The low operating cash flow in Q3 2024 was mainly due to the absence of a one-time boost that was recorded in 2023. In the prior year, CVS received an early **CMS payment of $5.2 billion**, which significantly increased cash flows. In 2024, this benefit was missing, and higher **Medicare utilization** further contributed to the decline in operating cash flows. Additionally, although there was some favorable timing of cash receipts and payments, it was not enough to offset these factors.  **[0000064803-24-000034_cvs-20240930.htm:73]** 

Why was Operating Cash Flow so low in Q3 2024?

The turnaround in Q4 2024 was largely driven by a couple of key factors. Despite pressures from elevated Medicare utilization and significantly higher insurance benefits paid (which increased from **$84,097 million** in Q4 2023 to **$109,464 million** in Q4 2024) that hurt operating cash flows, a reduction in income taxes paid—from **$3,524 million** down to **$1,703 million**—combined with a smaller increase in accounts receivable helped improve the net cash provided by operating activities, contributing to the turnaround in operating cash flow.  **[0000064803-25-000007_cvs-20241231.htm:174]** **[0000064803-25-000007_cvs-20241231.htm:147]** 

What drove the turnaround in Operating Cash Flow in Q4 2024?

1ffced842ce3c65d201f4adb2a12ed697e6e1e45c85caf17fe97cd9c0696a5a3

The drop in **cash and cash equivalents** in Q3 2024 for CVS Health Corporation was primarily due to a **significant decrease in net cash provided by operating activities**—a decline of **$8.8 billion** compared to the prior year, attributed to the earlier receipt of a large CMS payment in the previous period and timing differences in cash receipts and payments. Additionally, there were notable changes in investing and financing activities, including a **$12.6 billion** decrease in net cash used in investing activities related to major acquisitions and a shift in net cash used in financing activities. These factors collectively contributed to the decrease in cash levels.  **[0000064803-24-000034_cvs-20240930.htm:73]** 

Why did cash and cash equivalents drop so low in Q3 2024?

The spike in **long-term debt** during **Q2 2024** was primarily driven by **new debt issuances for acquisitions** and an overall increase in borrowings. Specifically, CVS Health issued additional long-term debt in **June 2023** to fund the acquisition of **Oak Street Health, Inc.** and again in **May 2024**, leading to a rise in debt levels from **$58,638 million** as of December 2023 to **$62,643 million** by June 2024.  **[20240807NE78412:2]** **[0000064803-24-000028_cvs_ex99x1q2-24.htm:1]** **[0000064803-24-000029_cvs-20240630.htm:25]** **[0000064803-24-000029_cvs-20240630.htm:3]** 

What drove the spike in long-term debt in Q2 2024?

Short-term debt dropped to **zero in Q2 2024** because CVS Health repaid its outstanding commercial paper, eliminating the related short-term debt. As of **June 30, 2024**, the company had **no commercial paper outstanding**, compared to **$200 million** outstanding as of **December 31, 2023**.  **[0000064803-24-000029_cvs-20240630.htm:25]** 

Why did short-term debt drop to zero in Q2 2024?

21ce53ebc50c4e0540c27158db43556e8850e413145be1ff7719c5bf35f012fe

CVS's operating income for **Q3 2024** was notably low at **$832 million** due to several key factors. First, the company recorded **$1.2 billion** in restructuring charges, which included **$607 million** for store impairments, **$293 million** for corporate workforce optimization, and **$269 million** for other asset impairments related to discontinuing non-core assets.  **[20241106NE49115:1]** **[0000064803-24-000033_cvs_ex99x1q3-24.htm:1]**  Additionally, the Health Care Benefits segment suffered a significant downturn with approximately **$1.1 billion** in premium deficiency reserves, reflecting anticipated losses and increased costs, particularly in Medicare and Medicaid products.  **[20241106NE49115:1]** **[0000064803-24-000034_cvs-20240930.htm:54]** **[CVS_3406016_5]**  The challenges were further compounded by an increase in interest expense by **$59 million** due to higher long-term debt, along with a higher effective tax rate rising from **25.0%** to **32.4%**, and a decline in adjusted operating income by **42.8%** compared to Q3 2023.  **[20241106NE49115:1]** **[0000064803-24-000033_cvs_ex99x1q3-24.htm:1]** 

Why was Operating Income so low in Q3 2024?

The dramatic drop in **Net Income** for **Q3 2024** was primarily due to several factors, including **restructuring charges** of approximately **$1.2 billion** for store impairments and workforce optimization, **premium deficiency reserves** of about **$1.1 billion** in the Health Care Benefits segment, a **77.5% decrease in operating income**, and an **8.5% (or $59 million) increase in interest expense** due to higher debt levels. These factors together contributed to the decline from **$2,265 million** in Q3 2023 to **$71 million** in Q3 2024.  **[0001193125-24-239193_d837701dex991.htm:2]** **[0000064803-24-000033_cvs_ex99x1q3-24.htm:1]** **[20241106NE49115:1]** **[20241106NE49115:0]** 

What caused the dramatic drop in Net Income in Q3 2024?

In Q1 2024, the surge in **Premiums Revenues** was primarily driven by significant growth in the **Medicare and Commercial product lines** within the **Health Care Benefits segment**. This robust performance in these key areas contributed substantially to the overall increase in premiums revenue, marking a notable expansion compared to Q1 2023.  **[20240501NE02110:7]** **[0000064803-24-000016_cvs-20240331.htm:45]** **[20240501NE02110:2]** **[0000064803-24-000016_cvs-20240331.htm:52]** 

What factors contributed to the surge in Premiums Revenues in Q1 2024?

The negative provision in Q4 2024 mainly resulted from two factors. First, the effective income tax rate declined from **24.3%** in Q4 2023 to **23.7%** in Q4 2024 due to factors such as basis differences on the disposition of certain investments and the utilization of tax credits. Second, CVS experienced a significant drop in pre‐tax income—down by **$579 million** compared to Q4 2023—which, combined with the lower tax rate, pushed the tax expense into negative territory.  **[0000064803-25-000007_cvs-20241231.htm:171]** **[20250212NE17198:1]** **[20250212NE17198:8]** **[0000064803-25-000006_cvs_ex99x1q4-24.htm:1]** 

Why did the Income Tax Provision turn negative in Q4 2024?

The jump in Services Revenues in Q1 2024 was primarily driven by **substantial growth in the Health Services Segment**. This segment experienced an increase from **$920 million in Q1 2023 to $2,568 million in Q1 2024**, largely due to the acquisitions of **Oak Street Health** and **Signify Health** which significantly boosted its revenue. Additionally, modest growth in the **Health Care Benefits Segment** supported the overall increase, despite a decline in the Pharmacy & Consumer Wellness Segment from COVID-related factors.  **[20240501NE02110:13]** **[20240501NE02110:3]** **[0000064803-24-000015_cvs_ex99x1q1-24.htm:3]** **[20240501NE02110:2]** 

What drove the jump in Services Revenues in Q1 2024?

5eed670df10c3db8a788bc779e92bae5092fec82f9ecdb48b6e68251e32a2adb

Cash receipts from customers (USD, millions)

Cash paid for inventory, prescriptions dispensed and health services rendered (USD, millions)

Insurance benefits paid (USD, millions)

Cash paid to other suppliers and employees (USD, millions)

Interest and investment income received (USD, millions)

Interest paid (USD, millions)

Income taxes paid (USD, millions)

Net cash provided by operating activities (USD, millions)

Proceeds from sales and maturities of investments (USD, millions)

Purchases of investments (USD, millions)

Purchases of property and equipment (USD, millions)

Acquisitions (net of cash and restricted cash acquired) (USD, millions)

Other investing cash flows (USD, millions)

Net cash used in investing activities (USD, millions)

Commercial paper borrowings (repayments), net (USD, millions)

Repayments of long-term debt (USD, millions)

Repurchase of common stock (USD, millions)

Dividends paid (USD, millions)

Proceeds from exercise of stock options (USD, millions)

Payments for taxes related to net share settlement of equity awards (USD, millions)

Other financing cash flows (USD, millions)

Net cash provided by (used in) financing activities (USD, millions)

Net increase (decrease) in cash, cash equivalents and restricted cash (USD, millions)

Cash, cash equivalents and restricted cash at the beginning of the period (USD, millions)

Cash, cash equivalents and restricted cash at the end of the period (USD, millions)

e340c6ee9dfea5f3ab99b57cfab9b1cd313505cef00e19c5f5041186a7796f4a

Total Revenues (USD, millions)

Operating Income (USD, millions)

Net Income (USD, millions)

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7a3a97960cf24e002890e6e4f07ebaaf0bdc4ed006063c72cff954d84b100956

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

d6774fc45e965c2957de6e9f8f10f4328f596bea362c7fb9f2cf87d4d73b8aaa

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

Selling, General, and Administrative Expenses (SG&A) [USD, Millions]

Research and Development (R&D) [USD, Millions]

Depreciation and Amortization (D&A) [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

Earnings Per Share (EPS) - Basic [USD, Units]

Earnings Per Share (EPS) - Diluted [USD, Units]

a05729538aa98bffd15b1ce9f99bb1679e19df2deb07e48138a02d562f9c2f5d

cb3841ce842852b5af88b7998a93a51da5884f6059314e0ed3a43feaa5027a2e

Health Care Benefits

Health Services

Pharmacy & Consumer Wellness

Total Revenue

df477e57e75b37f58dda6ad6b22f8495cd9d8a1b334a149317323ff0957dc183

41fdabfebbfa13681389bbd861010d32453f13249160f0d7075e3d9142b7bc85

CVS HEALTH (CVS)

Financials