CVS HEALTH Corp (CVS) Risk Factors

Recent key developments

Concrete developments — dated events, named agreements and instruments, legal proceedings — that CVS HEALTH Corp surfaced in its latest filing.

• During the first quarter of 2025, we recorded a premium deficiency reserve of $448 million related to our individual exchange product line and during the second quarter of 2025, we recorded a premium deficiency reserve of $471 million related to our Group Medicare Advantage product line, primarily related to anticipated losses for the remainder of the 2025 coverage year.2025
• CMS issued final 2026 Medicare Advantage payment rates with an expected average revenue increase of 7.16%, including a 2.10% risk score trend increase.2026
• On January 26, 2026, CMS issued an advance notice for proposed 2027 Medicare Advantage rates with an expected average increase of 2.54%, including a 2.45% risk score trend increase.January 26, 2026
• More than 81% of our Medicare Advantage members were in 2026 plans rated 4 stars or higher, and more than 63% in a 4.5-star plan.2026
• In May 2025, CMS announced it would audit every Medicare Advantage contract each payment year, with expedited audits for payment years 2018 through 2024 by early 2026.May 2025
• The Working Families Tax Cut Act of 2025 makes changes to Medicaid eligibility rules and financing, reducing eligibility and state funding.2025
• The IRA contains significant changes to the Medicare Part D program, shifting more claim liability to plans, including a complete redesign of the standard benefit effective in 2025.2025
• As of December 31, 2025, Moody’s assigned long-term debt rating of “Baa3” and commercial paper rating of “P-3” with a “Stable” outlook; S&P assigned long-term debt rating of “BBB” and commercial paper rating of “A-2” with a “Negative” outlook; Fitch assigned long-term debt rating of “BBB” and commercial paper rating of “F2” with a “Negative” outlook.December 31, 2025
• Laws in Arkansas, Louisiana, North Dakota and Oklahoma attempting to limit PBM practices, subject to recent lawsuits.
• Litigation in several states challenging ERISA and Medicare Part D preemption.
• We are a defendant in qui tam or whistleblower suits under federal and state false claims acts.
• CMS and OIG are auditing risk adjustment-related data of certain of our Medicare Advantage plans.
• We are a defendant in hundreds of litigation proceedings relating to opioids and the sale of products containing talc.
• Some new state legislative activity around prohibiting ownership of a pharmacy if affiliated with a PBM.