CVS Health (CVS) 10-K risk factor changes: FY2022 vs FY2021

- If we fail to comply with applicable laws and [removed: regulations] [added: regulations, or fail to change our operations in line with any new legal or regulatory requirements,] we could be subject to significant adverse regulatory actions.

- We face unique regulatory and other challenges in our [added: Public Exchange,] Medicare and Medicaid businesses.

- We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, MBRs and operating results [removed: and] [added: which] could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes.

Our use and disclosure of members’, customers’ and other constituents’ sensitive information is subject to complex [removed: regulations at multiple levels.][added: regulations.]

The [removed: spread of,] impact of [removed: and response to] COVID-19 underscores and amplifies certain risks we [removed: face.][added: face.]

COVID-19 has spread to every state in the U.S., has been declared a pandemic by the World Health Organization and has severely [removed: impacted, and is expected to continue to severely impact,] [added: impacted] the economies of the U.S. and other countries around the world.

[removed: As] [added: In addition, as] a result of [removed: COVID-19, including] legislative and/or regulatory responses to [removed: COVID-19,] [added: a rise in infection rates or] the [added: development of new variants or viruses, the] premiums we charge in our Insured Health Care Benefits products may prove to be insufficient to cover the cost of medical services delivered to our [removed: Insured] [added: insured] medical members, which may increase significantly as a result of higher utilization rates of medical facilities and services and other increases in associated hospital and pharmaceutical costs.

[removed: Federal, state and local governmental policies and initiatives to reduce] [added: Although certain of] the [removed: transmission] [added: economic impacts] of [removed: COVID-19, including existing and new variants, such as mask and vaccination mandates, restrictions on large gatherings] [added: COVID-19 have moderated] and [removed: social distancing directives, may not effectively combat] the [removed: severity and/or duration] [added: restrictions imposed as a result] of [removed: the] COVID-19 [removed: pandemic and] have [removed: resulted] [added: eased, a rise in infection rates, the development of new variants or viruses could result] in, among other things, a [added: return of the following: a] reduction in [removed: utilization that is discretionary,] [added: discretionary utilization,] the cancellation of elective medical procedures, reduced customer traffic and front store sales in our retail pharmacies, our customers being ordered to close or severely curtail their operations, the adoption of work-from-home policies and a reduction in diagnostic reporting due to reductions in health care provider visits and restrictions on our access to providers’ medical records, all of which [added: have had a negative] impact [added: on] our businesses.

[removed: The various initiatives we have implemented to slow and/or reduce] [added: Over] the [removed: impact] [added: course] of [removed: COVID-19 and] the [removed: COVID-19-related] [added: COVID-19 pandemic, we implemented various initiatives, such as COVID-19 related] support programs [removed: we have put in place] for our customers, medical members and [removed: colleagues have increased our operating expenses and reduced the efficiency of our operations.][added: colleagues.]

We believe COVID-19’s [added: continuing] impact on our businesses, operating results, cash flows and/or financial condition primarily will be driven by [removed: the geographies impacted and the severity and duration of the pandemic;] vaccination rates; the severity of any new COVID-19 variants and [removed: whether vaccines are effective in combating them;] the [removed: pandemic’s impact on the U.S. and global economies] [added: continued effectiveness of vaccines;] and [removed: consumer behavior] [added: whether federal, state] and [removed: health care utilization patterns;] [added: local governments reinstitute and/or intensify policies] and [added: initiatives designed to reduce] the [removed: timing, scope] [added: transmission of COVID-19, including new] and [removed: impact] [added: existing variants, and to address the financial impacts] of [removed: any] [added: a pandemic through] additional [removed: stimulus] legislation [removed: as well as other federal, state] and [removed: local governmental responses to the pandemic.][added: other support programs.]

[removed: Those] [added: These] primary drivers are beyond our knowledge and control.

[removed: As a result,] [added: If any of] the [added: foregoing materializes, the Company’s ability to operate its businesses effectively may be adversely affected and other risks to the Company, such as the risk of cybersecurity attacks, may be amplified, and the] impact [removed: COVID-19 will have] on our businesses, operating results, cash flows and/or financial condition [removed: is uncertain,] [added: would be uncertain] but [removed: the impact] could be adverse and material.

[removed: As a result of COVID-19, the current economic environment is adverse and less predictable than recently experienced, which] [added: COVID-19] has caused and may continue to cause unanticipated and significant volatility in our health care and other benefits costs, including COVID-19 related testing and vaccination and post-acute care skilled nursing facility and behavioral health costs.

Premiums for our Insured Health Care Benefits products, which comprised 93% of our Health Care Benefits revenues for [removed: 2021,] [added: 2022,] are priced in advance based on our forecasts of health care and other benefit costs during a fixed premium period, which is generally twelve months.

[added: Cost increases in excess of] our projections cannot be recovered in the fixed premium period through higher premiums.

For [removed: 2022,] [added: 2023,] those forecasts include adjustments made to pricing based on prospective expectations for liabilities due to testing, vaccines, direct COVID-19 treatment and deferred care.

There can be no assurance regarding the accuracy of the health care or other benefit cost projections reflected in our pricing, and [added: whether] our health care and other benefit costs (including COVID-19 related testing and vaccination and post-acute care skilled nursing facility and behavioral health costs) [removed: are] [added: will be] affected by COVID-19 [added: or other variants or viruses] and other external events over which we have no control.

A number of factors contribute to rising health care and other benefit costs, including [removed: COVID-19,] [added: COVID-19 or other variants or viruses,] previously uninsured members entering the health care system, changes in members’ behavior and health care utilization patterns, turnover in our membership, additional government mandated benefits or other regulatory changes (including under the Families First Act, the CARES Act, and the American Rescue Plan Act), changes in the health status of our members, the aging of the population and other changing demographic characteristics, advances in medical technology, increases in the number and cost of prescription drugs (including specialty pharmacy drugs and ultra-high cost drugs and therapies), direct-to-consumer marketing by drug manufacturers, the increasing influence of social media on our members’ health care utilization and other behaviors, changes in health care practices and general economic conditions (such as inflation and employment levels).

In addition, government-imposed limitations on Medicare and Medicaid reimbursements to health plans and providers have caused the private sector to bear a greater share of increasing health care and other benefits costs over time, and future amendments to the ACA that increase the uninsured population may amplify this [removed: problem.][added: issue.]

Other factors that affect our health care and other benefit costs include epidemics or other pandemics, changes as a result of the ACA, changes to the ACA and other changes in the regulatory environment, the evolution toward a consumer driven business model, new technologies, influenza-related health care costs (which may be substantial and higher than we expected), clusters of high-cost cases, health care [removed: provider and member fraud, and numerous other factors that are or may be beyond our control.]

Adverse economic conditions in the U.S. and abroad, including those caused by [added: inflation, high interest rates, supply chain disruptions and] COVID-19, can materially and adversely impact our businesses, operating results, cash flows and financial condition, including:

- In our Retail/LTC segment, by causing drug utilization to decline, changing consumer purchasing power, preferences and/or spending patterns leading to reduced consumer demand for products sold in our [removed: stores] [added: stores, potentially increasing levels of theft at our retail locations] and adversely affecting the financial health of our LTC pharmacy customers.

- By increasing medical unit costs and causing changes in provider behavior in our Health Care Benefits segment as hospitals and other providers attempt to maintain revenue levels in their efforts to adjust to their own [removed: COVID-19-related and other] economic challenges.

- By weakening the ability or perceived ability of the issuers and/or guarantors of the debt or other securities we hold in our investment portfolio to perform on their obligations to us, which could result in defaults in those securities and has reduced, [removed: and may further reduce, the value of those securities and has created, and may continue to create, net realized capital losses for us that reduce our operating results.]

- By [removed: causing,] [added: continuing to cause,] over time, inflation that could cause interest rates to [added: further] increase and thereby [added: further] increase our interest expense and reduce our operating results, as well as [added: further] decrease the value of the debt securities we hold in our investment portfolio, which would [added: further] reduce our operating results and/or adversely affect our financial condition.

- In our Health Care Benefits [removed: segment] [added: segment,] we are seeking to substantially grow our Medicaid, dual eligible and dual eligible special needs plan membership over the next several years.

In many instances, to acquire and retain our government [added: customers’ business, we must bid against our competitors in a highly competitive environment.]

[removed: If we are unable to limit our price increases, we] [added: We] may lose members to competitors with more favorable pricing, [added: or our customers may purchase different types of products from us that are less profitable,] adversely affecting our revenues and operating results.

- We requested increases in our premium rates in our Commercial Health Care Benefits business for [removed: 2021] [added: 2023] and expect to request [added: future] increases in those rates [removed: for 2022 and beyond] in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by federal and state governments, including as a result of the ACA.

- The competitive success of our Pharmacy Services segment is dependent on our ability to establish and maintain contractual relationships with network [removed: pharmacies as PBM clients evaluate adopting narrow or restricted retail pharmacy networks.][added: pharmacies.]

[removed: If we] lose our relationship with one or more drug manufacturers, or if the discounts or rebates provided by drug manufacturers decline, our operating results, cash flows and/or prospects could be adversely affected.

In January 2022, we entered into the Public Exchanges in eight [removed: states.][added: states and further expanded to a total of twelve states in January 2023.]

[removed: Due to the price transparency] provided by Public Exchanges, when we market products we face competitive pressures from existing and new competitors who may have lower cost structures.

In addition, there can be no assurance that our pricing or other actions will result in the profitability of our Public Exchange products in [removed: 2022] [added: 2023] or any future year.

We have set [removed: 2022] [added: 2023] premium rates for our Public Exchange products based on our projections, including as to the health status and quantity of membership and utilization of medical and/or other covered services by members.

The accuracy of the projections reflected in our pricing may be impacted by (i) adverse selection among individuals who require or utilize more expensive medical and/or other covered services, (ii) other plans’ withdrawals from participation in the Public Exchanges we [removed: serve and] [added: serve,] (iii) [added: a rapid increase or decline in membership, including as a result of individuals losing Medicaid eligibility as redeterminations resume after being suspended during the COVID-19 pandemic, and (iv)] legislation, regulations, enforcement activity and/or judicial decisions that cause Public Exchanges to operate in a manner different than what we projected in setting our premium rates.

Because our specialty pharmacy business focuses on complex and high-cost medications, many of which are made available by manufacturers to a limited number of pharmacies (so-called limited distribution drugs) that serve a relatively limited universe of patients, the future growth of our [added: specialty pharmacy business depends largely upon expanding our access to key drugs and penetration in certain treatment categories.]

Any reserve, including a premium deficiency reserve, may [removed: be insufficient.][added: be]

For example, as of December 31, [removed: 2021 and 2020,] [added: 2021,] we established a premium deficiency reserve of $16 million [removed: and $11 million, respectively,] related to Medicaid products in the Health Care Benefits [removed: segment.][added: segment, but did not establish a premium deficiency reserve as of December 31, 2022.]

A worsening (or improvement) of health care cost trend rates or changes in claim payment patterns from those that we assumed in estimating health care costs payable as of December 31, [removed: 2021] [added: 2022] would cause these estimates to change in the near term, and such a change could be material.

If there is a rise in infection rates or the development of new variants or viruses, we may have to re-institute, extend or expand these initiatives, which could adversely impact our businesses, operating results, cash flows and/or financial condition.

In addition, measures that were imposed to limit the spread of COVID-19 may also be re-instituted, which may lead to impacts including, but not limited to, complete or partial facility closures, labor shortages, financial difficulties of third-party providers, supply chain disruptions and re-introduction of remote work arrangements.

provider and member fraud, and numerous other factors that are or may be beyond our control.

Many of the requirements set forth above may change once the PHE expires.

The Biden administration recently renewed the PHE on January 11, 2023 and has indicated that they intend for the PHE to expire on May 11, 2023.

and may further reduce, the value of those securities and has created, and may continue to create, net realized capital losses for us that reduce our operating results.

If we

- If laws or regulations are promulgated that limit the number of PBMs available in a particular business or geography, competition in those businesses and geographies could be amplified and could adversely affect our revenues and operating results.

Due to the price transparency

insufficient.

The U.S. financial markets have been experiencing, and may continue to experience, volatility and disruptions, including diminished liquidity and credit availability, inflation, declines in consumer confidence and economic growth and increases in unemployment rates, all of which have resulted in uncertainty about economic stability.

acceptable terms, our ability to execute sale-leaseback transactions under acceptable terms and the value of our investment portfolio.

The Bipartisan Infrastructure Act of 2021

delays the effective date of the rebate rule to January 2026, and the Inflation Reduction Act, enacted in August 2022, further delays the Rebate Rule through 2032.

The first filings of plan year data were required in December 2022 and will be required annually in June of each year on an ongoing basis.

Additional litigation has been filed in several states to challenge ERISA and Medicare Part D preemption.

Final 2023 Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 5.00%, excluding the CMS estimate of Medicare Advantage risk score trend.

On February 1, 2023, CMS issued an advance notice detailing proposed 2024 Medicare Advantage payment rates.

The 2024 Medicare Advantage rates, if finalized as proposed, will result in an expected average decrease in revenue for the Medicare Advantage industry of 2.27%, excluding the CMS estimate of Medicare Advantage risk score trend, though the rates may vary widely depending on the provider group and patient demographics.

CMS intends to publish the final 2024 rate announcement no later than April 3, 2023.

The Company faces a challenge from the impact of the increasing cost of medical care (including prescription medications), changes to methodologies for determining payments and CMS local and national coverage decisions that require the Company to pay for services and supplies that are not factored into the Company’s bids.

CMS released the Company’s 2023 star ratings in October 2022.

The Company’s 2023 star ratings will be used to determine which of its Medicare Advantage plans have ratings of 4 stars or higher and qualify for bonus payments in 2024.

Based on the 2023 star ratings, the percentage of the Company’s Medicare Advantage members in 4 stars or higher plans is expected to drop to 21% (based on enrollment and contract affiliation at December 31, 2022), as compared to 87% based on the 2022 star ratings.

The main driver of this decrease was a 1 star decrease in the Company’s Aetna National PPO, which dropped from 4.5 to 3.5 stars, while many other of the Company’s plans remain rated at 4 stars or higher.

The decrease in the star rating for the Aetna National PPO will mean that it will no longer be eligible for CMS’ quality bonus payments related to 2024.

A lower star rating may also negatively impact new enrollment in the Aetna National PPO as consumers seek out plans that have four star or higher ratings.

There can be no assurances that the Company will be successful in maintaining or improving its star ratings in future years.

- The RADV Audit Rule creates uncertainty for Medicare Advantage plans.

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

- The resumption of Medicaid eligibility redeterminations after being suspended during the COVID-19 pandemic could negatively impact the number of members eligible for the Company’s Medicaid plans.

The laws and regulations governing participation in Public Exchange, Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.

implementing proposed rate increases even if they ultimately are approved.

resources.

acquisitions, including the proposed acquisition of Oak Street Health and pending acquisition of Signify Health, and other inorganic growth strategies include:

- we may not be able to obtain the required regulatory approval for an acquisition in a timely manner, if at all;

- a proposed or pending transaction may have a negative effect on the Company’s credit ratings;

- announcements related to an acquisition could have an adverse effect on the market price of the Company’s common stock and other securities; and

Similarly, we may also seek to divest assets that no longer fit into our long-term strategic plan.

Such divestitures may take time and, even if such divestitures can be completed, they may have negative short-term financial impacts or may result in regulatory and financial exposure to businesses we have sold.

Risks Related to COVID-19

The impact COVID-19 will have on our businesses, operating results, cash flows and/or financial condition is uncertain, but the impact could be material and adverse.

The legislative and regulatory environment governing our businesses is dynamic and changing frequently, including the Families First Act, the CARES Act, the American Rescue Plan Act and mandated increases to the medical services we must pay for without a corresponding increase in the premiums we receive in our Health Care Benefits Insured products.

Among other impacts of these policies and initiatives on our businesses, there may be changes in medical claims submission patterns and an adverse impact on (i) drug utilization due to the reduction in discretionary visits with providers; (ii) front store sales as a result of reduced customer traffic in our retail pharmacies; (iii) medical membership in our Health Care Benefits segment and covered lives in our PBM clients due to reductions in workforce at our existing customers (including due to business failures) as well as reduced willingness to change benefits providers by prospective customers; (iv) benefit costs due to COVID-19 related support programs we have put in place for our medical members and mandated increases to the medical services we must pay for without a corresponding increase in the premiums we receive in our Insured Health Care Benefits products; and (v) the amount, timing and collectability of payments to the Company from customers, clients, government payers and members as a result of the impact of COVID-19 on them.

Over time, these policies and initiatives also may cause us to experience increased benefit costs and/or decreased revenues in our Health Care Benefits segment if, as a result of our medical members not seeing their providers as a result of COVID-19, we are unable to implement clinical initiatives to manage benefit costs and chronic conditions of our medical members and appropriately document their risk profiles.

In addition, in response to COVID-19, during the first half of 2020, we began to offer our medical members expanded benefit coverage and became obligated by governmental action to provide other additional coverage.

This expanded benefit coverage continued to be provided without a corresponding increase in the premiums we receive in our Insured Health Care Benefits

products.

We also are taking actions designed to help provide financial and administrative relief for the health care provider community.

Such measures and any further steps we take or are required to take to expand or otherwise modify the services delivered to our Health Care Benefits members, provide relief for the health care provider community, or in connection with the relaxation of social distancing directives and other restrictions on movement and economic activity intended to reduce the spread of COVID-19, including the potential for widespread testing and vaccination, including boosters, as a component of lifting those measures, could adversely impact our benefit costs, MBR and operating results.

Our operating results will continue to be adversely affected so long as these initiatives continue or if they are expanded.

In addition, any adverse economic conditions that could be caused by COVID-19 may have an adverse impact on our net investment income and the value of our investment portfolio.

The spread of COVID-19, or actions taken to mitigate its spread, could have material and adverse effects on our ability to operate our businesses effectively, including as a result of the complete or partial closure of facilities, labor shortages and/or financial difficulties experienced by third-party service providers.

Disruptions in our supply chains, our distribution chains and/or public and private infrastructure, including those caused by industry capacity constraints, material availability, global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers, and labor availability constraints, could materially and adversely impact our business operations.

We have transitioned a significant subset of our colleagues to a remote work environment in an effort to mitigate the spread of COVID-19, as have a significant number of our third-party service providers, which may amplify certain risks to our businesses, including an increased demand for information technology resources, increased risk of phishing and other cybersecurity attacks, increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us or our medical members or other third-parties and increased risk of business interruptions.

The COVID-19 pandemic continues to evolve and the severity and duration of the pandemic and scope and intensity of the governmental response to it are unknown at this time.

Cost increases in excess of

customers’ business, we must bid against our competitors in a highly competitive environment.

One of the key factors on which we compete for customers, especially in uncertain economic environments, is overall cost.

We are therefore under pressure to contain premium price increases despite being faced with increasing health care and other benefit costs and increasing operating costs.

In response to rising prices, our customers may elect to self-insure or to reduce benefits in order to limit increases in their benefit costs.

Alternatively, our customers may purchase different types of products from us that are less profitable.

Such elections may result in reduced membership in our more profitable Insured products and/or lower premiums for our Insured products, which may adversely affect our revenues and operating results, although such elections also may reduce our health care and other benefit costs.

If we are unable to increase our prices to reflect, or otherwise mitigate the impact of, increasing costs, our profitability will be adversely

affected.

specialty pharmacy business depends largely upon expanding our access to key drugs and penetration in certain treatment categories.

These risks are particularly acute during and following periods when utilization of medical and/or other covered services and/or medical cost trends are below

Such extreme events or the threat of

The federal and many

For example, on October 29, 2020, the HHS released a final rule requiring health insurers to disclose drug pricing and cost-sharing information.

The final rule requires group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request, to a participant, beneficiary, or enrollee, which, unless otherwise indicated, for the purpose of the final rules includes an authorized representative, and requires plans and issuers to disclose in-network provider rates, historical out-of-network allowed amounts and the associated billed charges, and negotiated rates for prescription drugs.

While the specific regulation requiring PBMs to disclose negotiated price concessions was paused under federal guidance released in August 2021, if it resurfaces, the regulation may result in drug manufacturers lowering discounts or rebates, resulting in higher drug costs for patients and impacting the ability of the Company to negotiate drug prices and provide competitive products and services to consumers.

The Bipartisan Infrastructure Act of 2021 delays the effective date of the rebate rule to January 2026, and pending Reconciliation legislation would fully repeal the Rebate Rule.

In August, the Tri-Departments deferred enforcement of both the December 2021 deadline for reporting 2020 plan year data and the June 2022 deadline for reporting 2021 plan year data to December 2022.

rights.

Final 2022 Medicare Advantage rates resulted in an increase in industry benchmark rates of approximately 4.1%.

us on short notice without cause or if funds are not available.

likelihood that our requested premium rate increases will be denied, reduced or delayed, which could adversely affect our MBRs and lead to operating margin compression.

We

designed to mitigate the information security risks it faces and protect the security of its computer systems, software, networks and other technology assets against attempts by unauthorized parties to obtain access to confidential information, disrupt or degrade service, or cause other damage.

In an increasingly connected and digital world, [removed: we are] [added: CVS Health is] meeting people wherever they are and changing health care to meet their needs.

The Company has more than [removed: 9,900] [added: 9,000] retail locations, [removed: nearly 1,200] [added: more than 1,100] walk-in medical clinics, a leading pharmacy benefits manager with [removed: approximately] [added: over] 110 million plan members with expanding specialty pharmacy solutions and a dedicated senior pharmacy care business serving more than one million patients per year.

The Company believes its [removed: innovative] [added: integrated] health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

In addition, through the Pharmacy Services segment, the Company provides specialty pharmacy and infusion services, clinical services, disease management services, medical spend management and pharmacy and/or other administrative services for providers and federal 340B drug pricing program covered entities (“Covered [removed: Entities”).][added: Entities”).The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants.]

The Retail/LTC segment sells prescription drugs and a wide assortment of health and wellness products and general merchandise, provides health care services through its MinuteClinic® walk-in medical clinics, provides medical diagnostic testing, administers vaccinations for illnesses such as influenza, coronavirus disease 2019 (“COVID-19”) and shingles and conducts long-term care pharmacy (“LTC”) operations, which distribute prescription drugs and provide related pharmacy [added: consulting and other ancillary services to long-term care facilities and other care settings.]

As of December 31, [removed: 2021,] [added: 2022,] the Retail/LTC segment operated more than [removed: 9,900] [added: 9,000] retail locations, [removed: nearly 1,200] [added: more than 1,100] MinuteClinic locations as well as online retail pharmacy websites, LTC pharmacies and [removed: onsite] [added: on-site] pharmacies.

For the year ended December 31, [removed: 2021,] [added: 2022,] the Company dispensed [removed: approximately 26.4%] [added: 26.8%] of the total retail pharmacy prescriptions in the United States.

- Products for which the Company no longer solicits or accepts new customers such as [added: its] large case pensions and long-term care insurance products.

The COVID-19 pandemic and its emerging new variants continue to impact the [added: economies of the] U.S. and other countries around the world.

The COVID-19 pandemic had a significant impact on the Company’s operating results for the years ended December 31, [added: 2022,] 2021 and 2020, primarily in the Company’s Health Care Benefits and Retail/LTC segments.

Beginning in mid-March 2020, the health [added: care] system experienced a significant reduction in utilization of medical services (“utilization”) that is discretionary and the cancellation of elective medical procedures.

During 2020, the Company also played a key role in supporting the local communities in which it operates through the administration of diagnostic testing at its CVS [removed: Pharmacy®] [added: pharmacy] locations, as well as in long-term care facilities, at community-based testing sites in underserved areas and through its Return ReadySM solution.

During the first quarter of 2021, the Company experienced reduced customer traffic in its retail pharmacies, which reflected the impact of a [removed: weak] [added: weaker] cough, cold and flu season, while it administered the highest quarterly volume of COVID-19 diagnostic tests.

[removed: We believe] [added: The Company believes] COVID-19’s impact on [removed: our] [added: its] businesses, operating results, cash flows and/or financial condition primarily will be driven by the geographies impacted and the severity and duration of the pandemic; the pandemic’s impact on the U.S. and global economies and consumer behavior and health care utilization patterns; and the timing, scope and impact of [removed: stimulus] legislation as well as other federal, state and local governmental responses to the pandemic.

Those primary drivers are beyond [removed: our] [added: the Company’s] knowledge and control.

As a result, the impact COVID-19 will have on [removed: our] [added: the Company’s] businesses, operating results, cash flows and/or financial condition is uncertain, but the impact could be adverse and material.

The following information summarizes the Company’s results of operations for [removed: 2021] [added: 2022] compared to [removed: 2020.][added: 2021.]

For discussion of the Company’s results of operations for [removed: 2020] [added: 2021] compared to [removed: 2019,] [added: 2020,] see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2020] [added: 2021] filed with the U.S. Securities and Exchange Commission (the “SEC”) on February [removed: 16, 2021.][added: 9, 2022.]

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | [removed: 2021] [added: 2022] vs. [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2020] [added: 2021] vs. [removed: 2019] [added: 2020] | | | | | | | | |

| In millions | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | $ | | | | | | % | | | | | | $ | | | | | | % | | |

| Products | | | $ | [removed: 203,738] [added: 226,616] | | | | | $ | [removed: 190,688] [added: 203,738] | | | | | $ | [removed: 185,236] [added: 190,688] | | | | | $ | [removed: 13,050] [added: 22,878] | | | | | [removed: 6.8] [added: 11.2] | | % | | | | $ | [removed: 5,452] [added: 13,050] | | | | | [removed: 2.9] [added: 6.8] | | % |

| Premiums | | | [removed: 76,132] [added: 85,330] | | | | | | [removed: 69,364] [added: 76,132] | | | | | | [removed: 63,122] [added: 69,364] | | | | | | [removed: 6,768] [added: 9,198] | | | | | | [removed: 9.8] [added: 12.1] | | % | | | | [removed: 6,242] [added: 6,768] | | | | | | [removed: 9.9] [added: 9.8] | | % |

| Services | | | [removed: 11,042] [added: 9,683] | | | | | | [removed: 7,856] [added: 11,042] | | | | | | [removed: 7,407] [added: 7,856] | | | | | | [removed: 3,186] [added: (1,359)] | | | | | | [removed: 40.6] [added: (12.3)] | | % | | | | [removed: 449] [added: 3,186] | | | | | | [removed: 6.1] [added: 40.6] | | % |

| Net investment income | | | [removed: 1,199] [added: 838] | | | | | | [removed: 798] [added: 1,199] | | | | | | [removed: 1,011] [added: 798] | | | | | | [removed: 401] [added: (361)] | | | | | | [removed: 50.3] [added: (30.1)] | | % | | | | [removed: (213)] [added: 401] | | | | | | [removed: (21.1)] [added: 50.3] | | % |

| Total revenues | | | [removed: 292,111] [added: 322,467] | | | | | | [removed: 268,706] [added: 292,111] | | | | | | [removed: 256,776] [added: 268,706] | | | | | | [removed: 23,405] [added: 30,356] | | | | | | [removed: 8.7] [added: 10.4] | | % | | | | [removed: 11,930] [added: 23,405] | | | | | | [removed: 4.6] [added: 8.7] | | % |

| Cost of products sold | | | [removed: 175,803] [added: 196,892] | | | | | | [removed: 163,981] [added: 175,803] | | | | | | [removed: 158,719] [added: 163,981] | | | | | | [removed: 11,822] [added: 21,089] | | | | | | [removed: 7.2] [added: 12.0] | | % | | | | [removed: 5,262] [added: 11,822] | | | | | | [removed: 3.3] [added: 7.2] | | % |

| Benefit costs | | | [removed: 64,260] [added: 71,281] | | | | | | [removed: 55,679] [added: 64,260] | | | | | | [removed: 52,529] [added: 55,679] | | | | | | [removed: 8,581] [added: 7,021] | | | | | | [removed: 15.4] [added: 10.9] | | % | | | | [removed: 3,150] [added: 8,581] | | | | | | [removed: 6.0] [added: 15.4] | | % |

| Store impairments | | | [removed: 1,358] [added: —] | | | | | | [removed: —] [added: 1,358] | | | | | | [removed: 231] [added: —] | | | | | | [removed: 1,358] [added: (1,358)] | | | | | | [removed: 100.0] [added: (100.0)] | | % | | | | [removed: (231)] [added: 1,358] | | | | | | [removed: (100.0)] [added: 100.0] | | % |

| Goodwill impairment | | | [removed: 431] [added: —] | | | | | | [removed: —] [added: 431] | | | | | | — | | | | | | [removed: 431] [added: (431)] | | | | | | [removed: 100.0] [added: (100.0)] | | % | | | | [removed: —] [added: 431] | | | | | | [removed: —] [added: 100.0] | | % |

| Operating expenses | | | [removed: 37,066] [added: 38,212] | | | | | | [removed: 35,135] [added: 37,066] | | | | | | [removed: 33,310] [added: 35,135] | | | | | | [removed: 1,931] [added: 1,146] | | | | | | [removed: 5.5] [added: 3.1] | | % | | | | [removed: 1,825] [added: 1,931] | | | | | | 5.5 | | % |

| Total operating costs | | | [removed: 278,918] [added: 314,721] | | | | | | [removed: 254,795] [added: 278,918] | | | | | | [removed: 244,789] [added: 254,795] | | | | | | [removed: 24,123] [added: 35,803] | | | | | | [removed: 9.5] [added: 12.8] | | % | | | | [removed: 10,006] [added: 24,123] | | | | | | [removed: 4.1] [added: 9.5] | | % |

| Operating income | | | [removed: 13,193] [added: 7,746] | | | | | | [removed: 13,911] [added: 13,193] | | | | | | [removed: 11,987] [added: 13,911] | | | | | | [removed: (718)] [added: (5,447)] | | | | | | [removed: (5.2)] [added: (41.3)] | | % | | | | [removed: 1,924] [added: (718)] | | | | | | [removed: 16.1] [added: (5.2)] | | % |

| Interest expense | | | [removed: 2,503] [added: 2,287] | | | | | | [removed: 2,907] [added: 2,503] | | | | | | [removed: 3,035] [added: 2,907] | | | | | | [removed: (404)] [added: (216)] | | | | | | [removed: (13.9)] [added: (8.6)] | | % | | | | [removed: (128)] [added: (404)] | | | | | | [removed: (4.2)] [added: (13.9)] | | % |

| Loss on early extinguishment of debt | | | [removed: 452] [added: —] | | | | | | [removed: 1,440] [added: 452] | | | | | | [removed: 79] [added: 1,440] | | | | | | [removed: (988)] [added: (452)] | | | | | | [removed: (68.6)] [added: (100.0)] | | % | | | | [removed: 1,361] [added: (988)] | | | | | | [removed: 1,722.8] [added: (68.6)] | | % |

| Other income | | | [removed: (182)] [added: (169)] | | | | | | [removed: (206)] [added: (182)] | | | | | | [removed: (124)] [added: (206)] | | | | | | [removed: 24] [added: 13] | | | | | | [removed: 11.7] [added: 7.1] | | % | | | | [removed: (82)] [added: 24] | | | | | | [removed: (66.1)] [added: 11.7] | | % |

| Income before income tax provision | | | [removed: 10,420] [added: 5,628] | | | | | | [removed: 9,770] [added: 10,420] | | | | | | [removed: 8,997] [added: 9,770] | | | | | | [removed: 650] [added: (4,792)] | | | | | | [removed: 6.7] [added: (46.0)] | | % | | | | [removed: 773] [added: 650] | | | | | | [removed: 8.6] [added: 6.7] | | % |

| Income tax provision | | | [removed: 2,522] [added: 1,463] | | | | | | [removed: 2,569] [added: 2,522] | | | | | | [removed: 2,366] [added: 2,569] | | | | | | [removed: (47)] [added: (1,059)] | | | | | | [removed: (1.8)] [added: (42.0)] | | % | | | | [removed: 203] [added: (47)] | | | | | | [removed: 8.6] [added: (1.8)] | | % |

| Income from continuing operations | | | [removed: 7,898] [added: 4,165] | | | | | | [removed: 7,201] [added: 7,898] | | | | | | [removed: 6,631] [added: 7,201] | | | | | | [removed: 697] [added: (3,733)] | | | | | | [removed: 9.7] [added: (47.3)] | | % | | | | [removed: 570] [added: 697] | | | | | | [removed: 8.6] [added: 9.7] | | % |

| Loss from discontinued operations, net of tax | | | — | | | | | | [removed: (9)] [added: —] | | | | | | [removed: —] [added: (9)] | | | | | | [removed: 9] [added: —] | | | | | | [removed: 100.0] [added: —] | | % | | | | [removed: (9)] [added: 9] | | | | | | [removed: (100.0)] [added: 100.0] | | % |

| Net income | | | [removed: 7,898] [added: 4,165] | | | | | | [removed: 7,192] [added: 7,898] | | | | | | [removed: 6,631] [added: 7,192] | | | | | | [removed: 706] [added: (3,733)] | | | | | | [removed: 9.8] [added: (47.3)] | | % | | | | [removed: 561] [added: 706] | | | | | | [removed: 8.5] [added: 9.8] | | % |

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a leading diversified health solutions company reshaping health care to help make healthier happen for more Americans.

The Company entered Public Exchanges in four additional states effective January 2023.

The Company also provides various administrative, management and reporting services to pharmaceutical manufacturers.

During the year ended December 31, 2022, the impact of COVID-19 within the Health Care Benefits segment has generally stabilized as a result of the Company’s ability to capture COVID-19 related medical costs in pricing.

During the year ended December 31, 2022, the customary quarterly operating income progression in the Retail/LTC segment continued to be impacted by COVID-19.

During the first quarter, the Company saw high volumes of administration of COVID-19 vaccinations, as well as demand for OTC test kits in the front store, particularly in the beginning of the year when

the Omicron variant incidence was high.

In addition, the Company administered the highest quarterly volume of COVID-19 diagnostic tests of 2022 during the first quarter, however a decline compared to the prior year.

During the second and third quarters, the Company continued to generate earnings from the sale of OTC test kits, as customers performed more in-home testing versus diagnostic testing, in addition to earnings from the continued administration of COVID-19 diagnostic testing and vaccinations, albeit at lower levels than those experienced in the first quarter.

During the fourth quarter, the Company saw an increase in COVID-19 vaccine administration from the prior quarter related to the bivalent COVID-19 booster.

During the year ended December 31, 2022, the Company administered more than 15 million COVID-19 tests and nearly 28 million COVID-19 vaccines and sold more than 63 million OTC test kits.

COVID-19 also may result in legal and regulatory proceedings, investigations and claims against the Company.

| Opioid litigation charges | | | 5,803 | | | | | | — | | | | | | — | | | | | | 5,803 | | | | | | 100.0 | | % | | | | — | | | | | | — | | % |

| Loss on assets held for sale | | | 2,533 | | | | | | — | | | | | | — | | | | | | 2,533 | | | | | | 100.0 | | % | | | | — | | | | | | — | | % |

- Total revenues increased $30.4 billion, or 10.4%, in 2022 compared to 2021.

- Operating expenses increased $1.1 billion, or 3.1%, in 2022 compared to 2021.

The increase in operating expenses was primarily due to increased operating expenses to support growth in the business, incremental investments in business operations and decreased gains from legal settlements in 2022 compared to 2021.

These increases were partially offset by a decrease in amortization of intangible assets compared to the prior year, as well as pre-tax gains of $250 million on the sale

of the Company’s wholly-owned subsidiary bswift LLC (“bswift”) and $225 million on the sale of PayFlex Holdings, Inc. (“PayFlex”), both of which were sold during 2022.

- Operating income decreased $5.4 billion, or 41.3%, in 2022 compared to 2021.

The decrease in operating income was primarily driven by the $5.8 billion of opioid litigation charges and declines in the Retail/LTC segment, which included a $2.5 billion loss on assets held for sale related to the write-down of the Company’s Omnicare® long-term care business (“LTC business”) during 2022, partially offset by the absence of a store impairment charge of approximately $1.4 billion and a $431 million goodwill impairment charge on the remaining goodwill of the LTC reporting unit, both of which were recorded in the prior year.

These decreases were partially offset by increases in the Health Care Benefits segment, which included the pre-tax gains of $250 million on the sale of bswift and $225 million on the sale of PayFlex and a decrease in amortization of intangible assets, as well as improved purchasing economics and growth in specialty pharmacy in the Pharmacy Services segment.

- The Company’s effective income tax rate increased to 26.0% in 2022 compared to 24.2% in the prior year.

The increase was primarily due to certain nondeductible legal charges and basis differences on the sale of certain subsidiaries in 2022.

These increases were partially offset by the impact of certain discrete tax items concluded in the first quarter of 2022.

These increases are expected to be partially offset by continued client price improvements and regulation of pharmacy pricing.

| 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total revenues | | | $ | 91,409 | | | | | $ | 169,236 | | | | | $ | 106,594 | | | | | $ | 530 | | | | | $ | (45,302) | | | | | $ | 322,467 | |

| Adjusted operating income (loss) | | | 5,984 | | | | | | 7,356 | | | | | | 6,705 | | | | | | (1,785) | | | | | | (728) | | | | | | 17,532 | | |

| Operating income (loss) (GAAP measure) | | | $ | 5,118 | | | | | $ | 7,187 | | | | | $ | 3,778 | | | | | $ | (7,609) | | | | | $ | (728) | | | | | $ | 7,746 | |

| Amortization of intangible assets (1) | | | 1,203 | | | | | | 167 | | | | | | 435 | | | | | | 3 | | | | | | — | | | | | | 1,808 | | |

| Office real estate optimization charges (2) | | | 97 | | | | | | 2 | | | | | | — | | | | | | 18 | | | | | | — | | | | | | 117 | | |

| Gain on divestiture of subsidiaries (3) | | | (475) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (475) | | |

| Opioid litigation charges (4) | | | — | | | | | | — | | | | | | — | | | | | | 5,803 | | | | | | — | | | | | | 5,803 | | |

| Loss on assets held for sale (5) | | | 41 | | | | | | — | | | | | | 2,492 | | | | | | — | | | | | | — | | | | | | 2,533 | | |

| Adjusted operating income (loss) | | | $ | 5,984 | | | | | $ | 7,356 | | | | | $ | 6,705 | | | | | $ | (1,785) | | | | | $ | (728) | | | | | $ | 17,532 | |

(2)In 2022, the office real estate optimization charges primarily relate to the abandonment of leased real estate and the related right-of-use assets and property and equipment in connection with the planned reduction of corporate office real estate space in response to the Company’s new flexible work arrangement.

The office real estate optimization charges are reflected in the Company’s GAAP consolidated statement of operations in operating expenses within the Health Care Benefits, Corporate/Other and Pharmacy Services segments.

(3)In 2022, the gain on divestiture of subsidiaries represents the pre-tax gain on the sale of bswift, which the Company sold in November 2022, and the pre-tax gain on the sale of PayFlex, which the Company sold in June 2022.

In 2020, the gain on divestiture of subsidiary represents the pre-tax gain on the

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a diversified health solutions company united around a common purpose of helping people on their path to better health.

consulting and other ancillary services to long-term care facilities and other care settings.

- Total revenues increased $23.4 billion or 8.7% in 2021 compared to 2020.

- Operating expenses increased $1.9 billion or 5.5% in 2021 compared to 2020.

The increase in operating expenses was primarily due to incremental costs associated with growth in the business, including costs associated with the administration of COVID-19 vaccinations and diagnostic testing in the Retail/LTC segment.

The increase in operating expenses was partially offset by the repeal of the non-deductible health insurer fee (“HIF”) for 2021 and gains from anti-trust legal settlements of $263 million recorded in 2021.

- Operating income decreased $718 million or 5.2% in 2021 compared to 2020.

The decrease in operating income was primarily due to:

- A store impairment charge of approximately $1.4 billion recorded in the fourth quarter of 2021 related to planned retail store closures over the next three years;

- Decreased operating income in the Health Care Benefits segment, driven by higher COVID-19 related costs in 2021 compared to the prior year, including the impact of the deferral of elective procedures and other discretionary utilization in response to the COVID-19 pandemic during 2020, as well as the absence of pre-tax income of $307 million associated with the receipt of amounts owed to the Company under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) risk corridor program (“ACA risk corridor receipt”); and

- A $431 million goodwill impairment charge associated with the LTC business in the Retail/LTC segment recorded during the third quarter of 2021, partially offset by:

- Increased prescription and front store volume and the administration of COVID-19 vaccinations and diagnostic testing in the Retail/LTC segment;

- Improved purchasing economics and growth in specialty pharmacy in the Pharmacy Services segment;

- Gains from anti-trust legal settlements of $263 million recorded in 2021; and

- Lower acquisition-related integration costs in 2021 compared to the prior year.

During 2020, the loss on early extinguishment of debt relates to the Company’s repayment of $6.0 billion of its outstanding senior notes pursuant to its tender offers for such senior notes in August 2020, which resulted in a loss on early extinguishment of debt of $766 million, and the repayment of $4.5 billion of its outstanding senior notes pursuant to its tender offers for such senior notes in December 2020, which resulted in a loss on early extinguishment of debt of $674 million.

*•*The Company’s effective income tax rate decreased to 24.2% in 2021 compared to 26.3% in the prior year primarily due to the repeal of the non-deductible HIF for 2021 and the favorable impact of a prior year refund claim approved by the Internal Revenue Service during the fourth quarter of 2021.

The decrease was partially offset by the absence of the favorable resolution of certain tax matters in the fourth quarter of 2020.

*Loss from discontinued operations*

*•*In connection with certain business dispositions completed between 1995 and 1997, the Company retained guarantees on store lease obligations for a number of former subsidiaries, including Linens ‘n Things and Bob’s Stores, each of which subsequently filed for bankruptcy.

The Company’s loss from discontinued operations in 2020 primarily included lease-related costs required to satisfy these lease guarantees.

The projected MBR is expected to decrease compared to 2021, reflecting a combination of expected improved pricing and a reduction in COVID-19 related medical costs.

While the Company still expects a net negative impact from COVID-19 in 2022 within the Health Care Benefits segment, the expectation is the impact will be less adverse than what was experienced in 2021.

The Company expects that COVID-19 vaccinations and diagnostic testing will continue in 2022, albeit at lower levels than those experienced during 2021.

The Company expects to see continued strength in Front Store sales, including sales of OTC test kits, in 2022.

The extent of COVID-19 vaccinations, diagnostic testing and OTC test kit sales will be dependent upon various factors including vaccine hesitancy, the emergence of new variants, government testing initiatives and the availability and administration of pediatric and booster vaccinations.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total revenues | | | 69,604 | | | | | | 141,491 | | | | | | 86,608 | | | | | | 512 | | | | | | (41,439) | | | | | | 256,776 | | |

| Adjusted operating income (loss) | | | 5,202 | | | | | | 5,129 | | | | | | 6,705 | | | | | | (1,000) | | | | | | (697) | | | | | | 15,339 | | |

| Operating income (loss) (GAAP measure) | | | $ | 3,639 | | | | | $ | 4,735 | | | | | $ | 5,793 | | | | | $ | (1,483) | | | | | $ | (697) | | | | | $ | 11,987 | |

| Amortization of intangible assets (1) | | | 1,563 | | | | | | 394 | | | | | | 476 | | | | | | 3 | | | | | | — | | | | | | 2,436 | | |

| Acquisition-related integration costs (2) | | | — | | | | | | — | | | | | | — | | | | | | 480 | | | | | | — | | | | | | 480 | | |

| Loss on divestiture of subsidiary (6) | | | — | | | | | | — | | | | | | 205 | | | | | | — | | | | | | — | | | | | | 205 | | |

| Adjusted operating income (loss) | | | $ | 5,202 | | | | | $ | 5,129 | | | | | $ | 6,705 | | | | | $ | (1,000) | | | | | $ | (697) | | | | | $ | 15,339 | |

In 2019, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of Onofre, which occurred on July 1, 2019.

The loss on divestiture primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in the Company’s GAAP consolidated statement of operations in operating expenses within the Retail/LTC segment.

- Total revenues increased $6.7 billion, or 8.9%, to $82.2 billion in 2021 compared to 2020 primarily driven by growth in the Government Services business, partially offset by the unfavorable impact of the repeal of the HIF for 2021 and the absence of the ACA risk corridor receipt.

- The MBR increased from 80.9% to 85.0% in 2021 compared to the prior year.

The increase was primarily driven by higher COVID-19 related costs in 2021 compared to the prior year, including the impact of the deferral of elective procedures and other discretionary utilization in response to the COVID-19 pandemic during 2020 and the repeal of the HIF for 2021, partially offset by improved underlying performance in the current year.

The Company’s investment portfolio supported the following products at December 31, [removed: 2021] [added: 2022] and [removed: 2020:][added: 2021:]

| In millions | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Experience-rated products | | | $ | [removed: 957] [added: 744] | | | | | $ | [removed: 1,037] [added: 957] | |

| Remaining products | | | [removed: 25,185] [added: 23,147] | | | | | | [removed: 22,775] [added: 25,185] | | |

| Total investments [added: (1)] | | | $ | [removed: 26,142] [added: 23,891] | | | | | $ | [removed: 23,812] [added: 26,142] | |

The debt securities in the Company’s investment portfolio had an average credit quality rating of A at both December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] with a fair value of approximately [removed: $6.7] [added: $6.0] billion and [removed: $6.3] [added: $6.7] billion rated AAA at December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively.

The fair value of debt securities that were rated below investment grade (that is, having a credit quality rating below BBB-/Baa3) was [removed: $2.3] [added: $1.9] billion and [removed: $1.9] [added: $2.3] billion at December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively (of which [removed: 2%] [added: 1.6% and 2.0%] at [removed: both] December 31, [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021, respectively,] supported experience-rated products).

At December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the Company held [removed: $305] [added: $202] million and [removed: $321] [added: $305] million, respectively, of municipal debt securities that were guaranteed by third parties, representing 1% of total investments at both December 31, [removed: 2021] [added: 2022] and [removed: 2020.][added: 2021.]

These securities had an average credit quality rating of [added: AA+ and] AA at [removed: both] December 31, [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021, respectively,] with the guarantee.

These securities had an average credit quality rating of A at both December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] respectively, without the guarantee.

At both December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] less than 1% of debt securities were valued using inputs that reflect the Company’s assumptions (categorized as Level 3 inputs in accordance with accounting principles generally accepted in the United States of America).

If a debt security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the security before recovery of its amortized cost basis, [removed: the amortized cost basis of the security is written down to its fair value and the difference is recognized in net income.]

[added: The amount of the credit-related component is recorded as an allowance] for credit losses and recognized in net income, and the amount of the non-credit related component is included in other comprehensive [removed: income.][added: income (loss).]

Assuming an immediate increase of 100 basis points in interest rates, the theoretical decline in the fair values of market sensitive instruments at December 31, [removed: 2021] [added: 2022] is as follows:

- The fair value of long-term debt issued by the Company would decline by approximately [removed: $4.6] [added: $2.9] billion [removed: ($5.8] [added: ($3.6] billion pretax).

- The theoretical reduction in the fair value of interest rate sensitive investments partially offset by the theoretical reduction in the fair value of interest rate sensitive liabilities would result in a net decline in fair value of approximately [removed: $680] [added: $595] million [removed: ($860] [added: ($750] million pretax) related to continuing non-experience-rated products.

If the value of the Company’s publicly traded domestic equity securities held within its investment portfolio were to decline by 15%, this would result in a net decline in fair value of [removed: $14] [added: $20] million [removed: ($18] [added: ($26] million pretax).

Based on overall exposure to interest rate risk and equity price risk, the Company believes that these changes in market rates and prices would not materially affect consolidated near-term financial condition, operating results or cash flows as of December 31, [removed: 2021.][added: 2022.]

At December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the Company did not have any material foreign currency exchange rate or commodity derivative instruments in place and believes its exposure to foreign currency exchange rate risk is not material.

[removed: We have transitioned a] significant [removed: subset of our colleagues to a remote work environment in an effort to mitigate the spread of COVID-19, as have a significant] number of our third-party service providers, which may amplify certain risks to our businesses, including an increased demand for information technology resources, increased risk of phishing and other cyber attacks, increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information about us or our medical members or other third-parties and increased risk of business interruptions.

The impact of cyber attacks has not been material to the Company’s operations or operating results through December 31, [removed: 2021.][added: 2022.]

_____________________________________________

(1)Includes long-term investments of $17 million which have been accounted for as assets held for sale and are included in assets held for sale on the consolidated balance sheet at December 31, 2022.

See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ included in Item 8 of this 10-K for additional information.

the amortized cost basis of the security is written down to its fair value and the difference is recognized in net income.

We have transitioned a significant subset of our colleagues to a remote work environment in an effort to mitigate the spread of COVID-19, as have a

The amount of the credit-related component is recorded as an allowance

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is a leading diversified health solutions [removed: company, making] [added: company reshaping health care to help make] healthier happen [removed: now.][added: for more Americans.]

In an increasingly connected and digital world, [removed: we are] [added: CVS Health is] meeting people wherever they are and changing health care to meet their needs.

The Company has more than [removed: 9,900] [added: 9,000] retail locations, [removed: nearly 1,200] [added: more than 1,100] walk-in medical clinics, a leading pharmacy benefits manager with [removed: approximately] [added: over] 110 million plan members with expanding specialty pharmacy solutions and a dedicated senior pharmacy care business serving more than one million patients per year.

The Company believes its [removed: innovative] [added: integrated] health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

CVS Health is also shifting from transaction-based [removed: primary] care to addressing holistic health – physical, emotional, social, economic – which will lead to higher quality [removed: of] care and lower medical costs.

The Company is a leader in key segments of health care [removed: today] through [added: its] foundational businesses and is seeking to create new sources of value by expanding into next generation [removed: primary] care delivery and health services, with a goal of improving satisfaction levels for both providers and consumers.

The Company offered COVID-19 diagnostic testing at more than [removed: 4,800] [added: 4,700] CVS [removed: Pharmacy®] [added: pharmacy] locations, at community-based testing sites in underserved areas and through its Return ReadySM solution as of December 31, [removed: 2021.][added: 2022.]

The Company offered COVID-19 vaccinations at more than [removed: 9,800] [added: 9,000] CVS [removed: Pharmacy] [added: pharmacy] locations as of December 31, [removed: 2021.][added: 2022.]

During the year ended December 31, [removed: 2021,] [added: 2022,] the Company administered more than [removed: 32] [added: 15] million COVID-19 tests and [added: nearly 28 million COVID-19 vaccines and sold] more than [removed: 59] [added: 63] million [removed: COVID-19 vaccines.][added: OTC test kits.]

The impact of COVID-19 on the Company’s businesses, operating results, cash flows and financial condition in the years ended December 31, [added: 2022,] 2021 and 2020, as well as information regarding certain expected impacts of COVID-19 on the Company, is discussed throughout this 10-K.

The Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers, serving an estimated 35 million people as of December 31, [removed: 2021.][added: 2022.]

[removed: The Health Care Benefits segment offers a broad range of traditional, voluntary] and [removed: consumer-directed health insurance products and] related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management [removed: services] [added: services,] and health information [added: technology (“HIT”) products and services.]

With the launch of Aetna Virtual Primary CareTM in 2021, eligible members now have access to health services remotely, paired with access to in-person visits with providers in the Company’s network, including at MinuteClinic® [removed: and CVS HealthHUB®] locations.

The Company offered network-based HMO and/or PPO plans in 46 states and Washington, D.C. in [removed: 2021.][added: 2022.]

The Company offered PDP plans in all 50 states and Washington, D.C. in [removed: 2021.][added: 2022.]

The Company offered a wide selection of Medicare Supplement products in 49 states and Washington, D.C. in [removed: 2021.][added: 2022.]

The Company offered these services on an Insured or ASC basis in 16 states in [removed: 2021.][added: 2022.]

These members must meet certain income and resource requirements in order to qualify for [added: this coverage.]

[removed: this coverage.][added: This in]

At December 31, [removed: 2021,] [added: 2022,] the Company’s underlying nationwide provider network had approximately [removed: 1.5] [added: 1.6] million participating providers.

The Company seeks Health Plan accreditation for Aetna [added: Inc. (“Aetna”)] HMO plans from the National Committee for Quality Assurance (“NCQA”), a private, not-for-profit organization that evaluates, accredits and certifies a wide range of health care organizations.

As of December 31, [removed: 2021,] [added: 2022,] all of the Company’s Commercial HMO and all of ALIC’s PPO members who were eligible participated in HMOs or PPOs that are accredited by the NCQA.

[removed: full breadth of the Company’s assets to build enterprise technology that will help guide our members through their health care] journey, provide them a high level of service, enable healthier outcomes and encourage them to take next best actions to lead healthier lives.

Depending on the product, the Company markets to a range of [removed: customers] [added: customers,] including employer groups, individuals, college students, part-time and hourly workers, health plans, providers, governmental units, government-sponsored plans, labor groups and expatriates.

Frequently, larger employers offer employees a choice among coverage [removed: options,] [added: options] from which the employee makes his or her selection during a designated annual open enrollment period.

The loss of business from any [removed: one,] [added: one] or a [removed: few,] [added: few] independent brokers or agents would not have a material adverse effect on the earnings of the Health Care Benefits segment.

In [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] Health Care Benefits segment revenues from the federal government accounted for 14%, [removed: 13%] [added: 14%] and 13%, respectively, of the Company’s consolidated total revenues.

Contracts with CMS for coverage of Medicare-eligible individuals in the Health Care Benefits segment accounted for approximately [removed: 79%, 78%] [added: 74%, 79%] and [removed: 76%,] [added: 78%,] respectively, of the Company’s consolidated revenues from the federal government in [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019.][added: 2020.]

The Company typically cannot recover unanticipated increases in health care and other benefit costs in the current policy period; however, it may consider prior experience for a product in the aggregate or for a specific customer, among other factors, in [added: determining premium rates for future policy periods.]

Where required by state laws, premium rates are filed and approved by [removed: state regulators prior to contract inception.]

In some [removed: cases] [added: cases,] these supplemental premiums are adjusted based on the member’s income and asset levels.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) ties a portion of each Medicare Advantage plan’s reimbursement to the plan’s “star ratings.” Plans must have a star rating of [removed: four] [added: 4] or higher (out of [removed: five)] [added: 5)] to qualify for bonus payments.

CMS released the Company’s [removed: 2022] [added: 2023] star ratings in October [removed: 2021.][added: 2022.]

The Company’s [removed: 2022] [added: 2023] star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in [removed: 2023.][added: 2024.]

Based on the Company’s membership at December 31, [removed: 2021, 87%] [added: 2022, 21%] of the Company’s Medicare Advantage members were in plans with [removed: 2022] [added: 2023] star ratings of at least 4.0 stars, compared to [removed: 83%] [added: 87%] of the Company’s Medicare Advantage members being in plans with [removed: 2021] [added: 2022] star ratings of at least 4.0 stars based on the Company’s membership at December 31, [removed: 2020.][added: 2021.]

The Health Care Benefits segment’s quarterly operating income progression is [removed: also] impacted by (i) the seasonality of benefit costs which generally increase during the year as Insured members progress through their annual deductibles and out-of-pocket expense limits and (ii) the seasonality of operating expenses, which are generally the highest during the fourth quarter due primarily to spending to support readiness for the start of the upcoming plan year and marketing associated with Medicare annual enrollment.

During the year ended December 31, 2020, the customary quarterly operating income progression was [removed: also] impacted by COVID-19.

Utilization remained below historical levels through [removed: April,] [added: April 2020,] began to recover in May and June [added: 2020] and reached more normal levels in the third and fourth [removed: quarters,] [added: quarters of 2020,] with select geographies impacted by COVID-19 waves.

In addition, the rapid pace of change as the industry evolves towards a consumer-focused retail marketplace, including Insurance Exchanges, and the increased use of technology to interact with members, providers and customers, increase the risks the Company [removed: currently] faces from new entrants and disruptive actions by existing competitors compared to prior periods.

Emerging competitors include start up health care benefits plans, technology companies, provider-owned health plans, new joint ventures (including not-for-profit joint ventures among firms from multiple industries), [removed: technology firms,] financial services firms that are distributing competing products on their proprietary Private Exchanges, and consulting firms that are distributing competing products on their proprietary Private Exchanges, as well as [removed: non-traditional distributors such as retail companies.][added: non-]

The Company seeks to reimagine the consumer healthcare experience to make it easier and more affordable to live a healthier life.

This means delivering solutions that are more personalized, simpler to use, and increasingly digital so that consumers can receive care when, where and how they desire.

The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products

The Health Care Benefits segment is utilizing the full breadth of the Company’s assets to build enterprise technology that will help guide our members through their health care

The Company entered Public Exchanges in four additional states effective January 2023.

state regulators prior to contract inception.

Refer to “Medicare Star Ratings” within the “Government Regulation” section of this Item 1 for further discussion of the decrease in the Company’s star ratings.

During the year ended December 31, 2022, the impact of COVID-19 within the Health Care Benefits segment has generally stabilized as a result of the Company’s ability to capture COVID-19 related medical costs in pricing, and the segment has experienced a return to a more normal seasonality pattern, as described above.

traditional distributors such as retail companies.

certain chronic diseases, such as diabetes and cardiovascular conditions, to identify gaps in care, adhere to their prescribed medications and manage their health conditions.

The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants.

The Company also provides various administrative, management and reporting services to pharmaceutical manufacturers.

The Pharmacy Services segment has a significant number of competitors offering PBM services, including large, national PBM companies

goods and services.

MinuteClinic also offers virtual care services to connect customers with licensed providers to provide access to health services remotely.

As of December, 31, 2022, the Company has closed approximately 300 retail stores in connection with this strategic review.

The Company’s digital strategy is to empower the

During the year ended December 31, 2022, the customary quarterly operating income progression in the Retail/LTC segment continued to be impacted by COVID-19.

During the first quarter, the Company saw high volumes of administration of COVID-19 vaccinations, as well as demand for OTC test kits in the front store, particularly in the beginning of the year when the Omicron variant incidence was high.

In addition, the Company administered the highest quarterly volume of COVID-19 diagnostic tests of 2022 during the first quarter, however a decline compared to the prior year.

During the second and third quarters, the Company continued to generate earnings from the sale of OTC test kits, as customers performed more in-home testing versus diagnostic testing, in addition to earnings from the continued administration of COVID-19 diagnostic testing and vaccinations, albeit at lower levels than those experienced in the first quarter.

During the fourth quarter, the Company saw an increase in COVID-19 vaccine administration from the prior quarter related to the bivalent COVID-19 booster.

In 2022, we awarded incremental bonuses to select colleague groups including our front-line retail store, pharmacy and MinuteClinic colleagues.

Our

Our ESG strategy – *Healthy 2030* is focused on achieving our economic, environmental and social imperatives and outlines how we are shaping a more equitable and sustainable future for all – across multiple dimensions of health.

Through our ESG strategy we

are leveraging our expertise and resources to make the health care experience simple, equitable, convenient and deeply personal for each of us.

Through our ESG strategy, we are focused on providing people with the opportunity to be as healthy as possible by expanding community-centered solutions that advance health equity and improve outcomes.

Our philanthropic strategy, which includes grants made through the CVS Health Foundation, Health Zones initiative and Project Health program, improves health outcomes and reduce health disparities in under-resourced communities.

We are investing charitable resources, leveraging CVS Health assets, and working in partnership with non-profits to help our communities be as healthy as possible.

We are working to improve the health of our planet and make a difference in the lives of the people who live on it by advancing our sustainability commitments and addressing the environmental factors that contribute to health inequities.

The Company cannot predict whether pending or future federal or state legislation or court proceedings will change aspects of how it operates in the specific markets in which it

In response to the COVID-19 pandemic, the U.S. Department of Health and Human Services (“HHS”) put in place a public health emergency (“PHE”) in January 2020 and HHS must extend it every 90 days to maintain certain health care flexibilities and waivers.

The Biden administration most recently renewed the PHE on January 11, 2023 and has indicated that they intend for the PHE to expire on May 11, 2023.

In August 2022, the Inflation Reduction Act subsequently extended these subsidies through 2025, which could cause shifts in enrollment into Public Exchange plans.

the COVID-19 pandemic.

Coverage for COVID-19 OTC test kits has subsequently been required by Medicare and, in many states, Medicaid.

These requirements may increase benefit costs in those businesses and jurisdictions, and may increase revenues in our retail business.

Some activities that were suspended during the COVID-19 pandemic, such as Medicaid eligibility redeterminations, are currently scheduled to resume later this year, and many of the requirements set forth above may change once the PHE expires.

In July 2022, HHS issued a new proposed rule to significantly revise the agency’s prior interpretation of Section 1557 of the ACA.

The Company seeks to improve access, lower costs and enhance health outcomes by engaging with consumers when, where and how they desire.

This means delivering solutions that are personalized, seamless, connected and increasingly digital.

technology (“HIT”) products and services.

On November 30, 2018, the Company completed the sale of the standalone PDPs of Aetna, Inc. (“Aetna”) to WellCare Health Plans, Inc. effective December 31, 2018.

The Company provided administrative services to, and retained the financial results of, the divested plans through 2019.

Subsequent to 2019, the Company no longer retains the financial results of the divested plans.

The Health Care Benefits segment is utilizing the

determining premium rates for future policy periods.

The HIF applied for 2020 and was temporarily suspended for 2019.

The impact of the deferral of non-essential care was partially offset by COVID-19 testing and treatment costs, as well as planned COVID-19 related investments.

The Health Care Benefits segment’s international products compete with local, global and U.S.-based health plans and commercial health care benefit insurance companies, many of whom are licensed in more geographies and have a longer operating history, better brand recognition and greater marketplace presence in one or more geographies.

The Company also offers a performance program for non-Medicare customers, which can be implemented with either the Company’s broad, national network or with any managed network (as allowed by applicable laws and regulations).

Under the program, high performing pharmacies are eligible to receive an incremental positive performance payment.

The program aligns with key Healthcare Effectiveness Data Information Set measures utilized by CMS and is funded by client fees.

are new to therapy, limits the daily dosage of opioids dispensed based on the strength of the opioid and requires the use of immediate-release formulations of opioids before extended-release opioids are dispensed.

to provide flexible, clinically-oriented services to clients and be responsive to clients’ needs; (v) the quality, scope and costs of products and services offered to clients and their members; and (vi) operational excellence in delivering services.

customers by providing them with automatic sale prices, customized coupons, ExtraBucks® rewards and other benefits.

As part of the Company’s strategic review of its retail business, CVS Health will also create new store formats to drive higher engagement with consumers.

Three distinct models will serve as community health destinations: (a) sites dedicated to offering primary care services; (b) an enhanced version of CVS HealthHUB locations with products and services designed for everyday health and wellness needs; and (c) traditional CVS Pharmacy stores that provide prescription services and health, wellness, personal care and other convenient retail offerings.

During the third and fourth quarters, the segment also generated earnings from the sale of OTC test kits in the front store.

In addition, during 2021 we awarded incremental

in promoting a culture of safety.

Our ESG strategy includes a set of goals we hope to achieve in 2030 or earlier.

Our ESG strategy consists of four pillars: *Healthy People*, *Healthy Business*, *Healthy Community* and *Healthy Planet*.

Through our ESG strategy we are focused on our interaction with individuals across all our touchpoints to increase the likelihood that these initiatives will succeed.

Through our ESG strategy we will be investing in colleague mentoring, sponsorship, development and advancement; workforce initiatives that provide employment services and training to the underserved; and providing access to health care while addressing health disparities.

Through our recently announced Health Zones initiative, CVS Health and our nonprofit partners are working together to create a model that reduces health disparities, promotes and enhances equity and ensures at-risk communities can thrive.

Through our ESG strategy we are building healthier communities through social impact investments, such as supporting health care professionals, reducing food insecurity, engaging our customers in community health, and coordinating care for the underserved.

Our work to improve the planet is aligned with our commitment to the communities we serve and to help protect our businesses from the negative impacts of climate change.

All of our businesses, including our community locations, corporate offices and operation centers, distribution centers, and specialty pharmacy and PBM mail pharmacy locations, can be impacted by climate change-related extreme weather events and we are doing our part to reduce our environmental impacts.

We are focused on identifying resource efficiencies across our operations and supply chain.

We are proud to be recognized as a leader in addressing climate-related issues and are working closely with key stakeholders to make and deliver meaningful progress.

Key

in pending or future legal proceedings against or affecting the Company, including *qui tam* lawsuits, or affecting one or more of the industries in which the Company competes and/or the health care industry generally.

These changes are currently in effect through the remainder of 2022, and Congress may extend, or potentially make permanent, these policies in subsequent legislation, which could cause continued shifts in enrollment into Public Exchange plans.

Additionally, in December 2021, the Biden administration reiterated CARES Act guidance noting commercial health insurers are not required to cover workplace or surveillance testing and announced several new directives and actions to combat COVID-19, including the expansion of free at-home testing to be covered by commercial health insurers for the remainder of the public health emergency.

This requirement will likely impact multiple business operations, including increasing benefit costs in our commercial health insurance business and increasing revenues in our retail business.

In December 2021, President Biden signed the Protecting Medicare and American Farmers from Sequester Cuts Act.

The legislation extends the suspension of the 2% Medicare sequester cuts until March 2022.

Starting in April 2022, the Medicare sequester cuts will be phased back in with a 1% cut that will continue through June.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

The aggregate market value of the registrant’s common stock held by non-affiliates was approximately [removed: $109,651,334,285] [added: $121,258,020,752] as of June 30, [removed: 2021,] [added: 2022,] based on the closing price of the common stock on the New York Stock Exchange.

As of February [removed: 2, 2022,] [added: 1, 2023,] the registrant had [removed: 1,312,510,426] [added: 1,284,111,667] shares of common stock outstanding.

Information contained in the definitive proxy statement for CVS Health Corporation’s [removed: 2022] [added: 2023] Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year ended December 31, [removed: 2021] [added: 2022] (the “Proxy Statement”), is incorporated by reference in Parts III and IV to the extent described therein.

| Item 1: | | | [removed: [Business](#ibab9fb71d67648f0b758869f160b7f4b_13)] [added: [Business](#i1ae8e8cf4da649e4afa2b073939999d2_13)] | | | [removed: [2](#ibab9fb71d67648f0b758869f160b7f4b_13)] [added: [2](#i1ae8e8cf4da649e4afa2b073939999d2_13)] | | |

| Item 1A: | | | [Risk [removed: Factors](#ibab9fb71d67648f0b758869f160b7f4b_34)] [added: Factors](#i1ae8e8cf4da649e4afa2b073939999d2_34)] | | | [removed: [35](#ibab9fb71d67648f0b758869f160b7f4b_34)] [added: [34](#i1ae8e8cf4da649e4afa2b073939999d2_34)] | | |

| Item 1B: | | | [Unresolved Staff [removed: Comments](#ibab9fb71d67648f0b758869f160b7f4b_37)] [added: Comments](#i1ae8e8cf4da649e4afa2b073939999d2_37)] | | | [removed: [63](#ibab9fb71d67648f0b758869f160b7f4b_37)] [added: [62](#i1ae8e8cf4da649e4afa2b073939999d2_37)] | | |

| Item 2: | | | [removed: [Properties](#ibab9fb71d67648f0b758869f160b7f4b_40)] [added: [Properties](#i1ae8e8cf4da649e4afa2b073939999d2_40)] | | | [removed: [63](#ibab9fb71d67648f0b758869f160b7f4b_40)] [added: [62](#i1ae8e8cf4da649e4afa2b073939999d2_40)] | | |

| Item 3: | | | [Legal [removed: Proceedings](#ibab9fb71d67648f0b758869f160b7f4b_43)] [added: Proceedings](#i1ae8e8cf4da649e4afa2b073939999d2_43)] | | | [removed: [63](#ibab9fb71d67648f0b758869f160b7f4b_43)] [added: [63](#i1ae8e8cf4da649e4afa2b073939999d2_43)] | | |

| Item 4: | | | [Mine Safety [removed: Disclosures](#ibab9fb71d67648f0b758869f160b7f4b_46)] [added: Disclosures](#i1ae8e8cf4da649e4afa2b073939999d2_46)] | | | [removed: [63](#ibab9fb71d67648f0b758869f160b7f4b_46)] [added: [63](#i1ae8e8cf4da649e4afa2b073939999d2_46)] | | |

| | | | [Information about our Executive [removed: Officers](#ibab9fb71d67648f0b758869f160b7f4b_49)] [added: Officers](#i1ae8e8cf4da649e4afa2b073939999d2_49)] | | | [removed: [64](#ibab9fb71d67648f0b758869f160b7f4b_49)] [added: [64](#i1ae8e8cf4da649e4afa2b073939999d2_49)] | | |

| Item 5: | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ibab9fb71d67648f0b758869f160b7f4b_55)] [added: Securities](#i1ae8e8cf4da649e4afa2b073939999d2_55)] | | | [removed: [65](#ibab9fb71d67648f0b758869f160b7f4b_55)] [added: [66](#i1ae8e8cf4da649e4afa2b073939999d2_55)] | | |

| Item 6: | | | [removed: [Reserved](#ibab9fb71d67648f0b758869f160b7f4b_58)] [added: [Reserved](#i1ae8e8cf4da649e4afa2b073939999d2_58)] | | | [removed: [66](#ibab9fb71d67648f0b758869f160b7f4b_58)] [added: [68](#i1ae8e8cf4da649e4afa2b073939999d2_58)] | | |

| Item 7: | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ibab9fb71d67648f0b758869f160b7f4b_61)] [added: Operations](#i1ae8e8cf4da649e4afa2b073939999d2_61)] | | | [removed: [67](#ibab9fb71d67648f0b758869f160b7f4b_61)] [added: [69](#i1ae8e8cf4da649e4afa2b073939999d2_61)] | | |

| Item 7A: | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ibab9fb71d67648f0b758869f160b7f4b_97)] [added: Risk](#i1ae8e8cf4da649e4afa2b073939999d2_97)] | | | [removed: [99](#ibab9fb71d67648f0b758869f160b7f4b_97)] [added: [102](#i1ae8e8cf4da649e4afa2b073939999d2_97)] | | |

| Item 8: | | | [Financial Statements and Supplementary [removed: Data](#ibab9fb71d67648f0b758869f160b7f4b_100)] [added: Data](#i1ae8e8cf4da649e4afa2b073939999d2_100)] | | | [removed: [102](#ibab9fb71d67648f0b758869f160b7f4b_100)] [added: [105](#i1ae8e8cf4da649e4afa2b073939999d2_100)] | | |

| Item 9: | | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#ibab9fb71d67648f0b758869f160b7f4b_190)] [added: Disclosure](#i1ae8e8cf4da649e4afa2b073939999d2_181)] | | | [removed: [176](#ibab9fb71d67648f0b758869f160b7f4b_190)] [added: [182](#i1ae8e8cf4da649e4afa2b073939999d2_181)] | | |

| Item 9A: | | | [Controls and [removed: Procedures](#ibab9fb71d67648f0b758869f160b7f4b_193)] [added: Procedures](#i1ae8e8cf4da649e4afa2b073939999d2_184)] | | | [removed: [176](#ibab9fb71d67648f0b758869f160b7f4b_193)] [added: [182](#i1ae8e8cf4da649e4afa2b073939999d2_184)] | | |

| Item 10: | | | [Directors, Executive Officers and Corporate [removed: Governance](#ibab9fb71d67648f0b758869f160b7f4b_202)] [added: Governance](#i1ae8e8cf4da649e4afa2b073939999d2_193)] | | | [removed: [177](#ibab9fb71d67648f0b758869f160b7f4b_202)] [added: [183](#i1ae8e8cf4da649e4afa2b073939999d2_193)] | | |

| Item 12: | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ibab9fb71d67648f0b758869f160b7f4b_208)] [added: Matters](#i1ae8e8cf4da649e4afa2b073939999d2_199)] | | | [removed: [177](#ibab9fb71d67648f0b758869f160b7f4b_208)] [added: [183](#i1ae8e8cf4da649e4afa2b073939999d2_199)] | | |

| Item 13: | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ibab9fb71d67648f0b758869f160b7f4b_211)] [added: Independence](#i1ae8e8cf4da649e4afa2b073939999d2_202)] | | | [removed: [178](#ibab9fb71d67648f0b758869f160b7f4b_211)] [added: [184](#i1ae8e8cf4da649e4afa2b073939999d2_202)] | | |

| Item 14: | | | [Principal Accountant Fees and [removed: Services](#ibab9fb71d67648f0b758869f160b7f4b_214)] [added: Services](#i1ae8e8cf4da649e4afa2b073939999d2_205)] | | | [removed: [178](#ibab9fb71d67648f0b758869f160b7f4b_214)] [added: [184](#i1ae8e8cf4da649e4afa2b073939999d2_205)] | | |

| Item 15: | | | [Exhibits and Financial Statement [removed: Schedules](#ibab9fb71d67648f0b758869f160b7f4b_220)] [added: Schedules](#i1ae8e8cf4da649e4afa2b073939999d2_211)] | | | [removed: [179](#ibab9fb71d67648f0b758869f160b7f4b_220)] [added: [185](#i1ae8e8cf4da649e4afa2b073939999d2_211)] | | |

This information includes, but is not limited to: “Outlook for [removed: 2022”] [added: 2023”] of Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in Item 7, “Quantitative and Qualitative Disclosures About Market Risk” included in Item 7A, “Government Regulation” included in Item 1, and “Risk Factors” included in Item 1A.

*All statements addressing the future operating performance of CVS Health or any segment or any subsidiary and/or future events or developments, including statements relating to the [removed: projected] impact of coronavirus disease 2019 (“COVID-19”) and [removed: its emerging] [added: any] new variants [added: or viruses] on the Company’s businesses, investment portfolio, operating results, cash flows and/or financial condition, statements relating to corporate strategy, statements relating to future revenue, operating income or adjusted operating income, earnings per share or adjusted earnings per share, Health Care Benefits segment business, sales results and/or trends, medical cost trends, medical membership, Medicare Part D membership, medical benefit ratios and/or operations, Pharmacy Services segment business, sales results and/or trends and/or operations, Retail/LTC segment business, sales results and/or trends and/or operations, incremental investment spending, interest expense, effective tax rate, weighted-average share count, cash flow from operations, net capital expenditures, cash available for debt repayment, [added: statements related to possible, proposed or pending acquisitions, joint ventures, investments or combinations that involve, among other things, the timing or likelihood of receipt of regulatory approvals, the timing of completion,] integration synergies, net [removed: synergies,] [added: synergies and] integration [added: risks and other] costs, [added: including those related to CVS Health’s proposed acquisition of Oak Street Health, Inc. (“Oak Street Health”) and pending acquisition of Signify Health, Inc. (“Signify Health”),] enterprise modernization, transformation, leverage ratio, cash available for enhancing shareholder value, inventory reduction, turn rate and/or loss rate, debt ratings, the Company’s ability to attract or retain customers and clients, store development and/or relocations, new product development, and the impact of industry and regulatory developments, as well as statements expressing optimism or pessimism about future operating results or events, are forward-looking statements within the meaning of the Reform Act.*

Many of these risks and uncertainties and other factors are outside our [removed: control.][added: control.*]

[removed: Certain] [added: *Certain] of these risks and uncertainties and other factors are described under “Risk Factors” included in Item 1A of this 10-K; these are not the only risks and uncertainties we face.

| If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements | | | | | | | | | | | | ☐ | | | Yes | | | ☒ | | | No | | |

| Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). | | | | | | | | | | | | ☐ | | | Yes | | | ☒ | | | No | | |

| Item 9B: | | | [Other Information](#i1ae8e8cf4da649e4afa2b073939999d2_187) | | | [182](#i1ae8e8cf4da649e4afa2b073939999d2_187) | | |

| Item 9C: | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i1ae8e8cf4da649e4afa2b073939999d2_2199023257430) | | | [183](#i1ae8e8cf4da649e4afa2b073939999d2_2199023257430) | | |

| Item 11: | | | [Executive Compensation](#i1ae8e8cf4da649e4afa2b073939999d2_196) | | | [183](#i1ae8e8cf4da649e4afa2b073939999d2_196) | | |

| Item 16: | | | [Form 10-K Summary](#i1ae8e8cf4da649e4afa2b073939999d2_214) | | | [189](#i1ae8e8cf4da649e4afa2b073939999d2_214) | | |

| | | | [Signatures](#i1ae8e8cf4da649e4afa2b073939999d2_217) | | | [190](#i1ae8e8cf4da649e4afa2b073939999d2_217) | | |

| Item 9B: | | | [Other Information](#ibab9fb71d67648f0b758869f160b7f4b_196) | | | [177](#ibab9fb71d67648f0b758869f160b7f4b_196) | | |

| Item 11: | | | [Executive Compensation](#ibab9fb71d67648f0b758869f160b7f4b_205) | | | [177](#ibab9fb71d67648f0b758869f160b7f4b_205) | | |

| Item 16: | | | [Form 10-K Summary](#ibab9fb71d67648f0b758869f160b7f4b_223) | | | [183](#ibab9fb71d67648f0b758869f160b7f4b_223) | | |

| | | | [Signatures](#ibab9fb71d67648f0b758869f160b7f4b_226) | | | [184](#ibab9fb71d67648f0b758869f160b7f4b_226) | | |

As of December 31, [removed: 2021,] [added: 2022,] the Retail/LTC segment operated the following properties:

- Approximately [removed: 8,075] [added: 7,795] retail stores, of which approximately 5% were owned.

Net selling space for retail stores was approximately [removed: 79.8] [added: 77.4] million square feet as of December 31, [removed: 2021.][added: 2022.]

- Approximately [removed: 1,865] [added: 1,880] retail pharmacies within retail chains, as well as approximately [removed: 80] [added: 60] clinics in Target Corporation (“Target”) stores;

In connection with certain business dispositions completed between 1995 and 1997, the Company continues to guarantee lease obligations for [removed: 72] [added: 67] former stores.

These guarantees generally remain in effect for the initial lease term and any extension thereof pursuant to a [removed: renewal option provided for in the lease prior to the time of the disposition.]

renewal option provided for in the lease prior to the time of the disposition.

The following sets forth the name, age and biographical information for each of the Registrant’s executive officers as of February [removed: 9, 2022.][added: 8, 2023.]

[removed: Brennan, M.D*.,] [added: Lynch*,] age [removed: 67, Executive Vice] [added: 60,] President and Chief [removed: Medical] [added: Executive] Officer of CVS Health Corporation since [removed: November 2008;] [added: February 2021;] Executive Vice President [removed: and Chief Medical Officer] of [added: CVS Health Corporation from November 2018 through January 2021; President of] Aetna Inc. from [removed: February 2006] [added: January 2015] through [removed: November 2008.][added: January 2021; and a director of CVS Health Corporation since February 2021.]

Clark*, age [removed: 57,] [added: 58,] Senior Vice President - Controller and Chief Accounting Officer of CVS Health Corporation since November 2018; Vice President - Finance and Accounting of CVS Pharmacy, Inc. from September 2009 through October 2018.

Finke*, age [removed: 51,] [added: 52,] Executive Vice President of CVS Health Corporation and President of Health Care Benefits since February 2021; Executive Vice President, Commercial Business and Markets of Aetna Inc. from February 2020 through January 2021; Executive Vice President, Consumer Health and Service of Aetna Inc. from June 2018 through January 2020; Senior Vice President, Network and Clinical Services of Aetna Inc. from January 2016 through May 2018.

Guertin*, age [removed: 58,] [added: 59,] Executive Vice President and Chief Financial Officer of CVS Health Corporation since May 2021; Executive Vice President, Chief Financial Officer and Chief Enterprise Risk Officer of Aetna Inc. from February 2013 through May 2019; Senior Vice President, Finance of Aetna Inc. from April 2011 through January 2013.

Havanec*, age [removed: 61,] [added: 62,] Executive Vice President and Chief People Officer of CVS Health Corporation since February 2021; Executive Vice President and Chief People Officer, Otis Worldwide Corporation, an elevator, escalator and moving walkway manufacturer, from October 2019 through January 2021; Corporate Vice President, Talent of United Technologies Corporation, a multinational manufacturing conglomerate, from April 2017 through October 2019; Vice President - Human Resources, Institution Businesses of Aetna Inc. from 2013 through March 2017.

[removed: Lotvin, M.D*.,] [added: *Prem Shah*,] age [removed: 60,] [added: 43,] Executive Vice President [added: and Chief Pharmacy Officer] of CVS Health Corporation [added: since November 2021] and [removed: President] [added: Co-President] of [removed: CVS Caremark] [added: Retail] since [removed: March 2020;] [added: January 2022;] Executive Vice [removed: President - Transformation of] [added: President, Specialty and Product Innovation,] CVS [removed: Health Corporation] [added: Caremark] from [removed: June] [added: August] 2018 through [removed: February 2020; Executive] [added: November 2021;] Vice President - Specialty Pharmacy, CVS Caremark from [removed: November 2012] [added: February 2013] through [removed: May] [added: July] 2018.

Moriarty*, age [removed: 58,] [added: 59,] Executive Vice President and General Counsel of CVS Health Corporation since October 2012; Chief Policy and External Affairs Officer since March 2017; Chief Strategy Officer from March 2014 through February 2017.

Peluso*, age [removed: 49,] [added: 50,] Executive Vice President and Chief Customer Officer of CVS Health Corporation since January 2021 and Co-President of Retail since January 2022; Senior Vice President, Digital Sales and Chief Marketing Officer, IBM, a multinational technology corporation, from February 2016 through January 2021; Chief Executive Officer, Gilt Groupe, Inc., an online shopping destination, from 2013 through February 2016.

*Sreekanth K.

Chaguturu, M.D*., age 44, Executive Vice President and Chief Medical Officer of CVS Health Corporation since May 2022; Chief Medical Officer of CVS Caremark from September 2019 through May 2022; Chief Population Health Officer at Mass General Brigham, a non-profit hospital formerly known as Partners HealthCare, from August 2017 through August 2019; Vice President, Population Health Management at Mass General Brigham from June 2014 through August 2017.

Dr. Chaguturu is also an Attending Physician at Massachusetts General Hospital and an Instructor in Internal Medicine at Harvard Medical School from July 2007 to the present.

Ms. Havanec is also a member of the board of directors of American Water Works Company, Inc., a publicly traded water and wastewater utility company.

*J.

David Joyner*, age 58, Executive Vice President of CVS Health Corporation and President of Pharmacy Services since January 2023; Strategic Business Advisor to gWell, Inc., a wellness technology company, since July 2021; Advisor to Podimetrics Inc., a health care company focused on the identification and treatment of diabetic foot ulcers since September 2020; Advisory Council to the Rawls College of Business of Texas Tech University since July 2020; Executive Vice President – Sales and Account Services, CVS Caremark for CVS Health Corporation from March 2011 through December 2019.

*Tilak Mandadi*, age 59, Executive Vice President and Chief Data, Digital and Technology Officer of CVS Health Corporation since July 2022; Chief Strategy Officer, MGM Resorts International from July 2021 through July 2022; Executive Vice President, Digital & Global Chief Technology Officer, Disney Parks, Experiences and Products from March 2013 through July 2021.

*Troyen A.

*Alan M.

Lynch*, age 59, President and Chief Executive Officer of CVS Health Corporation since February 2021; Executive Vice President of CVS Health Corporation from November 2018 through January 2021; President of Aetna Inc. from January 2015 through January 2021; and a director of CVS Health Corporation since February 2021.

Ms. Lynch is also a member of the board of directors of U.S. Bancorp, a banking and financial services company.

*Jonathan C.

Roberts*, age 66, Executive Vice President and Chief Operating Officer of CVS Health Corporation since March 2017; Executive Vice President of CVS Health Corporation and President of CVS Caremark from September 2012 through February 2017.

*Prem Shah*, age 42, Executive Vice President and Chief Pharmacy Officer of CVS Health Corporation since November 2021 and Co-President of Retail since January 2022; Executive Vice President, Specialty and Product Innovation , CVS Caremark from August 2018 through November 2021; Vice President - Specialty Pharmacy, CVS Caremark from February 2013 through July 2018.

During [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] the quarterly cash dividend was [added: $0.55,] $0.50 [added: and $0.50] per [removed: share.][added: share, respectively.]

In December [removed: 2021,] [added: 2022,] the Board authorized a 10% increase in the quarterly cash dividend to [removed: $0.55] [added: $0.605] per share effective in [removed: 2022.][added: 2023.]

As of February [removed: 2, 2022,] [added: 1, 2023,] there were [removed: 24,946] [added: 24,142] registered holders of the registrant’s common stock according to the records maintained by the registrant’s transfer agent.

| In billions Authorization Date | | | Authorized | | | | | | Remaining as of December 31, [removed: 2021] [added: 2022] | | |

| December 9, 2021 (“2021 Repurchase Program”) | | | [removed: $ |] 10.0 | | | | | [removed: $] | [removed: 10.0] [added: 6.5] | | [added: |]

| November [removed: 2, 2016 (“2016] [added: 17, 2022 (“2022] Repurchase Program”) | | | [removed: 15.0] [added: $] | [added: 10.0] | | | | | [removed: —] [added: $] | [added: 10.0] | |

[removed: The 2021] [added: Each of the share] Repurchase [removed: Program permits] [added: Programs was effective immediately and permit] the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions.

[removed: The] [added: Both the 2022 and] 2021 Repurchase [removed: Program] [added: Programs] can be modified or terminated by the Board at any time.

During the [removed: three months] [added: years] ended December 31, [removed: 2021,] [added: 2021 and 2020,] the Company did not repurchase any shares of common stock.

Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $1.5 billion fixed dollar ASR with Barclays Bank [removed: PLC (“Barclays”).][added: PLC.]

At the conclusion of the ASR, the Company may receive additional shares [removed: equal to] [added: representing] the remaining 20% of the [removed: $1.5] [added: $2.0] billion notional amount.

It is also possible, depending on such weighted average price, that the Company will have an obligation to [removed: Barclays] [added: Citibank] which, at the Company’s option, could be settled in additional cash or by issuing shares.

Under the terms of the ASR, the maximum number of shares that could be delivered to the Company is [removed: 29.0] [added: 43.4] million.

The following graph compares the cumulative total shareholder return on CVS Health Corporation’s common stock (assuming reinvestment of dividends) with the cumulative total return on the S&P 500 Index, the S&P 500 Food and Staples Retailing Industry Group Index and the S&P 500 Healthcare Sector Group Index from December 31, [removed: 2016] [added: 2017] through December 31, [removed: 2021.][added: 2022.]

The graph assumes a $100 investment in shares of CVS Health Corporation’s common stock on December 31, [removed: 2016.][added: 2017.]

[removed: ][added: ]

| | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | |

| CVS Health Corporation | | | $ | 100 | | | | | $ | [removed: 94] [added: 93] | | | | | $ | [removed: 88] [added: 109] | | | | | $ | 103 | | | | | $ | [removed: 97] [added: 160] | | | | | $ | [removed: 151] [added: 148] | |

| S&P 500 Food & Staples Retailing Group Index (2) | | | 100 | | | | | | [removed: 113] [added: 101] | | | | | | [removed: 115] [added: 129] | | | | | | [removed: 146] [added: 150] | | | | | | [removed: 170] [added: 187] | | | | | | [removed: 213] [added: 168] | | |

(3)Includes [removed: 64] [added: 63] companies.

| | | | | | | | | | | | |

During the year ended December 31, 2022, the Company repurchased an aggregate of 34.1 million shares of common stock for approximately $3.5 billion pursuant to the 2021 Repurchase Program, including share repurchases under the $1.5 billion fixed dollar ASR transaction described below.

Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $2.0 billion fixed dollar ASR with Citibank, N.A. (“Citibank”).

Upon payment of the $2.0 billion purchase price on January 4, 2023, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $2.0 billion notional amount of the ASR or approximately 17.4 million shares at a price of $92.19 per share, which were placed into treasury stock in January 2023.

The

ASR was accounted for as an initial treasury stock transaction for $1.2 billion and a forward contract for $0.3 billion.

The forward contract was classified as an equity instrument and was recorded within capital surplus.

In February 2022, the Company received approximately 2.7 million shares of CVS Health Corporation’s common stock, representing the remaining 20% of the $1.5 billion notional amount of the ASR, thereby concluding the ASR.

These shares were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in February 2022.

At the time they were received, the initial and final receipt of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share.

| S&P 500 (1) | | | 100 | | | | | | 96 | | | | | | 126 | | | | | | 149 | | | | | | 191 | | | | | | 157 | | |

| S&P 500 Health Care Group Index (1) (3) | | | 100 | | | | | | 106 | | | | | | 129 | | | | | | 146 | | | | | | 184 | | | | | | 180 | | |

Each of the share Repurchase Programs was effective immediately.

The 2016 Repurchase program was terminated effective December 9, 2021.

| S&P 500 (1) | | | 100 | | | | | | 122 | | | | | | 116 | | | | | | 153 | | | | | | 181 | | | | | | 233 | | |

| S&P 500 Health Care Group Index (1) (3) | | | 100 | | | | | | 122 | | | | | | 130 | | | | | | 157 | | | | | | 178 | | | | | | 225 | | |

| [Consolidated Statements of Operations for the years ended December 31, [removed: 202](#ibab9fb71d67648f0b758869f160b7f4b_103)[1](#ibab9fb71d67648f0b758869f160b7f4b_103)[, 20](#ibab9fb71d67648f0b758869f160b7f4b_103)[20](#ibab9fb71d67648f0b758869f160b7f4b_103)] [added: 202](#i1ae8e8cf4da649e4afa2b073939999d2_103)[2](#i1ae8e8cf4da649e4afa2b073939999d2_103)[, 202](#i1ae8e8cf4da649e4afa2b073939999d2_103)[1](#i1ae8e8cf4da649e4afa2b073939999d2_103)] [and [removed: 201](#ibab9fb71d67648f0b758869f160b7f4b_103)[9](#ibab9fb71d67648f0b758869f160b7f4b_103)] [added: 20](#i1ae8e8cf4da649e4afa2b073939999d2_103)[20](#i1ae8e8cf4da649e4afa2b073939999d2_103)] | | | [removed: [103](#ibab9fb71d67648f0b758869f160b7f4b_103)] [added: [106](#i1ae8e8cf4da649e4afa2b073939999d2_103)] | | |

| [Consolidated Statements of Comprehensive [removed: Income](#ibab9fb71d67648f0b758869f160b7f4b_109) [for] [added: Income for] the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#ibab9fb71d67648f0b758869f160b7f4b_109)] [added: 2020](#i1ae8e8cf4da649e4afa2b073939999d2_106)] | | | [removed: [104](#ibab9fb71d67648f0b758869f160b7f4b_109)] [added: [107](#i1ae8e8cf4da649e4afa2b073939999d2_106)] | | |

| [Consolidated Balance Sheets as of December 31, [removed: 202](#ibab9fb71d67648f0b758869f160b7f4b_112)[1](#ibab9fb71d67648f0b758869f160b7f4b_112)] [added: 20](#i1ae8e8cf4da649e4afa2b073939999d2_109)[22](#i1ae8e8cf4da649e4afa2b073939999d2_109)] [and [removed: 20](#ibab9fb71d67648f0b758869f160b7f4b_112)[20](#ibab9fb71d67648f0b758869f160b7f4b_112)] [added: 202](#i1ae8e8cf4da649e4afa2b073939999d2_109)[1](#i1ae8e8cf4da649e4afa2b073939999d2_109)] | | | [removed: [105](#ibab9fb71d67648f0b758869f160b7f4b_112)] [added: [108](#i1ae8e8cf4da649e4afa2b073939999d2_109)] | | |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 202](#ibab9fb71d67648f0b758869f160b7f4b_118)[1](#ibab9fb71d67648f0b758869f160b7f4b_118)[, 20](#ibab9fb71d67648f0b758869f160b7f4b_118)[20](#ibab9fb71d67648f0b758869f160b7f4b_118)] [added: 202](#i1ae8e8cf4da649e4afa2b073939999d2_112)[2](#i1ae8e8cf4da649e4afa2b073939999d2_112)[, 202](#i1ae8e8cf4da649e4afa2b073939999d2_112)[1](#i1ae8e8cf4da649e4afa2b073939999d2_112)] [and [removed: 20](#ibab9fb71d67648f0b758869f160b7f4b_118)[19](#ibab9fb71d67648f0b758869f160b7f4b_118)] [added: 20](#i1ae8e8cf4da649e4afa2b073939999d2_112)[20](#i1ae8e8cf4da649e4afa2b073939999d2_112)] | | | [removed: [106](#ibab9fb71d67648f0b758869f160b7f4b_118)] [added: [109](#i1ae8e8cf4da649e4afa2b073939999d2_112)] | | |

| [Consolidated Statements of Shareholders’ Equity for the years ended December 31, [removed: 202](#ibab9fb71d67648f0b758869f160b7f4b_121)[1](#ibab9fb71d67648f0b758869f160b7f4b_121)[, 2](#ibab9fb71d67648f0b758869f160b7f4b_121)[020](#ibab9fb71d67648f0b758869f160b7f4b_121)] [added: 202](#i1ae8e8cf4da649e4afa2b073939999d2_115)[2](#i1ae8e8cf4da649e4afa2b073939999d2_115)[, 202](#i1ae8e8cf4da649e4afa2b073939999d2_115)[1](#i1ae8e8cf4da649e4afa2b073939999d2_115)] [and [removed: 20](#ibab9fb71d67648f0b758869f160b7f4b_121)[19](#ibab9fb71d67648f0b758869f160b7f4b_121)] [added: 20](#i1ae8e8cf4da649e4afa2b073939999d2_115)[20](#i1ae8e8cf4da649e4afa2b073939999d2_115)] | | | [removed: [108](#ibab9fb71d67648f0b758869f160b7f4b_121)] [added: [111](#i1ae8e8cf4da649e4afa2b073939999d2_115)] | | |

| [Notes to Consolidated Financial [removed: Statements](#ibab9fb71d67648f0b758869f160b7f4b_127)] [added: Statements](#i1ae8e8cf4da649e4afa2b073939999d2_118)] | | | [removed: [109](#ibab9fb71d67648f0b758869f160b7f4b_127)] [added: [112](#i1ae8e8cf4da649e4afa2b073939999d2_118)] | | |

| [Reports of Independent Registered Public Accounting [removed: Firm](#ibab9fb71d67648f0b758869f160b7f4b_184)] [added: Firm](#i1ae8e8cf4da649e4afa2b073939999d2_175)] (Public Company Accounting Oversight Board ID: 42) | | | [removed: [172](#ibab9fb71d67648f0b758869f160b7f4b_184)] [added: [179](#i1ae8e8cf4da649e4afa2b073939999d2_175)] | | |

[Index to Consolidated Financial [removed: Statements](#ibab9fb71d67648f0b758869f160b7f4b_100)][added: Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)]

| In millions, except per share amounts | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Products | | | $ | [removed: 203,738] [added: 226,616] | | | | | $ | [removed: 190,688] [added: 203,738] | | | | | $ | [removed: 185,236] [added: 190,688] | |

| Premiums | | | [removed: 76,132] [added: 85,330] | | | | | | [removed: 69,364] [added: 76,132] | | | | | | [removed: 63,122] [added: 69,364] | | |

| Services | | | [removed: 11,042] [added: 9,683] | | | | | | [removed: 7,856] [added: 11,042] | | | | | | [removed: 7,407] [added: 7,856] | | |

| Net investment income | | | [removed: 1,199] [added: 838] | | | | | | [removed: 798] [added: 1,199] | | | | | | [removed: 1,011] [added: 798] | | |

| Total revenues | | | [removed: 292,111] [added: 322,467] | | | | | | [removed: 268,706] [added: 292,111] | | | | | | [removed: 256,776] [added: 268,706] | | |

| Cost of products sold | | | [removed: 175,803] [added: 196,892] | | | | | | [removed: 163,981] [added: 175,803] | | | | | | [removed: 158,719] [added: 163,981] | | |

| Benefit costs | | | [removed: 64,260] [added: 71,281] | | | | | | [removed: 55,679] [added: 64,260] | | | | | | [removed: 52,529] [added: 55,679] | | |

| Store impairments | | | [removed: 1,358] [added: —] | | | | | | [removed: —] [added: 1,358] | | | | | | [removed: 231] [added: —] | | |

| Goodwill impairment | | | [removed: 431] [added: —] | | | | | | [removed: —] [added: 431] | | | | | | — | | |

| Operating expenses | | | [removed: 37,066] [added: 38,212] | | | | | | [removed: 35,135] [added: 37,066] | | | | | | [removed: 33,310] [added: 35,135] | | |

| Total operating costs | | | [removed: 278,918] [added: 314,721] | | | | | | [removed: 254,795] [added: 278,918] | | | | | | [removed: 244,789] [added: 254,795] | | |

| Operating income | | | [removed: 13,193] [added: 7,746] | | | | | | [removed: 13,911] [added: 13,193] | | | | | | [removed: 11,987] [added: 13,911] | | |

| Interest expense | | | [removed: 2,503] [added: 2,287] | | | | | | [removed: 2,907] [added: 2,503] | | | | | | [removed: 3,035] [added: 2,907] | | |

| Loss on early extinguishment of debt | | | [removed: 452] [added: —] | | | | | | [removed: 1,440] [added: 452] | | | | | | [removed: 79] [added: 1,440] | | |

| Other income | | | [removed: (182)] [added: (169)] | | | | | | [removed: (206)] [added: (182)] | | | | | | [removed: (124)] [added: (206)] | | |

| Income before income tax provision | | | [removed: 10,420] [added: 5,628] | | | | | | [removed: 9,770] [added: 10,420] | | | | | | [removed: 8,997] [added: 9,770] | | |

| Income tax provision | | | [removed: 2,522] [added: 1,463] | | | | | | [removed: 2,569] [added: 2,522] | | | | | | [removed: 2,366] [added: 2,569] | | |

| Income from continuing operations | | | [removed: 7,898] [added: 4,165] | | | | | | [removed: 7,201] [added: 7,898] | | | | | | [removed: 6,631] [added: 7,201] | | |

| Loss from discontinued operations, net of tax | | | — | | | | | | [removed: (9)] [added: —] | | | | | | [removed: —] [added: (9)] | | |

| Net income | | | [removed: 7,898] [added: 4,165] | | | | | | [removed: 7,192] [added: 7,898] | | | | | | [removed: 6,631] [added: 7,192] | | |

| Net (income) loss attributable to noncontrolling interests | | | [removed: 12] [added: (16)] | | | | | | [removed: (13)] [added: 12] | | | | | | [removed: 3] [added: (13)] | | |

| Net income attributable to CVS Health | | | $ | [removed: 7,910] [added: 4,149] | | | | | $ | [removed: 7,179] [added: 7,910] | | | | | $ | [removed: 6,634] [added: 7,179] | |

| Income from continuing operations attributable to CVS Health | | | $ | [removed: 6.00] [added: 3.16] | | | | | $ | [removed: 5.49] [added: 6.00] | | | | | $ | [removed: 5.10] [added: 5.49] | |

| Loss from discontinued operations attributable to CVS Health | | | $ | — | | | | | $ | [removed: (0.01)] [added: —] | | | | | $ | [removed: —] [added: (0.01)] | |

| Net income attributable to CVS Health | | | $ | [removed: 6.00] [added: 3.16] | | | | | $ | [removed: 5.48] [added: 6.00] | | | | | $ | [removed: 5.10] [added: 5.48] | |

| Weighted average basic shares outstanding | | | [removed: 1,319] [added: 1,312] | | | | | | [removed: 1,309] [added: 1,319] | | | | | | [removed: 1,301] [added: 1,309] | | |

| Income from continuing operations attributable to CVS Health | | | $ | [removed: 5.95] [added: 3.14] | | | | | $ | [removed: 5.47] [added: 5.95] | | | | | $ | [removed: 5.08] [added: 5.47] | |

| Net income attributable to CVS Health | | | $ | [removed: 5.95] [added: 3.14] | | | | | $ | [removed: 5.46] [added: 5.95] | | | | | $ | [removed: 5.08] [added: 5.46] | |

| Weighted average diluted shares outstanding | | | [removed: 1,329] [added: 1,323] | | | | | | [removed: 1,314] [added: 1,329] | | | | | | [removed: 1,305] [added: 1,314] | | |

| Dividends declared per share | | | $ | [removed: 2.00] [added: 2.20] | | | | | $ | 2.00 | | | | | $ | 2.00 | |

| In millions | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| Opioid litigation charges | | | 5,803 | | | | | | — | | | | | | — | | |

| Loss on assets held for sale | | | 2,533 | | | | | | — | | | | | | — | | |

| Loss from discontinued operations attributable to CVS Health | | | $ | — | | | | | $ | — | | | | | $ | (0.01) | |

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

| In millions, except per share amounts | | | 2022 | | | | | | 2021 | | |

| Assets held for sale | | | 908 | | | | | | — | | |

| Liabilities held for sale | | | 228 | | | | | | — | | |

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

| Proceeds from sale of subsidiaries (net of cash and restricted cash sold of $2,854, $0 and $9) | | | (1,249) | | | | | | — | | | | | | 840 | | |

| Repurchase of common stock | | | (3,500) | | | | | | — | | | | | | — | | |

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

| Net income | | | $ | 4,165 | | | | | $ | 7,898 | | | | | $ | 7,192 | |

| Loss on assets held for sale | | | 2,533 | | | | | | — | | | | | | — | | |

| Loss on early extinguishment of debt | | | — | | | | | | 452 | | | | | | 1,440 | | |

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

| Net income | | | — | | | — | | | | | | — | | | — | | | 4,149 | | | — | | | 4,149 | | | 16 | | | 4,165 | | |

| Balance at December 31, 2022 | | | 1,758 | | | (458) | | | | | | $ | 48,193 | | $ | (31,858) | | $ | 56,145 | | $ | (1,465) | | $ | 71,015 | | $ | 300 | | $ | 71,315 | |

[Index to Consolidated Financial Statements](#i1ae8e8cf4da649e4afa2b073939999d2_100)

The Company entered Public Exchanges in four additional states effective January 2023.

The Company operates a group purchasing organization that negotiates pricing for the purchase of pharmaceuticals and rebates with pharmaceutical manufacturers on behalf of its participants.

The Company also provides various administrative, management and reporting services to pharmaceutical manufacturers.

long-term care facilities and other care settings.

The decrease in restricted cash included in other current assets as of December 31, 2022 compared to December 31, 2021 was primarily due to a decrease in HSA funds held on behalf of customers as a result of the sale of Payflex Holdings, Inc. (“PayFlex”).

See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ for additional information on the Company’s sale of PayFlex.

_____________________________________

(1)Includes accounts receivable of $227 million which have been accounted for as assets held for sale and are included in assets held for sale on the consolidated balance sheet at December 31, 2022.

See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ for additional information.

Estimated useful lives generally range from 1 to 40 years for buildings,

| In millions | | | 2022 | | | | | | 2021 | | |

_____________________________________

(1)Includes property and equipment of $244 million which have been accounted for as assets held for sale and are included in assets held for sale on the consolidated balance sheet at December 31, 2022.

See Note 2 ‘‘Acquisitions, Divestitures and Asset Sales’’ for additional information.

Goodwill is

Recoverability of Long-Lived Assets

During the year ended December 31, 2022, the Company recorded office real estate optimization charges of $117 million primarily related to the abandonment of leased real estate and the related right-of-use assets and property and equipment in connection with the planned reduction of corporate office real estate space in response to its new flexible work arrangement.

income approach.

of claims incurred for these months.

The Company did not have any premium deficiency reserves as of December 31, 2022.

At December 31, 2022, the Company did not hold any HSA funds as a result of the PayFlex sale.

| Proceeds from sale of subsidiary | | | — | | | | | | 840 | | | | | | — | | |

| Net repayments of short-term debt | | | — | | | | | | — | | | | | | (720) | | |

| Balance at December 31, 2018 | | | 1,720 | | | (425) | | | | | | $ | 45,440 | | $ | (28,228) | | $ | 40,911 | | $ | 102 | | $ | 58,225 | | $ | 318 | | $ | 58,543 | |

| Net income | | | — | | | — | | | | | | — | | | — | | | 6,634 | | | — | | | 6,634 | | | (3) | | | 6,631 | | |

| Adoption of new accounting standard (4) | | | — | | | — | | | | | | — | | | — | | | (3) | | | — | | | (3) | | | — | | | (3) | | |

(4)Reflects the adoption of ASU 2016-13, *Financial Instruments - Credit Losses* (Topic 326), which resulted in a reduction to retained earnings of $3 million during the year ended December 31, 2020.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Beginning in 2021, the Company began presenting these funds held on behalf of members in restricted cash and, for statement of cash flow purposes, retrospectively adjusted the 2020 and 2019 balances by the amounts shown in the table below in the line item “restricted cash (included in other current assets)” to conform with the current year presentation.

Major renewals or replacements that

Long-Lived Asset Impairment

During the year ended December 31, 2019 the Company recorded a store impairment charge of $231 million primarily related to operating lease right-of-use assets.

Deposits, withdrawals and net

Changes in health care practices, inflation, new technologies, increases in the cost of

Reserves for long-

In 2020, interest rates for pension and annuity investment contracts ranged from 4.1% to 5.1%.

On July 1, 2019, the Company sold its Brazilian subsidiary, Drogaria Onofre Ltda.

(“Onofre”) for an immaterial amount.

The Company recorded a loss on the divestiture, which included the elimination of the subsidiary’s $154 million cumulative translation adjustment from accumulated other comprehensive income during the year ended December 31, 2019.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Pharmacy | | | $ | — | | | | | $ | 140,896 | | | | | $ | 66,442 | | | | | $ | — | | | | | $ | (41,413) | | | | | $ | 165,925 | |

| Premiums | | | 63,031 | | | | | | — | | | | | | — | | | | | | 91 | | | | | | — | | | | | | 63,122 | | |

| Net investment income | | | 599 | | | | | | — | | | | | | — | | | | | | 412 | | | | | | — | | | | | | 1,011 | | |

| Other | | | 5,974 | | | | | | 595 | | | | | | 744 | | | | | | 9 | | | | | | (26) | | | | | | 7,296 | | |

| Total | | | $ | 69,604 | | | | | $ | 141,491 | | | | | $ | 86,608 | | | | | $ | 512 | | | | | $ | (41,439) | | | | | $ | 256,776 | |

| Total | | | | | | | | | $ | 141,491 | | | | | | | | | | | | | | | | | | | | | | | | | |

There was no expense related to the HIF in 2019, since there was a one-year suspension of the HIF for 2019.

After considering

New Accounting Pronouncements Recently Adopted

*Simplifying the Accounting for Income Taxes*

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, *Simplifying the Accounting for Income Taxes* (Topic 740).

This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The Company adopted this new accounting standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company’s consolidated operating results, cash flows, financial condition or related disclosures.

liabilities.

Divestiture of Brazilian Subsidiary

On July 1, 2019, the Company sold its Brazilian subsidiary, Onofre, for an immaterial amount.

The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 (f) and 15d-15(f) under the Securities Exchange Act of 1934) as of December 31, [removed: 2021,] [added: 2022,] have concluded that as of such date the Company’s disclosure controls and procedures were adequate and effective at a reasonable assurance level and designed to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to such officers on a timely basis.

In order to ensure the Company’s internal control over financial reporting is effective, management regularly assesses such control and did so most recently for its financial reporting as of December 31, [removed: 2021.][added: 2022.]

Based on management’s assessment, management concluded that the Company’s internal control over financial reporting is effective and provides reasonable assurance that assets are safeguarded and that the financial records are reliable for preparing financial statements as of December 31, [removed: 2021.][added: 2022.]

There has been no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that occurred during the fourth quarter ended December 31, [removed: 2021] [added: 2022] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

No events have occurred during the fourth quarter ended December 31, [removed: 2021] [added: 2022] that would require disclosure under this item.

PART III

None.

PART III

The following table summarizes information about the registrant’s common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s equity compensation plans as of December 31, [removed: 2021:][added: 2022:]

| Equity compensation plans approved by stockholders (3) | | | [removed: 29,075] [added: 26,544] | | | | | | $ | [removed: 74.09] [added: 75.70] | | | | | [removed: 29,585] [added: 21,341] | | |

| Equity compensation plans not approved by stockholders (4) | | | [removed: 5,064] [added: 1,800] | | | | | | [removed: 43.63] [added: 43.60] | | | | | | — | | |

(2)Consists of: (i) [removed: 17,575] [added: 13,834] shares of common stock underlying outstanding options, (ii) [removed: 854] [added: 639] shares of common stock issuable upon the exercise of outstanding stock appreciation rights (“SARs”) and (iii) [removed: 15,710] [added: 13,871] shares of common stock issuable on the vesting of outstanding restricted stock units, deferred stock units and performance stock units, assuming target level performance in the case of performance stock units.

The number of shares included with respect to outstanding SARs is the number of shares of CVS Health Corporation common stock that would have been issued had the SARs been exercised based on the closing price per share of CVS Health Corporation common stock on December 31, [removed: 2021,] [added: 2022,] as reported on the NYSE, which was [removed: $103.16.][added: $93.19.]

The Aetna Stock Plan expired on May 21, 2020, therefore there are no securities available for future [removed: issuance] [added: grants] under this plan.

| Total | | | 28,344 | | | | | | 74.28 | | | | | | 21,341 | | |

| Total | | | 34,139 | | | | | | $ | 72.68 | | | | | 29,585 | | |

The section of the Proxy Statement under the caption “Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm for [removed: 2021”] [added: 2022”] is incorporated herein by reference.

| 3.2 | | | | | | [By-Laws of the Registrant, as amended and restated [removed: July 8, 2020] [added: November 17, 2022] (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed [removed: July 10, 2020).](https://www.sec.gov/Archives/edgar/data/64803/000094787120000619/ss177554_ex0301.htm)] [added: November 21, 2022).](https://www.sec.gov/Archives/edgar/data/64803/000094787122001199/ss1535680_ex0301.htm)] | | |