CVS HEALTH CORPORATION

Core operations · Quality control and product defects

Errors in the dispensing, packaging or administration of drugs or other products and consuming drugs in a manner that is not prescribed could lead to serious injury or death. Product liability or personal injury claims may be asserted against us with respect to any of the drugs or other products we sell or services we provide.

Human capital and workforce · Key personnel dependence and succession

Our failure to adequately plan for succession of senior management and other key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on our businesses, operating results and/or future performance.

Supply chain and procurement · Supplier financial distress and capability

Our suppliers are independent entities subject to their own operational and financial risks that are outside our control. If our current suppliers were to stop selling prescription drugs to us or delay delivery...closing or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives.

Data and privacy · Data protection and privacy laws

Our use and disclosure of members', customers' and other constituents' personal information is subject to complex regulations at multiple levels...The use and disclosure of such information is regulated at the federal, state and international levels.

Industry regulation · Licensing and permits

We may face increased regulatory risks related to our vertical integration strategy, such as legislation prohibiting state licensure of pharmacies affiliated with a PBM.

Legal and litigation · Litigation and legal proceedings

We routinely are subject to litigation and other adverse legal proceedings, including class actions and qui tam actions. Many of these proceedings seek substantial damages which may not be covered by insurance...Litigation is increasing as we execute our vertical integration strategy and expand our services along the continuum of health care.

Economic and market conditions · Inflation and deflation pressures

Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions...can materially and adversely impact our businesses, operating results, cash flows and financial condition.

Economic and market conditions · Economic recession and downturns

Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions, all of which we have experienced over the last number of years, can materially and adversely impact our businesses, operating results, cash flows and financial condition.

Strategic execution · Merger acquisition and divestiture risks

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.

Customer and revenue · Changing customer preferences and behavior

Failure to timely identify or effectively respond to changing consumer preferences, spending patterns and evolving demographic mixes in the communities we serve, including shifts toward online shopping, or failure to maintain desirable selections of merchandise, store environments or guest experiences could adversely affect our relationship with our customers and clients.

Innovation and product development · Product development and randd investment risks

Unless we can demonstrate enhanced value to our clients through innovative product and service offerings in the rapidly changing health care industry, we may be unable to remain competitive.

Market position and competition · Pricing pressure and margin compression

The PBM industry has been experiencing price compression as a result of competitive pressures and increased client demands for lower prices; pricing guarantees; increased revenue sharing, including sharing in a larger portion of payments, including rebates and fees, to PBMs and group purchasing organizations received from drug manufacturers.

Technology infrastructure · Technology systems and infrastructure failure

Our and our vendors' information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches (including credit card or personally identifiable information breaches), cyberattacks, vandalism, catastrophic events and human error.

Information management · Data quality and integrity

We have experienced challenges in obtaining complete and accurate encounter data for our Medicaid products due to difficulties with providers and third-party vendors submitting claims in a timely fashion in the proper format.

Information management · Information systems and reporting

Our businesses depend in large part on these systems to adequately price our products and services; accurately establish reserves, process claims and report operating results; and interact with providers, employer plan sponsors, customers, members, consumers and vendors in an efficient and uninterrupted fashion.

Cybersecurity and data protection · Data privacy and protection regulations

Data governance failures, the failure or disruption of our information technology or infrastructure, a cyberattack or other information security incident 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.

International and currency · International operations and emerging markets

We face international political, legal and compliance, operational, regulatory, economic and other risks that may be more significant than in our domestic operations. These risks vary widely by country and include varying regional and geopolitical business conditions and demands, government intervention and censorship, discriminatory regulation, climate change regulation, nationalization or expropriation of assets and pricing constraints.

Capital structure and performance · Credit rating and cost of capital

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.

Stakeholder relations · Customer satisfaction and loyalty

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...If we or our vendors fail to provide compliant service that meets our customers' and members' expectations, we may have difficulty retaining or profitably growing our customer base and/or membership.

Reputation and brand · Corporate social responsibility

We may be unable to achieve our corporate responsibility and sustainability goals...Achievement of our goals is subject to risks and uncertainties, many of which are outside of our control, and it is possible that we may fail to achieve these goals or that our colleagues, customers, stockholders or other stakeholders may not be satisfied with the goals we set or our efforts to achieve them.