Our Thoughts On Upcoming CVS Contract Renewal

Research evidence excerpt

Our Thoughts On Upcoming CVS Contract Renewal

TD SECURITIES (USA) LLC INDUSTRY UPDATE

July 21, 2026

■Health Care Technology & Distribution: Our Thoughts On Upcoming CVS Contract

Drug Distributors

Care Technology & Distribution: Renewal■Health

Drug Retailers

Charles Rhyee THE TD COWEN INSIGHT

646 562 1376

Given focus on CVS's distribution contract renewal and potential impact to MCK & CAH, we

charles.rhyee@tdsecurities.com

provide our thoughts on the potential outcome based on our recent discussions w/ CVS, MCK,

Lucas Romanski and CAH. Our base assumption is that the status quo continues w/ MCK and CAH retaining

646 562 1352 their respective portions of CVS, but with meaningful concessions, particularly from MCK. We

lucas.romanski@tdsecurities.com

adjust ests & PT for MCK.

Price Target Changes

Impact To Thesis

MCK $989.00 (Prior $1,012.00)

With CVS indicating it is assessing all options, investors have grown concerned that a worst

case scenario for MCK – seeing both PCW & HSS (spec. pharmacy & mail-order) contracts lost

to CAH – is possible. In this note, we provide our thoughts on what our recent conversations

with CVS, MCK & CAH suggest could be an outcome. We believe commentary from each

suggests that largely maintaining the status quo is a more likely outcome, but w/ greater

concessions from MCK (an impact that we believe is manageable).

What Each Have Said In Our Recent Discussions

CVS: CVS noted its exploring all options in its renewals, highlighting its MCK contract. CVS is

prioritizing maximizing value w/o disrupting patients or supply.

Our Take: We view CVS keeping all options on table as negotiating tactic and making any

wholesale changes unlikely, likely settling for meaningful concessions from MCK.