CVS 10-K & 10-Q changes, risk factors and insider trading

•Our health care delivery businesses face unique risksrisks.

•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.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, whichand could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes.

•Data governance failures orfailures, the failure or disruption of our information technology or infrastructureinfrastructure, a cyberattack or other information security incident 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. The use of AI and related technology may also increase exposure to reputational, cybersecurity, data privacy, legal, regulatory and operational risks.

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 benefitsbenefit 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,products 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 benefitsbenefit 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.

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 benefitsbenefit costs over time, and future amendments to the ACA that increase the uninsured population may amplify this issue.

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.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.

•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 benefitsbenefit costs; causing customers and potential customers of our Health Care Benefits segment, particularly smaller employers and individuals, to foregoforgo 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 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.locations.

•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 benefitsbenefit 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 causing an increasingincrease in the prevalence of high deductiblehigh-deductible health plans and health plan designs favoring co-insurance over co-payments.

•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.

•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 cancelledcanceled 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.

•WeFrom requestedtime to time we request increases in our premium rates in our Commercial Health Care Benefits business for 2025 and expect 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 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 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 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.

•Our retail pharmacy, specialty pharmacy and LTCspecialty 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.

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 Publicpublic Exchangesexchanges 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.

Our health care delivery businesses, which we expanded with acquisitions to include health risk assessments,assessments value-basedand primary care andservices, provider enablement services through our Signify Health business, and additionalincluding senior-focused value-based primary care services for Medicare eligible patients through our Oak Street Health business,patients, face unique risks.risks which include, but are not limited to, the following:

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

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

•the regulatory and business risks associated with participation in certain government health care programs, including, among others, the MSSP and ACO REACH models,programs 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 useused to calculate an individual’s risk adjustment factor or a change to how patient-level risk is determined for CMS programs;

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

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

•reductions in the quality ratings of Medicare health plans Oakthe Street HealthCompany serves could result in a shift of patients from, or the termination of, a health plan Oakthe Street HealthCompany 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 Street Health recordsrecorded or receipt of overpayments, which may subject itthe Company to repayment obligations and penalties;

•geographic concentration of its primary care centers;

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

•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,cybersecurity and compliance with applicable laws and regulations, among others.

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 thanapproximately 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics,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.solutions. 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 Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers.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 statesyear as ofended December 31, 2024.2025. The Company exited the states in which Aetna operated on the Public Exchanges effective January 2026.

The Health Services segment provides a full range of pharmacy benefit management (“PBM”) solutions,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.home. 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. DuringThe 2023,segment thealso Companyworks completeddirectly thewith acquisitionpharmaceutical ofmanufacturers twoto keycommercialize 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,assessments and value-based care and provider enablement services,care, 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, CMS,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.

The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy® retail pharmacieslocations and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, diagnostic testingprograms 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 thanapproximately 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.

•Total revenues increased $15.0$29.3 billion, or 4.2%,7.8%, in 20242025 compared to 2023.2024. The increase in total revenues was driven by growth inacross theall Healthoperating Care Benefits and Pharmacy & Consumer Wellness segments, partially offset by a decline in the Health Services segment.segments.

•Interest expense increased $300$161 million, or 11.3%,5.4%, in 20242025 compared to 2023, due to higher debt in the year ended December 31, 2024 primarily as a result of long-term debt issuances in 2024.December 2024 and August 2025. See “Liquidity and Capital Resources” later in this reportMD&A for additional information.

Key Business Trends and Uncertainties

KeyThe RegulatoryCompany Trendsbelieves you should consider the following business and Uncertaintiesregulatory 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 and Medicaid 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.

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 a reconciliationreconciliations of financial measures of the Company’s segments to the consolidated totals:

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

(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- GAAPnon-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.

(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.

(89)In 2022,2025, the gainloss on divestiturethe wind down and sale of subsidiariesAccountable Care assets represents the pre-tax gainloss on the saledivestiture of bswift,the Company’s Medicare Shared Savings Program (“MSSP”) operations, which the Company sold in NovemberMarch 2022,2025, as well as costs incurred in connection with the process of winding down the Company’s Accountable Care Organization Realizing Equity, Access and theCommunity pre-taxHealth gain(“ACO REACH”) operations. The loss on theAccountable saleCare ofassets PayFlex, which the Company sold in June 2022. The gains on divestitures areis reflected as a reduction ofin operating expenses within the Health Care BenefitsServices segment.

•Total revenues increased $25.0$12.7 billion, or 23.7%,9.7%, in 20242025 compared to 2023,2024 primarily driven by growthincreases in the Government business, largely due to the impact of the Inflation Reduction Act (“IRA”) on the Medicare andPart individualD exchange product lines.program.

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a leading health solutions company simplifying health care one person, one family and one community at a time. As of MarchJune 31,30, 2026, the Company had approximately 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics and a leading pharmacy benefits manager with approximately 8887 million plan members and expanding specialty pharmacy solutions. The Company also serves an estimated more than 37 million people through a broad range of health insurance products and related services. 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 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. 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. The segment also works directly with pharmaceutical manufacturers to commercialize and/or co-produce high quality biosimilar products through its CordavisTMCordavis® subsidiary. The Health Services segment’s health care delivery assets include Signify Health, Inc. (“Signify Health”), a leader in health risk assessments, and Oak Street Health, Inc. (“Oak Street Health”), a leading multi-payor operator of value-based primary care centers serving Medicare eligible patients.

The following discussion explains the material changes in the Company’s operating results for the three and six months ended MarchJune 31,30, 2026 and 2025, and the significant developments affecting the Company’s financial condition since December 31, 2025. We strongly recommend that you read our audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included in the 2025 Form 10-K.

•Total revenues increased $5.8$7.2 billion, or 6.2%,7.3%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by revenue growth across all operating segments.

•Operating expenses remaineddecreased relatively$166 consistentmillion, or 1.5%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily due to the absence of a $387$833 million in legacy litigation charge and a $247 million pre-tax loss on the wind down and sale of Accountable Care assets, bothcharges recorded in the prior year, largelypartially offset by continued business investments,investments and operating expenses to support increased volume from the Rite Aid asset acquisitions and the retroactive effect of a change in a state law related to non-income taxes.acquisitions.

•Operating income increased $1.3$2.3 billion, or 38.7%,97.5%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily due to improved operating performance inacross theall Healthoperating Care Benefits segment,segments, as well as the absence of the $387$833 million in legacy litigation charge and the $247 million pre-tax loss on the wind down and sale of Accountable Care assets, bothcharges recorded in the prior year.

•The effective income tax rate was 24.9%24.7% for the three months ended MarchJune 31,30, 2026 compared to 31.9%38.5% for the three months ended MarchJune 31,30, 2025. The change in the effective income tax rate was primarily due to the absence of the impact of the non-deductible legacy litigation chargecharges recorded in the prior year.

•Utilization persisted at elevated levels in the firstsecond quarter of 2026. Although the level of utilization is difficult to accurately predict, utilization beyond current elevated levels may pressure the Company’s Health Care Benefits segment and its health care delivery assets in its Health Services segment in 2026.

(1)Total revenues of the Health Services segment include approximately $3.8$2.8 billion and $3.7$2.7 billion of retail co-payments for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $6.6 billion and $6.4 billion of retail co-payments for the six months ended June 30, 2026 and 2025, respectively.

(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)During the three and six months ended MarchJune 31,30, 2026 and 2025, the acquisition-related integration costs relate to the acquisitions of Signify Health and Oak Street Health. The acquisition-related integration costs are reflected in operating expenses within the Corporate/Other segment.

(4)During the three and six months ended MarchJune 31,30, 2025, the Company recorded a legacy litigation chargecharges related to atwo court decisiondecisions associated with its past business practices. The legacy litigation chargecharges waswere reflected in operating expenses within the Pharmacy & Consumer Wellness segment.and Health Services segments.

(5)During the three and six months ended MarchJune 31,30, 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, as well as costs incurred in connection with the wind down of the Company’s ACO REACH operations. The loss on Accountable Care assets was reflected in operating expenses within the Health Services segment.

(6)During the three and six months ended MarchJune 31,30, 2025, the office real estate optimization charges primarily relate to the abandonment of leased real estate and the related right-of-use assets and property and equipment in connection with the Company’s evaluation of corporate office real estate space. The office real estate optimization charges were reflected in operating expenses within each segment.

•Total revenues increased $1.2$1.3 billion, or 3.3%,3.5%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by an increase in the Government business, partially offset by a decline as a result of the Company’s exit of the individual exchange business in 2026.

•The MBR decreased to 84.6%87.4% in the three months ended MarchJune 31,30, 2026 compared to 87.3%89.9% in the prior year primarily driven by improved underlying performance in the Government business and the absence of thea $448$471 million premium deficiency reserve recorded within the individualGroup exchangeMedicare Advantage product line in the prior year, partially offset by lower favorable prior-year development.year.

•Operating expenses remainedincreased relatively$139 consistentmillion, or 3.1%, in the three months ended MarchJune 31,30, 2026 compared to the prior year.year primarily driven by increased business investments.

•Adjusted operating income increased $1.0$1.1 billion, or 52.6%,85.5%, for the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by improved underlying performance in the Government business and the absence of the premium deficiency reserve recorded in the prior year, partially offset by lower favorable prior-year development.year.

•Medical membership as of MarchJune 31,30, 2026 of 26.0 million decreased approximately 600 thousand700,000 members compared with DecemberJune 31,30, 2025 reflecting the Company’s exit of the individual exchange business in 2026, partially offset by an increase in Commercial ASC membership.

•Total revenues increased $4.8$5.3 billion, or 11.0%,11.5%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements.

•Operating expenses decreased $204$236 million, or 19.0%,20.2%, in the three months ended MarchJune 31,30, 2026 compared to the prior year. The decrease wasyear primarily driven by the absence of thea $247$291 million pre-taxlegacy losslitigation on the wind down and sale of Accountable Care assetscharge recorded in the prior year.

•Adjusted operating income decreasedincreased $114$158 million, or 7.1%,10.0%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by improved purchasing economics, pharmacy drug mix and modest improvement in the Company’s health care delivery business. These increases were partially offset by continued pharmacy client price improvements, partially offset by improved purchasing economics and pharmacy drug mix.improvements.

•Pharmacy claims processed remained relatively consistent on a 30-day equivalent basis in the three months ended MarchJune 31,30, 2026 compared to the prior year.

•Total revenues remainedincreased relatively consistentslightly in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by pharmacy drug mix, increased prescription volume, including contributions from the Company’s Rite Aid asset acquisitions which were completed during the third quarter of 2025, and brand inflation. These increases were largely offset by regulatory-related price reductions on certain drugs, the impact of recent generic drug introductions and pharmacy reimbursement pressure.

•Pharmacy same store sales increased 3.1%2.9% in the three months ended MarchJune 31,30, 2026 compared to the prior year. The increase was primarily driven by pharmacy drug mix, the 6.8%7.0% increase in pharmacy same store prescription volume on a 30-day equivalent basis and brand inflation,inflation. These increases were partially offset by regulatory-related price reductions on certain drugs, the impact of recent generic drug introductions and pharmacy reimbursement pressure.

•Front store same store sales increased 1.2%1.0% in the three months ended MarchJune 31,30, 2026 compared to the prior year.

•Operating expenses decreased $179$168 million, or 3.4%,3.2%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily due to the absence of thea $387$542 million legacy litigation charge recorded in the prior year, partially offset by continued business investments and operating expenses to support increased volume from the Rite Aid asset acquisitions.

•Adjusted operating income decreasedincreased $116$137 million, or 8.8%,10.2%, in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by core pharmacy reimbursement pressure, continued business investments, lower contributions from seasonal illnesses and greater weather disruption compared to the prior year. These decreases were partially offset by increased prescription volumestrength and contributions from the Company’s Rite Aid asset acquisitions. These increases were partially offset by continued business investments and the impact of consumer dynamics.

•Prescriptions filled increased 3.6%4.3% on a 30-day equivalent basis in the three months ended MarchJune 31,30, 2026 compared to the prior year primarily driven by incremental volume resulting from the Company’s Rite Aid prescription file acquisitions and increased utilization, partially offset by the absence of long-term care pharmacy prescription volume following the deconsolidation of Omnicare in September 2025.