CVS Health Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Lisa Gill - JPMorgan Chase & Co - Analyst : And good morning and thanks for the question. I really want to start with some of the comments you made on the PBM side. So first, the $240 million that you talked about, as we shift more towards transparency, towards TrueCost, should we anticipate -- and again, this kind of goes to Brian's comments around '26 as well, should we anticipate as we see shifts in these contracts that we're going to continue to see headwinds as we make that initial shift? So that would be the first part of the question. Secondly, how do we think about future PBM economics around a TrueCost model, not only for you as the PBM? But we also get questions around the plan sponsor. So as we know, many plan sponsors use rebates to offset premiums, et cetera. So how does that future look on the plan sponsor side as well as your economics on the PBM side?

Question: Justin Lake - Wolfe Research LLC - Analyst : Thanks. Good morning. I wanted to ask about the PCW business. It looks like 3Q was ahead of your expectations and you have about 3% growth assumed for the fourth quarter. I was hoping you could share some of the drivers around your confidence in that fourth quarter growth, particularly the headwind from lower vaccine volumes to OI and then the benefit of the 600 store file buy you got from Rite Aid for the fourth quarter and how that EBIT impacts into 2026. Thanks.

Question: Elizabeth Anderson - Evercore Inc - Analyst : Good morning, guys. Thanks so much for the question. I believe you can hear me. I had a question in terms of the 100 basis points provider liabilities that you called out. Can you give us a little bit more detail on exactly what those are? And is this a onetime item? Do we expect this to continue for a couple of quarters? Just any additional color there would be helpful because, obviously, with that, it shows that your MBR was much more in line than maybe it looked like from the first glance. Thanks.

Question: Stephen Baxter - Wells Fargo Securities LLC - Analyst : Hi, I hope. Hi, thanks. Sorry for the difficulties there. Just to kind of come back to that point a little bit. I think with the first couple of quarters of the year, you size in each quarter that, I guess, on a continuing basis there was around $500 million core upside that you weren't taking through into the guidance. Wondering if there's an equivalent amount, if you think about kind of excluding the items that you called out around the exchanges and around the out-of-period settlements that you'd cite for Q3? And I guess how do we reconcile that versus the raise that you made? And I guess just one clarification as we're getting a lot of questions on it. This mid-teens EPS growth that you're framing for 2026, is that after taking the $0.45 out of the baseline? Or is that off of this year's guidance as you currently revised it? Thank you.

Question: Michael Charney - Leerink Partners - Analyst : Great. Thank you so much for taking the question. I know Lisa had asked about the PBM headwinds that you had been discussing. I want to talk a little bit more about the PBM tailwinds. Beyond Cordavis, what are you seeing broadly from a specialty growth perspective? And can you talk about some of the strategic advancements you're making to continue to benefit from what has obviously been an extremely strong overall market growth? Thank you.

Question: Eric Percher - Nephron Research LLC - Analyst : Thank you. I'd like to return to Caremark and ask you to clarify the extent to which you're seeing pressure from adoption of TrueCost versus change in mix, if it's TrueCost, how much of that was CVS? I'd expect you were ahead of that versus others or independents that you're enabling. And then if more change in mix, are you seeing that changes to GLP-1 formulary or biosimilar private label is having an impact on rebate guarantees? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2025 / 12:00PM, CVS.N - Q3 2025 CVS Health Corp Earnings Call Prem Shah - CVS Health Corp - Executive Vice President, Chief Pharmacy Officer and President - Pharmacy and Consumer Wellness Yeah, Eric. Thanks for the question. First off, let me be clear. This is not from TrueCost. The TrueCost model is not what's driving this. As you know, in the legacy PBM models in the PBM marketplace, we predict and try to drive rebate guarantees, which is a way in which we derive the value for our customers. In that case, we had probably three primary drivers of some of the pressure. One, the slower growth of GLP-1s that we're seeing in the back half, primarily driven from we expected a little bit more of the compounding volumes to come back into the benefit, which we're not seeing. Secondly, we had a couple of products on the autoimmune category not related to Cordavis, but drivers of a couple of products that we're driving that. So one is in the autoimmune category and one is in the HIV category. So this is not from TrueCost. It is something we're working with our clients actively adjusting our guarantees appropriately as we move forward, but create a little bit of pressure in the short term.

Question: Andrew Mok - Barclays Services Corp - Analyst : Hi, good morning. I wanted to ask about the re-contracting efforts at Oak Street and understand the room for improvement there. So first, can you share the pretax operating losses of that business today? And to the extent you had problematic external membership this year, did you see the needed changes made to benefits for the 2026 plan year? And if not, can you help us understand what contracting changes you're making, including how much risk is shifting back to your Medicare Advantage partners? Thanks.

Question: George Hill - Deutsche Bank AG - Analyst : Yeah, good morning guys, and thanks for taking the question. And David and Brian, my question is kind of focused on the retail pharmacy business. And you talked about how 2026 is going to show an improvement from the long-term guide. I guess I would ask if you can comment, how far are we away from like the long-term guidance down 5% not being the case anymore? And given the PBMs are paying pharmacies more money and CostVantage gas taken root across different payer segments, does earnings growth starts to look more like script growth in that segment? I'll stop there.