CVS Health (CVS) 1 Nov 232023 Q3 Earnings call transcript

Good morning or good afternoon, and welcome to today's Third Quarter 2023 CVS Health Earnings Call. My name is Adam, and I'll be your operator for today. [Operator Instructions] I will now hand the floor to Larry McGrath to begin.

So Larry, please go ahead when you are ready.

Good morning, and welcome to the CVS Health Third Quarter 2023 Earnings Call and Webcast. Vice Health. Business Senior Relations and McGrath, CVS for Larry President Development of Investor I'm this by Financial joined and I'm morning Tom Executive and Cowhey, Officer; Chief Interim Chief Officer. Karen Lynch, President

host Following our additional of leadership our question-and-answer that will members a team. prepared include session we'll remarks,

will press slide also the with it being year. website, SEC. call is presentation Our broadcast X posted along on website, where morning our release filed archived Form our this and being our with XX-Q are for to be that we Today's

During this call, we certain forward-looking will statements. make

and the statements that differ forward-looking particular, in are these results. to our Our concerning subject on this currently XX-K, are file that XX-Q, including in morning's to reports those from cause was of to We press regarding significant and most in risks on risks with earnings Form this results and risk the encourage SEC quarterly which you recent review uncertainties uncertainties, the actual reports cautionary factors Form strongly forward-looking recent described filings projected filed Form could materially and our on we recent the our report statement X-K, statements most morning, release. annual filed

press Relations the our will and measures to use morning's this our and During we in call, performance posted when company's talking the of document Investor and can a release non-GAAP measures website. reconciliation this non-GAAP in about find financial reconciliation you condition, financial portion of these

call turn With that, I'd like over to Karen? the Karen. to

EPS We $X.XX $X.X quarter results, income our power call. and and for of our third adjusted we Good of diversified delivered Today, operating reported of everyone, Larry. strong the morning, adjusted thanks you, business model. billion. nearly Thank highlighting joining

our prior almost And bringing revenues $XX consolidated operating billion total the again, of increase reflect to quarter nearly cash billion. once we XX% flows, over year-to-date outstanding $XX.X of an generated year. the Our for

reflects This to in continued in incremental strategy Care strong adjusted Benefits momentum Health for & execution performance EPS our with of Pharmacy segment, reconfirming pressures in and $X.XX. are XXXX Services our guidance segment range cost our our offsetting against medical Health We $X.XX our Wellness segment. Advantage Medicare Consumer

of power rating. with significant demonstrated in restoring the Advantage made progress clear. is Medicare this integrated We our The model our Star

Our breadth insight will XXXX that very We show stores XX% driving accomplished CVS an this of Advantage by or by Health members. we We of rated our point experiences a that and rating our address unique X average the of plans short Medicare point have time the our powerful with period to better. consumer full a by utilizing improved in of cap members X/X design of touch of members. needs stars

cap. We also made improvements beyond

to CVS Caremark address ensure critical members team help adherence, services. improve and and and HEDIS costs medication remove preventive measures, Medicare members For Pharmacy closely completed our tests, Advantage patient example, with transportation worked safety and to barriers and screenings

was D result a in domain. of others, many Part performer among and both the these HEDIS the Aetna patient As top safety efforts,

will and improve well Our in our enhance the into year Star XXXX rating will future. position plan the XXXX our position

growth area a is for Advantage Medicare business. strategic key our

Medicare Aetna product still and and leader this Aetna access it's offering will XX% to attractive competitive eligibles category benefit plans annual in that confident a have enrollment consumer our meet zero-dollar premium While period, in in will we the XXXX. are early expectations. design to in XXXX approximately continues of be

of up year. cover also expanding D-SNP Medicare We than and footprint last X/X from our more are X% of eligibles, breadth the now

including Oak Our delivery them introducing focuses appropriate. options D-SNP coordinated live where the to healthier as Health, care on such need medical strategy offering members these Street lives, to management

or most will above to integrated the benefits grow at in Our market that and care sites us of access value offer XXXX. the convenient seniors ability to to position

how unlocking now Turning of to care. new sources health in are value we

the owned of subsidiary announced Cordavis, we CVS Health. wholly creation quarter, a This of

of history have ways to the cost to years that drug working health U.S. market we need and of the find history significant represents Cordavis, the directly our stay biggest bring are one with to that a medications healthy. We savings of is they the established the opportunity $XXX to XXXX. sources The come. to people through Cordavis of innovating have market, to billion manufacturers to to available potential and ensuring the driving by savings an we customers biosimilar serve system. lower for access biosimilars of clients expected will ensure our spend Through portfolio that be a drug continues It U.S. and realize innovation. consumers biosimilar care products to growth for and in

to versus segment, of nearly grew members million prior XX% reflecting increase turn XX.X exchange, increase across an grew individual the our Care quarter commercial. quarter. and Let's product to including $X.X billion. than of membership adjusted In the our growth performance $XX Medical million, income operating we Health in of more to revenues third the lines, multiple billion, an Medicare Benefits year in delivered X.X and

flex elevated in We Medicare such card. our experience utilization benefits Advantage supplemental business, as dental, health, continue and behavioral outpatient OTC trends primarily to in and

help elevated on year, revenue, alleviate cost that to to executing this pressures. we and additional are network clinical opportunities plans the trends these Given unlock emerged have

innovative XX% grew and our to X%. Services billion. consumers These again than drive revenues Health once business, impressive our for operating Pharmacy reflect in nearly clinical near performance grew results Adjusted our and $XX In Services to solutions drug increase commitment billion, to an more clients. where our $X.X our value costs income segment, deliver of lower

season, substantially the strong XXs, remains Centene renewals the selling are our In in retention complete high excluding our the and XXXX contract.

successful sales for Our strategy business moved of that PBM. national XX% been has new capturing over employers

our to delivery care assets. Turning

growth We scaling Signify at accelerate Street. Oak are and both to capabilities

Pharmacy. Health our We across on multiple CVS integrated CVS Aetna, channels, initiatives and to are Signify, progressing create experiences health including Retail

Medicare-eligible in our these receive can clinic. need Street care we services are primary Oak adults educate they Health, the For and channels health to using about

early, in Day at December. still we results share these and initiatives it's are to more While our of excited Investor encouraging, the are details

connecting more For CVS for and the Signify other we evaluation services Health, patients to in in-home Signify home. Pharmacy are

Our trusted patients the members XX counter in a at frequent connection more our Aetna This the are capabilities and beyond. the pharmacist to care. initial scaling than more was in unable and engagement surpassed to members is our million excited engage reach, and prospects our utilizing we effectively to previously care. By conversion has of been their rate health enhancing we relationship most XXXX reach in XX% goals, the these pharmacy initiative by powerful of able with that Signify connection, have opportunity

to of versus pharmacy $XX & X% the pharmacy of We Revenues versus operating billion, Turning the grew primarily mix line nearly Performance excluding $X.X billion Consumer was our in segment. quarter, prescription Pharmacy with the growth X.X%. prior year. inflation. year. in XX% results income the generated adjusted strong. Wellness our in Same-store by business sales to driven prior COVID, pharmacy grew prior drug nearly by impact when increased retail the in our year, and brand up Same-store

strategy. Turning consumer to engagement our

navigate and digital is simplify journey. health Our helping their platform consumers

This an experiences that continues grow delivering our with powered million our been on increase most customers. reach strong by focus year. now to matter for growth versus customers, last on digital of unique has XX innovating nearly XX% Our over and

to for barriers to as refill it removing online. been have they seek, the access customers and scheduling adoption services pharmacy digital and for easier making advanced such immunizations We

connect to strong and Our our will patients RSV ability awareness health immunization enhanced capabilities seasonal our flu, digital and for engagement important locations COVID and strengthen these to drive services. CVS

to Tom like discuss I'd Before to changes over leadership to our I turn our financial some to recent highlight it results, team.

than of extensive he as experience his holistic be industry previously like would I Brian's critical and welcome As President new by work Aetna. Brian Aetna. team we health deliver care XX million announced, as served the Kane to members to will consumer-centric, to more our

we seamlessly Interim has Tom Guertin, on of unforeseen CFO strategy. the role mid-October, that our Health absence to assumed well to Services and Both President to a also leave Mike In Health role the Mike reasons. Officer Services. appointed of of continue President the execute Tom are Chief positioned to health Interim due Pykosz our and and family Financial announced been is has taking Cowhey of business, Shawn

I thank colleagues commitment the to dedication day every patients. for clients like show Finally, they our support our would our and and to customers, our

call to to the over details results provide and Tom turn now our Tom? will guidance. more on I our

morning, Thank everyone. good you, Karen, and

Our third of diversified and quarter the our power the results of continue execution value enterprise. to our demonstrate

adjusted key strength flow across as and saw operations. from This metrics such earnings per cash revenue, quarter, share we

highlights. A few total company

of EPS revenues nearly representing execution operating growth nearly partially to percentages strong Care Third increased We X% primarily of our the $X.X the Health of businesses. in services results. growth over our across of Benefits adjusted each increases double-digit year reflecting of Oak by Health offset income prior and inclusion of billion billion operations, pharmacy in adjusted delivered quarter the versus quarter, These strong $XX Street approximately were due by and year. prior pressure $X.XX, continued

fourth remains generate in Cash timing benefited flow outstanding of cash year-to-date from CMS with the cash flows expected ability operations normalize to are quarter. payments to billion. of Our from the $XX.X that

from impact, cash billion. operations at this approximately year-to-date flows remained our Excluding strong $XX

Health for the to delivered Benefits segment. year. revenue our strong details Care versus prior Shifting growth the We

XX.X to exchange the our lines, Medicaid $XX.X but individual products. all increased individual our and offset of billion grew impact and of partially product nearly redeterminations. businesses, of in to XX% exchange reflecting sequentially, members an Medicare million, increase XX,XXX reflecting revenue quarter year-over-year, Membership Third growth attributable across primarily Medicare growth by

year. was offset driven net the income investment prior higher of higher billion quarter ratio, versus X% operating in benefit decline $X.X income. by This by declined Adjusted the a approximately partially medical

prior of Karen well primarily basis earlier, Utilization Medicare period primarily was Advantage as the inside the quarter. ratio highlighted XX.X% including XXX reflecting attributable lower from categories to prior supplemental dental, behavioral the year, utilization year benefit medical in we drive also period points quarter, pressure higher development enrollment experienced added a increased growth OTC as health, outpatient late particularly exceeded These members, such special cards. Further, expectations. higher exchange individual the that when our and flex the and MBR. will in benefits as Our

to our growth full higher is also contributing result, for updated our MBR a year. the individual As guidance exchange

closely not that in to stage, consider we trends our trends we observed other utilization but of watch at any would with continue inconsistent have expectations. lines total We other this our business,

X.X reserves. up premium payable exceeded XX.X, claims remain days adequacy of quarter sequentially. end sequentially the the of was growth growth reserve the confident and in Overall, Days we at our

our the inflation revenue Street. an addition These mix, which This was by of increases generated Our Health driven Pharmacy Services continued than more growth our pharmacy drug Services Services of specialty improvements. Health impact pharmacy, brand and billion, were in Oak year-over-year. by the includes and partially and business of X% increase $XX of approximately client operations, Signify segment, price increase offset

approximately XX grew by processed X% strong offset in down only versus was economics, year-over-year, billion XXX by net $X.X by basis to nearly prior the were remains the than claims partially primarily year, of declined million pharmacy less improvements. by new vaccinations, XX% COVID-XX points COVID-XX approximately Total membership when carve-out primarily and client offset decline vaccinations. income improved excluding steady operating the purchasing and Adjusted business. ongoing quarter execution lower pharmacy price at and driven Total attributable New partially York Medicaid members. This

continue performance Services XX%. last of prior by of track grown the by XX the a year, Street are the XXX,XXX XXX,XXX We've with and Oak centers same increase total growth revenue and the centers Health We be XXXX. lives. ended centers quarter XX this XX new completed centers to open quarter of Signify in encouraged on in period to versus XXX assets. to ramping and XX the X% to year of quarter, versus in-home at-risk and generated year an our evaluations growth

growing the quarter released XX%. Oak week, to all of in model X% the rate Last XXXX participants. performance Street same last exceptional savings of also year. increased significantly revenue was meaningful the to the of Street's savings gross among Oak generating continues a quarter, ACO demonstrate REACH clinical participants, XX% performance. top compared Street Oak CMS program

increased volumes, and pressure of largely in prior sales introductions, Same-store were was billion X% decreased versus the partially line prescriptions lower reimbursement inflation. increased driven drug the revenue improved continued with prescription and and Moving Consumer year, Wellness Adjusted $X.X volumes to purchasing, continued count lower offset contributions, COVID decrease expenses. by reimbursement nearly brand offset of billion, increase were by pharmacy X.X%. mix, and year, generic of up driven nearly same-store up operating volumes $XX mix, by on the nearly in excluding pharmacy related pressure, generated vaccinations, increase same-store brand was and store prescription volume. prescription in reflecting drug a the of COVID-XX recent These prior the impact impact & a XX%, a inflation. X% COVID-XX We income by same-store increases impact X.X% The basis, our segment. revenue in drug Pharmacy of

to underlying growth. initiative, stores, XXX we on we XXX of encourage As on same-store planned having execute focus continue to understand to our investors closure closed store metrics out

Our front the cold challenges, in primarily to front declines store store face and business X.X%, the to of flu and resiliency consumers. due value in continues we underscoring test kits. exhibit the for Same-store down cough, sales offer were OTC industry

year. Excluding same-store of the kits, front in the impact line OTC prior test were sales with

balance Shifting the to sheet.

liquidity excellent. remains and position capital Our

including cash and optimize billion and billion, continues quarter from identify We ability ended our to our CMS cash of at Our flow opportunities third subsidiaries. I $X.X we earlier. of sheet. remains the generated cash operations the enterprise organization balance Through the $XX.X of a discussed generate core further to approximately parent the prepayment with strength the flow to unrestricted new quarter,

quarter, $XXX flexibility remain This capital dividend. to through committed deploy shareholders returned strategically. our to we quarterly maintaining million while ratings preserving current We investment-grade our to

to now our for year XXXX. Turning outlook full

as cost adjusted our Pharmacy by reflects Health to of strength offset and now medical higher higher-than-expected impact ratio medical quarter primarily special utilization driven the segments. In Consumer through $X.XX. the as our of of expect individual approximately during to reaffirming period. remainder XXXX, previously trend performance impact the mentioned our Benefits Health of $X.XX higher Medicare EPS be the exchange continuation primarily the third and & well segment, Advantage of the the by Care growth XXXX our XX%, in Medicare are enrollment we for Wellness Services This We benefit Advantage

now $X.XX operating be billion we range the expect segment result, to for billion. to adjusted a of a income As in $X.XX

earnings of individual in function is late expected largely a adjusted exchange growth. reduce operating business Our to XXXX, year

to of are to implementing margin poised an business positive well annualized in now we this on in is reach actions run earn business and teams than are specific this billion positioned pricing However, revenue, $X rate our more including of based adjustments. XXXX a

In we and to updating in income the our continued year-to-date strong Services expectation for Pharmacy of billion, the remainder a year. of our guidance segment, $X.XX reflecting of business $X.XX adjusted strength Health range to are execution our billion operating the our Services

contributions the immunizations, lower-than-expected driven primarily range now $X.XX In expect adjusted our volume, script income attributable Pharmacy from $X.XX segment, wellness billion redeterminations. seasonal operating by partially to primarily & to we Consumer of billion, in offset by higher Medicaid

Shifting flow. to our cash

end from Given our strong to performance the year-to-date, we now anticipate full year of be $XX.X XXXX cash upper operations to $XX.X flow range our of billion at billion.

Our $X.X to $X.X capital expenditures is billion. expectation billion for now

to also rate share are adjusted our X.XXX our updating billion. XX.X% tax to We effective count and

page. components You updated Investor our can find on additional of XXXX details web Relations the guidance our on

want Before the tailwinds to I headwinds. conclude and remarks, with the my I update give an prepared you XXXX, on starting headwinds for

now Advantage million the communicated in XXXX ratings margins. discussed, previously Medicare to of year previously Star to We to our be of closer pressure range the we end As billion. the decline our expect $XXX $X low for will our benefit impact

expect to abundance provision the Medicare elevated utilization in utilization for pressure XXXX. and, of continue Advantage persist at our of book in are We a level maintaining to an caution, current further

As contributions as Centene ends the previously on January discussed, decline X, from XXXX. contract will

XXXX. expect we segment XXXX a investments, our PCW consumer annualize and lower contribution softness to incremental the expect and labor We from headwind related to in COVID, XXXB in

tailwinds to for the Shifting XXXX.

our our our end We and guidance. now expect announced higher the We underlying core at savings the growth initiatives cost coming in expect businesses. previously actions from of

We our business created from newly pricing We capture discussed from as the exchange the we well Cordavis our And Services clinic actions. previously Health opportunity contributions of net as have incremental expect from to our we businesses, believe contribution value from the business. commercial expect pricing a positive impact individual of expansion.

their and Investor advance provide investors on the communicated low on of and At our utilization on based our prudent detailed we the this At adjusted created is to believe will our sustainable distance, to of $X.XX. progress headwinds uncertainty consumers. of the forward leading range Day the becoming for by company $X.XX end updates we we detailed XXXX growth tailwinds, long-term execution operational guidance our it ground our and total focused We conclude, XXXX for providing solutions goal preliminary December, EPS health views on to these remain we growth outlook. To our strategy in of recent at guidance sum updated against for our look trends, previously December. expectations more as including in

With now the that, we'll to your Operator? open call questions.

Lake today And Instructions] comes [Operator Research. Wolfe from first from Justin question the

cost color value invested to It What kind going brands, right? you we there. in did think specifically, perform you more the on business expected? was assume through talk Advantage looks you you get what did quarter? how Wanted cards some about these can Medicare if in see you And can benefits is for of the what then like see versus to XXXX,

So margins they're maybe you your investors year? where could then think how back, about this think through be cetera? going in year? and just us are And business, Where beyond reprice Stars this you us to as you should walk where improvement think you tell next get et -- XXXX hopefully,

the for here. me. a to question. lot Bear go Justin, thanks through with There's

some turn through 'XX. And couple make maybe like ways to you sure questions. we'd of that really I'd think walk happened other understand you then of what's about to a Brian that over to your about So you it XXXX, I'll in talk

company benefits pressure supplemental to into that that the and guide. bps XXXX, by behavioral pressure that MBR quarter year remaining total for bps about carried and trend on further reflected resulting our higher-than-expected of driven that in the total in of remember incorporate and portion we XXX outpatient as XXXX utilization second the discussed the dental of XX captured our a forward We did guide. health. was pressure outpatient in Medicare in such that we in half, in the second to some call, We pressure an was half, we had we So first increase you the and were bids indicated XXX seeing the not

We for preliminary placeholder put additional utilization guidance our a in also range. in XXXX

strong third individual The the quarter, to utilization we Advantage, of higher driver the you this continues pressure SEP. main growth driver So is be notable Medicare than look into less experiencing anticipated. through a continued impactful in but as the exchange product we're

SEP late year, it's a carries this added in higher-than-average membership, when So MBR. the particularly

Medicare, look see particularly dental, utilization in in and if health behavioral you cards. So OTC quarter. seen also in outpatient, and the quarter, specifically third then at flex second the to continued pressure we've supplemental additional elevated benefits including and We've pressure incremental

for members So a XXXX OTC they to were also for in anticipated other as part we we purchases. and design, meaningfully utilization our important XXXX levels of pricing of basis, a fixed grow flex higher as than how use part outlook. a in plan strategy. amount can of cards bid had that quarterly well in cards XXXX the allot our on To typically cash, and an differentiator seen The cards our planning is of these our but among date, it's OTC use we've initial and of food in

full to the growth the and by primarily our related the If forward XX where Medicare fourth MBR. million Net in represents that guide, you presumed to roll its that we've we some XX in elevated level to we've $XXX raised exchange impact XX the the revenue pressure about quarter. related Advantage, SEP offsets, product MBR third points the to basis Medicare. is basis of points. is of bps the XX The observed to that into year in of persists XX trend quarter on remaining

And you persist though, at note, tailwinds are to favorable year $XXX these into which reduction XXXX. in of important there about like HCB, guidance investment are full as our portion expenses. income, million net things also expected non-MBR fees to items, of It's look include and a

although mentioned, think the current we outpatient pressure supplemental 'XX MBR experience our the higher utilization benefits So completed I how 'XX, the and MA about MA then impacts provision. in exceeds as pricing as 'XX bid for

in higher relates while to Consequently, part it specifically of those of with of therefore, actually cards, consistent to be pricing in flex going cards, the proactively bps we the contemplated pressure XXXX XX XXXX products. in XX recognized and customers how of much and on that more sale bps it this not. in utilization OTC bps were was XX which account this benefit how the quarter remaining assumed cards, the market of As is an out. important would we incremental how And value our the OTC has was played we flex

then are think you there's XX of that that offsets. as things of So about think we exposure, bps couple a

the -- First, end now diversification as mitigation we of our low $XXX expectations low contract and our at about will the $XXX prior impact Stars expectation projecting Stars of be million progress XXXX efforts, be or midpoint the versus we're that will the at million.

we've forward exchange provides Second, towards individual we adjustment. members for to exchange in documented as risk get properly through individual membership XXXX. actually members coming SEP margins these 'XX target upside get our move in The our repriced opportunity incremental as

that Third, environment, investment macro income will persist in which net light we've previously the seen of contemplated. current not certainly almost was the tailwinds

enterprise previously talked million expect which year. finally, end reduction to being we million to high we've of $XXX the about And cost $XXX our initiatives, achieve next

offset these It's range our stabilize. that headwind preserved trends provision quarter inside of Medicare lower can XXXX on updated Altogether, range where are the half we're until but to tailwinds guidance meaningful the of incremental of we about to we out a understand caution, we noting, excess Medicare encouraging of investors guidance talked an focus believe portion for Brian? 'XX the XXXX in our abundance the going XXXX. worth we've utilization second

Thanks, Tom.

talk on Justin, little the talk can what we benefit question build me your saying, bit on and the just was Tom utilization and, design about about a margins. to then Let

detail, what guide, the as break. after fully in, really is discussed, and utilization just as With Tom to echo breakage that including to all fully the detailed obviously -- I to our the bids Tom say assumptions, everything understand well the utilization, baked I have what's just respect would believe, in pricing reflects said, in utilization been all through utilization

we are the out. So feel XXXX for laid good about that guide I Tom where

Just the to showing other other that benefits of outpatient some controlled, none the categories categories, important as categories. for and other went some as I Tom pressure it's to of are any in service patient supplemental service through say is well with respect think that besides the well example,

On did to side, to anticipated it's thing which for what get Tom we the the individual XXXX. I I important say, think members mention good in more did, we is which is a SEP actually, think, period than

And increases because in come to you document so some while late will between really it's pressure the as adjustment as we their in it's pricing that for processes year opportunity up creating XXXX, XXXX well tailwind nice actually through conditions, they the have put a ramp our in that for don't the risk and XXXX.

also business at our business. commercial Medicaid commercial is business group Our doing our well,

XXXX a This Medicare no I And as there's we're fully with guide. there. said, I our is think really story. other covered pressures So

across your question, into wide-ranging of obviously the impacts it not the for Medicare. on our to also important Stars respect enterprise. maintain This stability our XXXX benefit an pressure Aetna light we side us in coming only members with was strategic has that the for priority Justin, is impacts benefits It to faced. important business but for

investments so committed that we to being made. maintaining business was of And that benefits the thoughtful a stability some we this are in and

where D-SNP So the on for in. clearly leaned side, an that's we area example,

an Tom use on said, these full food, members OTC, assume cards. XXXX are cards for as importantly, was was utilization. cetera. focus And we use flex for that et attractive this can benefit, utilities, We believe the but Our the effectively assumptions our

can relative a not occur the D-SNP breakage population. just there's lot to of XXXX so that And in incremental

I'd so you impacted and XXXX. also by challenges had largely for the is HMO, that we've remind our population D-SNP Stars that they weren't

that about So profit where on anticipation D-SNP. we grow our benefit actually, new for marginal marginal expect think contribution as design book, contribution is and and our members to you

actually that a I so positive. as view And

to in book driving which incremental entire are of very investments way the general growth targeted as tended opportunities was for with enrollment in burning the a and the actually we on made our And plans, new really thoughtful opposed to side, plans we be costs. without investments existing

So where feel growth opening as in again, good good about at I the say, our very positioned. feel we're I Medicare market to remarks, achieve would said ability And Karen XXXX, on or her about side. above

your question, to clearly, margin we finally, then that. we're We below where on understand way be need margins. XXXX on And

XXXX margin that for to we but rate see notice to Obviously, significant where out, see us expect is dynamic competitive and the our expectation take Our you against we'll for XXXX is, regard. ground the should hopefully improvement that need what improvement targets. margin comes incremental material in

next Lisa Gill comes from The question JPMorgan. from

to think about talk expectation of the this your opportunity for few to PBM, to as is I what is? when some for frame you business. want some side maybe year here. is a about big focus there and I this business a there positive thirdly, how right had seeing built you about opportunity a now? there'll questions level bill your a And expectations on when about the I like Can think that of Cordavis we And services us biosimilars, being understand One, help care GLP-Xs, business around of Can XXXX? any then the that the health around is be we you way for of maybe you're really that think when think reconciliation. about Secondly, things would and think into that I that?

I'm at there's we the -- ask talk bill, a the year of about the to and obviously, team going We the talk end couple take on lot reconciliation U.S. don't the going body unrest and in the me let in legislative -- end to that on PBM and ask to see the the about of of then I'll bill. may something of Cordavis Prem just Lisa, a GLP-Xs. generally But

now thinking that best fully are we aware is is contemplated of transparency, have Our which and our business. in

-- remains package. year-end in be reconciliation it really seen will happen but what So to that

going on a in there's think Washington. I lot

will what unclear it's happen. So

on I as mentioned to Cordavis, U.S. and we to has customers. we by Relative been it. can a to market costs significant about This Prem healthy opportunity is are my an I'll the and It a that so for opportunity lot view $XXX this in opportunity, to is billion drug to lower doing of a kind we the really have an a bring we biosimilar remarks. prepared in bring impact. that ask position to a opportunity, of magnitude us really him talk our XXXX. as excited are But

next the obviously, over lowering opportunity cost few in company. of our to and improvement the in have we So the years drug significant performance make really

we focused reduce what cost considered overall if prescribed the And then doing creating U.S. area competitive it environment. and I care could hefty and were have would on improvement weight demonstrated is that would the a price by that relative why is very it that's That's a significant It PBM GLP-Xs, comes the And opportunity very GLP-Xs. really American Americans, That to this obese, system. that loss significant is million pressure are to on these that in health cost we exists, XX is tag. to reason and at health, say it for trillion what see -- but is about GLP-Xs. proven can put $X every has U.S. an

really So with reduce our imperative us and to to PBM closely it we're for overall cost of drugs, a very as that. is customers do working those the

will top about talk GLP-Xs, priority imagine, the that. understanding can cost and customers' our is David really of you As

to turn let But talk Cordavis. me to about Prem it over

generic you you've opportunity add is what around time. exciting that extremely Karen for to we pipeline, long said, think Cordavis specialty relates was competition And at an for to created the competition pipeline view the if it part the early that's drugs, you us. to just industry about of it's the as Lisa, think as a PBM spend And the drugs. the about XXXXs, the the if in XX% And for been point. And Yes. biosimilar the in of greater amount specialty this than pharmacy

able to create competition really it's that important to So us biosimilars. for be in

Cordavis these what going bring to really about think intended marketplace. I as pharmaceutical do, work into it's is manufacturers products to And the U.S. with to

continuity is is of we that of work these the supply things ensure that's of of what need will say the the to that products One pieces in Cordavis for. one I'd And marketplace. big

in to that that the we'll we biosimilar going contract recall, a list the is commercialize of were list current for that and first XX% And year be we'll Hyrimoz to XXXX. HUMIRA. greater that's launch mentioned our we product in And than going as we HUMIRA. So for first the a mentioned lower launching Sandoz earlier than to product a launch, with be co-manufacture quarter it and price at is price

board. the better it So lower creates affordability across for again, and cost consumers, access

with these U.S. we XXXX broader see have out access we portfolio of of the the to full As facilitate products marketplace to in we biosimilar products into in Cordavis, look intend other a coming the as competition specialty

the And the of I'll hand about some questions Tom talk it over financial. on to to

how of the the impact Lisa, GLP-X the specifics you then and asked some the about kind the can some on helps customers our and enterprise there, challenges just more think of it's to impact, what PBM self-insured of I some that talk are is about facing. important but here about talk David

are suited drugs the Services, GLP-Xs uniquely provides. the of are the value of class services that to PBM Pharmacy that In a a

have segment. And do from the so we margin that in GLP-Xs a contribution positive

whether it's capturing really most for that about in or loss. the utilization pricing not not weight is side, for our On we But pricing. of indications capture really Aetna diabetes,

and our latest something we that make for that's our customers on For individualized thinking decision we've buyout weight appropriately self-insured we're for loss, it's for insured XXXX, our pricing priced book taking a that our an or and believe into that 'XX. really

margins side, in pressure On PCW the business. branded the flip products

a are So GLP-Xs to headwind business. that the generally

could provide more on PBM you of little David, impacts? a the context kind Maybe,

Tom. Thanks, Sure.

of mentioned, drugs. list a client's top going certainly about areas of critically the this are category concerned GLP-Xs actually terms managing that they're into at the news every Karen beyond. PBM in in is as role that plays and important So 'XX of Good

So have which drive X ways in for we different savings trying to really our we're customers.

our come entrants market, into create it formulary, And the as customers. continue we is as for us an so serves first cost The competition. to new to opportunity reduce the for obviously,

and being Secondly solutions, medications, the of which conditions. to view causes we're including our a significant us on advanced opportunity use investment giving management holistic focusing is drug treating. conditions essentially the lastly, appropriate it's of complementing which And the and And of utilization the the it's therapy management, is then the underlying off-label on at care looking an made so there's in the of utilization. focus

commercial at you at So year-to-date, the of saving management, of look combination we least our formulary results, as utilization costs the XX% look at nearly the clients. for addition management in our to we're

to out the at point as medications. great growing it's this we've system cost looking obviously again, cost take of that we're able of So been a proof

is diabetic area percentage of or The I in the growing would have that's we're -- what that utilization the is. customers or loss. non Xx obesity And probably sizable a included area still it's our an on say weight that there's 'XX focused

so services into to sure we're unit ROI there's ROI then these more both the as the focus for product focusing big making reducing focus market overall right on a is that as and competitors the the now using that well opportunities come the delivering. on the And as on pricing new of specifically,

So maybe X think it pivot variety to different us because and for -- market. ways. But Cordavis the trying I know opportunity we're X-part was in minute unique I the a answer question, it a just and really on I a in just of Cordavis could if is important Lisa, I

So as a brought to Cordavis market Prem said, has price list low product.

that current net XX% for low efficacy the have we as is, driving as low that news influence, with well actually we looks list when product a have prices, we Prem mentioned, at PBM, cost we of as the list -- clinical moving customers. As below price are to the is the formulary good brand HUMIRA. The our a both

the changing require market. does it So

share you aggressively out -- can if enough believe look XX% 'XX, at this price create list we take we're opportunity to moving can into looking customers? for our product. in low going the a models, our we we move XXXX by of So the how our for cost In category it's at order value to

then we to look we then have the So share. that can at move what gives actually confidence us

mentioned, that Lantus ago. that if that BASAGLAR. with previous years XX-plus We And we've many we've back product obviously, calls conversion example, percent at in had a look of to able the exclude to chosen of the coverage days. the last product has we've within XX% -- client Medicaid branded been in you of is to moving HUMIRA, had move by success XX one for So which upwards

that, experience category I point we're make ultimately our can the customers preserving think So the low-cost biosimilars. of proof a the sure move become one, cost can members. actually and it's We for the for reduce the we actually

So the we're on capitalizing think, our changing and market. therapies to pretty I innovative again, bullish on of opportunity marketplace new bringing

The next question comes from Sachs. from Rich Nathan Goldman

what how rate you opportunities kind given us in biggest of maybe just in Street I like is we're scaling see maybe of you guess, to your sounds the tougher Oak a bit update line the platform for how incremental of as about year? And you're going terms for environment year? practices thinking next expectations. kind the It than Medicare better they just that need to could be contribution in on adapt next to

to delivery currently? for build of deployment mature that do standpoint, can look you a at capital more allow a to of existing your M&A from And the before looking Is additional from to standpoint? Or assets kind that care further? about you're need kind something appetite talk you you

program financials. thing caps what hospital. whether of for start keep couple which we then We then it's lot we'll us which capturing whether healthy on is priorities over I'll patients model, an savings. points, keeping apply it where can that on by have do years program turn of MA if to is were Tom our we operational we we our out top keep of proof care it's our biggest shared the know Maybe a Yes. and X% best, savings the a the REACH healthy The the or do value patients it's on that. the the And ACO we score that create and whether Medicare a ago performer, has and risk focusing

keeping think that tailwind And we further that changes And they're harder going how shape. things actually it model, so business. us that, for the is every Oak just Street Street that's to the that it's if intact. at think and patients, you're be at will about we'll I in your or others, care platform. differentiate driving will risk do longer great and culture that well, every running day, running And make medium right running biggest be And if a the center term, you to if because think what's think running for the doing adjustment for the in sure it's our focus I I doing that's Oak care

So that's focus. our

David. Thanks,

term think their there's about tremendous on that model, a environment. As Oak which through diligence. regulatory is to adapt long you vXX of really financial something ability a people, of lot that to the process, in the to we the of think We their here amount specifically opportunity you're impact, time technology we about changing a I think over risk and the referring thinking think spent their as Street,

a lot have we so confidence And of in their model.

really to more think eliminated you ability they've a of there's of more codes added what's this? this. The generic in timing a this impact execute lot that have indexes be issue they to think their HCC is where going to of a with costs. codes a We of higher lot about confidence They've the and complicated correlation lot

up we're set that other mitigants. to And of so just what gross And we've happen encounters there's systems both got then the impact And net but ensure actually to appropriate data. about that to lots not need the what is. to the capture the is have capturing think the impact help to we data

impact. in lot they're of timing shape look better pretty we actually a will fully as that revenue participants next it is industry. over that, will we than but a that think kind other even we implemented. in X/X as about of time I at of Oak of the Street, more X% year, think think, is because phased the changes, the But But in we're vXX shrink have of only these it probably comfortable implementation gap

so -- is of all our guidance captured within And and that preliminary range.

care. good model, ability exceptional really feel about Oak Street's to actually we deliver its Overall,

how their is of great example marketplace. is results differentiated in versus model what just the out the another REACH ACO I think else is

actually after we that as doubled and XX to grow And so probably really is we look to to prospects, XX next the year footprint down great which long-term and expand accelerate that feel we're centers about going aggressively. we've more why

asked You and also capital M&A. about

our continuing to of year in we've on term synergies drive lot 'XX and think in really the focus and growth. near on and execution execution, track for are acquisitions is and which well done a this execution businesses, I those growing

The from comes question from Kevin UBS. Caliendo next

segment and we to the in exactly hear broadly, how year a still retail to that, And for to on 'XX? should you you specifically, a and segment, think is called tailwinds dynamics headwinds think change tailwinds the bit. what there's particular. in the vaccine I but remains growth I then this for and expect next headwinds micro any year? that little driving also contributing the of increased just retail for much competitive how segment out the about anything Love If couple go retail the if elevated. The pharmacy within

I and environment. more don't competitive Why you Prem little the start then bit Sure. of kind can color on give a

of the that about some segment. tailwinds asked in You specifically

that things out. call I'd I think there's X

getting that, just franchise enough -- where second as year of actions and the as that you some and the the don't quorum to of provide. our was for credit first we is took I immunization we're for that you think benefits the that some think at there last that consensus of that strengthen I restructure look is The think business, would

to the you're on importantly, retention particularly continue starting of and that, of Some on that our the we've exceeded goals some all script retention, and of store as front retention. store ramp closures, but see employee which to from also benefits

to on execution the team well kudos and we've there. really So done that

vaccines, declining in. the vaccines of which a X and the included quarter about good, lot across probably different also helped as the was team, a a trade million but variety the maybe with probably about emergency in do quarter. strong the you of in and to efforts in versus our that's of going about growth under half part to quarter. some vaccines still has early RSV that franchise, to 'XX is fourth total some vaccine, softening book was early a we quite when the of with XXXX, COVID represented actually saw probably Performance new immunization think due health remainder of just the the that effect. public did in that the of of Flu strength part project in before to which that But We the of we peak COVID and are really primarily quarter drive

there's our do plan is As endemic be to COVID to that COVID holistically, vaccine moves franchise phase, going think but going we into the going pressure that the wane. because we're is talk more to about there

think I provision rate of typical pressure, a is performance about consumer anticipated but that of And year, about the bit level and dynamics you because as partially a of also of to the not reimbursement little think next for COVID, we've current just partially softness. of going persist, because

Prem, maybe dynamics the script about growth underlying in a market. bit kind little about more and you of -- the could talk

sure. thing. Sure Yes,

So strong be execute pharmacy to across scripts initiatives. continues and transformational our retail results deliver service and our business

scripts, our about we X.X%. think we you X.X%. If you grew COVID, if And exclude grew same-store

growth. continued script So momentum on strong

measure NPS than our year. higher about is to continue NPS, we front, basis points year-to-date service XX the On and prior

do our and strategies. consumer then cost our omnichannel So lower that experience consumers we foremost, of to focused think continue and through innovative easier. to ways about we're our And first make that have we which service lastly, continue to continue we and grow strong to then in the primary with initiatives can scripts. And service. think is engagement about I also retain think And know a we reason the on, transformational how goods

things of marketplace. scheduling as COVID well One multi group our that during scheduling we did as that the results vaccine consumers had very this good we the was did in for year

model. operating Lastly, we continue to look at our

of do that we in our have to and to model some that working changes easier other for make in the to colleagues We that we're innovative we're around that XXXX. stores doing as and some work stores, continue the across solutions really of our scale sharing pharmacy doing our in continue things technology colleagues with the to can invest well as

And for on of payer Stars consumers, our to us value-based in deliver focused lastly, terms important continue for our things and like incredibly rating. value programs to it's clinical

we those to So work very Aetna, the outcomes our with adherence and really across be national partners, chain closely drive and #X on including measures. that MA patient

really, other leveraging those businesses or to into engagement is make And Street our or these that's streamline and connect our really Signify really Oak important payer in consumer businesses, what's better. also stores to into whether our into experiences into

is store, business and and we've consumers, As value and see market convenience to products, grow navigate we relates in through share help front wellness health challenging continue really well. continued that would say and conditions perform what I to the to it

and OTC about we're If basis our you drug are front even traffic that share to despite we continue same-store -- COVID flat, kits, seeing. sales points are test exclude grow the store softening about XX

about and of market. committed we Yes. I our competitive what are our including that, our a talked the to take just and is providing of the work pharmacy colleagues, want as best the to pharmacists all Kevin, for there's And this you dynamics, around opportunity. techs. I would say place company, a labor lot discussion to

of year year, made the we'll of the Over our so, end or investments By investments a number billion. wage labor. $X have last for over we've of the

teams in streamlined they that operations. to smoother We have can continue workflows technology field and to invest in support the so our our

very labor tight success It's continue in We a hire. hiring. good are but committed been market, and having to we've

as well to here, top is are at Our the for of we ongoing employer that new are an development the making powerful the actively stable. of choice. -- and we sure of attrition this I training -- But as are top numbers colleagues. And said developing our we committed programs a are

question Research. The comes Percher Eric from from next Nephron

want headwinds Services for and tailwinds I back Health XXXX. in the to come to

we've be seen versus on latter share on in headwind 'XX sourcing specialty on in over in par year? or is you've shifts do 'XX And is versus early outsized after drug the the to and 'XX introduction biosimilar is, that reading X pretty were XXXB For Cordavis question Or GLP-X and or sourcing, in I'm this saw expect biosimilar. as that 'XX and mix, Question then and outperformance 'XX, drug better really year, as significant time? will mix it a after tailwind outperformance what attributed And benefits the this given or outlook itself? 'XX? rebates X is rebate we you 'XX for

Eric, A couple let can me things David of add commentary. there, and so color any in start,

to trade our exceptional. year. They teams benefits, Sourcing every execute continue are

saw efforts Some of of of part some of strength the their franchise we we broadly. to that their and is do the in -- vaccine applying what some strategies more

that that, there's exceptional the I every wouldn't So team that is for say except day. anything fact exceptional

Your that's point are the an GLP-Xs drive us mix of that I to and to on. is to year less enhanced net think some for a developed hit. cost. category to opportunity present going is our excellent that, competition drug lowest spot rebates with particularly But made on onerous way this has continue guarantees

that drive we benefit And organization. we believe volume absolutely as XXXX, will as a through there we Cordavis think in about that be

Final question today ISI. is Elizabeth for Evercore time have from from we Anderson

wanted also return of I headwinds to talked the tailwinds you and about. to some

in previously sort being I the about XXXX segment, like think growth the put that assumptions you for through. I HSS poor you AOI talked for think mid-single digits the of

And tell you headwinds us sort level? then some what 'XX a more you that savings that -- if given secondarily, of mentioned corporate I was do in we saying obviously still would of level you of that quantitative So wondering would like think you're terms about of I like be all some more those of that business? that, cost hear how you're on position still the investment. about saying versus How labor that the on the to

Elizabeth. thanks, -- There's Yes.

you probably to start growth, think think I So that about about this. the core think as to best think way I that's

you are the that. against do minuses some should core of and But of mid-single-digit specific that we items think So growth see business. out got that you've very then kind pluses

business So or first past loss the folks think well and as this But larger. of bit has little think that we've has year, become in would the Centene implicitly. I sized contract you that about number be a that performed for how the that the

also as annualization talked we we XXXB. the -- have We about, of

offset of incremental also offset core a think of And to you of see from -- that are single-digit those cost you're that provide Investor there. think the details value segment But that a Offsetting about will will as pressure as Cordavis help probably our I so you'll we the that see help you we'll and looking growth Services that, some to the mean growth. low lot overall will be Pharmacy get AOI Day. more at that that. I and on some going both savings to in

As we $X labor places try investments, the the that made last note and to clear to think over I thing is through would are that environment on look have wages. the we'll other there those. about billion do, over that. I the next It's we in also based we're years right to committed investment doing few think can to offset that year, this

making strength that to committed we're so continuing that we're sure employees. And destination and for a

This session. Q&A today's concludes

to any concluding back call the hand remarks. I'll So Lynch for Karen

December the call. Thanks. We'll for you in Thank you see Yes. in Boston. joining

very much you Thank call. today's for concludes attendance. This you

You lines. may now your disconnect