CVS Health : Q1 2020 Earnings Presentation

FIRST QUARTER 2020

Earnings conference call

May 6, 2020

Larry Merlo

President &

Chief Executive Officer

Eva Boratto

Executive Vice President &

Chief Financial Officer

©2019 CVS Health and/or one of its affiliates. Confidential and proprietary.

Cautionary statement concerning forward-looking statements

This presentation includes forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. By their nature, all forward-looking statements are not guarantees of future performance or results and are subject to risks and uncertainties that are difficult to predict and/or quantify. Actual results may differ materially from those contemplated by the forward-looking statements due to the risks and uncertainties related to the COVID-19 pandemic, the severity and duration of the pandemic, the pandemic's impact on the U.S. and global economies and consumer behavior and health care utilization patterns, and the timing, scope and impact of stimulus legislation and other federal, state and local governmental responses to the pandemic, as well as the risks and uncertainties described in our Securities and Exchange Commission filings, including those set forth in the Risk Factors section and under the heading "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 and our recently filed Current Reports on Form 8-K.

This presentation includes non-GAAP financial measures that we use to describe our company's performance. In accordance with SEC regulations, you can find the definitions of these non-GAAP measures, as well as reconciliations to the most directly comparable GAAP measures, on the Investor Relations portion of our website.

Link to ournon-GAAPreconciliations

2©2020 CVS Health and/or one of its affiliates.

CVS Health is uniquely positioned to help the country through the COVID-19 pandemic

First priority is the wellbeing and safety of our colleagues, consumers and the communities we serve

• Executing robustCOVID-19 response plan*
• Acted swiftly to invest in our people and our businesses
• In collaboration with federal, state and local governments:

Second priority is maintaining the continuity of our businesses and operations

• Making investments to support our consumers, clients and members, while deepening our relationships and advancing ourlong-term strategy of being the most consumer-centric health company

• Opened large scaleCOVID-19 testing sites across 5 states. Through May 4, we had administered nearly 90k tests with real-time results
• Establishing additional testing sites; targeting up to 1,000 locations across the country by the end of May

*Refer to today's earnings press release for comprehensive view of actions taken

3©2020 CVS Health and/or one of its affiliates.

Financial highlights

Strong first quarter in unprecedented and unpredictable environment due to COVID-19

Q1 2020 Enterprise results reflect strong underlying performance

• Q1 Adjusted EPS of$1.91, up 17.9%year-over-year
• • Strong underlying core performance exceeded our expectations
  • COVID-19added ~10 centsto Q1 2020 Adjusted EPS, as we met elevated consumer and member needs from COVID-19
• Q1 Total Revenues of$66.8 billion, up 8.3% year-over- year
• • Growth driven by higher volume in Retail/LTC and Pharmacy Services and membership growth in Government products in Health Care Benefits

Strong liquidity position with access to over $11B in cash, short-term investments and commercial paper or borrowing capacity under credit facilities

Cash flow from operations of $3.3 billion; returned ~$650 million to shareholders through dividends

2020 Full-Year Adjusted EPS guidance range of $7.04 to $7.17 and cash flow from operations guidance range of $10.5 to $11 billion remain unchanged

• Underlying core business performance strong prior toCOVID-19
• Prudently managing operating expenses; will reduce planned capital expenditures by~$200 million
• Guidance is subject to key considerations, including significant uncertainties that exist surrounding the COVID-
  19 pandemic, including:
• • The severity and duration of the pandemic
  • The impact of the pandemic on the U.S. and global economies, consumer behavior and health care utilization patterns
  • The timing, scope and impact of stimulus legislation and other governmental responses to the pandemic
• Given likelihood of significant variability in impact ofCOVID-19 on financial statement line items and related ratios, 2020 additional detailed guidance not noted above is withdrawn

Remain committed to target leverage ratio in low 3x's in 2022

4©2020 CVS Health and/or one of its affiliates.

Strength and diversity of our Enterprise

Our integrated, innovation-driven health care model is providing benefits to members and consumers across the health care system that will continue into the future as needs evolve

New opportunities to serve our members and consumers

• Significant acceleration of digital platform utilization
• Opportunity to utilize CVS Health Retail assets to conduct nationwideCOVID-19 testing and provide medication therapies and vaccines, when available
• Increase of care in the home (through home delivery and other services including telehealth and infusion)
• Enhance flu vaccine program in anticipation of stronger than historical demand

Uncertainties

• Severity and duration of theCOVID-19 pandemic
• Impact of the pandemic on consumer behavior and health care utilization patterns
• Impact of stimulus legislation and other governmental responses to the pandemic (including on the economy and unemployment)
• Impact of incremental benefit costs and operating expenses associated withCOVID-19

5©2020 CVS Health and/or one of its affiliates.

Enterprise Priorities Update

Enterprise priorities to accelerate growth

Consumer focused - be local, make it simple, improve health

Grow and	Deliver
differentiate our	transformational
businesses	products and services

Create a consumer-	Modernize Enterprise
centric technology	functions and
infrastructure	capabilities

7©2020 CVS Health and/or one of its affiliates.

CONTINUED PROGRESS

ON STRATEGIC PRIORITIES

Grow and differentiate our businesses

1. Includes an adjustment to convert90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.
2. Source: IQVIA retail pharmacy script data for March 2020

Integrated value offerings

In collaboration with federal, state and local governments, MinuteClinic®practitioners are administering COVID-19 rapid tests across 5 states. Through May 4, we had administered nearly 90k tests with real-time results

Pharmacist Panels that integrate pharmacy and medical data are operating in 75 pharmacies supporting over 1,200 high risk patients with engagement rates exceeding expectations

HealthHUB®conversions status:

• 98 HealthHUB®locations opened as of April across 17 states
• HealthHUB®conversions paused due to COVID-19;year-end 2020 count dependent on duration of stay-at-home guidelines and other COVID-19 related constraints
• Expect 1,500 HealthHUB®locations by end of 2021

Business growth

Medicare Advantage sequential membership growth of 11.3% in Q1, outpacing the industry average of ~6%

Completed >70% of 2021 Pharmacy Services selling season renewals with strong retention rate

Q1 2020 Specialty pharmacy revenue growth of ~19% year-over-year

Q1 2020 Retail script share up ~50 bps year-over-year to 26.8%1, 2

Agreed to acquire Schnuck Markets Inc.'s Retail and Specialty pharmacy businesses

8©2020 CVS Health and/or one of its affiliates.

CONTINUED PROGRESS

ON STRATEGIC PRIORITIES

Deliver transformational products and services

Oncology care

Chronic Kidney Disease care

Diabetes management

Transform Oncology Care program rolled out to over 40 providers and ~1,300 Commercial insured and Medicare members across 17 states

Chronic Kidney Disease (CKD) care management program is currently available to ~4 million people across Aetna and 14 Caremark clients

Entered into joint venture with Satellite Healthcare to provide comprehensive kidney care in two geographies

Home hemodialysis device: enrollment in our clinical trial paused due to stay at home guidelines

Launch of integrated version of our diabetes product for early adopter Caremark and Aetna ASC clients scheduled for September 2020, with a full launch scheduled for January 2021

9©2020 CVS Health and/or one of its affiliates.

CONTINUED PROGRESS

ON STRATEGIC PRIORITIES

Create a consumer-centric technology infrastructure

CarePass®membership

Retail prescription home delivery

Telemedicine

Mobile engagement

CarePass subscription program has ~2.2M enrolled members as of Q1 2020, ~40% growth from prior quarter

Retail prescription home delivery is up more than 1,000% compared to Q1 2019

Utilization of telemedicine for virtual visits through MinuteClinic®is up ~600% compared to Q1 2019

Launched streamlined digital experience through new scheduling app to support COVID-19 testing sites; 85% customer satisfaction rate

~89M patients are enrolled in text messaging program as of Q1 2020, up 9% from prior quarter

Double digit percentage increase in app usage across CVS Pharmacy, Caremark and Specialty compared to Q1 2019

Through the Aetna Health app, engaged more households in Q1 2020 than in the first three quarters of 2019

10©2020 CVS Health and/or one of its affiliates.

CONTINUED PROGRESS

ON STRATEGIC PRIORITIES

Modernize Enterprise functions and capabilities

Client service delivery

Modernization

Investing in improving client service delivery with continued progress toward process simplification and delivering net savings

• Enhancingself-service capabilities by eliminating unnecessary member and patient inquiries, mailings and reducing incoming call volumes

Continued technology modernization with business system and application rationalizations, data center consolidation review and cloud strategy

• Advancing integrated data and analytics capabilities
• Advancing and embedding intelligent automation to streamline routine processes and optimize our utilization management capabilities

11©2020 CVS Health and/or one of its affiliates.

Q1 2020 Financial Review

Q1 RESULTS

Consolidated results

in millions,
Q1 2020		Q1 2019		Change %
except per share data
Total revenues	$66,755	$61,646	8.3%
Adjusted	$4,113	$3,595	14.4%
operating income
GAAP EPS	$1.53	$1.09	40.4%
Adjusted EPS	$1.91	$1.62	17.9%
Cash flow from	$3,305	$1,948	69.7%
operations

Interest expense of $733 million

Adjusted effective tax rate of 27.0%

Weighted-average diluted share count: 1,312 millionshares

COVID-19 added ~10 centsto Q1 2020 Adjusted EPS, as we met elevated consumer and member needs from COVID- 19

13©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Cash flow and capital allocation

Strong cash generation and commitment to disciplined capital allocation priorities

Generated $3.3 billionof cash flow from operations

Strong liquidity: access to over $11 billion

• Over$5 billionof cash and short- term investments at March 31, 2020, including proceeds from the March bond deal
• $6 billionavailable through commercial paper or borrowing capacity under credit facilities

Continue to prioritize paying down debt and maintaining dividend, with no share repurchases planned until leverage target met

Paid ~$650 million in shareholder dividends

Remain committed to target leverage ratio in low 3x'sin 2022

14©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Pharmacy Services segment

in millions	Q1 2020		Q1 2019		Change %
Total revenues	$34,983	$33,558	4.2%
Adjusted	$1,181	$947	24.7%
operating income
Total pharmacy claims	541.4	481.8	12.4%
processed1

Note: IngenioRx network revenue recorded on a net basis

1. Total pharmacy claims processed and generic dispensing rate for all periods presented include an adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

Revenue growth drivers

• Growth driven by Specialty pharmacy revenue reflecting full benefit of IngenioRx that started onboarding in Q2 2019 andCOVID-19 related pull- forward of scripts and increase in 90-day prescriptions, partially offset by previously disclosed client losses and continued price compression

Increase in Adjusted Operating Incomeprimarily driven by Specialty pharmacy volume, continued improvement in purchasing economics and an increase in generic dispensing rate (GDR), partially offset by previously disclosed client losses and continued price compression

• GDR of89.0%1, up ~ 70 bps, year-over-year

Growth in Total Pharmacy Claims Processed1primarily driven by increased claims from IngenioRx and COVID-19 related prescription volume discussed above. Estimated COVID-19 impact ~125 bps

15©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Retail / LTC segment

in millions	Q1 2020		Q1 2019		Change %
Total revenues	$22,749	$21,115	7.7%
Adjusted	$1,902	$1,489	27.7%
operating income
Prescriptions filled1	375.1	346.8	8.2%

1. Prescriptions filled and generic dispensing rate for all periods presented include an adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

Revenue growth drivers

• Strong prescription volume growth described below and increased Front Store revenues (up ~2% pre-COVID-19), partially offset by continued reimbursement pressure and increased GDR
• GDR1of 89.3%, up ~ 60 bps,year-over-year

Adjusted Operating Incomegrowth from strong sales performance, benefit from generics, Front Store margin improvements and lower SG&A reflecting favorable resolution of legal matters and ongoing modernization efforts, partially offset by continued reimbursement pressure

Prescriptions Filledgrowth driven by continued adoption of patient care programs, COVID-19 related prescription volume and leap day. Estimated COVID-19 impact ~200 bps

COVID-19 had meaningful impact on segment performance

• COVID-19contributed ~40% of Q1 2020 adjusted operating income growth, including the impact of additional operating expenses

16©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Retail pharmacy

Same store sales1

Pharmacy sales

Pharmacy adjusted prescription volume2

Front Store sales

Retail pharmacy script share of 26.8%2, 3

Change vs. Q1 2019

9.0%

9.3%

9.8%

8.0%

Up ~50 bps

Growth in prescription volume driven by continued adoption of patient care programs, COVID-19 related prescription volume and leap day

Growth in Front Store sales primarily driven by strength in consumer health and general merchandise sales, which was primarily driven by COVID-19 related sales, expansion of CarePass®program and leap day

1. Same store sales and prescription volume exclude revenues from MinuteClinic and revenues and prescriptions fromlong-term care operations and, in 2019, from stores in Brazil.
2. Includes an adjustment to convert90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.
3. Source: IQVIA retail pharmacy script data for March 2020

17©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Health Care Benefits segment

Revenue growthprimarily driven by strong membership growth in Government products

in millions, except MBR

Total revenues

Adjusted operating income

Total medical membership

Commercial membership

Government membership

Medical benefit ratio (MBR)

Q1 2020		Q1 2019		Change %
$19,198	$17,870	7.4%
$1,491	$1,562	(4.5%)
23.5	22.8	2.8%
17.6	17.9	(1.9%)
5.9	4.9	19.6%
82.4%	84.0%		160 bps

Adjusted operating income slight decline primarily

due to membership declines in Commercial insured products, higher Medicaid benefit costs in certain states and incremental operating expenses related to onboarding IlliniCare members, partially offset by membership growth in Government products and increased integration synergies

Medical membershipgrowth driven by increases in Medicare and Medicaid products, partially offset by decline in Commercial insured products

Improvement to MBRprimarily reflects return of HIF. During Q1 2020, also saw reduced discretionary utilization due to COVID-19 that started in mid March, partially offset by growth in Government business and leap day

18©2020 CVS Health and/or one of its affiliates.

Q1 RESULTS

Estimated impact of COVID-19 on Q1 financials

Pharmacy Services

Increase in prescription volume due to pull- forward in scripts driven by early maintenance medication refills and greater use of 90-day prescriptions

• EstimateCOVID-19 impacted total pharmacy claims growth by ~125 bps

Incremental costs for operations

Retail / LTC

Increase in prescription volume; same drivers as

PSS

• EstimateCOVID-19 impacted prescriptions filled growth by ~200 bps

Front Store revenue growth of 8.5%; significant portion due to COVID-19

Incremental costs for operations

Long term care performance

Health Care Benefits	Corporate / Other
Lower discretionary	Realized capital losses
utilization starting mid	in investment portfolio
March

Realized capital losses in investment portfolio

COVID-19 related business activity added ~10 cents to Q1 2020 GAAP Diluted EPS and Adjusted EPS

19©2020 CVS Health and/or one of its affiliates.

April Business Update

April business update

Retail same store sales1

Pharmacy sales

Pharmacy adjusted prescription volume2

March 2020 YoY

17.5%

17.2%

12.6%

April 2020 YoY3

1.4%

5.3%

(0.6%)

Change in April prescription and claims processed volume year-over-year versus March driven by reversal of the pull- forward in scripts seen in March, and drop in new prescriptions related to lower physician visits

Front Store sales

Pharmacy Services total claims processed2

HCB decreases in utilization across an array of services

18.6%(10.9%)

17.0%0.6%

(~30%)

Decline in April Front Store sales year- over-year as increased basket size is offset by reduction in store traffic as shelter in place orders took hold

Reduction in discretionary utilization that began in mid March continued through April; Q2 2020 MBR could be lowest of the year

1. Same store sales and prescription volume exclude revenues from MinuteClinic and revenues and prescriptions fromlong-term care operations and, in 2019, from stores in Brazil.
2. Includes an adjustment to convert90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.
3. April 2020 information is preliminary.

Cannot predict impact of delayed or missed treatment on members with chronic conditions

21©2020 CVS Health and/or one of its affiliates.