CVS Health Faces 2027 Health Services Headwinds from 340B, Leveraging Specialty and Formulary Actions

CVS Health: 2027 Health Services headwinds/tailwinds and how it plans to offset 340B

1) 2027 Health Services (HSS): key headwinds

A. 340B pressure continues into 2027 (Caremark/PBM)

• CVS explicitly expects 340B to be a headwind in 2027 and frames it as a continuation of “previously discussed market dynamics in our 340B business”. ¹²
• Management characterizes 340B as a “moving target within D.C.” and notes they are building up plans as the situation evolves. ³¹
• CVS also indicates the 340B environment remains dynamic and has already created pressure in 340B in 2026. ⁴

B. Potential membership declines in Caremark next year (health plan client retention)

• CVS expects membership declines in Caremark in 2027, describing two main drivers:
  1. Transition to a pricing model grounded in “the lowest net cost” over the next few years, requiring client renewals to reflect appropriate risk/contracting structures; and
  2. “Product actions and market exits” by some health plan customers that would mechanically reduce membership. ⁵

C. Near-term earnings pressure in Pharmacy Services despite enterprise strength

• While CVS stresses that enterprise momentum offsets near-term pressures, it nonetheless signals earnings pressure in Pharmacy Services tied to the 340B dynamic continuing into 2027. ⁶²

2) 2027 Health Services (HSS): key tailwinds

A. Specialty pharmacy execution and secular trends (CVS Specialty)

• CVS calls out the tailwinds on the “PS business” (Pharmacy Services) as specialty, stating it is running the “best specialty pharmacy in the country” and highlighting the specialty trajectory and execution. ⁷
• In addition to execution, CVS ties specialty strength to secular trends and specifically points to a “robust generic portfolio in 2027” as part of the offsetting dynamics against near-term earnings pressure. ²

B. Health care delivery momentum and PCW growth

• In Health Services more broadly, CVS states it is on track improving results in health care delivery. ²
• CVS is also building momentum in its PCW business, with “second consecutive year of mid-single-digit growth” cited in updated guidance and with intent to carry that momentum into 2027. ²

C. Enterprise-wide strength as a backdrop that offsets HSS headwinds

• CVS emphasizes that any pressure in PBM is “more than offset by the strength that we have across the enterprise.” ⁶
• Management repeatedly highlights “tremendous momentum across CVS Health” and links it to improvements in Aetna, the retail pharmacy business, and technology/AI investments that reduce friction and improve the care experience. ⁷

3) How CVS plans to offset 340B headwinds (and where formulary actions and specialty dynamics fit)

A. It already offset 340B in 2026 and expects continued mitigation into 2027

• CVS says it expects 340B pressure next year and explicitly analogizes to 2026 mitigation: “just like we offset it this year.” ¹
• At the same time, CVS avoids giving a precise 340B size, stating it is not commenting on 340B sizing specifically and will return with more detailed headwind/tailwind breakdown later in the year. ¹

B. Formulary actions: the most explicit “tool” CVS highlights for affordability and drug access (especially GLP-1)

While the excerpts do not give a direct “340B mitigation” formulary mechanism (e.g., specific 340B-related formulary rules), CVS does describe formulary actions as a major lever in its pharmacy benefits model:

• CVS states that for employers providing coverage, Caremark “continues to lead the industry by taking formulary actions that will increase availability of these drugs at a lower cost.” ⁸
• Management’s GLP-1 discussion also emphasizes managing affordability/access across funded programs (Caremark and Aetna) and then addressing the movement to cash/unfunded markets via direct-to-consumer capabilities. ⁸⁹
• This matters for 340B mitigation because the same overall strategy—improve affordability via formulary and cost management in funded arrangements while expanding access routes—is the type of internal lever CVS is describing to manage drug-cost pressures while specialty grows. ⁸⁹

C. Specialty dynamics as a direct offset to PBM/340B pressure

The excerpts connect specialty to offsetting Pharmacy Services pressure:

• CVS explicitly describes specialty pharmacy execution and secular trends as a key driver of tailwinds that help offset near-term earnings pressures, including those coming from 340B. ²
• CVS reiterates that specialty success depends on clinical expertise, data/analytics, and personalized engagement and highlights operating metrics: CVS Specialty operates above 90% adherence, while others target 80%. ¹⁰
• Management also positions specialty as fast-growing, “critically important,” and supported by technology/automation/AI to identify patients earlier and initiate therapy faster. ¹⁰

D. “Pull forward” and planning cadence: management is actively managing as the 340B rules change

• CVS indicates it pulled forward headwinds/tailwinds commentary for 2027 by about a quarter due to dynamics observed early in the year. ³¹¹
• Management says 340B remains dynamic with plans being built and that more granular detail will be shared at the third quarter call and then further at the fourth quarter call. ¹

4) Bottom line synthesis for 2027 (HSS)

• Headwinds for 2027 in Health Services center on continued 340B pressure. ¹²

• CVS also expects Caremark membership declines driven by the pricing-model transition to lowest net cost and health-plan product actions/market exits. ⁵

• Tailwinds include specialty pharmacy strength (with management positioning it as leading in the category and supported by execution/technology), plus robust generic portfolio dynamics in 2027, continued improvement in health care delivery, and PCW mid-single-digit growth momentum. ⁷²

• Mitigation approach to offset 340B is described as a combination of:

  • using the enterprise’s PBM/enterprise offset framework where PBM pressures are more than offset elsewhere ⁶;
  • leveraging Pharmacy Services levers such as formulary actions to improve drug affordability/access in funded programs (illustrated in GLP-1 strategy) ⁸; and
  • relying materially on specialty pharmacy dynamics to generate tailwinds that offset PBM earnings pressure in the 340B environment. ²

• CVS quantifies overall enterprise earnings expectations as a “bridge” backdrop for these 2027 dynamics: it provides a reasonable floor for 2027 adjusted EPS of $8.44, implying ~13% EPS growth off a baseline of $7.46, and reiterates confidence in enterprise earnings growth into 2027 while it continues to refine HSS-specific headwind/tailwind detail later in the year. ¹¹¹²