The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

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World's Most Admired Companies

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

Fortune Sector Leaders: Health Care

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

WMA 2024-CVS

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMA-2023-CVS

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-CVS Health

The health retail, pharmacy, and insurance conglomerate is the largest company ever to be led by a female CEO; Karen Lynch has been chief executive since Feb. 2021. 
<ul> 
 	<li>CVS exceeded Wall Street’s revenue expectations in 2022 with $322 billion, but profits fell nearly 50% compared to 2021.</li> 
 	<li>The company made progress in expanding into the primary care space with two big acquisitions: primary care network Oak Street Health, purchased for approximately $10.6 billion; and health services company Signify Health, for approximately $8 billion. The deals were completed earlier than anticipated, prompting the company to lower its earnings expectations for 2023.</li> 
 	<li>CVS joined other health care companies in settling lawsuits that claimed they should have known they were filling too many opioid prescriptions. Under a settlement announced in December, CVS will pay state and local governments up to $4.9 billion over 10 years. (The company did not admit wrongdoing.)</li> 
</ul>

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-CVS Health

The health retail, pharmacy, and insurance conglomerate led by Karen Lynch is one of the nation’s two biggest health care companies. It’s also the biggest company ever to be led by a female CEO. 
<ul> 
 	<li>CVS exceeded Wall Street’s revenue expectations in 2022 with $322 billion, but profits fell nearly 50% compared to 2021.</li> 
 	<li>The company made progress in expanding into the primary care space with two big acquisitions: primary care network Oak Street Health, purchased for approximately $10.6 billion; and health services company Signify Health, for approximately $8 billion. The deals were completed earlier than expected, prompting the company to pull back on earnings expectations for 2023.</li> 
 	<li>CVS joined other health care companies in settling lawsuits that claimed they should have known they were filling too many opioid prescriptions. Under a settlement announced in December, CVS will pay state and local governments up to $4.9 billion over 10 years. (The company did not admit wrongdoing.)</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

WMAC-2022-27-CVS

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

G500 2022-10-CVS Health

CVS outpaced analyst expectations for 2021 under the leadership of Karen Lynch, who came aboard as CEO in February. The company reported $292 billion in revenue for the fiscal year ended December 2021—an 8.7% increase year over year. In a quest to revolutionize America’s access to health care, Lynch initiated a plan to transform hundreds of CVS stores into super-clinics that provide primary care—creating what will become the nation’s biggest network of urgent care and primary care outlets. CVS also played a major role in fighting COVID-19, administering over 50 million vaccines and 29 million tests through December 2021. In the fight to retain talent, CVS announced a minimum wage increase to $15 an hour, effective July 2022.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Board 2022-CVS Health

CVS, the retail and pharmacy giant that ranks fourth on the <a href="https://fortune.com/fortune500/">Fortune</a> 500, scored high on gender equality, board independence, and ESG. Karen Lynch was named CEO in February 2021 and <a href="https://fortune.com/2021/10/04/cvs-ceo-karen-lynch-stores-health-care-super-clinics/">has said the company</a> is “pivoting to become more central to America’s health care.” The company recently made the decision to <a href="https://fortune.com/2021/08/04/cvs-minimum-wage-t15-an-hour/">raise its minimum wage</a> to $15. 
 
CVS counts the former CEOs of Chiquita Brands; AT&amp;T; Becton, Dickinson; Johnson &amp; Johnson; PCS Health Systems; and Applied Biosystems among its directors. The board also has two members with high-level government experience: Nancy-Ann DeParle is the former deputy chief of staff and director of the White House Office of Health Reform, and Mary Schapiro is a former chairman of the Securities and Exchange Commission. 
 
Editor's note: An earlier version of this post misspelled the name of Nancy-Ann DeParle.

Fortune Modern Board 25

Fortune's annual list dedicated to the idea that business is uniquely suited to address society’s biggest challenges.

CTW.1122. CVS Aetna

CVS-owned Aetna last year launched an effort to reduce suicide attempts. Its clinicians began asking mental health screening questions of most members, rather than querying only those who showed risk of self-harm; it also reached out to high-risk youth. Aetna has seen an 18% decrease in suicide attempts since 2019 among its 16.3 million adult members with behavioral health coverage—a promising start.

Change the World

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 CVS Health

CVS outpaced analyst expectations for 2021 under the leadership of Karen Lynch, who came aboard as CEO in February. The company reported $292 billion in revenue for the fiscal year that ended in December 2021—an 8.7% increase year over year. In a quest to revolutionize America’s access to health care, Lynch initiated a plan to transform hundreds of CVS stores into super-clinics that provide primary care—creating what will become the nation’s biggest network of urgent care and primary care outlets. CVS also played a major role in fighting COVID-19, administering over 50 million vaccines and 29 million tests through December 2021. In the fight to retain talent, CVS has announced a minimum wage increase to $15 an hour, effective July 2022.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-007-CVS

CVS embedded itself on the front lines of the COVID pandemic as one of the central hubs for distributing vaccines to local communities. In the first quarter of 2021 alone, the company, now fully integrated with health insurer Aetna following a mammoth $69 billion acquisition, produced more than $69 billion in revenues. In 2020, revenue grew $12 billion compared to the previous year. Karen Lynch, who became CEO in February 2021, believes that “millions of new customers will engage with CVS Health for the first time through testing and vaccine administration.” The company’s upbeat guidance for 2021, meanwhile, relies on pharmacy sales, rather than retail, to carry the revenue growth.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-04-CVS Health

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-013-CVS-Health

The drug store chain-slash-health care juggernaut got a $62 billion revenue boost—due to its $69 billion acquisition of Aetna, the insurance giant, in 2018. Though investors haven’t entirely sweetened on the deal, CEO Larry Merlo pronounced the integration of the two companies “successful” in February. Former Aetna CEO Mark Bertolini, meanwhile, resigned from the CVS board and said the integration was “far from over.” As a pharmacy retailer on the pandemic’s frontlines, CVS’s sales were brisk in the first quarter, but Merlo has warned about the “uncertainties” that surround the long-term performance of the company’s multifaceted business in a time of COVID-19.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-005-CVS-Health

The drug store chain-slash-health care juggernaut leapt three spots on this year's Fortune 500—and got a $62 billion revenue boost—due to its $69 billion acquisition of Aetna, the insurance giant, in 2018. Though investors haven’t entirely sweetened on the deal, CEO Larry Merlo pronounced the integration of the two companies “successful” in February; former Aetna CEO Mark Bertolini, meanwhile, resigned from the CVS board and said the integration was “far from over.” As a pharmacy retailer on the pandemic’s frontlines, CVS’s sales were brisk in the first quarter, but Merlo has warned about the “uncertainties” that surround the long-term performance of the company’s multifaceted business in a time of COVID-19.

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Here’s our look at 50 companies that do well by doing good.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

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Nike, Cisco, MasterCard, SABMiller, Vodafone, Google—and 45 other companies that are doing well by doing good.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Change The World

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Headquartered in Woonsocket, R.I., CVS Health owns the country’s largest pharmacy chain with more than 9,000 physical locations found mostly in the Northeastern U.S. The publicly traded corporation is comprised of more than 300,000 employees and offers pharmacy services, health and beauty products, convenience foods, and other services like photo printing. CVS Health didn’t start adding pharmacies to new stores until 1967, but since then has acquired large companies in the health space such as Aetna, Signify Health, and Oak Street Health to boost its primary care offerings and develop its own insurance arm. Other subsidiaries of CVS Health include benefit services manager CVS Caremark and MinuteClinic, a walk-in health clinic for vaccinations, health screenings, and other quick appointments.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

David Joyner

President and Chief Executive Officer, CVS Health®

Sree Chaguturu, MD

Executive Vice President and Chief Medical Officer, CVS Health®

Thomas F. Cowhey

Executive Vice President and Chief Financial Officer of CVS Health®

Sam Khichi

Executive Vice President, Chief Policy Officer and General Counsel, CVS Health®

Tilak Mandadi

Executive Vice President, Ventures and Chief Digital, Data, Analytics and Technology Officer, CVS Health®

Larry McGrath

Executive Vice President, Chief Strategy Officer and Chief Strategic Advisor to the CEO of CVS Health®

Michelle Peluso

Executive Vice President and Chief Customer and Experience Officer, CVS Health®

Mike Pykosz

Executive Vice President and President of Health Care Delivery, CVS Health®

Prem Shah

Executive Vice President, Chief Pharmacy Officer, and President of Pharmacy and Consumer Wellness, CVS Health®

CVS Health (CVS): Company Profile, Stock Price, News, Rankings

legacy

CVS Health

cvs health

Hello, and welcome to CVS Health's third quarter 2025 earnings call. We ask that you please hold all questions until the end of the prepared remarks, at which time you'll be given instructions for the question and answer session. As a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I would now like to pass the call to Larry McGrath, Chief Strategy Officer. Larry, please proceed.

Good morning, and welcome to the CVS Health third quarter 2025 earnings call and webcast. I'm Larry McGrath, Chief Strategy Officer. I'm joined this morning by Karen Lynch, President and Chief Executive Officer, and Brian Newman, Chief Financial Officer. Following our prepared remarks, we'll host a question and answer session that will include additional members of the leadership team. Our press release and slide presentation have been posted to our website, along with our Form 10-Q filed this morning with the SEC. Today's call is also being broadcast on our website, where it'll be archived for one year. During this call, we'll make certain forward-looking statements. Our forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from currently projected results. We strongly encourage you to review the reports we filed with the SEC regarding these risks and uncertainties.

In particular, those that are described in the cautionary statement concerning forward-looking statements and risk factors in our most recent annual report on Form 10-K, our quarterly report on Form 10-Q filed this morning, and our recent filings on Form 8-K, including this morning's earnings press release. During this call, we'll use non-GAAP measures when talking about the company's financial performance and financial condition. You can find a reconciliation of these non-GAAP measures in this morning's press release and in the reconciliation document posted to the investor relations portion of our website. With that, I'd like to turn the call over to David. David?

Thank you, Larry, and good morning, everyone. This morning, we are pleased to report another quarter of solid results, once again reflecting the power of our diversified business and progress on becoming the most trusted healthcare company in America. In the third quarter, we delivered adjusted operating income of $3.5 billion and adjusted earnings per share of $1.60. In addition, for the third consecutive quarter, we are increasing our full-year 2025 adjusted earnings per share guidance to a range of $6.55-$6.65, up from our previous range of $6.30-$6.40. Over the past 12 months, we have been intensely focused on executing against our commitments to our customers, partners, colleagues, and shareholders. We are building momentum across the enterprise and feel a growing excitement about the opportunities ahead for CVS Health. We are incredibly proud of what we have accomplished so far this year.

While we are encouraged by our progress, we maintain a disciplined and cautious outlook as we position our business for another year of strong performance in 2026. This transformation is clearly visible within our Aetna business, where after a challenging 2024, there is renewed vigor and optimism about the future. Steve, Katrina, and the broader Aetna team are well on the path to ensuring this business is best in class. The Aetna team continues to drive impactful and exceptional results. Aetna is once again the industry leader amongst national payers for 2026 Medicare Advantage STARS ratings, even with CMS recently announcing that cut points for STARS continue to become more challenging. Based on the current membership, we expect over 81% of our Medicare Advantage members will be in plans rated four stars or higher, with over 63% of them in 4.5 star plans, nearly double the industry average.

This result is not just a point of pride, but another proof point that our ability to effectively collaborate across the enterprise allows us to deliver exceptional quality and service, drive down the cost of care, and remove friction from the healthcare system. We are still in the early stages of the 2026 annual enrollment period, but we remain confident that our thoughtful approach to our geographic footprint, benefit design, and pricing positions us well for another year of recovery. In my first year as CEO, I have pushed our team to act with urgency and focus as we execute on opportunities to improve our business. This means making thoughtful and difficult decisions, such as exiting our individual exchange business or taking advantage of market opportunities like our acquisition of the Rite Aid assets.

In a similar way, as we outlined last quarter, we are moving with urgency to address pressures in healthcare delivery. During the quarter, we recorded a $5.7 billion goodwill impairment within healthcare delivery. I want to be clear that this business's performance in the quarter was in line with our most recent expectations. However, our decision during the quarter to temper Oak Street Health clinic growth over the next few years was the primary reason for recording this charge. Despite this update, value-based care remains a critical component of our strategy. The reasons to believe in this business have not changed, but the marketplace is evolving, and we are adapting our strategy to get financial performance back in line with our expectations. We understand the challenges at Oak Street Health and have taken actions to improve performance in both the near and long term.

We continue to strengthen our healthcare delivery business through investments in technology, a new leadership team, and a fair and equitable contract with our payer clients. Turning to pharmacy services, we're incredibly proud of the meaningful impact we've had on drug costs in this country. As you've seen with our recently announced IVF initiative with the administration, we are strong supporters of President Trump's focus on lowering brand prices in America. This is important for our patients, our customers, and for our business model. By tackling branded pharmas and equitable pricing strategies that have left Americans carrying the financial weight of global drug innovation, the government is helping to relieve a longstanding burden on U.S. consumers and businesses.

We believe that over time, the administration's actions can create a new lower ceiling price in the U.S., from which PBMs will continue to negotiate and further reduce costs for their customers and consumers. This has been our job for more than three decades, and we have been tremendously successful at achieving durable results. We believe these actions are good for us, for our customers, and for consumers, and we are encouraged to see the impact they may create for the industry. As the leading healthcare consumer company, we've been working diligently for years to lead with greater transparency and savings for consumers at the pharmacy counter. We are at the forefront of this transition with more than 25 million members who benefit at the pharmacy counter from their lowest net cost through point of sale rebates.

This includes our Aetna fully insured commercial members who we transitioned in 2019, and the benefit design we offer our own colleagues. Two years ago, we continued our innovation leadership when we introduced our new true cost model, which guarantees a net cost for each individual drug, delivering drug pricing transparency for our clients and consumers. We are encouraged by recent announcements that others are following us on this path. We know that this is the transition that consumers want and is also important for the future of our business. We're incredibly encouraged by the path Caremark is on. However, we acknowledge there are near-term market dynamics from a few of our client contracts that have resulted in a revision to our guidance and will impact our near-term growth rate. While incorporating this, as Brian will discuss later, we continue to expect meaningful growth in enterprise earnings next year.

We are working diligently to recontract over the next few years and resolve this issue. Importantly, clients, including the most sophisticated buyers of pharmacy benefit services, continue to see the tremendous value we provide, as evidenced by another strong selling season. We have achieved new client wins of nearly $6 billion and are closing out another selling season with retention in the high 90%. I am incredibly bullish about the road ahead and believe we will continue to lead this industry, given our unique advantages and insights. Turning to PCW, our leadership is clear in the retail pharmacy market as we work towards a more sustainable and transparent future. Our deliberate strategic decisions, intentional investments, best-in-class drug purchasing, and superior customer service have meaningfully improved our differentiated position in the market. Once again this quarter, CVS Pharmacy delivered solid performance, including pharmacy share gains.

This is a testament to the strength and scalability of our model, as well as the commitment of our engaged colleagues. We play a critical role in improving the health of millions of Americans by providing convenient health services, including vaccinations. Our 9,000 pharmacies are the front door to our enterprise. They are a differentiator for our business and a force multiplier towards improving the health of the communities that we serve. For CVS Health, being the most trusted healthcare company in America means improving health, simplifying care, and delivering a quality experience every day. We do not take this responsibility lightly, and it is this team's firm belief that we must drive the evolution of healthcare forward in the U.S. We have unique capabilities to achieve all of those goals.

The strength of our diversified businesses continues to set us apart, enabling us to deliver strong results even in this dynamic environment. The progress we've made this year is fueling momentum, and our disciplined execution positions us for another year of strong performance in 2026. We are working to simplify healthcare and are bullish about the opportunities we see to lower the cost of care and drive innovation. Our future is bright because of the work of our more than 300,000 colleagues who take care of their friends, families, and neighbors in communities across our country. We look forward to sharing more on our longer-term plans at our investor day on December 9. With that, I'd like to hand the call over to Brian. Brian?

Thank you, David, and good morning. I will cover four key topics in my remarks. First, an update on our third quarter results. Next, I'll discuss cash flow and the balance sheet. After that, I will provide an update on a revised financial outlook for the remainder of 2025. Finally, I'll wrap up with a brief discussion on high-level headwinds and tailwinds as we look ahead to 2026. As David mentioned, we are pleased to report another quarter of solid performance and to deliver a third quarter in a row where we beat and raised expectations as we continue to focus on building a track record of consistent success. We improved our full-year outlook for revenue, adjusted EPS, and cash flow from operations, and are building positive momentum as we close out the year. Let me start with highlights on our enterprise results in the quarter.

Third quarter revenues achieved a new record of nearly $103 billion, an increase of approximately 8% over the prior year quarter, driven by revenue growth across all segments. Adjusted operating income of approximately $3.5 billion increased approximately 36% from the prior year quarter, primarily driven by an improvement in our healthcare benefits segment. We delivered adjusted EPS of $1.60, an increase of nearly 47% from the prior year quarter. Finally, we generated year-to-date cash flow from operations of approximately $7.2 billion. Turning now to each of our segments. In healthcare benefits, we generated nearly $36 billion of revenue in the quarter, an increase of over 9% from the prior year. This increase is primarily driven by our government business, largely related to the impact of the Inflation Reduction Act on the Medicare Part D program.

We ended the quarter with medical membership of approximately 26.7 million, which was flat sequentially and decreased approximately 445,000 members from the prior year quarter. This year-over-year decrease is primarily driven by declines in our individual exchange and Medicare product lines, partially offset by growth in our commercial fee-based membership. Adjusted operating income in the quarter was approximately $314 million, a substantial increase from the adjusted operating loss recorded in the prior year quarter. Our medical benefit ratio was 92.8%, a decrease of 240 basis points from the prior year quarter result of 95.2%. The change was driven by the favorable year-over-year impact of premium deficiency reserves, higher favorable prior period development, and improved underlying performance in our government business.

These increases were partially offset by changes in the seasonality of the Medicare Part D program due to the impact of the IRA and the impact of higher acuity in the individual exchange product line. Our medical benefit ratio this quarter was impacted by approximately 100 basis points due to provider liabilities for matters dating as far back as 2018 and worsening individual exchange risk adjustment expectations based on the latest weekly data. Each of these two items were roughly equivalent. Medical cost trends in the quarter remained elevated across all products but were modestly favorable relative to our expectations, primarily driven by our individual Medicare Advantage book.

Days claimed payable at the end of the quarter was approximately 42.5 days, an increase of approximately 1.6 days sequentially, primarily driven by the partial release of premium deficiency reserves established in the first half of 2025, as well as an additional day in the third quarter compared to the second quarter. We remain confident in the adequacy of our reserves. Shifting now to our health services segment. During the quarter, we generated revenues of over $49 billion, an increase of over 11% year-over-year. This increase was primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements. Adjusted operating income in the quarter of approximately $2.1 billion decreased 7% from the prior year quarter, primarily driven by continued pharmacy client price improvements, partially offset by improved purchasing economics.

Performance in our healthcare delivery business during the quarter was broadly in line with our expectations. Total revenues grew approximately 25% compared to the same quarter last year, excluding the impact of our exit from our CVS accountable care business earlier this year. This increase was primarily driven by patient growth at Oak Street Health and increased volumes at Signify. During the quarter, we made certain strategic changes in our healthcare delivery business, including the decision to reduce the number of new Oak Street Health clinics we expect to open over the next several years. These changes necessitated a quantitative assessment of the carrying value of goodwill in our healthcare delivery reporting unit, which resulted in a goodwill impairment charge of approximately $5.7 billion during the quarter. We are focused on improving financial performance in our healthcare delivery business.

As discussed last quarter, we have and continue to take actions at Oak Street to enhance our operations. During the quarter, we completed a comprehensive review of our Oak Street clinic footprint. As David mentioned, this is core to our approach of evaluating each of our businesses, identifying strengths, and making decisions to drive improved execution and performance. Following our review, we made the difficult decision to close underperforming clinics where we do not see a reasonable path to sustainable margins. To be clear, we view value-based care as a critical component to our Medicare strategy and expect the actions we are taking to support improved financial performance beginning next year. Our pharmacy and consumer wellness segment delivered another strong quarter.

We generated revenues of over $36 billion, an increase of nearly 12% versus the prior year quarter, primarily driven by pharmacy drug mix and increased prescription volume, partially offset by continued pharmacy reimbursement pressure. Revenues in the quarter increased over 14% on a same-store basis. Our retail pharmacy script share grew to approximately 28.9%, as our emphasis on operational excellence and superior customer experiences enables us to benefit from pharmacy market disruption. Same-store pharmacy sales in the quarter grew nearly 17% compared to the prior year, driven by pharmacy drug mix and a nearly 9% increase in same-store prescription volumes. Same-store front-store sales increased 150 basis points versus the prior year quarter. Adjusted operating income decreased approximately 7% from the prior year to approximately $1.5 billion. This decrease was primarily driven by continued pharmacy reimbursement pressure and increased investments in colleagues and capabilities.

These items were partially offset by increased prescription volume. Shifting now to cash flow and the balance sheet. We generated cash flows from operations of approximately $7.2 billion year to date through the third quarter. We have distributed approximately $2.6 billion in dividends to our shareholders year to date, and we ended the quarter with approximately $2.3 billion of cash at the parent and unrestricted subsidiaries. We continue to meaningfully improve our leverage ratio, supported by our strong year-to-date performance, and expect to make further improvement next year as we grow enterprise earnings, driven by margin recovery in our Aetna business. Shifting now to our revised outlook for 2025, we are increasing our full-year 2025 guidance for adjusted EPS to a range of $6.55-$6.65, an increase of $0.25.

This update reflects our third quarter performance and our revised expectations for the remainder of the year, which continue to maintain a prudent outlook on medical cost trends and macro factors. We now expect full-year total revenues of at least $397 billion, an increase of nearly $6 billion, driven by increases across all segments. In our healthcare benefits segment, we now expect full-year adjusted operating income of approximately $2.72 billion at the low end of our guidance range, an increase of approximately $300 million, reflecting our performance in the third quarter and improved expectations for the remainder of the year. We continue to project our full-year 2025 medical benefit ratio at the low end of our healthcare benefits adjusted operating income guidance range to be approximately 91%. This outlook continues to maintain a thoughtful and prudent view on medical cost trends through the remainder of the year.

In our health services segment, we now expect full-year adjusted operating income of at least $7.1 billion, a decrease of approximately $240 million from our prior guidance. This update reflects our latest expectations for performance that David highlighted in his remarks. Importantly, we continue to make progress evolving our contracting and pricing models to respond and adapt to market dynamics. We are confident we're on the path to lead the evolution with our new true cost model, which guarantees a net cost of each individual drug, driving drug pricing transparency for our clients and members. The outlook for our healthcare delivery business remains largely unchanged. Lastly, in our pharmacy and consumer wellness segment, we now expect full-year adjusted operating income of at least $5.95 billion, an increase of approximately $270 million from our prior guidance.

This increase reflects our performance in the third quarter and our revised expectations for the remainder of the year, while continuing to maintain a prudent outlook for the rest of the immunization season and potential impacts to the consumer environment. In aggregate, we now expect full-year enterprise adjusted operating income to be in the range of $14.14 billion-$14.31 billion. We are also increasing our expectations for full-year cash flow from operations to be in a range of $7.5 billion-$8 billion. Additionally, we now expect our full-year adjusted effective tax rate to be 25.3%, an improvement of 40 basis points. You can find additional details on the components of our 2025 guidance on our investor relations website. Before we open the call up to Q&A, I also want to provide an update on some of the key headwinds and tailwinds for 2026.

Consistent with past practice, we expect to provide formal 2026 guidance at our investor day in December. Beginning with our healthcare benefits business, we expect another year of meaningful margin improvement at Aetna. This includes another year of progress in our Medicare Advantage business, supported by our disciplined approach to plan design and footprint in individual, as well as repricing opportunities in our group business. We also expect a tailwind from our exit of the individual exchange business. Although our conversations with our Medicaid state partners continue to progress, and this business has performed in line with our expectations this year, we are taking a cautious outlook in light of the broader pressures across the industry. In our health services segment, we expect improvement in our healthcare delivery business, primarily driven by Oak Street Health.

In our Caremark business, we expect modestly lower growth as we continue our work to transition our contracts towards drug-level pricing over the next few years. Altogether, we expect the segment to deliver low single-digit adjusted operating income growth next year. In our pharmacy and consumer wellness segment, we are encouraged by our strong performance this year and expect this momentum to continue into next year. While challenges, including reimbursement pressure and the impact of shifting consumer dynamics, remain in this business, we currently expect the trajectory to improve relative to our long-term expectation of a 5% decline. I would also remind everyone that, consistent with past practice, the impact of prior year reserve development and other out-of-period items should be removed when considering an appropriate baseline for bridging to 2026. As of the end of the quarter, these items contributed approximately $0.45 to our year-to-date results.

Altogether, and after adjusting for these items, we currently expect a reasonable starting point for our 2026 adjusted EPS guidance to reflect mid-teens growth. We will provide formal guidance at our investor day on December 9th. Overall, we are encouraged by the year-to-date performance of our diversified enterprise and are confident we are taking the right steps to position us for both near and long-term success. We recognize the importance of establishing credible commitments and expect to continue this philosophy as we establish future financial targets. With that, we'll now open the call to your questions. Operator?

Thank you. At this time, if you would like to ask a question, please click on the raised hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you'll receive a message on your screen, and then you'll hear your name called. Please accept, unmute your audio, and ask your question. We ask that you please limit yourself to one question this morning. We will wait one moment to allow a queue to form. Our first question will come from Lisa Gill with JPMorgan. You may now unmute your audio and ask your question.

Good morning, and thanks for the question. I really want to start with some of the comments you made on the PBM side. First, the $240 million that you talked about, as we shift more towards transparency, towards true cost, should we anticipate, and again, this kind of goes to Brian's comments around 2026 as well, should we anticipate, as we see shifts in these contracts, that we're going to continue to see headwinds as we make that initial shift? That would be the first part of the question. Secondly, how do we think about future PBM economics around a true cost model, not only for you as the PBM, but we also get questions around the plan sponsor? As we know, many plan sponsors use rebates to offset premiums, et cetera.

How does that future look on the plan sponsor side, as well as your economics on the PBM side?

Yeah, Lisa, great question and something that obviously we're prepared to address both today as well as where we see the marketplace evolving. Let me first start with, I think if you look at the headwinds that we're seeing specifically within the PBM, this does reinforce the strength of a diversified company. This is the third consecutive quarter where we both exceeded and raised guidance. It highlights the focus and the commitment that we've made around building trust and credibility. I think that is what I want to make sure is known, that there's performance, again, across the broader enterprise. A couple of things as it relates to the PBM and specifically to your question about the future. Over the course of my 30-year career, Caremark has consistently driven innovation and been able to adapt to the changing market.

The drive is not just changing the way in which our teams are working, but we have talked over the last couple of years about changing the PBM model, and part of this is the true cost transition to what I believe will be the pricing model of the future. I remain confident that Caremark will deliver both on the strong earnings and cash flow for the foreseeable future, and I think it's going to be reinforced in what we've said about the selling season. Even in light of some of the challenges around the industry, we delivered $6 billion of new wins and had a high retention rate in the 90s. I'm going to let Brian speak to some of the financials and some of the pressures, and then I'll have Prem speak more broadly to the last question about where this is going from a PBM model. Brian?

Thanks, David, and Lisa, thanks for the question. I think if we take a step back, I think it's actually important to provide some context on the historical industry practices. Historically, the norm in the industry was to use an aggregate market basket-based approach to structure guarantees. I think as we highlighted in our prepared remarks, throughout the year, we've observed a combination in mix of drugs and utilization patterns that differed from our prior forecast. Given the market basket structure underlying the client guarantees, those dynamics are putting pressure on the contracts David actually mentioned in his prepared remarks. We've been closely monitoring the trends, and while we realize the impact that the market basket had on guarantees on a subset of our contracts, we actually believe we had a credible and achievable pathway to mitigate the rapidly emerging challenges.

As we closed the quarter, we realized the mitigations that we had identified didn't materialize as quickly or have the impact we'd initially anticipated. That's really the driver as a result that drove us to modestly miss our expectations in the third quarter. We've also revised our expectations for the full year. That's captured in the guide I gave. As I mentioned in my prepared remarks, it will have an impact on the near-term growth outlook as we recontract over the next couple of years. Prem, maybe you can talk more about the value Caremark delivers and the evolving model.

Yeah, Lisa, thanks for the question. Just to answer directly on the future PBM economics, as you know, the PBM industry has been and will continue to be an extremely competitive space, where we deliver a tremendous value to our customers and deploy that value to them. If you think about our, from my perspective, what Caremark has done over the course of the last many decades is we continue to focus on our clients' biggest problems, which is high cost of branded drugs. As we've said, 10% of drugs drive 88% of our pharmacy costs in this country. We're going to continue to lead and be a leader in this space. You saw this 18 months ago. We launched Cordavis. We went after the largest specialty drug in the country.

We delivered our clients over $1 billion in savings, and we've interchanged and moved all the product to a lower cost, 81% lower WACC price than the originator, and we delivered $1 billion in savings. You saw it earlier this year with our addressing GLP-1s. GLP-1s are approximately 15% of our clients' cost. We were able to narrow our formulary in the weight loss category, and our clients benefited from lower cost. I would argue the market benefited from the fact that we moved against one of the products, and we saw the net prices of the entire category come down. This is what PBMs do every single day. They create this competition. This is what they've done for the last three decades and will continue to do that.

As it relates to the value and how the economics kind of pass through from us and our clients and how that plays out in the marketplace, at the end of the day, the problem in this country still is healthcare is unaffordable. What you're describing is really kind of the spread of which is a member out of pocket or a plan premium. From our perspective, what we're doing with True Cost, which we launched two years ago, was very deliberate, and it was driving greater transparency and making sure that consumers and clients had the benefit of that transparency, while again maintaining our ability to create the competition and lower the net cost of drugs. As David said in his prepared remarks, we have over 25 million customers and consumers that are in our point of sale rebate program.

Aetna has launched point of sale rebates as far back as 2019. This is something that we have been really focused on, where we get the consumers the lowest possible price at the counter, because we know medicines in this country help lower the cost of overall healthcare expenditures, and it's critically important. Lastly, I'll say, as all the things have been happening with the administration, we're excited to play an active role in making medicine more affordable in this country. We think we will continue to play that role, and we love the fact that they are going after the inequity across countries that you've seen and the price disparities that exist.

More to come, but I would say the PBM business continues to be a very competitive space, continues to have durable margins, and continues to be a very necessary component of how we deliver care and lower cost in this country.

Maybe just one final comment. I think it's important to note that we saw this trend several years back, which is part of what we're trying to do within retail, moving to cost advantage, and where the PBM was driving towards true cost. We saw where the marketplace was going. We led the market. We're in the middle of that transition to the model of the future. I think the near-term headwinds is not an implication on the long-term viability of the PBM model. Thanks, Lisa. Next question.

Our next question comes from Justin Lake with Wolfe Research. You may now unmute your line and ask your question.

Thanks. Good morning. I wanted to ask about the PCW business. Looks like 3Q was ahead of your expectations, and you have about 3% growth assumed for the fourth quarter. I was hoping you could share some of the drivers around your confidence in that fourth quarter growth, particularly the headwind from lower vaccine volumes to OI, and then the benefit of the 600-store file buy you got from Rite Aid for the fourth quarter and how that even impacts into 2026. Thanks.

All right. Thanks, Justin. I appreciate the question on PCW. Prem, you want to talk specifically about the growth, right?

Yeah, Justin, thanks for the question. As you recall from a few analysts days ago, we were very deliberate with our strategy and purposeful with how we were going to kind of get this business back to something better than -5%. A couple of things. One, I'm incredibly proud of the leadership team and the strong execution that we've delivered. We have the right strategy, and we're focused on it, and it's a foundation of just healthcare engagement. It's one of the things we really believe. We have over 9,000 community pharmacy destinations where we know we can service patients and members in a much better way to create differentiated services. At this point, I'm proud to say we are the best-run pharmacy in the country, and it's operating nationally at scale. It has extremely strong consumer engagement and really good clinical expertise that we're delivering into the marketplace.

It's a very, very strong deliverer of trust for our consumers that we can then continue to create value in other parts of our enterprise. When you think about what's driving that, first, from a business perspective, we were very deliberate in our investments in technology and taking care of our colleagues. We have over 200,000 colleagues in 9,000 of these stores that continue to deliver best-in-class service. Secondly, we were focused on how we can engage and better engage consumers in a differentiated way. All in all, it's going really well. As it relates to the quarter, we delivered a strong quarter despite some of the persistent reimbursement pressures that we faced. If you look at the script growth, we had top line growth about 11.7%, and our pharmacy market share is now at 28.9%.

Rite Aid was one of the drivers that was in that as we kind of moved that business into our operating model. Just remember, the strong foundation and the strong service enabled us to really be able to do that in a much more effective way. If you think about the immunization piece, we continue to be a trusted choice and a convenient option for those choosing to get vaccinated. The market demand is down year over year, but we've been able to offset that with market share growth in our channel. We've seen approximately 400 basis points of market share growth inside of CVS. Secondly, if you think about our front store, we still have strong momentum. We're posting another positive comp from the second quarter in a row and improved from last year. We grew our customer base 2.6% versus last year.

We increased trips 2.7% versus last year, and our retail market share on the front store has gained by two basis points versus last year. We are continuing to focus on delivering the value, being where consumers want us to be in the front store by driving loyalty and improving our value proposition. I just say, all in all, we're incredibly proud of the results, incredibly proud of the leadership team and the focus that we have here, but we still have more work to do to stabilize this business over time. Brian, I'll hand it over to you for a couple more comments.

Yeah, no, just Justin, in terms of the outlook, the strong performance Prem talked about in the quarter, we lifted our guide for the segment, and it's now sitting at a growth of 3% for the year. I'd remind you, that's an 8% swing from our initial expectations of down 5%. We're seeing that business improve, and we'll talk more about it come December 9th and investor day.

Maybe just closing out on the PCW conversation, this is a business that we've been investing in for the last several years. I think some of this is coming to fruition in terms of the investments we've made in becoming best in class. We've talked about this in the opening comments that the 9,000 stores is our front door to the enterprise. When this business runs well, it does become the force multiplier to improving health and our focus on serving the community. Really excited about the performance, and we'll share obviously more, as Brian said, on investor day about the future direction of this business.

Our next question comes from Stephen Baxter with Wells Fargo. You may now unmute your audio and ask your question. We'll take our next question from Elizabeth Anderson with Evercore. Please unmute your line and ask your question.

Good morning, guys. Thanks so much for the question. Hopefully, you can hear me. I had a question in terms of the 100 basis points of provider liabilities that you called out. Can you give us a little bit more detail on exactly what those are, and is this a one-time item? Do we expect this to continue for a couple of quarters? Just any additional color there would be helpful, because obviously with that, it shows that your MBR was much more in line than maybe it looked like from the first glance. Thanks.

Yeah, Elizabeth, thanks for the question, and you're correct in that assumption. Brian, we want to speak to the.

Yeah, I guess I'd lift it up from an HCB perspective, Elizabeth. We're really pleased with the performance in the third quarter. As you think specifically about the third quarter MBR, some of the noise I called out in my prepared remarks, we had about 100 basis points of impact. Two things, provider liabilities, those are from dating as far back as 2018 for kind of a three to four-year period, and then a combination of that, that was roughly 50 basis points of the 100, and then worsening expectations for the individual exchange risk adjustment. We got the latest weekly data that informed that. These two factors really took a 92.8 as we printed, and if you back that up to get to a 91.8 roughly, it would say that the core outperformance on the MBR in the quarter was driven on an adjusted basis by individual MA.

That's how we think about the two drivers specifically to your question.

We'll now take our question from Stephen Baxter with Wells Fargo. Stephen, if you're calling in today, please use star six to unmute.

Hi, thanks. Sorry for the difficulties there. Just to kind of come back to that point a little bit, I think with the first couple of quarters of the year, you sized in each quarter that I guess on a continuing basis, there was around $500 million of core upside that you weren't taking through into the guidance. Wondering if there's an equivalent amount if we think about kind of excluding the items that you called out around the exchanges and around the added period settlements that you'd cite for Q3. I guess how do we reconcile that versus the raise that you made? I guess just one clarification as we're getting a lot of questions on it. This mid-teens EPS growth that you're framing for 2026, is that after taking the $0.45 out of the baseline, or is that off of this year's guidance as you currently revised it?

To take your last question first, Stephen, you take the midpoint of the guide, which is $6.60, back off the $0.45, and then you can grow mid-teens off of that. The way we got to the $0.45, I think going into the quarter, we had about a combination of net both positives and negatives if you take some of the out-of-period risk adjustments and revenue adjustments, net of the upside. We'd be about $900 million coming out of the first half of the year. You take the $150 million of the provider settlements, that's how we get the $7.50 roughly or the $0.45 as we adjusted, which I just walked you through.

Our next question comes from Michael Cherny with Leerink Partners. Please unmute your audio and ask your question.

CVS Health (CVS) Q3 2025 Earnings Call Transcript

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