Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 29, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-01011 | |
Entity Registrant Name | CVS HEALTH CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 05-0494040 | |
Entity Address, Address Line One | One CVS Drive, | |
Entity Address, City or Town | Woonsocket, | |
Entity Address, State or Province | RI | |
Entity Address, Postal Zip Code | 02895 | |
City Area Code | (401) | |
Local Phone Number | 765-1500 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CVS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,300,964,007 | |
Entity Central Index Key | 0000064803 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||
Revenues from customers | $ 64,547 | $ 47,269 | $ 189,082 | $ 139,670 |
Net investment income | 263 | 221 | 805 | 485 |
Total revenues | 64,810 | 47,490 | 189,887 | 140,155 |
Operating costs: | ||||
Cost of products sold | 40,437 | 39,502 | 116,654 | 115,883 |
Benefit costs | 12,850 | 439 | 39,396 | 2,399 |
Goodwill impairment | 0 | 0 | 0 | 3,921 |
Operating expenses | 8,595 | 4,975 | 24,887 | 14,755 |
Total operating costs | 61,882 | 44,916 | 180,937 | 136,958 |
Operating income | 2,928 | 2,574 | 8,950 | 3,197 |
Interest expense | 747 | 674 | 2,301 | 1,886 |
Loss on early extinguishment of debt | 79 | 0 | 79 | 0 |
Other expense (income) | (31) | 1 | (93) | 7 |
Income before income tax provision | 2,133 | 1,899 | 6,663 | 1,304 |
Income tax provision | 604 | 509 | 1,776 | 1,478 |
Income (loss) from continuing operations | 1,529 | 1,390 | 4,887 | (174) |
Loss from discontinued operations, net of tax | 0 | 0 | 0 | (1) |
Net income (loss) | 1,529 | 1,390 | 4,887 | (175) |
Net loss attributable to noncontrolling interests | 1 | 0 | 0 | 0 |
Net income (loss) attributable to CVS Health | $ 1,530 | $ 1,390 | $ 4,887 | $ (175) |
Basic earnings (loss) per share: | ||||
Income (loss) from continuing operations attributable to CVS Health, basic (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.76 | $ (0.17) |
Loss from discontinued operations attributable to CVS Health, basic (in dollars per share) | 0 | 0 | 0 | 0 |
Net income (loss) attributable to CVS Health, basic (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.76 | $ (0.17) |
Weighted average basic shares outstanding (in shares) | 1,302 | 1,020 | 1,300 | 1,018 |
Diluted earnings (loss) per share: | ||||
Income (loss) from continuing operations attributable to CVS Health, diluted (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.75 | $ (0.17) |
Loss from discontinued operations attributable to CVS Health, diluted (in dollars per share) | 0 | 0 | 0 | 0 |
Net income (loss) attributable to CVS Health, diluted (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.75 | $ (0.17) |
Weighted average diluted shares outstanding (in shares) | 1,305 | 1,022 | 1,303 | 1,018 |
Dividends declared per share (in dollars per share) | $ 0.50 | $ 0.5 | $ 1.50 | $ 1.5 |
Products | ||||
Revenues: | ||||
Revenues from customers | $ 47,149 | $ 46,334 | $ 136,023 | $ 136,035 |
Premiums | ||||
Revenues: | ||||
Revenues from customers | 15,539 | 627 | 47,612 | 2,684 |
Services | ||||
Revenues: | ||||
Revenues from customers | $ 1,859 | $ 308 | $ 5,447 | $ 951 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 1,529 | $ 1,390 | $ 4,887 | $ (175) |
Other comprehensive income (loss), net of tax: | ||||
Net unrealized investment gains | 136 | 0 | 721 | 0 |
Foreign currency translation adjustments | 153 | (8) | 157 | (34) |
Net cash flow hedges | (23) | (4) | (30) | 335 |
Other comprehensive income (loss) | 266 | (12) | 848 | 301 |
Comprehensive income | 1,795 | 1,378 | 5,735 | 126 |
Comprehensive loss attributable to noncontrolling interests | 1 | 0 | 0 | 0 |
Comprehensive income attributable to CVS Health | $ 1,796 | $ 1,378 | $ 5,735 | $ 126 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash and cash equivalents | $ 5,193 | $ 4,059 |
Investments | 2,334 | 2,522 |
Accounts receivable, net | 19,789 | 17,631 |
Inventories | 16,028 | 16,450 |
Other current assets | 4,841 | 4,581 |
Total current assets | 48,185 | 45,243 |
Long-term investments | 17,342 | 15,732 |
Property and equipment, net | 11,651 | 11,349 |
Operating lease right-of-use assets | 20,757 | 0 |
Goodwill | 79,548 | 78,678 |
Intangible assets, net | 33,655 | 36,524 |
Separate accounts assets | 4,590 | 3,884 |
Other assets | 4,385 | 5,046 |
Total assets | 220,113 | 196,456 |
Liabilities: | ||
Accounts payable | 9,442 | 8,925 |
Pharmacy claims and discounts payable | 13,099 | 11,365 |
Health care costs payable | 7,014 | 6,147 |
Policyholders’ funds | 2,938 | 2,939 |
Accrued expenses | 11,615 | 10,711 |
Other insurance liabilities | 1,790 | 1,937 |
Current portion of operating lease liabilities | 1,798 | 0 |
Short-term debt | 1,070 | 720 |
Current portion of long-term debt | 3,778 | 1,265 |
Total current liabilities | 52,544 | 44,009 |
Long-term operating lease liabilities | 18,826 | 0 |
Long-term debt | 64,206 | 71,444 |
Deferred income taxes | 7,279 | 7,677 |
Separate accounts liabilities | 4,590 | 3,884 |
Other long-term insurance liabilities | 7,557 | 8,119 |
Other long-term liabilities | 2,178 | 2,780 |
Total liabilities | 157,180 | 137,913 |
Shareholders’ equity: | ||
Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, par value $0.01: 3,200 shares authorized; 1,725 shares issued and 1,301 shares outstanding at September 30, 2019 and 1,720 shares issued and 1,295 shares outstanding at December 31, 2018 and capital surplus | 45,854 | 45,440 |
Treasury stock, at cost: 424 shares at September 30, 2019 and 425 shares at December 31, 2018 | (28,207) | (28,228) |
Retained earnings | 44,017 | 40,911 |
Accumulated other comprehensive income | 950 | 102 |
Total CVS Health shareholders’ equity | 62,614 | 58,225 |
Noncontrolling interests | 319 | 318 |
Total shareholders’ equity | 62,933 | 58,543 |
Total liabilities and shareholders’ equity | $ 220,113 | $ 196,456 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 3,200,000,000 | 3,200,000,000 |
Common stock, shares issued (in shares) | 1,725,000,000 | 1,720,000,000 |
Common stock, shares outstanding (in shares) | 1,301,000,000 | 1,295,000,000 |
Treasury stock (in shares) | 424,000,000 | 425,000,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Cash receipts from customers | $ 184,519 | $ 132,275 |
Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (109,958) | (107,920) |
Insurance benefits paid | (38,812) | (2,400) |
Cash paid to other suppliers and employees | (21,411) | (12,305) |
Interest and investment income received | 756 | 406 |
Interest paid | (2,675) | (1,759) |
Income taxes paid | (2,205) | (1,911) |
Net cash provided by operating activities | 10,214 | 6,386 |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of investments | 5,616 | 43 |
Purchases of investments | (6,011) | (97) |
Purchases of property and equipment | (1,890) | (1,452) |
Acquisitions (net of cash acquired) | (361) | (616) |
Proceeds from sale of subsidiary | 0 | 725 |
Other | 16 | 11 |
Net cash used in investing activities | (2,630) | (1,386) |
Cash flows from financing activities: | ||
Net borrowings (repayments) of short-term debt | 350 | (1,276) |
Proceeds from issuance of long-term debt | 3,458 | 39,376 |
Repayments of long-term debt | (8,350) | (2,266) |
Derivative settlements | (25) | 446 |
Dividends paid | (1,952) | (1,528) |
Proceeds from exercise of stock options | 183 | 214 |
Payments for taxes related to net share settlement of equity awards | (85) | (39) |
Other | 11 | 0 |
Net cash provided by (used in) financing activities | (6,410) | 34,927 |
Net increase in cash, cash equivalents and restricted cash | 1,174 | 39,927 |
Cash, cash equivalents and restricted cash at the beginning of the period | 4,295 | 1,900 |
Cash, cash equivalents and restricted cash at the end of the period | 5,469 | 41,827 |
Reconciliation of net income (loss) to net cash provided by operating activities: | ||
Net income (loss) | 4,887 | (175) |
Adjustments required to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 3,275 | 1,911 |
Goodwill impairment | 0 | 3,921 |
Stock-based compensation | 355 | 172 |
Loss on sale of subsidiary | 205 | 86 |
Loss on early extinguishment of debt | 79 | 0 |
Deferred income taxes and other noncash items | (38) | 210 |
Change in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable, net | (2,312) | (1,725) |
Inventories | 413 | 472 |
Other assets | (374) | (3) |
Accounts payable and pharmacy claims and discounts payable | 2,330 | 1,839 |
Health care costs payable and other insurance liabilities | 535 | 0 |
Other liabilities | 859 | (322) |
Net cash provided by operating activities | $ 10,214 | $ 6,386 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock | Common Stock Including Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | CVS Health Shareholders' Equity | Noncontrolling Interest | |||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2017 | 1,712 | (698) | [1] | ||||||||
Balance at beginning of period at Dec. 31, 2017 | $ 37,695 | $ (37,796) | [1] | $ 32,096 | [2] | $ 43,556 | $ (165) | $ 37,691 | $ 4 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 998 | 998 | 998 | ||||||||
Other comprehensive income (loss) | 344 | 344 | 344 | ||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||
Stock option activity, stock awards and other | 112 | 112 | [2] | 112 | |||||||
Purchase of treasury shares, net of ESPP issuances | 49 | $ 49 | [1] | 49 | |||||||
Common stock dividends | (508) | (508) | (508) | ||||||||
Shares outstanding, balance at end of period (in shares) at Mar. 31, 2018 | 1,714 | (698) | [1] | ||||||||
Balance at end of period at Mar. 31, 2018 | 38,677 | $ (37,747) | [1] | 32,208 | [2] | 44,040 | 172 | 38,673 | 4 | ||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2017 | 1,712 | (698) | [1] | ||||||||
Balance at beginning of period at Dec. 31, 2017 | 37,695 | $ (37,796) | [1] | 32,096 | [2] | 43,556 | (165) | 37,691 | 4 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Other comprehensive income (loss) | 301 | ||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2018 | 1,717 | (698) | [1] | ||||||||
Balance at end of period at Sep. 30, 2018 | 36,622 | $ (37,731) | [1] | 32,377 | [2] | 41,843 | 129 | 36,618 | 4 | ||
Shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2018 | 1,714 | (698) | [1] | ||||||||
Balance at beginning of period at Mar. 31, 2018 | 38,677 | $ (37,747) | [1] | 32,208 | [2] | 44,040 | 172 | 38,673 | 4 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | (2,563) | (2,563) | (2,563) | ||||||||
Other comprehensive income (loss) | (31) | (31) | (31) | ||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||
Stock option activity, stock awards and other | 73 | 73 | [2] | 73 | |||||||
Purchase of treasury shares, net of ESPP issuances (in shares) | [1] | (1) | |||||||||
Purchase of treasury shares, net of ESPP issuances | (33) | $ (33) | [1] | (33) | |||||||
Common stock dividends | (512) | (512) | (512) | ||||||||
Shares outstanding, balance at end of period (in shares) at Jun. 30, 2018 | 1,716 | (699) | [1] | ||||||||
Balance at end of period at Jun. 30, 2018 | 35,611 | $ (37,780) | [1] | 32,281 | [2] | 40,965 | 141 | 35,607 | 4 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 1,390 | 1,390 | 1,390 | ||||||||
Other comprehensive income (loss) | (12) | (12) | |||||||||
Stock option activity, stock awards and other (in shares) | 1 | ||||||||||
Stock option activity, stock awards and other | 96 | 96 | [2] | 96 | |||||||
Purchase of treasury shares, net of ESPP issuances (in shares) | [1] | 1 | |||||||||
Purchase of treasury shares, net of ESPP issuances | 49 | $ 49 | [1] | 49 | |||||||
Common stock dividends | (512) | (512) | (512) | ||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2018 | 1,717 | (698) | [1] | ||||||||
Balance at end of period at Sep. 30, 2018 | 36,622 | $ (37,731) | [1] | 32,377 | [2] | 41,843 | 129 | 36,618 | 4 | ||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2018 | 1,720 | (425) | [3] | ||||||||
Balance at beginning of period at Dec. 31, 2018 | 58,543 | $ (28,228) | [3] | 45,440 | [4] | 40,911 | 102 | 58,225 | 318 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 1,427 | 1,421 | 1,421 | 6 | |||||||
Other comprehensive income (loss) | 331 | 331 | 331 | ||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||
Stock option activity, stock awards and other | 175 | 175 | [4] | 175 | |||||||
Purchase of treasury shares, net of ESPP issuances (in shares) | [3] | 1 | |||||||||
Purchase of treasury shares, net of ESPP issuances | 7 | $ 7 | [3] | 7 | |||||||
Common stock dividends | (651) | (651) | (651) | ||||||||
Other (decreases) increases in noncontrolling interests | (4) | (4) | |||||||||
Shares outstanding, balance at end of period (in shares) at Mar. 31, 2019 | 1,722 | (424) | [3] | ||||||||
Balance at end of period at Mar. 31, 2019 | 60,006 | $ (28,221) | [3] | 45,615 | [4] | 41,859 | 433 | 59,686 | 320 | ||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2018 | 1,720 | (425) | [3] | ||||||||
Balance at beginning of period at Dec. 31, 2018 | 58,543 | $ (28,228) | [3] | 45,440 | [4] | 40,911 | 102 | 58,225 | 318 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Other comprehensive income (loss) | 848 | ||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2019 | 1,725 | (424) | [3] | ||||||||
Balance at end of period at Sep. 30, 2019 | 62,933 | $ (28,207) | [3] | 45,854 | [4] | 44,017 | 950 | 62,614 | 319 | ||
Shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2019 | 1,722 | (424) | [3] | ||||||||
Balance at beginning of period at Mar. 31, 2019 | 60,006 | $ (28,221) | [3] | 45,615 | [4] | 41,859 | 433 | 59,686 | 320 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 1,931 | 1,936 | 1,936 | (5) | |||||||
Other comprehensive income (loss) | 251 | 251 | 251 | ||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||
Stock option activity, stock awards and other | 104 | 104 | [4] | 104 | |||||||
Purchase of treasury shares, net of ESPP issuances (in shares) | [3] | (1) | |||||||||
Purchase of treasury shares, net of ESPP issuances | (36) | $ (36) | [3] | (36) | |||||||
Common stock dividends | (659) | (659) | (659) | ||||||||
Other (decreases) increases in noncontrolling interests | 2 | 2 | |||||||||
Shares outstanding, balance at end of period (in shares) at Jun. 30, 2019 | 1,724 | (425) | [3] | ||||||||
Balance at end of period at Jun. 30, 2019 | 61,599 | $ (28,257) | [3] | 45,719 | [4] | 43,136 | 684 | 61,282 | 317 | ||
Shareholders' Equity [Roll Forward] | |||||||||||
Net income (loss) | 1,529 | 1,530 | 1,530 | (1) | |||||||
Other comprehensive income (loss) | 266 | 266 | |||||||||
Stock option activity, stock awards and other (in shares) | 1 | ||||||||||
Stock option activity, stock awards and other | 135 | 135 | [4] | 135 | |||||||
Purchase of treasury shares, net of ESPP issuances (in shares) | [3] | 1 | |||||||||
Purchase of treasury shares, net of ESPP issuances | 50 | $ 50 | [3] | 50 | |||||||
Common stock dividends | (649) | (649) | (649) | ||||||||
Other (decreases) increases in noncontrolling interests | 3 | 3 | |||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2019 | 1,725 | (424) | [3] | ||||||||
Balance at end of period at Sep. 30, 2019 | $ 62,933 | $ (28,207) | [3] | $ 45,854 | [4] | $ 44,017 | $ 950 | $ 62,614 | $ 319 | ||
[1] | Treasury shares include 1 million shares held in trust as of September 30, 2018, June 30, 2018, March 31, 2018 and December 31, 2017. Treasury stock includes $29 million related to shares held in trust as of September 30, 2018 and $31 million related to shares held in trust as of June 30, 2018, March 31, 2018 and December 31, 2017. | ||||||||||
[2] | Common stock and capital surplus includes the par value of common stock of $17 million as of September 30, 2018, June 30, 2018, March 31, 2018 and December 31, 2017. | ||||||||||
[3] | Treasury shares includes 1 million shares held in trust and treasury stock includes $29 million related to shares held in trust as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018. | ||||||||||
[4] | Common stock and capital surplus includes the par value of common stock of $17 million as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018. |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders' Equity (Parentheticals) - USD ($) shares in Millions, $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Treasury shares held in trust (in shares) | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | ||
Treasury shares held in trust value | $ 29 | $ 29 | $ 29 | $ 29 | $ 29 | $ 31 | $ 31 | $ 31 | ||
Common stock par value | 17 | $ 17 | $ 17 | 17 | $ 17 | $ 17 | $ 17 | $ 17 | ||
Adoption of new accounting standard | [1] | $ 13 | ||||||||
Decrease to accumulated other comprehensive income | (950) | (102) | ||||||||
Increase to retained earnings | $ 44,017 | $ 40,911 | ||||||||
Accounting Standards Update 2014-09 | ||||||||||
Adoption of new accounting standard | 13 | |||||||||
Accounting Standards Update 2018-02 | ||||||||||
Adoption of new accounting standard | 7 | |||||||||
Decrease to accumulated other comprehensive income | 7 | |||||||||
Increase to retained earnings | $ 7 | |||||||||
[1] | Reflects the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which resulted in a reduction to accumulated other comprehensive income of $7 million and an increase to retained earnings of $7 million , each during the three months ended March 31, 2018. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Description of business CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is the nation’s premier health innovation company helping people on their path to better health. Whether in one of its pharmacies or through its health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has approximately 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 102 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs. On November 28, 2018 (the “Aetna Acquisition Date”), the Company acquired Aetna Inc. (“Aetna”). As a result of the acquisition of Aetna (the “Aetna Acquisition”), the Company added the Health Care Benefits segment. Certain aspects of Aetna’s operations, including products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products, are included in the Company’s Corporate/Other segment. Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how its Chief Operating Decision Maker (the “CODM”) reviews information and manages the business. As a result of this realignment, the Company’s SilverScript ® PDP moved from the Pharmacy Services segment to the Health Care Benefits segment. In addition, the Company moved Aetna’s mail order and specialty pharmacy operations from the Health Care Benefits segment to the Pharmacy Services segment. Segment financial information for the three and nine months ended September 30, 2018 , has been retrospectively adjusted to reflect these changes. The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services. Retail/LTC Segment The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic ® walk-in medical clinics and conducts long-term care (“LTC”) pharmacy operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. As of September 30, 2019 , the Retail/LTC segment operated approximately 9,900 retail locations, approximately 1,100 MinuteClinic ® locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment The Health Care Benefits segment is one of the nation’s leading diversified health care benefits providers, serving an estimated 38 million people as of September 30, 2019 . The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services, workers’ compensation administrative services and health information technology products and services. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of: • Management and administrative expenses to support the overall operations of the Company, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs; and • Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018, which were revised to reflect the Company’s segment realignment and are included in Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 8, 2019 (the “August 2019 8-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. Because of the influence of various factors on the Company’s operations, including business combinations, certain holidays and other seasonal influences, net income for any interim period may not be comparable to the same interim period in previous years or necessarily indicative of income for the full year. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of CVS Health Corporation and its majority-owned subsidiaries and the variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. Restricted Cash Restricted cash included in other current assets in the unaudited condensed consolidated balance sheets represents amounts held in escrow accounts in connection with certain recent acquisitions. Restricted cash included in other assets in the unaudited condensed consolidated balance sheets represents amounts held in a trust in one of the Company’s captive insurance companies to satisfy collateral requirements associated with the assignment of certain insurance policies. All restricted cash is invested in time deposits, money market funds or commercial paper. The following represents a reconciliation of cash and cash equivalents in the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash in the unaudited condensed consolidated statements of cash flows: In millions September 30, December 31, Cash and cash equivalents $ 5,193 $ 4,059 Restricted cash (included in other current assets) 6 6 Restricted cash (included in other assets) 270 230 Total cash, cash equivalents and restricted cash in the statements of cash flows $ 5,469 $ 4,295 Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations. Accounts receivable, net is composed of the following: In millions September 30, December 31, Trade receivables $ 6,413 $ 6,497 Vendor and manufacturer receivables 9,029 7,315 Premium receivables 2,340 2,259 Other receivables 2,007 1,560 Total accounts receivable, net $ 19,789 $ 17,631 Revenue Recognition The following is a discussion of the Company’s revenue recognition policies by segment. Pharmacy Services Segment The Pharmacy Services segment sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through the Company’s retail pharmacy network. The Company’s pharmacy benefit arrangements are accounted for in a manner consistent with a master supply arrangement as there are no contractual minimum volumes and each prescription is considered a separate purchasing decision and distinct performance obligation transferred at a point in time. PBM services performed in connection with each prescription claim are considered part of a single performance obligation which culminates in the dispensing of prescription drugs. The Company recognizes revenue using the gross method at the contract price negotiated with its clients when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescriptions dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while also performing the related PBM services. Revenues include (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any discounts earned on brand name drugs or other discounts and refunds paid back to the client (see “Drug Discounts” and “Guarantees” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions and the price paid to retail network pharmacies by client plan members for retail prescriptions (“retail co-payments”) and (iii) claims based administrative fees for retail pharmacy network contracts. Sales taxes are not included in revenue. The Company recognizes revenue when control of the prescription drugs is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those prescription drugs. The following revenue recognition policies have been established for the Pharmacy Services segment: • Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription drug is delivered to the client plan member. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments. • Revenues generated from prescription drugs sold by third-party pharmacies in the Company’s retail pharmacy network and associated administrative fees are recognized at the Company’s point-of-sale, which is when the claim is adjudicated by the Company’s online claims processing system and the Company has transferred control of the prescription drug and performed all of its performance obligations. For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client plan member, revenue is recognized using the net method. Drug Discounts The Pharmacy Services segment records revenue net of manufacturers’ rebates earned by its clients based on their plan members’ utilization of brand name formulary drugs. The Pharmacy Services segment estimates these rebates at period-end based on actual and estimated claims data and its estimates of the manufacturers’ rebates earned by its clients. The estimates are based on the best available data at period-end and recent history for the various factors that can affect the amount of rebates due to the client. The Pharmacy Services segment adjusts its rebates payable to clients to the actual amounts paid when these rebates are paid or as significant events occur. Any cumulative effect of these adjustments is recorded against revenues at the time it is identified. Adjustments generally result from contract changes with clients or manufacturers that have retroactive rebate adjustments, differences between the estimated and actual product mix subject to rebates, or whether the brand name drug was included in the applicable formulary. The effect of adjustments between estimated and actual manufacturers’ rebate amounts has not been material to the Company’s operating results or financial condition. Guarantees The Pharmacy Services segment also adjusts revenues for refunds owed to clients resulting from pricing guarantees and performance against defined service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition. Retail/LTC Segment Retail Pharmacy The Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims under other retail network arrangements. Revenues are adjusted for refunds owed to third party payers resulting from pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition. Revenue from Company gift cards purchased by customers is deferred as a contract liability until goods or services are transferred. Any amounts not expected to be redeemed by customers (i.e., breakage) are recognized based on historical redemption patterns. Customer returns are not material to the Company’s operating results or financial condition. Sales taxes are not included in revenue. Loyalty Program The Company’s customer loyalty program, ExtraCare ® , consists of two components, ExtraSavings TM and ExtraBucks ® Rewards. ExtraSavings are coupons that are recorded as a reduction of revenue when redeemed as the Company has concluded that they do not represent a promise to the customer to deliver additional goods or services at the time of issuance because they are not tied to a specific transaction or spending level. ExtraBucks Rewards are accumulated by customers based on their historical spending levels. Thus, the Company has determined that there is an additional performance obligation to those customers at the time of the initial transaction. The Company allocates the transaction price to the initial transaction and the ExtraBucks Rewards transaction based upon the relative standalone selling price, which considers historical redemption patterns for the rewards. Revenue allocated to ExtraBucks Rewards is recognized as those rewards are redeemed. At the end of each period, unredeemed ExtraBucks Rewards are reflected as a contract liability. Long-term Care Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. A significant portion of Long-term Care revenue from sales of pharmaceutical and medical products is reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue at the revenue recognition date to properly account for the variable consideration due to anticipated differences between billed and reimbursed amounts. Accordingly, the total revenues and receivables reported in the Company’s unaudited condensed consolidated financial statements are recorded at the amount expected to be ultimately received from these payors. Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third-party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of normal billing procedures and subject to normal accounts receivable collections procedures. Walk-In Medical Clinics For services provided by the Company’s walk-in medical clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third-party payor contractual obligations and patient direct bill historical collection rates. Health Care Benefits Segment Premium Revenue Premiums are recognized as revenue in the month in which the enrollee is entitled to receive health care services. Premiums are reported net of an allowance for estimated terminations and uncollectible amounts. Additionally, premium revenue subject to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010’s (as amended, collectively, the “ACA’s”) minimum medical loss ratio (“MLR”) rebate requirements is recorded net of the estimated minimum MLR rebates for the current calendar year. Premiums related to unexpired contractual coverage periods (unearned premiums) are reported as other insurance liabilities on the unaudited condensed consolidated balance sheets and recognized as revenue when earned. Some of the Company’s contracts allow for premiums to be adjusted to reflect actual experience or the relative health status of Insured members. Such adjustments are reasonably estimable at the outset of the contract, and adjustments to those estimates are made based on actual experience of the customer emerging under the contract and the terms of the underlying contract. Services Revenue Services revenue relates to contracts that can include various combinations of services or series of services which generally are capable of being distinct and accounted for as separate performance obligations. Health Care Benefits segment services revenue primarily consists of the following components: • ASC fees are received in exchange for performing certain claim processing and member services for ASC members. ASC fee revenue is recognized over the period the service is provided. Some of the Company’s administrative services contracts include guarantees with respect to certain functions, such as customer service response time, claim processing accuracy and claim processing turnaround time, as well as certain guarantees that a plan sponsor’s benefit claim experience will fall within a certain range. With any of these guarantees, the Company is financially at risk if the conditions of the arrangements are not met, although the maximum amount at risk is typically limited to a percentage of the fees otherwise payable to the Company by the customer involved. Each period the Company estimates its obligations under the terms of these guarantees and records its estimate as an offset to services revenues. • Workers’ compensation administrative services consist of fee-based managed care services. Workers’ compensation administrative services revenue is recognized once the service is provided. Disaggregation of Revenue The following tables disaggregate the Company’s revenue by major source in each segment for the three and nine months ended September 30, 2019 and 2018 : In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2019 Major goods/services lines: Pharmacy $ 35,872 $ 16,687 $ — $ — $ (10,007 ) $ 42,552 Front Store — 4,614 — — — 4,614 Premiums — — 15,507 32 — 15,539 Net investment income — — 146 117 — 263 Other 146 165 1,528 3 — 1,842 Total $ 36,018 $ 21,466 $ 17,181 $ 152 $ (10,007 ) $ 64,810 Pharmacy Services distribution channel: Pharmacy network (1) $ 22,469 Mail choice (2) 13,403 Other 146 Total $ 36,018 Three Months Ended September 30, 2018 Major goods/services lines: Pharmacy $ 33,733 $ 16,123 $ — $ — $ (8,088 ) $ 41,768 Front Store — 4,557 — — — 4,557 Premiums — — 627 — — 627 Net investment income — — 4 217 — 221 Other 131 176 10 — — 317 Total $ 33,864 $ 20,856 $ 641 $ 217 $ (8,088 ) $ 47,490 Pharmacy Services distribution channel: Pharmacy network (1) $ 21,921 Mail choice (2) 11,812 Other 131 Total $ 33,864 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. (2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order. In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Nine Months Ended September 30, 2019 Major goods/services lines: Pharmacy $ 103,983 $ 49,197 $ — $ — $ (31,436 ) $ 121,744 Front Store — 14,288 — — — 14,288 Premiums — — 47,543 69 — 47,612 Net investment income — — 458 347 — 805 Other 435 543 4,453 7 — 5,438 Total $ 104,418 $ 64,028 $ 52,454 $ 423 $ (31,436 ) $ 189,887 Pharmacy Services distribution channel: Pharmacy network (1) $ 66,071 Mail choice (2) 37,912 Other 435 Total $ 104,418 Nine Months Ended September 30, 2018 Major goods/services lines: Pharmacy $ 99,432 $ 47,428 $ — $ — $ (24,840 ) $ 122,020 Front Store — 13,990 — — — 13,990 Premiums — — 2,684 — — 2,684 Net investment income — — 10 475 — 485 Other 405 542 29 — — 976 Total $ 99,837 $ 61,960 $ 2,723 $ 475 $ (24,840 ) $ 140,155 Pharmacy Services distribution channel: Pharmacy network (1) $ 64,625 Mail choice (2) 34,807 Other 405 Total $ 99,837 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. (2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order. Contract Balances Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example ExtraBucks Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the customer. In addition, the Company recognizes breakage on Company gift cards based on historical redemption patterns. The following table provides information about receivables and contract liabilities from contracts with customers: In millions September 30, December 31, Trade receivables (included in accounts receivable, net) $ 6,413 $ 6,497 Contract liabilities (included in accrued expenses) 72 67 During the nine months ended September 30, 2019 , the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes: In millions Balance at December 31, 2018 $ 67 Loyalty program earnings and gift card issuances 269 Redemption and breakage (264 ) Balance at September 30, 2019 $ 72 Related Party Transactions The Company has an equity method investment in SureScripts, LLC (“SureScripts”). SureScripts operates a clinical health information network. The Company utilizes this clinical health information network in providing services to its client plan members and retail customers. The Company expensed fees for the use of this network of approximately $14 million and $4 million in the three months ended September 30, 2019 and 2018 , respectively, and expensed fees for the use of this network of approximately $26 million and $34 million in the nine months ended September 30, 2019 and 2018 , respectively. The Company’s investment in and equity in the earnings of SureScripts for all periods presented is immaterial. The Company has an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several LTC pharmacies in four states. Heartland paid the Company approximately $20 million and $34 million for pharmaceutical inventory purchases during the three months ended September 30, 2019 and 2018 , respectively, and $72 million and $105 million for pharmaceutical inventory purchases during the nine months ended September 30, 2019 and 2018 , respectively. Additionally, the Company performs certain collection functions for Heartland and then passes those customer cash collections back to Heartland. The Company’s investment in and equity in the earnings of Heartland for all periods presented is immaterial. New Accounting Pronouncements Recently Adopted Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). Under this accounting standard, lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard that was adopted in 2018. The Company adopted this new accounting standard on January 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On January 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $ 178 million ( $241 million prior to tax effect). The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company’s consolidated operating results and had no impact on the Company’s cash flows. The following is a discussion of the Company’s lease policy under the new lease accounting standard: The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives. The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years each. For real estate leases, the options to extend are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options and regularly opens or closes stores to align with its operating strategy. Generally, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at l |
Acquisition and Divestiture
Acquisition and Divestiture | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition and Divestiture | Acquisition and Divestiture Acquisition of Aetna On the Aetna Acquisition Date, the Company acquired 100% of the outstanding shares and voting interests of Aetna for a combination of cash and stock. Under the terms of the merger agreement, Aetna shareholders received $145.00 in cash and 0.8378 CVS Health shares for each Aetna share. The transaction valued Aetna at approximately $212 per share or approximately $70 billion . Including the assumption of Aetna’s debt, the total value of the transaction was approximately $78 billion . The Company financed the cash portion of the purchase price through a combination of cash on hand and by issuing approximately $45 billion of new debt, including senior notes and term loans. Aetna is a leading health care benefits company that offers a broad range of traditional, voluntary, and consumer-directed health insurance products and related services. The Company acquired Aetna to help improve the consumer health care experience by combining Aetna’s health care benefits products and services with CVS Health’s approximately 9,900 retail locations, approximately 1,100 walk-in medical clinics and integrated pharmacy capabilities with the goal of becoming the new, trusted front door to health care. The transaction has been accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values at the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: In millions Cash and cash equivalents $ 6,565 Accounts receivable 4,094 Other current assets 3,894 Investments (current and long-term) 17,984 Goodwill 47,554 Intangible assets 22,571 Other long-term assets 8,249 Total assets acquired 110,911 Health care costs payable 5,302 Other current liabilities 10,069 Debt (current and long-term) 8,098 Deferred income taxes 4,278 Other long-term liabilities 13,078 Total liabilities assumed 40,825 Noncontrolling interests 320 Total consideration transferred $ 69,766 The assessment of fair value is preliminary and is based on information that was available to management at the time the unaudited condensed consolidated financial statements were prepared. The most significant open item relates to the accounting for income taxes as management is awaiting additional information to complete its assessment. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Measurement period adjustments to assets acquired and liabilities assumed during the nine months ended September 30, 2019 primarily related to additional information received related to certain valuations and contingencies and the related impact on the accounting for income taxes and goodwill. There were no material income statement measurement period adjustments recorded during the three and nine months ended September 30, 2019 . Unaudited pro forma financial information The following unaudited pro forma information presents a summary of the Company’s combined operating results for the three and nine months ended September 30, 2018 as if the Aetna acquisition and the related financing transactions had occurred on January 1, 2017 . The following pro forma financial information is not necessarily indicative of the Company’s operating results as they would have been had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies and the impact of incremental costs incurred in integrating the businesses. In millions, except per share amounts Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Total revenues $ 60,865 $ 180,164 Income from continuing operations attributable to CVS Health 1,864 1,731 Basic earnings per share from continuing operations attributable to CVS Health $ 1.44 $ 1.34 Diluted earnings per share from continuing operations attributable to CVS Health $ 1.43 $ 1.33 The pro forma results for the three and nine months ended September 30, 2018 include adjustments related to the following purchase accounting and acquisition-related items: • Elimination of intercompany transactions between CVS Health and Aetna; • Elimination of estimated foregone interest income associated with (i) cash assumed to have been used to partially fund the Aetna Acquisition and (ii) adjusting the amortized cost of Aetna’s investment portfolio to fair value as of the completion of the Aetna Acquisition; • Elimination of historical intangible asset, deferred acquisition cost and capitalized software amortization expense and addition of amortization expense based on the current preliminary values of identified intangible assets; • Additional interest expense from (i) the long-term debt issued to partially fund the Aetna Acquisition and (ii) the amortization of the fair value adjustment to assumed long-term debt. • Additional depreciation expense related to the adjustment of Aetna’s property and equipment to fair value; • Adjustments to align CVS Health’s and Aetna’s accounting policies; • Elimination of transaction related costs; and • Tax effects of the adjustments noted above. Divestiture of Brazilian Subsidiary On July 1, 2019, the Company sold its Brazilian subsidiary, Drogaria Onofre Ltda. (“Onofre”) for an immaterial amount. Onofre operates 50 retail pharmacy stores, the results of which have historically been reported within the Retail/LTC segment. The Company recorded a loss on the divestiture of $205 million in the three months ended September 30, 2019, which primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in operating expenses in the Company’s unaudited condensed consolidated statements of operations within the Retail/LTC segment. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2019 | |
Investments [Abstract] | |
Investments | Investments Total investments at September 30, 2019 and December 31, 2018 were as follows: September 30, 2019 December 31, 2018 In millions Current Long-term Total Current Long-term Total Debt securities available for sale $ 2,175 $ 14,583 $ 16,758 $ 2,359 $ 12,896 $ 15,255 Mortgage loans 159 1,131 1,290 145 1,216 1,361 Other investments — 1,628 1,628 18 1,620 1,638 Total investments $ 2,334 $ 17,342 $ 19,676 $ 2,522 $ 15,732 $ 18,254 Debt Securities Debt securities available for sale at September 30, 2019 and December 31, 2018 were as follows: In millions Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value September 30, 2019 Debt securities: U.S. government securities $ 1,743 $ 83 $ — $ 1,826 States, municipalities and political subdivisions 2,240 114 (1 ) 2,353 U.S. corporate securities 7,076 568 (7 ) 7,637 Foreign securities 2,095 194 — 2,289 Residential mortgage-backed securities 529 25 — 554 Commercial mortgage-backed securities 645 56 — 701 Other asset-backed securities 1,348 15 (5 ) 1,358 Redeemable preferred securities 32 8 — 40 Total debt securities (1) $ 15,708 $ 1,063 $ (13 ) $ 16,758 December 31, 2018 Debt securities: U.S. government securities $ 1,662 $ 26 $ — $ 1,688 States, municipalities and political subdivisions 2,370 30 (1 ) 2,399 U.S. corporate securities 6,444 61 (16 ) 6,489 Foreign securities 2,355 31 (3 ) 2,383 Residential mortgage-backed securities 567 10 — 577 Commercial mortgage-backed securities 594 11 — 605 Other asset-backed securities 1,097 3 (15 ) 1,085 Redeemable preferred securities 30 — (1 ) 29 Total debt securities (1) $ 15,119 $ 172 $ (36 ) $ 15,255 _____________________________________________ (1) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At September 30, 2019 , debt securities with a fair value of $973 million , gross unrealized capital gains of $85 million and no gross unrealized capital losses and at December 31, 2018 , debt securities with a fair value of $916 million , gross unrealized capital gains of $12 million and gross unrealized capital losses of $2 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income. The fair value of debt securities at September 30, 2019 is shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity. In millions Amortized Cost Fair Value Due to mature: Less than one year $ 1,017 $ 1,022 One year through five years 5,378 5,568 After five years through ten years 3,098 3,316 Greater than ten years 3,693 4,239 Residential mortgage-backed securities 529 554 Commercial mortgage-backed securities 645 701 Other asset-backed securities 1,348 1,358 Total $ 15,708 $ 16,758 Summarized below are the debt securities the Company held at September 30, 2019 and December 31, 2018 that were in an unrealized capital loss position: In millions, except number of securities Number of Securities Fair Value Unrealized Losses September 30, 2019 Debt securities: U.S. government securities 8 $ 41 $ — States, municipalities and political subdivisions 38 53 1 U.S. corporate securities 217 254 7 Foreign securities 27 39 — Residential mortgage-backed securities 31 17 — Other asset-backed securities 327 386 5 Total debt securities 648 $ 790 $ 13 December 31, 2018 Debt securities: U.S. government securities 8 $ 26 $ — States, municipalities and political subdivisions 54 86 1 U.S. corporate securities 1,399 1,431 16 Foreign securities 243 314 3 Residential mortgage-backed securities 45 1 — Other asset-backed securities 516 528 15 Redeemable preferred securities 14 23 1 Total debt securities 2,279 $ 2,409 $ 36 Since Aetna’s investment portfolio was measured at fair value as of the Aetna Acquisition Date, each of the securities in the table above were in an unrealized loss position for less than 12 months. The Company reviewed the securities in the table above and concluded that these are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of September 30, 2019 , the Company did not intend to sell these securities, and did not believe it was more likely than not that it would be required to sell these securities prior to anticipated recovery of their amortized cost basis. The maturity dates for debt securities in an unrealized capital loss position at September 30, 2019 were as follows: Supporting experience-rated products Supporting remaining products Total In millions Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Due to mature: Less than one year $ — $ — $ 3 $ — $ 3 $ — One year through five years 1 — 137 2 138 2 After five years through ten years 8 — 128 4 136 4 Greater than ten years 11 — 99 2 110 2 Residential mortgage-backed securities — — 17 — 17 — Other asset-backed securities 10 — 376 5 386 5 Total $ 30 $ — $ 760 $ 13 $ 790 $ 13 Mortgage Loans The Company’s mortgage loans are collateralized by commercial real estate. The Company did not have any mortgage loans during the three and nine months ended September 30, 2018 . During the three and nine months ended September 30, 2019 , the Company had the following activity in its mortgage loan portfolio: In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 New mortgage loans $ 12 $ 90 Mortgage loans fully repaid 56 127 Mortgage loans foreclosed — — The Company assesses mortgage loans on a regular basis for credit impairments and annually assigns a credit quality indicator to each loan. The Company’s credit quality indicator is internally developed and categorizes its portfolio on a scale from 1 to 7. These indicators are based upon several factors, including current loan to value ratios, property condition, market trends, creditworthiness of the borrower and deal structure. The vast majority of the Company’s mortgage loans fall into categories 2 to 4. • Category 1 - Represents loans of superior quality. • Categories 2 to 4 - Represent loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes. • Categories 5 and 6 - Represent loans where credit risk is not substantial, but these loans warrant management’s close attention. • Category 7 - Represents loans where collections are potentially at risk; if necessary, an impairment is recorded. Based upon the Company’s assessments at September 30, 2019 and December 31, 2018 , the Company’s mortgage loans were given the following credit quality indicators: In millions, except credit ratings indicator September 30, December 31, 1 $ 44 $ 42 2 to 4 1,234 1,301 5 and 6 12 18 7 — — Total $ 1,290 $ 1,361 Net Investment Income Sources of net investment income for the three and nine months ended September 30, 2019 and 2018 were as follows: Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Debt securities $ 145 $ 2 $ 437 $ 5 Mortgage loans 19 — 54 — Other investments 60 219 163 480 Gross investment income 224 221 654 485 Investment expenses (10 ) — (28 ) — Net investment income (excluding net realized capital gains or losses) 214 221 626 485 Net realized capital gains (1) 49 — 179 — Net investment income (2) $ 263 $ 221 $ 805 $ 485 _____________________________________________ (1) Other-than-temporary impairment (“OTTI”) losses on debt securities recognized in the unaudited condensed consolidated statements of operations were $9 million and $22 million , respectively, for the three and nine months ended September 30, 2019 . There were no OTTI losses on debt securities for the three and nine months ended September 30, 2018 . (2) Net investment income includes $10 million and $33 million for the three and nine months ended September 30, 2019 , respectively, related to investments supporting experience-rated products. The Company had no investments supporting experience-rated products during the three and nine months ended September 30, 2018 . The portion of unrealized capital gains and losses recognized during the three and nine months ended September 30, 2019 related to investments in equity securities held as of the reporting date was not material. The Company did not have any material proceeds from the sale of available for sale debt securities or related gross realized capital gains or losses for the three and nine months ended September 30, 2018 . Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three and nine months ended September 30, 2019 were as follows: In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Proceeds from sales $ 1,325 $ 4,087 Gross realized capital gains 55 127 Gross realized capital losses 9 13 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. The Company’s assets and liabilities carried at fair value have been classified within one of three levels of a hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of valuation information (“valuation inputs”) that qualifies a financial asset or liability for each level: • Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets. • Level 2 – Valuation inputs other than Level 1 that are based on observable market data. These include: quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets, valuation inputs that are observable that are not prices (such as interest rates and credit risks) and valuation inputs that are derived from or corroborated by observable markets. • Level 3 – Developed from unobservable data, reflecting the Company’s assumptions. For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 “Fair Value” contained in the “Notes to Consolidated Financial Statements” in Exhibit 99.2 to the August 2019 8-K. There were no financial liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2019 or December 31, 2018 . Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2019 and December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total September 30, 2019 Debt securities: U.S. government securities $ 1,746 $ 80 $ — $ 1,826 States, municipalities and political subdivisions — 2,353 — 2,353 U.S. corporate securities — 7,596 41 7,637 Foreign securities — 2,284 5 2,289 Residential mortgage-backed securities — 554 — 554 Commercial mortgage-backed securities — 701 — 701 Other asset-backed securities — 1,358 — 1,358 Redeemable preferred securities — 28 12 40 Total debt securities 1,746 14,954 58 16,758 Equity securities 32 — 36 68 Total $ 1,778 $ 14,954 $ 94 $ 16,826 December 31, 2018 Debt securities: U.S. government securities $ 1,597 $ 91 $ — $ 1,688 States, municipalities and political subdivisions — 2,399 — 2,399 U.S. corporate securities — 6,422 67 6,489 Foreign securities — 2,380 3 2,383 Residential mortgage-backed securities — 577 — 577 Commercial mortgage-backed securities — 605 — 605 Other asset-backed securities — 1,085 — 1,085 Redeemable preferred securities — 22 7 29 Total debt securities 1,597 13,581 77 15,255 Equity securities 19 — 54 73 Total $ 1,616 $ 13,581 $ 131 $ 15,328 There were no transfers between Levels 1 and 2 during the three and nine months ended September 30, 2019 or 2018 . During the three and nine months ended September 30, 2019 and 2018, there were no transfers into or out of Level 3. The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the condensed consolidated balance sheets at adjusted cost or contract value at September 30, 2019 and December 31, 2018 were as follows: Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total September 30, 2019 Assets: Mortgage loans $ 1,290 $ — $ — $ 1,317 $ 1,317 Equity securities (1) 142 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 372 — — 385 385 Long-term debt 67,984 72,823 — — 72,823 December 31, 2018 Assets: Mortgage loans $ 1,361 $ — $ — $ 1,366 $ 1,366 Equity securities (1) 140 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 382 — — 357 357 Long-term debt 72,709 71,252 — — 71,252 _____________________________________________ (1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. Separate Accounts assets related to the Company’s large case pensions products represent funds maintained to meet specific objectives of contract holders. Since contract holders bear the investment risk of these assets, a corresponding Separate Accounts liability has been established equal to the assets. These assets and liabilities are carried at fair value. Separate Accounts financial assets as of September 30, 2019 and December 31, 2018 were as follows: September 30, 2019 December 31, 2018 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Debt securities $ 1,207 $ 2,609 $ — $ 3,816 $ 782 $ 2,500 $ 4 $ 3,286 Equity securities — 2 — 2 — 3 — 3 Common/collective trusts — 513 — 513 — 404 — 404 Total (1) $ 1,207 $ 3,124 $ — $ 4,331 $ 782 $ 2,907 $ 4 $ 3,693 _____________________________________________ (1) Excludes $259 million and $191 million of cash and cash equivalents and accounts receivable at September 30, 2019 and December 31, 2018 , respectively. During the three and nine months ended September 30, 2019 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years . The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years . The Company maintains certain lease agreements for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased. For these pharmacy lease agreements, the Company concluded that for accounting purposes the lease term was the remaining economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases. The following table is a summary of the Company’s components of net lease cost for the three and nine months ended September 30, 2019 : In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 681 $ 2,044 Finance lease cost: Amortization of right-of-use assets 9 27 Interest on lease liabilities 11 32 Total finance lease costs 20 59 Short-term lease costs 5 17 Variable lease costs 148 434 Less: sublease income 13 35 Net lease cost $ 841 $ 2,519 Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows: In millions Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 2,023 Operating cash flows paid for interest portion of finance leases 32 Financing cash flows paid for principal portion of finance leases 19 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1,203 Finance leases 82 Supplemental balance sheet information related to leases as of September 30, 2019 is as follows: In millions, except lease term and discount rate Operating leases: Operating lease right-of-use assets $ 20,757 Current portion of operating lease liabilities $ 1,798 Long-term operating lease liabilities 18,826 Total operating lease liabilities $ 20,624 Finance leases: (1) Property and equipment, net $ 560 Current portion of long-term debt $ 27 Long-term debt 591 Total finance lease liabilities $ 618 Weighted average remaining lease term Operating leases 13.8 Finance leases 20.6 Weighted average discount rate Operating leases 4.6 % Finance leases 7.3 % _____________________________________________ (1) Finance lease right-of-use assets are included within property and equipment, net and the respective finance lease liabilities are included in current portion of long-term debt and long-term debt on the unaudited condensed consolidated balance sheets. The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 30, 2019 : In millions Finance Operating (1) Total 2019 (remaining three months) $ 18 $ 679 $ 697 2020 70 2,688 2,758 2021 68 2,567 2,635 2022 64 2,408 2,472 2023 62 2,297 2,359 Thereafter 883 17,165 18,048 Total lease payments (2) 1,165 27,804 28,969 Less: imputed interest (547 ) (7,180 ) (7,727 ) Total lease liabilities $ 618 $ 20,624 $ 21,242 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $320 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the table above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Sale-leaseback transactions resulted in an immaterial gain and proceeds of $5 million in the nine months ended September 30, 2019 . There were no sale-leaseback transactions in the three months ended September 30, 2019 or the three and nine months ended September 30, 2018 . Store Rationalization Charges During the first quarter of 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million , primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. During the third quarter of 2019, in connection with its annual budgeting process, the Company performed an updated review of its retail stores and determined it would close an additional 22 underperforming retail pharmacy stores during the first quarter of 2020. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended September 30, 2019 , the Company recorded a store rationalization charge of $96 million , primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. |
Leases | Leases The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years . The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years . The Company maintains certain lease agreements for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased. For these pharmacy lease agreements, the Company concluded that for accounting purposes the lease term was the remaining economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases. The following table is a summary of the Company’s components of net lease cost for the three and nine months ended September 30, 2019 : In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 681 $ 2,044 Finance lease cost: Amortization of right-of-use assets 9 27 Interest on lease liabilities 11 32 Total finance lease costs 20 59 Short-term lease costs 5 17 Variable lease costs 148 434 Less: sublease income 13 35 Net lease cost $ 841 $ 2,519 Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows: In millions Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 2,023 Operating cash flows paid for interest portion of finance leases 32 Financing cash flows paid for principal portion of finance leases 19 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1,203 Finance leases 82 Supplemental balance sheet information related to leases as of September 30, 2019 is as follows: In millions, except lease term and discount rate Operating leases: Operating lease right-of-use assets $ 20,757 Current portion of operating lease liabilities $ 1,798 Long-term operating lease liabilities 18,826 Total operating lease liabilities $ 20,624 Finance leases: (1) Property and equipment, net $ 560 Current portion of long-term debt $ 27 Long-term debt 591 Total finance lease liabilities $ 618 Weighted average remaining lease term Operating leases 13.8 Finance leases 20.6 Weighted average discount rate Operating leases 4.6 % Finance leases 7.3 % _____________________________________________ (1) Finance lease right-of-use assets are included within property and equipment, net and the respective finance lease liabilities are included in current portion of long-term debt and long-term debt on the unaudited condensed consolidated balance sheets. The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 30, 2019 : In millions Finance Operating (1) Total 2019 (remaining three months) $ 18 $ 679 $ 697 2020 70 2,688 2,758 2021 68 2,567 2,635 2022 64 2,408 2,472 2023 62 2,297 2,359 Thereafter 883 17,165 18,048 Total lease payments (2) 1,165 27,804 28,969 Less: imputed interest (547 ) (7,180 ) (7,727 ) Total lease liabilities $ 618 $ 20,624 $ 21,242 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $320 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the table above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Sale-leaseback transactions resulted in an immaterial gain and proceeds of $5 million in the nine months ended September 30, 2019 . There were no sale-leaseback transactions in the three months ended September 30, 2019 or the three and nine months ended September 30, 2018 . Store Rationalization Charges During the first quarter of 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million , primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. During the third quarter of 2019, in connection with its annual budgeting process, the Company performed an updated review of its retail stores and determined it would close an additional 22 underperforming retail pharmacy stores during the first quarter of 2020. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended September 30, 2019 , the Company recorded a store rationalization charge of $96 million , primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. |
Health Care Costs Payable
Health Care Costs Payable | 9 Months Ended |
Sep. 30, 2019 | |
Health Care and Other Insurance Liabilities [Abstract] | |
Health Care Costs Payable | Health Care Costs Payable Prior to the Aetna Acquisition, the Company’s health care costs payable balance was immaterial and related to unpaid pharmacy claims for its SilverScript PDP. Accordingly, the Company has not included disclosures for health care costs payable for periods prior to the Aetna Acquisition Date. The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2019 : In millions Health care costs payable, beginning of the period $ 6,147 Less: Reinsurance recoverables 4 Health care costs payable, beginning of the period, net 6,143 Add: Components of incurred health care costs Current year 39,657 Prior years (511 ) Total incurred health care costs (1) 39,146 Less: Claims paid Current year 33,032 Prior years 5,253 Total claims paid 38,285 Add: Premium deficiency reserve 6 Health care costs payable, end of period, net 7,010 Add: Reinsurance recoverables 4 Health care costs payable, end of period $ 7,014 _____________________________________________ (1) Total incurred health care costs during the nine months ended September 30, 2019 in the table above exclude (i) $6 million related to a premium deficiency reserve for the 2019 coverage year related to the Company’s Medicaid products, (ii) $31 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet and (iii) $213 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet. The Company’s estimates of prior years’ health care costs payable decreased by $511 million in the nine months ended September 30, 2019 , because claims were settled for amounts less than originally estimated (i.e., the amount of claims incurred was lower than originally estimated), primarily due to lower health care cost trends as well as the actual claim submission time being faster than originally assumed (i.e., the Company’s completion factors were higher than originally assumed) in estimating health care costs payable at the end of the prior year. At September 30, 2019 , the Company’s liabilities for the ultimate cost of (i) services rendered to members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid (collectively, “IBNR”) plus expected development on reported claims totaled approximately $5.0 billion . Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at September 30, 2019 related to the current year. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table is a summary of the Company’s borrowings at September 30, 2019 and December 31, 2018 : In millions September 30, 2019 December 31, 2018 Short-term debt Commercial paper $ 1,070 $ 720 Long-term debt 2.2% senior notes due March 2019 — 375 2.25% senior notes due August 2019 — 850 3.125% senior notes due March 2020 723 2,000 Floating rate notes due March 2020 277 1,000 2.8% senior notes due July 2020 2,750 2,750 3.35% senior notes due March 2021 2,038 3,000 Floating rate notes due March 2021 1,000 1,000 4.125% senior notes due May 2021 222 550 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 203 500 5.45% senior notes due June 2021 187 600 3-year tranche term loan due November 2021 — 3,000 3.5% senior notes due July 2022 1,500 1,500 2.75% senior notes due November 2022 1,000 1,000 2.75% senior notes due December 2022 1,250 1,250 4.75% senior notes due December 2022 399 399 3.7% senior notes due March 2023 6,000 6,000 2.8% senior notes due June 2023 1,300 1,300 4% senior notes due December 2023 1,250 1,250 2.625% senior notes due August 2024 1,000 — 3.375% senior notes due August 2024 650 650 3.5% senior notes due November 2024 750 750 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 5,000 5,000 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 3% senior notes due August 2026 750 — 6.25% senior notes due June 2027 372 372 4.3% senior notes due March 2028 9,000 9,000 3.25% senior notes due August 2029 1,750 — 4.875% senior notes due July 2035 652 652 6.625% senior notes due June 2036 771 771 6.75% senior notes due December 2037 533 533 4.78% senior notes due March 2038 5,000 5,000 6.125% senior notes due September 2039 447 447 5.75% senior notes due May 2041 133 133 4.5% senior notes due May 2042 500 500 4.125% senior notes due November 2042 500 500 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 375 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 1,000 5.05% senior notes due March 2048 8,000 8,000 Finance lease obligations 618 642 Other 1 19 Total debt principal 69,848 74,265 Debt premiums 267 302 Debt discounts and deferred financing costs (1,061 ) (1,138 ) 69,054 73,429 Less: Short-term debt (commercial paper) (1,070 ) (720 ) Current portion of long-term debt (3,778 ) (1,265 ) Long-term debt $ 64,206 $ 71,444 Long-term Borrowings 2019 Notes On August 15, 2019, the Company issued $1.0 billion aggregate principal amount of 2.625% unsecured senior notes due August 15, 2024, $750 million aggregate principal amount of 3% unsecured senior notes due August 15, 2026 and $1.75 billion aggregate principal amount of 3.25% unsecured senior notes due August 15, 2029 (collectively, the “2019 Notes”) for total proceeds of approximately $3.5 billion , net of discounts and underwriting fees. The net proceeds of the 2019 Notes were used to repay certain of the Company’s outstanding debt. Beginning in July 2019, the Company entered into several interest rate swap and treasury lock transactions to manage interest rate risk. These agreements were designated as cash flow hedges and were used to hedge the exposure to variability in future cash flows resulting from changes in interest rates related to the anticipated issuance of the 2019 Notes. In connection with the issuance of the 2019 Notes, the Company terminated all outstanding cash flow hedges. The Company paid a net amount of $25 million to the hedge counterparties upon termination, which was recorded as a loss, net of tax, of $18 million in accumulated other comprehensive income and will be reclassified as interest expense over the life of the 2019 Notes. See Note 9 ‘‘Other Comprehensive Income (Loss)’’ for additional information. Early Extinguishment of Debt In August 2019, the Company purchased $4.0 billion of its outstanding senior notes through cash tender offers. The senior notes purchased included the following: $1.3 billion of its 3.125% senior notes due 2020, $723 million of its floating rate notes due 2020, $328 million of its 4.125% senior notes due 2021, $297 million of 4.125% senior notes due 2021 issued by Aetna, $413 million of 5.45% senior notes due 2021 issued by Coventry Health Care, Inc., a wholly-owned subsidiary of Aetna and $962 million of its 3.35% senior notes due 2021. In connection with the purchase of such senior notes, the Company paid a premium of $76 million in excess of the aggregate principal amount of the senior notes that were purchased, incurred $8 million in fees and recognized a net gain of $5 million on the write-off of net unamortized deferred financing premiums, for a net loss on early extinguishment of debt of $79 million |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Repurchases On November 2, 2016, the Company’s Board of Directors (the “Board”) authorized the 2016 share repurchase program (“2016 Repurchase Program”) for up to $15.0 billion of the Company’s common shares. The 2016 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions. The 2016 Repurchase Program can be modified or terminated by the Board at any time. During the nine months ended September 30, 2019 and 2018, the Company did not repurchase any shares of its common stock. At September 30, 2019 , the Company had remaining authorization to repurchase an aggregate of up to approximately $13.9 billion of its common shares under the 2016 Repurchase Program. Dividends The quarterly cash dividend declared by the Board was $0.50 per share in each of the three-month periods ended September 30, 2019 and 2018 . Cash dividends declared year to date by the Board were $1.50 per share in each of the nine-month periods ended September 30, 2019 and 2018 |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2019 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) Shareholders’ equity included the following activity in accumulated other comprehensive income for the three and nine months ended September 30, 2019 and 2018 : Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Net unrealized investment gains (losses): Beginning of period balance $ 682 $ — $ 97 $ — Other comprehensive income before reclassifications ($214, $0, $933 and $0 pretax) 192 — 799 — Amounts reclassified from accumulated other comprehensive income ($(63), $0, $(93) and $0 pretax) (1) (56 ) — (78 ) — Other comprehensive income 136 — 721 — End of period balance 818 — 818 — Foreign currency translation adjustments: Beginning of period balance (154 ) (155 ) (158 ) (129 ) Other comprehensive income (loss) before reclassifications (1 ) (8 ) 3 (34 ) Amounts reclassified from accumulated other comprehensive loss (2) 154 — 154 — Other comprehensive income (loss) 153 (8 ) 157 (34 ) End of period balance (1 ) (163 ) (1 ) (163 ) Net cash flow hedges: Beginning of period balance 305 321 312 (15 ) Adoption of new accounting standard (3) — — — (3 ) Other comprehensive income (loss) before reclassifications ($(25), $0, $(25) and $464 pretax) (18 ) — (18 ) 344 Amounts reclassified from accumulated other comprehensive income (loss) ($(7), $(5), $(16) and $(12) pretax) (4) (5 ) (4 ) (12 ) (9 ) Other comprehensive income (loss) (23 ) (4 ) (30 ) 335 End of period balance 282 317 282 317 Pension and OPEB plans: Beginning of period balance (149 ) (25 ) (149 ) (21 ) Adoption of new accounting standard (3) — — — (4 ) End of period balance (149 ) (25 ) (149 ) (25 ) Total beginning of period accumulated other comprehensive income (loss) 684 141 102 (165 ) Adoption of new accounting standard (3) — — — (7 ) Total other comprehensive income (loss) 266 (12 ) 848 301 Total end of period accumulated other comprehensive income $ 950 $ 129 $ 950 $ 129 _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income in the unaudited condensed consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive loss represent the elimination of the cumulative translation adjustment associated with the sale of Onofre, which was sold on July 1, 2019. The loss on the divestiture of Onofre is reflected in operating expenses in the unaudited condensed consolidated statements of operations. (3) Reflects the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income during the nine months ended September 30, 2018. (4) Amounts reclassified from accumulated other comprehensive income (loss) for specifically identified cash flow hedges are included in interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $15 million , net of tax, in net gains associated with its cash flow hedges into net income within the next 12 months. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share is computed using the two-class method. For periods in which the Company reports net income, diluted earnings per share is determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period, unless the effect is antidilutive. Stock appreciation rights and options to purchase 18 million and 19 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three and nine months ended September 30, 2019 , respectively, because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase 12 million and 14 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three and nine months ended September 30, 2018 , respectively. Due to the loss from continuing operations attributable to CVS Health in the nine months ended September 30, 2018 , 2 million potentially dilutive common equivalent shares also were excluded from the calculation of diluted earnings per share, as the impact of these shares was antidilutive. The following is a reconciliation of basic and diluted earnings (loss) per share from continuing operations for the respective periods: Three Months Ended Nine Months Ended In millions, except per share amounts 2019 2018 2019 2018 Numerator for earnings (loss) per share calculation: Income (loss) from continuing operations $ 1,529 $ 1,390 $ 4,887 $ (174 ) Income from continuing operations allocated to participating securities — (1 ) (3 ) (3 ) Loss from continuing operations attributable to noncontrolling interest 1 — — — Income (l oss) from continuing operations attributable to CVS Health $ 1,530 $ 1,389 $ 4,884 $ (177 ) Denominator for earnings (loss) per share calculation: Weighted average shares, basic 1,302 1,020 1,300 1,018 Effect of dilutive securities 3 2 3 — Weighted average shares, diluted 1,305 1,022 1,303 1,018 Earnings (loss) per share from continuing operations: Basic $ 1.17 $ 1.36 $ 3.76 $ (0.17 ) Diluted $ 1.17 $ 1.36 $ 3.75 $ (0.17 ) |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2019 | |
Reinsurance Disclosures [Abstract] | |
Reinsurance | Reinsurance The Company utilizes reinsurance agreements primarily to reduce required capital and to facilitate the acquisition or disposition of certain insurance contracts. Ceded reinsurance agreements permit the Company to recover a portion of its losses from reinsurers, although they do not discharge the Company’s primary liability as the direct insurer of the risks reinsured. On November 30, 2018, Aetna completed the sale of its standalone Medicare Part D prescription drug plans to a subsidiary of WellCare Health Plans, Inc. (“WellCare”), effective December 31, 2018. In connection with that sale, subsidiaries of WellCare and Aetna entered into reinsurance agreements under which WellCare has ceded to Aetna 100% of the insurance risk related to the divested standalone Medicare Part D prescription drug plans for the 2019 PDP plan year. In January 2019, the Company entered into two four-year reinsurance agreements with an unrelated reinsurer that allow it to reduce required capital and provide collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease Guarantees Between 1995 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores and Linens ‘n Things, each of which subsequently filed for bankruptcy, and Marshalls. In many cases, when a former subsidiary leased a store, the Company provided a guarantee of the former subsidiary’s lease obligations. When the subsidiaries were disposed of and accounted for as discontinued operations, the Company’s guarantees remained in place, although each initial purchaser agreed to indemnify the Company for any lease obligations the Company was required to satisfy. If any of the purchasers or any of the former subsidiaries fail to make the required payments under a store lease, the Company could be required to satisfy those obligations. As of September 30, 2019 , the Company guaranteed approximately 79 such store leases (excluding the lease guarantees related to Linens ‘n Things, which have been recorded as a liability on the unaudited condensed consolidated balance sheet), with the maximum remaining lease term extending through 2029. Guaranty Fund Assessments, Market Stabilization and Other Non-Voluntary Risk Sharing Pools Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (in most states up to prescribed limits) for certain obligations of insolvent insurance companies to policyholders and claimants. The life and health insurance guaranty associations in which the Company participates that operate under these laws respond to insolvencies of long-term care insurers as well as health insurers. The Company’s assessments generally are based on a formula relating to the Company’s health care premiums in the state compared to the premiums of other insurers. Certain states allow assessments to be recovered over time as offsets to premium taxes. Some states have similar laws relating to HMOs and/or other payors such as not-for-profit consumer-governed health plans established under the ACA. In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and one of its subsidiaries (collectively, “Penn Treaty”) in rehabilitation, an intermediate action before insolvency, and subsequently petitioned a state court to convert the rehabilitation into a liquidation. Penn Treaty was placed in liquidation in March 2017. The Company has recorded a liability for its estimated share of future assessments by applicable life and health guaranty associations. It is reasonably possible that in the future the Company may record a liability and expense relating to other insolvencies which could have a material adverse effect on the Company’s operating results, financial condition and cash flows. While historically the Company has ultimately recovered more than half of guaranty fund assessments through statutorily permitted premium tax offsets, significant increases in assessments could lead to legislative and/or regulatory actions that may limit future offsets. HMOs in certain states in which the Company does business are subject to assessments, including market stabilization and other risk-sharing pools, for which the Company is assessed charges based on incurred claims, demographic membership mix and other factors. The Company establishes liabilities for these assessments based on applicable laws and regulations. In certain states, the ultimate assessments the Company pays are dependent upon the Company’s experience relative to other entities subject to the assessment, and the ultimate liability is not known at the financial statement date. While the ultimate amount of the assessment is dependent upon the experience of all pool participants, the Company believes it has adequate reserves to cover such assessments. Litigation and Regulatory Proceedings The Company is a party to numerous legal proceedings, investigations, audits and claims arising, for the most part, in the ordinary course of its businesses, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial condition. Except as otherwise noted, the Company cannot predict with certainty the timing or outcome of the legal matters described below, and the Company is unable to reasonably estimate a possible loss or range of possible loss in excess of amounts already accrued for these matters. It is reasonably possible that the outcome of such legal matters could be material to the Company. Usual and Customary Litigation The Company is named as a defendant in a number of litigations that allege that the Company’s retail stores overcharged for prescription drugs by not providing the correct usual and customary charge. State of Texas ex rel. Myron Winkelman and Stephani Martinson, et al. v. CVS Health Corporation (Travis County Texas District Court). In February 2012, the Attorney General of the State of Texas issued Civil Investigative Demands (“CIDs”) to the Company and subsequently has issued a series of requests for documents and information in connection with its investigation concerning the CVS Health Savings Pass program and other pricing practices with respect to claims for reimbursement from the Texas Medicaid program. In January 2017, the Travis County Court unsealed a first amended qui tam petition filed in April 2014. The government has intervened in this case. The amended petition alleges the Company violated the Texas Medicaid Fraud Prevention Act by submitting false claims for reimbursement to the Texas Medicaid program by, among other things, failing to use the price available to members of the CVS Health Savings Pass program as the pharmacies’ usual and customary price. The amended petition was unsealed following the Company’s December 2016 filing of CVS Pharmacy, Inc. v. Charles Smith, et al. (Travis County Texas District Court), a declaratory judgment action against the State of Texas seeking a declaration that the prices charged to members of the CVS Health Savings Pass program do not constitute usual and customary prices under the applicable Medicaid regulation. In March 2018, the Travis County Court denied the State of Texas’s request for temporary injunctive relief. In June 2019, the Company and the Texas Attorney General commenced a civil jury trial in the qui tam action. Prior to the conclusion of that trial, the parties reached a settlement in principle on the remaining issues. Corcoran et al. v. CVS Health Corporation (U.S. District Court for the Northern District of California) and Podgorny et al. v. CVS Health Corporation (U.S. District Court for the Northern District of Illinois). These putative class actions were filed against the Company in July and September 2015. The cases were consolidated in the U.S. District Court for the Northern District of California. Plaintiffs seek damages and injunctive relief under the consumer protection statutes and common laws of certain states on behalf of a class of consumers who purchased certain prescription drugs. Several third-party payors filed similar putative class actions on behalf of payors captioned Sheet Metal Workers Local No. 20 Welfare and Benefit Fund v. CVS Health Corp. and Plumbers Welfare Fund, Local 130 v. CVS Health Corporation (both pending in the U.S. District Court for the District of Rhode Island) in February and August 2016. In all of these cases the plaintiffs allege the Company overcharged for certain prescription drugs by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. In the Corcoran case, the U.S. District Court granted summary judgment to CVS on plaintiffs’ claims in their entirety and certified certain subclasses in September 2017. In June 2019, the U.S. Court of Appeals for the Ninth Circuit reversed the District Court’s grant of summary judgment and reversed the District Court’s narrowing of the requested class. The Corcoran case is now proceeding to a trial on a class basis. The Sheet Metal Workers plaintiffs have amended their complaint to assert a claim under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) premised on an alleged conspiracy between the Company and other PBMs. The Company is defending itself against these claims. State of California ex rel. Matthew Omlansky v. CVS Caremark Corporation (Superior Court of the State of California, County of Sacramento). In April 2016, the California Superior Court unsealed a first amended qui tam complaint filed in July 2013. The government has declined to intervene in this case. The relator alleges that the Company submitted false claims for payment to the California Medicaid program in connection with reimbursement for drugs available through the CVS Health Savings Pass program as well as certain other generic drugs. The case has been stayed pending the relator’s appeal of the judgment against him in a similar case against another retailer. The Company is defending itself against these claims. State of Mississippi v. CVS Health Corporation, et al. (Circuit Court of DeSoto County, Mississippi, Third Judicial District). In July 2016, the Company was served with a complaint filed on behalf of the State of Mississippi, originally in the Chancery Court, but later transferred to the Circuit Court. The complaint alleged that CVS retail pharmacies in Mississippi submitted false claims for reimbursement to the Mississippi Medicaid program by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. In June 2019, the Company’s motion for judgment on the pleadings was granted in part and denied in part. Also in June 2019, the State of Mississippi’s motion to dismiss the Company’s counterclaim for declaratory relief was granted. The Company is defending itself against these claims. PBM Litigation and Investigations The Company is named as a defendant in a number of lawsuits and is subject to a number of investigations concerning its PBM practices. Bewley, et al. v. CVS Health Corporation , et al. and Prescott , et al. v. CVS Health Corporation , et al. (both previously pending in the U.S. District Court for the Western District of Washington). These putative class actions were filed against the Company and other PBMs and manufacturers of glucagon kits ( Bewley ) and diabetes test strips ( Prescott ) in May 2017. Both cases alleged that, by contracting for rebates with the manufacturers of these diabetes products, the Company and other PBMs caused list prices for these products to increase, thereby harming certain consumers. The plaintiffs’ primary claims were made under federal antitrust laws, RICO, state unfair competition and consumer protection laws and the federal Employee Retirement Income Security Act of 1974 (“ERISA”). Both of these cases were transferred to the U.S. District Court for the District of New Jersey on defendants’ motions. In April 2019, the named plaintiffs in both the Bewley and Prescott cases voluntarily dismissed all of their claims without prejudice, ending both cases. Klein , et al. v. Prime Therapeutics , et al. (U.S. District Court for the District of Minnesota). This putative class action was filed against the Company and other PBMs in June 2017 on behalf of ERISA plan members who purchased and paid for EpiPen or EpiPen Jr. Plaintiffs allege that the PBMs are ERISA fiduciaries to plan members and have violated ERISA by allegedly causing higher inflated prices for EpiPens through the process of negotiating increased rebates from EpiPen manufacturer Mylan. This case has been consolidated with a similar matter and is now proceeding as In re EpiPen ERISA Litigation . The Company is defending itself against these claims. The Company has received subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, Attorneys General of several states regarding its PBM practices, including pricing and rebates. In addition, the Company received an inquiry from the U.S. Senate Committee on Finance regarding insulin pricing. The Company has been providing documents and information in response to these subpoenas, CIDs and requests for information. Controlled Substances Litigation, Audits and Subpoenas In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against various defendants by plaintiffs such as counties, cities, hospitals, Indian tribes and third-party payors, alleging claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation captioned In re National Prescription Opiate Litigation (MDL No. 2804) is pending in the U.S. District Court for the Northern District of Ohio. This multidistrict litigation presumptively includes hundreds of relevant federal court cases that name the Company as a defendant. A significant number of similar cases that name the Company as a defendant in some capacity are pending in state courts. In addition, the Company has been named as a defendant in similar cases brought by certain state Attorneys General. The Company is defending itself against all such claims. Additionally, the Company has received subpoenas, CIDs and/or other requests for information regarding opioids from the Attorneys General and insurance and other regulators of several states. The Company has been cooperating with the government with respect to these subpoenas, CIDs and other requests for information. The Company routinely is audited by the United States Drug Enforcement Administration (“DEA”). In some instances, the Company is in discussions with the DEA and U.S. Attorney’s Offices concerning allegations that the Company violated certain requirements of the Controlled Substance Act. In September 2015, the DEA served the Company with an administrative subpoena. The subpoena seeks documents related to controlled substance policies, procedures and practices at eight Omnicare pharmacy locations from May 2012 to the present. In September 2017, the DEA expanded the investigation to include an additional Omnicare pharmacy location. The Company has been cooperating with the government and providing documents and witnesses in response to this subpoena. Prescription Processing Investigations In October 2015, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning the Company’s Omnicare pharmacies’ cycle fill process for assisted living facilities. The Company has been cooperating with the government and providing documents and information in response to this CID. In July 2017, the Company also received a subpoena from the California Department of Insurance requesting documents concerning similar subject matter. The Company has been cooperating with the California Department of Insurance and providing documents and information in response to this subpoena. In December 2016, the Company received a CID from the U.S. Attorney’s Office for the Northern District of New York requesting documents and information in connection with a federal False Claims Act investigation concerning whether the Company’s retail pharmacies improperly submitted certain insulin claims to Part D of the Medicare program rather than Part B of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to this CID. In May 2017, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning possible false claims submitted to Medicare in connection with reimbursements for prescription drugs under the Medicare Part D program. The Company has been cooperating with the government and providing documents and information in response to this CID. Provider Proceedings The Company is named as a defendant in purported class actions and individual lawsuits arising out of its practices related to the payment of claims for services rendered to its members by health care providers with whom the Company has a contract and with whom the Company does not have a contract (“out-of-network providers”). Among other things, these lawsuits allege that the Company paid too little to its health plan members and/or providers for these services and/or otherwise allege that the Company failed to timely or appropriately pay or administer claims and benefits (including the Company’s post payment audit and collection practices and reductions in payments to providers due to sequestration). Other major health insurers are the subject of similar litigation or have settled similar litigation. On October 28, 2016, Aetna was named as a respondent in an arbitration proceeding that had commenced as a lawsuit in Florida state court on August 25, 2015. The arbitration proceeding was brought by hospitals owned by HCA Holdings, Inc. with respect to Aetna’s out-of-network benefit payment and administration practices in Florida relating to services and care rendered to members in Aetna’s individual Public Exchange products from 2014 through 2016. Coverage under Aetna’s individual Public Exchange products in Florida was not available after December 31, 2016. On October 15, 2018, the trial arbitrator awarded the claimant hospitals approximately $150 million . Aetna appealed the trial arbitrator’s decision. On March 28, 2019, the appellate arbitrator reduced the award to approximately $86 million . The proceeding has ended. During the nine months ended September 30, 2019 , the Company recorded the reduction in the required reserve amount for this proceeding as a measurement period adjustment to its Aetna Acquisition accounting and recorded a reduction to goodwill. The Company also has received subpoenas and/or requests for documents and other information from, and been investigated by, Attorneys General and other state and/or federal regulators, legislators and agencies relating to, and the Company is involved in other litigation regarding, its out-of-network benefit payment and administration practices. It is reasonably possible that others could initiate additional litigation or additional regulatory action against the Company with respect to its out-of-network benefit payment and/or administration practices. CMS Actions The United States Centers for Medicare & Medicaid Services (“CMS”) regularly audits the Company’s performance to determine its compliance with CMS’s regulations and its contracts with CMS and to assess the quality of services it provides to Medicare beneficiaries. CMS uses various payment mechanisms to allocate and adjust premium payments to the Company’s and other companies’ Medicare plans by considering the applicable health status of Medicare members as supported by information prepared, maintained and provided by health care providers. The Company collects claim and encounter data from providers and generally relies on providers to appropriately code their submissions to the Company and document their medical records, including the diagnosis data submitted to the Company with claims. CMS pays increased premiums to Medicare Advantage plans and Medicare PDP plans for members who have certain medical conditions identified with specific diagnosis codes. Federal regulators review and audit the providers’ medical records to determine whether those records support the related diagnosis codes that determine the members’ health status and the resulting risk-adjusted premium payments to the Company. In that regard, CMS has instituted risk adjustment data validation (“RADV”) audits of various Medicare Advantage plans, including certain of the Company’s plans, to validate coding practices and supporting medical record documentation maintained by health care providers and the resulting risk adjusted premium payments to the plans. CMS may require the Company to refund premium payments if the Company’s risk adjusted premiums are not properly supported by medical record data. The Office of Inspector General (the “OIG”) also is auditing the Company’s risk adjustment-related data and that of other companies. The Company expects CMS and the OIG to continue these types of audits. In 2012, CMS revised its audit methodology for RADV audits to determine refunds payable by Medicare Advantage plans for contract year 2011 and forward. Under the revised methodology, among other things, CMS will project the error rate identified in the audit sample of approximately 200 members to all risk adjusted premium payments made under the contract being audited. For contract years prior to 2011, CMS did not project sample error rates to the entire contract. As a result, the revised methodology may increase the Company’s exposure to premium refunds to CMS based on incomplete medical records maintained by providers. Since 2013, CMS has selected certain of the Company’s Medicare Advantage contracts for various contract years for RADV audit. The Company is currently unable to predict which of its Medicare Advantage contracts will be selected for future audit, the amounts of any retroactive refunds of, or prospective adjustments to, Medicare Advantage premium payments made to the Company, the effect of any such refunds or adjustments on the actuarial soundness of the Company’s Medicare Advantage bids, or whether any RADV audit findings would require the Company to change its method of estimating future premium revenue in future bid submissions to CMS or compromise premium assumptions made in the Company’s bids for prior contract years, the current contract year or future contract years. Any premium or fee refunds or adjustments resulting from regulatory audits, whether as a result of RADV, Public Exchange-related or other audits by CMS, the OIG, the United States Department of Health and Human Services or otherwise, including audits of the Company’s minimum MLR rebates, methodology and/or reports, could be material and could adversely affect the Company’s operating results, financial condition and/or cash flows. Medicare CIDs The Company has received CIDs from the Civil Division of the United States Department of Justice (the “DOJ”) in connection with a current investigation of the Company’s patient chart review processes in connection with risk adjustment data submissions under Parts C and D of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to these CIDs. Tunney Act Proceeding On October 10, 2018, the Company and Aetna entered into a consent decree with the DOJ that allowed CVS Health’s proposed acquisition of Aetna to proceed, provided Aetna agreed to sell its individual standalone Medicare Part D prescription drug plans. As permitted by the asset preservation stipulation and order dated October 25, 2018, CVS Health completed its acquisition of Aetna on November 28, 2018, and Aetna completed the sale of such plans on November 30, 2018. On September 4, 2019, the United States District Court for the District of Columbia (the “D.C. District Court”) entered a final order that concluded the court approval process for the consent decree under the Antitrust Procedures and Penalties Act. The final order was issued without conditions. No further action is required by the D.C District Court, the DOJ or any other entity with regard to CVS Health’s acquisition of Aetna. Shareholder Matters Between February and August 2019, six class action complaints were filed by putative plaintiffs against the Company and certain current and former officers and directors: Anarkat v. CVS Health Corp., et al., Case No. 1:19-cv-00437 (U.S. District Court for the District of Rhode Island); Labourers’ Pension Fund of Central and Eastern Canada v. CVS Health Corp., et al., Case No. 651700/2019 (New York Supreme Court); City of Warren Police and Fire Retirement Sys.v. CVS Health Corp., et. al. , Case No. PC-2019-5658 (Rhode Island Superior Court); Cambria Co. Employees Retirement Sys. v. CVS Health Corp., et al. , Case No. 653223/2019 (New York Supreme Court); Freundlich v. CVS Health Corp., et al ., Case No. PC-2019-6685 (Rhode Island Superior Court); and Waterford Twp. Police & Fire Retirement Sys. v. CVS Health Corp., et al., Case No. 19-cv-00434 (U.S. District Court for the District of Rhode Island). The plaintiffs in these cases assert a variety of causes of action under federal securities laws that are premised on allegations that the defendants made certain omissions and misrepresentations relating to the performance of the Company’s LTC business unit, which allegedly injured investors who acquired CVS Health securities between February 9, 2016 and February 20, 2019. The Freundlich case also alleges that defendants misrepresented anticipated synergies of the Aetna Acquisition. The Company is defending itself against these claims. Other Legal and Regulatory Proceedings The Company is also a party to other legal proceedings and is subject to government investigations, inquiries and audits and has received and is cooperating with the government in response to CIDs, subpoenas or similar process from various governmental agencies requesting information, arising, for the most part, in the ordinary course of its businesses. These other legal proceedings and government actions include claims of or relating to bad faith, medical or professional malpractice, claims processing, dispensing of medications, non-compliance with state and federal regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits, provider network structure (including the use of performance-based networks and termination of provider contracts), rescission of insurance coverage, improper disclosure or use of personal information, anticompetitive practices, general contractual matters, product liability, intellectual property litigation and employment litigation. Some of these other legal proceedings are or are purported to be class actions or derivative claims. The Company is defending itself against the claims brought in these matters. Awards to the Company and others of certain government contracts, particularly Medicaid contracts and other contracts with government customers in the Company’s Health Care Benefits segment, are subject to increasingly frequent protests by unsuccessful bidders. These protests may result in awards to the Company being reversed, delayed or modified. The loss or delay in implementation of any government contract could adversely affect the Company’s operating results. The Company will continue to defend contract awards it receives. There also continues to be a heightened level of review and/or audit by regulatory authorities and legislators of, and increased litigation regarding, the Company’s and the rest of the health care and related benefits industry’s business and reporting practices, including premium rate increases, utilization management, development and application of medical policies, complaint, grievance and appeal processing, information privacy, provider network structure (including provider network adequacy, the use of performance-based networks and termination of provider contracts), provider directory accuracy, calculation of minimum medical loss ratios and/or payment of related rebates, delegated arrangements, rescission of insurance coverage, limited benefit health products, student health products, pharmacy benefit management practices (including manufacturers’ rebates, pricing, the use of narrow networks and the placement of drugs in formulary tiers), sales practices, customer service practices, vendor oversight and claim payment practices (including payments to out-of-network providers). As a leading national health care company, the Company regularly is the subject of government actions of the types described above. These government actions may prevent or delay the Company from implementing planned premium rate increases and may result, and have resulted, in restrictions on the Company’s businesses, changes to or clarifications of the Company’s business practices, retroactive adjustments to premiums, refunds or other payments to members, beneficiaries, states or the federal government, withholding of premium payments to the Company by government agencies, assessments of damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/or suspension or exclusion from participation in government programs. The Company can give no assurance, however, that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business practices, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; (v) adverse developments in any pending qui tam lawsuit against the Company, whether sealed or unsealed, or in any future qui tam lawsuit that may be filed against the Company; or (vi) adverse developments in pending or future legal proceedings against the Company or affecting one or more of the industries in which the Company competes and/or the health care industry generally. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the CODM evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company’s segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance. Segment financial information for the three and nine months ended September 30, 2018 has been retrospectively adjusted to conform with the current period presentation. See the reconciliation of consolidated operating income (GAAP measure) to adjusted operating income below for further context regarding the items excluded from operating income in determining adjusted operating income. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company’s ability to compare past financial performance with current performance and analyze underlying business performance and trends. Non-GAAP financial measures the Company discloses, such as consolidated adjusted operating income, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ for further discussion. Segment financial information for the three and nine months ended September 30, 2018 , has been retrospectively adjusted to reflect these changes as shown below: Three Months Ended September 30, 2018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Revenues, as previously reported $ 33,767 $ 20,856 $ — $ 217 $ (7,350 ) $ 47,490 Adjustments 97 — 641 — (738 ) — Revenues, as adjusted $ 33,864 $ 20,856 $ 641 $ 217 $ (8,088 ) $ 47,490 Cost of products sold (1) $ 31,587 $ 15,042 $ — $ — $ (7,127 ) $ 39,502 Adjustments 651 — — — (651 ) — Cost of products sold, as adjusted $ 32,238 $ 15,042 $ — $ — $ (7,778 ) $ 39,502 Benefit costs (1) $ 439 $ — $ — $ — $ — $ 439 Adjustments (439 ) — 439 — — — Benefit costs, as adjusted $ — $ — $ 439 $ — $ — $ 439 Operating expenses, as previously reported $ 392 $ 4,323 $ — $ 287 $ (27 ) $ 4,975 Adjustments (41 ) — 128 — (87 ) — Operating expenses, as adjusted $ 351 $ 4,323 $ 128 $ 287 $ (114 ) $ 4,975 Operating income (loss), as previously reported $ 1,349 $ 1,491 $ — $ (70 ) $ (196 ) $ 2,574 Adjustments (74 ) — 74 — — — Operating income (loss), as adjusted 1,275 1,491 74 (70 ) (196 ) 2,574 Segment measure adjustments 87 131 1 (143 ) — 76 Adjusted operating income (loss) $ 1,362 $ 1,622 $ 75 $ (213 ) $ (196 ) $ 2,650 _____________________________________________ (1) The total of cost of products sold and benefit costs previously were reported as cost of revenues. Nine Months Ended September 30, 2018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Revenues, as previously reported $ 99,238 $ 61,960 $ — $ 475 $ (21,518 ) $ 140,155 Adjustments 599 — 2,723 — (3,322 ) — Revenues, as adjusted $ 99,837 $ 61,960 $ 2,723 $ 475 $ (24,840 ) $ 140,155 Cost of products sold (1) $ 92,459 $ 44,318 $ — $ — $ (20,894 ) $ 115,883 Adjustments 3,059 — — — (3,059 ) — Cost of products sold, as adjusted $ 95,518 $ 44,318 $ — $ — $ (23,953 ) $ 115,883 Benefit costs (1) $ 2,399 $ — $ — $ — $ — $ 2,399 Adjustments (2,399 ) — 2,399 — — — Benefit costs, as adjusted $ — $ — $ 2,399 $ — $ — $ 2,399 Operating expenses, as previously reported $ 1,176 $ 12,831 $ — $ 814 $ (66 ) $ 14,755 Adjustments (125 ) — 388 — (263 ) — Operating expenses, as adjusted $ 1,051 $ 12,831 $ 388 $ 814 $ (329 ) $ 14,755 Operating income (loss), as previously reported $ 3,204 $ 890 $ — $ (339 ) $ (558 ) $ 3,197 Adjustments 64 — (64 ) — — — Operating income (loss), as adjusted 3,268 890 (64 ) (339 ) (558 ) 3,197 Segment measure adjustments 262 4,389 2 (308 ) — 4,345 Adjusted operating income (loss) $ 3,530 $ 5,279 $ (62 ) $ (647 ) $ (558 ) $ 7,542 _____________________________________________ (1) The total of cost of products sold and benefit costs previously were reported as cost of revenues. The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals: In millions Pharmacy (1) Retail/ Health Care Corporate/ Intersegment (2) Consolidated Three Months Ended September 30, 2019 Revenues from customers $ 36,018 $ 21,466 $ 17,035 $ 35 $ (10,007 ) $ 64,547 Net investment income — — 146 117 — 263 Total revenues 36,018 21,466 17,181 152 (10,007 ) 64,810 Adjusted operating income (loss) 1,439 1,516 1,423 (252 ) (179 ) 3,947 September 30, 2018 Revenues from customers $ 33,864 $ 20,856 $ 637 $ — $ (8,088 ) $ 47,269 Net investment income — — 4 217 — 221 Total revenues 33,864 20,856 641 217 (8,088 ) 47,490 Adjusted operating income (loss) 1,362 1,622 75 (213 ) (196 ) 2,650 Nine Months Ended September 30, 2019 Revenues from customers $ 104,418 $ 64,028 $ 51,996 $ 76 $ (31,436 ) $ 189,082 Net investment income — — 458 347 — 805 Total revenues 104,418 64,028 52,454 423 (31,436 ) 189,887 Adjusted operating income (loss) 3,682 4,674 4,423 (685 ) (521 ) 11,573 September 30, 2018 Revenues from customers $ 99,837 $ 61,960 $ 2,713 $ — $ (24,840 ) $ 139,670 Net investment income — — 10 475 — 485 Total revenues 99,837 61,960 2,723 475 (24,840 ) 140,155 Adjusted operating income (loss) 3,530 5,279 (62 ) (647 ) (558 ) 7,542 _____________________________________________ (1) Total revenues of the Pharmacy Services segment include approximately $2.7 billion of retail co-payments for each of the three-month periods ended September 30, 2019 and 2018 , and $8.9 billion and $8.8 billion of retail co-payments for the nine months ended September 30, 2019 and 2018 , respectively. (2) Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment, the Retail/LTC segment and/or the Health Care Benefits segment. The following are reconciliations of consolidated operating income to adjusted operating income for the three and nine months ended September 30, 2019 and 2018 : Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Operating income (GAAP measure) $ 2,928 $ 2,574 $ 8,950 $ 3,197 Amortization of intangible assets (1) 607 215 1,822 639 Acquisition-related transaction and integration costs (2) 111 70 365 152 Store rationalization charges (3) 96 — 231 — Loss on divestiture of subsidiary (4) 205 — 205 86 Goodwill impairment (5) — — — 3,921 Interest income on financing for the Aetna Acquisition (6) — (209 ) — (453 ) Adjusted operating income $ 3,947 $ 2,650 $ 11,573 $ 7,542 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. (2) During the three and nine months ended September 30, 2019 and 2018, acquisition-related transaction and integration costs relate to the Aetna Acquisition. During the nine months ended September 30, 2018, acquisition-related integration costs also relate to the acquisition of Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment. (3) During the three and nine months ended September 30, 2019, the store rationalization charges relate to the planned closure of 22 underperforming retail pharmacy stores in the first quarter of 2020. During the nine months ended September 30, 2019, the store rationalization charges also relate to the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charges primarily relate to operating lease right-of-use asset impairment charges and are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment. (4) During the three and nine months ended September 30, 2019, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of Onofre, which occurred on July 1, 2019. The loss on divestiture primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. During the nine months ended September 30, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. (5) During the nine months ended September 30, 2018, the goodwill impairment charge relates to the LTC reporting unit within the Retail/LTC segment. (6) During the three and nine months ended September 30, 2018 , the Company recorded interest income of $209 million and $453 million , respectively, on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services. Retail/LTC Segment The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic ® walk-in medical clinics and conducts long-term care (“LTC”) pharmacy operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. As of September 30, 2019 , the Retail/LTC segment operated approximately 9,900 retail locations, approximately 1,100 MinuteClinic ® locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment The Health Care Benefits segment is one of the nation’s leading diversified health care benefits providers, serving an estimated 38 million people as of September 30, 2019 . The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services, workers’ compensation administrative services and health information technology products and services. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of: • Management and administrative expenses to support the overall operations of the Company, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs; and • Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products. |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018, which were revised to reflect the Company’s segment realignment and are included in Exhibit 99.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 8, 2019 (the “August 2019 8-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. Because of the influence of various factors on the Company’s operations, including business combinations, certain holidays and other seasonal influences, net income for any interim period may not be comparable to the same interim period in previous years or necessarily indicative of income for the full year. |
Principles of Consolidation | The unaudited condensed consolidated financial statements include the accounts of CVS Health Corporation and its majority-owned subsidiaries and the variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. |
Reclassifications | Certain prior year amounts have been reclassified to conform with the current year presentation. |
Restricted Cash | Restricted cash included in other current assets in the unaudited condensed consolidated balance sheets represents amounts held in escrow accounts in connection with certain recent acquisitions. Restricted cash included in other assets in the unaudited |
Accounts Receivable | Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations. |
Revenue Recognition | The following is a discussion of the Company’s revenue recognition policies by segment. Pharmacy Services Segment The Pharmacy Services segment sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through the Company’s retail pharmacy network. The Company’s pharmacy benefit arrangements are accounted for in a manner consistent with a master supply arrangement as there are no contractual minimum volumes and each prescription is considered a separate purchasing decision and distinct performance obligation transferred at a point in time. PBM services performed in connection with each prescription claim are considered part of a single performance obligation which culminates in the dispensing of prescription drugs. The Company recognizes revenue using the gross method at the contract price negotiated with its clients when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescriptions dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while also performing the related PBM services. Revenues include (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any discounts earned on brand name drugs or other discounts and refunds paid back to the client (see “Drug Discounts” and “Guarantees” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions and the price paid to retail network pharmacies by client plan members for retail prescriptions (“retail co-payments”) and (iii) claims based administrative fees for retail pharmacy network contracts. Sales taxes are not included in revenue. The Company recognizes revenue when control of the prescription drugs is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those prescription drugs. The following revenue recognition policies have been established for the Pharmacy Services segment: • Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription drug is delivered to the client plan member. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments. • Revenues generated from prescription drugs sold by third-party pharmacies in the Company’s retail pharmacy network and associated administrative fees are recognized at the Company’s point-of-sale, which is when the claim is adjudicated by the Company’s online claims processing system and the Company has transferred control of the prescription drug and performed all of its performance obligations. For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client plan member, revenue is recognized using the net method. Drug Discounts The Pharmacy Services segment records revenue net of manufacturers’ rebates earned by its clients based on their plan members’ utilization of brand name formulary drugs. The Pharmacy Services segment estimates these rebates at period-end based on actual and estimated claims data and its estimates of the manufacturers’ rebates earned by its clients. The estimates are based on the best available data at period-end and recent history for the various factors that can affect the amount of rebates due to the client. The Pharmacy Services segment adjusts its rebates payable to clients to the actual amounts paid when these rebates are paid or as significant events occur. Any cumulative effect of these adjustments is recorded against revenues at the time it is identified. Adjustments generally result from contract changes with clients or manufacturers that have retroactive rebate adjustments, differences between the estimated and actual product mix subject to rebates, or whether the brand name drug was included in the applicable formulary. The effect of adjustments between estimated and actual manufacturers’ rebate amounts has not been material to the Company’s operating results or financial condition. Guarantees The Pharmacy Services segment also adjusts revenues for refunds owed to clients resulting from pricing guarantees and performance against defined service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition. Retail/LTC Segment Retail Pharmacy The Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims under other retail network arrangements. Revenues are adjusted for refunds owed to third party payers resulting from pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition. Revenue from Company gift cards purchased by customers is deferred as a contract liability until goods or services are transferred. Any amounts not expected to be redeemed by customers (i.e., breakage) are recognized based on historical redemption patterns. Customer returns are not material to the Company’s operating results or financial condition. Sales taxes are not included in revenue. Loyalty Program The Company’s customer loyalty program, ExtraCare ® , consists of two components, ExtraSavings TM and ExtraBucks ® Rewards. ExtraSavings are coupons that are recorded as a reduction of revenue when redeemed as the Company has concluded that they do not represent a promise to the customer to deliver additional goods or services at the time of issuance because they are not tied to a specific transaction or spending level. ExtraBucks Rewards are accumulated by customers based on their historical spending levels. Thus, the Company has determined that there is an additional performance obligation to those customers at the time of the initial transaction. The Company allocates the transaction price to the initial transaction and the ExtraBucks Rewards transaction based upon the relative standalone selling price, which considers historical redemption patterns for the rewards. Revenue allocated to ExtraBucks Rewards is recognized as those rewards are redeemed. At the end of each period, unredeemed ExtraBucks Rewards are reflected as a contract liability. Long-term Care Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. A significant portion of Long-term Care revenue from sales of pharmaceutical and medical products is reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue at the revenue recognition date to properly account for the variable consideration due to anticipated differences between billed and reimbursed amounts. Accordingly, the total revenues and receivables reported in the Company’s unaudited condensed consolidated financial statements are recorded at the amount expected to be ultimately received from these payors. Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third-party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of normal billing procedures and subject to normal accounts receivable collections procedures. Walk-In Medical Clinics For services provided by the Company’s walk-in medical clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third-party payor contractual obligations and patient direct bill historical collection rates. Health Care Benefits Segment Premium Revenue Premiums are recognized as revenue in the month in which the enrollee is entitled to receive health care services. Premiums are reported net of an allowance for estimated terminations and uncollectible amounts. Additionally, premium revenue subject to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010’s (as amended, collectively, the “ACA’s”) minimum medical loss ratio (“MLR”) rebate requirements is recorded net of the estimated minimum MLR rebates for the current calendar year. Premiums related to unexpired contractual coverage periods (unearned premiums) are reported as other insurance liabilities on the unaudited condensed consolidated balance sheets and recognized as revenue when earned. Some of the Company’s contracts allow for premiums to be adjusted to reflect actual experience or the relative health status of Insured members. Such adjustments are reasonably estimable at the outset of the contract, and adjustments to those estimates are made based on actual experience of the customer emerging under the contract and the terms of the underlying contract. Services Revenue Services revenue relates to contracts that can include various combinations of services or series of services which generally are capable of being distinct and accounted for as separate performance obligations. Health Care Benefits segment services revenue primarily consists of the following components: • ASC fees are received in exchange for performing certain claim processing and member services for ASC members. ASC fee revenue is recognized over the period the service is provided. Some of the Company’s administrative services contracts include guarantees with respect to certain functions, such as customer service response time, claim processing accuracy and claim processing turnaround time, as well as certain guarantees that a plan sponsor’s benefit claim experience will fall within a certain range. With any of these guarantees, the Company is financially at risk if the conditions of the arrangements are not met, although the maximum amount at risk is typically limited to a percentage of the fees otherwise payable to the Company by the customer involved. Each period the Company estimates its obligations under the terms of these guarantees and records its estimate as an offset to services revenues. • Workers’ compensation administrative services consist of fee-based managed care services. Workers’ compensation administrative services revenue is recognized once the service is provided. |
New Accounting Pronouncements Recently Adopted and Not Yet Adopted | Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). Under this accounting standard, lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard that was adopted in 2018. The Company adopted this new accounting standard on January 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On January 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $ 178 million ( $241 million prior to tax effect). The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company’s consolidated operating results and had no impact on the Company’s cash flows. The following is a discussion of the Company’s lease policy under the new lease accounting standard: The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives. The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years each. For real estate leases, the options to extend are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options and regularly opens or closes stores to align with its operating strategy. Generally, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease. For real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities. See Note 5 ‘‘Leases’’ for additional information. Impact of New Lease Standard on Balance Sheet Line Items As a result of applying the new lease accounting standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2019: Impact of Change in Accounting Policy In millions As Reported Adjustments As Adjusted Condensed Consolidated Balance Sheets: Other current assets $ 4,581 $ (48 ) $ 4,533 Total current assets 45,243 (48 ) 45,195 Property and equipment, net 11,349 11 11,360 Operating lease right-of-use assets — 20,987 20,987 Intangible assets, net 36,524 (217 ) 36,307 Other assets 5,046 (521 ) 4,525 Total assets 196,456 20,212 216,668 Accrued expenses 10,711 (52 ) 10,659 Current portion of operating lease liabilities — 1,803 1,803 Current portion of long-term debt 1,265 2 1,267 Total current liabilities 44,009 1,753 45,762 Long-term operating lease liabilities — 18,832 18,832 Long-term debt 71,444 (96 ) 71,348 Deferred income taxes 7,677 63 7,740 Other long-term liabilities 2,780 (518 ) 2,262 Total liabilities 137,913 20,034 157,947 Retained earnings 40,911 178 41,089 Total CVS Health shareholders’ equity 58,225 178 58,403 Total shareholders’ equity 58,543 178 58,721 Accounting for Interest Associated with the Purchase of Callable Debt Securities In March 2017, the FASB issued ASU 2017-08, Accounting for Interest Associated with the Purchase of Callable Debt Securities (Topic 310). Under this standard, premiums on callable debt securities are amortized to the earliest call date rather than to the contractual maturity date. Callable debt securities held at a discount will continue to be amortized to the contractual maturity date. The Company adopted this new accounting standard on January 1, 2019 on a modified retrospective basis and recorded an immaterial cumulative effect adjustment from accumulated other comprehensive income to retained earnings on the condensed consolidated balance sheet. New Accounting Pronouncements Not Yet Adopted Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires the use of a forward-looking expected loss impairment model for trade and other receivables, held-to-maturity debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the implementation of this standard to have a material impact on the Company’s consolidated operating results, cash flows, financial condition or related disclosures. Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the implementation of this standard to have a material impact on the Company’s consolidated operating results, cash flows, financial condition or related disclosures. Targeted Improvements to the Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This standard requires the Company to review cash flow assumptions for its long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount the Company’s liability for future policy benefits will be based on an estimate of the yield for an upper-medium-grade fixed-income instrument. In addition, this standard changes the amortization method for deferred acquisition costs and requires additional disclosures regarding the long duration insurance contract liabilities in the Company’s interim and annual financial statements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | The following represents a reconciliation of cash and cash equivalents in the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash in the unaudited condensed consolidated statements of cash flows: In millions September 30, December 31, Cash and cash equivalents $ 5,193 $ 4,059 Restricted cash (included in other current assets) 6 6 Restricted cash (included in other assets) 270 230 Total cash, cash equivalents and restricted cash in the statements of cash flows $ 5,469 $ 4,295 |
Accounts Receivable, Net | Accounts receivable, net is composed of the following: In millions September 30, December 31, Trade receivables $ 6,413 $ 6,497 Vendor and manufacturer receivables 9,029 7,315 Premium receivables 2,340 2,259 Other receivables 2,007 1,560 Total accounts receivable, net $ 19,789 $ 17,631 |
Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by major source in each segment for the three and nine months ended September 30, 2019 and 2018 : In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2019 Major goods/services lines: Pharmacy $ 35,872 $ 16,687 $ — $ — $ (10,007 ) $ 42,552 Front Store — 4,614 — — — 4,614 Premiums — — 15,507 32 — 15,539 Net investment income — — 146 117 — 263 Other 146 165 1,528 3 — 1,842 Total $ 36,018 $ 21,466 $ 17,181 $ 152 $ (10,007 ) $ 64,810 Pharmacy Services distribution channel: Pharmacy network (1) $ 22,469 Mail choice (2) 13,403 Other 146 Total $ 36,018 Three Months Ended September 30, 2018 Major goods/services lines: Pharmacy $ 33,733 $ 16,123 $ — $ — $ (8,088 ) $ 41,768 Front Store — 4,557 — — — 4,557 Premiums — — 627 — — 627 Net investment income — — 4 217 — 221 Other 131 176 10 — — 317 Total $ 33,864 $ 20,856 $ 641 $ 217 $ (8,088 ) $ 47,490 Pharmacy Services distribution channel: Pharmacy network (1) $ 21,921 Mail choice (2) 11,812 Other 131 Total $ 33,864 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. (2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order. In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Nine Months Ended September 30, 2019 Major goods/services lines: Pharmacy $ 103,983 $ 49,197 $ — $ — $ (31,436 ) $ 121,744 Front Store — 14,288 — — — 14,288 Premiums — — 47,543 69 — 47,612 Net investment income — — 458 347 — 805 Other 435 543 4,453 7 — 5,438 Total $ 104,418 $ 64,028 $ 52,454 $ 423 $ (31,436 ) $ 189,887 Pharmacy Services distribution channel: Pharmacy network (1) $ 66,071 Mail choice (2) 37,912 Other 435 Total $ 104,418 Nine Months Ended September 30, 2018 Major goods/services lines: Pharmacy $ 99,432 $ 47,428 $ — $ — $ (24,840 ) $ 122,020 Front Store — 13,990 — — — 13,990 Premiums — — 2,684 — — 2,684 Net investment income — — 10 475 — 485 Other 405 542 29 — — 976 Total $ 99,837 $ 61,960 $ 2,723 $ 475 $ (24,840 ) $ 140,155 Pharmacy Services distribution channel: Pharmacy network (1) $ 64,625 Mail choice (2) 34,807 Other 405 Total $ 99,837 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. (2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order. |
Contracts With Customers, Assets and Liabilities | The following table provides information about receivables and contract liabilities from contracts with customers: In millions September 30, December 31, Trade receivables (included in accounts receivable, net) $ 6,413 $ 6,497 Contract liabilities (included in accrued expenses) 72 67 During the nine months ended September 30, 2019 , the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes: In millions Balance at December 31, 2018 $ 67 Loyalty program earnings and gift card issuances 269 Redemption and breakage (264 ) Balance at September 30, 2019 $ 72 |
Impact of New Lease Standard on Balance Sheet Line Items | As a result of applying the new lease accounting standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2019: Impact of Change in Accounting Policy In millions As Reported Adjustments As Adjusted Condensed Consolidated Balance Sheets: Other current assets $ 4,581 $ (48 ) $ 4,533 Total current assets 45,243 (48 ) 45,195 Property and equipment, net 11,349 11 11,360 Operating lease right-of-use assets — 20,987 20,987 Intangible assets, net 36,524 (217 ) 36,307 Other assets 5,046 (521 ) 4,525 Total assets 196,456 20,212 216,668 Accrued expenses 10,711 (52 ) 10,659 Current portion of operating lease liabilities — 1,803 1,803 Current portion of long-term debt 1,265 2 1,267 Total current liabilities 44,009 1,753 45,762 Long-term operating lease liabilities — 18,832 18,832 Long-term debt 71,444 (96 ) 71,348 Deferred income taxes 7,677 63 7,740 Other long-term liabilities 2,780 (518 ) 2,262 Total liabilities 137,913 20,034 157,947 Retained earnings 40,911 178 41,089 Total CVS Health shareholders’ equity 58,225 178 58,403 Total shareholders’ equity 58,543 178 58,721 |
Acquisition and Divestiture (Ta
Acquisition and Divestiture (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Estimated Fair Values Of The Assets Acquired And Liabilities Assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition: In millions Cash and cash equivalents $ 6,565 Accounts receivable 4,094 Other current assets 3,894 Investments (current and long-term) 17,984 Goodwill 47,554 Intangible assets 22,571 Other long-term assets 8,249 Total assets acquired 110,911 Health care costs payable 5,302 Other current liabilities 10,069 Debt (current and long-term) 8,098 Deferred income taxes 4,278 Other long-term liabilities 13,078 Total liabilities assumed 40,825 Noncontrolling interests 320 Total consideration transferred $ 69,766 |
Unaudited Pro Forma Financial Information | The following unaudited pro forma information presents a summary of the Company’s combined operating results for the three and nine months ended September 30, 2018 as if the Aetna acquisition and the related financing transactions had occurred on January 1, 2017 . The following pro forma financial information is not necessarily indicative of the Company’s operating results as they would have been had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies and the impact of incremental costs incurred in integrating the businesses. In millions, except per share amounts Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Total revenues $ 60,865 $ 180,164 Income from continuing operations attributable to CVS Health 1,864 1,731 Basic earnings per share from continuing operations attributable to CVS Health $ 1.44 $ 1.34 Diluted earnings per share from continuing operations attributable to CVS Health $ 1.43 $ 1.33 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments [Abstract] | |
Total Investments | Total investments at September 30, 2019 and December 31, 2018 were as follows: September 30, 2019 December 31, 2018 In millions Current Long-term Total Current Long-term Total Debt securities available for sale $ 2,175 $ 14,583 $ 16,758 $ 2,359 $ 12,896 $ 15,255 Mortgage loans 159 1,131 1,290 145 1,216 1,361 Other investments — 1,628 1,628 18 1,620 1,638 Total investments $ 2,334 $ 17,342 $ 19,676 $ 2,522 $ 15,732 $ 18,254 |
Debt Securities Available For Sale | Debt securities available for sale at September 30, 2019 and December 31, 2018 were as follows: In millions Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value September 30, 2019 Debt securities: U.S. government securities $ 1,743 $ 83 $ — $ 1,826 States, municipalities and political subdivisions 2,240 114 (1 ) 2,353 U.S. corporate securities 7,076 568 (7 ) 7,637 Foreign securities 2,095 194 — 2,289 Residential mortgage-backed securities 529 25 — 554 Commercial mortgage-backed securities 645 56 — 701 Other asset-backed securities 1,348 15 (5 ) 1,358 Redeemable preferred securities 32 8 — 40 Total debt securities (1) $ 15,708 $ 1,063 $ (13 ) $ 16,758 December 31, 2018 Debt securities: U.S. government securities $ 1,662 $ 26 $ — $ 1,688 States, municipalities and political subdivisions 2,370 30 (1 ) 2,399 U.S. corporate securities 6,444 61 (16 ) 6,489 Foreign securities 2,355 31 (3 ) 2,383 Residential mortgage-backed securities 567 10 — 577 Commercial mortgage-backed securities 594 11 — 605 Other asset-backed securities 1,097 3 (15 ) 1,085 Redeemable preferred securities 30 — (1 ) 29 Total debt securities (1) $ 15,119 $ 172 $ (36 ) $ 15,255 _____________________________________________ (1) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At September 30, 2019 , debt securities with a fair value of $973 million , gross unrealized capital gains of $85 million and no gross unrealized capital losses and at December 31, 2018 , debt securities with a fair value of $916 million , gross unrealized capital gains of $12 million and gross unrealized capital losses of $2 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income. |
Fair Value of Debt Securities by Contractual Maturity | The fair value of debt securities at September 30, 2019 is shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity. In millions Amortized Cost Fair Value Due to mature: Less than one year $ 1,017 $ 1,022 One year through five years 5,378 5,568 After five years through ten years 3,098 3,316 Greater than ten years 3,693 4,239 Residential mortgage-backed securities 529 554 Commercial mortgage-backed securities 645 701 Other asset-backed securities 1,348 1,358 Total $ 15,708 $ 16,758 |
Debt Securities In An Unrealized Capital Loss Position | Summarized below are the debt securities the Company held at September 30, 2019 and December 31, 2018 that were in an unrealized capital loss position: In millions, except number of securities Number of Securities Fair Value Unrealized Losses September 30, 2019 Debt securities: U.S. government securities 8 $ 41 $ — States, municipalities and political subdivisions 38 53 1 U.S. corporate securities 217 254 7 Foreign securities 27 39 — Residential mortgage-backed securities 31 17 — Other asset-backed securities 327 386 5 Total debt securities 648 $ 790 $ 13 December 31, 2018 Debt securities: U.S. government securities 8 $ 26 $ — States, municipalities and political subdivisions 54 86 1 U.S. corporate securities 1,399 1,431 16 Foreign securities 243 314 3 Residential mortgage-backed securities 45 1 — Other asset-backed securities 516 528 15 Redeemable preferred securities 14 23 1 Total debt securities 2,279 $ 2,409 $ 36 The maturity dates for debt securities in an unrealized capital loss position at September 30, 2019 were as follows: Supporting experience-rated products Supporting remaining products Total In millions Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Due to mature: Less than one year $ — $ — $ 3 $ — $ 3 $ — One year through five years 1 — 137 2 138 2 After five years through ten years 8 — 128 4 136 4 Greater than ten years 11 — 99 2 110 2 Residential mortgage-backed securities — — 17 — 17 — Other asset-backed securities 10 — 376 5 386 5 Total $ 30 $ — $ 760 $ 13 $ 790 $ 13 |
Activity in Mortgage Loan Portfolio | During the three and nine months ended September 30, 2019 , the Company had the following activity in its mortgage loan portfolio: In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 New mortgage loans $ 12 $ 90 Mortgage loans fully repaid 56 127 Mortgage loans foreclosed — — |
Mortgage Loan Internal Credit Rating | Based upon the Company’s assessments at September 30, 2019 and December 31, 2018 , the Company’s mortgage loans were given the following credit quality indicators: In millions, except credit ratings indicator September 30, December 31, 1 $ 44 $ 42 2 to 4 1,234 1,301 5 and 6 12 18 7 — — Total $ 1,290 $ 1,361 |
Net Investment Income | Sources of net investment income for the three and nine months ended September 30, 2019 and 2018 were as follows: Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Debt securities $ 145 $ 2 $ 437 $ 5 Mortgage loans 19 — 54 — Other investments 60 219 163 480 Gross investment income 224 221 654 485 Investment expenses (10 ) — (28 ) — Net investment income (excluding net realized capital gains or losses) 214 221 626 485 Net realized capital gains (1) 49 — 179 — Net investment income (2) $ 263 $ 221 $ 805 $ 485 _____________________________________________ (1) Other-than-temporary impairment (“OTTI”) losses on debt securities recognized in the unaudited condensed consolidated statements of operations were $9 million and $22 million , respectively, for the three and nine months ended September 30, 2019 . There were no OTTI losses on debt securities for the three and nine months ended September 30, 2018 . (2) Net investment income includes $10 million and $33 million for the three and nine months ended September 30, 2019 , respectively, related to investments supporting experience-rated products. The Company had no investments supporting experience-rated products during the three and nine months ended September 30, 2018 . |
Proceeds and Related Gross Realized Capital Gains and Losses From the Sale of Debt Securities | Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three and nine months ended September 30, 2019 were as follows: In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Proceeds from sales $ 1,325 $ 4,087 Gross realized capital gains 55 127 Gross realized capital losses 9 13 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2019 and December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total September 30, 2019 Debt securities: U.S. government securities $ 1,746 $ 80 $ — $ 1,826 States, municipalities and political subdivisions — 2,353 — 2,353 U.S. corporate securities — 7,596 41 7,637 Foreign securities — 2,284 5 2,289 Residential mortgage-backed securities — 554 — 554 Commercial mortgage-backed securities — 701 — 701 Other asset-backed securities — 1,358 — 1,358 Redeemable preferred securities — 28 12 40 Total debt securities 1,746 14,954 58 16,758 Equity securities 32 — 36 68 Total $ 1,778 $ 14,954 $ 94 $ 16,826 December 31, 2018 Debt securities: U.S. government securities $ 1,597 $ 91 $ — $ 1,688 States, municipalities and political subdivisions — 2,399 — 2,399 U.S. corporate securities — 6,422 67 6,489 Foreign securities — 2,380 3 2,383 Residential mortgage-backed securities — 577 — 577 Commercial mortgage-backed securities — 605 — 605 Other asset-backed securities — 1,085 — 1,085 Redeemable preferred securities — 22 7 29 Total debt securities 1,597 13,581 77 15,255 Equity securities 19 — 54 73 Total $ 1,616 $ 13,581 $ 131 $ 15,328 |
Fair Value, by Balance Sheet Grouping | The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the condensed consolidated balance sheets at adjusted cost or contract value at September 30, 2019 and December 31, 2018 were as follows: Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total September 30, 2019 Assets: Mortgage loans $ 1,290 $ — $ — $ 1,317 $ 1,317 Equity securities (1) 142 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 372 — — 385 385 Long-term debt 67,984 72,823 — — 72,823 December 31, 2018 Assets: Mortgage loans $ 1,361 $ — $ — $ 1,366 $ 1,366 Equity securities (1) 140 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 382 — — 357 357 Long-term debt 72,709 71,252 — — 71,252 _____________________________________________ (1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. |
Schedule of Fair Value of Separate Accounts by Major Category of Investment | Separate Accounts financial assets as of September 30, 2019 and December 31, 2018 were as follows: September 30, 2019 December 31, 2018 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Debt securities $ 1,207 $ 2,609 $ — $ 3,816 $ 782 $ 2,500 $ 4 $ 3,286 Equity securities — 2 — 2 — 3 — 3 Common/collective trusts — 513 — 513 — 404 — 404 Total (1) $ 1,207 $ 3,124 $ — $ 4,331 $ 782 $ 2,907 $ 4 $ 3,693 _____________________________________________ (1) Excludes $259 million and $191 million of cash and cash equivalents and accounts receivable at September 30, 2019 and December 31, 2018 , respectively. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease Costs and Supplemental Cash Flow Information | The following table is a summary of the Company’s components of net lease cost for the three and nine months ended September 30, 2019 : In millions Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Operating lease cost $ 681 $ 2,044 Finance lease cost: Amortization of right-of-use assets 9 27 Interest on lease liabilities 11 32 Total finance lease costs 20 59 Short-term lease costs 5 17 Variable lease costs 148 434 Less: sublease income 13 35 Net lease cost $ 841 $ 2,519 Supplemental cash flow information related to leases for the nine months ended September 30, 2019 is as follows: In millions Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases $ 2,023 Operating cash flows paid for interest portion of finance leases 32 Financing cash flows paid for principal portion of finance leases 19 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1,203 Finance leases 82 |
Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases as of September 30, 2019 is as follows: In millions, except lease term and discount rate Operating leases: Operating lease right-of-use assets $ 20,757 Current portion of operating lease liabilities $ 1,798 Long-term operating lease liabilities 18,826 Total operating lease liabilities $ 20,624 Finance leases: (1) Property and equipment, net $ 560 Current portion of long-term debt $ 27 Long-term debt 591 Total finance lease liabilities $ 618 Weighted average remaining lease term Operating leases 13.8 Finance leases 20.6 Weighted average discount rate Operating leases 4.6 % Finance leases 7.3 % _____________________________________________ (1) Finance lease right-of-use assets are included within property and equipment, net and the respective finance lease liabilities are included in current portion of long-term debt and long-term debt on the unaudited condensed consolidated balance sheets. |
Maturities of Operating Lease Liabilities | The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 30, 2019 : In millions Finance Operating (1) Total 2019 (remaining three months) $ 18 $ 679 $ 697 2020 70 2,688 2,758 2021 68 2,567 2,635 2022 64 2,408 2,472 2023 62 2,297 2,359 Thereafter 883 17,165 18,048 Total lease payments (2) 1,165 27,804 28,969 Less: imputed interest (547 ) (7,180 ) (7,727 ) Total lease liabilities $ 618 $ 20,624 $ 21,242 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $320 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. |
Maturities of Financing Lease Liabilities | The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 30, 2019 : In millions Finance Operating (1) Total 2019 (remaining three months) $ 18 $ 679 $ 697 2020 70 2,688 2,758 2021 68 2,567 2,635 2022 64 2,408 2,472 2023 62 2,297 2,359 Thereafter 883 17,165 18,048 Total lease payments (2) 1,165 27,804 28,969 Less: imputed interest (547 ) (7,180 ) (7,727 ) Total lease liabilities $ 618 $ 20,624 $ 21,242 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $320 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. |
Health Care Costs Payable (Tabl
Health Care Costs Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Health Care and Other Insurance Liabilities [Abstract] | |
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2019 : In millions Health care costs payable, beginning of the period $ 6,147 Less: Reinsurance recoverables 4 Health care costs payable, beginning of the period, net 6,143 Add: Components of incurred health care costs Current year 39,657 Prior years (511 ) Total incurred health care costs (1) 39,146 Less: Claims paid Current year 33,032 Prior years 5,253 Total claims paid 38,285 Add: Premium deficiency reserve 6 Health care costs payable, end of period, net 7,010 Add: Reinsurance recoverables 4 Health care costs payable, end of period $ 7,014 _____________________________________________ (1) Total incurred health care costs during the nine months ended September 30, 2019 in the table above exclude (i) $6 million related to a premium deficiency reserve for the 2019 coverage year related to the Company’s Medicaid products, (ii) $31 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet and (iii) $213 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet. |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Company's Borrowings | The following table is a summary of the Company’s borrowings at September 30, 2019 and December 31, 2018 : In millions September 30, 2019 December 31, 2018 Short-term debt Commercial paper $ 1,070 $ 720 Long-term debt 2.2% senior notes due March 2019 — 375 2.25% senior notes due August 2019 — 850 3.125% senior notes due March 2020 723 2,000 Floating rate notes due March 2020 277 1,000 2.8% senior notes due July 2020 2,750 2,750 3.35% senior notes due March 2021 2,038 3,000 Floating rate notes due March 2021 1,000 1,000 4.125% senior notes due May 2021 222 550 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 203 500 5.45% senior notes due June 2021 187 600 3-year tranche term loan due November 2021 — 3,000 3.5% senior notes due July 2022 1,500 1,500 2.75% senior notes due November 2022 1,000 1,000 2.75% senior notes due December 2022 1,250 1,250 4.75% senior notes due December 2022 399 399 3.7% senior notes due March 2023 6,000 6,000 2.8% senior notes due June 2023 1,300 1,300 4% senior notes due December 2023 1,250 1,250 2.625% senior notes due August 2024 1,000 — 3.375% senior notes due August 2024 650 650 3.5% senior notes due November 2024 750 750 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 5,000 5,000 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 3% senior notes due August 2026 750 — 6.25% senior notes due June 2027 372 372 4.3% senior notes due March 2028 9,000 9,000 3.25% senior notes due August 2029 1,750 — 4.875% senior notes due July 2035 652 652 6.625% senior notes due June 2036 771 771 6.75% senior notes due December 2037 533 533 4.78% senior notes due March 2038 5,000 5,000 6.125% senior notes due September 2039 447 447 5.75% senior notes due May 2041 133 133 4.5% senior notes due May 2042 500 500 4.125% senior notes due November 2042 500 500 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 375 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 1,000 5.05% senior notes due March 2048 8,000 8,000 Finance lease obligations 618 642 Other 1 19 Total debt principal 69,848 74,265 Debt premiums 267 302 Debt discounts and deferred financing costs (1,061 ) (1,138 ) 69,054 73,429 Less: Short-term debt (commercial paper) (1,070 ) (720 ) Current portion of long-term debt (3,778 ) (1,265 ) Long-term debt $ 64,206 $ 71,444 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Shareholders’ equity included the following activity in accumulated other comprehensive income for the three and nine months ended September 30, 2019 and 2018 : Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Net unrealized investment gains (losses): Beginning of period balance $ 682 $ — $ 97 $ — Other comprehensive income before reclassifications ($214, $0, $933 and $0 pretax) 192 — 799 — Amounts reclassified from accumulated other comprehensive income ($(63), $0, $(93) and $0 pretax) (1) (56 ) — (78 ) — Other comprehensive income 136 — 721 — End of period balance 818 — 818 — Foreign currency translation adjustments: Beginning of period balance (154 ) (155 ) (158 ) (129 ) Other comprehensive income (loss) before reclassifications (1 ) (8 ) 3 (34 ) Amounts reclassified from accumulated other comprehensive loss (2) 154 — 154 — Other comprehensive income (loss) 153 (8 ) 157 (34 ) End of period balance (1 ) (163 ) (1 ) (163 ) Net cash flow hedges: Beginning of period balance 305 321 312 (15 ) Adoption of new accounting standard (3) — — — (3 ) Other comprehensive income (loss) before reclassifications ($(25), $0, $(25) and $464 pretax) (18 ) — (18 ) 344 Amounts reclassified from accumulated other comprehensive income (loss) ($(7), $(5), $(16) and $(12) pretax) (4) (5 ) (4 ) (12 ) (9 ) Other comprehensive income (loss) (23 ) (4 ) (30 ) 335 End of period balance 282 317 282 317 Pension and OPEB plans: Beginning of period balance (149 ) (25 ) (149 ) (21 ) Adoption of new accounting standard (3) — — — (4 ) End of period balance (149 ) (25 ) (149 ) (25 ) Total beginning of period accumulated other comprehensive income (loss) 684 141 102 (165 ) Adoption of new accounting standard (3) — — — (7 ) Total other comprehensive income (loss) 266 (12 ) 848 301 Total end of period accumulated other comprehensive income $ 950 $ 129 $ 950 $ 129 _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income in the unaudited condensed consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive loss represent the elimination of the cumulative translation adjustment associated with the sale of Onofre, which was sold on July 1, 2019. The loss on the divestiture of Onofre is reflected in operating expenses in the unaudited condensed consolidated statements of operations. (3) Reflects the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income during the nine months ended September 30, 2018. (4) Amounts reclassified from accumulated other comprehensive income (loss) for specifically identified cash flow hedges are included in interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $15 million , net of tax, in net gains associated with its cash flow hedges into net income within the next 12 months. |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following is a reconciliation of basic and diluted earnings (loss) per share from continuing operations for the respective periods: Three Months Ended Nine Months Ended In millions, except per share amounts 2019 2018 2019 2018 Numerator for earnings (loss) per share calculation: Income (loss) from continuing operations $ 1,529 $ 1,390 $ 4,887 $ (174 ) Income from continuing operations allocated to participating securities — (1 ) (3 ) (3 ) Loss from continuing operations attributable to noncontrolling interest 1 — — — Income (l oss) from continuing operations attributable to CVS Health $ 1,530 $ 1,389 $ 4,884 $ (177 ) Denominator for earnings (loss) per share calculation: Weighted average shares, basic 1,302 1,020 1,300 1,018 Effect of dilutive securities 3 2 3 — Weighted average shares, diluted 1,305 1,022 1,303 1,018 Earnings (loss) per share from continuing operations: Basic $ 1.17 $ 1.36 $ 3.76 $ (0.17 ) Diluted $ 1.17 $ 1.36 $ 3.75 $ (0.17 ) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | Segment financial information for the three and nine months ended September 30, 2018 , has been retrospectively adjusted to reflect these changes as shown below: Three Months Ended September 30, 2018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Revenues, as previously reported $ 33,767 $ 20,856 $ — $ 217 $ (7,350 ) $ 47,490 Adjustments 97 — 641 — (738 ) — Revenues, as adjusted $ 33,864 $ 20,856 $ 641 $ 217 $ (8,088 ) $ 47,490 Cost of products sold (1) $ 31,587 $ 15,042 $ — $ — $ (7,127 ) $ 39,502 Adjustments 651 — — — (651 ) — Cost of products sold, as adjusted $ 32,238 $ 15,042 $ — $ — $ (7,778 ) $ 39,502 Benefit costs (1) $ 439 $ — $ — $ — $ — $ 439 Adjustments (439 ) — 439 — — — Benefit costs, as adjusted $ — $ — $ 439 $ — $ — $ 439 Operating expenses, as previously reported $ 392 $ 4,323 $ — $ 287 $ (27 ) $ 4,975 Adjustments (41 ) — 128 — (87 ) — Operating expenses, as adjusted $ 351 $ 4,323 $ 128 $ 287 $ (114 ) $ 4,975 Operating income (loss), as previously reported $ 1,349 $ 1,491 $ — $ (70 ) $ (196 ) $ 2,574 Adjustments (74 ) — 74 — — — Operating income (loss), as adjusted 1,275 1,491 74 (70 ) (196 ) 2,574 Segment measure adjustments 87 131 1 (143 ) — 76 Adjusted operating income (loss) $ 1,362 $ 1,622 $ 75 $ (213 ) $ (196 ) $ 2,650 _____________________________________________ (1) The total of cost of products sold and benefit costs previously were reported as cost of revenues. Nine Months Ended September 30, 2018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Revenues, as previously reported $ 99,238 $ 61,960 $ — $ 475 $ (21,518 ) $ 140,155 Adjustments 599 — 2,723 — (3,322 ) — Revenues, as adjusted $ 99,837 $ 61,960 $ 2,723 $ 475 $ (24,840 ) $ 140,155 Cost of products sold (1) $ 92,459 $ 44,318 $ — $ — $ (20,894 ) $ 115,883 Adjustments 3,059 — — — (3,059 ) — Cost of products sold, as adjusted $ 95,518 $ 44,318 $ — $ — $ (23,953 ) $ 115,883 Benefit costs (1) $ 2,399 $ — $ — $ — $ — $ 2,399 Adjustments (2,399 ) — 2,399 — — — Benefit costs, as adjusted $ — $ — $ 2,399 $ — $ — $ 2,399 Operating expenses, as previously reported $ 1,176 $ 12,831 $ — $ 814 $ (66 ) $ 14,755 Adjustments (125 ) — 388 — (263 ) — Operating expenses, as adjusted $ 1,051 $ 12,831 $ 388 $ 814 $ (329 ) $ 14,755 Operating income (loss), as previously reported $ 3,204 $ 890 $ — $ (339 ) $ (558 ) $ 3,197 Adjustments 64 — (64 ) — — — Operating income (loss), as adjusted 3,268 890 (64 ) (339 ) (558 ) 3,197 Segment measure adjustments 262 4,389 2 (308 ) — 4,345 Adjusted operating income (loss) $ 3,530 $ 5,279 $ (62 ) $ (647 ) $ (558 ) $ 7,542 _____________________________________________ (1) |
Summarized Financial Information Of Segments | The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals: In millions Pharmacy (1) Retail/ Health Care Corporate/ Intersegment (2) Consolidated Three Months Ended September 30, 2019 Revenues from customers $ 36,018 $ 21,466 $ 17,035 $ 35 $ (10,007 ) $ 64,547 Net investment income — — 146 117 — 263 Total revenues 36,018 21,466 17,181 152 (10,007 ) 64,810 Adjusted operating income (loss) 1,439 1,516 1,423 (252 ) (179 ) 3,947 September 30, 2018 Revenues from customers $ 33,864 $ 20,856 $ 637 $ — $ (8,088 ) $ 47,269 Net investment income — — 4 217 — 221 Total revenues 33,864 20,856 641 217 (8,088 ) 47,490 Adjusted operating income (loss) 1,362 1,622 75 (213 ) (196 ) 2,650 Nine Months Ended September 30, 2019 Revenues from customers $ 104,418 $ 64,028 $ 51,996 $ 76 $ (31,436 ) $ 189,082 Net investment income — — 458 347 — 805 Total revenues 104,418 64,028 52,454 423 (31,436 ) 189,887 Adjusted operating income (loss) 3,682 4,674 4,423 (685 ) (521 ) 11,573 September 30, 2018 Revenues from customers $ 99,837 $ 61,960 $ 2,713 $ — $ (24,840 ) $ 139,670 Net investment income — — 10 475 — 485 Total revenues 99,837 61,960 2,723 475 (24,840 ) 140,155 Adjusted operating income (loss) 3,530 5,279 (62 ) (647 ) (558 ) 7,542 _____________________________________________ (1) Total revenues of the Pharmacy Services segment include approximately $2.7 billion of retail co-payments for each of the three-month periods ended September 30, 2019 and 2018 , and $8.9 billion and $8.8 billion of retail co-payments for the nine months ended September 30, 2019 and 2018 , respectively. (2) Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment, the Retail/LTC segment and/or the Health Care Benefits segment. |
Reconciliation of Operating Earnings to Net Income | The following are reconciliations of consolidated operating income to adjusted operating income for the three and nine months ended September 30, 2019 and 2018 : Three Months Ended Nine Months Ended In millions 2019 2018 2019 2018 Operating income (GAAP measure) $ 2,928 $ 2,574 $ 8,950 $ 3,197 Amortization of intangible assets (1) 607 215 1,822 639 Acquisition-related transaction and integration costs (2) 111 70 365 152 Store rationalization charges (3) 96 — 231 — Loss on divestiture of subsidiary (4) 205 — 205 86 Goodwill impairment (5) — — — 3,921 Interest income on financing for the Aetna Acquisition (6) — (209 ) — (453 ) Adjusted operating income $ 3,947 $ 2,650 $ 11,573 $ 7,542 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. (2) During the three and nine months ended September 30, 2019 and 2018, acquisition-related transaction and integration costs relate to the Aetna Acquisition. During the nine months ended September 30, 2018, acquisition-related integration costs also relate to the acquisition of Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment. (3) During the three and nine months ended September 30, 2019, the store rationalization charges relate to the planned closure of 22 underperforming retail pharmacy stores in the first quarter of 2020. During the nine months ended September 30, 2019, the store rationalization charges also relate to the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charges primarily relate to operating lease right-of-use asset impairment charges and are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment. (4) During the three and nine months ended September 30, 2019, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of Onofre, which occurred on July 1, 2019. The loss on divestiture primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. During the nine months ended September 30, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. (5) During the nine months ended September 30, 2018, the goodwill impairment charge relates to the LTC reporting unit within the Retail/LTC segment. (6) During the three and nine months ended September 30, 2018 , the Company recorded interest income of $209 million and $453 million , respectively, on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment. |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) person in Millions, patient in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($)personbuildingclinicpatientstate | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)personbuildingclinicpatientSegmentstate | Sep. 30, 2018USD ($) | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of stores | building | 9,900 | 9,900 | ||||
Number of walk in medical clinics | clinic | 1,100 | 1,100 | ||||
Number of pharmacy plan members | person | 102 | 102 | ||||
Number of patients served per year | patient | 1 | 1 | ||||
Number of people served through health insurance products and related services | person | 38 | 38 | ||||
Number of reportable segments | Segment | 4 | |||||
Related party transaction, expenses from transactions with related party | $ 14 | $ 4 | $ 26 | $ 34 | ||
Related party transaction, other revenues from transactions with related party | 20 | $ 34 | 72 | $ 105 | ||
Retained earnings | $ 44,017 | $ 44,017 | $ 41,089 | $ 40,911 | ||
Lease renewal term | 5 years | 5 years | ||||
Retail Long-Term Care Segment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of stores | building | 9,900 | 9,900 | ||||
Number of walk in medical clinics | clinic | 1,100 | 1,100 | ||||
Health Care Benefits Segment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of people served through health insurance products and related services | person | 38 | 38 | ||||
Accounting Standards Update 2016-02 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Retained earnings | 178 | |||||
Retained earnings, pre-tax | $ 241 | |||||
Equity Method Investee | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of states in which entity operates | state | 4 | 4 |
Significant Accounting Polici_5
Significant Accounting Policies - Cash and Cash Equivalents, Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 5,193 | $ 4,059 | ||
Restricted cash (included in other current assets) | 6 | 6 | ||
Restricted cash (included in other assets) | 270 | 230 | ||
Total cash, cash equivalents and restricted cash in the statements of cash flows | $ 5,469 | $ 4,295 | $ 41,827 | $ 1,900 |
Significant Accounting Polici_6
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Trade receivables | $ 6,413 | $ 6,497 |
Vendor and manufacturer receivables | 9,029 | 7,315 |
Premium receivables | 2,340 | 2,259 |
Other receivables | 2,007 | 1,560 |
Total accounts receivable, net | $ 19,789 | $ 17,631 |
Significant Accounting Polici_7
Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | $ 64,547 | $ 47,269 | $ 189,082 | $ 139,670 |
Net investment income | 263 | 221 | 805 | 485 |
Total revenues | 64,810 | 47,490 | 189,887 | 140,155 |
Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 42,552 | 41,768 | 121,744 | 122,020 |
Front Store | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 4,614 | 4,557 | 14,288 | 13,990 |
Premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 15,539 | 627 | 47,612 | 2,684 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 1,842 | 317 | 5,438 | 976 |
Operating Segments | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 36,018 | 33,864 | 104,418 | 99,837 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 36,018 | 33,864 | 104,418 | 99,837 |
Operating Segments | Retail Long-Term Care Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 21,466 | 20,856 | 64,028 | 61,960 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 21,466 | 20,856 | 64,028 | 61,960 |
Operating Segments | Health Care Benefits Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 17,035 | 637 | 51,996 | 2,713 |
Net investment income | 146 | 4 | 458 | 10 |
Total revenues | 17,181 | 641 | 52,454 | 2,723 |
Operating Segments | Corporate / Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 35 | 0 | 76 | 0 |
Net investment income | 117 | 217 | 347 | 475 |
Total revenues | 152 | 217 | 423 | 475 |
Operating Segments | Pharmacy | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 35,872 | 33,733 | 103,983 | 99,432 |
Operating Segments | Pharmacy | Retail Long-Term Care Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 16,687 | 16,123 | 49,197 | 47,428 |
Operating Segments | Pharmacy | Health Care Benefits Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Pharmacy | Corporate / Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Front Store | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Front Store | Retail Long-Term Care Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 4,614 | 4,557 | 14,288 | 13,990 |
Operating Segments | Front Store | Health Care Benefits Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Front Store | Corporate / Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Retail Long-Term Care Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Health Care Benefits Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 15,507 | 627 | 47,543 | 2,684 |
Operating Segments | Premiums | Corporate / Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 32 | 0 | 69 | 0 |
Operating Segments | Other | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 146 | 131 | 435 | 405 |
Operating Segments | Other | Retail Long-Term Care Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 165 | 176 | 543 | 542 |
Operating Segments | Other | Health Care Benefits Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 1,528 | 10 | 4,453 | 29 |
Operating Segments | Other | Corporate / Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 3 | 0 | 7 | 0 |
Operating Segments | Pharmacy network | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 22,469 | 21,921 | 66,071 | 64,625 |
Operating Segments | Mail choice | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 13,403 | 11,812 | 37,912 | 34,807 |
Operating Segments | Other | Pharmacy Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 146 | 131 | 435 | 405 |
Intersegment Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | (10,007) | (8,088) | (31,436) | (24,840) |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | (10,007) | (8,088) | (31,436) | (24,840) |
Intersegment Eliminations | Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | (10,007) | (8,088) | (31,436) | (24,840) |
Total revenues | (10,007) | (8,088) | (31,436) | (24,840) |
Intersegment Eliminations | Front Store | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Intersegment Eliminations | Premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | 0 | 0 | 0 | 0 |
Intersegment Eliminations | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues from customers | $ 0 | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_8
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Trade receivables (included in accounts receivable, net) | $ 6,413 | $ 6,497 | |
Contract liabilities (included in accrued expenses) | $ 72 | $ 72 | $ 67 |
Change in Contract with Customer, Liability [Roll Forward] | |||
Contract liabilities (included in accrued expenses) beginning balance | 67 | ||
Loyalty program earnings and gift card issuances | 269 | ||
Redemption and breakage | (264) | ||
Contract liabilities (included in accrued expenses) ending balance | $ 72 |
Significant Accounting Polici_9
Significant Accounting Policies - Impact of New Lease Standard On Balance Sheet Line Items (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Other current assets | $ 4,841 | $ 4,533 | $ 4,581 | ||||||
Total current assets | 48,185 | 45,195 | 45,243 | ||||||
Property and equipment, net | 11,651 | 11,360 | 11,349 | ||||||
Operating lease right-of-use assets | 20,757 | 20,987 | 0 | ||||||
Intangible assets, net | 33,655 | 36,307 | 36,524 | ||||||
Other assets | 4,385 | 4,525 | 5,046 | ||||||
Total assets | 220,113 | 216,668 | 196,456 | ||||||
Accrued expenses | 11,615 | 10,659 | 10,711 | ||||||
Current portion of operating lease liabilities | 1,798 | 1,803 | 0 | ||||||
Current portion of long-term debt | 3,778 | 1,267 | 1,265 | ||||||
Total current liabilities | 52,544 | 45,762 | 44,009 | ||||||
Long-term operating lease liabilities | 18,826 | 18,832 | 0 | ||||||
Long-term debt | 64,206 | 71,348 | 71,444 | ||||||
Deferred income taxes | 7,279 | 7,740 | 7,677 | ||||||
Other long-term liabilities | 2,178 | 2,262 | 2,780 | ||||||
Total liabilities | 157,180 | 157,947 | 137,913 | ||||||
Retained earnings | 44,017 | 41,089 | 40,911 | ||||||
Total CVS Health shareholders’ equity | 62,614 | 58,403 | 58,225 | ||||||
Total shareholders’ equity | $ 62,933 | $ 61,599 | $ 60,006 | 58,721 | $ 58,543 | $ 36,622 | $ 35,611 | $ 38,677 | $ 37,695 |
Accounting Standards Update 2016-02 | |||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||
Other current assets | (48) | ||||||||
Total current assets | (48) | ||||||||
Property and equipment, net | 11 | ||||||||
Operating lease right-of-use assets | 20,987 | ||||||||
Intangible assets, net | (217) | ||||||||
Other assets | (521) | ||||||||
Total assets | 20,212 | ||||||||
Accrued expenses | (52) | ||||||||
Current portion of operating lease liabilities | 1,803 | ||||||||
Current portion of long-term debt | 2 | ||||||||
Total current liabilities | 1,753 | ||||||||
Long-term operating lease liabilities | 18,832 | ||||||||
Long-term debt | (96) | ||||||||
Deferred income taxes | 63 | ||||||||
Other long-term liabilities | (518) | ||||||||
Total liabilities | 20,034 | ||||||||
Retained earnings | 178 | ||||||||
Total CVS Health shareholders’ equity | 178 | ||||||||
Total shareholders’ equity | $ 178 |
Acquisition and Divestiture (De
Acquisition and Divestiture (Details) $ / shares in Units, $ in Millions | Nov. 28, 2018USD ($)$ / shares | Sep. 30, 2019USD ($)buildingclinic | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||
Long-term debt | $ 69,054 | $ 73,429 | |
Number of stores | building | 9,900 | ||
Number of walk in medical clinics | clinic | 1,100 | ||
Aetna Inc. | |||
Business Acquisition [Line Items] | |||
Percentage of voting interests acquired | 100.00% | ||
Cash received by shareholders (in dollars per share) | $ / shares | $ 145 | ||
Per share exchange ratio (in shares) | $ / shares | 0.8378 | ||
Acquisition value per share acquired (in dollars per share) | $ / shares | $ 212 | ||
Consideration transferred | $ 70,000 | ||
Acquisition assigned value of acquiree | 78,000 | ||
Long-term debt | $ 45,000 |
Acquisition and Divestiture - F
Acquisition and Divestiture - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Nov. 28, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Goodwill | $ 79,548 | $ 78,678 | |
Aetna Inc. | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 6,565 | ||
Accounts receivable | 4,094 | ||
Other current assets | 3,894 | ||
Investments (current and long-term) | 17,984 | ||
Goodwill | 47,554 | ||
Intangible assets | 22,571 | ||
Other long-term assets | 8,249 | ||
Total assets acquired | 110,911 | ||
Health care costs payable | 5,302 | ||
Other current liabilities | 10,069 | ||
Debt (current and long-term) | 8,098 | ||
Deferred income taxes | 4,278 | ||
Deferred income taxes | 13,078 | ||
Total liabilities assumed | 40,825 | ||
Noncontrolling interests | 320 | ||
Total consideration transferred | $ 69,766 |
Acquisition and Divestiture - P
Acquisition and Divestiture - Pro Forma Financials (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Business Combinations [Abstract] | ||
Total revenues | $ 60,865 | $ 180,164 |
Income from continuing operations attributable to CVS Health | $ 1,864 | $ 1,731 |
Basic earnings per share from continuing operations attributable to CVS Health (in dollars per share) | $ 1.44 | $ 1.34 |
Diluted earnings per share from continuing operations attributable to CVS Health (in dollars per share) | $ 1.43 | $ 1.33 |
Acquisition and Divestiture - D
Acquisition and Divestiture - Divestiture of Brazilian Subsidiary (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)building | Sep. 30, 2019USD ($)building | Sep. 30, 2018USD ($) | Jul. 01, 2019store | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of stores | building | 9,900 | 9,900 | ||
Loss on divestiture | $ | $ (205) | $ (86) | ||
Retail Long-Term Care Segment | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of stores | building | 9,900 | 9,900 | ||
Retail Long-Term Care Segment | Brazil Subsidiary | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of stores | store | 50 | |||
Loss on divestiture | $ | $ 205 |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Total Investments [Line Items] | ||
Current investments | $ 2,334 | $ 2,522 |
Long-term investments | 17,342 | 15,732 |
Total investments | 19,676 | 18,254 |
Debt securities available for sale | ||
Total Investments [Line Items] | ||
Current investments | 2,175 | 2,359 |
Long-term investments | 14,583 | 12,896 |
Total investments | 16,758 | 15,255 |
Mortgage loans | ||
Total Investments [Line Items] | ||
Current investments | 159 | 145 |
Long-term investments | 1,131 | 1,216 |
Total investments | 1,290 | 1,361 |
Other investments | ||
Total Investments [Line Items] | ||
Current investments | 0 | 18 |
Long-term investments | 1,628 | 1,620 |
Total investments | $ 1,628 | $ 1,638 |
Investments - Debt Securities (
Investments - Debt Securities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 15,708,000,000 | $ 15,119,000,000 |
Gross Unrealized Gains | 1,063,000,000 | 172,000,000 |
Gross Unrealized Losses | (13,000,000) | (36,000,000) |
Fair Value | 16,758,000,000 | 15,255,000,000 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,743,000,000 | 1,662,000,000 |
Gross Unrealized Gains | 83,000,000 | 26,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 1,826,000,000 | 1,688,000,000 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,240,000,000 | 2,370,000,000 |
Gross Unrealized Gains | 114,000,000 | 30,000,000 |
Gross Unrealized Losses | (1,000,000) | (1,000,000) |
Fair Value | 2,353,000,000 | 2,399,000,000 |
U.S. corporate securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 7,076,000,000 | 6,444,000,000 |
Gross Unrealized Gains | 568,000,000 | 61,000,000 |
Gross Unrealized Losses | (7,000,000) | (16,000,000) |
Fair Value | 7,637,000,000 | 6,489,000,000 |
Foreign securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,095,000,000 | 2,355,000,000 |
Gross Unrealized Gains | 194,000,000 | 31,000,000 |
Gross Unrealized Losses | 0 | (3,000,000) |
Fair Value | 2,289,000,000 | 2,383,000,000 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 529,000,000 | 567,000,000 |
Gross Unrealized Gains | 25,000,000 | 10,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 554,000,000 | 577,000,000 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 645,000,000 | 594,000,000 |
Gross Unrealized Gains | 56,000,000 | 11,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 701,000,000 | 605,000,000 |
Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 1,348,000,000 | 1,097,000,000 |
Gross Unrealized Gains | 15,000,000 | 3,000,000 |
Gross Unrealized Losses | (5,000,000) | (15,000,000) |
Fair Value | 1,358,000,000 | 1,085,000,000 |
Redeemable preferred securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 32,000,000 | 30,000,000 |
Gross Unrealized Gains | 8,000,000 | 0 |
Gross Unrealized Losses | 0 | (1,000,000) |
Fair Value | 40,000,000 | 29,000,000 |
Supporting experience-rated products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | 85,000,000 | 12,000,000 |
Gross Unrealized Losses | 0 | (2,000,000) |
Fair Value | $ 973,000,000 | $ 916,000,000 |
Investments - Debt Securities b
Investments - Debt Securities by Maturity (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Amortized Cost | ||
Less than one year | $ 1,017 | |
One year through five years | 5,378 | |
After five years through ten years | 3,098 | |
Greater than ten years | 3,693 | |
Amortized Cost | 15,708 | $ 15,119 |
Fair Value | ||
Less than one year | 1,022 | |
One year through five years | 5,568 | |
After five years through ten years | 3,316 | |
Greater than ten years | 4,239 | |
Total | 16,758 | 15,255 |
Residential mortgage-backed securities | ||
Amortized Cost | ||
Debt securities, maturity, without single maturity date | 529 | |
Amortized Cost | 529 | 567 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 554 | |
Total | 554 | 577 |
Commercial mortgage-backed securities | ||
Amortized Cost | ||
Debt securities, maturity, without single maturity date | 645 | |
Amortized Cost | 645 | 594 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 701 | |
Total | 701 | 605 |
Other asset-backed securities | ||
Amortized Cost | ||
Debt securities, maturity, without single maturity date | 1,348 | |
Amortized Cost | 1,348 | 1,097 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 1,358 | |
Total | $ 1,358 | $ 1,085 |
Investments - Unrealized Loss P
Investments - Unrealized Loss Position (Details) $ in Millions | Sep. 30, 2019USD ($)security | Dec. 31, 2018USD ($)security |
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 648 | 2,279 |
Fair Value | $ 790 | $ 2,409 |
Unrealized Losses | $ 13 | $ 36 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 8 | 8 |
Fair Value | $ 41 | $ 26 |
Unrealized Losses | $ 0 | $ 0 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 38 | 54 |
Fair Value | $ 53 | $ 86 |
Unrealized Losses | $ 1 | $ 1 |
U.S. corporate securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 217 | 1,399 |
Fair Value | $ 254 | $ 1,431 |
Unrealized Losses | $ 7 | $ 16 |
Foreign securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 27 | 243 |
Fair Value | $ 39 | $ 314 |
Unrealized Losses | $ 0 | $ 3 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 31 | 45 |
Fair Value | $ 17 | $ 1 |
Unrealized Losses | $ 0 | $ 0 |
Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 327 | 516 |
Fair Value | $ 386 | $ 528 |
Unrealized Losses | $ 5 | $ 15 |
Redeemable preferred securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Number of Securities | security | 14 | |
Fair Value | $ 23 | |
Unrealized Losses | $ 1 |
Investments - Unrealized Loss_2
Investments - Unrealized Loss Position Maturities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | $ 3 | |
One year through five years | 138 | |
After five years through ten years | 136 | |
Greater than ten years | 110 | |
Fair Value | 790 | $ 2,409 |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 2 | |
After five years through ten years | 4 | |
Greater than ten years | 2 | |
Unrealized Losses | 13 | 36 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 17 | |
Fair Value | 17 | 1 |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Unrealized Losses | 0 | 0 |
Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 386 | |
Fair Value | 386 | 528 |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 5 | |
Unrealized Losses | 5 | $ 15 |
Supporting experience-rated products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | 0 | |
One year through five years | 1 | |
After five years through ten years | 8 | |
Greater than ten years | 11 | |
Fair Value | 30 | |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 0 | |
After five years through ten years | 0 | |
Greater than ten years | 0 | |
Unrealized Losses | 0 | |
Supporting experience-rated products | Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 0 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting experience-rated products | Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 10 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting remaining products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | 3 | |
One year through five years | 137 | |
After five years through ten years | 128 | |
Greater than ten years | 99 | |
Fair Value | 760 | |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 2 | |
After five years through ten years | 4 | |
Greater than ten years | 2 | |
Unrealized Losses | 13 | |
Supporting remaining products | Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 17 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting remaining products | Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 376 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | $ 5 |
Investments - Mortgage Loans (D
Investments - Mortgage Loans (Details) - Commercial Real Estate - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Mortgage Loans on Real Estate [Line Items] | ||
New mortgage loans | $ 12 | $ 90 |
Mortgage loans fully repaid | 56 | 127 |
Mortgage loans foreclosed | $ 0 | $ 0 |
Investments - Mortgage Loans Cr
Investments - Mortgage Loans Credit Ratings Indicator (Details) - Commercial Real Estate - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | $ 1,290 | $ 1,361 |
Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 44 | 42 |
Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 1,234 | 1,301 |
Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 12 | 18 |
Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | $ 0 | $ 0 |
Investments - Investment Income
Investments - Investment Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 224,000,000 | $ 221,000,000 | $ 654,000,000 | $ 485,000,000 |
Investment expenses | (10,000,000) | 0 | (28,000,000) | 0 |
Net investment income (excluding net realized capital gains or losses) | 214,000,000 | 221,000,000 | 626,000,000 | 485,000,000 |
Net realized capital gains | 49,000,000 | 0 | 179,000,000 | 0 |
Net investment income | 263,000,000 | 221,000,000 | 805,000,000 | 485,000,000 |
OTTI losses, investments, portion recognized in earnings, net | (9,000,000) | 0 | (22,000,000) | 0 |
Supporting experience-rated products | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Net investment income | 10,000,000 | 0 | 33,000,000 | 0 |
Debt securities | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 145,000,000 | 2,000,000 | 437,000,000 | 5,000,000 |
Mortgage loans | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 19,000,000 | 0 | 54,000,000 | 0 |
Other investments | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 60,000,000 | $ 219,000,000 | $ 163,000,000 | $ 480,000,000 |
Investments - Realized Gains (D
Investments - Realized Gains (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Investments [Abstract] | ||
Proceeds from sales | $ 1,325 | $ 4,087 |
Gross realized capital gains | 55 | 127 |
Gross realized capital gains | $ 9 | $ 13 |
Fair Value - Measurement on a R
Fair Value - Measurement on a Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 16,758 | $ 15,255 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 16,758 | 15,255 |
Equity securities | 68 | 73 |
Total | 16,826 | 15,328 |
Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,746 | 1,597 |
Equity securities | 32 | 19 |
Total | 1,778 | 1,616 |
Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 14,954 | 13,581 |
Equity securities | 0 | 0 |
Total | 14,954 | 13,581 |
Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 58 | 77 |
Equity securities | 36 | 54 |
Total | 94 | 131 |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,826 | 1,688 |
U.S. government securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,826 | 1,688 |
U.S. government securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,746 | 1,597 |
U.S. government securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 80 | 91 |
U.S. government securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,353 | 2,399 |
States, municipalities and political subdivisions | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,353 | 2,399 |
States, municipalities and political subdivisions | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
States, municipalities and political subdivisions | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,353 | 2,399 |
States, municipalities and political subdivisions | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
U.S. corporate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 7,637 | 6,489 |
U.S. corporate securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 7,637 | 6,489 |
U.S. corporate securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
U.S. corporate securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 7,596 | 6,422 |
U.S. corporate securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 41 | 67 |
Foreign securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,289 | 2,383 |
Foreign securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,289 | 2,383 |
Foreign securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Foreign securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,284 | 2,380 |
Foreign securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 5 | 3 |
Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 554 | 577 |
Residential mortgage-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 554 | 577 |
Residential mortgage-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Residential mortgage-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 554 | 577 |
Residential mortgage-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 701 | 605 |
Commercial mortgage-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 701 | 605 |
Commercial mortgage-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Commercial mortgage-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 701 | 605 |
Commercial mortgage-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Other asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,358 | 1,085 |
Other asset-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,358 | 1,085 |
Other asset-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Other asset-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,358 | 1,085 |
Other asset-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Redeemable preferred securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 40 | 29 |
Redeemable preferred securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 40 | 29 |
Redeemable preferred securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Redeemable preferred securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 28 | 22 |
Redeemable preferred securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 12 | $ 7 |
Fair Value - Carrying Value and
Fair Value - Carrying Value and Fair Value Classified by Level (Details) - Nonrecurring - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Assets: | ||
Mortgage loans | $ 1,290 | $ 1,361 |
Equity securities | 142 | 140 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 372 | 382 |
Long-term debt | 67,984 | 72,709 |
Level 1 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 0 | 0 |
Investment contracts liabilities without a fixed maturity | 0 | 0 |
Long-term debt | 72,823 | 71,252 |
Level 2 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 0 | 0 |
Investment contracts liabilities without a fixed maturity | 0 | 0 |
Long-term debt | 0 | 0 |
Level 3 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 1,317 | 1,366 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 385 | 357 |
Long-term debt | 0 | 0 |
Total | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 1,317 | 1,366 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 385 | 357 |
Long-term debt | $ 72,823 | $ 71,252 |
Fair Value - Separate Accounts
Fair Value - Separate Accounts Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 4,590 | $ 3,884 |
Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 4,331 | 3,693 |
Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3,816 | 3,286 |
Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2 | 3 |
Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 513 | 404 |
Cash and Cash Equivalents | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 259 | 191 |
Level 1 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 1,207 | 782 |
Level 1 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 1,207 | 782 |
Level 1 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 1 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 2 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3,124 | 2,907 |
Level 2 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2,609 | 2,500 |
Level 2 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2 | 3 |
Level 2 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 513 | 404 |
Level 3 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 4 |
Level 3 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 4 |
Level 3 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 3 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 0 | $ 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)store | Mar. 31, 2019USD ($)store | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)store | Sep. 30, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | |||||
Sale leaseback transaction, net proceeds, investing activities | $ 0 | $ 0 | $ 5 | $ 0 | |
Store rationalization charges | $ 96 | $ 0 | $ 231 | $ 0 | |
Building | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 15 years | ||||
Building | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 25 years | ||||
Equipment and other assets | Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 3 years | ||||
Equipment and other assets | Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 10 years | ||||
Retail Long-Term Care Segment | |||||
Lessee, Lease, Description [Line Items] | |||||
Number of under performing stores | store | 22 | 46 | 22 | ||
Store rationalization charges | $ 96 | $ 135 |
Leases - Summary of the compone
Leases - Summary of the components of net lease cost (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 681 | $ 2,044 |
Lease, Cost [Abstract] | ||
Amortization of right-of-use assets | 9 | 27 |
Interest on lease liabilities | 11 | 32 |
Total finance lease costs | 20 | 59 |
Short-term lease costs | 5 | 17 |
Variable lease costs | 148 | 434 |
Less: sublease income | 13 | 35 |
Net lease cost | $ 841 | $ 2,519 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows paid for operating leases | $ 2,023 |
Operating cash flows paid for interest portion of finance leases | 32 |
Financing cash flows paid for principal portion of finance leases | 19 |
Right-of-use assets obtained in exchange for lease obligations: | |
Operating leases | 1,203 |
Finance leases | $ 82 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating leases: | |||
Operating lease right-of-use assets | $ 20,757 | $ 20,987 | $ 0 |
Current portion of operating lease liabilities | 1,798 | 1,803 | 0 |
Long-term operating lease liabilities | 18,826 | $ 18,832 | $ 0 |
Total operating lease liabilities | 20,624 | ||
Finance leases: | |||
Property and equipment, net | 560 | ||
Current portion of long-term debt | 27 | ||
Long-term debt | 591 | ||
Total finance lease liabilities | $ 618 | ||
Weighted average remaining lease term | |||
Operating leases | 13 years 9 months 18 days | ||
Finance leases | 20 years 7 months 6 days | ||
Weighted average discount rate | |||
Operating leases | 4.60% | ||
Finance leases | 7.30% |
Leases - Maturities of Operatin
Leases - Maturities of Operating and Finance Lease Liabilities (Details) $ in Millions | Sep. 30, 2019USD ($) |
Financing Leases | |
2019 (remaining three months) | $ 18 |
2020 | 70 |
2021 | 68 |
2022 | 64 |
2023 | 62 |
Thereafter | 883 |
Total financing lease payments | 1,165 |
Less: imputed interest | (547) |
Total lease liabilities | 618 |
Operating Leases | |
2019 (remaining three months) | 679 |
2020 | 2,688 |
2021 | 2,567 |
2022 | 2,408 |
2023 | 2,297 |
Thereafter | 17,165 |
Total operating lease payments | 27,804 |
Less: imputed interest | (7,180) |
Total lease liabilities | 20,624 |
Total | |
2019 (remaining three months) | 697 |
2020 | 2,758 |
2021 | 2,635 |
2022 | 2,472 |
2023 | 2,359 |
Thereafter | 18,048 |
Total lease payments | 28,969 |
Less: imputed interest | (7,727) |
Total lease liabilities | 21,242 |
Future noncancelable subleases, future minimum payments | 320 |
Leases, amount due in excess of remaining estimated economic life | $ 2,300 |
Health Care Costs Payable - Com
Health Care Costs Payable - Components of Change in Health Care Costs Payable (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |
Health care costs payable, beginning of the period, net | $ 6,147 |
Less: Claims paid | |
Health care costs payable, end of period, net | 7,014 |
Health Insurance Product Line | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |
Health care costs payable, beginning of the period | 6,147 |
Less: Reinsurance recoverables | 4 |
Health care costs payable, beginning of the period, net | 6,143 |
Add: Components of incurred health care costs | |
Current year | 39,657 |
Prior years | (511) |
Total incurred health care costs | 39,146 |
Less: Claims paid | |
Current year | 33,032 |
Prior years | 5,253 |
Total claims paid | 38,285 |
Add: Premium deficiency reserve | 6 |
Health care costs payable, end of period, net | 7,010 |
Add: Reinsurance recoverables | 4 |
Health care costs payable, end of period | 7,014 |
Premium deficiency reserve | 6 |
Health Care Benefits Segment | |
Less: Claims paid | |
Benefit costs recorded in other insurance liabilities | 31 |
Corporate / Other | |
Less: Claims paid | |
Benefit costs recorded in other insurance liabilities | $ 213 |
Health Care Costs Payable - Nar
Health Care Costs Payable - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Health Care and Other Insurance Liabilities [Abstract] | |
Decrease in prior year health care costs payable | $ 511 |
Incurred but not reported (IBNR) claims liability, net | $ 5,000 |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2019 | Aug. 31, 2019 | Aug. 15, 2019 | Jan. 01, 2019 | |
Debt Instrument [Line Items] | |||||
Short-term debt (commercial paper) | $ 720 | $ 1,070 | |||
Long-term debt gross | 74,265 | 69,848 | |||
Debt premiums | 302 | 267 | |||
Debt discounts and deferred financing costs | (1,138) | (1,061) | |||
Long-term Debt | 73,429 | 69,054 | |||
Short-term debt (commercial paper) | (720) | (1,070) | |||
Current portion of long-term debt | (1,265) | (3,778) | $ (1,267) | ||
Long-term debt | $ 71,444 | 64,206 | $ 71,348 | ||
Senior Notes | 2.2% senior notes due March 2019 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.20% | ||||
Long-term debt gross | $ 375 | 0 | |||
Senior Notes | 2.25% senior notes due August 2019 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.25% | ||||
Long-term debt gross | $ 850 | $ 0 | |||
Senior Notes | 3.125% senior notes due March 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.125% | 3.125% | |||
Long-term debt gross | 2,000 | $ 723 | |||
Senior Notes | 2.8% senior notes due July 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.80% | ||||
Long-term debt gross | 2,750 | $ 2,750 | |||
Senior Notes | 3.35% senior notes due March 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.35% | 3.35% | |||
Long-term debt gross | 3,000 | $ 2,038 | |||
Senior Notes | 4.125% senior notes due May 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.125% | ||||
Long-term debt gross | 550 | $ 222 | |||
Senior Notes | 2.125% senior notes due June 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.125% | ||||
Long-term debt gross | 1,750 | $ 1,750 | |||
Senior Notes | 4.125% senior notes due June 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.125% | ||||
Long-term debt gross | 500 | $ 203 | |||
Senior Notes | 5.45% senior notes due June 2021 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.45% | 5.45% | |||
Long-term debt gross | 600 | $ 187 | |||
Senior Notes | 3.5% senior notes due July 2022 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.50% | ||||
Long-term debt gross | 1,500 | $ 1,500 | |||
Senior Notes | 2.75% senior notes due November 2022 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.75% | ||||
Long-term debt gross | 1,000 | $ 1,000 | |||
Senior Notes | 2.75% senior notes due December 2022 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.75% | ||||
Long-term debt gross | 1,250 | $ 1,250 | |||
Senior Notes | 4.75% senior notes due December 2022 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.75% | ||||
Long-term debt gross | 399 | $ 399 | |||
Senior Notes | 3.7% senior notes due March 2023 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.70% | ||||
Long-term debt gross | 6,000 | $ 6,000 | |||
Senior Notes | 2.8% senior notes due June 2023 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.80% | ||||
Long-term debt gross | 1,300 | $ 1,300 | |||
Senior Notes | 4% senior notes due December 2023 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.00% | ||||
Long-term debt gross | 1,250 | $ 1,250 | |||
Senior Notes | 2.625% senior notes due August 2024 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.265% | 2.625% | |||
Long-term debt gross | 0 | $ 1,000 | |||
Senior Notes | 3.375% senior notes due August 2024 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.375% | ||||
Long-term debt gross | 650 | $ 650 | |||
Senior Notes | 3.5% senior notes due November 2024 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.50% | ||||
Long-term debt gross | 750 | $ 750 | |||
Senior Notes | 5% senior notes due December 2024 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.00% | ||||
Long-term debt gross | 299 | $ 299 | |||
Senior Notes | 4.1% senior notes due March 2025 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.10% | ||||
Long-term debt gross | 5,000 | $ 5,000 | |||
Senior Notes | 3.875% senior notes due July 2025 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.875% | ||||
Long-term debt gross | 2,828 | $ 2,828 | |||
Senior Notes | 2.875% senior notes due June 2026 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 2.875% | ||||
Long-term debt gross | 1,750 | $ 1,750 | |||
Senior Notes | 3% senior notes due August 2026 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.00% | 3.00% | |||
Long-term debt gross | 0 | $ 750 | |||
Senior Notes | 6.25% senior notes due June 2027 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 6.25% | ||||
Long-term debt gross | 372 | $ 372 | |||
Senior Notes | 4.3% senior notes due March 2028 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.30% | ||||
Long-term debt gross | 9,000 | $ 9,000 | |||
Senior Notes | 3.25% senior notes due August 2029 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.25% | 3.25% | |||
Long-term debt gross | 0 | $ 1,750 | |||
Senior Notes | 4.875% senior notes due July 2035 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.875% | ||||
Long-term debt gross | 652 | $ 652 | |||
Senior Notes | 6.625% senior notes due June 2036 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 6.625% | ||||
Long-term debt gross | 771 | $ 771 | |||
Senior Notes | 6.75% senior notes due December 2037 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 6.75% | ||||
Long-term debt gross | 533 | $ 533 | |||
Senior Notes | 4.78% senior notes due March 2038 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.78% | ||||
Long-term debt gross | 5,000 | $ 5,000 | |||
Senior Notes | 6.125% senior notes due September 2039 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 6.125% | ||||
Long-term debt gross | 447 | $ 447 | |||
Senior Notes | 5.75% senior notes due May 2041 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.75% | ||||
Long-term debt gross | 133 | $ 133 | |||
Senior Notes | 4.5% senior notes due May 2042 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.50% | ||||
Long-term debt gross | 500 | $ 500 | |||
Senior Notes | 4.125% senior notes due November 2042 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.125% | ||||
Long-term debt gross | 500 | $ 500 | |||
Senior Notes | 5.3% senior notes due December 2043 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.30% | ||||
Long-term debt gross | 750 | $ 750 | |||
Senior Notes | 4.75% senior notes due March 2044 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 4.75% | ||||
Long-term debt gross | 375 | $ 375 | |||
Senior Notes | 5.125% senior notes due July 2045 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.125% | ||||
Long-term debt gross | 3,500 | $ 3,500 | |||
Senior Notes | 3.875% senior notes due August 2047 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 3.875% | ||||
Long-term debt gross | 1,000 | $ 1,000 | |||
Senior Notes | 5.05% senior notes due March 2048 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate | 5.05% | ||||
Long-term debt gross | 8,000 | $ 8,000 | |||
Floating Rate Notes | Floating rate notes due March 2020 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt gross | 1,000 | 277 | |||
Floating Rate Notes | Floating rate notes due March 2021 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt gross | 1,000 | 1,000 | |||
Floating Rate Notes | 3-year tranche term loan due November 2021 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt gross | $ 3,000 | 0 | |||
Debt instrument term | 3 years | ||||
Capital Lease Obligations | |||||
Debt Instrument [Line Items] | |||||
Long-term debt gross | $ 642 | 618 | |||
Other Debt Obligations | |||||
Debt Instrument [Line Items] | |||||
Long-term debt gross | $ 19 | $ 1 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) | Aug. 15, 2019 | Aug. 31, 2019 | Jul. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 |
Debt Instrument [Line Items] | |||||||
Proceeds from debt | $ 3,500,000,000 | ||||||
Proceeds from derivative instruments | $ 25,000,000 | $ 25,000,000 | $ (446,000,000) | ||||
Net cash flow hedges | $ 18,000,000 | ||||||
Premium paid in excess of debt principal | $ 76,000,000 | ||||||
Debt extinguishment fees | 8,000,000 | ||||||
Gain on write off of unamortized deferred financing premiums | 5,000,000 | ||||||
Loss on early extinguishment of debt | $ 79,000,000 | $ 79,000,000 | $ 0 | $ 79,000,000 | $ 0 | ||
Senior Notes | 2.625% senior notes due August 2024 | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | $ 1,000,000,000 | ||||||
Debt interest rate | 2.625% | 2.265% | 2.265% | ||||
Senior Notes | 3% senior notes due August 2026 | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | $ 750,000,000 | ||||||
Debt interest rate | 3.00% | 3.00% | 3.00% | ||||
Senior Notes | 3.25% senior notes due August 2029 | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt | $ 1,750,000,000 | ||||||
Debt interest rate | 3.25% | 3.25% | 3.25% | ||||
Senior Notes | 3.125% senior notes due March 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 3.125% | 3.125% | 3.125% | ||||
Aggregate principal of debt extinguished | $ 1,300,000,000 | ||||||
Senior Notes | 4.125% senior notes due 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 4.125% | ||||||
Aggregate principal of debt extinguished | $ 328,000,000 | ||||||
Senior Notes | Senior Notes Issued By Aetna, 4.125%, Due 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 4.125% | ||||||
Aggregate principal of debt extinguished | $ 297,000,000 | ||||||
Senior Notes | 5.45% senior notes due June 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 5.45% | 5.45% | 5.45% | ||||
Aggregate principal of debt extinguished | $ 413,000,000 | ||||||
Senior Notes | 3.35% senior notes due March 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 3.35% | 3.35% | 3.35% | ||||
Aggregate principal of debt extinguished | $ 962,000,000 | ||||||
Senior Notes | 2.125% senior notes due June 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 2.125% | 2.125% | |||||
Senior Notes | Outstanding senior notes | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal of debt extinguished | 4,000,000,000 | ||||||
Floating Rate Notes | Floating rate notes due March 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate principal of debt extinguished | $ 723,000,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Nov. 02, 2016 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchased during period (in shares) | 0 | 0 | |||
Dividends declared per share (in dollars per share) | $ 0.50 | $ 0.5 | $ 1.50 | $ 1.5 | |
2016 Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 15,000,000,000 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 13,900,000,000 | $ 13,900,000,000 |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jul. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2018 | ||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | $ 61,599 | $ 61,599 | $ 60,006 | $ 58,543 | $ 35,611 | $ 38,677 | $ 37,695 | $ 58,543 | $ 37,695 | ||
Other comprehensive income (loss) before reclassifications, net of tax | 18 | ||||||||||
Adoption of new accounting standard | [1] | $ (13) | |||||||||
Other comprehensive income (loss), net of tax | 266 | 251 | 331 | (12) | (31) | 344 | 848 | 301 | |||
Balance at end of period | 62,933 | 61,599 | 60,006 | 36,622 | 35,611 | 38,677 | 62,933 | 36,622 | |||
Net unrealized investment gains (losses) | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | 682 | 682 | 97 | 0 | 0 | 97 | 0 | ||||
Other comprehensive income (loss) before reclassifications, net of tax | 192 | 0 | 799 | 0 | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (56) | 0 | (78) | 0 | |||||||
Other comprehensive income (loss), net of tax | 136 | 0 | 721 | 0 | |||||||
Balance at end of period | 818 | 682 | 0 | 0 | 818 | 0 | |||||
OCI before Reclass, pre-tax | 214 | 0 | 933 | 0 | |||||||
Amounts reclassified, pre-tax | (63) | 0 | (93) | 0 | |||||||
Foreign currency translation adjustments | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | (154) | (154) | (158) | (155) | (129) | (158) | (129) | ||||
Other comprehensive income (loss) before reclassifications, net of tax | (1) | (8) | 3 | (34) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 154 | 0 | 154 | 0 | |||||||
Other comprehensive income (loss), net of tax | 153 | (8) | 157 | (34) | |||||||
Balance at end of period | (1) | (154) | (163) | (155) | (1) | (163) | |||||
Net cash flow hedges | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | 305 | 305 | 312 | 321 | (15) | 312 | (15) | ||||
Other comprehensive income (loss) before reclassifications, net of tax | (18) | 0 | (18) | 344 | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (5) | (4) | (12) | (9) | |||||||
Adoption of new accounting standard | (3) | ||||||||||
Other comprehensive income (loss), net of tax | (23) | (4) | (30) | 335 | |||||||
Balance at end of period | 282 | 305 | 317 | 321 | 282 | 317 | |||||
Amount expected to be reclassified | 15 | 15 | |||||||||
OCI before Reclass, pre-tax | (25) | 0 | (25) | 464 | |||||||
Amounts reclassified, pre-tax | (7) | (5) | (16) | (12) | |||||||
Pension and OPEB plans | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | (149) | (149) | (149) | (25) | (21) | (149) | (21) | ||||
Adoption of new accounting standard | (4) | ||||||||||
Balance at end of period | (149) | (149) | (25) | (25) | (149) | (25) | |||||
AOCI Including Portion Attributable to Noncontrolling Interest | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Balance at beginning of period | $ 684 | 684 | $ 102 | 141 | $ (165) | 102 | (165) | ||||
Balance at end of period | $ 950 | $ 684 | $ 129 | $ 141 | $ 950 | $ 129 | |||||
Accounting Standards Update 2018-02 | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Adoption of new accounting standard | $ (7) | ||||||||||
[1] | Reflects the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which resulted in a reduction to accumulated other comprehensive income of $7 million and an increase to retained earnings of $7 million , each during the three months ended March 31, 2018. |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share, Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of EPS (in shares) | 18 | 12 | 19 | 14 |
Numerator for earnings (loss) per share calculation: | ||||
Income (loss) from continuing operations | $ 1,529 | $ 1,390 | $ 4,887 | $ (174) |
Income from continuing operations allocated to participating securities | 0 | (1) | (3) | (3) |
Net loss attributable to noncontrolling interests | 1 | 0 | 0 | 0 |
Income (loss) from continuing operations attributable to CVS Health | $ 1,530 | $ 1,389 | $ 4,884 | $ (177) |
Denominator for earnings (loss) per share calculation: | ||||
Weighted average shares, basic (in shares) | 1,302 | 1,020 | 1,300 | 1,018 |
Effect of dilutive securities (in shares) | 3 | 2 | 3 | 0 |
Weighted average shares, diluted (in shares) | 1,305 | 1,022 | 1,303 | 1,018 |
Earnings (loss) per share from continuing operations: | ||||
Basic (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.76 | $ (0.17) |
Diluted (in dollars per share) | $ 1.17 | $ 1.36 | $ 3.75 | $ (0.17) |
Continuing Operations | ||||
Earnings Per Share, Basic and Diluted [Line Items] | ||||
Antidilutive securities excluded from computation of EPS (in shares) | 2 |
Reinsurance (Details)
Reinsurance (Details) | 1 Months Ended |
Jan. 31, 2019agreement | |
Reinsurance Disclosures [Abstract] | |
Number of reinsurance agreements | 2 |
Term of reinsurance agreement | 4 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 28, 2019USD ($) | Oct. 15, 2018USD ($) | Sep. 30, 2015store | Aug. 31, 2019claim | Dec. 31, 2012memeber | Sep. 30, 2019store |
Loss Contingencies [Line Items] | ||||||
Guarantor obligations, number of leases | 79 | |||||
Loss contingency, number of locations with subpoena for documents | 8 | |||||
Sample size | memeber | 200 | |||||
Number of pending claims | claim | 6 | |||||
Provider Proceedings | ||||||
Loss Contingencies [Line Items] | ||||||
Loss contingency, damages awarded, value | $ | $ 86 | $ 150 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Segment Reporting - Retrospecti
Segment Reporting - Retrospective Adjustment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 64,810 | $ 47,490 | $ 189,887 | $ 140,155 |
Cost of products sold | 40,437 | 39,502 | 116,654 | 115,883 |
Benefit costs | 12,850 | 439 | 39,396 | 2,399 |
Operating expenses | 8,595 | 4,975 | 24,887 | 14,755 |
Operating income (GAAP measure) | 2,928 | 2,574 | 8,950 | 3,197 |
Adjusted operating income (loss) | 3,947 | 2,650 | 11,573 | 7,542 |
Operating Segments | Pharmacy Services Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 36,018 | 33,864 | 104,418 | 99,837 |
Cost of products sold | 32,238 | 95,518 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 351 | 1,051 | ||
Operating income (GAAP measure) | 1,275 | 3,268 | ||
Adjusted operating income (loss) | 1,439 | 1,362 | 3,682 | 3,530 |
Operating Segments | Retail Long-Term Care Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 21,466 | 20,856 | 64,028 | 61,960 |
Cost of products sold | 15,042 | 44,318 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 4,323 | 12,831 | ||
Operating income (GAAP measure) | 1,491 | 890 | ||
Adjusted operating income (loss) | 1,516 | 1,622 | 4,674 | 5,279 |
Operating Segments | Health Care Benefits Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 17,181 | 641 | 52,454 | 2,723 |
Cost of products sold | 0 | 0 | ||
Benefit costs | 439 | 2,399 | ||
Operating expenses | 128 | 388 | ||
Operating income (GAAP measure) | 74 | (64) | ||
Adjusted operating income (loss) | 1,423 | 75 | 4,423 | (62) |
Operating Segments | Corporate / Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 152 | 217 | 423 | 475 |
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 287 | 814 | ||
Operating income (GAAP measure) | (70) | (339) | ||
Adjusted operating income (loss) | (252) | (213) | (685) | (647) |
Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (10,007) | (8,088) | (31,436) | (24,840) |
Cost of products sold | (7,778) | (23,953) | ||
Benefit costs | 0 | 0 | ||
Operating expenses | (114) | (329) | ||
Operating income (GAAP measure) | (196) | (558) | ||
Adjusted operating income (loss) | $ (179) | (196) | $ (521) | (558) |
Previously Reported | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 47,490 | 140,155 | ||
Cost of products sold | 39,502 | 115,883 | ||
Benefit costs | 439 | 2,399 | ||
Operating expenses | 4,975 | 14,755 | ||
Operating income (GAAP measure) | 2,574 | 3,197 | ||
Previously Reported | Operating Segments | Pharmacy Services Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 33,767 | 99,238 | ||
Cost of products sold | 31,587 | 92,459 | ||
Benefit costs | 439 | 2,399 | ||
Operating expenses | 392 | 1,176 | ||
Operating income (GAAP measure) | 1,349 | 3,204 | ||
Previously Reported | Operating Segments | Retail Long-Term Care Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 20,856 | 61,960 | ||
Cost of products sold | 15,042 | 44,318 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 4,323 | 12,831 | ||
Operating income (GAAP measure) | 1,491 | 890 | ||
Previously Reported | Operating Segments | Health Care Benefits Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 0 | 0 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 0 | 0 | ||
Operating income (GAAP measure) | 0 | 0 | ||
Previously Reported | Operating Segments | Corporate / Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 217 | 475 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 287 | 814 | ||
Operating income (GAAP measure) | (70) | (339) | ||
Previously Reported | Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (7,350) | (21,518) | ||
Cost of products sold | (7,127) | (20,894) | ||
Benefit costs | 0 | 0 | ||
Operating expenses | (27) | (66) | ||
Operating income (GAAP measure) | (196) | (558) | ||
Restatement Adjustment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 0 | 0 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 0 | 0 | ||
Operating income (GAAP measure) | 0 | 0 | ||
Adjusted operating income (loss) | 76 | 4,345 | ||
Restatement Adjustment | Operating Segments | Pharmacy Services Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 97 | 599 | ||
Cost of products sold | 651 | 3,059 | ||
Benefit costs | (439) | (2,399) | ||
Operating expenses | (41) | (125) | ||
Operating income (GAAP measure) | (74) | 64 | ||
Adjusted operating income (loss) | 87 | 262 | ||
Restatement Adjustment | Operating Segments | Retail Long-Term Care Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 0 | 0 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 0 | 0 | ||
Operating income (GAAP measure) | 0 | 0 | ||
Adjusted operating income (loss) | 131 | 4,389 | ||
Restatement Adjustment | Operating Segments | Health Care Benefits Segment | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 641 | 2,723 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 439 | 2,399 | ||
Operating expenses | 128 | 388 | ||
Operating income (GAAP measure) | 74 | (64) | ||
Adjusted operating income (loss) | 1 | 2 | ||
Restatement Adjustment | Operating Segments | Corporate / Other | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 0 | 0 | ||
Cost of products sold | 0 | 0 | ||
Benefit costs | 0 | 0 | ||
Operating expenses | 0 | 0 | ||
Operating income (GAAP measure) | 0 | 0 | ||
Adjusted operating income (loss) | (143) | (308) | ||
Restatement Adjustment | Intersegment Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (738) | (3,322) | ||
Cost of products sold | (651) | (3,059) | ||
Benefit costs | 0 | 0 | ||
Operating expenses | (87) | (263) | ||
Operating income (GAAP measure) | 0 | 0 | ||
Adjusted operating income (loss) | $ 0 | $ 0 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Financial Measures of Segments to Consolidated Totals (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | $ 64,547 | $ 47,269 | $ 189,082 | $ 139,670 |
Net investment income | 263 | 221 | 805 | 485 |
Total revenues | 64,810 | 47,490 | 189,887 | 140,155 |
Adjusted operating income (loss) | 3,947 | 2,650 | 11,573 | 7,542 |
Operating Segments | Pharmacy Services Segment | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 36,018 | 33,864 | 104,418 | 99,837 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 36,018 | 33,864 | 104,418 | 99,837 |
Adjusted operating income (loss) | 1,439 | 1,362 | 3,682 | 3,530 |
Net revenues, retail copayments | 2,700 | 2,700 | 8,900 | 8,800 |
Operating Segments | Retail Long-Term Care Segment | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 21,466 | 20,856 | 64,028 | 61,960 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 21,466 | 20,856 | 64,028 | 61,960 |
Adjusted operating income (loss) | 1,516 | 1,622 | 4,674 | 5,279 |
Operating Segments | Health Care Benefits Segment | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 17,035 | 637 | 51,996 | 2,713 |
Net investment income | 146 | 4 | 458 | 10 |
Total revenues | 17,181 | 641 | 52,454 | 2,723 |
Adjusted operating income (loss) | 1,423 | 75 | 4,423 | (62) |
Operating Segments | Corporate / Other | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 35 | 0 | 76 | 0 |
Net investment income | 117 | 217 | 347 | 475 |
Total revenues | 152 | 217 | 423 | 475 |
Adjusted operating income (loss) | (252) | (213) | (685) | (647) |
Intersegment Eliminations | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | (10,007) | (8,088) | (31,436) | (24,840) |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | (10,007) | (8,088) | (31,436) | (24,840) |
Adjusted operating income (loss) | $ (179) | $ (196) | $ (521) | $ (558) |
Segment Reporting - Reconcili_2
Segment Reporting - Reconciliation from Operating Income to Adjusted Operating Income (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)store | Mar. 31, 2019USD ($)store | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)store | Sep. 30, 2018USD ($) | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Operating income (GAAP measure) | $ 2,928 | $ 2,574 | $ 8,950 | $ 3,197 | |
Amortization of intangible assets | 607 | 215 | 1,822 | 639 | |
Acquisition-related transaction and integration costs | 111 | 70 | 365 | 152 | |
Store rationalization charges | 96 | 0 | 231 | 0 | |
Loss on sale of subsidiary | 205 | 0 | 205 | 86 | |
Goodwill impairment | 0 | 0 | 0 | 3,921 | |
Interest income on financing for the Aetna Acquisition | 0 | (209) | 0 | (453) | |
Adjusted operating income (loss) | 3,947 | 2,650 | $ 11,573 | 7,542 | |
Corporate / Other | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Interest income on financing for the Aetna Acquisition | $ (209) | (453) | |||
Retail Long-Term Care Segment | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Store rationalization charges | $ 96 | $ 135 | |||
Number of under performing stores | store | 22 | 46 | 22 | ||
RX Crossroads | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Loss on sale of subsidiary | $ 725 |
Uncategorized Items - a09302019
Label | Element | Value | |
Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (13,000,000) | [1] |
Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (6,000,000) | [1] |
AOCI Attributable to Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (7,000,000) | [1] |
Accounting Standards Update 2016-02 [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 178,000,000 | |
Accounting Standards Update 2016-02 [Member] | Parent [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 178,000,000 | |
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 178,000,000 | |
[1] | Reflects the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which resulted in a reduction to accumulated other comprehensive income of $7 million and an increase to retained earnings of $7 million , each during the three months ended March 31, 2018. |