During 2023, the Company completed the acquisition of two key health care delivery assets – Signify Health, Inc. (“Signify Health”), a leader in health risk assessments, value-based care and provider enablement services, and Oak Street Health, Inc. (“Oak Street Health”), a leading multi-payor operator of value-based primary care centers serving Medicare eligible patients.

During the third quarter of 2024, in connection with an enterprise-wide restructuring plan, the Company completed a strategic review of its retail business and determined that it plans to close an additional 271 retail stores in 2025.

The Company also launched CordavisTM, a wholly owned subsidiary that works directly with pharmaceutical manufacturers to commercialize and/or co-produce high quality biosimilar products.

During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and generate expected cost savings of over $500 million in 2025.

During the year ended December 31, 2024, our colleagues invested approximately 16 million hours in learning and development courses.

The Company has continued to invest in information systems to enable it to deliver exceptional customer service, enhance safety and quality, and expand patient care services while lowering operating costs.

Premiums for our Insured Health Care Benefits products are priced in advance based on our forecasts of health care and other benefit costs during a fixed premium period. Our profits are particularly sensitive to the accuracy of our forecasts of the increases in health care and other benefit costs that we expect to incur and our ability to anticipate and detect medical cost trends.

Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions, all of which we have experienced over the last number of years, can materially and adversely impact our businesses, operating results, cash flows and financial condition.

The Company and its vendors have experienced diverse cyberattacks and expect to continue to experience cyberattacks going forward. Attacks can originate from external sources (including criminals, terrorists and nation states) or internal actors.

Each of our segments, Health Care Benefits, Health Services, which includes our PBM business, and Pharmacy & Consumer Wellness, operates in a highly competitive and evolving business environment.

We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success.

The retail pharmacy business is highly competitive. The Company believes that it competes principally on the basis of: (i) store location and convenience, (ii) customer service and satisfaction, (iii) product selection and variety, and (iv) price.

During the third quarter of 2024, the Company finalized an enterprise-wide restructuring plan intended to streamline and simplify the organization, improve efficiency and generate expected cost savings of over $500 million in 2025.

Operating expenses as a percentage of total revenues decreased to 13.8% in the year ended December 31, 2024 compared to 15.3% in the prior year, reflecting improved fixed cost leverage across the business due to membership growth in Health Care Benefits segment.

Operating expenses remained relatively consistent in 2024 compared to the prior year at $19.6 billion, as the absence of gains from anti-trust legal settlements and increased investments in the segment's operations and capabilities were substantially offset by the decrease in store count.

The Company has continued to invest in information systems to enable it to deliver exceptional customer service, enhance safety and quality, and expand patient care services while lowering operating costs.

The Company's digital strategy is to empower the consumer to navigate their pharmacy experience and manage their condition through integrated online and mobile solutions that offer utility and convenience.

The Health Services segment's custom-built proprietary Canopy technology is a key driver of the success of its value-based care model and foundation for patients receiving a consistent, high-quality level of care.

During the years ended December 31, 2024, 2023 and 2022, the Company repurchased an aggregate of 39.7 million shares of common stock for approximately $3.0 billion, an aggregate of 22.8 million shares of common stock for approximately $2.0 billion and an aggregate of 34.1 million shares of common stock for approximately $3.5 billion, respectively, each pursuant to the 2021 Repurchase Program.

In December 2024, pursuant to a cash tender offer, the Company repaid approximately $2.6 billion of its outstanding senior notes for a cash payment of approximately $2.0 billion.

Gross capital expenditures were approximately $2.8 billion and $3.0 billion in 2024 and 2023, respectively. During 2024, approximately 76% of the Company's total capital expenditures were for technology, digital and other strategic initiatives and 24% were for store, fulfillment and support and improvements.

Our Healthy 2030 impact strategy outlines how we are creating a more equitable health care system and sustainable future. It reinforces our company's strategy and is embedded in our purpose-driven culture.

We continue to invest in initiatives and programs that focus on improving the health of our planet by advancing our sustainability commitments and addressing the environmental factors that contribute to poor health and exacerbation of chronic illnesses.

We support our colleagues' education and growth with scholarships, promote and develop leadership skills through training and development courses and continue strengthening our pipeline to our workforce through job training and skill building programs in our communities.

The Company is seeking to grow its Medicaid, dual eligible and dual eligible special needs plan businesses over the next several years. As a result, the Company is increasing its exposure to changes in government policy with respect to and/or regulation of the various Medicaid, dual eligible and dual eligible special needs plan programs in which the Company participates.

The Company expects the ACA, including potential changes thereto, to continue to significantly impact its business operations and operating results, including pricing, medical benefit ratios (“MBRs”) and the geographies in which the Company's products are available.

The Company faces a challenge from the impact of the increasing cost of medical care (including prescription medications), changes to methodologies for determining payments and CMS local and national coverage decisions that require the Company to pay for services and supplies that are not factored into the Company's bids.