What the changes say
- CVS Health faces heightened regulatory pressure in government programs and vertical integration strategies.
- Reimbursement and pricing constraints continue to impact pharmacy profitability across retail and specialty segments.
- Competition for talent and distribution channels creates new operational and compliance hurdles.
What changed since the prior 10-K
New
- NewRisks Relating to Our Businesses
service offerings and/or higher service levels. Marketplace dynamics and regulatory changes also have adversely affected our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread,” which could adversely affect our future profitability, and we expect these trends to continue
Market dynamics and regulations limit our use of retail differential pricing, threatening future profitability.
- NewRisks Relating to Our Businesses
in 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
Whistleblower lawsuits under false claims acts expose us to severe monetary penalties and government program suspensions.
- NewRisks Relating to Our Businesses
addition, some types of damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or some forms of liability also may become unavailable or prohibitively expensive in the future
Uncertain legal outcomes and uninsurable punitive damages could inflict substantial financial and reputational harm.
- NewRisks Relating to Our Businesses
We may face increased regulatory risks related to our vertical integration strategy
Our vertical integration strategy triggers increased regulatory scrutiny and state-level bans on pharmacy-PBM affiliation.
- NewRisks Relating to Our Businesses
As our government funded businesses grow, our exposure to changes in federal and state government policy with respect to and/or regulation of the various government funded programs in which we participate also increases
Expanding government-funded businesses increases our vulnerability to policy changes and short-notice contract cancellations.
- NewRisks Relating to Our Businesses
our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and priorities
Federal funding delays, shutdowns, or debt ceiling disputes could disrupt provider claim payments and investment portfolio values.
- NewRisks Related to Our Operations
There can be no assurance that we have been able to, or will be able to, adequately prevent, detect, and/or remediate such data security incidents
We cannot guarantee successful prevention, detection, or remediation of data security and IT failures, including artificial intelligence systems.
- NewRisks Related to Our Operations
results and/or future performance. The succession plans we have in place and our employment arrangements with certain key executives do not guarantee the services of these executives will continue to be available to us
New distribution channels create disintermediation risk and potential regulatory penalties from broker and agent marketing practices.
Dropped
- DroppedRisks Relating to Our Businesses
Risks Associated with Mergers, Acquisitions, and Divestitures
- DroppedRisks Relating to Our Businesses
We can provide no assurance that we will be able to compete successfully on Public Exchanges or that our pricing or other actions will result in the profitability of our Public Exchange products
Risks associated with mergers, acquisitions, and divestitures.
- DroppedRisks Relating to Our Businesses
We are exposed to risks relating to the solvency of other insurers
- DroppedRisks Relating to Our Businesses
Our risk profile is changing as we offer new products and services and expand in business areas beyond our historical businesses, and we may face increased regulatory risks related to our vertical integration strategy
- DroppedRisks Relating to Our Businesses
Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues, and we expect that percentage to increase
- DroppedRisks Relating to Our Businesses
We may be unable to successfully integrate companies we acquire
Competition on Public Exchanges and profitability of exchange products.
- DroppedRisks Related to Our Operations
The failure or disruption of our information technology systems or the failure of our information technology infrastructure to support our businesses could adversely affect our reputation, businesses, operating results and cash flows
- DroppedRisks Related to Our Operations
Our business success and operating results depend in part on effective information technology systems and on continuing to develop and implement improvements in technology. Pursuing multiple initiatives simultaneously could make this continued development and implementation significantly more challenging
- DroppedRisks Related to Our Operations
Both our and our vendors’ operations are subject to a variety of business continuity hazards and risks, any of which could interrupt our operations or otherwise adversely affect our performance and operating results
- DroppedRisks Related to Our Relationships with Manufacturers, Providers, Suppliers and Vendors
If our suppliers or service providers fail to meet their contractual obligations to us or to comply with applicable laws or regulations, we may be exposed to brand and reputational harm, litigation and/or regulatory action
- DroppedRisks Related to Our Relationships with Manufacturers, Providers, Suppliers and Vendors
We may experience increased medical and other benefit costs, litigation risk and customer and member dissatisfaction when providers that do not have contracts with us render services to our Health Care Benefits members
Solvency risks of other insurers and guaranty fund assessments like Penn Treaty.
Reworded
- 84% rewrittenRisks Related to Our Operations
We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success, and our failure to do so could adversely affect our businesses, operating results and/or future performance
Added explicit emphasis on executive succession planning and the critical retention of key leadership roles.
- 70% rewrittenRisks Relating to Our Businesses
Extreme events, or the threat of extreme events, could materially impact our businesses
Expanded extreme events risk to explicitly include potential material impacts on our vendors.
- 52% rewrittenRisks Relating to Our Businesses
If we fail to comply with applicable laws and regulations, many of which are highly complex, we could be subject to significant adverse regulatory actions, including monetary penalties, or suffer brand and reputational harm
Removed specific references to human capital and climate change regulations from the general compliance overview.
- 51% rewrittenRisks Relating to Our Businesses
Each of our segments operates in a highly competitive and evolving business environment; and operating income in the industries in which we compete may decline
Changed the word 'withdrawn' to 'canceled' regarding challenged Medicaid and dual eligible program winning bids.
- 50% rewrittenRisks Related to Our Operations
Failure to meet customer expectations may harm our brand and reputation, our ability to retain and grow our customer base and membership and our operating results and cash flows
Streamlined customer service operational examples and tied vendor or service failures directly to customer retention and revenue growth.
- 49% rewrittenFinancial Risks
We would be adversely affected if we do not effectively deploy our capital. Downgrades or potential downgrades in our credit ratings, should they occur, could adversely affect our brand and reputation, businesses, operating results, cash flows and financial condition
Retained core capital deployment and credit rating language with no material strategic changes.
- 48% rewrittenRisks Relating to Our Businesses
Our Health Care Delivery businesses face unique risks
Trimmed specific subsidiary listings for Signify Health and Oak Street Health while adding a reference to potential U.S. changes.
- 37% rewrittenRisks Relating to Our Businesses
We face unique regulatory and other challenges that may inhibit the profitability of our Medicare and Medicaid businesses
Updated CMS Medicare Advantage payment rate figures for 2025 to 2026 final rates and 2026 to 2027 advance notices.
- 34% rewrittenRisks Relating to Our Businesses
We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things
- 29% rewrittenRisks Relating to Our Businesses
Our operating results may be adversely affected by changes in laws and policies governing employers and by union organizing activity
- 29% rewrittenRisks Relating to Our Businesses
Risks From Changes in Public Policy and Other Legal and Regulatory Risks
- 28% rewrittenRisks Relating to Our Businesses
If our compliance or other systems and processes fail or are deemed inadequate, we may suffer brand and reputational harm and become subject to contractual damages, regulatory actions and/or litigation
- 27% rewrittenRisks Relating to Our Businesses
A change in our Health Care Benefits product mix may adversely affect our profit margins
- 23% rewrittenRisks Related to Our Operations
Data governance failures can adversely affect our reputation, businesses and prospects. Our use and disclosure of members’, customers’ and other constituents’ personal information is subject to complex regulations at multiple levels
All 42 risk factors
Headings as the filing states them, in filing order.
Risks Relating to Our Businesses
- 01Risks From Changes in Public Policy and Other Legal and Regulatory Risks29% rewritten
- 02Adverse economic conditions in the U.S. and abroad can materially and adversely impact our businesses, operating results, cash flows and financial condition
- 03Each of our segments operates in a highly competitive and evolving business environment; and operating income in the industries in which we compete may decline51% rewritten
- 04service offerings and/or higher service levels. Marketplace dynamics and regulatory changes also have adversely affected our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread,” which could adversely affect our future profitability, and we expect these trends to continueNew
- 05A change in our Health Care Benefits product mix may adversely affect our profit margins27% rewritten
- 06Our Health Care Delivery businesses face unique risks48% rewritten
- 07Negative public perception of the industries in which we operate, or of our industries’ or our practices, can adversely affect our businesses, operating results, cash flows and prospects
- 08We must maintain and improve our relationships with our retail and specialty pharmacy customers and increase the demand for our products and services, including proprietary brands
- 09We face risks relating to the availability, pricing and safety profiles of prescription drugs that we purchase and sell
- 10Extreme events, or the threat of extreme events, could materially impact our businesses70% rewritten
- 11We may be unable to achieve our corporate responsibility and sustainability goals
- 12We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things34% rewritten
- 13We are subject to potential changes in public policy, laws and regulations, including reform of the U.S. health care system and entitlement programs, which could have a material adverse effect on our businesses, operations and/or operating results
- 14If we fail to comply with applicable laws and regulations, many of which are highly complex, we could be subject to significant adverse regulatory actions, including monetary penalties, or suffer brand and reputational harm52% rewritten
- 15in 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-complianceNew
- 16If our compliance or other systems and processes fail or are deemed inadequate, we may suffer brand and reputational harm and become subject to contractual damages, regulatory actions and/or litigation28% rewritten
- 17addition, some types of damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or some forms of liability also may become unavailable or prohibitively expensive in the futureNew
- 18We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions
- 19We may face increased regulatory risks related to our vertical integration strategyNew
- 20We face unique regulatory and other challenges that may inhibit the profitability of our Medicare and Medicaid businesses37% rewritten
- 21As our government funded businesses grow, our exposure to changes in federal and state government policy with respect to and/or regulation of the various government funded programs in which we participate also increasesNew
- 22our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and prioritiesNew
- 23Possible changes in industry pricing benchmarks and drug pricing generally can adversely affect our PBM and Pharmacy & Consumer Wellness businesses
- 24We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, which would have an adverse effect on our revenues, MBRs and operating results and could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes
- 25Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs. Challenges to our minimum MLR rebate methodology and/or reports could adversely affect our operating results
- 26Our operating results may be adversely affected by changes in laws and policies governing employers and by union organizing activity29% rewritten
- 27We face international political, legal and compliance, operational, regulatory, economic and other risks that may be more significant than in our domestic operations
Risks Related to Our Operations
- 28Failure to meet customer expectations may harm our brand and reputation, our ability to retain and grow our customer base and membership and our operating results and cash flows50% rewritten
- 29We and our vendors have experienced and continue to experience cyberattacks. We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security (including cybersecurity) risks or threats in the future
- 30Data governance failures can adversely affect our reputation, businesses and prospects. Our use and disclosure of members’, customers’ and other constituents’ personal information is subject to complex regulations at multiple levels23% rewritten
- 31There can be no assurance that we have been able to, or will be able to, adequately prevent, detect, and/or remediate such data security incidentsNew
- 32Product liability, product recall, professional liability or personal injury issues could damage our reputation and have a significant adverse effect on our businesses, operating results, cash flows and/or financial condition
- 33We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success, and our failure to do so could adversely affect our businesses, operating results and/or future performance84% rewritten
- 34results and/or future performance. The succession plans we have in place and our employment arrangements with certain key executives do not guarantee the services of these executives will continue to be available to usNew
- 35Failure of our businesses to effectively collaborate could prevent us from maximizing our operating results
- 36We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to new rules and other requirements and potential liability and may disrupt our business operations
Financial Risks
- 37We would be adversely affected if we do not effectively deploy our capital. Downgrades or potential downgrades in our credit ratings, should they occur, could adversely affect our brand and reputation, businesses, operating results, cash flows and financial condition49% rewritten
- 38Goodwill and other intangible assets could, in the future, become impaired
- 39Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative investments and other investments, and our operating results and/or our financial condition
Risks Related to Our Relationships with Manufacturers, Providers, Suppliers and Vendors
- 40We face risks relating to the market availability, pricing, suppliers and safety profiles of prescription drugs and other products that we purchase and sell
- 41Our operating results may be adversely affected if we are unable to contract with providers on competitive terms and develop and maintain attractive networks with high quality providers
- 42Continuing consolidation and integration among providers and other suppliers may increase our medical and other covered benefit costs, make it difficult for us to compete in certain geographies and create new competitors
Other CVS Health 10-Ks
- FY2024 10-K risk factors45 risks
CVS Health faces intense regulatory scrutiny regarding Medicare rates, drug pricing benchmarks, and health care policy reform. The company manages major integration risks from expanding into value-based care through Signify Health and Oak Street Health. Cybersecurity, data governance, and information technology failures present significant ongoing threats to operations and reputation.
Filed Feb 12, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.