CVSCVS Health

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 Exchange regulations; changes 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.

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 those mechanism or other changes that may result from enforcement or audit actions, could: materially affect the final Part C contract-level Risk Adjustment amount of our Medicare reimbursement, 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.

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.

For example, during the third first quarter of 2024, 2025, we recorded a premium deficiency reserves reserve of approximately $1.1 billion $448 million related to our Medicare, individual exchange product line and Medicaid during the second quarter of 2025, we recorded a premium deficiency reserve of $471 million related to our Group Medicare Advantage product lines line within the Health Care Benefits segment, primarily related to anticipated losses for the 2024 remainder of the 2025 coverage year.

Our health care delivery businesses, which we expanded with acquisitions to include health risk assessments, value-based assessments and primary care and provider enablement services through our Signify Health business, and additional services, including 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:

Based on the 2024 ratings, 88% Company’s membership as of December 2025, more than 81% of the Company’s Medicare Advantage members are were in 2025 2026 Medicare Advantage plans that are rated 4 stars or higher. higher and more than 63% of the Company’s Medicare Advantage members were in a 4.5-star plan for 2026.

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.

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; droughts, 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

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

Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues, are particularly sensitive to reduced government funding and we expect that percentage to increase. regulatory changes.

The lack of detail provided with respect to how CMS will select contracts and claims to audit, audit and the methodology CMS will use, and how it will extrapolate as part of the RADV Audit Rule use may impact future Medicare Advantage bids and result in other implications.

As one of the largest national retail, mail order, specialty and LTC pharmacy, PBM and health care and related benefits providers, companies in the 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.

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%, 5.06%, though the rates may vary widely depending on the provider group and patient demographics.

However, our remaining Our 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.

Year Ended December 31, 2024 2025 In millions Health Care Health Pharmacy & Corporate/ Consolidated Benefits Services Consumer Other Totals Wellness Operating income (loss) (GAAP measure) $ (984) 1,793 $ 6,937 220 $ 4,770 4,860 $ (2,207) (2,213) $ 8,516 4,660 Amortization of intangible assets (1) 1,175 595 253 2 2,025 1,155 569 249 3 1,976 Net realized capital (gains) losses (2) 97 (289) (13) (25) — 75 (117) 82 44 Acquisition-related integration costs (3) — — — 243 243 Restructuring charges 117 117 Goodwill impairment (4) — 5,725 — 747 432 1,179 — 5,725 Health Care Delivery clinic closure charge (5) — 83 — — 83 Opioid litigation charge (6) — — — 320 320 Office real estate optimization charges (5) 19 (7) 4 — 2 4 7 30 Opioid 10 Legacy litigation charges (6) (8) — 291 929 — 1,220 Loss on Accountable Care assets (9) — 288 — — — 100 100 288 Adjusted operating income (loss) $ 307 2,939 $ 7,243 7,151 $ 5,774 6,040 $ (1,348) (1,687) $ 11,976 14,443

On May 9, 2024, August 15, 2025, the Company issued $1.0 $750 million aggregate principal amount of 5.0% senior notes due September 2032, $1.5 billion aggregate principal amount of 5.4% 5.45% senior notes due June 2029, $1.0 billion aggregate principal amount of 5.55% senior notes due June 2031, September 2035, $1.25 billion aggregate principal amount of 5.7% 6.2% senior notes due June 2034, $750 September 2055 and $500 million aggregate principal amount of 6.0% 6.25% senior notes due June 2044 and $1.0 billion aggregate principal amount of 6.05% senior notes due June 2054 September 2065 for total proceeds of approximately $5.0 $4.0 billion, net of discounts and underwriting fees.

In millions Total Current Long-Term Operating lease liabilities (1) $ 21,189 19,387 $ 2,683 2,626 $ 18,506 16,761 Finance lease liabilities (1) 2,038 144 1,894 1,960 139 1,821 Contractual lease obligations with Target (2) 2,217 2,268 — 2,217 Commercial paper (3) 2,119 2,119 — 2,268 Long-term debt (3) 63,268 3,559 59,709 63,709 4,007 59,702 Interest payments on long-term debt (3) 42,240 2,892 39,348 44,003 2,933 41,070 Opioid litigation settlement obligations (4) 4,792 814 3,978 3,975 648 3,327 Other long-term liabilities on the consolidated balance sheets (5) Future policy benefits (6) 4,560 371 4,189 4,477 360 4,117 Unpaid claims (6) 993 280 713 801 202 599 Policyholders’ funds (6) (7) 1,270 869 401 937 615 322 Total $ 144,686 141,517 $ 13,731 11,530 $ 130,955 129,987

Although the Company believes the financial projections used to determine the fair value of the Government Health Care Delivery reporting unit were reasonable and achievable, continued utilization pressure within pressure, insufficient CMS Medicare rate increases relative to underlying medical cost trend or further reductions to the Medicare product line and continued higher acuity in Medicaid number of existing primary care centers or new primary care center openings may affect the Company’s ability to increase operating income results in the Government Health Care Delivery reporting unit at the rate estimated when such goodwill impairment test was performed.

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, 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. U.S.

In connection with its commercial paper program, the Company maintains a three $2.5 billion, five-year unsecured back-up revolving credit facility, facilities, which expires on expire in May 11, 2027, a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 16, 2028, 2029 and a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 16, 2029. 2030.

Upon assessment of the impact of Based on these factors on the Company’s year-to-date 2024 results and its expectations for the full year, the Company updated projections, management determined that there were indicators that the Government Health Care Delivery reporting unit’s goodwill may be impaired, and impaired and, accordingly, performed an interim goodwill impairment test was performed during the third quarter of 2024. 2025.

Year Ended December 31, 2024 In millions Health Care Health Pharmacy & Corporate/ Consolidated Benefits Services Consumer Other Totals Wellness Operating income (loss) (GAAP measure) $ (984) $ 6,937 $ 4,770 $ (2,207) $ 8,516 Amortization of intangible assets (1) 1,175 595 253 2 2,025 Net realized capital (gains) losses (2) 97 (289) — 75 (117) Acquisition-related integration costs (3) — — — 243 243 Restructuring charges (4) — — 747 432 1,179 Office real estate optimization charges (5) 19 — 4 7 30 Opioid litigation charges charge (6) — — — 100 100 Office real estate optimization charges (7) 19 — 4 7 30 Restructuring charges (10) — — 747 432 1,179 Adjusted operating income (loss) $ 307 $ 7,243 $ 5,774 $ (1,348) $ 11,976

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.

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.

The Health Centers for Medicare & Medicaid Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, CMS, (“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.

(7)In 2023 and 2022, (11)In 2023, the loss on assets held for sale relates to the LTC business long-term care pharmacy (“LTC”) business, which was included within the Pharmacy & Consumer Wellness segment. segment prior to the deconsolidation of the Omnicare Entities in September 2025.