Capital Deployment and Share Repurchase
Q: Will you continue significant share repurchases in 2025?
A: Management highlighted their disciplined capital deployment, noting they repurchased about $24 billion of stock over the last four years. While they haven't provided detailed guidance for 2025, they expect to continue returning capital to shareholders and will offer more specifics in the next earnings call.

2025 EPS Growth Guidance
Q: Which factors will drive 2025 EPS growth?
A: Management outlined three tailwinds and three headwinds for 2025. Tailwinds include continued biosimilar adoption, advancements in large PBM client relationships, and EPS accretion from deploying Medicare sale proceeds, which could be a low single-digit percent impact on 2025 EPS. Headwinds include absence of the $130 million VillageMD dividend, $150 million in stranded overhead from the Medicare divestiture, and continued investments for long-term growth. Overall, they are confident in achieving their EPS growth algorithm, expecting to guide at the lower end of the range for 2025.

Medical Cost Trends and Pricing
Q: Are you pricing for elevated cost trends in 2025?
A: Management expects cost trends to remain elevated above historical levels and is pricing for 2025 rate increases greater than those achieved in 2024 to preserve margin levels. They characterize the environment as competitive but rational and remain disciplined with their pricing strategy.

Competitive Environment for Exchanges
Q: How is the 2025 exchange market shaping up?
A: Management acknowledged that their low double-digit weighted average rate increase for 2025 is on the higher end compared to competitors. They see individual exchanges as an important growth engine and continue to invest, aiming for 10% to 15% annualized growth over time. The exact margin profile and customer volumes will depend on geographic mix and competitor behavior.

Specialty Business and Biosimilars
Q: What's the outlook for biosimilar adoption?
A: Management is encouraged by the strong growth in biosimilar adoption. For HUMIRA, 33% of eligible patients adopted biosimilars in the third quarter, up from 20% in July. They expect continued growth and plan to replicate this strategy with upcoming biosimilars like STELARA in 2025. They anticipate biosimilars to be a meaningful part of growth, with nearly half of the specialty market having biosimilar alternatives available.

FTC Report and Legislation Impact
Q: Any update on potential legislation affecting PBMs?
A: Management disagrees with the FTC's unfounded assertions and highlighted a contrasting report by Dr. Carlton. They are actively engaged in fact-based conversations but do not see any specific mature proposed legislation likely to pass this year. They remain confident in the durability of their model and ability to deliver value.

Medicare Advantage Market Challenges
Q: Are MA market challenges cyclical or structural?
A: Management views the Medicare Advantage market's current challenges as transitional. Despite disruptions from elevated medical costs, reset of star ratings, and risk adjuster changes, they believe the market will find its footing. They affirm that MA serves an important societal value and expect leaders to navigate through the choppy phase.

EnCircleRx Program Growth
Q: What is driving EnCircleRx's rapid growth?
A: There is significant interest from clients seeking help with managing GLP-1 affordability. EnCircleRx has grown to almost 8 million lives since launching a few months ago. The solution targets the right patient population, provides guaranteed clinical outcomes, and offers a strong return on investment, resonating with clients in addressing affordability challenges.

Planned Investments in PBM and Specialty
Q: Details on investments in PBM and specialty?
A: The company plans to continue investing in technology, including customer-facing, provider-facing, and broker-facing solutions. They expect to allocate around $1.5 billion in discretionary capital expenditures, focusing on strengthening capabilities in the specialty space to capture growth opportunities.

Specialty Cost Pressure in Medicare vs. Commercial
Q: Is specialty cost pressure higher in Medicare?
A: The uptick in specialty drug utilization was broad-based across therapeutic areas like inflammatory conditions, oncology, and neurology, affecting all product lines including Commercial Employer, Medicare, and individual exchanges. Medicare volumes were slightly more elevated but not significantly different in root cause, and the IRA was not a meaningful driver of third-quarter experience.

M&A Criteria and Strategic Priorities
Q: How do you assess inorganic moves?
A: Management's M&A criteria remain strategic alignment, financial attractiveness, and a clear path to close. They consider EPS accretion, capital efficiency, and return on invested capital. In a disruptive environment, they require higher visibility to durable synergies and value capture to compensate for increased risk.

Share Buyback Cadence and Clarity on MA
Q: Is share buyback accelerating due to MA clarity?
A: The timing and cadence of share repurchases are driven by cash flow timing, not clarity on Medicare Advantage. Significant capital deployment occurs in high cash flow quarters like the fourth quarter. Management highlighted that their actions are consistent with their plans, and they continue to be active in the marketplace.