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

AI is a major force shaping this year’s list—but it’s far from the only story.

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.

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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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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.

Q3 2026 & Investor update

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 2026 earnings call. We ask that you please hold all questions until the end of the prepared remarks, at which time you will 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. Larry, please proceed.

Good morning, and welcome to the CVS Health third quarter 2026 earnings and business update call and webcast. I'm Larry McGrath, Executive Vice President of Capital Markets at CVS Health. I'm joined this morning by David Joyner, Chairman 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 releases and slide presentations 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. 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 file 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 certain non-GAAP measures when talking about the company's financial performance and financial condition, and 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. Our organization has a long and distinguished history, and in my 40 years at this company, there has been one constant: we act, we evolve, and we proactively shape the future of healthcare. Today, we announced our intention to separate into two independent publicly traded companies. This decision marks the next important chapter in the evolution of CVS Health. We are creating two distinct leaders in healthcare. The first will be a healthcare solutions company that brings together medical, pharmacy, specialty, and care delivery capabilities integrated where it matters. In the interim period, we are referring to this business as CVS Health. The second company will be a leading national retail pharmacy and community healthcare company. This business will be named CVS Pharmacy.

Both companies will be led by experienced leadership teams, have a clear right to win in their respective markets, and we expect will be supported by solid investment-grade balance sheets, enabling each company to pursue disciplined and tailored capital allocation. We take this action from a position of strength, which you can see in the consistent progress we've made since 2024, as well as in the third quarter results and the updated guidance we announced this morning. This quarter, we generated adjusted operating income of $4.2 billion and adjusted EPS of $2.09. Building on our continued strong performance so far this year, we are raising our full year 2026 adjusted EPS guidance to at least $8.20, an increase from our prior range of $7.90-$8.10.

We are also updating our full year expectation for cash flow from operations to at least $15.5 billion. With this latest update, our 2026 adjusted EPS guidance is now more than $1 above our initial expectations for 2026, and our cash flow from operations outlook has increased by more than $5.5 billion for the year. This progress clearly reflects our growing momentum. I'll now ask Brian to provide more details on the results this quarter, our updated full year 2026 guidance, and perspective on the factors shaping our 2027 expectations. I will then come back to provide more details on our announcement. Brian?

Thank you, David, and good morning. I will cover four key topics in my remarks this morning. First, an update on our third quarter results. Second, I'll discuss cash flow, the balance sheet, and capital deployment. After that, I will provide an updated financial outlook for 2026. Finally, I will share some headwinds and tailwinds as we look ahead to 2027. Our third quarter results demonstrate the discipline with which we continue to manage the enterprise. We once again delivered on our commitments and raised our full year outlook for revenue, adjusted EPS, and cash flow from operations. Our execution has significantly strengthened our balance sheet, allowing us to achieve target leverage ahead of schedule, and will enable us to resume our share repurchase program in the fourth quarter. Let me start by highlighting some of our enterprise results in the quarter.

We generated over $108 billion of revenue and delivered nearly $4.2 billion of adjusted operating income, once again reflecting earnings growth across all of our operating segments. We delivered adjusted EPS of $2.09, an increase of over 30% from the prior year quarter. Finally, in the quarter, we generated cash flow from operations of approximately $4.7 billion, bringing our year-to-date cash flow from operations to $15.3 billion. Turning now to each of our segments. In healthcare benefits, we continue to make strong progress in our return to target margins. In the quarter, we delivered adjusted operating income of approximately $900 million, an increase of nearly $600 million from the prior year quarter. Our medical benefit ratio was 91.3%, an improvement of approximately 150 basis points from the prior year.

These results were primarily driven by improved underlying performance in our Medicare business. Across our businesses, we continue to successfully navigate elevated trends that remain above historical levels throughout the industry, but were broadly in line with our expectations. Performance in our Medicare book modestly exceeded our expectations, driven by pockets of favorability as a result of strong medical cost management and disciplined pricing. We remain confident in the adequacy of our reserves. In our Health Services segment, we continue to execute against our objectives. During the quarter, we delivered adjusted operating income of $2.1 billion, an increase of nearly 3% from the prior year quarter, primarily driven by improved purchasing economics and pharmacy drug mix, partially offset by continued pharmacy client price improvements. Results in our pharmacy services business were in line with our expectations during the quarter, including performance in both our 340B business and rebate guarantees.

Healthcare delivery also performed as expected as we continue to drive improvement in the business. Our Pharmacy and Consumer Wellness segment delivered another strong quarter. We generated adjusted operating income of over $1.6 billion, an increase of over 10% from the prior year, primarily driven by core pharmacy strength, including a nearly 4% increase in same-store prescription volumes, partially offset by continued business investments and the impact of consumer dynamics. Turning now to cash flow and the balance sheet. Year to date, we have generated cash flow from operations of $15.3 billion, reflecting strong earnings as well as the impact of improvements in working capital. So far in 2026, we have returned nearly $2.6 billion to our shareholders through our shareholder dividend. We ended the quarter with nearly $6 billion of cash at the parent and unrestricted subsidiaries.

As I mentioned earlier, we have made significant progress strengthening our balance sheet and have achieved our leverage goal ahead of schedule. This improved position, combined with our strong cash flow, will enable us to resume our share repurchase program in the fourth quarter. Shifting now to our guidance for 2026. We are increasing our full-year 2026 guidance for adjusted EPS to at least $8.20, an increase of $0.20 from the midpoint of our previous outlook. We now also expect our full-year total revenues to be at least $420 billion. In our Health Care Benefits segment, we now expect full-year adjusted operating income to be at least $5.4 billion, an increase of $200 million relative to the midpoint of our prior outlook.

We now expect our full-year MBR to be in the lower half of our previously discussed range of 89.75%, ±25 basis points. This outlook continues to maintain a respectful and prudent view of medical cost trends. In our Pharmacy and Consumer Wellness segment, we now expect full-year adjusted operating income of at least $6.5 billion, an increase of $100 million from our prior guidance and nearly 8% growth from the prior year. This reflects our strong performance in the quarter and our updated expectations for the remainder of the year. We are also reiterating our full-year adjusted operating income outlook for our Health Services segment. In aggregate, we now expect full-year enterprise adjusted operating income to be at least $17.05 billion.

We are also increasing our outlook for full-year cash flow from operations to at least $15.5 billion, reflecting our updated earnings outlook as well as the impact of working capital improvements and the timing of certain payments. Cash generation has long been a strength of this enterprise, and we continue to build on that strength as we deliver on our embedded earnings and unlock further working capital efficiencies. You can find additional details on the components of our updated 2026 guidance on our investor relations website. Turning now to 2027. Consistent with past practice, we expect to provide formal 2027 guidance on our fourth quarter earnings call early next year. Today, I will share an update on some of the key headwinds and tailwinds we are considering for 2027.

Starting first with our healthcare benefits business, we expect another year of meaningful margin improvement as Aetna makes strong progress on its path back to target margins. Once again, this improvement will be largely driven by the deliberate actions we took in our Medicare Advantage business, along with continued disciplined underwriting and pricing across our businesses in response to the elevated trend environment we expect will persist in 2027. In our Health Services segment, we expect to generate adjusted operating income of at least $7 billion. This includes our previously discussed expectations for a year-on-year decline in our 340B business, as well as headwinds from the impact of a less robust selling season and health plan client membership attrition. We also expect tailwinds from continued strength in specialty and another year of improvement in our healthcare delivery business.

We continue to expect our 340B business to largely stabilize by the end of next year, and we have confidence as we enter the 2028 PBM selling season. We are confident 2027 will reflect trough earnings for the segment, and we expect to return to growth from there. In our Pharmacy and Consumer Wellness business, we expect adjusted operating income to grow low single digits off our current 2026 guidance of at least $6.5 billion, driven by continued pharmacy strength. This marks the third consecutive year of growth in earnings for this segment. Our updated outlook reflects the progress we've made differentiating our business and solidifying our position as the best-run national pharmacy, while maintaining a prudent view of consumer dynamics.

Pulling it all together and reflecting the strong performance we saw in the third quarter, we now expect to deliver at least $8.65 in adjusted EPS in 2027, reflecting approximately 13% growth off an adjusted 2026 baseline. Our strong results demonstrate the progress we're making across the enterprise. We've strengthened our financial position, created greater capacity for capital deployment, and built increased confidence in the long-term expectations we outlined at Investor Day. We now believe we will be in the high end of our mid-teens adjusted EPS CAGR through 2028. Importantly, these expectations remain grounded in the same guidance philosophy of establishing credible targets, delivering with disciplined execution, and highlighting opportunities for outperformance. We will continue delivering on our say-do ratio, and that discipline will remain as we progress towards separation. With that, I'll now turn the call back over to David. David?

Thank you, Brian. As Brian highlighted, we are executing against our strategy, and our businesses continue to deliver durable results. Today, we announce that we are building on that momentum. CVS Health is taking an important step in its evolution to create two independent publicly traded companies. Each of the two companies will remain a leader in their respective markets, powered by the right assets, the right focus, and the ability to adapt and move faster. We can take this strategic action today because of our tremendous progress since 2024. We rebuilt our leadership team and instilled a clear culture of accountability, excellence, and execution across the organization. We significantly improved our financial performance, strengthened our balance sheet, and reached our target leverage ratio ahead of schedule, creating capacity for disciplined capital deployment.

We expanded our technology capabilities across our enterprise, thoughtfully embedding AI throughout our businesses and creating a differentiated foundation to simplify and improve the healthcare experience. As we've consistently demonstrated, we are making great strides delivering against our goals while remaining focused on improving the health and care of the 185 million people we serve. As we have advanced our strategy, the environment around us is constantly changing. We will be better positioned to address this changing environment as two strong independent healthcare leaders. Following a thoughtful and deliberate strategic review by the Board and Senior Management, we have a structure and plan that are built to win and represent the best path to create value over the long term. As we announced, CVS Health will retain Aetna, Caremark, and Pharmacy Services, Specialty Pharmacy, Oak Street, and Signify Health.

This enables us to maintain and expand integration where it matters, combining the tools necessary to improve affordability within medical and pharmacy benefits and deliver care to high-acuity populations, including in Medicare and Specialty Pharmacy. CVS Pharmacy will be the leading national retail pharmacy and community healthcare company. It will include our retail pharmacy stores, mail order, MinuteClinic, and Health100, our AI-native integrated healthcare engagement platform for consumers. The rationale for the separation is simple, with four clear benefits. First, focus. Each company will have an experienced, dedicated leadership team that can concentrate on the areas where it has the greatest opportunity to create value. The same mission, sharper focus. Second, capital allocation. Each company is expected to have a solid investment-grade capital structure and strong free cash flow. This will enable tailored capital allocation, more closely aligned with each company's strategy and growth opportunities.

What will not change is the discipline that each company demonstrates in the deployment of capital. Third is agility. Each company will have greater flexibility to adopt the technologies that best fit its needs, improve efficiency, and more effectively adapt to the regulatory and other external dynamics. As independent companies, we will innovate and move faster as we work to improve how healthcare is experienced today. Finally, and importantly, simplicity. Greater independence will make it easier to serve consumers, members, patients, and communities, and will create opportunities for each company to pursue a broader range of partnerships. By taking this deliberate action, we are creating simpler, stronger, and more focused companies. CVS Health will be a scaled health solutions company with attractive growth and strong cash flow generation.

This business will preserve a well-diversified mix of assets and capabilities to address a $2-plus trillion growing market across Medicare, commercial, and Medicaid. We will stay relentlessly focused on affordability, access, and health outcomes. I will serve as Chairman and CEO alongside the best-in-class leadership team in place today. CVS Pharmacy will be the national leader in pharmacy and community healthcare. Our investments in technology and our colleagues continue to set us apart in this greater than a $500 billion market. This is an economically resilient sector where prescription growth will continue to be driven by medical innovation and demographics. CVS Pharmacy will build on its position as the most trusted and most frequent consumer touchpoint in healthcare. Prem Shah, currently the Group President of CVS Health, will become CEO of CVS Pharmacy upon separation.

He will be supported by the experienced leaders and colleagues who reset the trajectory and reinvigorated our retail pharmacy business. With attractive growth, enviable cash flow, and a strong balance sheet, CVS Pharmacy will be a unique asset across healthcare and retail. Both companies remain committed to unlocking the tremendous potential of Health100, our AI-native consumer engagement platform. The mission of Health100 remains unchanged, to be the front door of health and care. By focusing on consumers, Health100 will truly change the way healthcare is experienced in this country. We will drive greater interoperability to remove friction from the system and engage with consumers in a way that no one else has ever done before. We believe this separation will accelerate the adoption and development of Health100 and allow us to drive innovation, improve connectivity, and unlock greater value across both companies.

We expect the separation transaction to be tax-free for U.S. federal income tax purposes and to be completed in the first half of 2028, subject to customary conditions, including final board approval, Form 10 effectiveness, and receipt of customary tax confirmation. Following separation, CVS Health shareholders will own shares in both companies. We will be transparent about our progress, and we will provide additional details along the way. I want to emphasize that we will not lose sight of the need to execute with excellence every single day and consistently deliver on our commitments to all of our stakeholders. Our purpose is clear, to simplify healthcare one person, one family, and one community at a time. I am confident this decision will allow both companies to better deliver on that promise and create lasting value for all stakeholders. With that, we will now open the call for your questions. Operator?

Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen, and then you will hear your name called. Please accept, unmute your audio, and ask your question. If you are calling in today, star nine will activate the raised hand feature, and star six can be used to unmute and mute your line. We ask that you please limit yourself to one question this morning. We will wait one moment to allow the queue to form. Our first question will come from the line of Lisa Gill with JPMorgan. Please unmute your line and ask your question.

Good morning, thanks for taking the question. David, I cannot help but to think that on November 1, 2006, 20 years ago, CVS and Caremark came together. I know you were head of sales at Caremark at the time, so I am sure that this is a very important date for you. Can we first start with just the timing of this and the rationale? You walked through a number of the components, but if we could just maybe better understand especially the timing aspect.

Sure. Lisa, good to hear from you. Yes, I do remember 20 years ago in 2006 talking about what we were trying to build as a very different pharmacy services company, and incredibly proud of the work that we have done over the last 20 years. As I reflect back on that, I cannot help but think how much has changed since 2006 to 2026. So 20 years of change, and even, quite frankly, the change that we have seen from the timing of the acquisition of Aetna. The market continues to evolve and change, and as a company, we need to continue to evolve with it. So in the two years of being in this position, I have been afforded the unique opportunity of actually thinking about this from a position of strength.

It is eight quarters of both a beat and raise, and a financial or balance sheet that is on us ahead of schedule in terms of its leverage. So we are afforded different decisions based off of the strength of the business. I think there are two important things that I would point to. One is that most of the energy over the last two years has been focusing on the Medicare recovery, and we are now entering our third year of that important transition. I think you will hear a lot of that today, but I think that actually sets the stage for the fact that we actually have what we think is a repeatable process to be able to compete effectively in that market. One thing we have not talked a lot about is the progress that we have made at retail.

With Prem leading the recovery effort from a business that was guiding negative five two years ago to now, we are guiding our third year of growth in that business. It just creates an opportunity for us to say, "What is the future of this business? How should we be organized to be able to compete effectively?" I think what we look for is the integration that matter, and what we have done the last two years is integrate quite a bit inside of CVS Health with both Caremark and Aetna and some of the healthcare delivery assets that is helping us lean into value-based care. But retail has, for the most part, for the last two decades, operated behind a firewall. So we have always had to negotiate at arm's length. It is run independent of the business.

I think the timing of this decision is saying, "Now is the time," because we are not doing anything out of a distressed decision. We actually are doing it because we actually have healthy balance sheets with appropriate capital allocation opportunities and momentum in each one of the businesses that we are operating. Again, I feel really good about the timing, I feel really good about the decision, and I feel equally as important about the team that is going to allow us to execute against this plan.

David, if I can sneak one more in, just on the quarter and on Brian's comments on 2027, and that is 340B. I understand it is incorporated in the way you are thinking about 2027, but really just want to understand two things. One, is this a change in the way that you are contracting? And two, Brian made the comment that you have line of sight, that it ends in 2027, it does not spill into 2028. Can you maybe just help me to understand that when I think about what is happening here and why you have line of sight that it is only going to have an impact here in 2026 and 2027?

Yeah, it is a great question, Lisa. I know there has been a lot of topics since our last earnings call on 340B, which is why we tried to size it as we head into 2027. Maybe I will have Brian speak a little bit about how we are thinking about HSS and then specifically 340B, and then I want to have Prem speak a little bit to how we have our arms around and how we are thinking about specifically the 340B business. Brian?

Sure. Thanks, David. Lisa, thanks for the question. As I think about the quarter itself, and then I will progress on to 2027, performance in HSS, Lisa, was in line with our expectations. You asked specifically about PS and 340B. Both 340B and rebate guarantee performance, we saw no surprises from our expectations. We also continued to see strong performance in specialty in the quarter. We maintained our guide for the full year, so not expecting any surprises balance of year. I will comment, since it is in the segment, HCD as well was consistent with our expectations, and we continue to see Oak Street perform quite well. As we thought about next year, Lisa, and looking ahead to 2027, I thought it was important to establish a floor for the HS segment, and that is effectively what we have done today.

We are confident that we would deliver at least $7 billion in HSS AOI next year. That includes the discussions around year-over-year decline in 340B next year and the impact of lower Caremark membership, those two elements. It also includes tailwinds from continued strength in specialty, as well as the second year of improvement in HCD as we make progress towards our path to profitability at Oak Street, et cetera. Confident in our ability to manage the near-term dynamics, Lisa, and expect 2027, as I mentioned previously, to reflect trough earnings for the segment as we return to growth in 2027 as we look onward. So Prem do you want to color that up?

Yeah. Thanks, Brian and David. First off, thank you for the opportunity to lead CVS Pharmacy upon separation. It is an incredible opportunity, and just want to thank David and the board for that. When you think about the HSS segment, as Brian said, pharmacy services in the quarter was in line with our expectations, and we continue to feel good about our outlook for the remainder of the year. As we look into 2027, we are also confident in our position and our ability to manage through the transitory dynamics that we discussed prior. Coming out of the last call, I think there was two areas, 340B was one and the selling season was the second, that I want to take a few minutes to really spend a little bit more time on.

With respect to 340B, we do not expect this to be a topic we need to discuss going forward. The level of contribution that we have in our 2027 plan is an even smaller portion of the HSS segment earnings than it has been historically. I would also reiterate that it is an important program relied on by safety net hospitals and covered entities across the country, and we do not expect the program to go away fully in the future. Secondly, when you look at the 2028 selling season, we are headed into the season with confidence.

If you look at what the value proposition for Caremark has and has always been, it really starts with our industry-leading cost of goods, our customer focus, and our sophisticated capabilities, and our pricing model flexibility that we offer to our customers, that it really address their top concerns and priorities, which is affordability, transparency, and experience. Recall that 2026 for Caremark was an incredibly strong selling season. We achieved approximately $6 billion of gross new wins. As Brian said, a portion of the membership declines we expect in 2027 reflect strategic business decisions from our health plan clients, including what you saw in Aetna's PDP book, which are not a reflection of Caremark's offerings that we have in the marketplace.

We expect the 2028 sales season and the new business pipeline to be robust, and we remain confident in our position and the value proposition that we're providing into the marketplace. Finally, we have an incredibly strong and robust CVS Specialty Pharmacy business that's focused on the patients that we serve, but more importantly, the payers that we serve. Specialty continues to be a main driver of cost trend for our customers. We continue very diligent in driving competition and creating value for our payer partners, and it's an area that we've invested a lot in technology and AI. We continue to make the consumer experiences seamless. We continue to really drive an integrated and a very strong offering there for the patients that we serve.

Overall, I would just summarize this with, we expect 2027 to represent trough earnings of at least $7 billion, and for our Health Services segment, we're going to return to growth thereafter.

Your next question will come from the line of Justin Lake with Wolfe Research. Please unmute your line and ask your question.

Thanks. Good morning. Wanted to understand the impact of the breakup on the balance sheet and capital deployment opportunities. Specifically, I assume the rating agencies are now going to look at CVS Health as a managed care organization, meaning debt-to-cap versus debt-to-EBITDA. Wanted to hear how this might impact your leverage versus today. Then, we've all been expecting significant share repo into 2027 and beyond. Is there any impact on the company's ability to deploy capital versus that $35 billion of deployable capital opportunity you discussed at the Investor Day, post the breakup? Thanks.

Yeah. Thanks, Justin. I am going to let Brian speak to this, but I do want to just remind everybody that as we split CVS Pharmacy, the expectation is that we will have solid investment-grade positions on both of these companies. It speaks to the strength of each one of the businesses that remain in our confidence in the balance sheet and the ability to have the appropriate capital allocation flexibility. Brian, you want to

Yeah. Thanks, David. Justin, it is a good question, and obviously, I have spent a lot of time on the leverage, both together and some of the parts as we think about the business. I can say with a high degree of confidence that both companies will be solid investment grade with strong free cash flow generation. As you mentioned, we will target leverage or debt-to-cap metrics that are appropriate for that rating level. We will bring you along on the process, Justin, as we move throughout the next 15, 18 months. You asked about share repo as well, and I can tell you, we basically have a history of generating cash. You saw that in the guide. We raised our cash $4 billion, and my expectation to get back into the market here in the fourth quarter with the share repo program.

As we think about restoring that leverage ratio and targets, we are ahead of schedule. As I look out to the future and the transaction, I would not see anything getting in the way of our ability to deploy capital going forward.

Your next question will come from the line of Michael Cherny with Leerink Partners. Please unmute and ask your question.

Good morning, and thank you for taking the question. Maybe to dive a little bit on FutureCo. As you think about the business, there's clearly been numerous instances where CVS Pharmacy and Caremark made each other better. I'm thinking of the expansion and creation of Maintenance Choice, among other different areas. How do you think about the potential, I don't want to call them dis-synergies specifically, but the strategic rationale for the overlap going forward between the two entities, and how the competitive differentiation that both entities have been able to generate by being together, by being aligned between the store and the PBM, that they don't lose that capability going forward?

Yeah, it's a great question, Michael, and something we've given quite a bit of thought to, because we do think that there's something unique between CVS and Caremark, and even the role that Aetna plays in terms of engaging the pharmacist in the delivery of care. But the unique products that we've built over the last 20 years are things that were going to be preserved in commercial agreements between the two organizations. We don't need the integration in an operating structure. We need to make sure that we're aligned around where we believe that there can be value creation and make sure that there's an appropriate commercial agreement in place to support that.

That is, in large part, what we will be working on over the course of the next 15 to 18 months, is why the mail service is actually inside of CVS Pharmacy, because we have reinvented how pharmacy is delivered. So it's not the traditional mail order and retail. It is basically a 90-day supply focused and organized around how the consumer wants to get their medication. So we can choose to deliver it to the home. They can pick it up in the store. They can come through something maybe as convenient as a drive-through. But the idea is that we're organizing pharmacy around the consumer, and that Caremark gets the benefit of partnering with a company like CVS Pharmacy that continues to push the envelope on ways in which to better engage the consumer.

The thing that we've spent more time on, as opposed to the products that we built in the past, is where we're going in the future. And that is the emphasis around the technology platform of Health100. It will be the connective tissue between the two organizations, because CVS Pharmacy becomes the engagement engine. It's the most heavily transacted healthcare service, and as a result, more frequent transactions and a higher engagement rate with the consumer. And what Aetna and Caremark bring to the table is all the financial information to help make more informed and better decisions around their healthcare.

So you connect those two, which both organizations are committed to, and we think we will build a world-class consumer engagement platform to be able to help take advantage of where we believe and see technology going, and also being able to democratize the data that we know is an important part of where healthcare is headed. I think the most important takeaway is that we've given a lot of thought about what's unique, that needs to be organized a certain way, which is why mail service is at CVS Retail, and it's why we need to focus on the commercial agreement so we have the sustainability and the durability of being able to continue to organize and service the consumer.

Next question will come from the line of Elizabeth Anderson with Evercore ISI. Please unmute and ask your question.

Hi, guys. Good morning. Thanks so much for the question. Maybe one for you, Prem. I appreciate the comment you gave about the ability for the two organizations to continue to work together going forward. Prem, where do you see additional opportunities or additional areas you could focus on for the stores going forward as an independent entity that were not available to you in the current form? Then two, maybe David, could you just comment on where you see trend overall? You talked about obviously pockets of strength in MA, but any more details you could provide on that to just continue to understand the improving strength there? Thank you very much.

Yeah, perfect. Thanks, Elizabeth. I'm going to have Prem speak to where the future opportunity is, but I think it's worth noting what we've done over the last 2+ years to get ourselves in a position to go build new products and services and create new opportunities. Prem, if you could just take a second talking about your priority and why we're in a growth mode at retail and what gives you confidence that we're going to expand into new areas.

Yeah. Thanks, David, and Elizabeth, thank you for the question. This is an incredibly exciting time, and if you look at our retail business, if you look back, and I go back three or four years when we started to talk about the changes, the intentional changes that we're making here, historically, that was focused on really three things. First and foremost, we invested in the technology platform to create better experiences. If you think about just some clear examples, AI now supports our pharmacy workflow for 85% of our prescriptions. Second, we invested in our colleagues.

We know that our 30,000 pharmacists, we know that our 200,000 store colleagues are essential components to deliver healthcare locally, and we know that healthcare is done by humans in our local communities, and we have a tremendous focus on ensuring that our colleagues are enabled and successful in everything that they do. Lastly, I think some of the things that we focused on around customer NPS, so the customers that walk in our stores, how do we really improve that experience for them? How do we make that omnichannel? How do we make it consistent across the board? These are three areas we really spent a lot of time focusing on, and you can see that flow through in our results in this quarter, right? As you saw in the quarter, our comp scripts grew 3.9%, but also, we were also able to take advantage of new opportunities.

I think GLP-1s is another great example. Our scripts in GLP-1s this quarter grew 23%, and it's because we took action. We made access more affordable. We made it easier for patients to show up. I mean, we really drove focus on what's most important for the people walking into our stores. Lastly, I think it's really important to talk about our evolution of the reimbursement model. We focused on that over time with CVS CostVantage, and let me just be really clear. The CVS and Caremark relationships have operated behind a firewall for more than two decades, so this is something that we continually do, but we continue to be focused on the value proposition that we create to payers.

As I look forward, I think the excitement I have in our CVS Pharmacy asset is we have a well-run, strong service offering for the customers we serve. We're in a position now to offer incremental healthcare services, leverage our 9,000 stores, leverage our footprint in very different ways, because the key thing for almost all payers, I don't care who you are in this country, is we have a challenge with affordability. CVS Pharmacy affords and has the privilege to serve in every community, standardize healthcare services, and transform the industry in terms of what we can do, and this will afford us the right to really drive this forward into the marketplace.

That's perfect. Prem is effectively running America's pharmacy, and we say this all the time. We think this country needs CVS Pharmacy and the community-based services that we're providing because we are investing in the communities, and we're going to continue to extend that reach as we go forward. Now, if I could just speak to the remaining CVS Health organization and to Prem's point about this focus on affordability, we think the focus will now be purely on what we believe are the drivers of healthcare in this country. If you look at two-thirds of the spend coming from both the health systems and the drug manufacturers, with increases that, in most cases, are high single or low double digits, there is a significant opportunity for this organization to tackle that challenge on behalf of the customers in which we serve.

We are declaring that the company that will remain will be focused to support the payers and bring affordability and improving access. Steve, you want to just give a little bit of color on the trend environment and how we're looking, maybe just on Medicare as an example?

CVS Health (CVS) Q3 2026 & Investor update Earnings Call Transcript

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