedicaid ~~adequately~~laws), ~~oversee~~practice management companies, ~~monitor~~consolidation among and ~~regulate~~by ~~their~~integrated ~~performance~~health orsystems ifand ~~they~~other ~~fail~~changes toin ~~meet~~the ~~their~~organizational ~~contractual~~structures ~~obligations~~that tophysicians, ushospitals orand toother ~~comply~~providers ~~with~~adopt ~~applicable~~continues ~~laws~~to orchange ~~regulations,~~the ~~including~~way ~~those~~these ~~related~~providers tointeract ~~human~~with ~~capital~~us and ~~climate~~the ~~change~~competitive landscape in which we operate. ~~For~~These ~~example,~~changes ~~certain~~may ofincrease our ~~vendors~~medical ~~have~~and ~~been~~other ~~responsible~~covered ~~for~~benefit ~~releases~~costs, ofmay ~~sensitive~~affect ~~information~~the ofway we price our ~~members~~products and ~~employees,~~services ~~which~~and ~~has~~estimate ~~caused~~our medical and other covered benefit costs and may require us to ~~incur~~change ~~additional~~our ~~expenses~~operations, ~~and~~including ~~given~~by ~~rise~~withdrawing from certain geographies where we do not have a significant presence across our businesses or are unable to ~~regulatory~~collaborate ~~actions~~or ~~and~~contract ~~litigation~~with ~~against~~providers uson ~~and~~acceptable ~~has~~terms. Each of these changes may adversely ~~impacted~~affect our ~~brand~~businesses and operating results.

These risks are particularly high in our in Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans, where third parties may perform medical management and other member related

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services for us. Any failure of these third parties’ prevention, detection or control systems related to regulatory compliance, compliance with our internal policies, data security and/or cybersecurity or any incident involving the theft, misappropriation, loss or other unauthorized disclosure of, or access to, members’, customers’ or other constituents’ sensitive information could require us to expend significant resources to remediate any damage, interrupt our operations and adversely affect our brand and reputation and also expose us to whistleblower, class action and other litigation, other proceedings, prohibitions on marketing or active or passive enrollment of members, corrective actions, fines, sanctions and/or penalties, any of which could adversely affect our businesses, operating results, cash flows and/or financial condition.

We may experience increased medical and other benefit costs, litigation risk and customer and member dissatisfaction when providers that do not have contracts with us render services to our Health Care Benefits members.

Some providers that render services to our Health Care Benefits members do not have contracts with us. In those cases, we do not have a pre-established understanding with these nonparticipating providers as to the amount of compensation that is due to them for services rendered to our members. In some states, the amount of compensation due to these nonparticipating providers is defined by law or regulation, but in most instances it is either not defined or it is established by a standard that is not clearly translatable into dollar terms. In such instances, providers may believe that they are underpaid for their services and may either litigate or arbitrate their dispute with us or try to recover the difference between what we have paid them and the amount they charged us from our members, which may result in member dissatisfaction. For example, in 2019, certain claimant hospitals were awarded approximately $86 million in an arbitration proceeding relating to Aetna’s out-of-network benefit payment and administration practices. Such disputes may cause us to pay higher medical or other benefit costs than we projected.

Continuing consolidation and integration among providers and other suppliers may increase our medical and other covered benefits costs, make it difficult for us to compete in certain geographies and create new competitors.

Hospitals, other health care providers and health systems continue to consolidate across the health care industry. While this consolidation could increase efficiency and has the potential to improve the delivery of health care services, it also reduces competition and the number of potential contracting parties in certain geographies and sectors of the health care industry. Health systems also are increasingly forming and considering forming health plans to directly offer health insurance in competition with us, a process that has been accelerated by the ACA. In addition, ACOs (including Commercial and Medicaid-only ACOs developed as a result of state Medicaid laws), practice management companies, consolidation among and by integrated health systems and other changes in the organizational structures that physicians, hospitals and other providers adopt continues to change the way these providers interact with us and the competitive landscape in which we operate. These changes may increase our medical and other covered benefits costs, may affect the way we price our products and services and estimate our medical and other covered benefits costs and may require us to change our operations, including by withdrawing from certain geographies where we do not have a significant presence across our businesses or are unable to collaborate or contract with providers on acceptable terms. Each of these changes may adversely affect our businesses and operating results.

Item 1B. Unresolved Staff Comments.

There are no unresolved SEC Staff Comments.

Item 1C. Cybersecurity.

Cybersecurity Risk Management

Cybersecurity is an important and integrated part of the Company’s enterprise risk management strategy. Safeguarding the Company’s business information, intellectual property, customer, patient and employee data and technology systems is essential for the continuity of its businesses, meeting applicable regulatory requirements and maintaining the trust of its stakeholders.

To help protect the Company from a major cybersecurity incident that could have a material impact on operations or the Company’s financial results, the Company has implemented a robust information security program and has made technology investments that focus on cybersecurity incident prevention, detection and mitigation. The steps the Company takes to reduce its vulnerability and to mitigate the impacts from cybersecurity incidents include, but are not limited to: comprehensive information security policies and standards, implementing logical and technical controls through processes and technologies, monitoring its information technology systems for cybersecurity threats, assessing cybersecurity risk profiles of key third~~-parties,~~ ~~implementing cybersecurity training and collaborating with public and private organizations on cyber threat information~~

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parties, implementing cybersecurity training and collaborating with public and private organizations on cyber threat information and best practices. The Company is currently in material compliance with applicable information privacy and cybersecurity standards.

The Company has implemented a Cybersecurity Incident Response Plan (the “Plan”), which is integrated into its overall crisis management program. The Plan provides a framework for responding to cybersecurity incidents. The Plan identifies applicable requirements for incident disclosure and reporting as well as provides protocols for incident evaluation, including the use of third-party service providers and partners, processes for notification and internal escalation of information to the Company’s senior management, the disclosure committee, the Board and appropriate Board committees. The Plan also addresses requirements for the Company’s external reporting obligations. The Plan is reviewed and updated, as necessary, under the leadership of the Company’s Chief Information Security Officer (“CISO”) and Chief Privacy Officer (“CPO”).

The Company’s information technology systems and processes are regularly assessed internally as well as by independent third parties for compliance with the following standards: HIPAA; NIST 800-53; System and Organization Controls (“SOC”) 1; SOC 2 Type 2; HI-TRUST; Payment Card Industry Data Security Standards; and the National Association of Insurance Commissioners. The Company annually purchases a cybersecurity risk insurance policy that is expected to help defray the costs associated with a covered cybersecurity incident if it occurred.

Although the Company did not experience a material cybersecurity incident during the year ended December 31, ~~2024~~2025, ~~it did experience previously-disclosed impacts from~~ the ~~Change Healthcare cybersecurity incident in February 2024. See the Company’s Form 10-Q for the three months ended March 31, 2024 for more information. The~~ scope and impact of any future direct or third-party cybersecurity incident cannot be predicted. See “Item 1A. Risk Factors” for more information on the Company’s cybersecurity-related risks.

Governance

Management has responsibility to manage risk and bring to the Board’s attention the most material near-term and long-term risks to the Company. The Company’s CISO leads management’s assessment and management of cybersecurity risk. The CISO reports to the Company’s Chief ~~Digital,~~Experience ~~Data,~~and ~~Analytics &~~ Technology Officer (the “~~CDDATO~~CETO”), who reports directly to the Company’s Chief Executive Officer. The ~~CDDATO~~CETO, CISO and the CPO, regularly review cybersecurity matters with management. The current ~~CDDATO~~CETO, CISO and CPO each has more than 10 years of experience managing risks or advising on cybersecurity issues.

The Board is actively engaged in overseeing and reviewing the Company’s strategic direction and objectives, taking into account, among other considerations, the Company’s risk profile and related exposures. As part of this oversight, the Board has delegated certain of these responsibilities to committees of the Board. The Board has delegated the responsibility for the oversight of the Company’s cybersecurity risks to the Audit Committee. As part of ~~this~~its risk oversight responsibilities, the Audit Committee conducts regular reviews of the Company’s cybersecurity program ~~periodically~~, ~~and~~including atno ~~least~~fewer ~~annually~~than two formal updates each year. The Company’s ~~CDDATO~~CETO and CISO ~~update~~provide the Audit Committee ~~periodically,~~with ~~and~~recurring briefings—at least ~~annually,~~on a bi-quarterly basis—and update the full Board asannually ~~needed,~~ on the Company’s cybersecurity ~~program,~~posture. ~~including~~These ~~particular~~updates ~~cybersecurity~~include assessments of emerging cyber threats, significant cybersecurity incidents and ~~new~~material ~~developments~~changes in the Company’s risk profile. The CISO is a member of the Company’s Disclosure Committee, and the CPO advises the Disclosure Committee on cybersecurity matters on an as-needed basis.

Item 2. Properties.

The Company’s principal office is an owned building complex located in Woonsocket, Rhode Island, which totals approximately one million square feet. The Company also leases office space in other locations in the UUnited States.S.

Health Care Benefits Segment

The Health Care Benefits segment’s principal office is an owned building complex located in Hartford, Connecticut, which totals approximately 1.7 million square feet. The Health Care Benefits segment also owns or leases office space in other locations in the U.S. and ~~several~~ other countries.

Health Services Segment

The Health Services segment includes owned or leased mail service dispensing pharmacies, call centers, on-site pharmacy stores, retail specialty pharmacy stores, specialty mail service pharmacies and primary care centers.

64The Health Services segment leases 246 primary care centers across 27 states, totaling approximately 2.2 million square feet.

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The Health Services segment leases 239 primary care centers across 27 states, totaling approximately 2.2 million square feet.

The Health Services segment also owns or leases office space used for administration, sales and marketing, technology and development and professional services throughout the U.S. and in Ireland.

Pharmacy & Consumer Wellness Segment

As of December 31, ~~2024~~2025, the Pharmacy & Consumer Wellness segment operated the following properties:

•More than 7,000 retail stores, of which approximately 4% were owned. Net selling space for retail stores was approximately 7271.63 million square feet as of December 31, ~~2024~~2025.

•Approximately 1,~~860~~870 retail pharmacies within retail chains, as well as approximately 30 clinics in Target Corporation (“Target”) stores;

•Owned distribution centers and leased distribution facilities throughout the U.S. totaling approximately 10.10 million square feet; and

•Branches for compounding, specialty infusion and enteral nutrition services throughout the U.S.~~; and~~

~~•Owned~~In connection with certain business dispositions completed between 1995 and ~~leased~~1997, ~~LTC~~the ~~pharmacies~~Company ~~throughout~~continues to guarantee lease obligations for 60 former stores. The Company is indemnified for these guarantee obligations by the Urespective initial purchasers.S These guarantees generally remain in effect for the initial lease term and any extension thereof pursuant to a renewal option provided for in the lease prior to the time of the disposition. For additional information on these guarantees, see “Lease Guarantees” in Note 18 ‘‘Commitments and anContingencies’’ ~~owned~~included ~~LTC~~in ~~repackaging~~Item ~~facility~~8 of this 10-K.

In connection with certain business dispositions completed between 1995 and 1997, the Company continues to guarantee lease obligations for 61 former stores. The Company is indemnified for these guarantee obligations by the respective initial purchasers. These guarantees generally remain in effect for the initial lease term and any extension thereof pursuant to a renewal option provided for in the lease prior to the time of the disposition. For additional information on these guarantees, see “Lease Guarantees” in Note 18 ‘‘Commitments and Contingencies’’ included in Item 8 of this 10-K.

Management believes that the Company’s owned and leased facilities are suitable and adequate to meet the Company’s anticipated needs. At the end of the existing lease terms, management believes the leases can be renewed or replaced by alternative space. For additional information on the right-of-use assets and lease liabilities associated with the Company’s leases, see Note 7 ‘‘Leases’’ included in Item 8 of this 10-K.

Item 3. Legal Proceedings.

The information contained in Note 18 ‘‘Commitments and Contingencies’’ included in Item 8 of this 10-K is incorporated herein by reference.

Item 4. Mine Safety Disclosures.

Not applicable.

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Information about our Executive Officers

The following sets forth the name, age and biographical information for each of the Registrant’s executive officers as of February 1210, ~~2025~~2026. In each case the officer’s term of office extends to the date of the meeting of the Board following the next annual meeting of stockholders of CVS Health Corporation. Previous positions and responsibilities held by each of the executive officers over the past five years or more are indicated below:

Heidi B. Capozzi, age 5556, has been the Executive Vice President and Chief People Officer of CVS Health Corporation since September 2024;. ~~Executive~~Prior ~~Vice~~to ~~President~~joining ~~and~~the ~~Global~~Company, ~~Chief~~Ms. ~~People~~Capozzi ~~Officer~~was ofmost ~~McDonald’s~~recently ~~Corporation~~the ~~from~~Executive ~~April 2020 through August 2024; Senior~~ Vice President and Global Chief ~~Human~~People ~~Resources~~ Officer of ~~The~~McDonald’s ~~Boeing~~Corporation ~~Company~~ from April ~~2016~~2020 through ~~April~~August ~~2020~~2024.

James D. Clark, age 6061, has been the Senior Vice President, - Controller and Chief Accounting Officer of CVS Health Corporation since November 2018;. ~~Vice~~Prior ~~President~~to -joining ~~Finance~~the ~~and~~Company, ~~Accounting~~Mr. ofClark ~~CVS~~was ~~Pharmacy,~~a ~~Inc.~~partner ~~from~~at ~~September~~Deloitte ~~2009~~& ~~through~~Touche ~~October~~LLP, ~~2018~~an independent registered public accounting firm.

~~Thomas~~Amy ~~F. Cowhey~~Compton-Philips, age 5262, has been the Executive Vice President and Chief ~~Financial~~Medical Officer of CVS Health Corporation since ~~January~~May ~~2024;~~2025. ~~Senior~~Prior ~~Vice~~to ~~President~~joining ~~and~~the ~~Interim~~Company, ~~Chief~~Dr. ~~Financial~~Compton-Philips ~~Officer~~was ofmost ~~CVS~~recently ~~Health~~the ~~Corporation~~Chief ~~from~~Physician ~~October~~Executive ~~2023~~of ~~through~~Press ~~January 2024; Senior Vice President~~Ganey, ~~Corporate~~a ~~Finance~~health ofcare ~~CVS~~company ~~Health~~known ~~Corporation~~for ~~from~~developing ~~September~~and ~~2023~~distributing ~~through~~patient ~~October~~satisfaction ~~2023; Senior Vice President~~surveys, ~~Capital Markets of CVS Health Corporation~~ from ~~February~~September 2022 ~~through~~to ~~September~~April ~~2023;~~2025 and ~~Executive~~the ~~Vice President and~~ Chief ~~Financial~~Clinical Officer of ~~Surgical~~Providence ~~Partners~~Health System, aresponsible ~~large~~for ~~independent~~clinical ~~operator~~operation, ofquality, ~~short-stay~~pharmacy ~~surgical~~and ~~facilities,~~clinical institutes from ~~April~~August ~~2018~~2015 ~~through~~to ~~February~~September 2022.

~~Roger N~~J. ~~Farah~~David Joyner, age 7261, ~~Executive~~has ~~Chair~~been of the ~~Board~~President and Chief Executive Officer of CVS Health Corporation since October 2024;, and Chair of the Board of Directors of CVS Health Corporation since ~~May~~January ~~2022;~~2026. ~~Director~~Prior to his current role with the Company, Mr. Joyner was most recently the Executive Vice President of CVS Health Corporation ~~since~~and ~~November~~President ~~2018~~of Pharmacy Services from January 2023 through October 2024; ~~and~~Strategic ~~Director~~Business ofAdvisor ~~Aetna~~to gWell, Inc., a wellness technology company, from ~~June~~July ~~2007~~2021 through ~~November~~September ~~2018.~~2023; Heand ~~also~~Advisor ~~currently~~to ~~serves~~Podimetrics asInc., a ~~director~~health ofcare ~~The~~company ~~Progressive~~focused ~~Corporation,~~on anthe ~~auto~~identification ~~insurance~~and ~~company,~~treatment ~~and~~of ~~formerly~~diabetic ~~served~~foot asulcers ~~Chairman~~from ofSeptember ~~the~~2020 ~~Board~~through ~~and~~January a2023. ~~director~~Mr. ofJoyner ~~Tiffany~~has &also ~~Co.~~served ~~until~~on ~~January~~the ~~2021,~~Advisory ~~and~~Council asto athe ~~director~~Rawls College of ~~Metro~~Business ~~Bank~~of ~~PLC~~Texas ~~until~~Tech ~~March~~University since July 2020.

JSamrat S. ~~David Joyner~~Khichi, age 6058, ~~President~~has ~~and~~been ~~Chief~~the Executive ~~Officer~~Vice ofPresident, ~~CVS~~Chief ~~Health~~Policy ~~Corporation~~Officer ~~since~~and ~~October~~General ~~2024;~~Counsel ~~Executive Vice President~~ of CVS Health Corporation ~~and~~ ~~President~~since ofFebruary ~~Pharmacy Services from January~~ 2023. ~~through~~Prior ~~October~~to ~~2024;~~joining ~~Strategic~~the ~~Business Advisor to gWell~~Company, ~~Inc~~Mr., aKhichi ~~wellness~~was ~~technology~~most ~~company,~~recently ~~from~~the ~~July~~Executive ~~2021~~Vice ~~through~~President, ~~September~~Corporate ~~2023;~~Development, ~~Advisor~~Public ~~to Podimetrics Inc.~~Policy, aRegulatory ~~health~~Affairs ~~care company focused on the identification~~ and ~~treatment~~General ofCounsel ~~diabetic foot ulcers from September 2020 through January 2023; Advisory Council to the Rawls College~~ of ~~Business~~Becton ofDickinson ~~Texas~~Company, ~~Tech~~a ~~University~~global ~~since~~medical ~~July~~technology ~~2020; Executive Vice President – Sales and Account Services~~company, ~~CVS Caremark for CVS Health Corporation~~ from ~~March~~December ~~2011~~2017 through ~~December~~February ~~2019~~2023.

~~Samrat~~Tilak ~~S. Khichi~~Mandadi, age 5762, has been the Executive Vice President, ~~Chief~~Ventures ~~Policy~~and ~~Officer~~Chief Experience and ~~General~~Technology ~~Counsel~~Officer of CVS Health Corporation, ~~since~~or ~~February~~held ~~2023;~~the ~~Executive~~same ~~Vice~~role ~~President,~~with ~~Corporate~~a ~~Development~~different title, ~~Public~~since ~~Policy,~~July ~~Regulatory~~2022. ~~Affairs~~Prior ~~and~~to ~~General~~joining ~~Counsel~~the ofCompany, ~~Becton~~Mr. ~~Dickinson~~Mandadi ~~Company~~was ~~(“BD”),~~most arecently ~~global~~the ~~medical~~Chief ~~technology~~Strategy ~~company,~~Officer of MGM Resorts International from ~~December~~July ~~2017~~2021 through ~~February~~July ~~2023;~~2022 ~~Senior~~and the Executive Vice President, ~~General~~Digital ~~Counsel~~& ~~and~~Global ~~Secretary~~Chief Technology Officer of ~~C.R.~~Disney ~~Bard~~Parks, aExperiences ~~medical~~and ~~technology~~Products, ~~company~~a ~~that~~division ~~was~~of ~~acquired~~The ~~from~~Walt BDDisney Company, from ~~July~~March ~~2014~~2013 through ~~December~~July ~~2017~~2021.

~~Tilak~~Steven ~~Mandadi~~H. Nelson, age 6167, has been the Executive Vice President, ~~Ventures~~ and ~~Chief Digital~~President, ~~Data,~~Aetna ~~Analytics and Technology Officer~~ of CVS Health Corporation since ~~July~~November ~~2022;~~2024. Prior to joining the Company, Mr. Nelson was most recently the Chief ~~Strategy~~Executive Officer of ChenMed LLC (“ChenMed”), ~~MGM~~a ~~Resorts~~health ~~International~~care provider focused on senior citizens, from ~~July~~February ~~2021~~2024 through ~~July~~August ~~2022~~2024; ~~Executive~~President ~~Vice~~of ChenMed, from August 2023 through January 2024; President of JenCare Senior Medical Center, ~~Digital~~a &ChenMed ~~Global~~company, from September 2022 through August 2023; and Co-Chairman and Chief ~~Technology~~Executive Officer, ~~Disney~~of ~~Parks,~~Duly ~~Experiences~~Health and ~~Products~~Care, a large multispecialty independent provider group, from ~~March~~July ~~2013~~2020 through ~~July~~September ~~2021~~2022.

~~Steven~~Brian HO. ~~Nelson~~Newman, age 6657, has been the Executive Vice President and ~~President,~~Chief ~~Aetna~~Financial Officer of CVS Health Corporation since ~~November~~May ~~2024;~~2025. ~~Chief~~Prior ~~Executive~~to ~~Officer,~~joining ~~ChenMed~~the ~~LLC (“ChenMed”)~~Company, aMr. ~~health~~Newman ~~care~~was ~~provider~~most ~~focused~~recently onthe ~~senior~~Executive ~~citizens,~~Vice ~~from February 2024 through August 2024;~~ President, ~~ChenMed, from August 2023 through January 2024; President, JenCare Senior Medical Center, a ChenMed company, from September 2022 through August 2023; Co-Chairman~~ and Chief ~~Executive~~Financial Officer of ~~Duly~~United ~~Health~~Parcel ~~and Care~~Service, aInc. ~~large multispecialty independent provider group,~~ from ~~July~~September ~~2020~~2019 through ~~September~~May ~~2022~~2024.

Prem S. Shah, age 4546, has been the Executive Vice President and Group President of CVS Health Corporation since November 2024;. Prior to his current role with the Company, Mr. Shah was most recently the Executive Vice President and Chief Pharmacy Officer of CVS Health Corporation from November 2021 through November 2024 and President or Co-President of Retail from January 2022 through November 2024;. Mr. Shah was the Executive Vice President, Specialty and Product Innovation, CVS Caremark from August 2018 through November 2021~~; Vice President - Specialty Pharmacy, CVS Caremark from February 2013 through July 2018~~.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

CVS Health Corporation’s common stock is listed on the New York Stock Exchange under the symbol “CVS.”

Dividends

~~During~~The ~~2024, 2023 and 2022, the~~ quarterly cash dividend was $0.665, ~~$0.605~~per share in 2025 and 2024 and $0.55605 per share, ~~respectively~~in 2023. CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout ~~2025~~2026. Future dividends will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.

See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for information regarding CVS Health Corporation’s dividends.

Holders of Common Stock

As of February 54, ~~2025~~2026, there were 2120,~~818~~648 registered holders of the registrant’s common stock according to the records maintained by the registrant’s transfer agent.

Issuer Purchases of Equity Securities

The following share repurchase programs have been authorized by the Board:

In billionsAuthorization Date	Authorized		Remaining as ofDecember 31, ~~2024~~2025
November 17, 2022 (“2022 Repurchase Program”)	$	10.0	$	10.0
December 9, 2021 (“2021 Repurchase Program”)	10.0		1.5

Each of the share Repurchase Programs was effective immediately and permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions. Both the 2022 and 2021 Repurchase Programs can be modified or terminated by the Board at any time.

During the ~~years~~year ended December 31, ~~2024~~2025, ~~2023 and 2022,~~ the Company ~~repurchased~~did annot ~~aggregate~~repurchase ofany ~~39.7 million~~ shares of its common stock. ~~for~~During ~~approximately~~the ~~$3.0~~years ended December ~~billion~~31, 2024 and 2023, the Company repurchased an aggregate of 2239.87 million shares of common stock for approximately $23.0 billion and an aggregate of 3422.18 million shares of common stock for approximately $32.50 billion, respectively, each pursuant to the 2021 Repurchase Program. This activity includes the share repurchases under the ASR transactions described below.

Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $3.0 billion fixed dollar ASR with Morgan Stanley & Co. LLC ~~(“Morgan Stanley”)~~. Upon payment of the $3.0 billion purchase price on January 4, 2024, the Company received a number of shares of CVS Health Corporation’s common stock equal to 85% of the $3.0 billion notional amount of the ASR or approximately 31.4 million shares, which were placed into treasury stock in January 2024. The ASR was accounted for as an initial treasury stock transaction for $2.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus. In March 2024, the Company received approximately 8.3 million shares of CVS Health Corporation’s common stock, representing the remaining 15% of the $3.0 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury and the forward contract was reclassified from capital surplus to treasury stock in March 2024.

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initial treasury stock transaction for $1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus. In February 2023, the Company received approximately 5.4 million shares of CVS Health Corporation’s common stock, representing the remaining 20% of the $2.0 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in February 2023.

Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $1.5 billion fixed dollar ASR with Barclays Bank PLC. Upon payment of the $1.5 billion purchase price on January 4, 2022, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $1.5 billion notional amount of the ASR or approximately 11.6 million shares, which were placed into treasury stock in January 2022. The ASR was accounted for as an initial treasury stock transaction for $1.2 billion and a forward contract for $0.3 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus. In February 2022, the Company received approximately 2.7 million shares of CVS Health Corporation’s common stock, representing the remaining 20% of the $1.5 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in February 2022.

At the time they were received, the initial and final receipt of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for additional information regarding the Company’s share repurchases.

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Stock Performance Graph

The following graph compares the cumulative total shareholder return on CVS Health Corporation’s common stock (assuming reinvestment of dividends) with the cumulative total return on the S&P 500 Index, the S&P 500 ~~Food~~Consumer ~~and~~ Staples ~~Retailing~~Distribution & Retail Industry Group Index and the S&P 500 ~~Healthcare~~Health Care Sector ~~Group~~ Index from December 31, ~~2019~~2020 through December 31, ~~2024~~2025. The graph assumes a $100 investment in shares of CVS Health Corporation’s common stock on December 31, ~~2019~~2020.

	December 31,
	2019		2020		2021		2022		2023		2024
	2020		2021		2022		2023		2024		2025
CVS Health Corporation	$	100	$	95155	$	~~147~~143	$	~~136~~125	$	~~119~~74	$	70137
S&P 500 (1)	100		~~118~~129		~~152~~105		~~125~~133		~~157~~166		~~197~~196
S&P 500 Food & Staples Retailing Group Index (2)	100		116		146		131		151		204
S&P 500 Consumer Staples Distribution & Retail Industry Group Index (2)	100		125		112		130		176		191
S&P 500 Health Care Group Index (1) (3)	100		113		143		140		143		147
S&P 500 Health Care Sector Index (1) (3)	100		126		124		126		129		148

_____________________________________________

(1)Includes CVS Health Corporation.

(2)Includes 87 companies (COST, DG, DLTR, KR, SYY, TGT, ~~WBA,~~ WMT).

(3)Includes 6160 companies.

The year-ended values of each investment shown in the preceding graph are based on share price appreciation plus dividends, with the dividends reinvested as of the last business day of the month during which such dividends were ex-dividend. The calculations exclude trading commissions and taxes. Total shareholder returns from each investment can be calculated from the year-end investment values shown beneath the graph.

Item 6. Reserved

Not applicable.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (“MD&A”)

The following discussion and analysis should be read in conjunction with the audited consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K (this “10-K”), “Risk Factors” included in Item 1A of this 10-K and the “Cautionary Statement Concerning Forward-Looking Statements” in this 10-K.

Overview of Business

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a leading health solutions company building a world of health around every consumer it serves and connecting care so that it works for people wherever they are. As of December 31, ~~2024~~2025, the Company had ~~more~~approximately ~~than~~ 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics, and a leading pharmacy benefits manager with approximately 9087 million plan members and expanding specialty pharmacy solutions~~, and a dedicated senior pharmacy care business serving more than 800,000 patients per year~~. The Company also serves an estimated more than 3637 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company is creating new sources of value through its integrated model allowing it to expand into personalized, technology driven care delivery and health services, increasing access to quality care, delivering better health outcomes and lowering overall health care costs.

The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other, which are described below.

Overview of the Health Care Benefits Segment

The Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers through its Aetna® operations. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs and Medicaid health care management services. The Health Care Benefits segment’s primary customers, its members, primarily access the segment’s products and services through employer groups, government-sponsored plans or individually. The Health Care Benefits segment also serves customers who purchase products and services that are ancillary to its health insurance products. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” The Company also sold Insured plans directly to individual consumers through the individual public health insurance exchanges (“Public Exchanges”) inthrough 17the ~~states~~year asended of December 31, ~~2024~~2025. The Company exited the states in which Aetna operated on the Public Exchanges effective January 2026.

Overview of the Health Services Segment

The Health Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, through its CVS Caremark® operations and delivers health care services in its medical clinics, virtually, and in the home~~, and offers provider enablement solutions~~. PBM solutions include plan design offerings and administration, formulary management, retail pharmacy network management services, and specialty and mail order pharmacy services. In addition, the Company provides clinical services, disease management services, medical spend management and pharmacy and/or other administrative services for providers and federal 340B drug pricing program covered entities (“Covered Entities”). The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants and provides various administrative, management and reporting services to pharmaceutical manufacturers. ~~During~~The ~~2023,~~segment ~~the~~also ~~Company~~works ~~completed~~directly ~~the~~with ~~acquisition~~pharmaceutical ofmanufacturers ~~two~~to ~~key~~commercialize and/or co-produce high quality biosimilar products through its CordavisTM subsidiary. The Health Services segment’s health care delivery assets –include Signify Health, Inc. (“Signify Health”), a leader in health risk assessments, and value-based care ~~and provider enablement services~~, and Oak Street Health, Inc. (“Oak Street Health”), a leading multi-payor operator of value-based primary care centers serving Medicare eligible patients. The ~~Company also launched CordavisTM, a wholly owned subsidiary that works directly with pharmaceutical manufacturers to commercialize and/or co-produce high quality biosimilar products. The~~ Health Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, the U.S. Centers for Medicare & Medicaid Services (“CMS”), plans offered on public and private health insurance exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities.

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Overview of the Pharmacy & Consumer Wellness Segment

Overview of the Corporate/Other Segment

The Company presents the remainder of its financial results in the Corporate/Other segment, which primarily consists of:

•Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products.

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Results of Operations

The following information summarizes the Company’s results of operations for ~~2024~~2025 compared to ~~2023~~2024.

For discussion of the Company’s results of operations for ~~2023~~2024 compared to ~~2022~~2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023~~2024 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 7 12, ~~2024~~2025.

Summary of Consolidated Financial Results

							Change
	Year Ended December 31,						~~2024~~2025 vs. ~~2023~~2024				~~2023~~2024 vs. ~~2022~~2023
In millions	~~2024~~2025		~~2023~~2024		~~2022~~2023		$		%		$		%
Revenues:
Products	$	~~231~~249,~~521~~908	$	~~245~~231,~~138~~521	$	~~226~~245,~~616~~138	$	~~(13~~18,~~617)~~387	(57.6)9	%	$	18(13,~~522~~617)	8(5.26)	%
Premiums	~~122~~134,~~896~~751		99122,~~192~~896		8599,~~330~~192		2311,~~704~~855		~~23.~~9.6	%	1323,~~862~~704		1623.29	%
Services	1615,~~239~~175		1216,~~293~~239		912,~~683~~293		3(1,~~946~~064)		32(6.16)	%	23,~~610~~946		2732.01	%
Net investment income	2,~~153~~233		12,153		~~838~~1,153		~~1,000~~80		863.7	%	~~315~~1,000		3786.67	%
Total revenues	~~372~~402,~~809~~067		~~357~~372,~~776~~809		~~322~~357,~~467~~776		1529,~~033~~258		47.28	%	3515,~~309~~033		104.92	%
Operating costs:
Cost of products sold	~~206~~221,~~287~~167		~~217~~206,~~098~~287		~~196~~217,~~892~~098		~~(10~~14,~~811)~~880		(57.0)2	%	20(10,~~206~~811)		10(5.30)	%
Health care costs	~~115~~125,~~121~~538		86115,~~247~~121		7186,~~073~~247		2810,~~874~~417		339.50	%	1528,~~174~~874		2133.35	%
Operating expenses	4144,~~606~~977		3941,~~832~~706		3839,~~212~~832		13,~~774~~271		47.58	%	1,~~620~~874		4.27	%
Restructuring charges	1,179		507		—		672		132.5	%	507		100.0	%
Goodwill impairment	5,725		—		—		5,725		100.0	%	—		—	%
Opioid litigation charges	100		—		5,803		100		100.0	%	(5,803)		(100.0)	%
Restructuring charges	—		1,179		507		(1,179)		(100.0)	%	672		132.5	%
Loss on assets held for sale	—		~~349~~—		~~2,533~~349		~~(349)~~—		~~(100.0)~~—	%	(~~2,184~~349)		(86100.20)	%
Total operating costs	~~364~~397,~~293~~407		~~344~~364,~~033~~293		~~314~~344,~~513~~033		2033,~~260~~114		5.9.1	%	2920,~~520~~260		95.49	%
Operating income	84,~~516~~660		138,~~743~~516		713,~~954~~743		(53,~~227~~856)		(3845.03)	%	(5,~~789~~227)		72(38.80)	%
Interest expense	2(3,~~958~~119)		(2,~~658~~958)		(2,~~287~~658)		~~300~~(161)		11(5.34)	%	~~371~~(300)		16(11.23)	%
Gain on early extinguishment of debt	~~(491)~~—		—491		—		(491)		(100.0)	%	—491		—100.0	%
Other income	(99)		(88)		(169)		(11)		(12.5)	%	81		47.9	%
Gain on deconsolidation of subsidiary	483		—		—		483		100.0	%	—		—	%
Income before income tax provision	6,148		11,173		5,836		(5,025)		(45.0)	%	5,337		91.4	%
Other income	112		99		88		13		13.1	%	11		12.5	%
Income tax provision	1,562		2,805		1,509		(1,243)		(44.3)	%	1,296		85.9	%
Income before income tax provision	2,136		6,148		11,173		(4,012)		(65.3)	%	(5,025)		(45.0)	%
Net income	4,586		8,368		4,327		(3,782)		(45.2)	%	4,041		93.4	%
Income tax provision	408		1,562		2,805		(1,154)		(73.9)	%	(1,243)		(44.3)	%
Net (income) loss attributable to noncontrolling interests	28		(24)		(16)		52		216.7	%	(8)		(50.0)	%
Net income	1,728		4,586		8,368		(2,858)		(62.3)	%	(3,782)		(45.2)	%
Net income attributable to CVS Health	$	4,614	$	8,344	$	4,311	$	(3,730)	(44.7)	%	$	4,033	93.6	%
Net (income) loss attributable to noncontrolling interests	40		28		(24)		12		42.9	%	52		216.7	%
Net income attributable to CVS Health	$	1,768	$	4,614	$	8,344	$	(2,846)	(61.7)	%	$	(3,730)	(44.7)	%

Commentary - ~~2024~~2025 compared to ~~2023~~2024

Revenues

•Total revenues increased $1529.03 billion, or 47.28%, in ~~2024~~2025 compared to ~~2023~~2024. The increase in total revenues was driven by growth inacross ~~the~~all ~~Health~~operating ~~Care Benefits and Pharmacy & Consumer Wellness~~ segments~~, partially offset by a decline in the Health Services segment~~.

•Please see “Segment Analysis” later in this MD&A for additional information about the revenues of the Company’s segments.

Operating expenses

•Operating expenses increased $13.83 billion, or 47.58%, in ~~2024~~2025 compared to ~~2023~~2024. The increase in operating expenses was primarily due to ~~increased~~approximately ~~operating~~$1.2 ~~expenses~~billion of legacy litigation charges related to ~~support~~two ~~growth~~court indecisions associated with the Company’s past business practices, a $320 million opioid litigation charge related to a change in the Company’s accrual for ongoing opioid litigation matters and $288 million of pre-tax losses on Accountable Care assets, all recorded in 2025, as well as increased investments in colleagues and capabilities in 2025.

•Please see “Segment Analysis” later in this MD&A for additional information about the operating expenses of the Company’s segments.

Operating income

•Operating income decreased $53.29 billion, or 3845.03%, in ~~2024~~2025 compared to ~~2023~~2024. The decrease in operating income was primarily ~~driven~~due byto a ~~decrease~~$5.7 inbillion ~~adjusted~~goodwill ~~operating~~impairment ~~income,~~charge ~~which~~related isto ~~primarily~~ the ~~result~~Health ofCare ~~elevated~~Delivery ~~Medicare~~reporting ~~utilization~~unit inand the ~~Health~~$1.2 ~~Care~~billion ~~Benefits~~of ~~segment,~~legacy ~~and~~litigation ancharges ~~increase~~described inabove, ~~restructuring~~both ~~charges~~recorded ~~compared~~during tothe ~~2023~~year ended December 31, 2025. These decreases ~~in operating income~~ were partially offset by animproved ~~increase~~operating performance in ~~net~~the ~~realized~~Health ~~capital~~Care ~~gains,~~Benefits segment and the absence of aapproximately $~~349~~1.2 ~~million~~billion ~~loss on assets held for sale related to the write-down~~ of ~~the~~restructuring ~~Company’s~~charges ~~Omnicare® long-term care business~~ recorded in the prior year~~, as well as lower acquisition-related transaction and integration costs~~.

•Please see “Segment Analysis” later in this MD&A for additional information about the operating results of the Company’s segments.

Interest expense

•Interest expense increased $~~300~~161 million, or 115.34%, in ~~2024~~2025 compared to ~~2023, due to higher debt in the year ended December 31,~~ 2024 primarily as a result of long-term debt issuances in December 2024 and August 2025. See “Liquidity and Capital Resources” later in this ~~report~~MD&A for additional information.

Gain on early extinguishment of debt

•During 2024, the gain on early extinguishment of debt relates to the Company’s repayment of $2.6 billion of its outstanding senior notes pursuant to its tender offers for such senior notes in December 2024, which resulted in a gain on early extinguishment of debt of $491 million. See Note 10 ‘‘Borrowings and Credit Agreements’’ included in Item 8 of this 10-K for additional information.

Gain on deconsolidation of subsidiary

•During 2025, the gain on deconsolidation of subsidiary relates to Omnicare, LLC (“Omnicare”), a wholly-owned indirect subsidiary of CVS Health Corporation, and certain of its subsidiary entities (collectively, the “Omnicare Entities”). See Note 1 ‘‘Significant Accounting Policies’’ included in Item 8 of this 10-K for additional information on the deconsolidation of the Omnicare Entities.

Income tax provision

•The Company’s effective income tax rate ~~increased~~decreased to 2519.41% in ~~2024~~2025 compared to 25.14% in the prior year. ~~The~~due ~~increase~~to ~~was~~a ~~primarily~~worthless ~~due~~stock todeduction ~~the~~associated ~~mix~~with ofa ~~pre-tax~~subsidiary ~~income~~that ~~and~~filed ~~certain~~for ~~non-deductible~~bankruptcy ~~expenses~~in 2025, partially offset by ~~basis~~the ~~differences~~impact onof the ~~disposition~~goodwill ofimpairment ~~certain~~charge ~~investments~~ and ~~utilization~~the oflegacy ~~tax~~litigation ~~credits~~charges inrecorded ~~the~~during ~~year~~2025 ~~ended~~described ~~December 31~~above, ~~2024~~both ~~compared~~of towhich ~~the~~were ~~prior~~not ~~year~~deductible for income tax purposes.

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~~2025~~Trends ~~Outlook~~and Uncertainties

The Company believes you should consider the following ~~key~~ business and regulatory trends and uncertainties:

~~Key~~ Business Trends and Uncertainties

•~~The~~Utilization ~~Company~~is ~~expects~~expected ~~medical~~to ~~membership~~persist ~~declines~~at elevated levels in ~~its~~2026. ~~Medicare~~Although ~~and~~the ~~individual~~level ~~exchange~~of ~~products.~~utilization ~~Medical~~is ~~membership~~difficult ~~disruptions~~to ~~may~~accurately ~~result~~predict, inutilization ~~volatility~~beyond incurrent elevated levels may pressure the Company’s ~~financial~~Health ~~results.~~Care Benefits segment and its health care delivery assets in its Health Services segment in 2026.

•~~Utilization~~The ~~persisted~~Company atcontinues ~~elevated~~to ~~levels~~share ~~through~~with ~~the~~clients ~~fourth~~a ~~quarter~~larger portion of ~~2024.~~rebates, ~~Although~~fees ~~the~~and/or ~~level~~discounts ofreceived ~~utilization~~from ispharmaceutical ~~difficult~~manufacturers, toand ~~accurately~~typically ~~predict,~~offers atclients ~~this~~minimum ~~time,~~pricing ~~the~~guarantees ~~Company~~that ~~expects~~cannot ~~that~~always ~~continued~~be ~~elevated~~achieved. ~~utilization~~The ~~will~~Company also faces increasing pressure ~~its~~from ~~Health~~pharmaceutical ~~Care~~manufacturers ~~Benefits~~with ~~segment~~respect to the calculation and ~~its~~collection ~~health~~of ~~care~~rebates. ~~delivery~~In ~~assets~~addition, inmarketplace ~~its~~dynamics ~~Health~~and ~~Services~~regulatory ~~segment~~changes ~~into~~have ~~2025~~limited the Company’s ability to offer plan sponsors pricing that includes retail network “differential” or “spread.” The Company expects these trends to continue.

•~~Increases~~Changes in ~~utilization~~the ~~beyond~~economic environment, including inflation, the ~~Company’s~~implementation ~~projections~~of ~~may~~new ~~also~~tariffs ~~result~~or changes in tariffs, including the ~~Company~~impact ~~having~~of totariffs ~~record~~on ~~premium~~trade ~~deficiency~~relations ~~reserves~~between ~~within~~the inU.S. and foreign countries, and labor and other market dynamics could create exposure for increased costs and supply chain disruptions that can adversely impact consumer demand, the ~~Health~~ability ~~Care~~to ~~Benefits~~deliver ~~segment~~client ~~during~~savings ~~2025~~or the Company’s financial results.

•~~The~~Consumer ~~Company’s~~spend ~~Medicaid~~management ~~business~~and isa ~~experiencing~~decline ~~medical~~in ~~cost~~consumer ~~pressures~~discretionary spending, ~~largely~~as ~~driven~~well byas ~~higher~~a ~~than~~shift ~~expected acuity following the resumption of member redeterminations. While the Company continues~~ to ~~work~~value, ~~closely~~grocery ~~with~~and ~~its~~digital ~~state~~retailers, ~~partners~~could todrive ~~ensure~~lower ~~the~~front ~~underlying~~store ~~trends~~sales ~~are reflected~~ in ~~its~~the ~~premium~~Pharmacy ~~rates~~& ~~going~~Consumer ~~forward,~~Wellness ~~it is uncertain when these pressures will be fully offset by state rate updates~~segment.

~~•The~~Regulatory ~~Company’s~~Trends ~~individual~~and exchange business is subject to a risk adjustment program whereby the Company estimates its ultimate risk adjustment receivable or payable based on the risk of its qualified plan members relative to the average risk of members of other qualified plans in comparable markets. Changes in the Company’s risk relative to the markets’ risk, including changes resulting from volatility in membership, could adversely impact the Company’s estimate of its risk adjustment receivable or payable.Uncertainties

•The Company ~~continues~~is exposed to ~~share~~funding ~~with~~and ~~clients~~regulation aof, ~~larger~~and ~~portion~~changes ofin ~~rebates,~~government ~~fees~~policy with respect to and/or ~~discounts~~funding ~~received~~or ~~from~~regulation ~~pharmaceutical manufacturers. In addition~~of, ~~marketplace~~the ~~dynamics~~various Medicare and ~~regulatory~~Medicaid ~~changes~~programs ~~have~~in ~~limited~~which the Company’s ~~ability~~participates, toincluding ~~offer~~changes ~~plan~~in ~~sponsors~~the ~~pricing~~amounts ~~that~~payable ~~includes~~to ~~retail~~us ~~network~~under ~~“differential”~~those programs and/or ~~“spread.”~~new ~~The~~reforms ~~Company~~or ~~expects~~surcharges ~~these~~on ~~trends~~existing programs, including changes to ~~continue~~applicable risk adjustment mechanisms.

•~~Glucagon-like~~Legislation ~~peptide~~and/or 1regulations ~~(“GLP-1”)~~seeking ~~supply~~to ~~disruptions,~~regulate PBM activities in a comprehensive manner have been proposed or enacted in a majority of states and on the ~~associated~~federal ~~impact~~level. onThis ~~product~~legislative ~~mix,~~and regulatory activity could ~~pressure~~adversely affect the Company’s ability to ~~deliver~~conduct ~~savings~~business toon ~~clients~~commercially ~~and~~reasonable ~~could~~terms ~~impact~~and the Company’s ~~results~~ability to standardize its PBM products and services across state lines.

•Regulatory changes or consumer sentiment shift for immunizations may negatively impact national demand impacting financial results.

•Implementation of new tariffs create exposure for increased costs and supply chain disruptions that can adversely impact consumer demand or financial results.

•Consumer spend management and a decline in consumer discretionary spending, as well as a shift to value, grocery and digital retailers, could drive lower front store sales.

•Future financial performance will be influenced by a number of factors including competitive demand for products and services, legislative and regulatory considerations, and labor and other market dynamics, including inflation. The Company evaluates and adjusts its approach in each of the markets it serves, considering all relevant factors.

•The Company expects benefits from ongoing enterprise-wide cost savings initiatives and investments in efficiencies, which aim to reduce the Company’s operating cost structure in a way that improves the consumer experience and is sustainable. During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and generate expected cost savings of over $500 million in 2025. Refer to Note 3 ‘‘Restructuring’’ for actions implemented under the plan.

•Changes in conditions in the U.S. and global capital markets can significantly and adversely affect interest rates and capital market conditions which could result in increased financing costs.

•Actions taken by ratings agencies, including changes in the Company’s debt ratings, could impact the Company’s future borrowing costs, access to capital markets and new store operating lease costs.

Key Regulatory Trends and Uncertainties

•The Company is exposed to funding and regulation of, and changes in government policy with respect to and/or funding or regulation of, the various Medicare programs in which the Company participates, including changes in the amounts payable to us under those programs and/or new reforms or surcharges on existing programs, including changes to applicable risk adjustment mechanisms.

•Legislation and/or regulations seeking to regulate PBM activities in a comprehensive manner have been proposed or enacted in a majority of states and on the federal level. This legislative and regulatory activity could adversely affect

the Company’s ability to conduct business on commercially reasonable terms and the Company’s ability to standardize its PBM products and services across state lines.

For additional information regarding these and other trends and uncertainties, see Item 1A, “Risk Factors” and Part I, Item 1 “Business - Government Regulation.”

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Segment Analysis

The following discussion of segment operating results is presented based on the Company’s reportable segments in accordance with the accounting guidance for segment reporting and is consistent with the segment disclosure in Note 19 ‘‘Segment Reporting’’ included in Item 8 of this 10-K.

The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Company’s segments maintain separate financial information, and the Chief Operating Decision Maker (“the “CODM”) evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The Company’s CODM is the Chief Executive Officer. The CODM evaluates the performance of the Company’s segments based on adjusted operating income (loss). Adjusted operating income is defined as operating income (loss) as measured by accounting principles generally accepted in the United States of America (“GAAP”) excluding the impact of amortization of intangible assets, net realized capital gains or losses and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance. See the reconciliations of operating income (loss) (GAAP measure) to adjusted operating income (loss) below for further context regarding the items excluded from operating income in determining adjusted operating income. The CODM uses adjusted operating income as its principal measure of segment performance as it enhances the CODM’s ability to compare past financial performance with current performance and analyze underlying business performance and trends. Non-GAAP financial measures the Company discloses, such as consolidated adjusted operating income, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP.

The following isare areconciliations ~~reconciliation~~ of financial measures of the Company’s segments to the consolidated totals:

In millions	Health CareBenefits		HealthServices (1)		Pharmacy & Consumer Wellness		Corporate/Other		IntersegmentEliminations (2)		ConsolidatedTotals
2025
Total revenues	$	143,354	$	190,425	$	139,367	$	484	$	(71,563)	$	402,067
Adjusted operating income (loss)	2,939		7,151		6,040		(1,687)		—		14,443
2024
Total revenues	$	130,665	$	173,605	$	124,500	$	451	$	(56,412)	$	372,809
Adjusted operating income (loss)	307		7,243		5,774		(1,348)		—		11,976
2023
Total revenues	$	105,646	$	186,843	$	116,763	$	451	$	(51,927)	$	357,776
Adjusted operating income (loss)	5,577		7,312		5,963		(1,318)		—		17,534
2022
Total revenues	$	91,350	$	169,576	$	108,596	$	530	$	(47,585)	$	322,467
Adjusted operating income (loss)	6,338		6,781		6,531		(1,613)		—		18,037

_____________________________________________

(1)Total revenues of the Health Services segment include approximately $1110.49 billion, $1311.74 billion and $1213.67 billion of retail co-payments for ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively. See Note 1 ‘‘Significant Accounting Policies’’ included in Item 8 of this 10-K for additional information about retail co-payments.

(2)Intersegment revenue eliminations relate to intersegment revenue generating activities that occur between the Health Care Benefits segment, the Health Services segment, and/or the Pharmacy & Consumer Wellness segment.

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The following are reconciliations of consolidated operating income (~~loss) (~~GAAP measure) to consolidated adjusted operating income ~~(loss)~~, as well as reconciliations of segment GAAP operating income (loss) to segment adjusted operating income (loss):

	Year Ended December 31, 2024
	Year Ended December 31, 2025
In millions	Health CareBenefits		HealthServices		Pharmacy &ConsumerWellness		Corporate/Other		ConsolidatedTotals
Operating income (loss) (GAAP measure)	$	~~(984)~~1,793	$	~~6,937~~220	$	4,~~770~~860	$	(2,~~207~~213)	$	84,~~516~~660
Amortization of intangible assets (1)	1,~~175~~155		~~595~~569		~~253~~249		23		21,~~025~~976
Net realized capital (gains) losses (2)	97(13)		(~~289~~25)		—		7582		~~(117)~~44
Acquisition-related integration costs (3)	—		—		—		~~243~~117		~~243~~117
Restructuring charges (4)	—		—		747		432		1,179
Goodwill impairment (4)	—		5,725		—		—		5,725
Office real estate optimization charges (5)	19		—		4		7		30
Health Care Delivery clinic closure charge (5)	—		83		—		—		83
Opioid litigation charges (6)	—		—		—		100		100
Opioid litigation charge (6)	—		—		—		320		320
Adjusted operating income (loss)	$	307	$	7,243	$	5,774	$	(1,348)	$	11,976
Office real estate optimization charges (7)	4		—		2		4		10
Legacy litigation charges (8)	—		291		929		—		1,220
Loss on Accountable Care assets (9)	—		288		—		—		288
Adjusted operating income (loss)	$	2,939	$	7,151	$	6,040	$	(1,687)	$	14,443

	Year Ended December 31, 2023
	Year Ended December 31, 2024
In millions	Health CareBenefits		HealthServices		Pharmacy &ConsumerWellness		Corporate/Other		ConsolidatedTotals
Operating income (loss) (GAAP measure)	$	~~3,949~~(984)	$	6,~~842~~937	$	54,~~349~~770	$	(2,~~397~~207)	$	138,~~743~~516
Amortization of intangible assets (1)	1,~~177~~175		~~465~~595		~~260~~253		32		12,~~905~~025
Net realized capital losses (2)	402		—		5		90		497
Net realized capital (gains) losses (2)	97		(289)		—		75		(117)
Acquisition-related transaction and integration costs (3)	—		—		—		487		487
Acquisition-related integration costs (3)	—		—		—		243		243
Restructuring charges (4)	—		—		—		507		507
Opioid litigation charge (6)	—		—		—		100		100
Office real estate optimization charges (5)	49		5		—		(8)		46
Office real estate optimization charges (7)	19		—		4		7		30
Loss on assets held for sale (7)	—		—		349		—		349
Restructuring charges (10)	—		—		747		432		1,179
Adjusted operating income (loss)	$	~~5,577~~307	$	7,~~312~~243	$	5,~~963~~774	$	(1,~~318~~348)	$	1711,~~534~~976

	Year Ended December 31, 2022
	Year Ended December 31, 2023
In millions	Health CareBenefits		HealthServices		Pharmacy &ConsumerWellness		Corporate/Other		ConsolidatedTotals
Operating income (loss) (GAAP measure)	$	53,~~270~~949	$	6,~~612~~842	$	35,~~560~~349	$	(72,~~488~~397)	$	713,~~954~~743
Amortization of intangible assets (1)	1,~~180~~177		~~167~~465		~~435~~260		3		1,~~785~~905
Net realized capital losses (2)	~~225~~402		—		445		5190		~~320~~497
Office real estate optimization charges (5)	97		2		—		18		117
Acquisition-related transaction and integration costs (3)	—		—		—		487		487
Opioid litigation charges (6)	—		—		—		5,803		5,803
Office real estate optimization charges (7)	49		5		—		(8)		46
Loss on assets held for sale (7)	41		—		2,492		—		2,533
Restructuring charges (10)	—		—		—		507		507
Gain on divestiture of subsidiaries (8)	(475)		—		—		—		(475)
Loss on assets held for sale (11)	—		—		349		—		349
Adjusted operating income (loss)	$	65,~~338~~577	$	67,~~781~~312	$	65,~~531~~963	$	(1,~~613~~318)	$	1817,~~037~~534

_____________________________________________

(1)The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-

7769

financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

(2)The Company’s net realized capital gains and losses arise from various types of transactions, primarily in the course of managing a portfolio of assets that support the payment of insurance liabilities. Net realized capital gains and losses are reflected in net investment income (loss) within each segment. These capital gains and losses are the result of investment decisions, market conditions and other economic developments that are unrelated to the performance of the Company’s business, and the amount and timing of these capital gains and losses do not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Accordingly, the Company believes excluding net realized capital gains and losses enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends.

(3)In 2025 and 2024, the acquisition-related integration costs relate to the acquisitions of Signify Health and Oak Street Health. In 2023, the acquisition-related transaction and integration costs relate to the acquisitions of Signify Health and Oak Street Health. The acquisition-related transaction and integration costs are reflected in operating expenses within the Corporate/Other segment.

(4)In ~~2024~~2025, the ~~restructuring~~goodwill ~~charges are primarily comprised of a store~~ impairment charge, ~~corporate~~relates workforce optimization costs, including severance and employee-related costs, other asset impairment and related charges associated with the discontinuation of certain non-core assets, and a stock-based compensation charge. During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to ~~streamline and simplify~~ the ~~organization,~~Health ~~improve~~Care ~~efficiency~~Delivery ~~and~~reporting ~~reduce~~unit costs. In connection with this restructuring plan, the Company completed a strategic review of its retail business and determined that it plans to close 271 retail stores in 2025, and, accordingly, it recorded a store impairment charge to write down the associated operating or financing lease right-of-use assets and property and equipment. In addition, during the third quarter of 2024, the Company also conducted a review of its various strategic assets and determined that it would discontinue the use of certain non-core assets, at which time impairment losses were recorded to write down the carrying value of these assets to the Company’s best estimate of their fair value. In 2023, the restructuring charges are primarily comprised of severance and employee-related costs, asset impairment charges and a stock-based compensation charge. The restructuring charges associated with the store impairments are reflected within the ~~Pharmacy~~Health &Services ~~Consumer Wellness~~ segment, other asset impairments and related charges are reflected within the Corporate/Other and Pharmacy & Consumer Wellness segments and corporate workforce optimization costs, including severance and employee-related costs, as well as stock-based compensation changes, are reflected within the Corporate/Other segment.

(5)In ~~2024~~2025, ~~2023 and 2022,~~ the ~~office~~Health ~~real~~Care ~~estate~~Delivery ~~optimization~~clinic ~~charges~~closure charge primarily ~~relate~~relates to the ~~abandonment~~write down of ~~leased real estate and the related right~~long-~~of-use~~lived assets ~~and property and equipment~~ in connection with the ~~Company’s~~planned ~~evaluation~~closure of ~~corporate~~certain ~~office~~existing ~~real~~Oak ~~estate~~Street ~~space~~Health clinics in ~~response~~2026, toas ~~its~~well ~~ongoing~~as ~~flexible~~associated ~~work~~severance ~~arrangement~~and employee-related costs expected to be incurred. The ~~office~~Health ~~real~~Care ~~estate~~Delivery ~~optimization~~clinic ~~charges~~closure ~~are~~charge is reflected in operating expenses within ~~each~~the Health Services segment.

(6)In 2025 and 2024, the opioid litigation ~~charge~~charges ~~relates~~relate to achanges ~~change~~ in the Company’s accrual related to ongoing opioid litigation matters. In 2022, the opioid litigation charges relate to agreements to resolve substantially all opioid claims against the Company by certain states and governmental entities. The opioid litigation charges are reflected within the Corporate/Other segment.

(7)In ~~2023 and 2022~~2025, ~~the~~2024 ~~loss on assets held for sale relates to the LTC business within the Pharmacy & Consumer Wellness segment. During 2022, the Company determined that its LTC business was no longer a strategic asset~~ and committed to a plan to sell it, at which time the LTC business met the criteria for held-for-sale accounting and its net assets were accounted for as assets held for sale. The carrying value of the LTC business was determined to be greater than its estimated fair value less costs to sell and, accordingly, the Company recorded a loss on assets held for sale during 2022. During the first quarter of 2023, ~~a loss on assets held for sale was recorded to write down~~ the ~~carrying~~office ~~value~~real ofestate ~~the~~optimization ~~LTC~~charges ~~business~~primarily torelate ~~the Company’s best estimate of the ultimate selling price which reflected its estimated fair value less costs~~ to ~~sell. As of~~ the ~~third~~abandonment ~~quarter~~ of ~~2023,~~leased ~~the~~real ~~Company~~estate ~~determined~~and the ~~LTC~~related ~~business no longer met the criteria for held~~right-~~for~~of-~~sale~~use ~~accounting~~assets and, ~~accordingly,~~property ~~the~~and ~~net~~equipment ~~assets~~in ~~associated~~connection with the ~~LTC business were reclassified to held and used at their respective fair values. During 2022, the loss on assets held for sale also relates to the~~ Company’s ~~international~~evaluation ~~health~~of ~~care~~corporate ~~business~~office ~~domiciled~~real inestate ~~Thailand~~space ~~(“Thailand business”), which was included~~ in ~~the~~response ~~Commercial~~to ~~Business~~its ~~reporting~~ongoing ~~unit~~flexible inwork ~~the Health Care Benefits segment~~arrangement. The ~~sale~~office ofreal ~~the~~estate ~~Thailand~~optimization ~~business~~charges ~~closed~~are reflected in ~~the~~operating ~~second~~expenses ~~quarter~~within ofeach ~~2022, and the ultimate loss on the sale was not material~~segment.

(8)In ~~2022~~2025, the ~~gain on divestiture of subsidiaries represents the pre-tax gain on the sale of bswift, which the~~ Company ~~sold~~recorded inlegacy ~~November~~litigation ~~2022,~~charges ~~and~~related ~~the~~to ~~pre-tax~~two ~~gain~~court ondecisions ~~the~~associated ~~sale~~with ofits ~~PayFlex,~~past ~~which~~business ~~the Company sold in June 2022~~practices. ~~The gains on divestitures are reflected as a reduction of operating expenses within the Health Care Benefits segment.~~

78In April 2025, a jury found Omnicare and CVS Health Corporation liable in connection with alleged violations of the federal False Claims Act related to dispensing practices by Omnicare from 2010, prior to its acquisition by the Company in 2015, through 2018. Damages were found only with respect to Omnicare. Accordingly, the Company recorded a litigation charge of $387 million during the first quarter of 2025. During the second quarter of 2025, the Company recorded a charge of $542 million, reflecting penalties assessed under the False Claims Act. These litigation charges are reflected in operating expenses within the Pharmacy & Consumer Wellness segment.

In June 2025, a court found certain subsidiaries of CVS Health Corporation liable for damages in connection with a complaint filed in February 2014, in which the government declined to intervene, related to PBM direct and indirect remuneration reporting practices for two clients from 2010 through 2016, which the Company has since modified. In connection with this court decision, the Company recorded a litigation charge of $291 million during the second quarter of 2025. This litigation charge is reflected in operating expenses within the Health Services segment.

(9)In 2025, the loss on the wind down and sale of Accountable Care assets represents the pre-tax loss on the divestiture of the Company’s Medicare Shared Savings Program (“MSSP”) operations, which the Company sold in March 2025, as well as costs incurred in connection with the process of winding down the Company’s Accountable Care Organization Realizing Equity, Access and Community Health (“ACO REACH”) operations. The loss on Accountable Care assets is reflected in operating expenses within the Health Services segment.

(10)In 2024, the restructuring charges are primarily comprised of a store impairment charge, corporate workforce optimization costs, including severance and employee-related costs, other asset impairment and related charges associated with the discontinuation of certain non-core assets, and a stock-based compensation charge. During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and reduce costs. In connection with this restructuring plan, the Company completed a strategic review of its retail business and determined that it planned to close additional retail stores in 2025, and, accordingly, it recorded a store impairment charge to write down the associated lease right-of-use assets and property and equipment. In addition, during the third quarter of 2024, the Company also conducted a review of its various strategic assets and determined that it would discontinue the use of certain non-core assets, at which time impairment losses were recorded to write down the carrying value of these assets to the Company’s best estimate of their fair value. In 2023, the restructuring charges are primarily comprised of severance and employee-related costs, asset impairment charges and a stock-based compensation charge. The restructuring charges associated with the store impairments are reflected within the Pharmacy & Consumer Wellness segment, other asset impairments and related charges are reflected within the Corporate/Other and Pharmacy & Consumer Wellness segments and corporate workforce optimization costs, including severance and employee-related costs, as well as the stock-based compensation charge, are reflected within the Corporate/Other segment.

(11)In 2023, the loss on assets held for sale relates to the long-term care pharmacy (“LTC”) business, which was included within the Pharmacy & Consumer Wellness segment prior to the deconsolidation of the Omnicare Entities in September 2025. During 2022, the Company determined that its LTC business was no longer a strategic asset and committed to a plan to sell it, at which time the LTC business met the criteria for held-for-sale accounting and its net assets were accounted for as assets held for sale. During the first quarter of 2023, a loss on assets held for sale was recorded to write down the carrying value of the LTC business to the Company’s best estimate of the ultimate selling price which reflected its estimated fair value less costs to sell. As of the third quarter of 2023, the Company determined the LTC business no longer met the criteria for held-for-sale accounting and, at that time, the net assets associated with the LTC business were reclassified to held and used at their respective fair values.

Health Care Benefits Segment

The following table summarizes the Health Care Benefits segment’s performance for the respective periods:

										Change
	Year Ended December 31,									~~2024~~2025 vs. ~~2023~~2024					~~2023~~2024 vs. ~~2022~~2023
In millions, except percentages and basis points (“bps”)	~~2024~~2025			~~2023~~2024			~~2022~~2023			$			%		$			%
Revenues:
Premiums	$	~~122~~134,~~849~~749		$	99122,~~144~~849		$	8599,~~274~~144		$	2311,~~705~~900		~~23.~~9.7	%	$	1323,~~870~~705		1623.39	%
Services	6,~~343~~823			56,~~737~~343			5,~~600~~737			~~606~~480			107.6	%	~~137~~606			210.46	%
Net investment income	1,~~473~~782			~~765~~1,473			~~476~~765			~~708~~309			9221.50	%	~~289~~708			6092.75	%
Total revenues	~~130~~143,~~665~~354			~~105~~130,~~646~~665			91105,~~350~~646			2512,~~019~~689			239.7	%	1425,~~296~~019			1523.67	%
Health care costs	~~113~~122,~~659~~949			85113,~~504~~659			7185,~~473~~504			289,~~155~~290			328.92	%	1428,~~031~~155			1932.69	%
MBR (Health care costs as a % of premium revenues)	9291.52		%	8692.25		%	8386.82%			~~630~~(130)		bps			~~240~~630		bps
Operating expenses	$	1718,~~990~~612		$	1617,~~193~~990		$	1416,~~566~~193		$	~~1,797~~622		113.15	%	$	1,~~627~~797		11.21	%
Operating expenses as a % of total revenues	13.80		%	1513.38		%	15.93		%
Loss on assets held for sale	$	—		$	—		$	41		$	—		—	%	$	(41)		(100.0)	%
Operating income (loss)	$	1,793		$	(984)		$	3,949		$	2,777		282.2	%	$	(4,933)		(124.9)	%
Operating income (loss)	(984)			3,949			5,270			(4,933)			(124.9)	%	(1,321)			(25.1)	%
Operating income (loss) as a % of total revenues	1.3		%	(0.8)		%	3.7		%
Operating income (loss) as a % of total revenues	(0.8)		%	3.7		%	5.8		%
Adjusted operating income (1)	$	2,939		$	307		$	5,577		$	2,632		857.3	%	$	(5,270)		(94.5)	%
Adjusted operating income (1)	$	307		$	5,577		$	6,338		$	(5,270)		(94.5)	%	$	(761)		(12.0)	%
Adjusted operating income as a % of total revenues	2.1		%	0.2		%	5.3		%
Adjusted operating income as a % of total revenues	0.2		%	5.3		%	6.9		%
Premium revenues (by business):
Government	$	88103,~~433~~362		$	7088,~~094~~433		$	6370,~~141~~094		$	1814,~~339~~929		2616.29	%	$	618,~~953~~339		1126.02	%
Commercial	3431,~~416~~387			2934,~~050~~416			2229,~~133~~050			5(3,~~366~~029)			18(8.58)	%	65,~~917~~366			3118.35	%

_____________________________________________

(1)See “Segment Analysis” above in this MD&A for a reconciliation of operating income (loss) (GAAP measure) to adjusted operating income for the Health Care Benefits segment, which represents the Company’s principal measure of segment performance.

Commentary - ~~2024~~2025 compared to ~~2023~~2024

Revenues

•Total revenues increased $2512.07 billion, or 239.7%, in ~~2024~~2025 compared to ~~2023,~~2024 primarily driven by ~~growth~~increases in the ~~Medicare~~Government ~~and~~business, ~~individual~~largely ~~exchange~~due ~~product~~to ~~lines~~the impact of the Inflation Reduction Act (“IRA”) on the Medicare Part D program.

Medical Benefit Ratio

•Medical benefit ratio is calculated as health care costs divided by premium revenues and represents the percentage of premium revenues spent on medical benefits for the Company’s Insured members. Management uses MBR to assess the underlying business performance and underwriting of its insurance products, understand variances between actual results and expected results and identify trends in period-over-period results. MBR provides management and investors with information useful in assessing the operating results of the Company’s Insured Health Care Benefits products.

•The MBR ~~increased~~decreased ~~from~~to 8691.2% in 2025 compared to 92.5% in ~~2024 compared to~~ the prior year primarily driven by ~~increased~~improved ~~utilization,~~underlying ~~the~~performance ~~unfavorable~~in ~~impact of~~ the ~~Company’s~~Government ~~Medicare~~business ~~Advantage star ratings for the 2024 payment year~~ and higher ~~acuity~~favorable inprior ~~Medicaid~~year ~~following the resumption of redeterminations~~development.

Operating expenses

•Operating expenses in the Health Care Benefits segment include selling, general and administrative expenses and depreciation and amortization expenses.

•Operating expenses increased $~~1.8~~622 ~~billion~~million, or 113.15%, in ~~2024~~2025 compared to ~~2023.~~2024 ~~The increase in operating expenses was~~ primarily driven by increased ~~operating~~investments ~~expenses~~ to support the ~~growth~~segment’s ~~across the~~ business. ~~Operating expenses as a percentage of total revenues decreased to 13~~operations.~~8% in the year ended December 31, 2024 compared to 15.3% in the prior year, reflecting improved fixed cost leverage across the business due to membership growth.~~

Adjusted operating income

•Adjusted operating income ~~decreased~~increased $52.36 billion, ~~or 94.5%,~~ in ~~2024~~2025 compared to ~~2023.~~2024 ~~The decrease in adjusted operating income was~~ primarily driven by ~~increased~~improved ~~utilization,~~underlying ~~the~~performance ~~unfavorable~~in ~~impact of~~ the ~~Company’s~~Government ~~Medicare~~business ~~Advantage star ratings for the 2024 payment year~~ and higher ~~acuity~~favorable inprior ~~Medicaid.~~year ~~These decreases were partially offset by an increase in net investment income and improved fixed cost leverage across the business due to membership growth~~development.

~~The following table summarizes the Health Care Benefits segment’s medical membership as of December 31, 2024 and 2023:~~71

	2024			2023
In thousands	Insured	ASC	Total	Insured	ASC	Total
Medical membership:
Commercial	4,691	14,160	18,851	4,252	14,087	18,339
Medicare Advantage	4,447	—	4,447	3,460	—	3,460
Medicare Supplement	1,282	—	1,282	1,343	—	1,343
Medicaid	2,094	421	2,515	2,073	444	2,517
Total medical membership	12,514	14,581	27,095	11,128	14,531	25,659
Supplemental membership information:
Medicare Prescription Drug Plan (standalone)			4,882			6,081

The following table summarizes the Health Care Benefits segment’s medical membership as of December 31, 2025 and 2024:


	2025			2024
In thousands	Insured	ASC	Total	Insured	ASC	Total
Medical membership:
Commercial	3,447	15,350	18,797	4,691	14,160	18,851
Medicare Advantage	4,267	—	4,267	4,447	—	4,447
Medicare Supplement	1,202	—	1,202	1,282	—	1,282
Medicaid	1,952	373	2,325	2,094	421	2,515
Total medical membership	10,868	15,723	26,591	12,514	14,581	27,095

Supplemental membership information:
Medicare Prescription Drug Plan (stand-alone)			4,041			4,882

Medical Membership

•Medical membership represents the number of members covered by the Company’s Insured and ASC medical products and related services at a specified point in time. Management uses this metric to understand variances between actual medical membership and expected amounts as well as trends in period-over-period results. This metric provides management and investors with information useful in understanding the impact of medical membership on segment total revenues and operating results.

•Medical membership as of December 31, ~~2024~~2025 ofdecreased ~~27.1~~504,000 ~~million increased 1.4 million~~ members compared with December 31, ~~2023~~2024, reflecting ~~increases~~declines in the ~~Medicare~~individual exchange and ~~Commercial~~Government product lines, partially offset by an increase in Commercial ASC membership.

Medicare Update

On April 17, ~~2024~~2025, CMS issued its final notice detailing final ~~2025~~2026 Medicare Advantage payment rates. Final ~~2025~~2026 Medicare Advantage rates resulted in an expected average ~~decrease~~increase in revenue for the Medicare Advantage industry of 05.1606%, excluding the CMS estimate of Medicare Advantage risk score trend. On January 1026, ~~2025~~2026, CMS issued an advance notice detailing proposed ~~2026~~2027 Medicare Advantage payment rates. The ~~2026~~2027 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 20.2309%, excluding the CMS estimate of Medicare Advantage risk score trend. CMS intends to publish the final ~~2026~~2027 rate announcement no later than April 76, ~~2025~~2026.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively the “ACA”) ties a portion of each Medicare Advantage plan’s reimbursement to the plan’s “star ratings.” Plans must have a star rating of four or higher (out of five) to qualify for bonus payments. CMS released the Company’s ~~2025~~2026 star ratings in October ~~2024~~2025. The Company’s ~~2025~~2026 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in ~~2026~~2027. Based on the Company’s membership as of December ~~2024~~2025, 88more than 81% of the Company’s Medicare Advantage members were in plans with ~~2025~~2026 star ratings of at least 4.0 stars, compared to 9188% of the Company’s Medicare Advantage members being in plans with ~~2024~~2025 star ratings of at least 4.0 stars based on the Company’s membership as of December ~~2023~~2024.

8072

Health Services Segment

The following table summarizes the Health Services segment’s performance for the respective periods:

										Change
	Year Ended December 31,									~~2024~~2025 vs. ~~2023~~2024				~~2023~~2024 vs. ~~2022~~2023
In millions, except percentages	~~2024~~2025			~~2023~~2024			~~2022~~2023			$		%		$		%
Revenues:
Products	$	~~162~~180,~~436~~927		$	~~180~~162,~~608~~436		$	~~167~~180,~~019~~608		$	(18,~~172)~~491	~~(10~~11.1)4	%	$	13(18,~~589~~172)	8(10.1)	%
Services	109,~~884~~478			610,~~236~~884			26,~~557~~236			4(1,~~648~~406)		74(12.59)	%	34,~~679~~648		~~143~~74.95	%
Net investment income (loss) (1)	~~285~~20			~~(1)~~285			—(1)			~~286~~(265)		NM(93.0)	%	~~(1)~~286		~~(100.0)~~NM	%
Total revenues	~~173~~190,~~605~~425			~~186~~173,~~843~~605			~~169~~186,~~576~~843			~~(13~~16,~~238)~~820		(79.1)7	%	17(13,~~267~~238)		10(7.21)	%
Cost of products sold	~~160~~175,~~036~~634			~~175~~160,~~424~~036			~~160~~175,~~738~~424			(15,~~388)~~598		(89.8)7	%	14(15,~~686~~388)		9(8.18)	%
Health care costs	34,~~407~~834			13,~~607~~407			—1,607			1,~~800~~427		~~112~~41.09	%	1,~~607~~800		~~100~~112.0	%
Operating expenses	34,~~225~~012			23,~~970~~225			2,~~226~~970			~~255~~787		824.64	%	~~744~~255		338.46	%
Operating expenses as a % of total revenues	12.91		%	1.69		%	1.36		%
Operating income	$	6,937		$	6,842		$	6,612		$	95	1.4	%	$	230	3.5	%
Goodwill impairment	$	5,725		$	—		$	—		$	5,725	100.0	%	$	—	—	%
Operating income as a % of total revenues	4.0		%	3.7		%	3.9		%
Operating income	220			6,937			6,842			(6,717)		(96.8)	%	95		1.4	%
Adjusted operating income (2)	$	7,243		$	7,312		$	6,781		$	(69)	(0.9)	%	$	531	7.8	%
Operating income as a % of total revenues	0.1		%	4.0		%	3.7		%
Adjusted operating income as a % of total revenues	4.2		%	3.9		%	4.0		%
Adjusted operating income (2)	$	7,151		$	7,243		$	7,312		$	(92)	(1.3)	%	$	(69)	(0.9)	%
Adjusted operating income as a % of total revenues	3.8		%	4.2		%	3.9		%
Revenues (by distribution channel):
Pharmacy network (3)	$	91101,~~650~~775		$	~~112~~91,~~718~~650		$	~~102~~112,~~968~~718		$	~~(21~~10,~~068)~~125	~~(18~~11.7)0	%	$	9(21,~~750~~068)	9(18.57)	%
Mail & specialty (4)	7079,~~877~~334			6770,~~992~~877			6367,~~825~~992			28,~~885~~457		411.29	%	42,~~167~~885		64.52	%
Other	109,~~793~~296			610,~~134~~793			26,~~783~~134			4(1,~~659~~497)		76(13.09)	%	34,~~351~~659		~~120~~76.40	%
Net investment income (loss) (1)	~~285~~20			~~(1)~~285			—(1)			~~286~~(265)		NM(93.0)	%	~~(1)~~286		~~(100.0)~~NM	%
Pharmacy claims processed (5)	1,~~917~~900.67			21,~~344~~917.36			2,~~335~~344.13			(~~426~~16.79)		(180.29)	%	9(426.27)		0(18.42)	%
Generic dispensing rate (5)	87.4		%	87.6		%	87.4		%

_____________________________________________

(1)NM represents a percent change that is not meaningful.

(2)See “Segment Analysis” above in this MD&A for a reconciliation of operating income (GAAP measure) to adjusted operating income for the Health Services segment, which represents the Company’s principal measure of segment performance.

(3)Pharmacy network revenues relate to claims filled at retail and specialty retail pharmacies, including ~~the Company’s retail~~ pharmacies ~~and~~owned ~~LTC~~by ~~pharmacies~~the Company, as well as activity associated with Maintenance Choice, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS pharmacy retail store for the same price as mail order.

(4)Mail & specialty revenues relate to specialty mail claims inclusive of Specialty Connect® claims picked up at a retail pharmacy, as well as mail order and specialty claims fulfilled by the Pharmacy & Consumer Wellness segment.

(5)Includes an adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

Commentary - ~~2024~~2025 compared to ~~2023~~2024

Revenues

•Total revenues ~~decreased~~increased $1316.28 billion, or 79.17%, in ~~2024~~2025 compared to ~~2023.~~2024 ~~The decrease was~~ primarily driven by ~~the~~pharmacy ~~previously~~drug ~~announced~~mix ~~loss~~and ofbrand ainflation, ~~large~~partially ~~client~~offset ~~and~~by continued pharmacy client price improvements. These decreases were partially offset by pharmacy drug mix, increased contributions from the Company’s health care delivery assets, including the 2023 acquisitions of Oak Street Health and Signify Health, as well as growth in specialty pharmacy.

Operating expenses

•Operating expenses in the Health Services segment include selling, general and administrative expenses; and depreciation and amortization expense.

•Operating expenses increased $~~255~~787 million, or 824.64%, in ~~2024~~2025 compared to ~~2023~~2024. The increase was primarily ~~driven~~due byto ~~operating~~a ~~expenses~~$291 ~~associated~~million ~~with~~litigation ~~Oak~~charge, ~~Street~~$288 ~~Health~~million ~~which~~in ~~was~~pre-tax ~~acquired~~losses inon ~~May~~Accountable ofCare ~~2023,~~assets ~~including~~and ~~the~~an ~~amortization~~$83 ofmillion ~~acquired~~Health ~~intangible~~Care ~~assets~~Delivery clinic closure charge, all recorded during 2025.

8173

Goodwill impairment

•In 2025, the Company recorded a $5.7 billion goodwill impairment charge related to the Health Care Delivery reporting unit within the Health Services segment. See Note 6 ‘‘Goodwill and Other Intangibles’’ included in Item 8 of this 10-K for additional information.

Adjusted operating income

•Adjusted operating income decreased $6992 million, or 01.93%, in ~~2024~~2025 compared to ~~2023~~2024. The decrease in adjusted operating income was primarily driven by continued pharmacy client price improvements and the ~~previously~~impact ~~announced loss~~ of a ~~large~~higher ~~client.~~medical ~~These~~benefit ~~decreases~~ratio ~~were~~in ~~largely~~the Company’s health care delivery business, partially offset by improved purchasing economics and pharmacy drug mix.

•As you review the Health Services segment’s performance in this area, you should consider the following important information about the business:

•The Company’s efforts to (i) retain existing clients, (ii) obtain new business and (iii) maintain or improve the rebates, fees and/or discounts the Company receives from manufacturers, wholesalers and retail pharmacies continue to have an impact on adjusted operating income. In particular, competitive pressures in the PBM industry have caused the Company and other PBMs to continue to share with clients a larger portion of rebates, fees and/or discounts received from pharmaceutical manufacturers. In addition, marketplace dynamics and regulatory changes have limited the Company’s ability to offer plan sponsors pricing that includes retail network “differential” or “spread,” and the Company expects these trends to continue. The “differential” or “spread” is any difference between the drug price charged to plan sponsors, including Medicare Part D plan sponsors, by a PBM and the price paid for the drug by the PBM to the dispensing provider.

Pharmacy claims processed

•Pharmacy claims processed represents the number of prescription claims processed through the Company’s pharmacy benefits manager and dispensed by either its retail network pharmacies or the Company’s mail and specialty pharmacies. Management uses this metric to understand variances between actual claims processed and expected amounts as well as trends in period-over-period results. This metric provides management and investors with information useful in understanding the impact of pharmacy claim volume on segment total revenues and operating results.

•The Company’s pharmacy claims processed decreased 180.29% on a 30-day equivalent basis in ~~2024~~2025 compared to ~~2023 primarily driven by the previously announced loss of a large client~~2024.

~~Generic dispensing rate~~74

•Generic dispensing rate is calculated by dividing the Health Services segment’s generic claims processed by its total claims processed. Management uses this metric to evaluate the effectiveness of the business at encouraging the use of generic drugs when they are available and clinically appropriate, which aids in decreasing costs for client members and retail customers. This metric provides management and investors with information useful in understanding trends in segment total revenues and operating results.

•The Health Services segment’s generic dispensing rate decreased to 87.4% in 2024 compared to 87.6% in the prior year. The decrease in the segment’s generic dispensing rate was primarily driven by an increase in brand name GLP-1 pharmacy claims in 2024 compared to 2023.

Pharmacy & Consumer Wellness Segment

The following table summarizes the Pharmacy & Consumer Wellness segment’s performance for the respective periods:

										Change
	Year Ended December 31,									~~2024~~2025 vs. ~~2023~~2024				~~2023~~2024 vs. ~~2022~~2023
In millions, except percentages	~~2024~~2025			~~2023~~2024			~~2022~~2023			$		%		$		%
Revenues:
Products	$	~~122~~136,~~028~~575		$	~~113~~122,~~976~~028		$	~~104~~113,~~878~~976		$	814,~~052~~547	711.19	%	$	98,~~098~~052	8.7.1	%
Services	2,~~472~~792			2,~~792~~472			32,~~762~~792			(320)		~~(11~~12.5)9	%	(~~970~~320)		(2511.85)	%
Net investment income (loss)	—			~~(5)~~—			(445)			5—		~~100.0~~—	%	395		88100.60	%
Total revenues	~~124~~139,~~500~~367			~~116~~124,~~763~~500			~~108~~116,~~596~~763			714,~~737~~867		611.69	%	87,~~167~~737		76.56	%
Cost of products sold	99113,~~337~~583			9199,~~447~~337			8291,~~063~~447			714,~~890~~246		814.63	%	97,~~384~~890		118.46	%
Operating expenses	1920,~~646~~924			19,~~618~~646			2019,~~481~~618			281,278		06.15	%	~~(863)~~28		(40.2)1	%
Operating expenses as a % of total revenues	15.80		%	1615.8		%	1816.98		%
Restructuring charges	$	~~747~~—		$	—747		$	—		$	(747)	(100.0)	%	$	—747	—100.0	%
Loss on assets held for sale	—			~~349~~—			~~2,492~~349			~~(349)~~—		~~(100.0)~~—	%	(~~2,143~~349)		(86100.0)	%
Operating income	4,~~770~~860			54,~~349~~770			35,~~560~~349			~~(579)~~90		~~(10~~1.8)9	%	~~1,789~~(579)		50(10.38)	%
Operating income as a % of total revenues	3.85		%	43.68		%	34.36		%
Adjusted operating income (1)	$	56,~~774~~040		$	5,~~963~~774		$	65,~~531~~963		$	~~(189)~~266	(34.2)6	%	$	(~~568~~189)	(83.72)	%
Adjusted operating income as a % of total revenues	4.63		%	54.16		%	65.01		%
Revenues (by major goods/service lines):
Pharmacy	$	~~100~~115,~~687~~510		$	92100,~~111~~687		$	8392,~~480~~111		$	814,~~576~~823	914.37	%	$	8,~~631~~576	109.3	%
Front Store	21,~~522~~459			2221,~~458~~522			22,~~780~~458			(~~936~~63)		(40.23)	%	(~~322~~936)		(1.4.2)	%
Other	2,~~291~~398			2,~~199~~291			2,~~380~~199			92107		4.27	%	~~(181)~~92		(74.6)2	%
Net investment income (loss)	—			~~(5)~~—			(445)			5—		~~100.0~~—	%	395		88100.60	%
Prescriptions filled (2)	1,~~715~~808.58			1,~~649~~715.15			1,~~625~~649.41			6693.43		45.04	%	2366.74		14.50	%
Same store sales increase (decrease): (3)
Total	915.40		%	109.74		%	910.17		%
Pharmacy	1218.30		%	1312.63		%	913.56		%
Front Store	~~(2.~~1).2		%	0(2.31)		%	70.83		%
Prescription volume (2)	6.8.0		%	36.98		%	43.09		%
Generic dispensing rate (2)	88.9		%	88.4		%	87.4		%

_____________________________________________

(1)See “Segment Analysis” above in this MD&A for a reconciliation of operating income (GAAP measure) to adjusted operating income for the Pharmacy & Consumer Wellness segment, which represents the Company’s principal measure of segment performance.

(2)Includes an adjustment to convert 90‑day prescriptions to the equivalent of three 30‑day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

(3)Same store sales and prescription volume represent the change in revenues and prescriptions filled in the Company’s retail pharmacy stores that have been operating for greater than one year and digital sales initiated online or through mobile applications and fulfilled through the Company’s distribution centers, expressed as a percentage that indicates the increase or decrease relative to the comparable prior period. Same store metrics exclude revenues and prescriptions from ~~LTC and~~ infusion services operations and long-term care pharmacies. Management uses these metrics to evaluate the performance of existing stores on a comparable basis and to inform future decisions regarding existing stores and new locations. Same-store metrics provide management and investors with information useful in understanding the portion of current revenues and prescriptions resulting from organic growth in existing locations versus the portion resulting from opening new stores.

Commentary - ~~2024~~2025 compared to ~~2023~~2024

Revenues

•Total revenues increased $714.79 billion, or 611.69%, in ~~2024~~2025 compared to ~~2023~~2024. The increase was primarily driven by pharmacy drug mix and increased prescription volume, including ~~increased~~incremental ~~contributions~~volume resulting from ~~vaccinations.~~the ~~These~~Company’s ~~increases~~Rite ~~were~~Aid prescription file acquisitions, partially offset by continued pharmacy reimbursement pressure, and the impact of recent generic ~~introductions~~drug ~~and decreased~~ introductions.

8375

~~front~~•Pharmacy same store ~~volume~~sales increased 18.0% in 2025 compared to 2024. The increase was primarily driven by pharmacy drug mix, including ~~the~~branded ~~impact~~GLP-1 ofdrugs, aand ~~decrease~~the 8.0% increase in ~~store~~pharmacy ~~count~~same ~~and~~store ~~lower~~prescription ~~contributions~~volume ~~from~~on ~~COVID-19~~a ~~over~~30-~~the-counter~~day ~~(“OTC”)~~equivalent ~~test~~basis. ~~kits~~These ~~since~~increases ~~the~~were ~~expiration~~partially ofoffset by continued pharmacy reimbursement pressure and the ~~public~~impact ~~health~~of ~~emergency~~recent ingeneric ~~May~~drug ~~2023~~introductions.

•~~Pharmacy~~Front store same store sales increased 121.32% in ~~2024~~2025 compared to ~~2023~~2024. The increase was primarily driven by the 6.8% increase in pharmacy same store prescription volume on a 30-day equivalent basis, including increased contributions from vaccinations, and pharmacy drug mix, including branded GLP-1 drugs. These increases were partially offset by continued pharmacy reimbursement pressure and the impact of recent generic introductions.

•Front store same store sales decreased 2.1% in 2024 compared to 2023 primarily due to general softening of consumer demand and lower contributions from COVID-19 OTC test kits compared to the prior year.

Operating expenses

•Operating expenses in the Pharmacy & Consumer Wellness segment include payroll, employee benefits and occupancy costs associated with the segment’s stores and pharmacy fulfillment operations; selling expenses; advertising expenses; depreciation and amortization expense and certain administrative expenses.

•Operating expenses ~~remained~~increased ~~relatively~~$1.3 ~~consistent~~billion, or 6.5%, in ~~2024~~2025 compared to ~~the~~2024. ~~prior~~The ~~year~~increase atin operating expenses was primarily due to $~~19.6~~929 ~~billion,~~million asin ~~the~~litigation ~~absence~~charges ofrecorded ~~gains~~in ~~from~~2025 ~~anti~~related to the Omnicare long-~~trust~~term ~~legal~~care ~~settlements~~business and increased investments in the segment’s ~~operations~~colleagues and capabilities ~~were substantially offset by the decrease in store count~~.

Restructuring charges

•During 2024, the Company recorded $747 million of restructuring charges related to the write-down of lease right-of-use assets and property and equipment in connection with the Company’s restructuring program. See Note 3 ‘‘Restructuring’’ included in Item 8 of this 10-K for additional information.

Loss on assets held for sale

•During 2023, the Company recorded losses on assets held for sale of $349 million related to the write-down of its LTC business. See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ included in Item 8 of this 10-K for additional information.

Adjusted operating income

•Adjusted operating income ~~decreased~~increased $~~189~~266 million, or 34.26%, in ~~2024~~2025 compared to ~~2023~~2024 primarily driven by ~~continued~~increased ~~pharmacy~~prescription ~~reimbursement~~volume, ~~pressure~~including ~~and~~incremental ~~decreased~~volume ~~front~~resulting ~~store~~from ~~volume,~~the ~~including~~Company’s ~~lower~~Rite ~~contributions~~Aid ~~from~~prescription ~~COVID-19~~file ~~OTC~~acquisitions, ~~test~~as ~~kits~~well as favorable drug mix, ~~largely~~partially offset by ~~increased~~continued ~~prescription~~pharmacy ~~volume,~~reimbursement ~~including~~pressure and increased ~~contributions~~investments ~~from~~in ~~vaccinations,~~the assegment’s ~~well~~colleagues asand ~~improved drug purchasing~~capabilities.

•As you review the Pharmacy & Consumer Wellness segment’s performance in this area, you should consider the following important information about the business:

•The segment’s adjusted operating income has been adversely affected by the efforts of managed care organizations, PBMs and governmental and other third-party payors to reduce their prescription drug costs, including the use of restrictive networks, as well as changes in the mix of business within the pharmacy portion of the Pharmacy & Consumer Wellness segment. If the pharmacy reimbursement pressure accelerates, the segment may not be able to grow revenues, and its adjusted operating income could be adversely affected.

Prescriptions filled

•Prescriptions filled represents the number of prescriptions dispensed through the Pharmacy & Consumer Wellness segment’s retail pharmacies and infusion services operations, as well as through the Omnicare long-term care pharmacies ~~and~~prior ~~infusion~~to ~~services~~their ~~operations~~deconsolidation during the third quarter of 2025. Management uses this metric to understand variances between actual prescriptions dispensed and expected amounts as well as trends in period-over-period results. This metric provides management and investors with information useful in understanding the impact of prescription volume on segment total revenues and operating results.

•Prescriptions filled increased 45.04% on a 30-day equivalent basis in ~~2024~~2025 compared to ~~2023~~2024 primarily driven by increased utilization, ~~partially~~and ~~offset~~incremental byvolume resulting from the ~~decrease~~Company’s inRite ~~store~~Aid ~~count~~prescription file acquisitions.

~~Generic dispensing rate~~76

•Generic dispensing rate is calculated by dividing the Pharmacy & Consumer Wellness segment’s generic drug prescriptions filled by its total prescriptions filled. Management uses this metric to evaluate the effectiveness of the business at encouraging the use of generic drugs when they are available and clinically appropriate, which aids in decreasing costs for client members and retail customers. This metric provides management and investors with information useful in understanding trends in segment total revenues and operating results.

•The Pharmacy & Consumer Wellness segment’s generic dispensing rate increased to 88.9% in 2024 compared to 88.4% in the prior year. The increase in the segment’s generic dispensing rate was primarily driven by the impact of new generic drug introductions and the Company’s ongoing efforts to encourage plan members to use generic drugs when they are available and clinically appropriate.

Corporate/Other Segment

The following table summarizes the Corporate/Other segment’s performance for the respective periods:

							Change
	Year Ended December 31,						~~2024~~2025 vs. ~~2023~~2024				~~2023~~2024 vs. ~~2022~~2023
In millions, except percentages	~~2024~~2025		~~2023~~2024		~~2022~~2023		$		%		$		%
Revenues:
Premiums	$	4745	$	4847	$	5648	$	(12)	(24.13)	%	$	(81)	(142.31)	%
Services	98		9		689		—(1)		—(11.1)	%	~~(59)~~—		~~(86.8)~~—	%
Net investment income	~~395~~431		~~394~~395		~~406~~394		136		09.31	%	~~(12)~~1		~~(3.~~0).3	%
Total revenues	~~451~~484		451		~~530~~451		—33		—7.3	%	~~(79)~~—		~~(14.9)~~—	%
Cost of products sold	—		1—		421		~~(1)~~—		~~(100.0)~~—	%	(411)		(97100.60)	%
Health care costs	~~187~~177		~~210~~187		~~249~~210		(2310)		(115.03)	%	(3923)		(1511.70)	%
Operating expenses	12,~~939~~520		2,~~130~~039		12,~~924~~130		~~(191)~~481		(923.0)6	%	~~206~~(91)		10(4.73)	%
Restructuring charges	~~432~~—		~~507~~432		—507		(75432)		(14100.80)	%	~~507~~(75)		~~100~~(14.08)	%
Opioid litigation charges	100		—		5,803		100		100.0	%	(5,803)		(100.0)	%
Operating loss	(2,213)		(2,207)		(2,397)		(6)		(0.3)	%	190		7.9	%
Operating loss	(2,207)		(2,397)		(7,488)		190		7.9	%	5,091		68.0	%
Adjusted operating loss (1)	(1,687)		(1,348)		(1,318)		(339)		(25.1)	%	(30)		(2.3)	%
Adjusted operating loss (1)	(1,348)		(1,318)		(1,613)		(30)		(2.3)	%	295		18.3	%

_____________________________________________

(1)See “Segment Analysis” above in this MD&A for a reconciliation of Corporate/Other segment operating loss (GAAP measure) to adjusted operating loss, which represents the Company’s principal measure of segment performance.

Commentary - ~~2024~~2025 compared to ~~2023~~2024

Revenues

•Revenues primarily relate to products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products.

•Total revenues ofincreased $~~451~~33 million, inor ~~2024~~7.3%, ~~remained~~in ~~consistent~~2025 compared to ~~2023~~2024 primarily driven by higher net investment income driven by higher fixed income assets.

Restructuring charges

•During 2024, the Company recorded $432 million of restructuring charges comprised of $129 million of asset impairment and related charges associated with the write-down of certain non-core assets, $293 million of severance and employee-related costs associated with corporate workforce optimization and a $10 million stock-based compensation charge associated with the impacted employees. During 2023, the Company recorded $507 million in pre-tax restructuring charges, comprised of $344 million of severance and employee-related costs associated with corporate workforce optimization, $152 million of asset impairment charges and an $11 million stock-based compensation charge associated with the impacted employees. See Note 3 ‘‘Restructuring’’ included in Item 8 of this 10-K for additional information.

Adjusted operating loss

•Adjusted operating loss ofincreased $~~1.3~~339 ~~billion~~million, or 25.1%, in 2025 compared to 2024 ~~remained~~primarily ~~relatively~~driven ~~consistent~~by ~~compared~~increased toinvestments ~~2023~~in colleagues and capabilities.

8677

Liquidity and Capital Resources

Cash Flows

The Company maintains a level of liquidity sufficient to allow it to meet its cash needs in the short-term. Over the long term, the Company manages its cash and capital structure to maximize shareholder return, maintain its financial condition and maintain flexibility for future strategic initiatives. The Company continuously assesses its regulatory capital requirements, working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements, dividend payouts, potential share repurchases and future investments or acquisitions. The Company believes its operating cash flows, commercial paper program, credit facilities, as well as any potential future borrowings, will be sufficient to fund these future payments and long-term initiatives. As of December 31, ~~2024~~2025, the Company had approximately $8.65 billion in cash and cash equivalents, approximately $32.8 billion of which was held by the parent company or nonrestricted subsidiaries.

The net change in cash, cash equivalents and restricted cash for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 was as follows:

Change

Year Ended December 31,

~~2024~~2025 vs. ~~2023~~2024

~~2023~~2024 vs. ~~2022~~2023

In millions

~~2024~~2025

~~2023~~2024

~~2022~~2023

Net cash provided by operating activities

910,~~107~~639

139,~~426~~107

1613,~~177~~426

(41,~~319)~~532

~~(32~~16.2)8

(24,~~751~~319)

(1732.02)

Net cash used in investing activities

(75,~~613~~871)

(207,~~889~~613)

(520,~~047~~889)

131,~~276~~742

6322.69

~~(15~~13,~~842)~~276

~~(313~~63.9)6

Net cash provided by (used in) financing activities

(14,~~135~~940)

2(1,~~683~~135)

~~(10~~2,~~516)~~683

(3,~~818~~805)

(~~142~~335.32)

13(3,~~199~~818)

~~125~~(142.53)

Net increase (decrease) in cash, cash equivalents and restricted cash

~~359~~(172)

~~(4,780)~~359

~~614~~(4,780)

~~5,139~~(531)

~~107~~(147.59)

(5,~~394)~~139

~~(878~~107.5)

Commentary - ~~2024~~2025 compared to ~~2023~~2024

•Net cash provided by operating activities ~~decreased~~increased by $41.35 billion in ~~2024~~2025 compared to ~~2023~~2024 primarily due to the timing of payments and receipts and the impact of ~~elevated~~improved ~~Medicare~~operating ~~utilization~~performance onin ~~earnings~~the Health Care Benefits segment.

•Net cash used in investing activities decreased by $131.37 billion in ~~2024~~2025 compared to ~~2023~~2024 primarily due to ~~the~~higher ~~acquisitions~~proceeds offrom ~~Oak~~sales ~~Street~~and ~~Health~~maturities inof ~~May~~investments, ~~2023~~partially ~~and~~offset ~~Signify~~by ~~Health~~cash inpaid ~~March~~to ~~2023,~~acquire ~~partially~~the ~~offset~~prescription byfiles ~~higher~~of ~~net~~certain ~~purchases~~Rite ofAid ~~investments~~pharmacies. In addition, cash used in investing activities reflected the following activity:

•Gross capital expenditures were approximately $2.8 billion ~~and $3.0 billion~~ in ~~2024~~both 2025 and ~~2023, respectively~~2024. During ~~2024~~2025, approximately 7677% of the Company’s total capital expenditures were for technology, digital and other strategic initiatives and 2423% were for store, fulfillment and support facilities and equipment expansion and improvements.

•Net cash used in financing activities ~~was~~increased by $13.18 billion in ~~2024~~2025 compared to ~~net~~2024 ~~cash~~primarily ~~provided~~due byto ~~financing~~higher ~~activities~~repayments of ~~$2.7~~commercial ~~billion~~paper inand ~~2023. The change in cash provided by (used in) financing activities primarily related to~~ lower proceeds from the issuance of long-term ~~debt~~senior ~~and~~notes ~~higher repayments of long-term debt~~ in ~~2024 compared to the prior year~~2025, ~~as well as higher repurchases of common stock in 2024,~~ partially offset by higher ~~proceeds~~share ~~from~~repurchases ~~commercial~~and ~~paper~~repayments ~~borrowings~~of ~~compared~~long-term todebt ~~the~~in ~~prior year~~2024.

Included in net cash used in investing activities for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023 was the following store development activity: (1)

	2024	2023	2022
	2025	2024	2023
Total stores (beginning of year)	9,~~395~~135	9,~~674~~395	9,~~939~~674
New and acquired stores (2)	3987	39	4139
Closed stores (2)	(~~299~~243)	(~~318~~299)	(~~306~~318)
Total stores (end of year)	98,~~135~~979	9,~~395~~135	9,~~674~~395
Relocated stores (2)	35	53	45

_____________________________________________

(1)Includes retail drugstores and pharmacies within retail chains, primarily in Target Corporation (“Target”) stores.

(2)Relocated stores are not included in new and acquired stores or closed stores totals.

8778

Short-term Borrowings

Commercial Paper and Back-up Credit Facilities

The Company ~~had~~did ~~$2.1~~not ~~billion~~have ofany commercial paper outstanding ~~at a weighted average interest rate of 4.98%~~ as of December 31, ~~2024~~2025. The Company had $~~200~~2.1 ~~million~~billion of commercial paper outstanding at a weighted interest rate of 4.3198% as of December 31, ~~2023~~2024. In connection with its commercial paper program, the Company maintains athree $2.5 billion, five-year unsecured back-up revolving credit ~~facility~~facilities, which ~~expires~~expire onin May ~~11, 2027, a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 16,~~ 2028, 2029 and ~~a $2~~2030.5 ~~billion, five-year unsecured back-up revolving credit facility, which expires on May 16, 2029.~~ The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage. As of December 31, ~~2024~~2025 and ~~2023~~2024, there were no borrowings outstanding under any of the Company’s back-up credit facilities.

Term Loan Agreement

On March 25, 2024, the Company entered into a 364-day $3.0 billion term loan credit agreement. The term loan credit agreement allowed for borrowings at various rates that were dependent, in part, on the Company’s public debt ratings. On May 9, 2024, following the issuance of the $5.0 billion in senior notes described under “Long-term Borrowings” below, the term loan credit agreement terminated. There were no borrowings under the term loan credit agreement through the date of termination.

On May 1, 2023, the Company entered into a 364-day $5.0 billion term loan agreement. The term loan agreement allowed for borrowings at various rates that were dependent, in part, on the Company’s debt ratings. On May 2, 2023, the Company borrowed $5.0 billion at an interest rate of approximately 6.2% under the term loan agreement to fund a portion of the Oak Street Health acquisition purchase price. On June 2, 2023, the Company repaid the outstanding balance under the term loan agreement.

Federal Home Loan Bank of Boston (“FHLBB”)

A subsidiary of the Company is a member of the FHLBB. As a member, the subsidiary has the ability to obtain cash advances, subject to certain minimum collateral requirements. The maximum borrowing capacity available from the FHLBB as of December 31, ~~2024~~2025 was approximately $1.23 billion. As of December 31, ~~2024~~2025 and ~~2023~~2024, there were no outstanding advances from the FHLBB.

Long-term Borrowings

2025 Notes

On August 15, 2025, the Company issued $750 million aggregate principal amount of 5.0% senior notes due September 2032, $1.5 billion aggregate principal amount of 5.45% senior notes due September 2035, $1.25 billion aggregate principal amount of 6.2% senior notes due September 2055 and $500 million aggregate principal amount of 6.25% senior notes due September 2065 for total proceeds of approximately $4.0 billion, net of discounts and underwriting fees. The net proceeds of these offerings were used to repay existing indebtedness, including borrowings under the Company’s commercial paper program, as well as for general corporate purposes.

2024 Notes

On December 10, 2024, the Company issued $2.25 billion aggregate principal amount of 7.0% fixed-to-fixed rate series A junior subordinated notes due March 2055 and $750 million aggregate principal amount of 6.75% fixed-to-fixed rate series B junior subordinated notes due December 2054 for total proceeds of approximately $3.0 billion, net of discounts and underwriting fees. The series A junior subordinated notes bear interest at 7.0% per year until March 10, 2030, at which time the rate will reset March 10th of every fifth year, provided that the interest rate will not reset below the initial interest rate. The series B junior subordinated notes bear interest at 6.75% per year until December 10, 2034, at which time the rate will reset December 10th of every fifth year, provided that the interest rate will not reset below the initial interest rate. The series A and series B junior subordinated notes pay interest semi-annually and may be redeemed at any time beginning 90 days prior to their respective first interest rate reset date and on any interest payment date thereafter, in whole or in part at a defined redemption price plus accrued interest. The net proceeds of these offerings were used for the early extinguishment of certain of the Company’s senior notes as described below and the remaining proceeds after the early extinguishment of debt were used for general corporate purposes.

On May 9, 2024, the Company issued $1.0 billion aggregate principal amount of 5.4% senior notes due June 2029, $1.0 billion aggregate principal amount of 5.55% senior notes due June 2031, $1.25 billion aggregate principal amount of 5.7% senior notes due June 2034, $750 million aggregate principal amount of 6.0% senior notes due June 2044 and $1.0 billion aggregate principal amount of 6.05% senior notes due June 2054 for total proceeds of approximately $5.0 billion, net of discounts and underwriting fees. The net proceeds of these offerings were used for general corporate purposes.

2023 Notes

On June 2, 2023, the Company issued $1.0 billion aggregate principal amount of 5.0% senior notes due January 2029, $750 million aggregate principal amount of 5.25% senior notes due January 2031, $1.25 billion aggregate principal amount of 5.3% senior notes due June 2033, $1.25 billion aggregate principal amount of 5.875% senior notes due June 2053 and

$750 million aggregate principal amount of 6.0% senior notes due June 2063 for total proceeds of approximately $4.9 billion, net of discounts and underwriting fees. The net proceeds of these offerings were used, along with cash on hand, to repay the outstanding balance under the term loan agreement described above.

On February 21, 2023, the Company issued $1.5 billion aggregate principal amount of 5.0% senior notes due February 2026, $1.5 billion aggregate principal amount of 5.125% senior notes due February 2030, $1.75 billion aggregate principal amount of 5.25% senior notes due February 2033 and $1.25 billion aggregate principal amount of 5.625% senior notes due February 2053 for total proceeds of approximately $6.0 billion, net of discounts and underwriting fees. The net proceeds of these offerings were used to fund general corporate purposes, including a portion of the Signify Health acquisition purchase price.

Oak Street Health Convertible Notes

Prior to the Oak Street Health acquisition, Oak Street Health held 0% convertible senior notes with an aggregate principal amount of $920 million (the “Convertible Notes”), which were assumed by the Company in connection with the Oak Street Health acquisition. The Oak Street Health acquisition constituted a fundamental change in the Convertible Notes giving the holders the right to require the Company to repurchase the Convertible Notes. The repurchase price was an amount in cash equal to 100% of the principal amount of the Convertible Notes. On May 31, 2023, the Company issued a notice of repurchase to the holders of the Convertible Notes. In connection with this notice, $917 million of the Convertible Notes were submitted for repurchase and settled on July 21, 2023. Substantially all of the remaining $3 million of the Convertible Notes were submitted for repurchase and settled on October 20, 2023.

Gain on Early Extinguishment of Debt

In December 2024, pursuant to a cash tender offer, the Company repaid approximately $2.6 billion of its outstanding senior notes for a cash payment of approximately $2.0 billion. The senior notes purchased include: $226 million of its 4.1% senior notes due March 2025, $398 million of its 4.125% senior notes due April 2040, $883 million of its 2.7% senior notes due August 2040, $274 million of its 4.125% senior notes due November 2042, $463 million of its 3.875% senior notes due August 2047 and $351 million of its 4.25% senior notes due April 2050. In connection with the purchase of such senior notes, the Company recognized a total gain on early extinguishment of debt of $491 million, net of unamortized deferred financing costs and incurred fees.

August 2040, $274 million of its 4.125% senior notes due November 2042, $463 million of its 3.875% senior notes due August 2047 and $351 million of its 4.25% senior notes due April 2050. In connection with the purchase of such senior notes, the Company recognized a total gain on early extinguishment of debt of $491 million, net of unamortized deferred financing costs and incurred fees.

See Note 10 ‘‘Borrowings and Credit Agreements’’ included in Item 8 of this 10-K for additional information about debt issuances and debt repayments.

Derivative Financial Instruments

The Company uses derivative financial instruments in order to manage interest rate and foreign exchange risk and credit exposure. The Company’s use of these derivatives is generally limited to hedging risk and has principally consisted of using interest rate swaps, treasury rate locks, forward contracts, futures contracts, warrants, put options and credit default swaps.

Debt Covenants

The Company’s back-up revolving credit facilities and unsecured senior notes (see Note 10 ‘‘Borrowings and Credit Agreements’’ included in Item 8 of this 10-K) contain customary restrictive financial and operating covenants. These covenants do not include an acceleration of the Company’s debt maturities in the event of a downgrade in the Company’s credit ratings. The Company does not believe the restrictions contained in these covenants materially affect its financial or operating flexibility. As of December 31, ~~2024~~2025, the Company was in compliance with all of its debt covenants.

Debt Ratings

As of December 31, ~~2024~~2025, the Company’s long-term debt was rated “BBB” by Fitch Ratings, Inc. (“Fitch”), “Baa3” by Moody’s Investors Service, Inc. (“Moody’s”) and “BBB” by Standard & Poor’s Financial Services LLC (“S&P”), and its commercial paper program was rated “F2” by Fitch, “P-3” by Moody’s and “A-2” by S&P. InThe ~~August 2024, Moody’s and S&P changed their~~ outlook on the Company’s long-term debt ~~from~~is “~~Stable~~Negative” toby ~~“Negative.”~~both InFitch ~~October~~and ~~2024,~~S&P ~~Moody’s~~and ~~placed~~“Stable” ~~the~~by ~~Company~~Moody’s. ~~long-term~~In ~~debt~~assessing ~~ratings and~~ the Company’s ~~commercial~~credit ~~paper~~strength, ~~program~~the onCompany ~~review~~believes ~~for~~that ~~downgrade. Subsequently~~Fitch, ~~in December 2024,~~ Moody’s ~~downgraded~~and ~~the~~S&P ~~Company’s~~considered, ~~long-term~~among ~~debt~~other ~~rating~~things, ~~to “Baa3” and~~ the Company’s ~~commercial~~capital ~~paper~~structure ~~rating to “P3”~~ and ~~changed~~financial ~~their~~policies, ~~outlook~~as onwell ~~the~~as ~~Company~~its toconsolidated ~~“Stable”.~~balance ~~In December 2024~~sheet, ~~Fitch~~its ~~initiated~~historical ~~ratings~~acquisition ~~coverage~~activity ~~on the Company~~ and ~~assigned~~other afinancial ~~first-time~~information, ~~“BBB”~~including ~~rating to~~ the Company’s ~~long-term~~expectations ~~debt~~for ~~and~~future aearnings ~~“F2”~~and ~~rating~~cash toflows. Although the Company’s ~~commercial~~currently ~~paper~~believes ~~program~~its ~~with~~long-term ~~the~~debt ~~outlook~~ratings onwill ~~the~~remain ~~Company~~investment ofgrade, ~~“Negative”.~~it Incannot ~~assessing~~predict the ~~Company’s~~future ~~credit~~actions ~~strength,~~of ~~the Company believes that~~ Moody’s, S&P and/or Fitch. ~~considered,~~The ~~among~~Company’s ~~other~~debt ~~things~~ratings have a direct impact on its future borrowing costs, ~~the~~access ~~Company’s~~to capital ~~structure~~markets and ~~financial~~new store operating lease costs.

policies, as well as its consolidated balance sheet, its historical acquisition activity and other financial information, including the Company’s expectations for future earnings and cash flows. Although the Company currently believes its long-term debt ratings will remain investment grade, it cannot predict the future actions of Moody’s, S&P and/or Fitch. The Company’s debt ratings have a direct impact on its future borrowing costs, access to capital markets and new store operating lease costs.

Share Repurchase Programs

The following share repurchase programs have been authorized by CVS Health Corporation’s Board of Directors (the “Board”):

The following share repurchase programs have been authorized by the Board:


In billions Authorization Date	Authorized		Remaining as of December 31, 2025
November 17, 2022 (“2022 Repurchase Program”)	$	10.0	$	10.0
December 9, 2021 (“2021 Repurchase Program”)	10.0		1.5

In billionsAuthorization Date	Authorized		Remaining as ofDecember 31, 2024
November 17, 2022 (“2022 Repurchase Program”)	$	10.0	$	10.0
December 9, 2021 (“2021 Repurchase Program”)	10.0		1.5

initial treasury stock transaction for $2.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus. In March 2024, the Company received approximately 8.3 million shares of CVS Health Corporation’s common stock, representing the remaining 15% of the $3.0 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury and the forward contract was reclassified from capital surplus to treasury stock in March 2024.

Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $2.0 billion fixed dollar ASR with Citibank, N.A. Upon payment of the $2.0 billion purchase price on January 4, 2023, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $2.0 billion notional amount of the ASR or approximately 17.4 million shares, which were placed into treasury stock in January 2023. The ASR was accounted for as an initial treasury stock transaction for $1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus. In February 2023, the Company received approximately 5.4 million shares of CVS Health Corporation’s common stock, representing the remaining 20% of the $2.0 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in February 2023.

Dividends

~~During~~The ~~2024,~~quarterly ~~2023~~cash ~~and~~dividend ~~2022~~declared by the ~~quarterly~~Board ~~cash dividend~~ was $0.665, ~~$0.605~~per share in 2025 and 2024 and $0.55605 per share, ~~respectively~~in 2023. CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout ~~2025~~2026. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.

9181

Future Cash Requirements

The following table summarizes certain estimated future cash requirements under the Company’s various contractual obligations at December 31, ~~2024~~2025, in total and disaggregated into current and long-term obligations. The table below does not include future payments of claims to health care providers or pharmacies because certain terms of these payments are not determinable at December 31, ~~2024~~2025 (for example, the timing and volume of future services provided under fee-for-service arrangements and future membership levels for capitated arrangements).

In millions

Total

Current

Long-Term

Operating lease liabilities (1)

2119,~~189~~387

2,~~683~~626

1816,~~506~~761

Finance lease liabilities (1)

21,~~038~~960

~~144~~139

1,~~894~~821

Contractual lease obligations with Target (2)

2,~~217~~268

—

2,~~217~~268

Commercial paper (3)

2,119

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Filing Compare · CVS HEALTH Corp