Item 8.01 Other Events.
As previously reported, effective the first quarter of 2023, CVS Health Corporation (the “Company”) realigned the composition of its segments to correspond with changes to its operating model and reflect how its Chief Operating Decision Maker reviews information and manages the business. As a result of this realignment, the Company formed a new Health Services segment, which in addition to providing a full range of pharmacy benefit management solutions, also delivers health care services in the Company’s medical clinics, virtually, and in the home, as well as provider enablement solutions. In addition, the Company created a new Pharmacy & Consumer Wellness segment, which includes its retail and long-term care pharmacy operations and related pharmacy services, as well as its retail front store operations. This segment also provides pharmacy fulfillment services to support the Health Services segment’s specialty and mail order pharmacy offerings. Following the segment realignment described above, the Company’s four reportable segments are as follows: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Company began to report under the realigned segments effective with the filing of the Quarterly Report on Form 10-Q for the three months ended March 31, 2023.
The Company is filing this Current Report on Form 8-K (the “Form 8-K”) to revise the following sections: “Item 1. Business,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and “Item 8. Financial Statements and Supplementary Data” included in its annual report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission (“SEC”) on February 8, 2023 (the “2022 Form 10-K”), solely to reflect:
•The previously reported realignment of the Company’s segments to correspond with changes made to its operating model as described in “Note 1 – Significant Accounting Policies” included in “Item 8. Financial Statements and Supplementary Data with Retrospective Adjustments” of Exhibit 99.1 of this Form 8-K, including the discontinuance of the former Maintenance Choice® segment reporting practice as described within the “Segment Analysis” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Adjustments” of Exhibit 99.1.
•The exclusion of the impact of net realized capital gains or losses from adjusted operating income, as described within the “Segment Analysis” section included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Adjustments” of Exhibit 99.1.
•Additional disclosure in the “Medicare Update” included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Adjustments” of Exhibit 99.1 related to the impact of the decline in the number of Medicare Advantage members in plans with star ratings of at least 4.0.
•The impact of the adoption of a new accounting standard related to the accounting for long-duration insurance contracts, which the Company adopted on January 1, 2023 using a modified retrospective transition method as of January 1, 2021, as described in “Note 8 – Other Insurance Liabilities and Separate Accounts” included in “Item 8. Financial Statements and Supplementary Data with Retrospective Adjustments” of Exhibit 99.1.
This Form 8-K updates and supersedes the information in the following sections of the 2022 Form 10-K to reflect the application of the items described above:
•“Item 1. Business” of the 2022 Form 10-K, which is updated and superseded by “Item 1. Business with Retrospective Adjustments” of Exhibit 99.1.
•“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2022 Form 10-K, which is updated and superseded by “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Adjustments” of Exhibit 99.1.
•“Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of the 2022 Form 10-K, which is updated and superseded by “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of Exhibit 99.1.
•“Item 8. Financial Statements and Supplementary Data” of the 2022 Form 10-K, which is updated and superseded by “Item 8. Financial Statements and Supplementary Data with Retrospective Adjustments” of Exhibit 99.1.
Exhibit 99.1 is hereby incorporated by reference into this Item 8.01.
In the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, the Company’s unaudited condensed consolidated financial statements for the three months ended March 31, 2022 reflected the application of the changes described above. The Company is filing this Form 8-K so that information reported in the Company’s 2022 Form 10-K
incorporated by reference in any document that the Company has filed or may file from time to time with the SEC is updated to reflect the items described above.
Except as specifically set forth above, the information in this Form 8-K does not reflect any event or development occurring after February 8, 2023, the date the Company filed the 2022 Form 10-K with the SEC. For a discussion of events and developments subsequent to the filing of the 2022 Form 10-K, please refer to the Company’s SEC filings since that date. The portions of the 2022 Form 10-K that have not been updated or superseded by the information included in Exhibit 99.1 remain effective.