CVS Health CVS Health Week Day 2: The Health Care Benefits Segment

Research evidence excerpt

CVS Health CVS Health Week Day 2: The Health Care Benefits Segment

J P M O R G A N North America Equity Research

27 May 2026

CVS Health Overweight

CVS, CVS US

CVS Health Week Day 2: The Health Care Benefits Price (26 May 26):$90.73

Segment

Managed Care and Facilities

Lisa C. Gill AC

(1-212) 622-6466

lisa.c.gill@jpmorgan.com

John Stansel, CFA

(1-212) 622-0083

john.stansel@jpmorgan.com

For Day 2 of CVS Health Week, we focus on the company’s Health Care Benefits

Benjamin Rossi

(HCB) segment, which was the source of significant operating pressure in 2024

(1-212) 622-9603

and the driver of earnings recovery in 2025 and 2026. CVS has repositioned its benjamin.rossi@jpmorgan.com

Medicare Advantage book following 2024’s higher than anticipated Medicare Cole Harris

Advantage utilization, with the company still targeting a return to target margins (1-212) 622-9068

by 2028. We remain confident in the long-term margin profile of the business and cole.harris@jpmorgan.com

the value of CVS’s integrated care delivery model, which should enable the J.P. Morgan Securities LLC

company to lower costs and improve health outcomes. We will be hosting a call

tomorrow, Thursday, May 28th at 10:00am ET with David Joyner, Chairman and

CEO of CVS Health. Please reach out to us or your J.P. Morgan sales contact for

details.

• Medicare Advantage margins are on a multi-year path back to target

profitability. In 2024, we estimate CVS’s Medicare Advantage business ran

a -MSD% margin, reflecting higher than anticipated utilization pressure

industry-wide (including outpatient utilization and utilization of supplemental

benefits), a temporary reduction in the Star rating of CVS’s largest contract by

membership, and above-market growth in 2024 (exacerbating the impact of the

pricing mismatch).