CVS CVS Health 10-Q 2026-09-30 section summaries

CVS Health — Q3 and first nine months of 2026

Consolidated results

Q3 revenue grew 5.4% year over year; 9M revenue grew 6.3%. The prior-year GAAP comparisons were heavily affected by a $5.725 billion goodwill impairment in Health Care Delivery. Excluding that impairment, prior-year operating income was $2.518 billion for Q3 and $8.273 billion for 9M. The 9M 2025 comparison also included a $483 million Omnicare deconsolidation gain and significant litigation and other charges.

Q3 segment results

Adjusted operating income was $4.194 billion, up from $3.459 billion. Consolidated GAAP operating income was $3.566 billion. Q3 2026 adjustments included $425 million of intangible amortization, $13 million of acquisition integration costs and a $193 million Omnicare guarantee liability, partly offset by $3 million of net realized capital gains. Q3 2025 included the goodwill impairment, a $320 million opioid litigation charge and an $83 million clinic closure charge.

Health Services’ Q3 revenue included $28.258 billion from pharmacy network, $23.153 billion from mail and specialty, and $2.553 billion from other channels, compared with $26.408 billion, $20.392 billion and $2.467 billion, respectively. Mail and specialty grew faster than the segment overall. Pharmacy & Consumer Wellness external-customer revenue declined slightly. CVS reported about 9,000 retail locations, more than 1,000 walk-in and primary-care clinics, approximately 87 million PBM plan members and an estimated 37 million people served through health insurance products.

Cash flow, balance sheet and capital

Equity less goodwill and intangible assets implies negative tangible equity of $29.013 billion. Long-term debt’s estimated fair value was $54.977 billion at September 30, 2026, versus its $60.680 billion carrying value. CVS repaid $4.057 billion of long-term debt in 9M and issued none. Dividends paid were $2.578 billion, versus $2.552 billion; no shares were repurchased. The quarterly dividend was $0.665 per share, and the 2022 repurchase authorization had $10.0 billion remaining.

Health care costs payable were $16.858 billion at September 30, 2026, compared with $16.098 billion a year earlier; net of reinsurance recoverables and discount-rate effects, the figures were $16.759 billion and $15.300 billion. 9M incurred health care costs were $92.931 billion versus $91.570 billion, while claims paid were $91.501 billion versus $91.254 billion. Favorable development on prior-year estimates reduced costs by $1.371 billion, compared with $1.926 billion in 9M 2025. The ending premium deficiency reserve fell to $13 million from $728 million; the 2026 reserve related to one state Medicaid product line.

Investments, accounting and exposures

Available-for-sale debt securities had $31.320 billion amortized cost and $30.171 billion fair value at September 30, 2026, including $1.195 billion of gross unrealized losses and $46 million of gains. CVS attributed the increase in unrealized losses primarily to interest rates, said the securities were performing, and did not expect to sell them before recovery of amortized cost. Nine-month other comprehensive loss was $1.001 billion, including $1.213 billion of net unrealized investment losses; accumulated OCI moved from $416 million of income a year earlier to a $595 million loss.

CVS had an approximately $3.4 billion remaining accrual for opioid matters. Settlements cover substantially all participating states and political subdivisions, but private plaintiffs and some other parties remain outside the settlements; CVS cannot reasonably estimate ultimate losses for all remaining matters. A separate $315 million DOJ settlement was executed in October 2026, with the amount previously accrued.

For Omnicare, CVS recorded a $193 million estimated contingent guarantee liability in Q3 after determining an asset sale was probable. Under approved resolution agreements, CVS is to pay $130 million, while Omnicare estate proceeds fund the balance; CVS guarantees a shortfall below $310 million if not paid by March 15, 2028. The agreements remain subject to conditions, including closing the asset sale.

CVS and the FTC announced a proposed settlement in July 2026 intended to resolve outstanding FTC investigations into PBM and affiliated pharmacy practices; litigation is halted pending final FTC approval. CVS also faces other PBM and government-payor matters, including a $291 million judgment in a Part D pricing False Claims Act case that it has appealed, and claims concerning provider reimbursement, risk adjustment and Medicare Advantage. The company warns that litigation, investigations and government contract changes could lead to significant damages, penalties or loss of program participation.

On November 4, 2026, CVS announced plans to separate into two publicly traded companies, targeted for completion in the first half of 2028, subject to customary conditions: a healthcare solutions company including Aetna and CVS Caremark, and a retail pharmacy and community healthcare company to be named CVS Pharmacy. The interim financial statements received an accountant’s review, not an audit opinion; the review reported no material modifications needed for GAAP conformity.

CVS Health — Q3 and first nine months of 2026

CVS reported higher revenue and improved adjusted operating income across all operating segments in Q3. GAAP earnings comparisons were substantially affected by large prior-year impairment and litigation charges. Unless noted, figures are in $ billions.

Consolidated results

Revenue increased 5.4% in Q3 and 6.3% in 9M. Adjusted operating income—CVS’s principal segment performance measure—increased 21.2% in Q3 and 22.4% in 9M. GAAP operating income’s sharp improvement mainly reflects the absence of the prior-year $5.725 billion Health Care Delivery goodwill impairment. The 9M comparison also benefited from no repeat of prior-year charges, including $1.220 billion in legacy litigation, a $320 million opioid litigation charge, and a $288 million pretax loss on the wind-down and sale of Accountable Care assets. These benefits were partly offset by ongoing investment, costs supporting higher Rite Aid-acquisition volume, and a $193 million Omnicare contingent guarantee liability recorded in 2026. The prior-year Q3 included a $483 million gain on Omnicare deconsolidation. Effective tax rates were 23.8% versus (14.6)% in Q3 and 24.5% versus 252.8% for 9M; unusual prior-year rates reflected nondeductible impairment and litigation charges.

Segment results

For 9M, Health Care Benefits revenue was $110.364 billion from $107.061 billion, with adjusted operating income of $6.379 billion from $3.615 billion. Health Services revenue was $153.996 billion from $139.181 billion, with adjusted operating income of $5.328 billion from $5.228 billion. Pharmacy & Consumer Wellness revenue was $101.303 billion from $101.707 billion, with adjusted operating income of $4.307 billion from $4.129 billion. Corporate/Other revenue was $478 million from $362 million, and its adjusted operating loss was $1.513 billion from $1.126 billion; the year-to-date deterioration reflected a state non-income-tax law change and increased investment.

Health Care Benefits: Q3 results improved with Government business performance: the medical benefit ratio (MBR) was 91.3% versus 92.8%; for 9M it was 87.8% versus 90.0%, also benefiting from the absence of prior-year premium deficiency reserves, partly offset by lower favorable prior-period development. Government premium revenue rose to $28.108 billion from $25.968 billion in Q3 and $84.385 billion from $76.800 billion for 9M. Commercial premiums fell to $6.461 billion from $7.771 billion in Q3 and $19.095 billion from $23.931 billion for 9M, partly reflecting the 2026 individual-exchange exit. Membership was 26.120 million, down approximately 583,000 year over year; Medicare Advantage membership was 4.229 million versus 4.266 million. More than 69% of Medicare Advantage members were in plans rated at least 4 stars for 2027, down from more than 81% for 2026, affecting eligibility for 2028 bonus payments.

Health Services: Q3 growth reflected drug mix and brand inflation, partly offset by pharmacy client price improvements. Pharmacy network revenue was $28.258 billion from $26.408 billion, and mail and specialty revenue was $23.153 billion from $20.392 billion. Claims processed increased 1.3% to 481.7 million from 475.6 million on a 30-day-equivalent basis. Adjusted operating income grew more slowly than revenue amid client pricing pressure; 9M operating expenses fell partly because 2025 included legacy litigation and Accountable Care divestiture costs.

Pharmacy & Consumer Wellness: Q3 revenue and operating income reflected regulatory-related drug price reductions, generic introductions and reimbursement pressure, partly offset by favorable drug mix, brand inflation, prescription volume and Rite Aid contributions. Pharmacy revenue was $29.725 billion from $30.428 billion, and front-store revenue was $5.164 billion from $5.192 billion. Prescriptions filled increased 1.9% to 470.0 million from 461.4 million, while same-store prescription-volume growth slowed to 3.9% from 8.9%; pharmacy and front-store same-store sales each declined 0.6%. For 9M, same-store pharmacy sales rose 1.7%, supported by 5.8% prescription-volume growth, and front-store same-store sales rose 0.5%. The prior-year 9M period included $929 million of legacy litigation charges.

Cash flow, liquidity and capital allocation

The increase in operating cash flow primarily reflected timing of receipts and payments and improved Health Care Benefits performance. Higher net investment purchases contributed to investing outflows; financing outflows increased mainly because the prior-year period included proceeds from long-term senior-note issuance. At September 30, cash and cash equivalents were approximately $11.7 billion, including approximately $5.9 billion held by the parent or nonrestricted subsidiaries. CVS had no commercial paper outstanding, revolver borrowings or FHLB advances, and reported compliance with debt covenants. Its three backup revolving facilities total $7.5 billion and expire in 2029, 2030 and 2031; available FHLB borrowing capacity was approximately $1.4 billion. Long-term debt ratings were BBB (Fitch), Baa3 (Moody’s) and BBB (S&P); Fitch’s outlook was negative, S&P’s stable, and Moody’s outlook turned positive in August 2026.

CVS repurchased no common shares in the first nine months of 2026 or 2025. Remaining repurchase authorization was $10.0 billion under the 2022 program and $1.5 billion under the 2021 program. The dividend was $0.665 per share in Q3 and $1.995 per share for 9M, unchanged year over year.

Strategy and risks

On November 4, 2026, CVS announced plans to separate into two publicly traded companies, targeted for the first half of 2028, subject to approvals and customary conditions. The proposed healthcare solutions company would include Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health; CVS Pharmacy would include retail and mail pharmacy, MinuteClinic/virtual care and Health100 technology services. The separation is intended to be tax-free for U.S. federal income tax purposes.

Management cited continuing elevated medical utilization and risks to PBM economics from rebate sharing, pricing guarantees, manufacturer disputes and regulation, including possible limits on PBM-affiliated pharmacy licensure. Other risks include changing 340B conditions, potential Medicare/Medicaid funding or risk-adjustment changes, inflation, tariffs, labor and supply-chain costs, and consumer shifts toward value, grocery and digital retailers.

The Company reported no material changes in its market-risk exposures since December 31, 2025. For a description of those exposures, it referred readers to Part II, Item 7A of its FY2025 Form 10-K.

As of September 30, 2026, CVS’s CEO and CFO concluded that disclosure controls and procedures were adequate and effective, providing reasonable assurance that material information would be communicated to them in a timely manner. No change in internal control over financial reporting during the quarter was identified as materially affecting, or reasonably likely to materially affect, those controls. No specific control deficiencies or financial or business developments were reported in this section.

Planned separation and related risks

CVS Health’s risk disclosures supplement those in its 2025 Form 10-K and address the proposed separation announced November 4, 2026. The transaction is intended to create two publicly traded companies and to qualify as tax-free for U.S. federal income tax purposes:

• CVS Health: Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health.
• CVS Pharmacy: retail and mail pharmacy, MinuteClinic (including virtual care) and Health100.

Completion is expected in the first half of 2028, subject to customary conditions, including final board approval, effectiveness of an SEC Form 10 registration statement and confirmation of the expected tax treatment.

The separation could divert substantial management and employee attention from ongoing operations and disrupt the business. Execution is complex and depends on both companies being ready to operate independently and on finalizing the new company’s capital structure. The transaction could be delayed, changed or not completed because of market disruption, adverse business or industry changes, unmet or unwaived closing conditions, unavailable consents or approvals, or failure to qualify for the expected tax treatment. Greater-than-expected difficulty, duration or cost could also affect completion. Separation costs, including dis-synergies and restructuring costs, may exceed estimates; even if the transaction is completed, its anticipated benefits could be delayed or fail to materialize.

For the three months ended September 30, 2026, no CVS Health director or executive officer adopted or terminated a Rule 10b5-1(c) trading plan or a non-Rule 10b5-1 trading arrangement. This section reports no financial results, business developments, or other material changes.