Cover Page
Cover Page | Aug. 08, 2019 |
Cover page. | |
Document Type | 8-K |
Document Period End Date | Aug. 8, 2019 |
Entity Registrant Name | CVS HEALTH CORP |
Entity Central Index Key | 0000064803 |
Amendment Flag | false |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 001-01011 |
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 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | CVS |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Revenues | $ 193,919 | $ 184,765 | $ 177,526 |
Net investment income | 660 | 21 | 20 |
Total revenues | 194,579 | 184,786 | 177,546 |
Operating costs: | |||
Cost of products sold | 156,447 | 153,448 | 146,533 |
Benefit costs | 6,594 | 2,810 | 2,179 |
Goodwill impairments | 6,149 | 181 | 0 |
Operating expenses | 21,368 | 18,809 | 18,448 |
Total operating costs | 190,558 | 175,248 | 167,160 |
Operating income | 4,021 | 9,538 | 10,386 |
Interest expense | 2,619 | 1,062 | 1,078 |
Loss on early extinguishment of debt | 0 | 0 | 643 |
Other expense (income) | (4) | 208 | 28 |
Income before income tax provision | 1,406 | 8,268 | 8,637 |
Income tax provision | 2,002 | 1,637 | 3,317 |
Income (loss) from continuing operations | (596) | 6,631 | 5,320 |
Loss from discontinued operations, net of tax | 0 | (8) | (1) |
Net income (loss) | (596) | 6,623 | 5,319 |
Net (income) loss attributable to noncontrolling interests | 2 | (1) | (2) |
Net income (loss) attributable to CVS Health | $ (594) | $ 6,622 | $ 5,317 |
Basic earnings (loss) per share: | |||
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | $ (0.57) | $ 6.48 | $ 4.93 |
Loss from discontinued operations attributable to CVS Health (in dollars per share) | 0 | (0.01) | 0 |
Net income (loss) attributable to CVS Health (in dollars per share) | $ (0.57) | $ 6.47 | $ 4.93 |
Weighted average basic shares outstanding (in shares) | 1,044 | 1,020 | 1,073 |
Diluted earnings (loss) per share: | |||
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | $ (0.57) | $ 6.45 | $ 4.91 |
Loss from discontinued operations attributable to CVS Health (in dollars per share) | 0 | (0.01) | 0 |
Net income (loss) attributable to CVS Health (in dollars per share) | $ (0.57) | $ 6.44 | $ 4.90 |
Weighted average diluted shares outstanding (in shares) | 1,044 | 1,024 | 1,079 |
Dividends declared per share (in dollars per share) | $ 2 | $ 2 | $ 1.70 |
Products | |||
Revenues: | |||
Revenues | $ 183,910 | $ 180,063 | $ 173,377 |
Premiums | |||
Revenues: | |||
Revenues | 8,184 | 3,558 | 3,069 |
Services | |||
Revenues: | |||
Revenues | $ 1,825 | $ 1,144 | $ 1,080 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (596) | $ 6,623 | $ 5,319 |
Other comprehensive income (loss), net of tax: | |||
Net unrealized investment gains | 97 | 0 | 0 |
Foreign currency translation adjustments | (29) | (2) | 38 |
Net cash flow hedges | 330 | (10) | 2 |
Pension and other postretirement benefits | (124) | 152 | 13 |
Other comprehensive income | 274 | 140 | 53 |
Comprehensive income (loss) | (322) | 6,763 | 5,372 |
Comprehensive (income) loss attributable to noncontrolling interests | 2 | (1) | (2) |
Comprehensive income (loss) attributable to CVS Health | $ (320) | $ 6,762 | $ 5,370 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Cash and cash equivalents | $ 4,059 | $ 1,696 |
Investments | 2,522 | 111 |
Accounts receivable, net | 17,631 | 13,181 |
Inventories | 16,450 | 15,296 |
Other current assets | 4,581 | 945 |
Total current assets | 45,243 | 31,229 |
Long-term investments | 15,732 | 112 |
Property and equipment, net | 11,349 | 10,292 |
Goodwill | 78,678 | 38,451 |
Intangible assets, net | 36,524 | 13,630 |
Separate accounts assets | 3,884 | 0 |
Other assets | 5,046 | 1,417 |
Total assets | 196,456 | 95,131 |
Liabilities: | ||
Accounts payable | 8,925 | 8,863 |
Pharmacy claims and discounts payable | 11,365 | 10,355 |
Health care costs payable | 6,147 | 5 |
Policyholders’ funds | 2,939 | 0 |
Accrued expenses | 10,711 | 6,581 |
Other insurance liabilities | 1,937 | 23 |
Short-term debt | 720 | 1,276 |
Current portion of long-term debt | 1,265 | 3,545 |
Total current liabilities | 44,009 | 30,648 |
Long-term debt | 71,444 | 22,181 |
Deferred income taxes | 7,677 | 2,996 |
Separate accounts liabilities | 3,884 | 0 |
Other long-term insurance liabilities | 8,119 | 334 |
Other long-term liabilities | 2,780 | 1,277 |
Total liabilities | 137,913 | 57,436 |
Commitments and contingencies (Note 16) | ||
CVS Health 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; 1,720 shares issued and 1,295 shares outstanding at December 31, 2018 and 1,712 shares issued and 1,014 shares outstanding at December 31, 2017 and capital surplus | 45,440 | 32,096 |
Treasury stock, at cost: 425 shares at December 31, 2018 and 698 shares at December 31, 2017 | (28,228) | (37,796) |
Retained earnings | 40,911 | 43,556 |
Accumulated other comprehensive income (loss) | 102 | (165) |
Total CVS Health shareholders’ equity | 58,225 | 37,691 |
Noncontrolling interests | 318 | 4 |
Total shareholders’ equity | 58,543 | 37,695 |
Total liabilities and shareholders’ equity | $ 196,456 | $ 95,131 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares shares in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 0.1 | 0.1 |
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 | 3,200 |
Common stock, shares issued (in shares) | 1,720 | 1,712 |
Common stock, shares outstanding (in shares) | 1,295 | 1,014 |
Treasury stock (in shares) | 425 | 698 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Cash receipts from customers | $ 186,519 | $ 176,594 | $ 172,310 |
Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (148,981) | (146,469) | (140,312) |
Insurance benefits paid | (6,897) | (2,810) | (2,199) |
Cash paid to other suppliers and employees | (17,234) | (15,348) | (15,478) |
Interest and investment income received | 644 | 21 | 20 |
Interest paid | (2,803) | (1,072) | (1,140) |
Income taxes paid | (2,383) | (2,909) | (3,060) |
Net cash provided by operating activities | 8,865 | 8,007 | 10,141 |
Cash flows from investing activities: | |||
Proceeds from sales and maturities of investments | 817 | 61 | 91 |
Purchases of investments | (692) | (137) | (80) |
Purchases of property and equipment | (2,037) | (1,918) | (2,224) |
Proceeds from sale-leaseback transactions | 0 | 265 | 230 |
Acquisitions (net of cash acquired) | (42,226) | (1,181) | (524) |
Proceeds from sale of subsidiary and other assets | 832 | 0 | 0 |
Other | 21 | 33 | 37 |
Net cash used in investing activities | (43,285) | (2,877) | (2,470) |
Cash flows from financing activities: | |||
Net repayments of short-term debt | (556) | (598) | 1,874 |
Proceeds from issuance of long-term debt | 44,343 | 0 | 3,455 |
Repayments of long-term debt | (5,522) | 0 | (5,943) |
Purchase of noncontrolling interest in subsidiary | 0 | 0 | (39) |
Payment of contingent consideration | 0 | 0 | (26) |
Derivative settlements | 446 | 0 | 0 |
Repurchase of common stock | 0 | (4,361) | (4,461) |
Dividends paid | (2,038) | (2,049) | (1,840) |
Proceeds from exercise of stock options | 242 | 329 | 296 |
Payments for taxes related to net share settlement of equity awards | (97) | (71) | (72) |
Other | 1 | (1) | (5) |
Net cash provided by (used in) financing activities | 36,819 | (6,751) | (6,761) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (4) | 1 | 2 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,395 | (1,620) | 912 |
Cash, cash equivalents and restricted cash at the end of the period | 1,900 | 3,520 | 2,608 |
Cash, cash equivalents and restricted cash at the end of the period | 4,295 | 1,900 | 3,520 |
Reconciliation of net income (loss) to net cash provided by operating activities: | |||
Net income (loss) | (596) | 6,623 | 5,319 |
Reconciliation of net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 2,718 | 2,479 | 2,475 |
Goodwill impairments | 6,149 | 181 | 0 |
Losses on settlements of defined benefit pension plans | 0 | 187 | 0 |
Stock-based compensation | 280 | 234 | 222 |
Loss on early extinguishment of debt | 0 | 0 | 643 |
Deferred income taxes | 87 | (1,334) | 18 |
Other noncash items | 339 | 53 | 135 |
Change in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable, net | (1,139) | (941) | (243) |
Inventories | (1,153) | (514) | (742) |
Other assets | (3) | (338) | (8) |
Accounts payable and pharmacy claims and discounts payable | 2,329 | 1,710 | 2,189 |
Health care costs payable and other insurance liabilities | (311) | 0 | (19) |
Other liabilities | $ 165 | $ (333) | $ 152 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Shares | Treasury Shares | Common Stock and Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | CVS Health Shareholders' Equity | Noncontrolling Interest |
Balance at beginning of period (in shares) at Dec. 31, 2015 | 1,699 | (598) | ||||||
Balance at beginning of period at Dec. 31, 2015 | $ 37,203 | $ (28,917) | $ 30,965 | $ 35,506 | $ (358) | $ 37,196 | $ 7 | |
Stockholders' Equity [Roll Forward] | ||||||||
Net income | 5,318 | 5,317 | 5,317 | 1 | ||||
Net income (loss) | 5,319 | |||||||
Other comprehensive income (loss) | 53 | 53 | 53 | |||||
Stock option activity, stock awards, related tax benefits and other (in shares) | 6 | |||||||
Stock option activity, stock awards, related tax benefits and other | 525 | 525 | 525 | |||||
Purchase of treasury shares, net of ESPP issuances (in shares) | (46) | |||||||
Purchase of treasury shares, net of ESPP issuances | (4,421) | $ (4,566) | 145 | (4,421) | ||||
Common stock dividends | (1,840) | (1,840) | (1,840) | |||||
Other decreases in noncontrolling interests | (4) | (4) | ||||||
Balance at end of period (in shares) at Dec. 31, 2016 | 1,705 | (644) | ||||||
Balance at end of period at Dec. 31, 2016 | 36,834 | $ (33,483) | 31,635 | 38,983 | (305) | 36,830 | 4 | |
Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 6,623 | 6,622 | 6,622 | 1 | ||||
Other comprehensive income (loss) | 140 | 140 | 140 | |||||
Stock option activity, stock awards, related tax benefits and other (in shares) | 7 | |||||||
Stock option activity, stock awards, related tax benefits and other | 461 | 461 | 461 | |||||
Purchase of treasury shares, net of ESPP issuances (in shares) | (54) | |||||||
Purchase of treasury shares, net of ESPP issuances | (4,313) | $ (4,313) | (4,313) | |||||
Common stock dividends | (2,049) | (2,049) | (2,049) | |||||
Other decreases in noncontrolling interests | (1) | (1) | ||||||
Balance at end of period (in shares) at Dec. 31, 2017 | 1,712 | (698) | ||||||
Balance at end of period at Dec. 31, 2017 | 37,695 | $ (37,796) | 32,096 | 43,556 | (165) | 37,691 | 4 | |
Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (596) | (594) | (594) | (2) | ||||
Other comprehensive income (loss) | 274 | 274 | 274 | |||||
Common shares issued to acquire Aetna (in shares) | 274 | |||||||
Common shares issued to acquire Aetna | 22,484 | $ 9,561 | 12,923 | 22,484 | ||||
Stock option activity, stock awards, related tax benefits and other (in shares) | 8 | |||||||
Stock option activity, stock awards, related tax benefits and other | 421 | 421 | 421 | |||||
Purchase of treasury shares, net of ESPP issuances (in shares) | (1) | |||||||
Purchase of treasury shares, net of ESPP issuances | 7 | $ 7 | 7 | |||||
Common stock dividends | (2,045) | (2,045) | (2,045) | |||||
Other decreases in noncontrolling interests | (13) | (13) | ||||||
Acquisition of noncontrolling interests | 329 | 329 | ||||||
Balance at end of period (in shares) at Dec. 31, 2018 | 1,720 | (425) | ||||||
Balance at end of period at Dec. 31, 2018 | 58,543 | $ (28,228) | $ 45,440 | 40,911 | 102 | 58,225 | $ 318 | |
Stockholders' Equity [Roll Forward] | ||||||||
Adoption of new accounting standards (Note 1) | $ (13) | $ (6) | $ (7) | $ (13) |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parentheticals) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | |||
Treasury shares held in trust (in shares) | 1 | 1 | 1 |
Treasury shares held in trust | $ 31 | $ 29 | $ 31 |
Common stock | 17 | $ 17 | $ 17 |
Net income attributable to noncontrolling interest | $ 1 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
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 more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 92 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 stand-alone 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. The consolidated financial statements for the year ended December 31, 2018 reflect Aetna’s results subsequent to the Aetna Acquisition Date. 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 has been retrospectively adjusted to reflect these changes. The Company now has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment (“PSS”) PSS 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. PSS’ 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. PSS 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 (“RLS”) RLS 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. Prior to January 2, 2018, RLS also provided commercialization services under the name RxCrossroads ® . The Company divested its RxCrossroads subsidiary on January 2, 2018. As of December 31, 2018, RLS operated more than 9,900 retail locations, over 1,100 MinuteClinic ® locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment (“HCBS”) HCBS is one of the nation’s leading diversified health care benefits providers, serving an estimated 38 million people as of December 31, 2018 . HCBS has the information and resources to help members, in consultation with their health care professionals, make better informed decisions about their health care. HCBS offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, 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. HCBS’ 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 of medical and dental care costs) as “ASC.” For periods prior to the Aetna Acquisition (which occurred on November 28, 2018), the Health Care Benefits segment consisted solely of the Company’s SilverScript PDP business. 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 consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated. Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and cash equivalents Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. The Company invests in short-term money market funds, commercial paper and time deposits, as well as other debt securities that are classified as cash equivalents within the accompanying consolidated balance sheets, as these funds are highly liquid and readily convertible to known amounts of cash. Restricted cash As of December 31, 2018 and 2017 , the Company had $230 million and $190 million , respectively, of restricted cash held in a trust in an insurance captive to satisfy collateral requirements associated with the assignment of certain insurance policies. Such amounts are included in other assets on the consolidated balance sheets. Additionally, as of December 31, 2018 and 2017 , the Company had $6 million and $14 million , respectively, of restricted cash held in escrow accounts in connection with certain recent acquisitions. Such amounts are included in other current assets on the consolidated balance sheets. Investments Debt Securities Debt securities consist primarily of United States Treasury and agency securities, mortgage-backed securities, corporate and foreign bonds and other debt securities. Debt securities are classified as either current or long-term investments based on their contractual maturities unless the Company intends to sell an investment within the next twelve months, in which case it is classified as current within the consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value. See Note 4 ‘‘Fair Value’’ for additional information on how the Company estimates the fair value of these investments. The cost for mortgage-backed and other asset-backed securities is adjusted for unamortized premiums and discounts, which are amortized using the interest method over the estimated remaining term of the securities, adjusted for anticipated prepayments. Debt securities are regularly reviewed to determine whether a decline in fair value below the cost basis or carrying value is other-than-temporary. When a debt security is in an unrealized capital loss position, the Company monitors the duration and severity of the loss to determine if sufficient market recovery can occur within a reasonable period of time. If a decline in the fair value of a debt security is considered other-than-temporary, the cost basis or carrying value of the debt security is written down. The write-down is then bifurcated into its credit and non-credit related components. The amount of the credit-related component is included in net income, and the amount of the non-credit related component is included in other comprehensive income/loss, unless the Company intends to sell the debt security or it is more likely than not that the Company will be required to sell the debt security prior to its anticipated recovery of the debt security’s amortized cost basis. Interest is not accrued on debt securities when management believes the collection of interest is unlikely. Equity Securities Equity securities with readily available fair values are measured at fair value with changes in fair value recognized in net income. Mortgage Loans Mortgage loan investments on the consolidated balance sheets are valued at the unpaid principal balance, net of impairment reserves. A mortgage loan may be impaired when it is a problem loan (i.e., more than 60 days delinquent, in bankruptcy or in process of foreclosure), a potential problem loan (i.e., high probability of default) or a restructured loan. For impaired loans, a specific impairment reserve is established for the difference between the recorded investment in the loan and the estimated fair value of the collateral. The Company applies its loan impairment policy individually to all loans in its portfolio. The impairment evaluation described above also considers characteristics and risk factors attributable to the aggregate portfolio. An additional allowance for loan losses is established if it is probable that there will be a credit loss on a group of similar mortgage loans. The following characteristics and risk factors are considered when evaluating if a credit loss is probable on a group of similar mortgage loans: loan-to-value ratios, property type (e.g., office, retail, apartment, industrial), geographic location, vacancy rates and property condition. Full or partial impairments of loans are recorded at the time an event occurs affecting the legal status of the loan, typically at the time of foreclosure or upon a loan modification giving rise to forgiveness of debt. Interest income on a potential problem loan or restructured loan is accrued to the extent it is deemed to be collectible and the loan continues to perform under its original or restructured terms. Interest income on problem loans is recognized on a cash basis. Cash payments on loans in the process of foreclosure are treated as a return of principal. Mortgage loans with a maturity date or a committed prepayment date within twelve months are classified as current on the consolidated balance sheets. Other Investments Other investments consist primarily of the following: • Private equity and hedge fund limited partnerships are accounted for using the equity method of accounting. Under this method, the carrying value of the investments are based on the value of the Company’s equity ownership of the underlying investment funds provided by the general partner or manager of the investments, the financial statements of which generally are audited. As a result of the timing of the receipt of the valuation information provided by the fund managers, these investments are generally reported on up to a three month lag. The Company reviews investments for impairment at least quarterly and monitors their performance throughout the year through discussions with the administrators, managers and/or general partners. If the Company becomes aware of an impairment of a limited partnership’s investments through its review or prior to receiving the limited partnership’s financial statements at the financial statement date, an impairment will be recognized by recording a reduction in the carrying value of the limited partnership with a corresponding charge to net investment income. • Investment real estate, which is carried on the consolidated balance sheets at depreciated cost, including capital additions, net of write-downs for other-than-temporary declines in fair value. Depreciation is calculated using the straight-line method based on the estimated useful life of each asset. If any real estate investment is considered held-for-sale, it is carried at the lower of its carrying value or fair value less estimated selling costs. The Company generally estimates fair value using a discounted future cash flow analysis in conjunction with comparable sales information. At the time of the sale, the difference between the sales price and the carrying value is recorded as a realized capital gain or loss. • Privately-placed equity securities, which are carried on the consolidated balance sheets at cost less impairments, plus or minus subsequent adjustments for observable price changes. Additionally, as a member of the Federal Home Loan Bank of Boston (“FHLBB”), a subsidiary of the Company is required to purchase and hold shares of the FHLBB. These shares are restricted and carried at cost. Net Investment Income Net investment income on the Company’s investments is recorded when earned and is reflected in net income in the consolidated results of operations (other than net investment income on assets supporting experience-rated products). Experience-rated products are products in the large case pensions business where the contract holder, not the Company, assumes investment and other risks, subject to, among other things, minimum guarantees provided by the Company. The effect of investment performance on experience-rated products is allocated to contract holders’ accounts daily, based on the underlying investment experience and, therefore, does not impact the Company’s net income in the consolidated results of operations (as long as the contract’s minimum guarantees are not triggered). Net investment income on assets supporting large case pensions’ experience-rated products is included in net investment income in the consolidated statements of operations and is credited to contract holders’ accounts through a charge to benefit costs. Realized capital gains and losses on investments (other than realized capital gains and losses on investments supporting experience-rated products) are included as a component of net investment income in the consolidated statements of operations. Realized capital gains and losses are determined on a specific identification basis. Purchases and sales of debt and equity securities and alternative investments are reflected on the trade date. Purchases and sales of mortgage loans and investment real estate are reflected on the closing date. Realized capital gains and losses on investments supporting large case pensions’ experience-rated products are not included in realized capital gains and losses in the consolidated statements of operations and instead are credited directly to contract holders’ accounts. The contract holders’ accounts are reflected in policyholders’ funds on the consolidated balance sheets. Unrealized capital gains and losses on investments (other than unrealized capital gains and losses on investments supporting experience-rated products) are reflected in shareholders’ equity, net of tax, as a component of accumulated other comprehensive income. Unrealized capital gains and losses on investments supporting large case pensions’ experience-rated products are credited directly to contract holders’ accounts, which are reflected in policyholders’ funds on the consolidated balance sheets. Derivative Financial Instruments The Company uses derivative financial instruments in order to manage interest rate and foreign exchange risk and credit exposure. The Company’s use of these derivatives is generally limited to hedging risk and has principally consisted of using interest rate swaps, treasury rate locks, forward contracts, futures contracts, warrants, put options and credit default swaps. Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations. Accounts receivable, net consists of the following at December 31 : In millions 2018 2017 Trade receivables $ 6,896 $ 7,895 Vendor and manufacturer receivables 7,655 5,109 Premium receivables 2,259 31 Other receivables 821 146 Total accounts receivable, net $ 17,631 $ 13,181 The activity in the allowance for doubtful accounts receivable for the years ended December 31 is as follows: In millions 2018 2017 2016 Beginning balance $ 307 $ 286 $ 161 Additions charged to bad debt expense 256 177 221 Write-offs charged to allowance (70 ) (156 ) (96 ) Ending balance $ 493 $ 307 $ 286 Inventories Inventories are valued at the lower of cost or net realizable value using the weighted average cost method. Physical inventory counts are taken on a regular basis in each retail store and LTC pharmacy and a continuous cycle count process is the primary procedure used to validate the inventory balances on hand in each distribution center and mail facility to ensure that the amounts reflected in the accompanying consolidated financial statements are properly stated. During the interim period between physical inventory counts, the Company accrues for anticipated physical inventory losses on a location-by-location basis based on historical results and current trends. Reinsurance Recoverables The Company utilizes reinsurance agreements primarily to reduce its 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. Failure of reinsurers to indemnify the Company could result in losses; however, the Company does not expect charges for unrecoverable reinsurance to have a material effect on its consolidated results of operations or financial condition. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of its reinsurers. At December 31, 2018 , the Company’s reinsurance recoverables consisted primarily of amounts due from third parties that are rated consistent with companies that are considered to have the ability to meet their obligations. Reinsurance recoverables are recorded as other current assets or other assets on the consolidated balance sheets. Health Care Contract Acquisition Costs Insurance products included in the Health Care Benefits segment are cancelable by either the customer or the member monthly upon written notice. Acquisition costs related to prepaid health care and health indemnity contracts are generally expensed as incurred. Acquisition costs for certain long-duration insurance contracts are deferred and are recorded as other current assets or other assets on the consolidated balance sheets and are amortized over the estimated life of the contracts. The amortization of deferred acquisition costs is recorded in operating expenses in the consolidated statements of operations. At December 31, 2018 , the balance of deferred acquisition costs was $22 million , comprised primarily of commissions paid on Medicare Supplement products within the Health Care Benefits segment. Property and Equipment Property and equipment is reported at historical cost, net of accumulated depreciation. Property, equipment and improvements to leased premises are depreciated using the straight-line method over the estimated useful lives of the assets, or when applicable, the term of the lease, whichever is shorter. Estimated useful lives generally range from 5 to 40 years for buildings, building improvements and leasehold improvements and 3 to 10 years for fixtures, equipment and internally developed software. Repair and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Application development stage costs for significant internally developed software projects are capitalized and depreciated. Property and equipment consists of the following at December 31 : In millions 2018 2017 Land $ 1,872 $ 1,707 Building and improvements 3,785 3,343 Fixtures and equipment 13,028 11,963 Leashold improvements 5,384 4,793 Software 2,800 2,484 Total property and equipment 26,869 24,290 Accumulated depreciation and amortization (15,520 ) (13,998 ) Property and equipment, net $ 11,349 $ 10,292 The amount of property and equipment under capital leases at December 31 is as follows: In millions 2018 2017 Property and equipment under capital leases $ 582 $ 588 Accumulated amortization of property and equipment under capital leases (163 ) (140 ) Property and equipment under capital leases, net $ 419 $ 448 Depreciation expense (which includes the amortization of property and equipment under capital leases) totaled $1.7 billion in each of the years ended December 31, 2018 , 2017 and 2016 . Goodwill The Company accounts for business combinations using the acquisition method of accounting, which requires the excess cost of an acquisition over the fair value of net assets acquired and identifiable intangible assets to be recorded as goodwill. Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary. When evaluating goodwill for potential impairment, the Company compares the fair value of its reporting units to their respective carrying amounts. The Company estimates the fair value of its reporting units using a combination of a discounted cash flow method and a market multiple method. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess. See Note 5 ‘‘Goodwill and Other Intangibles’’ for additional information about goodwill and goodwill impairments. Intangible Assets The Company’s definite-lived intangible assets are amortized over their estimated useful-life based upon the pattern of future cash flows attributable to the asset. Other than value of business acquired (“VOBA”), definite-lived intangible assets are amortized using the straight-line method. VOBA is amortized over the expected life of the acquired contracts in proportion to estimated premiums. The Company groups and evaluates definite-lived intangible assets for impairment at the lowest level at which individual cash flows can be identified whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted and without interest charges). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted and with interest charges). If required, an impairment loss is recorded for the portion of the asset group’s carrying value that exceeds the asset group’s estimated future cash flows (discounted and with interest charges). There were no material impairment losses recognized on definite-lived intangible assets in any of the three years ended December 31, 2018 , 2017 or 2016 . Indefinitely-lived intangible assets are not amortized but are tested for impairment annually, or more frequently if necessary. Indefinitely-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. The Company estimates the fair value of its indefinitely-lived trademarks using the relief from royalty method under the income approach. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value. There were no impairment losses recognized on indefinitely-lived intangible assets in any of the three years ended December 31, 2018 , 2017 or 2016 . See Note 5 ‘‘Goodwill and Other Intangibles’’ for additional information about intangible assets. Separate Accounts Separate Accounts assets and liabilities related to large case pensions products represent funds maintained to meet specific objectives of contract holders who bear the investment risk. These assets and liabilities are carried at fair value. Net investment income (including net realized capital gains and losses) accrue directly to such contract holders. The assets of each account are legally segregated and are not subject to claims arising from the Company’s other businesses. Deposits, withdrawals and net investment income (including net realized and net unrealized capital gains and losses) on Separate Accounts assets are not reflected in the consolidated statements of operations or cash flows. Management fees charged to contract holders are included in services revenue and recognized over the period earned. Health Care Costs Payable Health care costs payable consist principally of unpaid fee-for-service medical, dental and pharmacy claims, capitation costs, other amounts due to health care providers pursuant to risk-sharing arrangements primarily related to the Health Care Benefits segment’s Insured Commercial, Medicare and Medicaid products and accruals for state assessments. Unpaid health care claims include an estimate of payments the Company will make for (i) services rendered to the Company’s Insured members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid, each as of the financial statement date (collectively, “IBNR”). Health care costs payable also include an estimate of the cost of services that will continue to be rendered after the financial statement date if the Company is obligated to pay for such services in accordance with contractual or regulatory requirements. Such estimates are developed using actuarial principles and assumptions which consider, among other things, historical and projected claim submission and processing patterns, assumed and historical medical cost trends, historical utilization of medical services, claim inventory levels, changes in Insured membership and product mix, seasonality and other relevant factors. The Company reflects changes in these estimates in benefit costs in the consolidated results of operations in the period they are determined. Capitation costs represent contractual monthly fees paid to participating physicians and other medical providers for providing medical care, regardless of the volume of medical services provided to the Insured member. Amounts due under risk-sharing arrangements are based on the terms of the underlying contracts with the providers and consider claims experience under the contracts through the financial statement date. The Company develops its estimate of IBNR using actuarial principles and assumptions that consider numerous factors. Of those factors, the Company considers the analysis of historical and projected claim payment patterns (including claims submission and processing patterns) and the assumed health care cost trend rate (the year-over-year change in per member per month health care costs) to be the most critical assumptions. In developing its IBNR estimate, the Company consistently applies these actuarial principles and assumptions each period, with consideration to the variability of related factors. There have been no significant changes to the methodologies or assumptions used to develop the Company’s estimate of IBNR from the Aetna Acquisition Date through December 31, 2018 . The Company analyzes historical claim payment patterns by comparing claim incurred dates (i.e., the date services were provided) to claim payment dates to estimate “completion factors.” The Company uses completion factors predominantly to estimate the ultimate cost of claims incurred more than three months before the financial statement date. The Company estimates completion factors by aggregating claim data based on the month of service and month of claim payment and estimating the percentage of claims incurred for a given month that are complete by each month thereafter. For any given month, substantially all claims are paid within six months of the date of service, but it can take up to 48 months or longer after the date of service before all of the claims are completely resolved and paid. These historically-derived completion factors are then applied to claims paid through the financial statement date to estimate the ultimate claim cost for a given month’s incurred claim activity. The difference between the estimated ultimate claim cost and the claims paid through the financial statement date represents the Company’s estimate of claims remaining to be paid as of the financial statement date and is included in the Company’s health care costs payable. The completion factors the Company uses reflect judgments and possible adjustments based on data such as claim inventory levels, claim submission and processing patterns and, to a lesser extent, other factors such as changes in health care cost trend rates, changes in Insured membership and changes in product mix. If claims are submitted or processed on a faster (slower) pace than prior periods, the actual claims may be more (less) complete than originally estimated using the Company’s completion factors, which may result in reserves that are higher (lower) than the ultimate cost of claims. Because claims incurred within three months before the financial statement date are less mature, the Company uses a combination of historically-derived completion factors and the assumed health care cost trend rate to estimate the ultimate cost of claims incurred for these months. The Company applies its actuarial judgment and places a greater emphasis on the assumed health care cost trend rate for the most recent claim incurred dates as these months may be influenced by seasonal patterns and changes in membership and product mix. The Company’s health care cost trend rate is affected by changes in per member utilization of medical services as well as changes in the unit cost of such services. Many factors influence the health care cost trend rate, including the Company’s ability to manage benefit costs through product design, negotiation of favorable provider contracts and medical management programs, as well as the mix of the Company’s business. The health status of the Company’s Insured members, aging of the populatio |
Acquisition of Aetna
Acquisition of Aetna | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition of Aetna | 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 majority of Aetna’s operations are included in a new segment, Health Care Benefits. 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 Corporate/Other segment. 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 more than 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 fair value of the consideration transferred on the date of acquisition consisted of the following: In millions Cash $ 48,089 Common stock (274.4 million shares) (1) 22,117 Fair value of replacement equity awards for pre-combination services (9.9 million shares) (2) 367 Effective settlement of pre-existing relationship (3) (807 ) Total consideration transferred $ 69,766 _____________________________________________ (1) The fair value of the Company’s common stock issued as consideration was calculated based on the 327.6 million Aetna common shares outstanding as of November 28, 2018 multiplied by (i) the merger agreement per share exchange ratio and (ii) the volume weighted average price of CVS Health common stock on November 28, 2018 of $80.59 . (2) The fair value of the replacement equity awards issued by the Company was determined as of the Aetna Acquisition Date. The fair value of the awards attributed to pre-combination services of $367 million is included in the consideration transferred and the fair value of the awards attributed to post-combination services of $232 million has been, or will be, included in the Company’s post-combination financial statements as compensation costs. (3) The purchase price included $807 million of effectively settled liabilities the Company owed to Aetna from their pre-existing pharmacy services relationship. 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 (1) 4,089 Other current assets 3,896 Investments (current and long-term) 17,991 Goodwill 46,684 Intangible assets 23,746 Other long-term assets 8,282 Total assets acquired 111,253 Health care costs payable 5,359 Other current liabilities 10,026 Debt (current and long-term) 8,098 Deferred income taxes 4,574 Other long-term liabilities 13,101 Total liabilities assumed 41,158 Noncontrolling interests 329 Total consideration transferred $ 69,766 _____________________________________________ (1) The fair value of premium receivables acquired is $2.4 billion , with the gross contractual amount being $2.8 billion . The Company expects $424 million of premium receivables to be uncollectible. The fair value of other receivables acquired is $1.7 billion , with the gross contractual amount being $1.8 billion . The Company expects $84 million of other receivables to be uncollectible. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. The most significant open items included the valuation of certain intangible assets and investments, the accounting for income taxes and the accounting for contingencies as management is awaiting additional information to complete its assessment of these matters. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company’s purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. Goodwill Goodwill represents future economic benefits expected to arise from the Company’s expanded presence in the health care industry, the assembled workforce acquired, expected purchasing, medical cost and revenue synergies, as well as operating efficiencies and cost savings. The preliminarily valuation of goodwill was allocated to the Company’s business segments as follows: In millions Health Care Benefits $ 44,484 Pharmacy Services 1,500 Retail/LTC 700 Total goodwill $ 46,684 Approximately $165 million of goodwill is deductible for income tax purposes. Intangible Assets The following table summarizes the preliminary fair values and weighted average useful lives for intangible assets acquired in the Aetna Acquisition, each of which is subject to change as the Company finalizes its purchase accounting: Weighted Average Gross Useful Life In millions, except weighted average useful life Fair Value (years) Customer relationships (1) $ 13,630 14.4 Standalone Medicare Part D prescription drug plan customer relationship (held for sale) 101 N/A Technology 1,060 3.0 Provider networks (1) 4,200 20.0 Value of Business Acquired 590 20.0 Trademark (definite-lived) 65 5.0 Trademark (indefinitely-lived) 4,100 N/A Total intangible assets $ 23,746 15.1 _____________________________________________ (1) The amortization period for the Company’s customer relationships and provider networks includes an assumption of renewal or extension of these arrangements. At the acquisition date, the periods prior to the next renewal or extension for provider networks primarily ranged from one to three years , and the period prior to the next renewal or extension for customer relationships was one year . Any costs related to the renewal or extension of these contracts are expensed as incurred. Deferred income taxes The purchase price allocation includes net deferred tax liabilities of $4.6 billion , primarily relating to deferred tax liabilities established on the identifiable acquired intangible assets. Consolidated results of operations The Company’s consolidated results of operations for the year ended December 31, 2018 , include $5.6 billion of revenues and $146 million of income before income tax provision associated with the results of operations of Aetna from the Aetna Acquisition Date to December 31, 2018 . During the year ended December 31, 2018 and 2017 , the Company incurred transaction costs of $147 million and $34 million , respectively, associated with the Aetna Acquisition that were recorded within operating expenses. Unaudited pro forma financial information The following unaudited pro forma information presents a summary of the Company’s combined results of operations for the years ended December 31, 2018 and 2017 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 results of operations 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. Year Ended December 31, In millions, except per share data 2018 2017 Total revenues $ 243,232 $ 236,000 Income from continuing operations 1,152 6,813 Basic earnings per share from continuing operations attributable to CVS Health $ 0.89 $ 5.25 Diluted earnings per share from continuing operations attributable to CVS Health $ 0.88 $ 5.21 The pro forma results for the years ended December 31, 2018 and 2017 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. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2018 | |
Investments [Abstract] | |
Investments | Investments On November 28, 2018, the Company completed the Aetna Acquisition. Prior to the Aetna Acquisition Date, the Company’s short term investments balance was comprised of certificates of deposit with initial maturities of greater than three months when purchased that mature in less than one year from the balance sheet date. These investments totaled $111 million as of December 31, 2017 and were classified as available for sale. In addition, the Company had $112 million of additional long-term investments as of December 31, 2017 which primarily consisted of cost method and equity method investments. Since the total amount of investments prior to the Aetna Acquisition was not material to the consolidated financial statements, the Company will include additional disclosures for investments on a prospective basis starting from the Aetna Acquisition Date. Total investments at December 31, 2018 were as follows: In millions Current Long-term Total Debt securities available for sale $ 2,359 $ 12,896 $ 15,255 Mortgage loans 145 1,216 1,361 Other investments 18 1,620 1,638 Total investments $ 2,522 $ 15,732 $ 18,254 At December 31, 2018 , the Company held investments of $531 million related to the 2012 conversion of an existing group annuity contract from a participating to a non-participating contract. The conversion occurred prior to the Aetna Acquisition. These investments are included in the total investments of large case pensions supporting non-experience-rated products. Although these investments are not accounted for as Separate Accounts assets, they are legally segregated and are not subject to claims that arise out of the Company’s business and only support future policy benefits obligations under that group annuity contract. Debt Securities Debt securities available for sale at December 31, 2018 were as follows: In millions Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 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 results of operations. 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. The fair value of debt securities at December 31, 2018 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 $ 901 $ 902 One year through five years 5,489 5,521 After five years through ten years 2,973 2,999 Greater than ten years 3,498 3,566 Residential mortgage-backed securities 567 577 Commercial mortgage-backed securities 594 605 Other asset-backed securities 1,097 1,085 Total $ 15,119 $ 15,255 Mortgage-Backed and Other Asset-Backed Securities All of the Company’s residential mortgage-backed securities at December 31, 2018 were issued by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation and carry agency guarantees and explicit or implicit guarantees by the United States Government. At December 31, 2018 , the Company’s residential mortgage-backed securities had an average credit quality rating of AAA and a weighted average duration of 4.8 years. The Company’s commercial mortgage-backed securities have underlying loans that are dispersed throughout the United States. Significant market observable inputs used to value these securities include loss severity and probability of default. At December 31, 2018 , these securities had an average credit quality rating of AAA and a weighted average duration of 6.3 years. The Company’s other asset-backed securities have a variety of underlying collateral (e.g., automobile loans, credit card receivables, home equity loans and commercial loans). Significant market observable inputs used to value these securities include the unemployment rate, loss severity and probability of default. At December 31, 2018 , these securities had an average credit quality rating of AA and a weighted average duration of 1.3 years. Summarized below are the debt securities the Company held at December 31, 2018 that were in an unrealized capital loss position: In millions, except number of securities Number of Securities Fair Value Unrealized Losses 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 they are performing assets generating investment income to support the needs of the Company’s businesses. 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 December 31, 2018 , 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 December 31, 2018 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 $ 21 $ — $ 308 $ — $ 329 $ — One year through five years 36 2 557 5 593 7 After five years through ten years 47 — 492 9 539 9 Greater than ten years 49 — 370 5 419 5 Residential mortgage-backed securities — — 1 — 1 — Other asset-backed securities 4 — 524 15 528 15 Total $ 157 $ 2 $ 2,252 $ 34 $ 2,409 $ 36 Mortgage Loans The Company’s mortgage loans are collateralized by commercial real estate. From the Aetna Acquisition Date through December 31, 2018 , the Company had the following activity in its mortgage loan portfolio: In millions New mortgage loans $ 4 Mortgage loans fully-repaid 27 Mortgage loans foreclosed — The Company assesses mortgage loans on a regular basis for credit impairments, and annually assign 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 - Represents loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes. • Categories 5 and 6 - Represents 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 most recent assessments at December 31, 2018 , the Company’s mortgage loans were given the following credit quality indicators: In millions, except credit ratings indicator 1 $ 42 2 to 4 1,301 5 and 6 18 7 — Total $ 1,361 At December 31, 2018 scheduled mortgage loan principal repayments were as follows: In millions 2019 $ 145 2020 109 2021 269 2022 228 2023 83 Thereafter 527 Total $ 1,361 Net Investment Income Sources of net investment income for the year ended December 31, 2018 were as follows: In millions Debt securities $ 61 Mortgage loans 6 Other investments 593 Gross investment income 660 Investment expenses (3 ) Net investment income (excluding net realized capital gains or losses) 657 Net realized capital gains 3 Net investment income (1) $ 660 _____________________________________________ (1) Net investment income in 2018 includes $4 million related to investments supporting experience-rated products. The Company’s net investment income was $21 million and $20 million in 2017 and 2016 , respectively, relating to interest income on cash equivalents and debt securities. The Company did not have any material realized capital gains or losses during 2017 or 2016. The portion of unrealized capital gains and losses recognized during the year ended December 31, 2018 related to investments in equity securities held as of December 31, 2018 was not material. 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 from the Aetna Acquisition Date through December 31, 2018 were as follows: (1) In millions Proceeds from sales $ 389 Gross realized capital gains 2 Gross realized capital losses (2 ) _____________________________________________ (1) The proceeds from sales and gross realized capital gains and losses exclude the impact of the sales of short-term debt securities which primarily relate to the Company’s investments in mutual funds. These investments were excluded from the disclosed amounts because they represent an immaterial amount of aggregate gross realized capital gains or losses and have a high volume of sales activity. |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value The preparation of the Company’s consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value, and others on another basis, such as an adjusted historical cost basis. In this note, the Company provides details on the fair value of financial assets and liabilities and how it determines those fair values. The Company presents this information for those financial instruments that are measured at fair value for which the change in fair value impacts net income (loss) attributable to CVS Health or other comprehensive income separately from other financial assets and liabilities. Financial Instruments Measured at Fair Value on the Consolidated Balance Sheets Certain of the Company’s financial instruments are measured at fair value on the consolidated balance sheets. The fair values of these instruments are based on valuations that include inputs that can be 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 (“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 – 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, inputs that are observable that are not prices (such as interest rates and credit risks) and inputs that are derived from or corroborated by observable markets. • Level 3 – Developed from unobservable data, reflecting the Company’s assumptions. Financial assets and liabilities are classified based upon the lowest level of input that is significant to the valuation. When quoted prices in active markets for identical assets and liabilities are available, the Company uses these quoted market prices to determine the fair value of financial assets and liabilities and classifies these assets and liabilities in Level 1. In other cases where a quoted market price for identical assets and liabilities in an active market is either not available or not observable, the Company estimates fair value using valuation methodologies based on available and observable market information or by using a matrix pricing model. These financial assets and liabilities would then be classified in Level 2. If quoted market prices are not available, the Company determines fair value using broker quotes or an internal analysis of each investment’s financial performance and cash flow projections. Thus, financial assets and liabilities may be classified in Level 3 even though there may be some significant inputs that may be observable. The following is a description of the valuation methodologies used for the Company’s financial assets and liabilities that are measured at fair value, including the general classification of such assets and liabilities pursuant to the valuation hierarchy. Debt Securities – Where quoted prices are available in an active market, debt securities are classified in Level 1 of the fair value hierarchy. The Company’s Level 1 debt securities consist primarily of United States Treasury securities. The fair values of the Company’s Level 2 debt securities are obtained using models, such as matrix pricing, which use quoted market prices of debt securities with similar characteristics or discounted cash flows to estimate fair value. The Company reviews these prices to ensure they are based on observable market inputs that include, but are not limited to, quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets and inputs that are observable but not prices (for example, interest rates and credit risks). The Company also reviews the methodologies and the assumptions used to calculate prices from these observable inputs. On a quarterly basis, the Company selects a sample of its Level 2 debt securities’ prices and compares them to prices provided by a secondary source. Variances over a specified threshold are identified and reviewed to confirm the price provided by the primary source represents an appropriate estimate of fair value. In addition, the Company’s internal investment team consistently compares the prices obtained for select Level 2 debt securities to the team’s own independent estimates of fair value for those securities. The Company obtained one price for each of its Level 2 debt securities and did not adjust any of these prices at December 31, 2018 . The Company’s Level 2 debt securities were not material as of December 31, 2017 . The Company also values certain debt securities using Level 3 inputs. For Level 3 debt securities, fair values are determined by outside brokers or, in the case of certain private placement securities, are priced internally. Outside brokers determine the value of these debt securities through a combination of their knowledge of the current pricing environment and market flows. The Company obtained one non-binding broker quote for each of these Level 3 debt securities and did not adjust any of these quotes at December 31, 2018 . The total fair value of broker quoted debt securities was $50 million at December 31, 2018 . The Company did not have any Level 3 debt securities as of December 31, 2017. Examples of these broker quoted Level 3 debt securities include certain United States and foreign corporate securities and certain of the Company’s commercial mortgage-backed securities as well as other asset-backed securities. For some private placement securities, the Company’s internal staff determines the value of these debt securities by analyzing spreads of corporate and sector indices as well as interest spreads of comparable public bonds. Examples of these private placement Level 3 debt securities include certain United States and foreign securities and certain tax-exempt municipal securities. Equity Securities – The Company currently has two classifications of equity securities: those that are publicly traded and those that are privately placed. Publicly-traded equity securities are classified in Level 1 because quoted prices are available for these securities in an active market. For privately placed equity securities, there is no active market; therefore, these securities are classified in Level 3 because the Company prices these securities through an internal analysis of each investment’s financial statements and cash flow projections. Significant unobservable inputs consist of earnings and revenue multiples, discount for lack of marketability and comparability adjustments. An increase or decrease in any of these unobservable inputs would result in a change in the fair value measurement, which may be significant. The Company did not have any Level 3 equity securities as of December 31, 2017. Derivative Financial Instruments - The fair values of derivative financial instruments are determined using quoted prices in markets that are not active or inputs that are observable for the asset or liability and therefore they are classified as Level 2 in the fair value hierarchy. The fair value of these instruments are recorded in other current assets or accrued expenses, as applicable. The Company did not have any material outstanding derivative financial instruments as of December 31, 2018. Financial assets and liabilities measured at fair value on a recurring basis on the consolidated balance sheets at December 31, 2018 and 2017 were as follows: In millions Level 1 Level 2 Level 3 Total December 31, 2018 Assets: 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 December 31, 2017 Assets: Debt securities: U.S. corporate securities $ — $ 1 $ — $ 1 Foreign securities — 110 — 110 Total debt securities — 111 — 111 Equity securities — — — — Derivative financial instruments — 5 — 5 Total assets $ — $ 116 $ — $ 116 Liabilities: Derivative financial instruments $ — $ 23 $ — $ 23 There were no transfers between Levels 1 and 2 during the years ended December 31, 2018 and 2017 . The change in the balance of Level 3 financial assets during 2018 relates to investments acquired in the Aetna Acquisition, which occurred on November 28, 2018. There were no transfers into or out of Level 3 from November 28, 2018 to December 31, 2018. Financial Instruments Not Measured at Fair Value on the Consolidated Balance Sheets The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the consolidated balance sheets at adjusted cost or contract value at December 31, 2018 and 2017 were as follows: Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total 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 Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total December 31, 2017 Assets: Equity securities (1) $ 47 N/A N/A N/A N/A Liabilities: Long-term debt 25,726 26,756 — — 26,756 _____________________________________________ (1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. See Note 1 ‘‘Significant Accounting Policies’’ for additional information regarding the valuation of cost-method investments. Separate Accounts Measured at Fair Value on the Consolidated Balance Sheets As part of the Aetna Acquisition, the Company acquired Separate Accounts assets related to large case pensions products which 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. Net investment income and capital gains and losses accrue directly to such contract holders. The assets of each account are legally segregated and are not subject to claims arising from the Company’s other businesses. Deposits, withdrawals, net investment income and realized and unrealized capital gains and losses on Separate Accounts assets are not reflected in the consolidated statements of operations, shareholders’ equity or cash flows. Separate Accounts assets include debt and equity securities. The valuation methodologies used for these assets are similar to the methodologies described above in this Note 4 “Fair Value.” Separate Accounts assets also include investments in common/collective trusts that are carried at fair value. Common/collective trusts invest in other investment funds otherwise known as the underlying funds. The Separate Accounts’ interests in the common/collective trust funds are based on the fair values of the investments of the underlying funds and therefore are classified in Level 2. The assets in the underlying funds primarily consist of equity securities. Investments in common/collective trust funds are valued at their respective net asset value (“NAV”) per share/unit on the valuation date. Separate Accounts financial assets as of December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total Debt securities $ 782 $ 2,500 $ 4 $ 3,286 Equity securities — 3 — 3 Common/collective trusts — 404 — 404 Total (1) $ 782 $ 2,907 $ 4 $ 3,693 _____________________________________________ (1) Excludes $191 million of cash and cash equivalents and accounts receivable at December 31, 2018 . During 2018 , the Company had an immaterial amount of Level 3 Separate Accounts financial assets and an immaterial amount of gross transfers of Separate Accounts financial assets into or out of Level 3. During 2018 , there were no transfers of Separate Accounts financial assets between Levels 1 and 2. The Company held no Separate Accounts financial assets as of December 31, 2017 . Offsetting Financial Assets and Liabilities Subsequent to the Aetna Acquisition Date, certain financial assets and liabilities are offset in the Company’s consolidated balance sheets or are subject to master netting arrangements or similar agreements with the applicable counterparty. Financial assets, including derivative assets, subject to offsetting and enforceable master netting arrangements were $13 million |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangibles Goodwill Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31, 2018 and 2017 : In millions Pharmacy Services Retail/LTC Health Care Benefits Total Balance at December 31, 2016 $ 21,637 $ 16,612 $ — $ 38,249 Acquisitions 182 203 — 385 Foreign currency translation adjustments — (2 ) — (2 ) Impairments — (181 ) — (181 ) Balance at December 31, 2017 21,819 16,632 — 38,451 Acquisitions 1,569 735 44,484 46,788 Foreign currency translation adjustments — (14 ) — (14 ) Divestiture of RxCrossroads subsidiary — (398 ) — (398 ) Impairments — (6,149 ) — (6,149 ) Balance at December 31, 2018 $ 23,388 $ 10,806 $ 44,484 $ 78,678 Cumulative goodwill impairments as of December 31, 2018 and 2017 were $6.1 billion and $181 million , respectively. The changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 reflect the following activity: Aetna Acquisition On November 28, 2018, the Company completed the Aetna Acquisition. The majority of the preliminary valuation of goodwill associated with the Aetna Acquisition was recorded in the Health Care Benefits segment. The Company also allocated a portion of such goodwill to the Retail/LTC and Pharmacy Services segments related to the fair value of identified synergies that are expected to directly benefit those segments. See Note 2 ‘‘Acquisition of Aetna’’ for further discussion regarding the Aetna Acquisition. LTC During 2018, the LTC reporting unit continued to experience industry wide challenges that have impacted management’s ability to grow the business at the rate that was originally estimated when the Company acquired Omnicare and when the 2017 annual goodwill impairment test was performed. These challenges include lower client retention rates, lower occupancy rates in skilled nursing facilities, the deteriorating financial health of numerous skilled nursing facility customers which resulted in a number of customer bankruptcies in 2018, and continued facility reimbursement pressures. In June 2018, LTC management submitted its initial budget for 2019 and updated the 2018 annual forecast which showed a projected deterioration in the financial results for the remainder of 2018 and in 2019, which also caused management to update its long-term forecast beyond 2019. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be impaired and, accordingly, management performed an interim goodwill impairment test as of June 30, 2018. The results of that interim impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in a $3.9 billion pre-tax goodwill impairment charge in the second quarter of 2018. The fair value of the LTC reporting unit was determined using a combination of a discounted cash flow method and a market multiple method. In addition to the lower financial projections, higher risk-free interest rates and lower market multiples of peer group companies contributed to the amount of the second quarter 2018 goodwill impairment charge. During the third quarter of 2018, the Company performed its required annual impairment tests of goodwill and concluded there was no impairment of goodwill or trade names. During the fourth quarter of 2018, the LTC reporting unit missed its forecast primarily due to operational issues and customer liquidity issues, including one significant customer bankruptcy. Additionally, LTC management submitted an updated final budget for 2019 which showed significant additional deterioration in the projected financial results for 2019 compared to the analyses performed in the second and third quarters of 2018 primarily due to continued industry and operational challenges, which also caused management to make further updates to its long-term forecast beyond 2019. The updated projections continue to reflect industry wide challenges including lower occupancy rates in skilled nursing facilities, significant deterioration in the financial health of numerous skilled nursing facility customers and continued facility reimbursement pressures. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be further impaired and, accordingly, an interim goodwill impairment test was performed during the fourth quarter of 2018. The results of that impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in an additional $2.2 billion goodwill impairment charge in the fourth quarter of 2018. In addition to the lower financial projections, lower market multiples of peer group companies also contributed to the amount of the fourth quarter 2018 goodwill impairment charge. The fair value of the LTC reporting unit was determined using a methodology consistent with the methodology described above for the analyses performed during the second and third quarters of 2018. As of December 31, 2018 , the remaining goodwill balance in the LTC reporting unit is approximately $431 million . RxCrossroads During 2017, the Company began pursuing various strategic alternatives for its RxCrossroads reporting unit. In connection with this effort, the Company performed an interim goodwill impairment test in the second quarter of 2017. The results of that impairment test showed that the fair value of the RxCrossroads reporting unit was lower than the carrying value, resulting in a $135 million pre-tax goodwill impairment charge in the second quarter of 2017. The TCJA was enacted on December 22, 2017 and reduced the United States federal corporate income tax rate from 35% to 21% effective January 1, 2018 (see Note 10 ‘‘Income Taxes’’ ). As a result, the RxCrossroads deferred income tax liabilities were reduced by $47 million and an income tax benefit of $47 million was recorded in the 2017 statement of operations. The reduction in the deferred income tax liabilities increased the carrying value of the RxCrossroads reporting unit by $47 million which triggered an additional goodwill impairment charge in the RxCrossroads reporting unit of $46 million during the fourth quarter of 2017. On January 2, 2018, the Company sold its RxCrossroads subsidiary to McKesson Corporation for $725 million , at which time the remaining goodwill of this reporting unit was removed from the consolidated balance sheet. Intangible Assets The following table is a summary of the Company’s intangible assets as of December 31 : In millions, except weighted average life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Life (years) 2018 Trademarks (indefinitely-lived) $ 10,498 $ — $ 10,498 N/A Customer contracts/relationships and covenants not to compete 26,213 (6,349 ) 19,864 14.8 Technology 1,060 (31 ) 1,029 3.0 Provider networks 4,200 (19 ) 4,181 20.0 Value of Business Acquired 590 (7 ) 583 20.0 Favorable leases and other 1,177 (808 ) 369 17.1 Total $ 43,738 $ (7,214 ) $ 36,524 15.3 2017 Trademark (indefinitely-lived) $ 6,398 $ — $ 6,398 N/A Customer contracts/relationships and covenants not to compete 12,341 (5,536 ) 6,805 15.3 Favorable leases and other 1,190 (763 ) 427 16.2 Total $ 19,929 $ (6,299 ) $ 13,630 15.4 Amortization expense for intangible assets totaled $1.0 billion , $817 million and $795 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. The projected annual amortization expense for the Company’s intangible assets for the next five years is as follows: In millions 2019 $ 2,563 2020 2,350 2021 2,253 2022 1,879 2023 1,844 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | Leases The Company leases most of its retail and mail order dispensing pharmacy locations, and certain distribution centers and corporate offices under noncancelable operating leases, typically with initial terms of 15 to 25 years and with options that permit renewals for additional periods. The Company also leases certain equipment and other assets under noncancelable operating leases, typically with initial terms of 3 to 10 years. In December 2015, in connection with the acquisition of the pharmacy and clinic businesses of Target, the Company entered into lease agreements with Target for the pharmacy and clinic space within Target stores. Given that the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased, the Company concluded for accounting purposes that the lease term was the remaining economic life of the buildings. Consequently, most of the individual Target pharmacy and clinic leases are capital leases. Minimum rent on operating leases is expensed on a straight-line basis over the term of the lease. In addition to minimum rental payments, certain 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. The following table is a summary of the Company’s net rental expense for operating leases for the years ended December 31: In millions 2018 2017 2016 Minimum rentals $ 2,528 $ 2,455 $ 2,418 Contingent rentals 28 29 35 Rental expense 2,556 2,484 2,453 Less: sublease income (21 ) (24 ) (24 ) Total rental expense, net $ 2,535 $ 2,460 $ 2,429 The following table is a summary of the future minimum lease payments under capital and operating leases as of December 31, 2018 : Capital Operating In millions Leases Leases (1) 2019 $ 74 $ 2,690 2020 73 2,544 2021 73 2,399 2022 73 2,233 2023 73 2,110 Thereafter 875 16,004 Total future lease payments (2) 1,241 $ 27,980 Less: imputed interest (599 ) Present value of capital lease obligations $ 642 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $164 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target. Amounts related to such capital and operating leases are reflected above. Amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.1 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the 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 above table. 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. There were no sale-leaseback transactions in 2018. Proceeds from sale-leaseback transactions totaled $265 million and $230 million in 2017 and 2016 , respectively. |
Health Care Costs Payable
Health Care Costs Payable | 12 Months Ended |
Dec. 31, 2018 | |
Health Care and Other Insurance Liabilities [Abstract] | |
Health Care Costs Payable | Health Care Costs Payable On November 28, 2018 , the Company completed the Aetna Acquisition. Prior to the Aetna Acquisition, the Company’s health care costs payable balance was immaterial and related to unpaid pharmacy claims for its stand-alone Medicare Part D PDPs within the Health Care Benefits segment. Accordingly, the Company will include disclosures for health care costs payable for the year ended December 31, 2018. Health care costs payable consist principally of unpaid fee-for-service medical, dental and pharmacy claims, capitation costs, other amounts due to health care providers pursuant to risk-sharing arrangements and accruals for state assessments within the Health Care Benefits segment. See Note 1 ‘‘Significant Accounting Policies’’ for information on how the Company estimates IBNR reserves and health care costs payable as well as changes to those methodologies, if any. The Company’s estimate of IBNR liabilities is primarily based on trend and completion factors. Claim frequency is not used in the calculation of the Company’s liability. In addition, it is impracticable to disclose claim frequency information for health care claims due to the Company’s inability to gather consistent claim frequency information across its multiple claims processing systems. Any claim frequency count disclosure would not be comparable across the Company’s different claim processing systems and would not be consistent from period to period based on the volume of claims processed through each system. As a result, health care claim count frequency was not included in the disclosures included below. The following table shows the components of the change in health care costs payable during 2018: In millions Health care costs payable, beginning of the period $ 5 Less: Reinsurance recoverables — Health care costs payable, beginning of the period, net 5 Acquisitions, net 5,357 Reclassification from pharmacy claims and discounts payable (1) 776 Add: Components of incurred health care costs Current year 6,594 Prior years (42 ) Total incurred health care costs (2) 6,552 Less: Claims paid Current year 6,303 Prior years 260 Total claims paid 6,563 Add: Premium deficiency reserve 16 Health care costs payable, end of period, net 6,143 Add: Reinsurance recoverables 4 Health care costs payable, end of period $ 6,147 _____________________________________________ (1) As of the Aetna Acquisition Date, the Company reclassified $776 million of the Pharmacy Services segment’s unpaid retail pharmacy claims to third parties from pharmacy claims and discounts payable to health care costs payable as the third party liability was incurred to support the Health Care Benefits segment’s fully insured members. (2) Total incurred health care costs for the year ended December 31, 2018 in the table above exclude (i) $16 million related to a premium deficiency reserve for the 2019 coverage year related to Medicaid products, (ii) $4 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the consolidated balance sheet and (iii) $22 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the consolidated balance sheet. At December 31, 2018 , the Company’s liabilities for IBNR plus expected development on reported claims totaled approximately $ 4.1 billion . Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at December 31, 2018 related to the current calendar year. Due to the proximity of the Aetna Acquisition Date to December 31, 2018 , the Company did not include disclosures related to incurred and paid claim development from November 28, 2018 to December 31, 2018 . The Company will begin including disclosures related to incurred and paid claim development for the year ended December 31, 2019. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Borrowings and Credit Agreements The following table is a summary of the Company’s borrowings as of December 31 : In millions 2018 2017 Short-term debt Commercial paper $ 720 $ 1,276 Long-term debt 1.9% senior notes due July 2018 — 2,250 2.25% senior notes due December 2018 — 1,250 2.2% senior notes due March 2019 375 — 2.25% senior notes due August 2019 850 850 3.125% senior notes due March 2020 2,000 — Floating rate notes due March 2020 1,000 — 2.8% senior notes due July 2020 2,750 2,750 3.35% senior notes due March 2021 3,000 — Floating rate notes due March 2021 1,000 — 4.125% senior notes due May 2021 550 550 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 500 — 5.45% senior notes due June 2021 600 — 3-Year tranche 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 — 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 — 2.8% senior notes due June 2023 1,300 — 4% senior notes due December 2023 1,250 1,250 3.375% senior notes due August 2024 650 650 3.5% senior notes due November 2024 750 — 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 5,000 — 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 6.25% senior notes due June 2027 372 372 4.3% senior notes due March 2028 9,000 — 4.875% senior notes due July 2035 652 652 3.25% senior exchange debentures due December 2035 — 1 6.625% senior notes due June 2036 771 — 6.75% senior notes due December 2037 533 — 4.78% senior notes due March 2038 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 — 4.125% senior notes due November 2042 500 — 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 — 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 — 5.05% senior notes due March 2048 8,000 — Capital lease obligations 642 670 Other 19 43 Total debt principal 74,265 27,170 Debt premiums 302 28 Debt discounts and deferred financing costs (1,138 ) (196 ) 73,429 27,002 Less: Short-term debt (commercial paper) (720 ) (1,276 ) Current portion of long-term debt (1,265 ) (3,545 ) Long-term debt $ 71,444 $ 22,181 The following is a summary of the Company’s required principal debt repayments due during each of the next five years and thereafter, as of December 31, 2018 : In millions 2019 $ 1,985 2020 5,775 2021 10,427 2022 4,178 2023 8,581 Thereafter 43,319 Total $ 74,265 Short-term Borrowings Commercial Paper and Back-up Credit Facilities The Company had approximately $720 million and $1.3 billion of commercial paper outstanding at weighted average interest rates of 2.8% and 2.0% as of December 31, 2018 and 2017 , respectively. In connection with its commercial paper program, the Company maintains a $1.75 billion 364 -day unsecured back-up revolving credit facility, which expires on May 16, 2019, a $1.25 billion , five -year unsecured back-up revolving credit facility, which expires on July 1, 2020, a $1.0 billion , five -year unsecured back-up revolving credit facility, which expires on May 18, 2022, and a $2.0 billion , five -year unsecured back-up revolving credit facility, which expires on May 17, 2023. The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately .03% , regardless of usage. As of December 31, 2018 and 2017 , there were no borrowings outstanding under any of the back-up credit facilities. Bridge Loan Facility On December 3, 2017, in connection with the Aetna Acquisition, the Company entered into a $49.0 billion unsecured bridge loan facility commitment. The Company paid $221 million in fees upon entering into the agreement. The fees were capitalized in other current assets and were amortized as interest expense over the period the bridge loan facility commitment was outstanding. The bridge loan facility commitment was reduced to $44.0 billion on December 15, 2017 upon the Company entering into a $5.0 billion term loan agreement. The Company recorded $56 million of amortization of the bridge loan facility fees during the year ended December 31, 2017, which was recorded in interest expense in the consolidated statements of operations. On March 9, 2018, the Company issued an aggregate of $40.0 billion principal amount of unsecured floating rate notes and unsecured fixed rate senior notes, collectively the “2018 Notes”. At this time, the bridge loan facility commitment was reduced to $4.0 billion , and the Company paid $8 million in fees to retain the bridge loan facility commitment through the Aetna Acquisition Date. Those fees were capitalized in other current assets and were amortized as interest expense over the period the bridge loan facility commitment was outstanding. The Company recorded $173 million of amortization of the bridge loan facility commitment fees during the year ended December 31, 2018 , which was recorded in interest expense in the consolidated statement of operations. On October 26, 2018, the Company entered into a $4.0 billion unsecured 364 -day bridge term loan agreement to formalize the bridge loan facility discussed above. On November 28, 2018, in connection with the Aetna Acquisition, the $4.0 billion unsecured 364 -day bridge term loan agreement terminated. Terminated Revolving Credit Facility On January 3, 2017, the Company entered into a $2.5 billion revolving credit facility. The credit facility allowed for borrowings at various rates that were dependent, in part, on the Company’s debt ratings and required the Company to pay a weighted average quarterly facility fee of approximately 0.03% , regardless of usage. The Company terminated this credit facility in May 2017. Federal Home Loan Bank of Boston Since the Aetna Acquisition Date, a subsidiary of the Company is a member of the FHLBB. As a member, the subsidiary has the ability to obtain cash advances, subject to certain minimum collateral requirements. The maximum borrowing capacity available from the FHLBB as of December 31, 2018 was approximately $790 million . As of December 31, 2018 , there were no outstanding advances from the FHLBB. Long-term Borrowings 2018 Notes On March 9, 2018, the Company issued the 2018 Notes with an aggregate principal amount of $40.0 billion , for total proceeds of approximately $39.4 billion , net of discounts and underwriting fees. The net proceeds of the 2018 Notes were used to fund a portion of the Aetna Acquisition. The 2018 Notes are comprised of the following: In millions 3.125% senior notes due March 2020 $ 2,000 Floating rate notes due March 2020 1,000 3.35% senior notes due March 2021 3,000 Floating rate notes due March 2021 1,000 3.7% senior notes due March 2023 6,000 4.1% senior notes due March 2025 5,000 4.3% senior notes due March 2028 9,000 4.78% senior notes due March 2038 5,000 5.05% senior notes due March 2048 8,000 Total debt principal $ 40,000 Beginning in December 2017 through March 31, 2018, 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 long-term debt to fund the Aetna Acquisition. In connection with the issuance of the 2018 Notes, the Company terminated all outstanding cash flow hedges. In connection with the hedge transactions, the Company received a net amount of $446 million from the hedge counterparties upon termination, which was recorded as a gain, net of tax, of $331 million in accumulated other comprehensive income and will be reclassified as a reduction of interest expense over the life of the 2018 Notes. See Note 13 ‘‘Other Comprehensive Income (Loss)’’ for additional information. The Company expects to reclassify approximately $18 million , net of tax, in gains associated with these cash flow hedges into net income within the next 12 months. Term Loan Agreement On December 15, 2017, in connection with the Aetna Acquisition, the Company entered into a $5.0 billion term loan agreement. The term loan facility under the term loan agreement consists of a $3.0 billion three -year tranche and a $2.0 billion five -year tranche. The term loan agreement allows for borrowings at various rates that are dependent, in part, on the Company’s debt ratings. In connection with the Aetna Acquisition, the Company borrowed $5.0 billion (a $3.0 billion three -year tranche and a $2.0 billion five -year tranche) under term loan agreement in November 2018. The Company terminated the $2.0 billion five-year tranche in December 2018 with the repayment of the borrowing. As of December 31, 2018, the Company had $3.0 billion outstanding under the three -year tranche of the term loan agreement. Aetna Related Debt On the Aetna Acquisition Date, the Company assumed long-term debt with a fair value of $8.1 billion , with stated interest rates ranging from 2.2% to 6.75% . The long-term debt assumed is included in the summary of borrowings table above. 2016 Notes On May 16, 2016, the Company issued $1.75 billion aggregate principal amount of 2.125% unsecured senior notes due June 1, 2021 and $1.75 billion aggregate principal amount of 2.875% unsecured senior notes due June 1, 2026 (collectively, the “ 2016 Notes ”) for total proceeds of approximately $3.5 billion , net of discounts and underwriting fees. The 2016 Notes may be redeemed, in whole at any time, or in part from time to time, at the Company’s option at a defined redemption price plus accrued and unpaid interest to the redemption date. The net proceeds of the 2016 Notes were used for general corporate purposes and to repay certain corporate debt. Early Extinguishment of Long-Term Debt On May 16, 2016, the Company announced tender offers for (i) any and all of its 5.75% senior notes due 2017, its 6.60% senior notes due 2019 and its 4.75% senior notes due 2020 (collectively, the “Any and All Notes”) and (ii) up to $1.5 billion aggregate principal amount of the 4.75% Senior Notes due 2022 issued by its wholly-owned subsidiary Omnicare, the 5.00% Senior Notes due 2024 issued by Omnicare, its 3.875% Senior Notes due 2025, its 6.25% Senior Notes due 2027, its 4.875% Senior Notes due 2035, its 6.125% Senior Notes due 2039 and its 5.75% Senior Notes due 2041 (collectively, the “Maximum Tender Offer Notes” and together with the Any and All Notes, the “Notes”). On May 31, 2016, the Company increased the aggregate principal amount of the tender offers for the Maximum Tender Offer Notes to $2.25 billion . The Company purchased approximately $835 million aggregate principal amount of the Any and All Notes and $2.25 billion aggregate principal amount of the Maximum Tender Offer Notes pursuant to the tender offers, which expired on June 13, 2016. In connection with the purchase of the Notes, the Company paid a premium of $486 million in excess of the debt principal, wrote off $50 million of unamortized deferred financing costs and incurred $6 million in fees, for a total loss on early extinguishment of long-term debt of $542 million , which was recorded in income from continuing operations in the consolidated statement of operations for the year ended December 31, 2016. On June 27, 2016, the Company notified the holders of the remaining Any and All Notes that the Company was exercising its option to redeem the outstanding Any and All Notes pursuant to the terms of the Any and All Notes and the Indenture dated as of August 15, 2006, between the Company and The Bank of New York Mellon Trust Company, N.A. Approximately $1.1 billion aggregate principal amount of Any and All Notes was redeemed on July 27, 2016. In connection with that redemption, the Company paid a premium of $97 million in excess of the debt principal and wrote off $4 million of unamortized deferred financing costs, for a total loss on early extinguishment of long-term debt of $101 million , which was recorded in income from continuing operations in the consolidated statement of operations for the year ended December 31, 2016. Debt Covenants The back-up revolving credit facilities, unsecured senior notes, unsecured floating rate notes and term loan agreement contain customary restrictive financial and operating covenants. These covenants do not include a requirement for the acceleration of the Company’s debt maturities in the event of a downgrade in the Company’s credit rating. The Company does not believe the restrictions contained in these covenants materially affect its financial or operating flexibility. As of December 31, 2018 , the Company was in compliance with all of its debt covenants. |
Pension Plans and Other Postret
Pension Plans and Other Postretirement Plans | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Pension Plans and Other Postretirement Plans | Pension Plans and Other Postretirement Benefits Defined Contribution Plans As of December 31, 2018 , the Company sponsors several active 401(k) savings plans that cover all employees who meet plan eligibility requirements. The Company makes matching contributions consistent with the provisions of the respective plans. At the participant’s option, account balances, including the Company’s matching contribution, can be invested without restriction among various investment options under each plan. Two of the defined contribution plans offer the Company’s common stock fund as an investment option. The Company also maintains nonqualified, unfunded deferred compensation plans for certain key employees. The plans provide participants the opportunity to defer portions of their eligible compensation and for certain nonqualified plans, participants receive matching contributions equivalent to what they could have received under the CVS Health 401(k) Plan or Aetna 401(k) Plan absent certain restrictions and limitations under the Internal Revenue Code. The Company’s contributions under the above defined contribution plans were $334 million , $314 million and $295 million in 2018, 2017 and 2016, respectively. The Company’s contributions for the year ended December 31, 2018 include contributions to the Aetna Inc. 401(k) plan subsequent to the Aetna Acquisition Date. Defined Benefit Pension Plans On November 28, 2018, the Company completed the Aetna Acquisition. Aetna sponsors a tax-qualified pension plan that was frozen in 2010. Aetna also sponsors a non-qualified supplemental pension plan that was frozen in 2007. Aetna’s pension plan benefit obligations and the fair value of plan assets were remeasured as of the Aetna Acquisition Date. Prior to the Aetna Acquisition, during the year ended December 31, 2017 , the Company settled the pension obligations of its existing two tax-qualified defined benefit pension plans by irrevocably transferring pension liabilities to an insurance company through the purchase of group annuity contracts and through lump sum distributions. These purchases, funded with pension plan assets, resulted in pre-tax settlement losses of $187 million in the year ended December 31, 2017 , related to the recognition of accumulated deferred actuarial losses. The settlement losses were recorded in other expense in the consolidated statement of operations. The Company also sponsors several other defined benefit pension plans that are unfunded nonqualified supplemental retirement plans as described in the “Other Postretirement Benefits” section below. Pension Benefit Obligations and Plan Assets The following tables outline the change in benefit obligations and plan assets over the specified periods: In millions 2018 2017 Change in benefit obligation: Benefit obligation, beginning of year $ 131 $ 844 Acquired benefit obligations 5,685 — Interest cost 25 20 Actuarial loss (gain) 41 (31 ) Benefit payments (41 ) (35 ) Settlements — (667 ) Benefit obligation, end of year $ 5,841 $ 131 In millions 2018 2017 Change in plan assets: Fair value of plan assets, beginning of year $ — $ 624 Fair value of plan assets acquired 5,709 — Actual return on plan assets (17 ) 32 Employer contributions 12 46 Benefit payments (41 ) (35 ) Settlements — (667 ) Fair value of plan assets, end of year 5,663 — Funded status $ (178 ) $ (131 ) The assets (liabilities) recognized on the consolidated balance sheets at December 31, 2018 and 2017 for the pension plans consisted of the following: In millions 2018 2017 Accrued benefit assets reflected in other assets $ 147 $ — Accrued benefit liabilities reflected in accrued expenses (25 ) (21 ) Accrued benefit liabilities reflected in other long-term liabilities (300 ) (110 ) Net liabilities $ (178 ) $ (131 ) Net Periodic Benefit Costs The components of net periodic benefit cost for the years ended December 31 are shown below: In millions 2018 2017 2016 Components of net periodic benefit cost: Interest cost $ 25 $ 20 $ 27 Expected return on plan assets (33 ) (20 ) (32 ) Amortization of net actuarial loss 2 21 32 Settlement losses — 187 — Net periodic benefit cost $ (6 ) $ 208 $ 27 Pension Plan Assumptions The Company uses a series of actuarial assumptions to determine its benefit obligations and net benefit costs as further detailed below. Discount Rates - The discount rate for the acquired Aetna plans is determined using a yield curve as of the annual measurement date. Each yield curve consisted of a series of individual discount rates, with each discount rate corresponding to a single point in time, based on high-quality bonds. Projected benefit payments are discounted to the measurement date using the corresponding rate from the yield curve. The weighted average discount rate for the Aetna pension plans was 4.4% in 2018 . The Company settled the pension obligations of its existing tax-qualified plans during 2017. The discount rates for determining plan benefit obligations (excluding the terminated qualified plan) were approximately 4.0% , 3.5% and 4.0% in 2018 , 2017 and 2016 , respectively. The discount rate for the terminated qualified plan was 3.1% in 2016. Expected Return on Plan Assets - The expected long-term rate of return on plan assets is determined by using the plan’s target allocation and return expectations based on many factors including forecasted long-term capital market real returns and the inflationary outlook on a plan by plan basis. The expected long-term rate of return for the acquired Aetna plans was 6.6% in 2018. See “Pension Plan Assets” below for additional details regarding the Aetna pension plan assets as of December 31, 2018. The Company settled the pension obligations of its existing tax-qualified plans during 2017. The expected long-term rate of return for these plans ranged from 4.0% to 5.5% in both 2017 and 2016 . Net Actuarial Losses/Gains - Based on the mortality experience of the acquired Aetna pension plans, in 2018 the Company utilized the RP-2014WC Mortality Table with a generation projection of future mortality improvements using Scale MP-2018 for the acquired Aetna plans. Pension Plan Assets As of December 31, 2017, the assets in the Company’s prior qualified defined benefit pension plans had been fully liquidated to settle all plan obligations through the purchase of group annuity contracts and through lump sum distributions. On November 28, 2018, the Company completed the Aetna Acquisition. At December 31, 2018, the assets of the Aetna pension plan (the “Aetna Pension Plan”) primarily include debt and equity securities held in separate accounts, as well as common/collective trusts and real estate investments. The valuation methodologies used to price these debt and equity securities and common/collective trusts are similar to the methodologies described in Note 4 “Fair Value.” Assets of the Aetna pension plan also include investments in other assets that are carried at fair value. The following is a description of the valuation methodology used to price real estate investments and these additional investments, including the general classification pursuant to the fair value hierarchy. Real Estate - Real estate investments are valued by independent third party appraisers. The appraisals comply with the Uniform Standards of Professional Appraisal Practice, which includes, among other things, the income, cost, and sales comparison approaches to estimating property value. Therefore, these investments are classified in Level 3. Private equity and hedge fund limited partnerships - Private equity and hedge fund limited partnerships are carried at fair value which is estimated using the NAV per unit as reported by the administrator of the underlying investment fund as a practical expedient to fair value. Therefore, these investments have been excluded from the fair value table below. Aetna Pension Plan assets with changes in fair value measured on a recurring basis at December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total Debt securities: U.S. government securities $ 511 $ 38 $ — $ 549 States, municipalities and political subdivisions — 147 — 147 U.S. corporate securities — 1,671 5 1,676 Foreign securities — 177 — 177 Residential mortgage-backed securities — 339 — 339 Commercial mortgage-backed securities — 70 — 70 Other asset-backed securities — 162 — 162 Redeemable preferred securities — 6 — 6 Total debt securities 511 2,610 5 3,126 Equity securities: U.S. Domestic 744 — — 744 International 356 — — 356 Domestic real estate 30 — — 30 Total equity securities 1,130 — — 1,130 Other investments: Real estate — — 425 425 Common/collective trusts (1) — 253 — 253 Derivatives — 2 — 2 Total other investments — 255 425 680 Total pension investments (2) $ 1,641 $ 2,865 $ 430 $ 4,936 _____________________________________________ (1) The assets in the underlying funds of common/collective trusts consist of $109 million of equity securities and $144 million of debt securities. (2) Excludes $98 million of cash and cash equivalents, $465 million of private equity limited partnership investments and $164 million of hedge fund limited partnership investments as the amounts are carried at fair value. The change in the balance of pension plan assets during 2018 relates to investments acquired in the Aetna Acquisition, which occurred on November 28, 2018. There was an immaterial amount of transfers into or out of Level 3 from November 28, 2018 to December 31, 2018. The Aetna Pension Plan invests in a diversified mix of assets intended to maximize long-term returns while recognizing the need for adequate liquidity to meet ongoing benefit and administrative obligations. The risk of unexpected investment and actuarial outcomes is regularly evaluated. This evaluation is performed through forecasting and assessing ranges of investment outcomes over short- and long-term horizons and by assessing Aetna Pension Plan’s liability characteristics. Complementary investment styles and techniques are utilized by multiple professional investment firms to further improve portfolio and operational risk characteristics. Public and private equity investments are used primarily to increase overall plan returns. Real estate investments are viewed favorably for their diversification benefits and above-average dividend generation. Fixed income investments provide diversification benefits and liability hedging attributes that are desirable, especially in falling interest rate environments. At December 31, 2018 , target investment allocations for the Aetna Pension Plan were: 31% in equity securities, 57% in debt securities, 6% in real estate, 3% in private equity limited partnerships and 3% in hedge funds. Actual asset allocations may differ from target allocations due to tactical decisions to overweight or underweight certain assets or as a result of normal fluctuations in asset values. Asset allocations are consistent with stated investment policies and, as a general rule, periodically rebalanced back to target asset allocations. Asset allocations and investment performance are formally reviewed periodically throughout the year by the Aetna Pension Plan’s Benefit Finance Committee. Forecasting of asset and liability growth is performed at least annually. Cash Flows The Company generally contributes to its tax-qualified pension plans based on minimum funding requirements determined under applicable federal laws and regulations. Employer contributions related to the non-qualified supplemental pension plans generally represent payments to retirees for current benefits. The Company contributed $12 million , $46 million and $25 million to the pension plans during 2018 , 2017 and 2016 , respectively. No contributions are required for the Aetna Pension Plan in 2019. The Company expects to make an immaterial amount of contributions for all other pension plans in 2019. The Company estimates the following future benefit payments, which are calculated using the same actuarial assumptions used to measure the pension plan benefit obligation as of December 31, 2018 : In millions 2019 $ 375 2020 387 2021 411 2022 387 2023 391 2024-2028 1,916 Multiemployer Pension Plans The Company also contributes to a number of multiemployer pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer pension plans in the following aspects: (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers, and (iii) if the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the applicable plan, referred to as a withdrawal liability. None of the multiemployer pension plans in which the Company participates are individually significant to the Company. Total Company contributions to multiemployer pension plans were $18 million , $17 million and $15 million in 2018 , 2017 and 2016 , respectively. Other Postretirement Benefits The Company provides postretirement health care and life insurance benefits to certain retirees who meet eligibility requirements. On November 28, 2018, the Company completed the Aetna Acquisition. Aetna also sponsors OPEB plans that provide certain health care and life insurance benefits for retired employees. The Company’s funding policy is generally to pay covered expenses as they are incurred. For retiree medical plan accounting, the Company reviews external data and its own historical trends for health care costs to determine the health care cost trend rates. As of December 31, 2018 and 2017 , the Company’s other postretirement benefits had an accumulated postretirement benefit obligation of $228 million and $25 million , respectively. Net periodic benefit costs related to these other postretirement benefits were $2 million in 2018 , and $1 million in both 2017 and 2016 . The Company estimates the following future benefit payments, which are calculated using the same actuarial assumptions used to measure the other postretirement benefit obligation as of December 31, 2018 : In millions 2019 $ 17 2020 17 2021 17 2022 16 2023 16 2024-2028 76 Pursuant to various collective bargaining agreements, the Company also contributes to multiemployer health and welfare plans that cover certain union-represented employees. The plans provide postretirement health care and life insurance benefits to certain employees who meet eligibility requirements. Total Company contributions to multiemployer health and welfare plans were $58 million , $58 million and $52 million in 2018 , 2017 and 2016 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The income tax provision for continuing operations consisted of the following for the years ended December 31: In millions 2018 2017 2016 Current: Federal $ 1,480 $ 2,594 $ 2,803 State 499 464 511 1,979 3,058 3,314 Deferred: Federal 22 (1,435 ) 5 State 1 14 (2 ) 23 (1,421 ) 3 Total $ 2,002 $ 1,637 $ 3,317 The TCJA was enacted on December 22, 2017. Among numerous changes to existing tax laws, the TCJA permanently reduced the federal corporate income tax rate from 35% to 21% effective on January 1, 2018. The effects of changes in tax rates on deferred tax balances are required to be taken into consideration in the period in which the changes are enacted, regardless of when they are effective. As a result of the reduction of the corporate income tax rate under the TCJA, the Company estimated the revaluation of its net deferred tax liabilities and recorded a provisional noncash income tax benefit of approximately $1.5 billion for year ended December 31, 2017. The Company completed its assessment of the TCJA’s final impact in December 2018 and recorded an additional tax benefit of approximately $100 million in the year ended December 31, 2018. The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31: 2018 2017 2016 Statutory income tax rate 21.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 27.7 4.1 4.1 Effect of the Tax Cuts and Jobs Act (7.1 ) (18.3 ) — Health insurer fee 2.2 — 0.2 Goodwill impairments 89.5 0.8 — Sale of subsidiary 5.0 — — Other 4.1 (1.8 ) (0.9 ) Effective income tax rate 142.4 % 19.8 % 38.4 % The following table is a summary of the components of the Company’s deferred income tax assets and liabilities as of December 31: In millions 2018 2017 Deferred income tax assets: Lease and rents $ 277 $ 291 Inventory 28 31 Employee benefits 243 246 Allowance for doubtful accounts 243 187 Retirement benefits 130 40 Net operating loss and capital loss carryforwards 529 101 Deferred income 104 93 Insurance reserves 467 — Investments 11 — Other 242 18 Valuation allowance (520 ) (77 ) Total deferred income tax assets 1,754 930 Deferred income tax liabilities: Depreciation and amortization (9,431 ) (3,926 ) Total deferred income tax liabilities (9,431 ) (3,926 ) Net deferred income tax liabilities $ (7,677 ) $ (2,996 ) The increase in net deferred income tax liabilities is mainly due to the Aetna Acquisition. As of December 31, 2018, the Company has net operating and capital loss carryovers of approximately $529 million . The Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. The Company established a valuation allowance of $520 million because it does not consider it more likely than not that these deferred tax assets will be recovered. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: In millions 2018 2017 2016 Beginning balance $ 344 $ 307 $ 338 Additions based on tax positions related to the current year 1 62 68 Additions based on tax positions related to prior years 324 32 70 Reductions for tax positions of prior years (5 ) (28 ) (100 ) Expiration of statutes of limitation (2 ) (10 ) (22 ) Settlements (1 ) (19 ) (47 ) Ending balance $ 661 $ 344 $ 307 The increase in the balance of unrecognized tax benefits in 2018 compared to 2017 and 2016 is mainly due to the Aetna Acquisition. The Company and most of its subsidiaries are subject to United States federal income tax as well as income tax of numerous state and local jurisdictions. The Company is a participant in the Compliance Assurance Process, which is a program made available by the Internal Revenue Service (“IRS”) to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax return. The IRS has substantially completed its examinations of the Company’s 2015, 2016 and 2017 consolidated United States federal income tax returns. The IRS is currently examining the Company’s 2018 consolidated United States federal income tax return. The Company and its subsidiaries are also currently under income tax examinations by a number of state and local tax authorities. As of December 31, 2018 , no examination has resulted in any proposed adjustments that would result in a material change to the Company’s results of operations, financial condition or liquidity. Substantially all material state and local income tax matters have been concluded for fiscal years through 2012. Certain state exams are likely to be concluded and certain state statutes of limitations will lapse in 2019, but the change in the balance of the Company’s uncertain tax positions is projected to be immaterial. In addition, it is reasonably possible that the Company’s unrecognized tax benefits could change within the next twelve months due to the anticipated conclusion of various examinations with the IRS for various years. An estimate of the range of the possible change cannot be made at this time. The Company records interest expense related to unrecognized tax benefits and penalties in the income tax provision. The Company accrued interest expense of approximately $19 million , $11 million and $10 million in 2018 , 2017 and 2016 , respectively. The Company had approximately $80 million and $34 million accrued for interest and penalties as of December 31, 2018 and 2017 , respectively. As of December 31, 2018 , the total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective income tax rate is approximately $597 million , after considering the federal benefit of state income taxes. |
Stock-based Employee Incentive
Stock-based Employee Incentive Plans | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
Stock Incentive Plans | Stock Incentive Plans The terms of the CVS Health 2017 Incentive Compensation Plan (“ICP”) provide for grants of annual incentive and long-term performance awards to executive officers and other officers and employees of the Company or any subsidiary of the Company, as well as equity compensation to outside directors of CVS Health. Payment of such annual incentive and long-term performance awards will be in cash, stock, other awards or other property, at the discretion of the Management Planning and Development Committee (the “MP&D Committee”) of the Company’s Board of Directors (the “Board”). The ICP allows for a maximum of 32 million shares of CVS Health common stock to be reserved and available for grants. Prior to the acquisition of Aetna in 2018, the ICP was the only compensation plan under which the Company granted stock options, restricted stock and other stock-based awards to its employees, with the exception of the Company’s Employee Stock Purchase Plan (“ESPP”). As of December 31, 2018 , there were approximately 26 million shares of CVS Health common stock available for future grants under the ICP. As of the Aetna Acquisition Date, approximately 22 million shares of Aetna common stock subject to awards outstanding under the Amended Aetna Inc. 2010 Stock Incentive Plan (“SIP”) were assumed by CVS Health. In addition, in accordance with the merger agreement, shares which were available for future issuance under the SIP were converted into approximately 32 million shares of CVS Health common stock reserved and available for issuance pursuant to future awards. As of December 31, 2018 , there were approximately 32 million shares of CVS Health common stock available for future grants under the SIP. Stock-based Compensation Expense Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the stock award (generally three to five years) using the straight-line method. The following table is a summary of stock-based compensation for each of the respective periods: In millions 2018 2017 2016 Stock options and stock appreciation rights (“SARs”) (1)(2) $ 70 $ 65 $ 79 Restricted stock units and performance stock units (2) 210 169 143 Total stock-based compensation $ 280 $ 234 $ 222 _____________________________________________ (1) Includes the ESPP. (2) Stock-based compensation for the year ended December 31, 2018 includes $14 million and $27 million associated with accelerated vesting of SARs and restricted stock replacement awards, respectively, issued to Aetna employees who were terminated subsequent to the acquisition. ESPP The ESPP provides for the purchase of up to 30 million shares of common stock. Under the ESPP, beginning in 2016, eligible employees could purchase common stock at the end of each six month offering period at a purchase price equal to 90% of the lower of the fair market value on the first day or the last day of the offering period. Prior to 2016, the purchase price was equal to 85% of the lower of the fair market value on the first day or the last day of the offering period. During 2018 , approximately two million shares of common stock were purchased under the provisions of the ESPP at an average price of $61.40 per share. As of December 31, 2018 , approximately 9 million shares of common stock were available for issuance under the ESPP. The fair value of stock-based compensation associated with the ESPP is estimated on the date of grant (the first day of the six month offering period) using the Black-Scholes option pricing model. The following table is a summary of the assumptions used to value the ESPP awards for each of the respective periods: 2018 2017 2016 Dividend yield (1) 1.45 % 1.24 % 0.88 % Expected volatility (2) 28.02 % 22.70 % 20.64 % Risk-free interest rate (3) 1.87 % 0.86 % 0.45 % Expected life (in years) (4) 0.5 0.5 0.5 Weighted-average grant date fair value $ 12.26 $ 13.01 $ 14.98 _____________________________________________ (1) The dividend yield is calculated based on semi-annual dividends paid and the fair market value of the Company’s stock at the grant date. (2) The expected volatility is based on the historical volatility of the Company’s daily stock market prices over the previous six month period. (3) The risk-free interest rate is based on the Treasury constant maturity interest rate whose term is consistent with the expected term of ESPP purchases (i.e., six months). (4) The expected life is based on the semi-annual purchase period. Restricted Stock Units and Performance Stock Units The Company’s restricted stock units and performance stock units are considered nonvested share awards and require no payment from the employee. Vesting of the Company’s performance stock units is dependent upon the degree to which the Company achieves its performance goals, which are set at the time of grant by the MP&D Committee. For each restricted stock unit and performance share stock granted, employees receive one share of common stock, net of taxes, at the end of the vesting period. Compensation cost is recorded based on the market price of the Company’s common stock on the grant date and is recognized on a straight-line basis over the requisite service period. On November 28, 2018, the Company completed the Aetna Acquisition. All unvested Aetna performance stock unit and restricted stock unit awards as of the Aetna Acquisition Date were converted into replacement CVS Health restricted stock awards. As of December 31, 2018 , there was $491 million of total unrecognized compensation cost related to Company restricted stock units and performance stock units that are expected to vest. These costs are expected to be recognized over a weighted-average period of 2.01 years. The total fair value of restricted shares vested during 2018 , 2017 and 2016 was $262 million , $175 million and $218 million , respectively. The following table is a summary of the restricted stock unit and performance stock unit activity for the year ended December 31, 2018 : Weighted Average Grant Date Units in thousands Units Fair Value Unvested at beginning of year 5,014 $ 86.92 Granted 10,185 $ 73.18 Vested (3,757 ) $ 68.85 Forfeited (437 ) $ 76.92 Unvested at end of year 11,005 $ 76.18 Stock Options and SARs All stock option grants are awarded at fair value on the date of grant. The fair value of stock options is estimated using the Black-Scholes option pricing model and stock-based compensation is recognized on a straight-line basis over the requisite service period. Stock options granted generally become exercisable over a four -year period from the grant date. Stock options generally expire seven years after the grant date. On November 28, 2018, the Company completed the Aetna Acquisition. All unvested Aetna SARs outstanding as of the Aetna Acquisition Date were converted into replacement CVS Health SARs. The replacement SARs granted will be settled in CVS Health common stock, net of taxes, based on the appreciation of the stock price on the exercise date over the market price on the date of grant. The fair value of SARs is estimated using the Black-Scholes option pricing model and stock-based compensation is recognized on a straight-line basis over the requisite service period. SARs generally become exercisable over a three -year period from the grant date. SARs generally expire ten years after the grant date. The following table is a summary of stock option and SAR activity that occurred for the years ended December 31, 2018 , 2017 and 2016 : In millions 2018 2017 2016 Cash received from stock options exercised (including ESPP) $ 242 $ 329 $ 296 Payments for taxes for net share settlement of equity awards 97 71 72 Intrinsic value of stock options and SARs exercised 79 176 244 Fair value of stock options and SARs vested 324 341 298 The fair value of each stock option and SAR is estimated using the Black-Scholes option pricing model based on the following assumptions at the time of grant: 2018 2017 2016 Dividend yield (1) 2.76 % 2.56 % 1.62 % Expected volatility (2) 21.27 % 18.39 % 17.22 % Risk-free interest rate (3) 2.77 % 1.77 % 1.24 % Expected life (in years) (4) 4.8 4.1 4.2 Weighted-average grant date fair value $ 24.55 $ 9.43 $ 13.00 _____________________________________________ (1) The dividend yield is based on annual dividends paid and the fair market value of the Company’s stock at the grant date. (2) The expected volatility is estimated using the Company’s historical volatility over a period equal to the expected life of each option grant after adjustments for infrequent events such as stock splits. (3) The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued. (4) The expected life represents the number of years the options are expected to be outstanding from grant date based on historical option holder exercise experience. As of December 31, 2018 , unrecognized compensation expense related to unvested stock options and SARs totaled $58 million , which the Company expects to be recognized over a weighted-average period of 1.2 years. After considering anticipated forfeitures, the Company expects approximately 11 million of the unvested stock options and SARs to vest over the requisite service period. The following table is a summary of the Company’s stock option and SAR activity for the year ended December 31, 2018 : Weighted Weighted Average Average Remaining Aggregate In thousands, except weighted average exercise price and remaining contractual term Exercise Contractual Intrinsic Shares Price Term Value Outstanding at December 31, 2017 20,530 $ 75.32 Granted 7,144 $ 51.06 Exercised (2,993 ) $ 44.62 Forfeited (908 ) $ 86.97 Expired (864 ) $ 81.79 Outstanding at December 31, 2018 22,909 $ 71.15 4.08 $ 165,245 Exercisable at December 31, 2018 11,436 $ 72.69 2.23 $ 73,784 Vested at December 31, 2018 and expected to vest in the future 22,532 $ 71.18 4.05 $ 163,596 |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Repurchases The following share repurchase programs have been authorized by the Board: In billions Remaining as of Authorization Date Authorized December 31, 2018 November 2, 2016 (“2016 Repurchase Program”) $ 15.0 $ 13.9 December 15, 2014 (“2014 Repurchase Program”) 10.0 — The share Repurchase Programs, each of which was effective immediately, permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions. The 2014 Repurchase Program was completed during the second quarter of 2017. The 2016 Repurchase Program can be modified or terminated by the Board at any time. 2018 Activity During the year ended December 31, 2018 , the Company did not repurchase any shares of common stock pursuant to the 2016 Repurchase Program. 2017 Activity Pursuant to the authorization under the 2014 Repurchase Program, in August 2016, the Company entered into two fixed dollar ASRs with Barclays Bank PLC (“Barclays”) for a total of $3.6 billion . Upon payment of the $3.6 billion purchase price in January 2017, the Company received a number of shares of its common stock equal to 80% of the $3.6 billion notional amount of the ASRs or approximately 36.1 million shares, which were placed into treasury stock in January 2017. The ASRs were accounted for as an initial treasury stock transaction for $2.9 billion and a forward contract for $0.7 billion . In April 2017, the Company received an additional 9.9 million shares of common stock, representing the remaining 20% of the $3.6 billion notional amount of the ASRs, thereby concluding the ASRs. The additional 9.9 million shares of common stock delivered to the Company by Barclays were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in April 2017. During the year ended December 31, 2017, the Company repurchased an aggregate of 55.4 million shares of common stock for approximately $4.4 billion under the 2014 and 2016 Repurchase Programs. 2016 Activity Pursuant to the authorization under the 2014 Repurchase Program, in December 2015, the Company entered into a $725 million fixed dollar ASR with Barclays. Upon payment of the $725 million purchase price in December 2015, the Company received a number of shares of its common stock equal to 80% of the $725 million notional amount of the ASR or approximately 6.2 million shares, which were placed into treasury stock in December 2015. The ASR was accounted for as an initial treasury stock transaction for $580 million and a forward contract for $145 million . The forward contract was classified as an equity instrument and was recorded within capital surplus on the consolidated balance sheet. In January 2016, the Company received an additional 1.4 million shares of common stock, representing the remaining 20% of the $725 million notional amount of the ASR, thereby concluding the ASR. The additional 1.4 million shares of common stock delivered to the Company by Barclays were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in January 2016. During the year ended December 31, 2016, the Company repurchased an aggregate of 47.5 million shares of common stock for approximately $4.5 billion under the 2014 Repurchase Program. Dividends The quarterly cash dividend declared by the Board was $0.50 per share in 2018 and 2017. CVS Health has paid cash dividends every quarter since becoming a public company. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board. Regulatory Requirements On November 28, 2018, the Company completed the Aetna Acquisition. Aetna’s insurance business operations are conducted through subsidiaries that principally consist of HMOs and insurance companies. The Company’s HMO and insurance subsidiaries report their financial statements in accordance with accounting practices prescribed by state regulatory authorities which may differ from GAAP. The combined statutory net income for the year ended December 31, 2018 (which includes Aetna and its subsidiaries from November 28, 2018 to December 2018) was not material. The estimated combined statutory capital and surplus at December 31, 2018 of the Company’s insurance and HMO subsidiaries was approximately $10.1 billion . From November 28, 2018 to December 31, 2018 , the Company’s insurance and HMO subsidiaries paid $909 million of gross dividends to the Company. In addition to general state law restrictions on payments of dividends and other distributions to shareholders applicable to all corporations, HMOs and insurance companies are subject to further regulations that, among other things, may require those companies to maintain certain levels of equity and restrict the amount of dividends and other distributions that may be paid to their equity holders. In addition, in connection with the Aetna Acquisition, the Company made certain undertakings that require prior regulatory approval of dividends by certain of its HMOs and insurance companies. At December 31, 2018 , these amounts were as follows: In millions Estimated minimum statutory surplus required by regulators $ 4,991 Investments on deposit with regulatory bodies 630 Estimated maximum dividend distributions permitted in 2019 without prior regulatory approval 480 Noncontrolling Interests At December 31, 2018 , noncontrolling interests were $318 million primarily related to third party interests in the Company’s operating entities. The noncontrolling entities’ share is included in total shareholders ’ equity. |
Other Comprehensive (Loss) Inco
Other Comprehensive (Loss) Income | 12 Months Ended |
Dec. 31, 2018 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive (Loss) Income | Other Comprehensive Income (Loss) Shareholders’ equity included the following activity in accumulated other comprehensive income (loss) in 2018 , 2017 and 2016 : At December 31, In millions 2018 2017 2016 Net unrealized investment gains (losses): Beginning of year balance $ — $ — $ — Other comprehensive income before reclassifications ($132 pretax) 97 — — Amounts reclassified from accumulated other comprehensive income ($1 pretax) (1) — — — Other comprehensive income 97 — — End of year balance 97 — — Foreign currency translation adjustments: Beginning of year balance (129 ) (127 ) (165 ) Other comprehensive income (loss) (29 ) (2 ) 38 Other comprehensive income (loss) (29 ) (2 ) 38 End of year balance (158 ) (129 ) (127 ) Net cash flow hedges: Beginning of year balance (15 ) (5 ) (7 ) Adoption of new accounting standard (4) (3 ) — — Other comprehensive income (loss) before reclassifications ($465, $(18) and $0 pretax) 344 (11 ) — Amounts reclassified from accumulated other comprehensive loss ($(19), $2 and $3 pretax) (2) (14 ) 1 2 Other comprehensive income (loss) 330 (10 ) 2 End of year balance 312 (15 ) (5 ) Pension and OPEB plans: Beginning of year balance (21 ) (173 ) (186 ) Adoption of new accounting standard (4) (4 ) — — Other comprehensive loss before reclassifications ($(178), $0 and $0 pretax) (132 ) — — Amounts reclassified from accumulated other comprehensive loss ($11, $249 and $21 pretax) (3) 8 152 13 Other comprehensive income (loss) (124 ) 152 13 End of year balance (149 ) (21 ) (173 ) Total beginning of year accumulated other comprehensive loss (165 ) (305 ) (358 ) Adoption of new accounting standard (4) (7 ) — — Total other comprehensive income 274 140 53 Total end of year accumulated other comprehensive income (loss) $ 102 $ (165 ) $ (305 ) _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for debt securities are included in net investment income within the consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive loss for specifically identified cash flow hedges are included within interest expense in the consolidated statements of operations. (3) Amounts reclassified from accumulated other comprehensive loss for specifically identified pension and other postretirement benefits are included in other (income) expense in the consolidated statements of operations. (4) See Note 1 ‘‘Significant Accounting Policies’’ for additional information on the adoption of ASU 2018-02 during the first quarter of 2018. |
Earnings Per Common Share
Earnings Per Common Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings 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. Due to the loss from continuing operations attributable to CVS Health in the year ended December 31, 2018 , 3 million potentially dilutive common equivalent shares were excluded from the calculation of diluted earnings per share, as the impact of these shares was antidilutive. In addition, options to purchase 13.2 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the year ended December 31, 2018 because the exercise prices of the options 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 10.4 million and 6.7 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the years ended December 31, 2017 and 2016 , respectively. The following is a reconciliation of basic and diluted earnings (loss) per share from continuing operations for the years ended December 31: In millions, except per share amounts 2018 2017 2016 Numerator for earnings per share calculation: Income (loss) from continuing operations $ (596 ) $ 6,631 $ 5,320 Income allocated to participating securities (3 ) (24 ) (27 ) Net (income) loss attributable to noncontrolling interests 2 (1 ) (2 ) Income (loss) from continuing operations attributable to CVS Health $ (597 ) $ 6,606 $ 5,291 Denominator for earnings per share calculation: Weighted average shares, basic 1,044 1,020 1,073 Effect of dilutive securities — 4 6 Weighted average shares, diluted 1,044 1,024 1,079 Earnings (loss) per share from continuing operations: Basic $ (0.57 ) $ 6.48 $ 4.93 Diluted $ (0.57 ) $ 6.45 $ 4.91 |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2018 | |
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, 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 allowed it to reduce required capital and provided collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business. Reinsurance recoverables (recorded as other current assets or other assets on the consolidated balance sheets) at December 31, 2018 were as follows: In millions Reinsurer Hartford Life and Accident Insurance Company $ 3,470 Lincoln Life & Annuity Company of New York 424 Constitution Life 320 VOYA Retirement Insurance and Annuity Company 186 All Other 141 Total $ 4,541 Direct, assumed and ceded premiums earned for the year ended December 31, 2018 were as follows: In millions Direct $ 8,365 Assumed 38 Ceded (219 ) Net premiums $ 8,184 The impact of reinsurance on benefit costs for the year ended December 31, 2018 was as follows: In millions Direct $ 6,773 Assumed 32 Ceded (211 ) Net benefit costs $ 6,594 There is not a material difference between premiums on a written basis versus an earned basis. The Company also has various agreements with unrelated reinsurers that do not qualify for reinsurance accounting under GAAP, and consequently are accounted for using deposit accounting. These contracts were entered into to reduce the risk of catastrophic loss which in turn reduces the Company’s capital and surplus requirements for certain portions of its group term life insurance and group accidental death and dismemberment insurance businesses and certain portions of the Health Care Benefits segment’s Medicare Advantage and group Commercial Insured businesses. Total deposit assets and liabilities related to reinsurance agreements that do not qualify for reinsurance accounting under GAAP were not material as of December 31, 2018 . |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Guarantees The Company has the following significant guarantee arrangements at December 31, 2018 : • ASC Claim Funding Accounts - The Company has arrangements with certain banks for the processing of claim payments for its ASC customers. The banks maintain accounts to fund claims of the Company’s ASC customers. The customer is responsible for funding the amount paid by the bank each day. In these arrangements, the Company guarantees that the banks will not sustain losses if the responsible ASC customer does not properly fund its account. The aggregate maximum exposure under these arrangements is generally limited to $250 million . The Company can limit its exposure to these guarantees by suspending the payment of claims for ASC customers that have not adequately funded the amount paid by the bank. • Separate Accounts Assets - Certain Separate Accounts assets associated with the large case pensions business in the Corporate/Other segment represent funds maintained as a contractual requirement to fund specific pension annuities that the Company has guaranteed. Minimum contractual obligations underlying the guaranteed benefits in these Separate Accounts were approximately $1.4 billion at December 31, 2018 . See Note 1 ‘‘Significant Accounting Policies’’ for additional information on Separate Accounts. Contract holders assume all investment and mortality risk and are required to maintain Separate Accounts balances at or above a specified level. The level of required funds is a function of the risk underlying the Separate Account’s investment strategy. If contract holders do not maintain the required level of Separate Accounts assets to meet the annuity guarantees, the Company would establish an additional liability. Contract holders’ balances in the Separate Accounts at December 31, 2018 exceeded the value of the guaranteed benefit obligation. As a result, the Company was not required to maintain any additional liability for its related guarantees at December 31, 2018 . 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 December 31, 2018, the Company guaranteed approximately 85 such store leases (excluding the lease guarantees related to Linens ‘n Things, which have been recorded as a liability on the 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. During the first quarter of 2017, Aetna recorded a discounted estimated liability and expense of $231 million pretax for its estimated share of future assessments by applicable life and health guaranty associations which reflects a 3.5% discount rate. The Company did not record an asset for expected premium tax offsets for its in force business at December 31, 2018, as the amount was not material. 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 results of operations, 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. The total guaranty fund assessments liability as of December 31, 2018 was $90 million and was recorded in accrued expenses on the consolidated balance sheet. 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 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. The Company is defending itself against these claims. 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. The Corcoran plaintiffs have appealed the District Court’s decision to the Ninth Circuit. 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. (Chancery 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 alleging 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. The Company has responded to the complaint, moved for judgment on the pleadings, filed a counterclaim and moved the case to Mississippi Circuit Court. The Company’s motion for judgment on the pleadings remains pending. The Company is defending itself against these claims. Manufacturer’s Rebate Litigation and Investigations The Company is named as a defendant in a number of lawsuits and is subject to a number of investigations concerning manufacturer’s rebates that the Company has negotiated. Bewley, et al. v. CVS Health Corporation , et al. and Prescott , et al. v. CVS Health Corporation , et al. (both 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 allege 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 are 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 have been transferred to the U.S. District Court for the District of New Jersey on defendants’ motions. The Company is defending itself against these claims. 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. In April 2017, the Company received a CID from the Attorney General of Washington requesting documents and information regarding pricing and rebates for insulin products in connection with a pending investigation into unfair and deceptive acts or practices regarding insulin pricing. The Office of the Attorney General of Washington has notified the Company that information provided in response to the Washington Attorney General’s CID will be shared with the Attorneys General of California, Florida, Minnesota, New Mexico, the District of Columbia and Mississippi. In July 2017, the Company received a CID from the Attorney General of Minnesota requesting documents and information regarding pricing and rebates for insulin and epinephrine products in connection with a pending investigation into unfair and deceptive acts or practices regarding insulin and epinephrine pricing. The Company has been cooperating with the government and providing documents and information in response to these CIDs. 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. Fewer than 100 similar cases that name the Company as a defendant in some capacity are pending in state courts. 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 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”). For several of these audits, 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 Omnicare with an administrative subpoena. The subpoena seeks documents related to controlled substance policies, procedures and practices at eight Company pharmacy locations from May 2012 to the present. In September 2017, the DEA expanded the investigation to include an additional Company 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, Omnicare received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning Omnicare’s 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, Omnicare 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 arbitrator awarded the claimant hospitals approximately $150 million . The Company is defending itself against the claimant hospitals’ claims and has appealed the arbitrator’s decision. 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 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, HHS 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 results of operations, financial condition and/or cash flows. Medicare CIDs The Company has received CIDs from the Civil Division of 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. The consent decree remains subject to the court approval process under the Antitrust Procedures and Penalties Act, which could result in a revision in or delay in receiving approval of the consent decree. The approval process is for the limited purpose of determining whether the consent decree is in the public interest. The Company believes that the consent decree will not have a material impact on the Company’s results of operations, cash flows or financial condition. 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, all arising in the ordinary course of its businesses. These other legal proceedings include claims of or relating to bad faith, medical malpractice, 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 contracts with government customers in the Company’s Commercial 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 results of operations. 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 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 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, results of operations 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 | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Reporting 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 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 has been retrospectively adjusted to reflect these changes. 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 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. In 2018 , 2017 and 2016 , approximately 9.8% , 12.3% and 11.7% , respectively, of the Company’s consolidated revenues were from Aetna, a Pharmacy Services segment client. On November 28, 2018, the Company completed the Aetna Acquisition. Subsequent to the Aetna Acquisition, transactions with Aetna will continue to be reported within the Pharmacy Services segment, but are eliminated in the Company’s consolidated financial statements. Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services (1)(2) LTC (2) Benefits (2) Other Eliminations (2) Totals 2018: Revenues from customers $ 134,736 $ 83,989 $ 8,904 $ 4 $ (33,714 ) $ 193,919 Net investment income (3) — — 58 602 — 660 Total revenues 134,736 83,989 8,962 606 (33,714 ) 194,579 Adjusted operating income (loss) 4,955 7,403 528 (856 ) (769 ) 11,261 Depreciation and amortization 710 1,698 172 138 — 2,718 Additions to property and equipment 326 1,350 46 401 — 2,123 2017: Revenues from customers 130,822 79,398 3,582 — (29,037 ) 184,765 Net investment income — — 5 16 — 21 Total revenues (4) 130,822 79,398 3,587 16 (29,037 ) 184,786 Adjusted operating income (loss) 4,628 7,475 359 (896 ) (741 ) 10,825 Depreciation and amortization 710 1,651 2 116 — 2,479 Additions to property and equipment 311 1,398 — 340 — 2,049 2016: Revenues from customers 119,267 81,100 3,069 — (25,910 ) 177,526 Net investment income — — 2 18 — 20 Total revenues (4) 119,267 81,100 3,071 18 (25,910 ) 177,546 Adjusted operating income (loss) 4,380 8,221 428 (887 ) (721 ) 11,421 Depreciation and amortization 713 1,642 1 119 — 2,475 Additions to property and equipment 295 1,732 — 252 — 2,279 _____________________________________________ (1) Total revenues of PSS include approximately $11.4 billion , $10.8 billion and $10.5 billion of retail co-payments for 2018 , 2017 and 2016 , respectively. See Note 1 ‘‘Significant Accounting Policies’’ for additional information about retail co-payments. (2) Intersegment eliminations relate to intersegment revenue generating activities that occur between PSS, RLS and/or HCBS. (3) Corporate/Other segment net investment income for 2018 includes interest income of $536 million related to the proceeds of the $40 billion 2018 Notes. This amount is for the period prior to the close of the Aetna Acquisition, which occurred on November 28, 2018. (4) Amounts revised to reflect the reclassification of interest income from interest expense, net to net investment income within total revenues to conform with insurance company presentation which increased total revenues and operating income by $21 million and $20 million in 2017 and 2016, respectively. In conjunction with the Company’s implementation of a new enterprise resource planning system in the first quarter of 2018, the Company changed the manner in which certain shared functional costs are allocated to its reportable segments. Additionally, in connection with the Aetna Acquisition on November 28, 2018, the Company reclassified interest income from interest expense, net to net investment income within revenues to conform with insurance company presentation. Segment financial information for the years ended December 31, 2018, 2017 and 2016 , have been retrospectively adjusted to reflect this change to the Company’s cost allocation methodology, net investment income presentation and segment realignment as shown below: Year Ended December 31, 2018 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 134,128 $ 83,989 $ 5,549 $ 606 $ (29,693 ) $ 194,579 Adjustments 608 — 3,413 — (4,021 ) — Revenues, as adjusted $ 134,736 $ 83,989 $ 8,962 $ 606 $ (33,714 ) $ 194,579 Cost of products sold (1) $ 125,107 $ 59,906 $ 147 $ — $ (28,713 ) $ 156,447 Adjustments 3,670 — — — (3,670 ) — Cost of products sold $ 128,777 $ 59,906 $ 147 $ — $ (32,383 ) $ 156,447 Benefit costs (1) $ 2,805 $ — $ 3,873 $ 22 $ (106 ) $ 6,594 Adjustments (2,805 ) — 2,805 — — — Benefit costs $ — $ — $ 6,678 $ 22 $ (106 ) $ 6,594 Operating expenses, as previously reported $ 1,517 $ 17,314 $ 1,253 $ 1,389 $ (105 ) $ 21,368 Adjustments (165 ) — 516 — (351 ) — Operating expenses, as adjusted $ 1,352 $ 17,314 $ 1,769 $ 1,389 $ (456 ) $ 21,368 Operating income (loss), as previously reported $ 4,699 $ 620 $ 276 $ (805 ) $ (769 ) $ 4,021 Adjustments (92 ) — 92 — — — Operating income (loss), as adjusted 4,607 620 368 (805 ) (769 ) 4,021 Segment measure adjustments 348 6,783 160 (51 ) — 7,240 Adjusted operating income (loss) $ 4,955 $ 7,403 $ 528 $ (856 ) $ (769 ) $ 11,261 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. Year Ended December 31, 2017 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 130,596 $ 79,398 $ — $ — $ (25,229 ) $ 184,765 Adjustments 226 — 3,587 16 (3,808 ) 21 Revenues, as adjusted $ 130,822 $ 79,398 $ 3,587 $ 16 $ (29,037 ) $ 184,786 Cost of products sold (1) $ 121,746 $ 56,081 $ — $ — $ (24,417 ) $ 153,410 Adjustments 3,527 (15 ) — — (3,474 ) 38 Cost of products sold $ 125,273 $ 56,066 $ — $ — $ (27,891 ) $ 153,448 Benefit costs (1) $ 2,810 $ — $ — $ — $ — $ 2,810 Adjustments (2,810 ) — 2,810 — — — Benefit costs $ — $ — $ 2,810 $ — $ — $ 2,810 Operating expenses, as previously reported (2) $ 1,285 $ 16,667 $ — $ 966 $ (71 ) $ 18,847 Adjustments (36 ) (74 ) 420 (14 ) (334 ) (38 ) Operating expenses, as adjusted $ 1,249 $ 16,593 $ 420 $ 952 $ (405 ) $ 18,809 Operating income (loss), as previously reported $ 4,755 $ 6,469 $ — $ (966 ) $ (741 ) $ 9,517 Adjustments (455 ) 89 357 30 — 21 Operating income (loss), as adjusted 4,300 6,558 357 (936 ) (741 ) 9,538 Segment measure adjustments 328 917 2 40 — 1,287 Adjusted operating income (loss) $ 4,628 $ 7,475 $ 359 $ (896 ) $ (741 ) $ 10,825 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. (2) Operating expenses excludes the $181 million goodwill impairment charge in RLS. Year Ended December 31, 2016 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 119,963 $ 81,100 $ — $ — $ (23,537 ) $ 177,526 Adjustments (696 ) — 3,071 18 (2,373 ) 20 Revenues, as adjusted $ 119,267 $ 81,100 $ 3,071 $ 18 $ (25,910 ) $ 177,546 Cost of products sold (1) $ 111,883 $ 57,362 $ — $ — $ (22,755 ) $ 146,490 Adjustments 2,106 (23 ) — — (2,040 ) 43 Cost of products sold $ 113,989 $ 57,339 $ — $ — $ (24,795 ) $ 146,533 Benefit costs (1) $ 2,179 $ — $ — $ — $ — $ 2,179 Adjustments (2,179 ) — 2,179 — — — Benefit costs $ — $ — $ 2,179 $ — $ — $ 2,179 Operating expenses, as previously reported $ 1,225 $ 16,436 $ — $ 891 $ (61 ) $ 18,491 Adjustments (90 ) (112 ) 465 27 (333 ) (43 ) Operating expenses, as adjusted $ 1,135 $ 16,324 $ 465 $ 918 $ (394 ) $ 18,448 Operating income (loss), as previously reported $ 4,676 $ 7,302 $ — $ (891 ) $ (721 ) $ 10,366 Adjustments (533 ) 135 427 (9 ) — 20 Operating income (loss), as adjusted 4,143 7,437 427 (900 ) (721 ) 10,386 Segment measure adjustments 237 784 1 13 — 1,035 Adjusted operating income (loss) $ 4,380 $ 8,221 $ 428 $ (887 ) $ (721 ) $ 11,421 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. The following is a reconciliation of consolidated operating income to adjusted operating income for the years ended December 31: In millions 2018 2017 2016 Operating income (GAAP measure) $ 4,021 $ 9,538 $ 10,386 Amortization of intangible assets (1) 1,006 817 795 Acquisition-related transaction and integration costs (2) 492 65 291 Goodwill impairments (3) 6,149 181 — Impairment of long-lived assets (4) 43 — — Loss on divestiture of subsidiary (5) 86 9 — Interest income on financing for the Aetna Acquisition (6) (536 ) — — Charges in connection with store rationalization (7) — 215 34 Adjustments to legal reserves in connection with certain legal settlements (8) — — (85 ) Adjusted operating income $ 11,261 $ 10,825 $ 11,421 _____________________________________________ (1) Intangible assets relate to the Company’s acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company’s GAAP consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company’s business operations since this amortization 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. Subsequent to the applicable acquisition date, the Company’s revenues and results of operations include the results of each of the Company’s acquisitions, which are supported by these intangible assets. (2) In 2018 and 2017, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare. In 2016, the acquisition-related integration costs relate to the acquisitions of Omnicare and the pharmacy and clinic businesses of Target. The acquisition-related transaction and integration costs are reflected in the Company’s GAAP consolidated statement of operations in operating expenses within the Corporate/Other segment and RLS. (3) In 2018, the goodwill impairments relate to the LTC reporting unit within RLS. In 2017, the goodwill impairments relate to the RxCrossroads reporting unit within RLS. (4) In 2018, impairment of long-lived assets primarily relates to the impairment of property and equipment within RLS and is reflected in operating expenses in the Company’s GAAP consolidated statement of operations. (5) In 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million on January 2, 2018. In 2017, the loss on divestiture of subsidiary represents transaction costs associated with the sale of RxCrossroads. The loss on divestiture of subsidiary costs are reflected the Company’s GAAP consolidated statement of operations in operating expenses within RLS and Corporate/Other segment. (6) In 2018, the Company recorded interest income of $536 million 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. (7) In 2017 and 2016, charges in connection with store rationalization related to the Company’s enterprise streamlining initiative. The charges in connection with store rationalization are reflected in the Company’s GAAP consolidated statement of operations in operating expenses within RLS. (8) In 2016, adjustments to legal reserves in connection with certain legal settlements relate to a reversal of an accrual in connection with a legal settlement within PSS and a charge related to a legacy lawsuit challenging the 1999 legal settlement of MedPartners of various securities class actions and a related derivative claim within the Corporate/Other segment. The adjustments to legal reserves are reflected in the Company’s GAAP consolidated statement of operations in operating expenses. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited) First Second Third Fourth In millions, except per share amounts Quarter Quarter Quarter Quarter Year 2018: Total revenues (1) $ 45,743 $ 46,922 $ 47,490 $ 54,424 $ 194,579 Operating income (loss) (1) 1,996 (1,373 ) 2,574 824 4,021 Income (loss) from continuing operations 998 (2,562 ) 1,390 (422 ) (596 ) Net income (loss) attributable to CVS Health 998 (2,563 ) 1,390 (419 ) (594 ) Per common share data: Basic earnings (loss) per common share: Income (loss) from continuing operations attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Income (loss) from discontinued operations attributable to CVS Health $ — $ — $ — $ — $ — Net income (loss) attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Diluted earnings (loss) per common share: Income (loss) from continuing operations attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Income (loss) from discontinued operations attributable to CVS Health $ — $ — $ — $ — $ — Net income (loss) attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Dividends per common share $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 2.00 _____________________________________________ (1) Effective for the fourth quarter of 2018, interest income was reclassified from interest expense, net to net investment income within revenues to conform with insurance company presentation. Accordingly, a retrospective reclassification of $50 million , $214 million and $221 million was made for the first, second and third quarters of 2018, respectively, to increase revenues and increase interest expense. First Second Third Fourth In millions, except per share amounts Quarter Quarter Quarter Quarter Year 2017: Total revenues (1) $ 44,520 $ 45,689 $ 46,186 $ 48,391 $ 184,786 Operating income (1) 1,799 2,121 2,504 3,114 9,538 Income from continuing operations 962 1,097 1,285 3,287 6,631 Net income attributable to CVS Health 952 1,098 1,285 3,287 6,622 Per common share data: Basic earnings per common share: Income from continuing operations attributable to CVS Health $ 0.93 $ 1.07 $ 1.26 $ 3.23 $ 6.48 Income (loss) from discontinued operations attributable to CVS Health $ (0.01 ) $ — $ — $ — $ (0.01 ) Net income attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.23 $ 6.47 Diluted earnings per common share: Income from continuing operations attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.22 $ 6.45 Income (loss) from discontinued operations attributable to CVS Health $ (0.01 ) $ — $ — $ — $ (0.01 ) Net income attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.22 $ 6.44 Dividends per common share $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 2.00 _____________________________________________ (1) Effective for the fourth quarter of 2018, interest income was reclassified from interest expense, net to net investment income within revenues to conform with insurance company presentation. Accordingly, a retrospective reclassification of $6 million , $4 million , $5 million and $6 million was made for the first, second, third and fourth quarters of 2017, respectively, to increase revenues and increase interest expense. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Segment policy | The Company now has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment (“PSS”) PSS 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. PSS’ 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. PSS 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 (“RLS”) RLS 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. Prior to January 2, 2018, RLS also provided commercialization services under the name RxCrossroads ® . The Company divested its RxCrossroads subsidiary on January 2, 2018. As of December 31, 2018, RLS operated more than 9,900 retail locations, over 1,100 MinuteClinic ® locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment (“HCBS”) HCBS is one of the nation’s leading diversified health care benefits providers, serving an estimated 38 million people as of December 31, 2018 . HCBS has the information and resources to help members, in consultation with their health care professionals, make better informed decisions about their health care. HCBS offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, 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. HCBS’ 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 of medical and dental care costs) as “ASC.” For periods prior to the Aetna Acquisition (which occurred on November 28, 2018), the Health Care Benefits segment consisted solely of the Company’s SilverScript PDP business. 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 |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. The Company invests in short-term money market funds, commercial paper and time deposits, as well as other debt securities that are classified as cash equivalents within the accompanying consolidated balance sheets, as these funds are highly liquid and readily convertible to known amounts of cash. |
Restricted cash | Restricted cash As of December 31, 2018 and 2017 , the Company had $230 million and $190 million , respectively, of restricted cash held in a trust in an insurance captive to satisfy collateral requirements associated with the assignment of certain insurance policies. Such amounts are included in other assets on the consolidated balance sheets. Additionally, as of December 31, 2018 and 2017 , the Company had $6 million and $14 million , respectively, of restricted cash held in escrow accounts in connection with certain recent acquisitions. Such amounts are included in other current assets on the consolidated balance sheets. |
Investments | Investments Debt Securities Debt securities consist primarily of United States Treasury and agency securities, mortgage-backed securities, corporate and foreign bonds and other debt securities. Debt securities are classified as either current or long-term investments based on their contractual maturities unless the Company intends to sell an investment within the next twelve months, in which case it is classified as current within the consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value. See Note 4 ‘‘Fair Value’’ for additional information on how the Company estimates the fair value of these investments. The cost for mortgage-backed and other asset-backed securities is adjusted for unamortized premiums and discounts, which are amortized using the interest method over the estimated remaining term of the securities, adjusted for anticipated prepayments. Debt securities are regularly reviewed to determine whether a decline in fair value below the cost basis or carrying value is other-than-temporary. When a debt security is in an unrealized capital loss position, the Company monitors the duration and severity of the loss to determine if sufficient market recovery can occur within a reasonable period of time. If a decline in the fair value of a debt security is considered other-than-temporary, the cost basis or carrying value of the debt security is written down. The write-down is then bifurcated into its credit and non-credit related components. The amount of the credit-related component is included in net income, and the amount of the non-credit related component is included in other comprehensive income/loss, unless the Company intends to sell the debt security or it is more likely than not that the Company will be required to sell the debt security prior to its anticipated recovery of the debt security’s amortized cost basis. Interest is not accrued on debt securities when management believes the collection of interest is unlikely. Equity Securities Equity securities with readily available fair values are measured at fair value with changes in fair value recognized in net income. Mortgage Loans Mortgage loan investments on the consolidated balance sheets are valued at the unpaid principal balance, net of impairment reserves. A mortgage loan may be impaired when it is a problem loan (i.e., more than 60 days delinquent, in bankruptcy or in process of foreclosure), a potential problem loan (i.e., high probability of default) or a restructured loan. For impaired loans, a specific impairment reserve is established for the difference between the recorded investment in the loan and the estimated fair value of the collateral. The Company applies its loan impairment policy individually to all loans in its portfolio. The impairment evaluation described above also considers characteristics and risk factors attributable to the aggregate portfolio. An additional allowance for loan losses is established if it is probable that there will be a credit loss on a group of similar mortgage loans. The following characteristics and risk factors are considered when evaluating if a credit loss is probable on a group of similar mortgage loans: loan-to-value ratios, property type (e.g., office, retail, apartment, industrial), geographic location, vacancy rates and property condition. Full or partial impairments of loans are recorded at the time an event occurs affecting the legal status of the loan, typically at the time of foreclosure or upon a loan modification giving rise to forgiveness of debt. Interest income on a potential problem loan or restructured loan is accrued to the extent it is deemed to be collectible and the loan continues to perform under its original or restructured terms. Interest income on problem loans is recognized on a cash basis. Cash payments on loans in the process of foreclosure are treated as a return of principal. Mortgage loans with a maturity date or a committed prepayment date within twelve months are classified as current on the consolidated balance sheets. Other Investments Other investments consist primarily of the following: • Private equity and hedge fund limited partnerships are accounted for using the equity method of accounting. Under this method, the carrying value of the investments are based on the value of the Company’s equity ownership of the underlying investment funds provided by the general partner or manager of the investments, the financial statements of which generally are audited. As a result of the timing of the receipt of the valuation information provided by the fund managers, these investments are generally reported on up to a three month lag. The Company reviews investments for impairment at least quarterly and monitors their performance throughout the year through discussions with the administrators, managers and/or general partners. If the Company becomes aware of an impairment of a limited partnership’s investments through its review or prior to receiving the limited partnership’s financial statements at the financial statement date, an impairment will be recognized by recording a reduction in the carrying value of the limited partnership with a corresponding charge to net investment income. • Investment real estate, which is carried on the consolidated balance sheets at depreciated cost, including capital additions, net of write-downs for other-than-temporary declines in fair value. Depreciation is calculated using the straight-line method based on the estimated useful life of each asset. If any real estate investment is considered held-for-sale, it is carried at the lower of its carrying value or fair value less estimated selling costs. The Company generally estimates fair value using a discounted future cash flow analysis in conjunction with comparable sales information. At the time of the sale, the difference between the sales price and the carrying value is recorded as a realized capital gain or loss. • Privately-placed equity securities, which are carried on the consolidated balance sheets at cost less impairments, plus or minus subsequent adjustments for observable price changes. Additionally, as a member of the Federal Home Loan Bank of Boston (“FHLBB”), a subsidiary of the Company is required to purchase and hold shares of the FHLBB. These shares are restricted and carried at cost. Net Investment Income Net investment income on the Company’s investments is recorded when earned and is reflected in net income in the consolidated results of operations (other than net investment income on assets supporting experience-rated products). Experience-rated products are products in the large case pensions business where the contract holder, not the Company, assumes investment and other risks, subject to, among other things, minimum guarantees provided by the Company. The effect of investment performance on experience-rated products is allocated to contract holders’ accounts daily, based on the underlying investment experience and, therefore, does not impact the Company’s net income in the consolidated results of operations (as long as the contract’s minimum guarantees are not triggered). Net investment income on assets supporting large case pensions’ experience-rated products is included in net investment income in the consolidated statements of operations and is credited to contract holders’ accounts through a charge to benefit costs. Realized capital gains and losses on investments (other than realized capital gains and losses on investments supporting experience-rated products) are included as a component of net investment income in the consolidated statements of operations. Realized capital gains and losses are determined on a specific identification basis. Purchases and sales of debt and equity securities and alternative investments are reflected on the trade date. Purchases and sales of mortgage loans and investment real estate are reflected on the closing date. Realized capital gains and losses on investments supporting large case pensions’ experience-rated products are not included in realized capital gains and losses in the consolidated statements of operations and instead are credited directly to contract holders’ accounts. The contract holders’ accounts are reflected in policyholders’ funds on the consolidated balance sheets. Unrealized capital gains and losses on investments (other than unrealized capital gains and losses on investments supporting experience-rated products) are reflected in shareholders’ equity, net of tax, as a component of accumulated other comprehensive income. Unrealized capital gains and losses on investments supporting large case pensions’ experience-rated products are credited directly to contract holders’ accounts, which are reflected in policyholders’ funds on the consolidated balance sheets. |
Derivative Financial Instruments | Derivative Financial Instruments The Company uses derivative financial instruments in order to manage interest rate and foreign exchange risk and credit exposure. The Company’s use of these derivatives is generally limited to hedging risk and has principally consisted of using interest rate swaps, treasury rate locks, forward contracts, futures contracts, warrants, put options and credit default swaps. |
Accounts Receivable | Accounts Receivable |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value using the weighted average cost method. Physical inventory counts are taken on a regular basis in each retail store and LTC pharmacy and a continuous cycle count process is the primary procedure used to validate the inventory balances on hand in each distribution center and mail facility to ensure that the amounts reflected in the accompanying consolidated financial statements are properly stated. During the interim period between physical inventory counts, the Company accrues for anticipated physical inventory losses on a location-by-location basis based on historical results and current trends. |
Reinsurance Recoverables | Reinsurance Recoverables The Company utilizes reinsurance agreements primarily to reduce its 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. Failure of reinsurers to indemnify the Company could result in losses; however, the Company does not expect charges for unrecoverable reinsurance to have a material effect on its consolidated results of operations or financial condition. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of its reinsurers. At December 31, 2018 , the Company’s reinsurance recoverables consisted primarily of amounts due from third parties that are rated consistent with companies that are considered to have the ability to meet their obligations. Reinsurance recoverables are recorded as other current assets or other assets on the consolidated balance sheets. |
Health Care Contract Acquisition Costs | Health Care Contract Acquisition Costs Insurance products included in the Health Care Benefits segment are cancelable by either the customer or the member monthly upon written notice. Acquisition costs related to prepaid health care and health indemnity contracts are generally expensed as incurred. Acquisition costs for certain long-duration insurance contracts are deferred and are recorded as other current assets or other assets on the consolidated balance sheets and are amortized over the estimated life of the contracts. The amortization of deferred acquisition costs is recorded in operating expenses in the consolidated statements of operations. At December 31, 2018 , the balance of deferred acquisition costs was $22 million , comprised primarily of commissions paid on Medicare Supplement products within the Health Care Benefits segment. |
Property and Equipment | Property and Equipment Property and equipment is reported at historical cost, net of accumulated depreciation. Property, equipment and improvements to leased premises are depreciated using the straight-line method over the estimated useful lives of the assets, or when applicable, the term of the lease, whichever is shorter. Estimated useful lives generally range from 5 to 40 years for buildings, building improvements and leasehold improvements and 3 to 10 years for fixtures, equipment and internally developed software. Repair and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Application development stage costs for significant internally developed software projects are capitalized and depreciated. |
Goodwill | Goodwill The Company accounts for business combinations using the acquisition method of accounting, which requires the excess cost of an acquisition over the fair value of net assets acquired and identifiable intangible assets to be recorded as goodwill. Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary. When evaluating goodwill for potential impairment, the Company compares the fair value of its reporting units to their respective carrying amounts. The Company estimates the fair value of its reporting units using a combination of a discounted cash flow method and a market multiple method. If the carrying amount of a reporting unit exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess. See Note 5 ‘‘Goodwill and Other Intangibles’’ for additional information about goodwill and goodwill impairments. |
Intangible Assets | Intangible Assets The Company’s definite-lived intangible assets are amortized over their estimated useful-life based upon the pattern of future cash flows attributable to the asset. Other than value of business acquired (“VOBA”), definite-lived intangible assets are amortized using the straight-line method. VOBA is amortized over the expected life of the acquired contracts in proportion to estimated premiums. The Company groups and evaluates definite-lived intangible assets for impairment at the lowest level at which individual cash flows can be identified whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted and without interest charges). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted and with interest charges). If required, an impairment loss is recorded for the portion of the asset group’s carrying value that exceeds the asset group’s estimated future cash flows (discounted and with interest charges). There were no material impairment losses recognized on definite-lived intangible assets in any of the three years ended December 31, 2018 , 2017 or 2016 . Indefinitely-lived intangible assets are not amortized but are tested for impairment annually, or more frequently if necessary. Indefinitely-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. The Company estimates the fair value of its indefinitely-lived trademarks using the relief from royalty method under the income approach. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is written down to its estimated fair value. There were no impairment losses recognized on indefinitely-lived intangible assets in any of the three years ended December 31, 2018 , 2017 or 2016 . See Note 5 ‘‘Goodwill and Other Intangibles’’ for additional information about intangible assets. |
Separate Accounts | Separate Accounts Separate Accounts assets and liabilities related to large case pensions products represent funds maintained to meet specific objectives of contract holders who bear the investment risk. These assets and liabilities are carried at fair value. Net investment income (including net realized capital gains and losses) accrue directly to such contract holders. The assets of each account are legally segregated and are not subject to claims arising from the Company’s other businesses. Deposits, withdrawals and net investment income (including net realized and net unrealized capital gains and losses) on Separate Accounts assets are not reflected in the consolidated statements of operations or cash flows. Management fees charged to contract holders are included in services revenue and recognized over the period earned. |
Health Care Costs Payable | Health Care Costs Payable Health care costs payable consist principally of unpaid fee-for-service medical, dental and pharmacy claims, capitation costs, other amounts due to health care providers pursuant to risk-sharing arrangements primarily related to the Health Care Benefits segment’s Insured Commercial, Medicare and Medicaid products and accruals for state assessments. Unpaid health care claims include an estimate of payments the Company will make for (i) services rendered to the Company’s Insured members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid, each as of the financial statement date (collectively, “IBNR”). Health care costs payable also include an estimate of the cost of services that will continue to be rendered after the financial statement date if the Company is obligated to pay for such services in accordance with contractual or regulatory requirements. Such estimates are developed using actuarial principles and assumptions which consider, among other things, historical and projected claim submission and processing patterns, assumed and historical medical cost trends, historical utilization of medical services, claim inventory levels, changes in Insured membership and product mix, seasonality and other relevant factors. The Company reflects changes in these estimates in benefit costs in the consolidated results of operations in the period they are determined. Capitation costs represent contractual monthly fees paid to participating physicians and other medical providers for providing medical care, regardless of the volume of medical services provided to the Insured member. Amounts due under risk-sharing arrangements are based on the terms of the underlying contracts with the providers and consider claims experience under the contracts through the financial statement date. The Company develops its estimate of IBNR using actuarial principles and assumptions that consider numerous factors. Of those factors, the Company considers the analysis of historical and projected claim payment patterns (including claims submission and processing patterns) and the assumed health care cost trend rate (the year-over-year change in per member per month health care costs) to be the most critical assumptions. In developing its IBNR estimate, the Company consistently applies these actuarial principles and assumptions each period, with consideration to the variability of related factors. There have been no significant changes to the methodologies or assumptions used to develop the Company’s estimate of IBNR from the Aetna Acquisition Date through December 31, 2018 . The Company analyzes historical claim payment patterns by comparing claim incurred dates (i.e., the date services were provided) to claim payment dates to estimate “completion factors.” The Company uses completion factors predominantly to estimate the ultimate cost of claims incurred more than three months before the financial statement date. The Company estimates completion factors by aggregating claim data based on the month of service and month of claim payment and estimating the percentage of claims incurred for a given month that are complete by each month thereafter. For any given month, substantially all claims are paid within six months of the date of service, but it can take up to 48 months or longer after the date of service before all of the claims are completely resolved and paid. These historically-derived completion factors are then applied to claims paid through the financial statement date to estimate the ultimate claim cost for a given month’s incurred claim activity. The difference between the estimated ultimate claim cost and the claims paid through the financial statement date represents the Company’s estimate of claims remaining to be paid as of the financial statement date and is included in the Company’s health care costs payable. The completion factors the Company uses reflect judgments and possible adjustments based on data such as claim inventory levels, claim submission and processing patterns and, to a lesser extent, other factors such as changes in health care cost trend rates, changes in Insured membership and changes in product mix. If claims are submitted or processed on a faster (slower) pace than prior periods, the actual claims may be more (less) complete than originally estimated using the Company’s completion factors, which may result in reserves that are higher (lower) than the ultimate cost of claims. Because claims incurred within three months before the financial statement date are less mature, the Company uses a combination of historically-derived completion factors and the assumed health care cost trend rate to estimate the ultimate cost of claims incurred for these months. The Company applies its actuarial judgment and places a greater emphasis on the assumed health care cost trend rate for the most recent claim incurred dates as these months may be influenced by seasonal patterns and changes in membership and product mix. The Company’s health care cost trend rate is affected by changes in per member utilization of medical services as well as changes in the unit cost of such services. Many factors influence the health care cost trend rate, including the Company’s ability to manage benefit costs through product design, negotiation of favorable provider contracts and medical management programs, as well as the mix of the Company’s business. The health status of the Company’s Insured members, aging of the population and other demographic characteristics, advances in medical technology and other factors continue to contribute to rising per member utilization and unit costs. Changes in health care practices, inflation, new technologies, increases in the cost of prescription drugs (including specialty pharmacy drugs), direct-to-consumer marketing by pharmaceutical companies, clusters of high-cost cases, claim intensity, changes in the regulatory environment, health care provider or member fraud and numerous other factors also contribute to the cost of health care and the Company’s health care cost trend rate. For each reporting period, the Company uses an extensive degree of judgment in the process of estimating its health care costs payable. As a result, considerable variability and uncertainty is inherent in such estimates, particularly with respect to claims with claim incurred dates of three months or less before the financial statement date; and the adequacy of such estimates is highly sensitive to changes in assumed completion factors and the assumed health care cost trend rates. For each reporting period the Company recognizes the actuarial best estimate of health care costs payable considering the potential volatility in assumed completion factors and health care cost trend rates, as well as other factors. The Company believes its estimate of health care costs payable is reasonable and adequate to cover its obligations at December 31, 2018 ; however, actual claim payments may differ from the Company’s estimates. A worsening (or improvement) of the Company’s health care cost trend rates or changes in completion factors from those that the Company assumed in estimating health care costs payable at December 31, 2018 would cause these estimates to change in the near term, and such a change could be material. Each quarter, the Company re-examines previously established health care costs payable estimates based on actual claim payments for prior periods and other changes in facts and circumstances. Given the extensive degree of judgment in this estimate, it is possible that the Company’s estimates of health care costs payable could develop either favorably (that is, its actual benefit costs for the period were less than estimated) or unfavorably. The changes in the Company’s estimate of health care costs payable may relate to a prior quarter, prior year or earlier periods. For a roll forward of the Company’s health care costs payable, see Note 7 “Health Care Costs Payable.” The Company’s reserving practice is to consistently recognize the actuarial best estimate of its ultimate liability for health care costs payable. |
Other Insurance Liabilities | Other Insurance Liabilities Unpaid claims Unpaid claims consist primarily of reserves associated with certain short-duration group disability and term life insurance contracts, including an estimate for IBNR as of the financial statement date. Reserves associated with certain short-duration group disability and term life insurance contracts are based upon the Company’s estimate of the present value of future benefits, which is based on assumed investment yields and assumptions regarding mortality, morbidity and recoveries from the United States Social Security Administration. The Company develops its estimate of IBNR using actuarial principles and assumptions which consider, among other things, contractual requirements, claim incidence rates, claim recovery rates, seasonality and other relevant factors. The Company discounts certain claim liabilities related to group long-term disability and life insurance waiver of premium contracts. The discount rates generally reflect the Company’s expected investment returns for the investments supporting all incurral years of these liabilities. The discount rates for retrospectively-rated contracts are set at contractually specified levels. The Company’s estimates of unpaid claims are subject to change due to changes in the underlying experience of the insurance contracts, changes in investment yields or other factors, and these changes are recorded in current and future benefits in the consolidated statements of operations in the period they are determined. The Company estimates its reserve for claims IBNR for life products largely based on completion factors. The completion factors used are based on the Company’s historical experience and reflect judgments and possible adjustments based on data such as claim inventory levels, claim payment patterns, changes in business volume and other factors. If claims are submitted or processed on a faster (slower) pace than historical periods, the actual claims may be more (less) complete than originally estimated using completion factors, which may result in reserves that are higher (lower) than required to cover future life benefit payments. There have been no significant changes to the methodologies or assumptions used to develop the Company’s estimate of IBNR from the Aetna Acquisition Date through December 31, 2018 . As of December 31, 2018 , unpaid claims balances of $816 million and $1.9 billion were recorded in other insurance liabilities and other long-term insurance liabilities, respectively. Substantially all life and disability insurance liabilities have been fully ceded to unrelated third parties through indemnity reinsurance agreements; however, the Company remains directly obligated to the policyholders. Future policy benefits Future policy benefits consist primarily of reserves for limited payment pension and annuity contracts, long-duration group life and long-term care insurance contracts. Reserves for limited payment pension and annuity contracts are computed using actuarial principles that consider, among other things, assumptions reflecting anticipated mortality, retirement, expense and interest rate experience. Such assumptions generally vary by plan, year of issue and policy duration. Assumed interest rates on such contracts ranged from 3.5% to 11.3% from the Aetna Acquisition Date through December 31, 2018 . The Company periodically reviews mortality assumptions against both industry standards and its experience. Reserves for long-duration long-term care contracts represent the Company’s estimate of the present value of future benefits to be paid to or on behalf of policyholders less the present value of future net premiums. The assumed interest rate on such contracts was 5.1% from the Aetna Acquisition Date through December 31, 2018 . The Company’s estimate of the present value of future benefits under such contracts is based upon mortality, morbidity and interest rate assumptions. As of December 31, 2018 , future policy benefits balances of $536 million and $6.2 billion were recorded in other insurance liabilities and other long-term insurance liabilities, respectively. |
Premium Deficiency Reserves | Premium Deficiency Reserves The Company evaluates its insurance contracts to determine if it is probable that a loss will be incurred. A premium deficiency loss is recognized when it is probable that expected future claims, including maintenance costs (for example, direct costs such as claim processing costs), will exceed existing reserves plus anticipated future premiums and reinsurance recoveries. Anticipated investment income is considered in the calculation of premium deficiency losses for short-duration contracts. For purposes of determining premium deficiency losses, contracts are grouped consistent with the Company’s method of acquiring, servicing and measuring the profitability of such contracts. The Company established a premium deficiency reserve of $16 million as of December 31, 2018 related to Medicaid products in the Health Care Benefits segment. |
Policyholders' Funds | Policyholders’ Funds Policyholders’ funds consist primarily of reserves for pension and annuity investment contracts and customer funds associated with certain health contracts. Reserves for such contracts are equal to cumulative deposits less withdrawals and charges plus credited interest thereon, net of experience-rated adjustments. From the Aetna Acquisition Date through December 31, 2018 , interest rates for pension and annuity investment contracts ranged from 3.5% to 13.4% . Reserves for contracts subject to experience rating reflect the Company’s rights as well as the rights of policyholders and plan participants. The Company also holds funds for health savings accounts (“HSAs”) on behalf of members associated with high deductible health plans. These amounts are held to pay for qualified health care expenses incurred by these members. The HSA balances were approximately $2.1 billion at December 31, 2018 and are reflected in other current assets with a corresponding liability in policyholder funds. Policyholders’ Funds liabilities that are expected to be paid within twelve months from the balance sheet date are classified as current on the consolidated balance sheets. Policyholders’ Funds liabilities that are expected to be paid greater than twelve months from the balance sheet date are included in other long-term liabilities on the consolidated balance sheets. |
Self-Insurance Liabilities | Self-Insurance Liabilities The Company is self-insured for certain losses related to general liability, workers’ compensation and auto liability. The Company obtains third party insurance coverage to limit exposure from these claims. The Company is also self-insured for certain losses related to health and medical liabilities. The Company’s self-insurance accruals, which include reported claims and claims incurred but not reported, are calculated using standard insurance industry actuarial assumptions and the Company’s historical claims experience. At December 31, 2018 and 2017 , self-insurance liabilities totaled $865 million and $696 million , respectively, and were recorded as accrued expenses on the consolidated balance sheets. |
Facility Opening and Closing Costs | Facility Opening and Closing Costs New facility opening costs, other than capital expenditures, are charged directly to expense when incurred. When the Company closes a facility, the present value of estimated unrecoverable costs, including the remaining lease obligation less estimated sublease income and the book value of abandoned property and equipment, are charged to expense. In December 2016, the Company announced an enterprise streamlining initiative designed to reduce costs and enhance operating efficiencies to allow the Company to be more competitive in the current health care environment. During the year ended December 31, 2017 , in connection with that enterprise streamlining initiative, the Company closed 71 retail stores and recorded charges of $215 million within operating expenses in the Retail/LTC segment. The charges are primarily comprised of provisions for the present value of noncancelable lease obligations. The noncancelable lease obligations associated with stores closed during the year ended December 31, 2017 extend through the year 2039. During the year ended December 31, 2018 , the Company did not recognize any significant charges related to facility closing costs. The long-term portion of the lease obligations associated with all outstanding facility closings was $269 million and $306 million as of December 31, 2018 and 2017 , respectively, and was recorded in other long-term liabilities on the consolidated balance sheets. |
Contingent Consideration | Contingent Consideration In December 2015, the Company acquired the pharmacy and clinic businesses of Target for approximately $1.9 billion , plus contingent consideration of up to $60 million based on future prescription growth over a three year period through December 31, 2019. As of December 31, 2018, no liability for any potential contingent consideration has been recorded based on historical and projected prescription growth through 2019. |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interest As a result of the acquisition of Omnicare, Inc. (“Omnicare”) in 2015, the Company obtained a 73% ownership interest in a limited liability company (“LLC”). Due to the change in control in Omnicare, the noncontrolling member of the LLC had the contractual right to put its membership interest to the Company at fair value. Consequently, the noncontrolling interest in the LLC was recorded as a redeemable noncontrolling interest at fair value. During 2016, the noncontrolling member of the LLC exercised its option to sell its ownership interest and the Company purchased the noncontrolling interest in the LLC for approximately $39 million . |
Foreign Currency Translation and Transactions and Translations | Foreign Currency Translation and Transactions For local currency functional currency, (i) assets and liabilities are translated at end-of-period exchange rates, (ii) revenues and expenses are translated at average exchange rates in effect during the period and (iii) equity is translated at historical exchange rates. The resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss). For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for nonmonetary balance sheet accounts which are remeasured at historical exchange rates. Revenue and expense are remeasured at average exchange rates in effect during each period, except for those expenses related to the nonmonetary balance sheet amounts which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in income. Gains and losses from foreign currency transactions and the effects of foreign currency remeasurements were not material in any of the periods presented. |
Revenue Recognition | Revenue Recognition The following is a discussion of the Company’s revenue recognition policies by segment under the new revenue recognition accounting standard. See “New accounting pronouncements recently adopted - Revenue from Contracts with Customers” below for further discussion regarding the adoption of the new revenue recognition accounting standard. The new revenue recognition accounting standard does not relate to contracts within the scope of Accounting Standards Codification 944 Financial Services - Insurance . As a result, the majority of revenues within the Health Care Benefits segment are not within the scope of the new accounting standard. Pharmacy Services Segment PSS 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 PSS, 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 PSS 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 in exchange for those prescription drugs. The following revenue recognition policies have been established for PSS: • 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 PSS acts as an agent or does not control the prescription drugs prior to transfer to the client, revenue is recognized using the net method. Drug discounts PSS records revenue net of manufacturers’ rebates earned by its clients based on their plan members’ utilization of brand-name formulary drugs. PSS 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. PSS 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 as 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 results of operations or financial condition. Guarantees PSS also adjusts revenues for refunds owed to the client 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 results of operations 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 the third party payer for 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 results of operations 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 results of operations or financial condition. Sales taxes are not included in revenue. Loyalty Program The Company’s customer loyalty program, ExtraCare ® , is comprised of two components, ExtraSavings TM and ExtraBucks ® Rewards. ExtraSavings are coupons that are recorded as a reduction of revenue when redeemed as the Company 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 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 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 the revenue from sales of pharmaceutical and medical products are 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 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 HCBS premiums are recognized as income 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 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 HCBS services revenue relates to contracts that can include various combinations of services or series of services which are generally capable of being distinct and accounted for as separate performance obligations. HCBS’ services revenue primarily consists of the following components: • ASC fees are received in exchange for performing certain claim processing and member services for HCBS’ ASC medical members. ASC fee revenue is recognized over the period the service is provided. Some of the 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, HCBS 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 HCBS estimates obligations under the terms of these guarantees and records its estimate as an offset to service revenues. • Workers’ compensation administrative services consist of fee-based managed care services. Workers’ compensation administrative services revenue is recognized once the service is provided. |
Cost of products sold | Cost of products sold The Company accounts for cost of products sold as follows: Pharmacy Services Segment PSS’ cost of products sold includes: (i) the cost of prescription drugs sold during the reporting period directly through its mail service dispensing pharmacies and indirectly through its retail pharmacy network, (ii) shipping and handling costs, and (iii) the operating costs of its mail service dispensing pharmacies and client service operations and related information technology support costs including depreciation and amortization. The cost of prescription drugs sold component of cost of products sold includes: (i) the cost of the prescription drugs purchased from manufacturers or distributors and shipped to members in clients’ benefit plans from PSS’ mail service dispensing pharmacies, net of any volume-related or other discounts (see “Vendor allowances and purchase discounts” below) and (ii) the cost of prescription drugs sold (including Retail Co-Payments) through PSS’ retail pharmacy network under contracts where it is the principal, net of any volume-related or other discounts. Retail/LTC Segment RLS’ cost of products sold includes: the cost of merchandise sold during the reporting period, including prescription drug costs, and the related purchasing costs, warehousing and delivery costs (including depreciation and amortization) and actual and estimated inventory losses. |
Vendor allowances and purchase discounts | Vendor allowances and purchase discounts The Company accounts for vendor allowances and purchase discounts as follows: Pharmacy Services Segment PSS receives purchase discounts on products purchased. PSS’ contractual arrangements with vendors, including manufacturers, wholesalers and retail pharmacies, normally provide for PSS to receive purchase discounts from established list prices in one, or a combination, of the following forms: (i) a direct discount at the time of purchase, (ii) a discount for the prompt payment of invoices, or (iii) when products are purchased indirectly from a manufacturer (e.g., through a wholesaler or retail pharmacy), a discount (or rebate) paid subsequent to dispensing. These rebates are recognized when prescriptions are dispensed and are generally calculated and billed to manufacturers within 30 days after the end of each completed quarter. Historically, the effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to PSS’ results of operations. PSS accounts for the effect of any such differences as a change in accounting estimate in the period the reconciliation is completed. PSS also receives additional discounts under its wholesaler contracts if it exceeds contractually defined annual purchase volumes. In addition, PSS receives fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of “cost of products sold”. Retail/LTC Segment Vendor allowances received by RLS reduce the carrying cost of inventory and are recognized in cost of products sold when the related inventory is sold, unless they are specifically identified as a reimbursement of incremental costs for promotional programs and/or other services provided. Amounts that are directly linked to advertising commitments are recognized as a reduction of advertising expense (included in operating expenses) when the related advertising commitment is satisfied. Any such allowances received in excess of the actual cost incurred also reduce the carrying cost of inventory. The total value of any upfront payments received from vendors that are linked to purchase commitments is initially deferred. The deferred amounts are then amortized to reduce cost of products sold over the life of the contract based upon purchase volume. The total value of any upfront payments received from vendors that are not linked to purchase commitments also is initially deferred. The deferred amounts are then amortized to reduce cost of products sold on a straight-line basis over the life of the related contract. The total amortization of these upfront payments was not material to the Company’s consolidated financial statements in any of the periods presented. |
Health Care Reform | Health Care Reform Health Insurer Fee Since January 1, 2014, the ACA imposes an annual premium-based health insurer fee (“HIF”) for each calendar year payable in September which is not deductible for tax purposes. The Company is required to estimate a liability for the HIF at the beginning of the calendar year in which the fee is payable with a corresponding deferred asset that is amortized ratably to operating expenses over the calendar year. The Company records the liability for the health insurer fee in accrued expenses and records the deferred asset in other current assets. In 2018 and 2016, operating expenses include $157 million and $56 million , respectively, related to the Company’s share of the HIF. There was no expense related to the HIF in 2017 and there will be no expense for HIF in 2019, since the HIF was suspended for each of those periods. Risk Adjustment The ACA established a permanent risk adjustment program to transfer funds from qualified individual and small group insurance plans with below average risk scores to plans with above average risk scores. Based on the risk of the Company’s qualified plan members relative to the average risk of members of other qualified plans in comparable markets, the Company estimates its ultimate risk adjustment receivable (recorded in accounts receivable) or payable (recorded in accrued expenses) for the current calendar year and reflects the pro-rata year-to-date impact as an adjustment to premium revenue. |
Advertising Costs | Advertising costs Advertising costs are expensed when the related advertising takes place. Advertising costs, net of vendor funding (included in operating expenses), were $364 million , $230 million and $216 million in 2018 , 2017 and 2016 , respectively. |
Share-based compensation | Stock-based compensation Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the applicable requisite service period of the stock award (generally 3 to 5 years) using the straight-line method. |
Income taxes | Income taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year or years in which the differences are expected to reverse. The effect of a change in the tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date of such change. The Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017. Among numerous changes to existing tax laws, the TCJA permanently reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The effects of changes in tax rates on deferred tax balances are required to be taken into consideration in the period in which the changes are enacted, regardless of when they are effective. As a result of the reduction of the corporate income tax rate under the TCJA, the Company estimated the revaluation of its net deferred tax liabilities and recorded a provisional noncash income tax benefit of approximately $1.5 billion for year ended December 31, 2017. The Company completed its assessment of the TCJA’s final impact in December 2018 and recorded an additional tax benefit of approximately $100 million in the year ended December 31, 2018. The Company recognizes deferred tax assets to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent results of operations. The Company establishes a valuation allowance when it does not consider it more likely than not that a deferred tax asset will be recovered. The Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Interest and/or penalties related to uncertain tax positions are recognized in the income tax provision. |
Measurement of Defined Benefit Pension and Other Postretirement Employee Benefit (OPEB) Plans | Measurement of Defined Benefit Pension and Other Postretirement Employee Benefit (“OPEB”) Plans The Company sponsors defined benefit pension plans (“pension plans”) and OPEB plans for its employees and retirees. The Company recognizes the funded status of its pension plans and OPEB plans on the consolidated balance sheets based on the year-end measurements of plan assets and benefit obligations. When the fair value of plan assets are in excess of the plans benefit obligations, the amounts are reported in other current assets and other assets. When the fair value of benefit obligations are in excess of plan assets, the amounts are reported in accrued expenses and other long-term liabilities based on the amount by which the actuarial present value of benefits payable in the next twelve months included in the benefit obligation exceeds the fair value of plan assets. Nearly all of the Company’s net benefit costs for the Company’s defined benefit pension and postretirement plans do not contain a service cost component as most of these defined benefit plans have been frozen for an extended period of time. Non-service components of pension and postretirement benefit cost are included in other expense (income) in the consolidated statements of operations. |
Earnings per common share | Earnings per common share Earnings per share is computed using the two-class method. The Company calculates basic earnings per share based on the weighted average number of common shares outstanding for the period. See Note 14 ‘‘Earnings Per Share’’ for additional information. |
Shares held in trust | Shares held in trust The Company maintains grantor trusts, which held approximately one million shares of its common stock at December 31, 2018 and 2017 , respectively. These shares are designated for use under various employee compensation plans. Since the Company holds these shares, they are excluded from the computation of basic and diluted shares outstanding. |
Variable Interest Entities | Variable Interest Entities The Company has investments in (i) a generic pharmaceutical sourcing entity, (ii) certain hedge fund and private equity investments and (iii) real estate partnerships that are considered VIE’s. The Company does not have a future obligation to fund losses or debts on behalf of these investments; however, it may voluntarily contribute funds. In evaluating whether the Company is the primary beneficiary of a VIE, the Company considers several factors, including whether the Company has (a) the power to direct the activities that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses and the right to receive benefits that could potentially be significant to the VIE. Variable Interest Entities - Primary Beneficiary In 2014, the Company and Cardinal Health, Inc. (“Cardinal”) established Red Oak Sourcing, LLC (“Red Oak”), a generic pharmaceutical sourcing entity in which the Company and Cardinal each own 50% . The Red Oak arrangement has an initial term of 10 years. Under this arrangement, the Company and Cardinal contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic pharmaceutical supply contracts for both companies through Red Oak; however, Red Oak does not own or hold inventory on behalf of either company. No physical assets (e.g., property and equipment) were contributed to Red Oak by either company, and minimal funding was provided to capitalize Red Oak. The Company has determined that it is the primary beneficiary of this VIE because it has the ability to direct the activities of Red Oak. Consequently, the Company consolidates Red Oak in its consolidated financial statements within the Retail/LTC segment. Cardinal is required to pay the Company 39 quarterly payments beginning in October 2014. As milestones are met, the quarterly payments increase. The Company received from Cardinal approximately $183 million during each of the years ended December 31, 2018 and 2017 and $163 million during the year ended December 31, 2016 . The payments reduce the Company’s carrying value of inventory and are recognized in cost of products sold when the related inventory is sold. Revenues associated with Red Oak expenses reimbursed by Cardinal for the years ended December 31, 2018 , 2017 and 2016 , as well as amounts due to or due from Cardinal at December 31, 2018 and 2017 were immaterial. Variable Interest Entities - Other Variable Interest Holder In November 2018, the Company completed the Aetna Acquisition. Aetna has involvement with VIEs where the Company has determined that it is not the primary beneficiary, consisting of the following: • Hedge fund and private equity investments - The Company invests in hedge fund and private equity investments in order to generate investment returns for its investment portfolio supporting its insurance businesses. • Real estate partnerships - The Company invests in various real estate partnerships, including those that construct, own and manage low-income housing developments. For the low income housing development investments, substantially all of the projected benefits to the Company are from tax credits and other tax benefits. The Company is not the primary beneficiary of these investments because the nature of the Company’s involvement with the activities of these VIEs does not give the Company the power to direct the activities that most significantly impact their economic performance. The Company records the amount of its investment in these VIEs as long-term investments on the consolidated balance sheet and recognizes its share of each VIE’s income or losses in earnings. The Company’s maximum exposure to loss from these VIEs is limited to its investment balances as disclosed below and the risk of recapture of previously recognized tax credits related to the real estate partnerships, which the Company does not consider significant. |
Related Party Transactions | Related Party Transactions The Company has an equity method investment in SureScripts, LLC (“SureScripts”), which operates a clinical health information network. PSS and RLS utilize this clinical health information network in providing services to their respective client plan members and retail customers. The Company expensed fees for the use of this network of approximately $45 million , $35 million and $39 million in the years ended December 31, 2018 , 2017 and 2016 , 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 $135 million , $139 million and $140 million for pharmaceutical inventory purchases during the years ended December 31, 2018 , 2017 and 2016 , 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. |
Discontinued Operations | Discontinued Operations In connection with certain business dispositions completed between 1991 and 1997, the Company retained guarantees on store lease obligations for a number of former subsidiaries, including Bob’s Stores and Linens ‘n Things each of which subsequently filed for bankruptcy. The Company’s loss from discontinued operations primarily includes lease-related costs which the Company believes it will likely be required to satisfy pursuant to its lease guarantees. See “Lease Guarantees” in Note 16 ‘‘Commitments and Contingencies’’ for more information. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”). ASU 2014-09 outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) which amends the principal-versus-agent implementation guidance and in April 2016 the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, which amends the guidance in those areas in the new revenue recognition standard. The Company adopted the new standard as of January 1, 2018 using the modified retrospective method and applied the new standard to all contracts. Therefore, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for the applicable period. While the adoption of the new standard did not result in any material adjustments to the Company’s revenue or net income, one difference was identified between the previous accounting guidance and the new accounting guidance in RLS related to the accounting for the Company’s ExtraBucks ® Rewards customer loyalty program. This program was previously accounted for under a cost deferral method, while under the new standard this program is accounted for under a revenue deferral method. The cumulative effect of applying the new guidance to all contracts was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new standard, the following adjustments were made to accounts on the consolidated balance sheet as of January 1, 2018: Impact of Change in Accounting Policy As Reported Adjusted In millions December 31, 2017 Adjustments January 1, 2018 Consolidated Balance Sheet: Accrued expenses $ 6,581 $ 17 $ 6,598 Deferred income taxes 2,996 (4 ) 2,992 Total liabilities 57,436 13 57,449 Retained earnings 43,556 (13 ) 43,543 Total CVS Health shareholders’ equity 37,691 (13 ) 37,678 Total shareholders’ equity 37,695 (13 ) 37,682 The following tables compare the reported consolidated balance sheet, statements of operations, and statement of cash flows amounts to the pro forma amounts had the previous revenue accounting guidance remained in effect: Impact of Change in Accounting Policy As Reported Balances As of/For the Without Year Ended Adoption of In millions December 31, 2018 Adjustments Topic 606 Consolidated Statement of Operations: Revenues: Products $ 183,910 $ 3 $ 183,913 Total revenues 194,579 3 194,582 Operating costs: Cost of products sold 156,447 2 156,449 Total operating costs 190,558 2 190,560 Operating income 4,021 1 4,022 Income before income tax provision 1,406 1 1,407 Income tax provision 2,002 — 2,002 Loss from continuing operations (596 ) 1 (595 ) Net loss (596 ) 1 (595 ) Net loss attributable to CVS Health (594 ) 1 (593 ) Consolidated Balance Sheet: Accrued expenses 10,711 (18 ) 10,693 Total current liabilities 44,009 (18 ) 43,991 Deferred income taxes 7,677 4 7,681 Total liabilities 137,913 (14 ) 137,899 Retained earnings 40,911 14 40,925 Total CVS Health shareholders’ equity 58,225 14 58,239 Total shareholders’ equity 58,543 14 58,557 Consolidated Statement of Cash Flow: Reconciliation of net loss to net cash provided by operating activities: Net loss (596 ) 1 (595 ) Other liabilities 165 (1 ) 164 Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities . This ASU requires equity investments, except those under the equity method of accounting or those that result in the consolidation of an investee, to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. This simplifies the impairment assessment of equity investments previously held at cost. Entities are required to apply the guidance retrospectively, with the exception of the amendments related to equity investments without readily determinable fair values, which must be applied on a prospective basis. Effective January 1, 2018, the Company adopted this new accounting guidance. The adoption of this new guidance did not have a material impact on the Company’s financial condition or results of operations. Classification of Certain Cash Receipts and Cash Payments in the Consolidated Statements of Cash Flows In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments . This ASU is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. Effective January 1, 2018, the Company adopted this new accounting guidance. The adoption of this new guidance did not have a material impact on the Company’s financial condition or results of operations. Statement of Cash Flows - Restricted Cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows , which amends Accounting Standard Codification Topic 230. This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities no longer are required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. The guidance is required to be applied retrospectively. Effective January 1, 2018, the Company adopted this new accounting guidance. The following is a reconciliation of cash and cash equivalents on the consolidated balance sheets as of December 31 to total cash, cash equivalents and restricted cash in the consolidated statements of cash flows: In millions 2018 2017 2016 Cash and cash equivalents $ 4,059 $ 1,696 $ 3,371 Restricted cash (included in other current assets) 6 14 — Restricted cash (included in other assets) 230 190 149 Total cash, cash equivalents and restricted cash at the end of the period in the statement of cash flows $ 4,295 $ 1,900 $ 3,520 See “Restricted cash” above for further discussion of the nature of the Company’s restricted cash and restricted cash equivalent balances. The following is a reconciliation of the effect on the relevant line items in the consolidated statement of cash flows for the years ended December 31, 2017 and 2016 as a result of adopting this new accounting guidance: As Previously In millions Reported Adjustments As Revised Year Ended December 31, 2017 Acquisitions (net of cash acquired) $ (1,236 ) $ 55 $ (1,181 ) Net cash used in investing activities (2,932 ) 55 (2,877 ) Net decrease in cash, cash equivalents and restricted cash (1) (1,675 ) 55 (1,620 ) Cash, cash equivalents and restricted cash at the beginning of the period (1) 3,371 149 3,520 Cash, cash equivalents and restricted cash at the end of the period (1) 1,696 204 1,900 Year Ended December 31, 2016 Acquisitions (net of cash acquired) (524 ) — (524 ) Net cash used in investing activities (2,470 ) — (2,470 ) Net decrease in cash, cash equivalents and restricted cash (1) 912 — 912 Cash, cash equivalents and restricted cash at the beginning of the period (1) 2,459 149 2,608 Cash, cash equivalents and restricted cash at the end of the period (1) 3,371 149 3,520 _____________________________________________ (1) Prior to the adoption of ASU 2016-18, these financial statement captions excluded restricted cash. The financial statement captions have been renamed to reflect the inclusion of restricted cash subsequent to the adoption of ASU 2016-18 on January 1, 2018. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”) . This ASU permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of the TCJA to retained earnings. The guidance states that because the adjustment of deferred income taxes due to the reduction of the historical corporate income tax rate to the newly enacted corporate income tax rate was required to be included in income from continuing operations, the tax effects of items within accumulated other comprehensive income (“stranded tax effects”) are not reflected at the appropriate tax rate. During the first quarter of 2018, the Company elected to early adopt this new standard and decreased accumulated other comprehensive income and increased retained earnings in the period of adoption by $7 million due to the change in the United States federal corporate income tax rate enacted in December 2017. See Note 13 ‘‘Other Comprehensive Income (Loss)’’ for the impact of the adoption of this guidance on accumulated other comprehensive income for the year ended December 31, 2018 . New accounting pronouncements not yet adopted Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Lessees will be 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 will be equal to the present value of future lease payments. The asset will be based on the liability, subject to adjustment, 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 will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Lessor accounting is similar to the current 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. The Company adopted this new accounting guidance on January 1, 2019 on a modified retrospective basis. The adoption of this new guidance resulted in an increase in both assets and liabilities of approximately $20 billion as of January 1, 2019. The adoption of this new guidance is not expected to have a material impact on the Company’s results of operations or cash flows. 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 ASU, 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 guidance 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 consolidated balance sheet. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This ASU 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. The ASU 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 is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated results of operations, cash flows, financial condition and 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. The new standard requires a customer in a cloud computing arrangement that is a service contract to follow 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. Early adoption is permitted. The Company is currently evaluating the effect the implementation of this standard will have on the Company’s consolidated results of operations, cash flows, financial condition and 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 Insurance Contracts (Topic 944). The ASU 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. The Company is also required 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, the new guidance 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 the implementation of this standard will have on the Company’s consolidated results of operations, cash flows, financial condition and related disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of accounts receivable, net | Accounts receivable, net consists of the following at December 31 : In millions 2018 2017 Trade receivables $ 6,896 $ 7,895 Vendor and manufacturer receivables 7,655 5,109 Premium receivables 2,259 31 Other receivables 821 146 Total accounts receivable, net $ 17,631 $ 13,181 |
Schedule of allowance for doubtful accounts | The activity in the allowance for doubtful accounts receivable for the years ended December 31 is as follows: In millions 2018 2017 2016 Beginning balance $ 307 $ 286 $ 161 Additions charged to bad debt expense 256 177 221 Write-offs charged to allowance (70 ) (156 ) (96 ) Ending balance $ 493 $ 307 $ 286 |
Schedule of property and equipment | Property and equipment consists of the following at December 31 : In millions 2018 2017 Land $ 1,872 $ 1,707 Building and improvements 3,785 3,343 Fixtures and equipment 13,028 11,963 Leashold improvements 5,384 4,793 Software 2,800 2,484 Total property and equipment 26,869 24,290 Accumulated depreciation and amortization (15,520 ) (13,998 ) Property and equipment, net $ 11,349 $ 10,292 The amount of property and equipment under capital leases at December 31 is as follows: In millions 2018 2017 Property and equipment under capital leases $ 582 $ 588 Accumulated amortization of property and equipment under capital leases (163 ) (140 ) Property and equipment under capital leases, net $ 419 $ 448 |
Schedule of changes in redeemable noncontrolling interest | Below is a summary of the changes in redeemable noncontrolling interest for the year ended December 31, 2016 : In millions Beginning balance $ 39 Net income attributable to noncontrolling interest 1 Distributions (2 ) Purchase of noncontrolling interest (39 ) Reclassification to capital surplus in connection with purchase of noncontrolling interest 1 Ending balance $ — |
Schedule of disaggregation of revenue | The following table disaggregates the Company’s revenue by major source in each segment for the year ended December 31, 2018 : Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Major goods/services lines: Pharmacy $ 134,216 $ 64,179 $ 164 $ — $ (33,714 ) $ 164,845 Front Store — 19,055 — — — 19,055 Premiums — — 8,180 4 — 8,184 Net investment income — — 58 602 — 660 Other 520 755 560 — — 1,835 Total $ 134,736 $ 83,989 $ 8,962 $ 606 $ (33,714 ) $ 194,579 Pharmacy Services distribution channel: Mail choice (1) $ 46,934 Pharmacy network (2) 87,282 Other 520 Total $ 134,736 _____________________________________________ (1) 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. (2) 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. |
Schedule of contract with customer assets and liabilities | The following table provides information about receivables and contract liabilities from contracts with customers as of December 31: In millions 2018 2017 Trade receivables (included in accounts receivable, net) $ 6,896 $ 7,895 Contract liabilities (included in accrued expenses) 67 53 During the year ended December 31, 2018 , 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, 2017 $ 53 Adoption of ASU 2014-09 17 Loyalty program earnings and gift card issuances 332 Redemption and breakage (335 ) Balance at December 31, 2018 $ 67 |
Schedule of variable interest entities | The total amount of other variable interest holder VIE assets included in long-term investments on the consolidated balance sheet at December 31, 2018 was as follows: In millions Hedge fund investments $ 270 Private equity investments 524 Real estate partnerships 275 Total $ 1,069 |
Schedule of discontinued operations | Results from discontinued operations were immaterial for the year ended December 31, 2018. Below is a summary of the results of discontinued operations for the years ended December 31 , 2017 and 2016: In millions 2017 2016 Loss from discontinued operations $ (13 ) $ (2 ) Income tax benefit 5 1 Loss from discontinued operations, net of tax $ (8 ) $ (1 ) |
Schedule of new accounting pronouncements | The following is a reconciliation of the effect on the relevant line items in the consolidated statement of cash flows for the years ended December 31, 2017 and 2016 as a result of adopting this new accounting guidance: As Previously In millions Reported Adjustments As Revised Year Ended December 31, 2017 Acquisitions (net of cash acquired) $ (1,236 ) $ 55 $ (1,181 ) Net cash used in investing activities (2,932 ) 55 (2,877 ) Net decrease in cash, cash equivalents and restricted cash (1) (1,675 ) 55 (1,620 ) Cash, cash equivalents and restricted cash at the beginning of the period (1) 3,371 149 3,520 Cash, cash equivalents and restricted cash at the end of the period (1) 1,696 204 1,900 Year Ended December 31, 2016 Acquisitions (net of cash acquired) (524 ) — (524 ) Net cash used in investing activities (2,470 ) — (2,470 ) Net decrease in cash, cash equivalents and restricted cash (1) 912 — 912 Cash, cash equivalents and restricted cash at the beginning of the period (1) 2,459 149 2,608 Cash, cash equivalents and restricted cash at the end of the period (1) 3,371 149 3,520 _____________________________________________ (1) Prior to the adoption of ASU 2016-18, these financial statement captions excluded restricted cash. The financial statement captions have been renamed to reflect the inclusion of restricted cash subsequent to the adoption of ASU 2016-18 on January 1, 2018. Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”). ASU 2014-09 outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) which amends the principal-versus-agent implementation guidance and in April 2016 the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, which amends the guidance in those areas in the new revenue recognition standard. The Company adopted the new standard as of January 1, 2018 using the modified retrospective method and applied the new standard to all contracts. Therefore, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for the applicable period. While the adoption of the new standard did not result in any material adjustments to the Company’s revenue or net income, one difference was identified between the previous accounting guidance and the new accounting guidance in RLS related to the accounting for the Company’s ExtraBucks ® Rewards customer loyalty program. This program was previously accounted for under a cost deferral method, while under the new standard this program is accounted for under a revenue deferral method. The cumulative effect of applying the new guidance to all contracts was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective method to adopt the new standard, the following adjustments were made to accounts on the consolidated balance sheet as of January 1, 2018: Impact of Change in Accounting Policy As Reported Adjusted In millions December 31, 2017 Adjustments January 1, 2018 Consolidated Balance Sheet: Accrued expenses $ 6,581 $ 17 $ 6,598 Deferred income taxes 2,996 (4 ) 2,992 Total liabilities 57,436 13 57,449 Retained earnings 43,556 (13 ) 43,543 Total CVS Health shareholders’ equity 37,691 (13 ) 37,678 Total shareholders’ equity 37,695 (13 ) 37,682 The following tables compare the reported consolidated balance sheet, statements of operations, and statement of cash flows amounts to the pro forma amounts had the previous revenue accounting guidance remained in effect: Impact of Change in Accounting Policy As Reported Balances As of/For the Without Year Ended Adoption of In millions December 31, 2018 Adjustments Topic 606 Consolidated Statement of Operations: Revenues: Products $ 183,910 $ 3 $ 183,913 Total revenues 194,579 3 194,582 Operating costs: Cost of products sold 156,447 2 156,449 Total operating costs 190,558 2 190,560 Operating income 4,021 1 4,022 Income before income tax provision 1,406 1 1,407 Income tax provision 2,002 — 2,002 Loss from continuing operations (596 ) 1 (595 ) Net loss (596 ) 1 (595 ) Net loss attributable to CVS Health (594 ) 1 (593 ) Consolidated Balance Sheet: Accrued expenses 10,711 (18 ) 10,693 Total current liabilities 44,009 (18 ) 43,991 Deferred income taxes 7,677 4 7,681 Total liabilities 137,913 (14 ) 137,899 Retained earnings 40,911 14 40,925 Total CVS Health shareholders’ equity 58,225 14 58,239 Total shareholders’ equity 58,543 14 58,557 Consolidated Statement of Cash Flow: Reconciliation of net loss to net cash provided by operating activities: Net loss (596 ) 1 (595 ) Other liabilities 165 (1 ) 164 |
Schedule of reconciliation of cash and cash equivalents | Statement of Cash Flows - Restricted Cash In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows , which amends Accounting Standard Codification Topic 230. This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities no longer are required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. The guidance is required to be applied retrospectively. Effective January 1, 2018, the Company adopted this new accounting guidance. The following is a reconciliation of cash and cash equivalents on the consolidated balance sheets as of December 31 to total cash, cash equivalents and restricted cash in the consolidated statements of cash flows: In millions 2018 2017 2016 Cash and cash equivalents $ 4,059 $ 1,696 $ 3,371 Restricted cash (included in other current assets) 6 14 — Restricted cash (included in other assets) 230 190 149 Total cash, cash equivalents and restricted cash at the end of the period in the statement of cash flows $ 4,295 $ 1,900 $ 3,520 |
Acquisition of Aetna Acquisitio
Acquisition of Aetna Acquisition of Aetna (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of consideration transferred | The fair value of the consideration transferred on the date of acquisition consisted of the following: In millions Cash $ 48,089 Common stock (274.4 million shares) (1) 22,117 Fair value of replacement equity awards for pre-combination services (9.9 million shares) (2) 367 Effective settlement of pre-existing relationship (3) (807 ) Total consideration transferred $ 69,766 _____________________________________________ (1) The fair value of the Company’s common stock issued as consideration was calculated based on the 327.6 million Aetna common shares outstanding as of November 28, 2018 multiplied by (i) the merger agreement per share exchange ratio and (ii) the volume weighted average price of CVS Health common stock on November 28, 2018 of $80.59 . (2) The fair value of the replacement equity awards issued by the Company was determined as of the Aetna Acquisition Date. The fair value of the awards attributed to pre-combination services of $367 million is included in the consideration transferred and the fair value of the awards attributed to post-combination services of $232 million has been, or will be, included in the Company’s post-combination financial statements as compensation costs. (3) The purchase price included $807 million of effectively settled liabilities the Company owed to Aetna from their pre-existing pharmacy services relationship. |
Schedule of fair value of 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 (1) 4,089 Other current assets 3,896 Investments (current and long-term) 17,991 Goodwill 46,684 Intangible assets 23,746 Other long-term assets 8,282 Total assets acquired 111,253 Health care costs payable 5,359 Other current liabilities 10,026 Debt (current and long-term) 8,098 Deferred income taxes 4,574 Other long-term liabilities 13,101 Total liabilities assumed 41,158 Noncontrolling interests 329 Total consideration transferred $ 69,766 _____________________________________________ (1) The fair value of premium receivables acquired is $2.4 billion , with the gross contractual amount being $2.8 billion . The Company expects $424 million of premium receivables to be uncollectible. The fair value of other receivables acquired is $1.7 billion , with the gross contractual amount being $1.8 billion . The Company expects $84 million of other receivables to be uncollectible. |
Schedule of goodwill acquired by segment | The preliminarily valuation of goodwill was allocated to the Company’s business segments as follows: In millions Health Care Benefits $ 44,484 Pharmacy Services 1,500 Retail/LTC 700 Total goodwill $ 46,684 |
Schedule of intangible assets acquired | The following table summarizes the preliminary fair values and weighted average useful lives for intangible assets acquired in the Aetna Acquisition, each of which is subject to change as the Company finalizes its purchase accounting: Weighted Average Gross Useful Life In millions, except weighted average useful life Fair Value (years) Customer relationships (1) $ 13,630 14.4 Standalone Medicare Part D prescription drug plan customer relationship (held for sale) 101 N/A Technology 1,060 3.0 Provider networks (1) 4,200 20.0 Value of Business Acquired 590 20.0 Trademark (definite-lived) 65 5.0 Trademark (indefinitely-lived) 4,100 N/A Total intangible assets $ 23,746 15.1 _____________________________________________ (1) The amortization period for the Company’s customer relationships and provider networks includes an assumption of renewal or extension of these arrangements. At the acquisition date, the periods prior to the next renewal or extension for provider networks primarily ranged from one to three years , and the period prior to the next renewal or extension for customer relationships was one year . Any costs related to the renewal or extension of these contracts are expensed as incurred. |
Schedule of pro forma financial information | The following unaudited pro forma information presents a summary of the Company’s combined results of operations for the years ended December 31, 2018 and 2017 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 results of operations 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. Year Ended December 31, In millions, except per share data 2018 2017 Total revenues $ 243,232 $ 236,000 Income from continuing operations 1,152 6,813 Basic earnings per share from continuing operations attributable to CVS Health $ 0.89 $ 5.25 Diluted earnings per share from continuing operations attributable to CVS Health $ 0.88 $ 5.21 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments [Abstract] | |
Schedule of Investments | Total investments at December 31, 2018 were as follows: In millions Current Long-term Total Debt securities available for sale $ 2,359 $ 12,896 $ 15,255 Mortgage loans 145 1,216 1,361 Other investments 18 1,620 1,638 Total investments $ 2,522 $ 15,732 $ 18,254 |
Schedule of Debt Securities AFS | Debt securities available for sale at December 31, 2018 were as follows: In millions Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value 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 results of operations. 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. |
Investments Classified by Contractual Maturity Date | The fair value of debt securities at December 31, 2018 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 $ 901 $ 902 One year through five years 5,489 5,521 After five years through ten years 2,973 2,999 Greater than ten years 3,498 3,566 Residential mortgage-backed securities 567 577 Commercial mortgage-backed securities 594 605 Other asset-backed securities 1,097 1,085 Total $ 15,119 $ 15,255 |
Schedule of AFS In Unrealized Capital Loss Position | The maturity dates for debt securities in an unrealized capital loss position at December 31, 2018 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 $ 21 $ — $ 308 $ — $ 329 $ — One year through five years 36 2 557 5 593 7 After five years through ten years 47 — 492 9 539 9 Greater than ten years 49 — 370 5 419 5 Residential mortgage-backed securities — — 1 — 1 — Other asset-backed securities 4 — 524 15 528 15 Total $ 157 $ 2 $ 2,252 $ 34 $ 2,409 $ 36 Summarized below are the debt securities the Company held at December 31, 2018 that were in an unrealized capital loss position: In millions, except number of securities Number of Securities Fair Value Unrealized Losses 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 |
Activity in Mortgage Loan Portfolio | The Company’s mortgage loans are collateralized by commercial real estate. From the Aetna Acquisition Date through December 31, 2018 , the Company had the following activity in its mortgage loan portfolio: In millions New mortgage loans $ 4 Mortgage loans fully-repaid 27 Mortgage loans foreclosed — Based upon the most recent assessments at December 31, 2018 , the Company’s mortgage loans were given the following credit quality indicators: In millions, except credit ratings indicator 1 $ 42 2 to 4 1,301 5 and 6 18 7 — Total $ 1,361 At December 31, 2018 scheduled mortgage loan principal repayments were as follows: In millions 2019 $ 145 2020 109 2021 269 2022 228 2023 83 Thereafter 527 Total $ 1,361 |
Investment Income | Sources of net investment income for the year ended December 31, 2018 were as follows: In millions Debt securities $ 61 Mortgage loans 6 Other investments 593 Gross investment income 660 Investment expenses (3 ) Net investment income (excluding net realized capital gains or losses) 657 Net realized capital gains 3 Net investment income (1) $ 660 _____________________________________________ (1) Net investment income in 2018 includes $4 million related to investments supporting experience-rated products. |
Realized Gain (Loss) on Investments | 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 from the Aetna Acquisition Date through December 31, 2018 were as follows: (1) In millions Proceeds from sales $ 389 Gross realized capital gains 2 Gross realized capital losses (2 ) _____________________________________________ (1) The proceeds from sales and gross realized capital gains and losses exclude the impact of the sales of short-term debt securities which primarily relate to the Company’s investments in mutual funds. These investments were excluded from the disclosed amounts because they represent an immaterial amount of aggregate gross realized capital gains or losses and have a high volume of sales activity. |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities | Financial assets and liabilities measured at fair value on a recurring basis on the consolidated balance sheets at December 31, 2018 and 2017 were as follows: In millions Level 1 Level 2 Level 3 Total December 31, 2018 Assets: 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 December 31, 2017 Assets: Debt securities: U.S. corporate securities $ — $ 1 $ — $ 1 Foreign securities — 110 — 110 Total debt securities — 111 — 111 Equity securities — — — — Derivative financial instruments — 5 — 5 Total assets $ — $ 116 $ — $ 116 Liabilities: Derivative financial instruments $ — $ 23 $ — $ 23 |
Carrying Value and Estimated Fair Value of Certain Financial Instruments | The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the consolidated balance sheets at adjusted cost or contract value at December 31, 2018 and 2017 were as follows: Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total 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 Carrying Value Estimated Fair Value In millions Level 1 Level 2 Level 3 Total December 31, 2017 Assets: Equity securities (1) $ 47 N/A N/A N/A N/A Liabilities: Long-term debt 25,726 26,756 — — 26,756 _____________________________________________ (1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. See Note 1 ‘‘Significant Accounting Policies’’ for additional information regarding the valuation of cost-method investments. |
Separate Account Financial Assets | Separate Accounts financial assets as of December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total Debt securities $ 782 $ 2,500 $ 4 $ 3,286 Equity securities — 3 — 3 Common/collective trusts — 404 — 404 Total (1) $ 782 $ 2,907 $ 4 $ 3,693 _____________________________________________ (1) Excludes $191 million of cash and cash equivalents and accounts receivable at December 31, 2018 . |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Goodwill | Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31, 2018 and 2017 : In millions Pharmacy Services Retail/LTC Health Care Benefits Total Balance at December 31, 2016 $ 21,637 $ 16,612 $ — $ 38,249 Acquisitions 182 203 — 385 Foreign currency translation adjustments — (2 ) — (2 ) Impairments — (181 ) — (181 ) Balance at December 31, 2017 21,819 16,632 — 38,451 Acquisitions 1,569 735 44,484 46,788 Foreign currency translation adjustments — (14 ) — (14 ) Divestiture of RxCrossroads subsidiary — (398 ) — (398 ) Impairments — (6,149 ) — (6,149 ) Balance at December 31, 2018 $ 23,388 $ 10,806 $ 44,484 $ 78,678 |
Other intangible assets | The following table is a summary of the Company’s intangible assets as of December 31 : In millions, except weighted average life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Life (years) 2018 Trademarks (indefinitely-lived) $ 10,498 $ — $ 10,498 N/A Customer contracts/relationships and covenants not to compete 26,213 (6,349 ) 19,864 14.8 Technology 1,060 (31 ) 1,029 3.0 Provider networks 4,200 (19 ) 4,181 20.0 Value of Business Acquired 590 (7 ) 583 20.0 Favorable leases and other 1,177 (808 ) 369 17.1 Total $ 43,738 $ (7,214 ) $ 36,524 15.3 2017 Trademark (indefinitely-lived) $ 6,398 $ — $ 6,398 N/A Customer contracts/relationships and covenants not to compete 12,341 (5,536 ) 6,805 15.3 Favorable leases and other 1,190 (763 ) 427 16.2 Total $ 19,929 $ (6,299 ) $ 13,630 15.4 |
Estimated annual pretax amortization for other acquired intangible assets over the next five years | The projected annual amortization expense for the Company’s intangible assets for the next five years is as follows: In millions 2019 $ 2,563 2020 2,350 2021 2,253 2022 1,879 2023 1,844 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Schedule of rental expense | The following table is a summary of the Company’s net rental expense for operating leases for the years ended December 31: In millions 2018 2017 2016 Minimum rentals $ 2,528 $ 2,455 $ 2,418 Contingent rentals 28 29 35 Rental expense 2,556 2,484 2,453 Less: sublease income (21 ) (24 ) (24 ) Total rental expense, net $ 2,535 $ 2,460 $ 2,429 |
Schedule of future minimum lease payments for capital leases | The following table is a summary of the future minimum lease payments under capital and operating leases as of December 31, 2018 : Capital Operating In millions Leases Leases (1) 2019 $ 74 $ 2,690 2020 73 2,544 2021 73 2,399 2022 73 2,233 2023 73 2,110 Thereafter 875 16,004 Total future lease payments (2) 1,241 $ 27,980 Less: imputed interest (599 ) Present value of capital lease obligations $ 642 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $164 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target. Amounts related to such capital and operating leases are reflected above. Amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.1 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the lease arrangement. |
Schedule of future minimum lease payments for operating leases | The following table is a summary of the future minimum lease payments under capital and operating leases as of December 31, 2018 : Capital Operating In millions Leases Leases (1) 2019 $ 74 $ 2,690 2020 73 2,544 2021 73 2,399 2022 73 2,233 2023 73 2,110 Thereafter 875 16,004 Total future lease payments (2) 1,241 $ 27,980 Less: imputed interest (599 ) Present value of capital lease obligations $ 642 _____________________________________________ (1) Future operating lease payments have not been reduced by minimum sublease rentals of $164 million due in the future under noncancelable subleases. (2) The Company leases pharmacy and clinic space from Target. Amounts related to such capital and operating leases are reflected above. Amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.1 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the lease arrangement. |
Health Care Costs Payable (Tabl
Health Care Costs Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 2018: In millions Health care costs payable, beginning of the period $ 5 Less: Reinsurance recoverables — Health care costs payable, beginning of the period, net 5 Acquisitions, net 5,357 Reclassification from pharmacy claims and discounts payable (1) 776 Add: Components of incurred health care costs Current year 6,594 Prior years (42 ) Total incurred health care costs (2) 6,552 Less: Claims paid Current year 6,303 Prior years 260 Total claims paid 6,563 Add: Premium deficiency reserve 16 Health care costs payable, end of period, net 6,143 Add: Reinsurance recoverables 4 Health care costs payable, end of period $ 6,147 _____________________________________________ (1) As of the Aetna Acquisition Date, the Company reclassified $776 million of the Pharmacy Services segment’s unpaid retail pharmacy claims to third parties from pharmacy claims and discounts payable to health care costs payable as the third party liability was incurred to support the Health Care Benefits segment’s fully insured members. (2) Total incurred health care costs for the year ended December 31, 2018 in the table above exclude (i) $16 million related to a premium deficiency reserve for the 2019 coverage year related to Medicaid products, (ii) $4 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the consolidated balance sheet and (iii) $22 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the consolidated balance sheet. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Carrying Value of Long-Term Debt | The following table is a summary of the Company’s borrowings as of December 31 : In millions 2018 2017 Short-term debt Commercial paper $ 720 $ 1,276 Long-term debt 1.9% senior notes due July 2018 — 2,250 2.25% senior notes due December 2018 — 1,250 2.2% senior notes due March 2019 375 — 2.25% senior notes due August 2019 850 850 3.125% senior notes due March 2020 2,000 — Floating rate notes due March 2020 1,000 — 2.8% senior notes due July 2020 2,750 2,750 3.35% senior notes due March 2021 3,000 — Floating rate notes due March 2021 1,000 — 4.125% senior notes due May 2021 550 550 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 500 — 5.45% senior notes due June 2021 600 — 3-Year tranche 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 — 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 — 2.8% senior notes due June 2023 1,300 — 4% senior notes due December 2023 1,250 1,250 3.375% senior notes due August 2024 650 650 3.5% senior notes due November 2024 750 — 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 5,000 — 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 6.25% senior notes due June 2027 372 372 4.3% senior notes due March 2028 9,000 — 4.875% senior notes due July 2035 652 652 3.25% senior exchange debentures due December 2035 — 1 6.625% senior notes due June 2036 771 — 6.75% senior notes due December 2037 533 — 4.78% senior notes due March 2038 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 — 4.125% senior notes due November 2042 500 — 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 — 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 — 5.05% senior notes due March 2048 8,000 — Capital lease obligations 642 670 Other 19 43 Total debt principal 74,265 27,170 Debt premiums 302 28 Debt discounts and deferred financing costs (1,138 ) (196 ) 73,429 27,002 Less: Short-term debt (commercial paper) (720 ) (1,276 ) Current portion of long-term debt (1,265 ) (3,545 ) Long-term debt $ 71,444 $ 22,181 |
Schedule of Maturities of Long-term Debt | The following is a summary of the Company’s required principal debt repayments due during each of the next five years and thereafter, as of December 31, 2018 : In millions 2019 $ 1,985 2020 5,775 2021 10,427 2022 4,178 2023 8,581 Thereafter 43,319 Total $ 74,265 |
Pension Plans and Other Postr_2
Pension Plans and Other Postretirement Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of changes in benefit obligations | The following tables outline the change in benefit obligations and plan assets over the specified periods: In millions 2018 2017 Change in benefit obligation: Benefit obligation, beginning of year $ 131 $ 844 Acquired benefit obligations 5,685 — Interest cost 25 20 Actuarial loss (gain) 41 (31 ) Benefit payments (41 ) (35 ) Settlements — (667 ) Benefit obligation, end of year $ 5,841 $ 131 In millions 2018 2017 Change in plan assets: Fair value of plan assets, beginning of year $ — $ 624 Fair value of plan assets acquired 5,709 — Actual return on plan assets (17 ) 32 Employer contributions 12 46 Benefit payments (41 ) (35 ) Settlements — (667 ) Fair value of plan assets, end of year 5,663 — Funded status $ (178 ) $ (131 ) |
Schedule of changes in plan assets | The following tables outline the change in benefit obligations and plan assets over the specified periods: In millions 2018 2017 Change in benefit obligation: Benefit obligation, beginning of year $ 131 $ 844 Acquired benefit obligations 5,685 — Interest cost 25 20 Actuarial loss (gain) 41 (31 ) Benefit payments (41 ) (35 ) Settlements — (667 ) Benefit obligation, end of year $ 5,841 $ 131 In millions 2018 2017 Change in plan assets: Fair value of plan assets, beginning of year $ — $ 624 Fair value of plan assets acquired 5,709 — Actual return on plan assets (17 ) 32 Employer contributions 12 46 Benefit payments (41 ) (35 ) Settlements — (667 ) Fair value of plan assets, end of year 5,663 — Funded status $ (178 ) $ (131 ) |
Schedule of assets (liabilities) recognized in Balance Sheet | The assets (liabilities) recognized on the consolidated balance sheets at December 31, 2018 and 2017 for the pension plans consisted of the following: In millions 2018 2017 Accrued benefit assets reflected in other assets $ 147 $ — Accrued benefit liabilities reflected in accrued expenses (25 ) (21 ) Accrued benefit liabilities reflected in other long-term liabilities (300 ) (110 ) Net liabilities $ (178 ) $ (131 ) |
Schedule of net periodic benefit cost | The components of net periodic benefit cost for the years ended December 31 are shown below: In millions 2018 2017 2016 Components of net periodic benefit cost: Interest cost $ 25 $ 20 $ 27 Expected return on plan assets (33 ) (20 ) (32 ) Amortization of net actuarial loss 2 21 32 Settlement losses — 187 — Net periodic benefit cost $ (6 ) $ 208 $ 27 |
Schedule of changes in fair value of plan assets | ension Plan assets with changes in fair value measured on a recurring basis at December 31, 2018 were as follows: In millions Level 1 Level 2 Level 3 Total Debt securities: U.S. government securities $ 511 $ 38 $ — $ 549 States, municipalities and political subdivisions — 147 — 147 U.S. corporate securities — 1,671 5 1,676 Foreign securities — 177 — 177 Residential mortgage-backed securities — 339 — 339 Commercial mortgage-backed securities — 70 — 70 Other asset-backed securities — 162 — 162 Redeemable preferred securities — 6 — 6 Total debt securities 511 2,610 5 3,126 Equity securities: U.S. Domestic 744 — — 744 International 356 — — 356 Domestic real estate 30 — — 30 Total equity securities 1,130 — — 1,130 Other investments: Real estate — — 425 425 Common/collective trusts (1) — 253 — 253 Derivatives — 2 — 2 Total other investments — 255 425 680 Total pension investments (2) $ 1,641 $ 2,865 $ 430 $ 4,936 _____________________________________________ (1) |
Schedule of expected future benefits payments | The Company estimates the following future benefit payments, which are calculated using the same actuarial assumptions used to measure the pension plan benefit obligation as of December 31, 2018 : In millions 2019 $ 375 2020 387 2021 411 2022 387 2023 391 2024-2028 1,916 The Company estimates the following future benefit payments, which are calculated using the same actuarial assumptions used to measure the other postretirement benefit obligation as of December 31, 2018 : In millions 2019 $ 17 2020 17 2021 17 2022 16 2023 16 2024-2028 76 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The income tax provision for continuing operations consisted of the following for the years ended December 31: In millions 2018 2017 2016 Current: Federal $ 1,480 $ 2,594 $ 2,803 State 499 464 511 1,979 3,058 3,314 Deferred: Federal 22 (1,435 ) 5 State 1 14 (2 ) 23 (1,421 ) 3 Total $ 2,002 $ 1,637 $ 3,317 |
Schedule of Effective Income Tax Rate Reconciliation | The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31: 2018 2017 2016 Statutory income tax rate 21.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 27.7 4.1 4.1 Effect of the Tax Cuts and Jobs Act (7.1 ) (18.3 ) — Health insurer fee 2.2 — 0.2 Goodwill impairments 89.5 0.8 — Sale of subsidiary 5.0 — — Other 4.1 (1.8 ) (0.9 ) Effective income tax rate 142.4 % 19.8 % 38.4 % |
Schedule of Deferred Tax Assets and Liabilities | The following table is a summary of the components of the Company’s deferred income tax assets and liabilities as of December 31: In millions 2018 2017 Deferred income tax assets: Lease and rents $ 277 $ 291 Inventory 28 31 Employee benefits 243 246 Allowance for doubtful accounts 243 187 Retirement benefits 130 40 Net operating loss and capital loss carryforwards 529 101 Deferred income 104 93 Insurance reserves 467 — Investments 11 — Other 242 18 Valuation allowance (520 ) (77 ) Total deferred income tax assets 1,754 930 Deferred income tax liabilities: Depreciation and amortization (9,431 ) (3,926 ) Total deferred income tax liabilities (9,431 ) (3,926 ) Net deferred income tax liabilities $ (7,677 ) $ (2,996 ) |
Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: In millions 2018 2017 2016 Beginning balance $ 344 $ 307 $ 338 Additions based on tax positions related to the current year 1 62 68 Additions based on tax positions related to prior years 324 32 70 Reductions for tax positions of prior years (5 ) (28 ) (100 ) Expiration of statutes of limitation (2 ) (10 ) (22 ) Settlements (1 ) (19 ) (47 ) Ending balance $ 661 $ 344 $ 307 |
Stock-based Employee Incentiv_2
Stock-based Employee Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based compensation | The following table is a summary of stock-based compensation for each of the respective periods: In millions 2018 2017 2016 Stock options and stock appreciation rights (“SARs”) (1)(2) $ 70 $ 65 $ 79 Restricted stock units and performance stock units (2) 210 169 143 Total stock-based compensation $ 280 $ 234 $ 222 _____________________________________________ (1) Includes the ESPP. (2) Stock-based compensation for the year ended December 31, 2018 includes $14 million and $27 million associated with accelerated vesting of SARs and restricted stock replacement awards, respectively, issued to Aetna employees who were terminated subsequent to the acquisition. |
Schedule ESPP valuation assumptions | The following table is a summary of the assumptions used to value the ESPP awards for each of the respective periods: 2018 2017 2016 Dividend yield (1) 1.45 % 1.24 % 0.88 % Expected volatility (2) 28.02 % 22.70 % 20.64 % Risk-free interest rate (3) 1.87 % 0.86 % 0.45 % Expected life (in years) (4) 0.5 0.5 0.5 Weighted-average grant date fair value $ 12.26 $ 13.01 $ 14.98 _____________________________________________ (1) The dividend yield is calculated based on semi-annual dividends paid and the fair market value of the Company’s stock at the grant date. (2) The expected volatility is based on the historical volatility of the Company’s daily stock market prices over the previous six month period. (3) The risk-free interest rate is based on the Treasury constant maturity interest rate whose term is consistent with the expected term of ESPP purchases (i.e., six months). (4) The expected life is based on the semi-annual purchase period. |
RSU and performance share unit activity | The following table is a summary of the restricted stock unit and performance stock unit activity for the year ended December 31, 2018 : Weighted Average Grant Date Units in thousands Units Fair Value Unvested at beginning of year 5,014 $ 86.92 Granted 10,185 $ 73.18 Vested (3,757 ) $ 68.85 Forfeited (437 ) $ 76.92 Unvested at end of year 11,005 $ 76.18 |
Cash Proceeds Received and Tax Benefit from Share-based Payment Awards | The following table is a summary of stock option and SAR activity that occurred for the years ended December 31, 2018 , 2017 and 2016 : In millions 2018 2017 2016 Cash received from stock options exercised (including ESPP) $ 242 $ 329 $ 296 Payments for taxes for net share settlement of equity awards 97 71 72 Intrinsic value of stock options and SARs exercised 79 176 244 Fair value of stock options and SARs vested 324 341 298 |
Schedule of valuation assumptions | The fair value of each stock option and SAR is estimated using the Black-Scholes option pricing model based on the following assumptions at the time of grant: 2018 2017 2016 Dividend yield (1) 2.76 % 2.56 % 1.62 % Expected volatility (2) 21.27 % 18.39 % 17.22 % Risk-free interest rate (3) 2.77 % 1.77 % 1.24 % Expected life (in years) (4) 4.8 4.1 4.2 Weighted-average grant date fair value $ 24.55 $ 9.43 $ 13.00 _____________________________________________ (1) The dividend yield is based on annual dividends paid and the fair market value of the Company’s stock at the grant date. (2) The expected volatility is estimated using the Company’s historical volatility over a period equal to the expected life of each option grant after adjustments for infrequent events such as stock splits. (3) The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued. (4) The expected life represents the number of years the options are expected to be outstanding from grant date based on historical option holder exercise experience. |
Schedule of Stock Options and Stock Appreciation Rights Award Activity | The following table is a summary of the Company’s stock option and SAR activity for the year ended December 31, 2018 : |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Share Repurchase Programs | The following share repurchase programs have been authorized by the Board: In billions Remaining as of Authorization Date Authorized December 31, 2018 November 2, 2016 (“2016 Repurchase Program”) $ 15.0 $ 13.9 December 15, 2014 (“2014 Repurchase Program”) 10.0 — |
Statutory Accounting Practices Disclosure | At December 31, 2018 , these amounts were as follows: In millions Estimated minimum statutory surplus required by regulators $ 4,991 Investments on deposit with regulatory bodies 630 Estimated maximum dividend distributions permitted in 2019 without prior regulatory approval 480 |
Other Comprehensive (Loss) In_2
Other Comprehensive (Loss) Income (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive (Loss) Income | Shareholders’ equity included the following activity in accumulated other comprehensive income (loss) in 2018 , 2017 and 2016 : At December 31, In millions 2018 2017 2016 Net unrealized investment gains (losses): Beginning of year balance $ — $ — $ — Other comprehensive income before reclassifications ($132 pretax) 97 — — Amounts reclassified from accumulated other comprehensive income ($1 pretax) (1) — — — Other comprehensive income 97 — — End of year balance 97 — — Foreign currency translation adjustments: Beginning of year balance (129 ) (127 ) (165 ) Other comprehensive income (loss) (29 ) (2 ) 38 Other comprehensive income (loss) (29 ) (2 ) 38 End of year balance (158 ) (129 ) (127 ) Net cash flow hedges: Beginning of year balance (15 ) (5 ) (7 ) Adoption of new accounting standard (4) (3 ) — — Other comprehensive income (loss) before reclassifications ($465, $(18) and $0 pretax) 344 (11 ) — Amounts reclassified from accumulated other comprehensive loss ($(19), $2 and $3 pretax) (2) (14 ) 1 2 Other comprehensive income (loss) 330 (10 ) 2 End of year balance 312 (15 ) (5 ) Pension and OPEB plans: Beginning of year balance (21 ) (173 ) (186 ) Adoption of new accounting standard (4) (4 ) — — Other comprehensive loss before reclassifications ($(178), $0 and $0 pretax) (132 ) — — Amounts reclassified from accumulated other comprehensive loss ($11, $249 and $21 pretax) (3) 8 152 13 Other comprehensive income (loss) (124 ) 152 13 End of year balance (149 ) (21 ) (173 ) Total beginning of year accumulated other comprehensive loss (165 ) (305 ) (358 ) Adoption of new accounting standard (4) (7 ) — — Total other comprehensive income 274 140 53 Total end of year accumulated other comprehensive income (loss) $ 102 $ (165 ) $ (305 ) _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for debt securities are included in net investment income within the consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive loss for specifically identified cash flow hedges are included within interest expense in the consolidated statements of operations. (3) Amounts reclassified from accumulated other comprehensive loss for specifically identified pension and other postretirement benefits are included in other (income) expense in the consolidated statements of operations. (4) See Note 1 ‘‘Significant Accounting Policies’’ for additional information on the adoption of ASU 2018-02 during the first quarter of 2018. |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 years ended December 31: In millions, except per share amounts 2018 2017 2016 Numerator for earnings per share calculation: Income (loss) from continuing operations $ (596 ) $ 6,631 $ 5,320 Income allocated to participating securities (3 ) (24 ) (27 ) Net (income) loss attributable to noncontrolling interests 2 (1 ) (2 ) Income (loss) from continuing operations attributable to CVS Health $ (597 ) $ 6,606 $ 5,291 Denominator for earnings per share calculation: Weighted average shares, basic 1,044 1,020 1,073 Effect of dilutive securities — 4 6 Weighted average shares, diluted 1,044 1,024 1,079 Earnings (loss) per share from continuing operations: Basic $ (0.57 ) $ 6.48 $ 4.93 Diluted $ (0.57 ) $ 6.45 $ 4.91 |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Reinsurance Disclosures [Abstract] | |
Schedule of reinsurance recoverables | Reinsurance recoverables (recorded as other current assets or other assets on the consolidated balance sheets) at December 31, 2018 were as follows: In millions Reinsurer Hartford Life and Accident Insurance Company $ 3,470 Lincoln Life & Annuity Company of New York 424 Constitution Life 320 VOYA Retirement Insurance and Annuity Company 186 All Other 141 Total $ 4,541 |
Schedule of direct, assumed and ceded premiums earned | In millions Reinsurer Hartford Life and Accident Insurance Company $ 3,470 Lincoln Life & Annuity Company of New York 424 Constitution Life 320 VOYA Retirement Insurance and Annuity Company 186 All Other 141 Total $ 4,541 Direct, assumed and ceded premiums earned for the year ended December 31, 2018 were as follows: |
Schedule of impact of reinsurance on benefit costs | The impact of reinsurance on benefit costs for the year ended December 31, 2018 was as follows: In millions Direct $ 6,773 Assumed 32 Ceded (211 ) Net benefit costs $ 6,594 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summarized financial information of segments | Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services (1)(2) LTC (2) Benefits (2) Other Eliminations (2) Totals 2018: Revenues from customers $ 134,736 $ 83,989 $ 8,904 $ 4 $ (33,714 ) $ 193,919 Net investment income (3) — — 58 602 — 660 Total revenues 134,736 83,989 8,962 606 (33,714 ) 194,579 Adjusted operating income (loss) 4,955 7,403 528 (856 ) (769 ) 11,261 Depreciation and amortization 710 1,698 172 138 — 2,718 Additions to property and equipment 326 1,350 46 401 — 2,123 2017: Revenues from customers 130,822 79,398 3,582 — (29,037 ) 184,765 Net investment income — — 5 16 — 21 Total revenues (4) 130,822 79,398 3,587 16 (29,037 ) 184,786 Adjusted operating income (loss) 4,628 7,475 359 (896 ) (741 ) 10,825 Depreciation and amortization 710 1,651 2 116 — 2,479 Additions to property and equipment 311 1,398 — 340 — 2,049 2016: Revenues from customers 119,267 81,100 3,069 — (25,910 ) 177,526 Net investment income — — 2 18 — 20 Total revenues (4) 119,267 81,100 3,071 18 (25,910 ) 177,546 Adjusted operating income (loss) 4,380 8,221 428 (887 ) (721 ) 11,421 Depreciation and amortization 713 1,642 1 119 — 2,475 Additions to property and equipment 295 1,732 — 252 — 2,279 _____________________________________________ (1) Total revenues of PSS include approximately $11.4 billion , $10.8 billion and $10.5 billion of retail co-payments for 2018 , 2017 and 2016 , respectively. See Note 1 ‘‘Significant Accounting Policies’’ for additional information about retail co-payments. (2) Intersegment eliminations relate to intersegment revenue generating activities that occur between PSS, RLS and/or HCBS. (3) Corporate/Other segment net investment income for 2018 includes interest income of $536 million related to the proceeds of the $40 billion 2018 Notes. This amount is for the period prior to the close of the Aetna Acquisition, which occurred on November 28, 2018. (4) Amounts revised to reflect the reclassification of interest income from interest expense, net to net investment income within total revenues to conform with insurance company presentation which increased total revenues and operating income by $21 million and $20 million in 2017 and 2016, respectively. |
Schedule of segment financial information adjusted | Segment financial information for the years ended December 31, 2018, 2017 and 2016 , have been retrospectively adjusted to reflect this change to the Company’s cost allocation methodology, net investment income presentation and segment realignment as shown below: Year Ended December 31, 2018 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 134,128 $ 83,989 $ 5,549 $ 606 $ (29,693 ) $ 194,579 Adjustments 608 — 3,413 — (4,021 ) — Revenues, as adjusted $ 134,736 $ 83,989 $ 8,962 $ 606 $ (33,714 ) $ 194,579 Cost of products sold (1) $ 125,107 $ 59,906 $ 147 $ — $ (28,713 ) $ 156,447 Adjustments 3,670 — — — (3,670 ) — Cost of products sold $ 128,777 $ 59,906 $ 147 $ — $ (32,383 ) $ 156,447 Benefit costs (1) $ 2,805 $ — $ 3,873 $ 22 $ (106 ) $ 6,594 Adjustments (2,805 ) — 2,805 — — — Benefit costs $ — $ — $ 6,678 $ 22 $ (106 ) $ 6,594 Operating expenses, as previously reported $ 1,517 $ 17,314 $ 1,253 $ 1,389 $ (105 ) $ 21,368 Adjustments (165 ) — 516 — (351 ) — Operating expenses, as adjusted $ 1,352 $ 17,314 $ 1,769 $ 1,389 $ (456 ) $ 21,368 Operating income (loss), as previously reported $ 4,699 $ 620 $ 276 $ (805 ) $ (769 ) $ 4,021 Adjustments (92 ) — 92 — — — Operating income (loss), as adjusted 4,607 620 368 (805 ) (769 ) 4,021 Segment measure adjustments 348 6,783 160 (51 ) — 7,240 Adjusted operating income (loss) $ 4,955 $ 7,403 $ 528 $ (856 ) $ (769 ) $ 11,261 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. Year Ended December 31, 2017 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 130,596 $ 79,398 $ — $ — $ (25,229 ) $ 184,765 Adjustments 226 — 3,587 16 (3,808 ) 21 Revenues, as adjusted $ 130,822 $ 79,398 $ 3,587 $ 16 $ (29,037 ) $ 184,786 Cost of products sold (1) $ 121,746 $ 56,081 $ — $ — $ (24,417 ) $ 153,410 Adjustments 3,527 (15 ) — — (3,474 ) 38 Cost of products sold $ 125,273 $ 56,066 $ — $ — $ (27,891 ) $ 153,448 Benefit costs (1) $ 2,810 $ — $ — $ — $ — $ 2,810 Adjustments (2,810 ) — 2,810 — — — Benefit costs $ — $ — $ 2,810 $ — $ — $ 2,810 Operating expenses, as previously reported (2) $ 1,285 $ 16,667 $ — $ 966 $ (71 ) $ 18,847 Adjustments (36 ) (74 ) 420 (14 ) (334 ) (38 ) Operating expenses, as adjusted $ 1,249 $ 16,593 $ 420 $ 952 $ (405 ) $ 18,809 Operating income (loss), as previously reported $ 4,755 $ 6,469 $ — $ (966 ) $ (741 ) $ 9,517 Adjustments (455 ) 89 357 30 — 21 Operating income (loss), as adjusted 4,300 6,558 357 (936 ) (741 ) 9,538 Segment measure adjustments 328 917 2 40 — 1,287 Adjusted operating income (loss) $ 4,628 $ 7,475 $ 359 $ (896 ) $ (741 ) $ 10,825 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. (2) Operating expenses excludes the $181 million goodwill impairment charge in RLS. Year Ended December 31, 2016 Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated In millions Services LTC Benefits Other Eliminations Totals Revenues, as previously reported $ 119,963 $ 81,100 $ — $ — $ (23,537 ) $ 177,526 Adjustments (696 ) — 3,071 18 (2,373 ) 20 Revenues, as adjusted $ 119,267 $ 81,100 $ 3,071 $ 18 $ (25,910 ) $ 177,546 Cost of products sold (1) $ 111,883 $ 57,362 $ — $ — $ (22,755 ) $ 146,490 Adjustments 2,106 (23 ) — — (2,040 ) 43 Cost of products sold $ 113,989 $ 57,339 $ — $ — $ (24,795 ) $ 146,533 Benefit costs (1) $ 2,179 $ — $ — $ — $ — $ 2,179 Adjustments (2,179 ) — 2,179 — — — Benefit costs $ — $ — $ 2,179 $ — $ — $ 2,179 Operating expenses, as previously reported $ 1,225 $ 16,436 $ — $ 891 $ (61 ) $ 18,491 Adjustments (90 ) (112 ) 465 27 (333 ) (43 ) Operating expenses, as adjusted $ 1,135 $ 16,324 $ 465 $ 918 $ (394 ) $ 18,448 Operating income (loss), as previously reported $ 4,676 $ 7,302 $ — $ (891 ) $ (721 ) $ 10,366 Adjustments (533 ) 135 427 (9 ) — 20 Operating income (loss), as adjusted 4,143 7,437 427 (900 ) (721 ) 10,386 Segment measure adjustments 237 784 1 13 — 1,035 Adjusted operating income (loss) $ 4,380 $ 8,221 $ 428 $ (887 ) $ (721 ) $ 11,421 _____________________________________________ (1) The total of cost of products sold and benefit costs previously was reported as cost of revenues. |
Reconciliation of operating earnings to net income | The following is a reconciliation of consolidated operating income to adjusted operating income for the years ended December 31: In millions 2018 2017 2016 Operating income (GAAP measure) $ 4,021 $ 9,538 $ 10,386 Amortization of intangible assets (1) 1,006 817 795 Acquisition-related transaction and integration costs (2) 492 65 291 Goodwill impairments (3) 6,149 181 — Impairment of long-lived assets (4) 43 — — Loss on divestiture of subsidiary (5) 86 9 — Interest income on financing for the Aetna Acquisition (6) (536 ) — — Charges in connection with store rationalization (7) — 215 34 Adjustments to legal reserves in connection with certain legal settlements (8) — — (85 ) Adjusted operating income $ 11,261 $ 10,825 $ 11,421 _____________________________________________ (1) Intangible assets relate to the Company’s acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company’s GAAP consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company’s business operations since this amortization 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. Subsequent to the applicable acquisition date, the Company’s revenues and results of operations include the results of each of the Company’s acquisitions, which are supported by these intangible assets. (2) In 2018 and 2017, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare. In 2016, the acquisition-related integration costs relate to the acquisitions of Omnicare and the pharmacy and clinic businesses of Target. The acquisition-related transaction and integration costs are reflected in the Company’s GAAP consolidated statement of operations in operating expenses within the Corporate/Other segment and RLS. (3) In 2018, the goodwill impairments relate to the LTC reporting unit within RLS. In 2017, the goodwill impairments relate to the RxCrossroads reporting unit within RLS. (4) In 2018, impairment of long-lived assets primarily relates to the impairment of property and equipment within RLS and is reflected in operating expenses in the Company’s GAAP consolidated statement of operations. (5) In 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million on January 2, 2018. In 2017, the loss on divestiture of subsidiary represents transaction costs associated with the sale of RxCrossroads. The loss on divestiture of subsidiary costs are reflected the Company’s GAAP consolidated statement of operations in operating expenses within RLS and Corporate/Other segment. (6) In 2018, the Company recorded interest income of $536 million 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. (7) In 2017 and 2016, charges in connection with store rationalization related to the Company’s enterprise streamlining initiative. The charges in connection with store rationalization are reflected in the Company’s GAAP consolidated statement of operations in operating expenses within RLS. (8) In 2016, adjustments to legal reserves in connection with certain legal settlements relate to a reversal of an accrual in connection with a legal settlement within PSS and a charge related to a legacy lawsuit challenging the 1999 legal settlement of MedPartners of various securities class actions and a related derivative claim within the Corporate/Other segment. The adjustments to legal reserves are reflected in the Company’s GAAP consolidated statement of operations in operating expenses. |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | First Second Third Fourth In millions, except per share amounts Quarter Quarter Quarter Quarter Year 2018: Total revenues (1) $ 45,743 $ 46,922 $ 47,490 $ 54,424 $ 194,579 Operating income (loss) (1) 1,996 (1,373 ) 2,574 824 4,021 Income (loss) from continuing operations 998 (2,562 ) 1,390 (422 ) (596 ) Net income (loss) attributable to CVS Health 998 (2,563 ) 1,390 (419 ) (594 ) Per common share data: Basic earnings (loss) per common share: Income (loss) from continuing operations attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Income (loss) from discontinued operations attributable to CVS Health $ — $ — $ — $ — $ — Net income (loss) attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Diluted earnings (loss) per common share: Income (loss) from continuing operations attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Income (loss) from discontinued operations attributable to CVS Health $ — $ — $ — $ — $ — Net income (loss) attributable to CVS Health $ 0.98 $ (2.52 ) $ 1.36 $ (0.37 ) $ (0.57 ) Dividends per common share $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 2.00 _____________________________________________ (1) Effective for the fourth quarter of 2018, interest income was reclassified from interest expense, net to net investment income within revenues to conform with insurance company presentation. Accordingly, a retrospective reclassification of $50 million , $214 million and $221 million was made for the first, second and third quarters of 2018, respectively, to increase revenues and increase interest expense. First Second Third Fourth In millions, except per share amounts Quarter Quarter Quarter Quarter Year 2017: Total revenues (1) $ 44,520 $ 45,689 $ 46,186 $ 48,391 $ 184,786 Operating income (1) 1,799 2,121 2,504 3,114 9,538 Income from continuing operations 962 1,097 1,285 3,287 6,631 Net income attributable to CVS Health 952 1,098 1,285 3,287 6,622 Per common share data: Basic earnings per common share: Income from continuing operations attributable to CVS Health $ 0.93 $ 1.07 $ 1.26 $ 3.23 $ 6.48 Income (loss) from discontinued operations attributable to CVS Health $ (0.01 ) $ — $ — $ — $ (0.01 ) Net income attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.23 $ 6.47 Diluted earnings per common share: Income from continuing operations attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.22 $ 6.45 Income (loss) from discontinued operations attributable to CVS Health $ (0.01 ) $ — $ — $ — $ (0.01 ) Net income attributable to CVS Health $ 0.92 $ 1.07 $ 1.26 $ 3.22 $ 6.44 Dividends per common share $ 0.50 $ 0.50 $ 0.50 $ 0.50 $ 2.00 _____________________________________________ (1) Effective for the fourth quarter of 2018, interest income was reclassified from interest expense, net to net investment income within revenues to conform with insurance company presentation. Accordingly, a retrospective reclassification of $6 million , $4 million , $5 million and $6 million was made for the first, second, third and fourth quarters of 2017, respectively, to increase revenues and increase interest expense. |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) shares in Millions, person in Millions, patient in Millions, memeber in Millions | 1 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018USD ($)personclinicmemeberpatientstorestateshares | Dec. 31, 2015USD ($) | Dec. 31, 2018USD ($)personclinicmemeberpatientstorestateSegmentshares | Dec. 31, 2017USD ($)storeshares | Dec. 31, 2016USD ($)payment | Dec. 31, 2014 | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | Jan. 01, 2017USD ($) | Jan. 01, 2016USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Pre TCJA Effective Tax Rate | 35.00% | |||||||||
TCJA Effective Tax Rate | 21.00% | |||||||||
Number of stores (more than) | store | 9,900 | 9,900 | ||||||||
Number of walk-in medical clinics | clinic | 1,100 | 1,100 | ||||||||
Number of plan members | memeber | 92 | 92 | ||||||||
Number of patients served per year | patient | 1 | 1 | ||||||||
Number of people served | person | 38 | 38 | ||||||||
Number of reportable segments | Segment | 4 | |||||||||
Restricted cash (included in other assets) | $ 230,000,000 | $ 230,000,000 | $ 190,000,000 | $ 149,000,000 | ||||||
Restricted cash (included in other current assets) | 6,000,000 | 6,000,000 | 14,000,000 | 0 | ||||||
Deferred acquisition costs | $ 22,000,000 | 22,000,000 | ||||||||
Depreciation | 1,700,000,000 | 1,700,000,000 | 1,700,000,000 | |||||||
Impairment of intangible assets, finite-lived | 0 | 0 | 0 | |||||||
Impairment of intangible assets, indefinite-lived | 0 | 0 | 0 | |||||||
Assumed interest rates on long-duration group life and long-term care contracts | 5.10% | |||||||||
Add: Premium deficiency reserve | $ 16,000,000 | 16,000,000 | ||||||||
Policyholder funds | 2,100,000,000 | 2,100,000,000 | ||||||||
Self insurance liabilities | 865,000,000 | 865,000,000 | $ 696,000,000 | |||||||
Number of stores closed | store | 71 | |||||||||
Restructuring charges | $ 215,000,000 | |||||||||
Operating lease obligation, long-term portion | 269,000,000 | $ 269,000,000 | 306,000,000 | |||||||
Noncontrolling interest, ownership percentage | 73.00% | |||||||||
Purchase of noncontrolling interest | 39,000,000 | |||||||||
Pharmacy rebate period | 30 days | |||||||||
Health insurer fee | $ 157,000,000 | 0 | 56,000,000 | |||||||
Expected future health insurer fee | 0 | |||||||||
Advertising costs | 364,000,000 | 230,000,000 | $ 216,000,000 | |||||||
Remeasured DTA under TCJA | $ 100,000,000 | $ 100,000,000 | $ 1,500,000,000 | |||||||
Common stock, shares held in trust | shares | 1,000,000 | 1,000,000 | 1 | |||||||
VIE, ownership percentage | 50.00% | |||||||||
Number of quarterly payments from VIE | payment | 39 | |||||||||
Proceeds from VIE | $ 183,000,000 | $ 183,000,000 | $ 163,000,000 | |||||||
Expenses from transactions with related party | 45,000,000 | 35,000,000 | 39,000,000 | |||||||
Other revenues from transactions with related party | 135,000,000 | 139,000,000 | $ 140,000,000 | |||||||
Adoption of new accounting standards (Note 1) | $ 13,000,000 | 13,000,000 | ||||||||
Assets | 196,456,000,000 | 196,456,000,000 | 95,131,000,000 | |||||||
Total liabilities | $ 137,913,000,000 | $ 137,913,000,000 | $ 57,436,000,000 | |||||||
ASU 2016-02 | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Assets | $ 20,000,000,000 | |||||||||
Total liabilities | $ 20,000,000,000 | |||||||||
Heartland Healthcare Services | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Number of states in which entity operates | state | 4 | 4 | ||||||||
Accumulated Other Comprehensive Income (Loss) | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Adoption of new accounting standards (Note 1) | $ 7,000,000 | $ 7,000,000 | $ 7,000,000 | $ 0 | $ 0 | |||||
Pharmacy and clinic businesses of Target | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Consideration transferred in acquisition | $ 1,900,000,000 | |||||||||
Contingent consideration from acquisition | $ 60,000,000 | |||||||||
Contingent consideration period from acquisition | 3 years | |||||||||
Other Insurance Liabilities | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Liability for unpaid claims | 816,000,000 | 816,000,000 | ||||||||
Future policy benefits | 536,000,000 | 536,000,000 | ||||||||
Other Long-Term Insurance Liabilities | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Liability for unpaid claims | 1,900,000,000 | 1,900,000,000 | ||||||||
Future policy benefits | $ 6,200,000,000 | $ 6,200,000,000 | ||||||||
Minimum | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Period after date of service a claim is paid | 6 months | |||||||||
Assumed interest rates on limited payment pension contracts on large case pension business (in hundredths) | 3.50% | |||||||||
Interest rate for pension and annuity investment contracts | 3.50% | |||||||||
Share-based compensation arrangement, requisite service period | 3 years | |||||||||
Minimum | Building, building improvements and leasehold improvements | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Useful life of property plant and equipment | 5 years | |||||||||
Minimum | Fixtures, equipment and internally developed software | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Useful life of property plant and equipment | 3 years | |||||||||
Maximum | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Period after date of service a claim is paid | 48 months | |||||||||
Assumed interest rates on limited payment pension contracts on large case pension business (in hundredths) | 11.30% | |||||||||
Interest rate for pension and annuity investment contracts | 13.40% | |||||||||
Share-based compensation arrangement, requisite service period | 5 years | |||||||||
Maximum | Building, building improvements and leasehold improvements | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Useful life of property plant and equipment | 40 years | |||||||||
Maximum | Fixtures, equipment and internally developed software | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Useful life of property plant and equipment | 10 years | |||||||||
Retail/LTC | ||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||||
Number of stores (more than) | store | 9,900 | 9,900 |
Significant Accounting Polici_5
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Trade receivables | $ 6,896 | $ 7,895 | |
Vendor and manufacturer receivables | 7,655 | 5,109 | |
Premium receivables | 2,259 | 31 | |
Other receivables | 821 | 146 | |
Total accounts receivable, net | 17,631 | 13,181 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning balance | 307 | 286 | $ 161 |
Additions charged to bad debt expense | 256 | 177 | 221 |
Write-offs charged to allowance | (70) | (156) | (96) |
Ending balance | $ 493 | $ 307 | $ 286 |
Significant Accounting Polici_6
Significant Accounting Policies - Property Plant and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 26,869 | $ 24,290 |
Accumulated depreciation and amortization | (15,520) | (13,998) |
Property, Plant and Equipment, Net | 11,349 | 10,292 |
Capital Leases, Balance Sheet, Assets by Major Class, Net [Abstract] | ||
Property and equipment under capital leases | 582 | 588 |
Accumulated amortization of property and equipment under capital leases | (163) | (140) |
Property and equipment under capital leases, net | 419 | 448 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,872 | 1,707 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 3,785 | 3,343 |
Fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 13,028 | 11,963 |
Leashold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 5,384 | 4,793 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,800 | $ 2,484 |
Significant Accounting Polici_7
Significant Accounting Policies - Redeemable Noncontrolling Interest (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Beginning balance | $ 39 |
Net income attributable to noncontrolling interest | 1 |
Distributions | (2) |
Purchase of noncontrolling interest | (39) |
Reclassification to capital surplus in connection with purchase of noncontrolling interest | 1 |
Ending balance | $ 0 |
Significant Accounting Polici_8
Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | $ 193,919 | $ 184,765 | $ 177,526 | |||||||||
Net investment income | 660 | 21 | 20 | |||||||||
Total revenues | $ 54,424 | $ 47,490 | $ 46,922 | $ 45,743 | $ 48,391 | $ 46,186 | $ 45,689 | $ 44,520 | $ 194,579 | 194,579 | 184,786 | 177,546 |
Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 164,845 | |||||||||||
Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 19,055 | |||||||||||
Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 8,184 | 3,558 | 3,069 | |||||||||
Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 1,835 | |||||||||||
Intersegment Eliminations | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | (33,714) | (29,037) | (25,910) | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | (33,714) | (33,714) | (29,037) | (25,910) | ||||||||
Intersegment Eliminations | Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | (33,714) | |||||||||||
Intersegment Eliminations | Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Intersegment Eliminations | Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Intersegment Eliminations | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Pharmacy Services | Operating Segments | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 134,736 | 130,822 | 119,267 | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | 134,736 | 134,736 | 130,822 | 119,267 | ||||||||
Pharmacy Services | Operating Segments | Mail Choice | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenues | 46,934 | |||||||||||
Pharmacy Services | Operating Segments | Pharmacy network | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenues | 87,282 | |||||||||||
Pharmacy Services | Operating Segments | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Total revenues | 520 | |||||||||||
Pharmacy Services | Operating Segments | Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 134,216 | |||||||||||
Pharmacy Services | Operating Segments | Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Pharmacy Services | Operating Segments | Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Pharmacy Services | Operating Segments | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 520 | |||||||||||
Retail/LTC | Operating Segments | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 83,989 | 79,398 | 81,100 | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | 83,989 | 83,989 | 79,398 | 81,100 | ||||||||
Retail/LTC | Operating Segments | Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 64,179 | |||||||||||
Retail/LTC | Operating Segments | Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 19,055 | |||||||||||
Retail/LTC | Operating Segments | Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Retail/LTC | Operating Segments | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 755 | |||||||||||
Health Care Benefits | Operating Segments | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 8,904 | 3,582 | 3,069 | |||||||||
Net investment income | 58 | 5 | 2 | |||||||||
Total revenues | 8,962 | 8,962 | 3,587 | 3,071 | ||||||||
Health Care Benefits | Operating Segments | Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 164 | |||||||||||
Health Care Benefits | Operating Segments | Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Health Care Benefits | Operating Segments | Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 8,180 | |||||||||||
Health Care Benefits | Operating Segments | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 560 | |||||||||||
Corporate/Other | Operating Segments | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 4 | 0 | 0 | |||||||||
Net investment income | 602 | 16 | 18 | |||||||||
Total revenues | $ 606 | 606 | $ 16 | $ 18 | ||||||||
Corporate/Other | Operating Segments | Pharmacy | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Corporate/Other | Operating Segments | Front Store | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 0 | |||||||||||
Corporate/Other | Operating Segments | Premiums | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | 4 | |||||||||||
Corporate/Other | Operating Segments | Other | ||||||||||||
Disaggregation of Revenue [Line Items] | ||||||||||||
Revenues | $ 0 |
Significant Accounting Polici_9
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Trade receivables (included in accounts receivable, net) | $ 6,896 | $ 7,895 | |
Contract liabilities (included in accrued expenses) | $ 53 | $ 67 | $ 53 |
Change in Contract with Customer, Liability [Abstract] | |||
Balance at December 31, 2017 | 53 | ||
Adoption of ASU 2014-09 | 17 | ||
Loyalty program earnings and gift card issuances | 332 | ||
Redemption and breakage | (335) | ||
Balance at December 31, 2018 | $ 67 |
Significant Accounting Polic_10
Significant Accounting Policies - Discontinued Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||
Loss from discontinued operations | $ (13) | $ (2) | |
Income tax benefit | 5 | 1 | |
Loss from discontinued operations, net of tax | $ 0 | $ (8) | $ (1) |
Significant Accounting Polic_11
Significant Accounting Policies - Variable Interest Entities (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jul. 31, 2014 | Dec. 31, 2018 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | |||
Initial contractual term (in years) | 10 years | ||
Long-term investments | $ 15,732 | $ 112 | |
Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Long-term investments | 1,069 | ||
Hedge fund investments | Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Long-term investments | 270 | ||
Private equity investments | Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Long-term investments | 524 | ||
Real estate partnerships | Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Long-term investments | $ 275 |
Significant Accounting Polic_12
Significant Accounting Policies - Impact of New Revenue Recognition Standard on Financial Statement Line Items (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | Dec. 31, 2015 | |
Consolidated Balance Sheet: | ||||||||||||||
Accrued expenses | $ 10,711 | $ 6,581 | $ 10,711 | $ 6,581 | ||||||||||
Total current liabilities | 44,009 | 30,648 | 44,009 | 30,648 | ||||||||||
Deferred income taxes | 7,677 | 2,996 | 7,677 | 2,996 | ||||||||||
Total liabilities | 137,913 | 57,436 | 137,913 | 57,436 | ||||||||||
Retained earnings | 40,911 | 43,556 | 40,911 | 43,556 | ||||||||||
Total CVS Health shareholders’ equity | 58,225 | 37,691 | 58,225 | 37,691 | ||||||||||
Total shareholders’ equity | 58,543 | 37,695 | 58,543 | 37,695 | $ 36,834 | $ 37,203 | ||||||||
Consolidated Statement of Operations: | ||||||||||||||
Revenues | 193,919 | 184,765 | 177,526 | |||||||||||
Total revenues | 54,424 | $ 47,490 | $ 46,922 | $ 45,743 | 48,391 | $ 46,186 | $ 45,689 | $ 44,520 | $ 194,579 | 194,579 | 184,786 | 177,546 | ||
Cost of products sold | 156,447 | 156,447 | 153,448 | 146,533 | ||||||||||
Total operating costs | 190,558 | 175,248 | 167,160 | |||||||||||
Operating income | 824 | 2,574 | (1,373) | 1,996 | 3,114 | 2,504 | 2,121 | 1,799 | $ 4,021 | 4,021 | 9,538 | 10,386 | ||
Income before income tax provision | 1,406 | 8,268 | 8,637 | |||||||||||
Income tax provision | 2,002 | 1,637 | 3,317 | |||||||||||
Loss from continuing operations | (422) | 1,390 | (2,562) | 998 | 3,287 | 1,285 | 1,097 | 962 | (596) | 6,631 | 5,320 | |||
Net loss | (596) | 6,623 | 5,319 | |||||||||||
Net loss attributable to CVS Health | (419) | $ 1,390 | $ (2,563) | $ 998 | $ 3,287 | $ 1,285 | $ 1,098 | $ 952 | (594) | 6,622 | 5,317 | |||
Reconciliation of net loss to net cash provided by operating activities: | ||||||||||||||
Net loss | (596) | 6,623 | 5,319 | |||||||||||
Other liabilities | 165 | (333) | 152 | |||||||||||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||||
Consolidated Balance Sheet: | ||||||||||||||
Accrued expenses | (18) | (18) | $ 17 | |||||||||||
Total current liabilities | (18) | (18) | ||||||||||||
Deferred income taxes | 4 | 4 | (4) | |||||||||||
Total liabilities | (14) | (14) | 13 | |||||||||||
Retained earnings | 14 | 14 | (13) | |||||||||||
Total CVS Health shareholders’ equity | 14 | 14 | (13) | |||||||||||
Total shareholders’ equity | 14 | 14 | (13) | |||||||||||
Consolidated Statement of Operations: | ||||||||||||||
Total revenues | 3 | |||||||||||||
Cost of products sold | 2 | |||||||||||||
Total operating costs | 2 | |||||||||||||
Operating income | 1 | |||||||||||||
Income before income tax provision | 1 | |||||||||||||
Income tax provision | 0 | |||||||||||||
Loss from continuing operations | 1 | |||||||||||||
Net loss | 1 | |||||||||||||
Net loss attributable to CVS Health | 1 | |||||||||||||
Reconciliation of net loss to net cash provided by operating activities: | ||||||||||||||
Net loss | 1 | |||||||||||||
Other liabilities | (1) | |||||||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||||||||||||
Consolidated Balance Sheet: | ||||||||||||||
Accrued expenses | 10,693 | 10,693 | 6,598 | |||||||||||
Total current liabilities | 43,991 | 43,991 | ||||||||||||
Deferred income taxes | 7,681 | 7,681 | 2,992 | |||||||||||
Total liabilities | 137,899 | 137,899 | 57,449 | |||||||||||
Retained earnings | 40,925 | 40,925 | 43,543 | |||||||||||
Total CVS Health shareholders’ equity | 58,239 | 58,239 | 37,678 | |||||||||||
Total shareholders’ equity | $ 58,557 | 58,557 | $ 37,682 | |||||||||||
Consolidated Statement of Operations: | ||||||||||||||
Total revenues | 194,582 | |||||||||||||
Cost of products sold | 156,449 | |||||||||||||
Total operating costs | 190,560 | |||||||||||||
Operating income | 4,022 | |||||||||||||
Income before income tax provision | 1,407 | |||||||||||||
Income tax provision | 2,002 | |||||||||||||
Loss from continuing operations | (595) | |||||||||||||
Net loss | (595) | |||||||||||||
Net loss attributable to CVS Health | (593) | |||||||||||||
Reconciliation of net loss to net cash provided by operating activities: | ||||||||||||||
Net loss | (595) | |||||||||||||
Other liabilities | 164 | |||||||||||||
Products | ||||||||||||||
Consolidated Statement of Operations: | ||||||||||||||
Revenues | 183,910 | $ 180,063 | $ 173,377 | |||||||||||
Products | Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||||||||||||
Consolidated Statement of Operations: | ||||||||||||||
Revenues | 3 | |||||||||||||
Products | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||||||||||
Consolidated Statement of Operations: | ||||||||||||||
Revenues | $ 183,913 |
Significant Accounting Polic_13
Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||||
Cash and cash equivalents | $ 4,059 | $ 1,696 | $ 3,371 | |||
Restricted cash (included in other current assets) | 6 | 14 | 0 | |||
Restricted cash (included in other assets) | 230 | 190 | 149 | |||
Total cash, cash equivalents and restricted cash at the end of the period in the statement of cash flows | $ 4,295 | $ 3,520 | $ 3,520 | $ 4,295 | 1,900 | 3,520 |
Consolidated Statement of Cash Flow: | ||||||
Acquisitions (net of cash acquired) | (42,226) | (1,181) | (524) | |||
Net cash used in investing activities | (43,285) | (2,877) | (2,470) | |||
Net decrease in cash, cash equivalents and restricted cash | 2,395 | (1,620) | 912 | |||
Cash, cash equivalents and restricted cash at the end of the period | 1,900 | 3,520 | 2,608 | |||
Cash, cash equivalents and restricted cash at the end of the period | 4,295 | 1,900 | 3,520 | |||
Accounting Standards Update 2016-18 | As Previously Reported | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||||
Total cash, cash equivalents and restricted cash at the end of the period in the statement of cash flows | 1,696 | 3,371 | 3,371 | 1,696 | 3,371 | |
Consolidated Statement of Cash Flow: | ||||||
Acquisitions (net of cash acquired) | (1,236) | (524) | ||||
Net cash used in investing activities | (2,932) | (2,470) | ||||
Net decrease in cash, cash equivalents and restricted cash | (1,675) | 912 | ||||
Cash, cash equivalents and restricted cash at the end of the period | 1,696 | 3,371 | 2,459 | |||
Cash, cash equivalents and restricted cash at the end of the period | 1,696 | 3,371 | ||||
Accounting Standards Update 2016-18 | Adjustments | ||||||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||||||
Total cash, cash equivalents and restricted cash at the end of the period in the statement of cash flows | 204 | 149 | 149 | $ 204 | $ 149 | |
Consolidated Statement of Cash Flow: | ||||||
Acquisitions (net of cash acquired) | 55 | |||||
Net cash used in investing activities | 55 | |||||
Net decrease in cash, cash equivalents and restricted cash | 55 | 0 | ||||
Cash, cash equivalents and restricted cash at the end of the period | $ 204 | 149 | 149 | |||
Cash, cash equivalents and restricted cash at the end of the period | $ 204 | $ 149 |
Acquisition of Aetna - Narrativ
Acquisition of Aetna - Narrative (Details) $ / shares in Units, $ in Millions | Nov. 29, 2018USD ($) | Dec. 31, 2018USD ($)clinicstore | Nov. 28, 2018USD ($)$ / shares | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | ||||
Long-term Debt | $ 73,429 | $ 27,002 | ||
Number of stores | store | 9,900 | |||
Number of walk-in medical clinics | clinic | 1,100 | |||
Aetna Inc. | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, share price (in dollars per share) | $ / shares | $ 145 | |||
Per share exchange ratio | $ / shares | 0.8378 | |||
The assigned value per share of acquiree (in dollars per share) | $ / shares | $ 212 | |||
Consideration transferred in acquisition | $ 70,000 | |||
Assigned value of acquiree | $ 78,000 | |||
Long-term Debt | 45,000 | |||
Deductible goodwill | 165 | |||
Deferred income taxes | $ 4,574 | |||
Revenue of acquiree since acquisition date | $ 5,600 | |||
Income (loss) of acquiree since acquisition date | 146 | |||
Business acquisition transaction costs | $ 147 | $ 34 |
Acquisition of Aetna - Consider
Acquisition of Aetna - Consideration Transferred (Details) - Aetna Inc. - USD ($) shares in Millions | Nov. 29, 2018 | Nov. 28, 2018 |
Business Acquisition [Line Items] | ||
Cash | $ 48,089,000,000 | |
Common stock (274.4 million shares) | 22,117,000,000 | |
Fair value of replacement equity awards for pre-combination services (9.9 million shares) | 367,000,000 | |
Effective settlement of pre-existing relationship | (807,000,000) | |
Total consideration transferred | $ 69,766,000,000 | |
Common stock (in shares) | 274.4 | |
Fair value of replacement equity awards for pre-combination services (in shares) | 9.9 | |
Common stock, shares outstanding (in shares) | 327.6 | |
Weighted average share price of stock (in dollars per share) | $ 80.59 | |
Post-combination compensation costs | $ 232,000,000 |
Acquisition of Aetna - Assets A
Acquisition of Aetna - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Nov. 28, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 78,678 | $ 38,451 | $ 38,249 | |
Other current liabilities | $ 5,357 | |||
Aetna Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 6,565 | |||
Accounts receivable | 4,089 | |||
Other current assets | 3,896 | |||
Investments (current and long-term) | 17,991 | |||
Goodwill | 46,684 | |||
Intangible assets | 23,746 | |||
Other long-term assets | 8,282 | |||
Total assets acquired | 111,253 | |||
Health care costs payable | 5,359 | |||
Other current liabilities | 10,026 | |||
Debt (current and long-term) | 8,098 | |||
Deferred income taxes | 4,574 | |||
Other long-term liabilities | 13,101 | |||
Total liabilities assumed | 41,158 | |||
Noncontrolling interests | 329 | |||
Total consideration transferred | 69,766 | |||
Premium receivables | 2,400 | |||
Premium receivables, gross contractual amount | 2,800 | |||
Premium uncollectible receivables | 424 | |||
Other receivables | 1,700 | |||
Other receivables, gross contractual amount | 1,800 | |||
Other uncollectible receivables | $ 84 |
Acquisition of Aetna - Goodwill
Acquisition of Aetna - Goodwill (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Nov. 28, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | $ 78,678 | $ 38,451 | $ 38,249 | |
Health Care Benefits | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | 44,484 | 0 | 0 | |
Pharmacy Services | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | 23,388 | 21,819 | 21,637 | |
Retail/LTC | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | $ 10,806 | $ 16,632 | $ 16,612 | |
Aetna Inc. | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | $ 46,684 | |||
Aetna Inc. | Health Care Benefits | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | 44,484 | |||
Aetna Inc. | Pharmacy Services | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | 1,500 | |||
Aetna Inc. | Retail/LTC | ||||
Business Combination Segment Allocation [Line Items] | ||||
Goodwill | $ 700 |
Acquisition of Aetna - Intangib
Acquisition of Aetna - Intangible Assets (Details) - Aetna Inc. - USD ($) $ in Millions | Nov. 29, 2018 | Nov. 28, 2018 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Life (years) | 15 years 1 month 6 days | |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Total intangible assets | $ 23,746 | |
Medicare Part D Customer Relationship [Domain] | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross fair value | 101 | |
Trademarks | ||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross fair value | 4,100 | |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross fair value | 13,630 | |
Weighted Average Useful Life (years) | 14 years 4 months 24 days | |
The maximum number of years in the period prior to the next renewal or extension for provider networks (in years) | 1 year | |
Technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross fair value | 1,060 | |
Weighted Average Useful Life (years) | 3 years | |
Provider networks | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross fair value | 4,200 | |
Weighted Average Useful Life (years) | 20 years | |
The minimum number of years in the period prior to the next renewal or extension for provider networks (in years) | 1 year | |
The maximum number of years in the period prior to the next renewal or extension for provider networks (in years) | 3 years | |
Value of Business Acquired | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross fair value | 590 | |
Weighted Average Useful Life (years) | 20 years | |
Trademarks | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross fair value | $ 65 | |
Weighted Average Useful Life (years) | 5 years |
Acquisition of Aetna - Pro Form
Acquisition of Aetna - Pro Forma (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Combinations [Abstract] | ||
Total revenues | $ 243,232 | $ 236,000 |
Income from continuing operations | $ 1,152 | $ 6,813 |
Basic earnings per share from continuing operations attributable to CVS Health (in dollars per share) | $ 0.89 | $ 5.25 |
Diluted earnings (loss) per share from continuing operations attributable to CVS Health (in dollars per share) | $ 0.88 | $ 5.21 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Securities, Available-for-sale [Line Items] | |||
Investments | $ 18,254 | ||
Debt securities available for sale, current | 2,359 | ||
Long-term investments | 15,732 | $ 112 | |
Restricted investments | 531 | ||
Net investment income | $ 660 | 21 | $ 20 |
Certificates of Deposit | |||
Debt Securities, Available-for-sale [Line Items] | |||
Investments | 111 | ||
Residential mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
AFS weighted average duration of securities | 4 years 9 months 18 days | ||
Commercial mortgage-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
AFS weighted average duration of securities | 6 years 3 months 18 days | ||
Other asset-backed securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
AFS weighted average duration of securities | 1 year 3 months 18 days | ||
Debt securities | |||
Debt Securities, Available-for-sale [Line Items] | |||
Net investment income | $ 21 | $ 20 |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Investments [Abstract] | ||
Debt securities available for sale, current | $ 2,359 | |
Debt securities available for sale, long-term | 12,896 | |
Available-for-sale Securities | 15,255 | |
Mortgage loans, current | 145 | |
Mortgage loans, noncurrent | 1,216 | |
Mortgage loans | 1,361 | |
Other investments, current | 18 | |
Other investments, noncurrent | 1,620 | |
Other investments, total | 1,638 | |
Total investments, current | 2,522 | $ 111 |
Total investments, noncurrent | 15,732 | $ 112 |
Total investments | $ 18,254 |
Investments - Debt Securities (
Investments - Debt Securities (Details) $ in Millions | Dec. 31, 2018USD ($) |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | $ 15,119 |
Gross Unrealized Gains | 172 |
Gross Unrealized Losses | (36) |
Fair Value | 15,255 |
Supporting experience-rated products | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Gross Unrealized Gains | 12 |
Gross Unrealized Losses | (2) |
Fair Value | 916 |
U.S. government securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 1,662 |
Gross Unrealized Gains | 26 |
Gross Unrealized Losses | 0 |
Fair Value | 1,688 |
States, municipalities and political subdivisions | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 2,370 |
Gross Unrealized Gains | 30 |
Gross Unrealized Losses | (1) |
Fair Value | 2,399 |
U.S. corporate securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 6,444 |
Gross Unrealized Gains | 61 |
Gross Unrealized Losses | (16) |
Fair Value | 6,489 |
Foreign securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 2,355 |
Gross Unrealized Gains | 31 |
Gross Unrealized Losses | (3) |
Fair Value | 2,383 |
Residential mortgage-backed securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 567 |
Gross Unrealized Gains | 10 |
Gross Unrealized Losses | 0 |
Fair Value | 577 |
Commercial mortgage-backed securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 594 |
Gross Unrealized Gains | 11 |
Gross Unrealized Losses | 0 |
Fair Value | 605 |
Other asset-backed securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 1,097 |
Gross Unrealized Gains | 3 |
Gross Unrealized Losses | (15) |
Fair Value | 1,085 |
Redeemable preferred securities | |
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract] (Deprecated 2018-01-31) | |
Total | 30 |
Gross Unrealized Gains | 0 |
Gross Unrealized Losses | (1) |
Fair Value | $ 29 |
Investments - Debt Securities b
Investments - Debt Securities by Maturity (Details) $ in Millions | Dec. 31, 2018USD ($) |
Amortized Cost | |
Less than one year | $ 901 |
One year through five years | 5,489 |
After five years through ten years | 2,973 |
Greater than ten years | 3,498 |
Total | 15,119 |
Fair Value | |
Less than one year | 902 |
One year through five years | 5,521 |
After five years through ten years | 2,999 |
Greater than ten years | 3,566 |
Available-for-sale Securities | 15,255 |
Residential mortgage-backed securities | |
Amortized Cost | |
Without single maturity date | 567 |
Total | 567 |
Fair Value | |
Without single maturity date | 577 |
Available-for-sale Securities | 577 |
Commercial mortgage-backed securities | |
Amortized Cost | |
Without single maturity date | 594 |
Total | 594 |
Fair Value | |
Without single maturity date | 605 |
Available-for-sale Securities | 605 |
Other asset-backed securities | |
Amortized Cost | |
Without single maturity date | 1,097 |
Total | 1,097 |
Fair Value | |
Without single maturity date | 1,085 |
Available-for-sale Securities | $ 1,085 |
Investments - Unrealized Loss P
Investments - Unrealized Loss Position (Details) $ in Millions | Dec. 31, 2018USD ($)security |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 2,279 |
Fair value | $ 2,409 |
Unrealized losses | $ 36 |
U.S. government securities | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 8 |
Fair value | $ 26 |
Unrealized losses | $ 0 |
States, municipalities and political subdivisions | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 54 |
Fair value | $ 86 |
Unrealized losses | $ 1 |
U.S. corporate securities | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 1,399 |
Fair value | $ 1,431 |
Unrealized losses | $ 16 |
Foreign securities | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 243 |
Fair value | $ 314 |
Unrealized losses | $ 3 |
Residential mortgage-backed securities | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 45 |
Fair value | $ 1 |
Unrealized losses | $ 0 |
Other asset-backed securities | |
Debt Securities, Available-for-sale [Line Items] | |
Number of securities | security | 516 |
Fair value | $ 528 |
Unrealized losses | $ 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) $ in Millions | Dec. 31, 2018USD ($) |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | $ 2,409 |
Unrealized losses, total | 36 |
Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 157 |
Unrealized losses, total | 2 |
Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 2,252 |
Unrealized losses, total | 34 |
Residential mortgage-backed securities | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 1 |
Unrealized losses, total | 0 |
Residential mortgage-backed securities | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 0 |
Unrealized losses, total | 0 |
Residential mortgage-backed securities | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 1 |
Unrealized losses, total | 0 |
Other asset-backed securities | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 528 |
Unrealized losses, total | 15 |
Other asset-backed securities | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 4 |
Unrealized losses, total | 0 |
Other asset-backed securities | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 524 |
Unrealized losses, total | 15 |
Less than one year | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 329 |
Unrealized losses, total | 0 |
Less than one year | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 21 |
Unrealized losses, total | 0 |
Less than one year | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 308 |
Unrealized losses, total | 0 |
One year through five years | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 593 |
Unrealized losses, total | 7 |
One year through five years | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 36 |
Unrealized losses, total | 2 |
One year through five years | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 557 |
Unrealized losses, total | 5 |
After five years through ten years | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 539 |
Unrealized losses, total | 9 |
After five years through ten years | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 47 |
Unrealized losses, total | 0 |
After five years through ten years | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 492 |
Unrealized losses, total | 9 |
Greater than ten years | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 419 |
Unrealized losses, total | 5 |
Greater than ten years | Supporting experience-rated products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 49 |
Unrealized losses, total | 0 |
Greater than ten years | Supporting remaining products | |
Debt Securities, Available-for-sale [Line Items] | |
Fair value, total | 370 |
Unrealized losses, total | $ 5 |
Investments - Mortgage Loans (D
Investments - Mortgage Loans (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
Mortgage loans | $ 1,361 |
Commercial Real Estate | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | |
New mortgage loans | 4 |
Mortgage loans fully repaid | 27 |
Mortgage loans foreclosed | 0 |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
2019 | 145 |
2020 | 109 |
2021 | 269 |
2022 | 228 |
2023 | 83 |
Thereafter | 527 |
Mortgage loans | 1,361 |
Commercial Real Estate | Category 1 | |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
Mortgage loans | 42 |
Commercial Real Estate | Category 2 to 4 | |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
Mortgage loans | 1,301 |
Commercial Real Estate | Categories 5 and 6 | |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
Mortgage loans | 18 |
Commercial Real Estate | Category 7 | |
Scheduled Mortgage Loan Principal Repayments [Abstract] | |
Mortgage loans | $ 0 |
Investments - Investment Income
Investments - Investment Income (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |
Gross investment income | $ 660 |
Investment expenses | (3) |
Net investment income (excluding net realized capital gains or losses) | 657 |
Net realized capital gains | 3 |
Net Investment Income | 660 |
Debt securities | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |
Gross investment income | 61 |
Mortgage loans | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |
Gross investment income | 6 |
Other investments | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |
Gross investment income | 593 |
Supporting experience-rated products | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |
Net Investment Income | $ 4 |
Investments - Realized Gains (D
Investments - Realized Gains (Details) - Debt securities $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |
Proceeds On Sales | $ 389 |
Gross Realized Capital Gains | 2 |
Gross Realized Capital Losses | $ (2) |
Fair Value - Fair Value Measure
Fair Value - Fair Value Measurements (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | $ 15,255 | |
U.S. government securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,688 | |
States, municipalities and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,399 | |
U.S. corporate securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 6,489 | |
Foreign securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,383 | |
Residential mortgage-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 577 | |
Commercial mortgage-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 605 | |
Other asset-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,085 | |
Redeemable preferred securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 29 | |
Recurring | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 15,255 | $ 111 |
Equity securities | 73 | 0 |
Derivative financial instruments | 5 | |
Total assets | 15,328 | 116 |
Liabilities: | ||
Derivative financial instruments | 23 | |
Recurring | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,597 | 0 |
Equity securities | 19 | 0 |
Derivative financial instruments | 0 | |
Total assets | 1,616 | 0 |
Liabilities: | ||
Derivative financial instruments | 0 | |
Recurring | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 13,581 | 111 |
Equity securities | 0 | 0 |
Derivative financial instruments | 5 | |
Total assets | 13,581 | 116 |
Liabilities: | ||
Derivative financial instruments | 23 | |
Recurring | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 77 | 0 |
Equity securities | 54 | 0 |
Derivative financial instruments | 0 | |
Total assets | 131 | 0 |
Liabilities: | ||
Derivative financial instruments | 0 | |
Recurring | Brokered Securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 50 | |
Recurring | U.S. government securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,688 | |
Recurring | U.S. government securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,597 | |
Recurring | U.S. government securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 91 | |
Recurring | U.S. government securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | States, municipalities and political subdivisions | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,399 | |
Recurring | States, municipalities and political subdivisions | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | States, municipalities and political subdivisions | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,399 | |
Recurring | States, municipalities and political subdivisions | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | U.S. corporate securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 6,489 | 1 |
Recurring | U.S. corporate securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | 0 |
Recurring | U.S. corporate securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 6,422 | 1 |
Recurring | U.S. corporate securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 67 | 0 |
Recurring | Foreign securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,383 | 110 |
Recurring | Foreign securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | 0 |
Recurring | Foreign securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 2,380 | 110 |
Recurring | Foreign securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 3 | $ 0 |
Recurring | Residential mortgage-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 577 | |
Recurring | Residential mortgage-backed securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Residential mortgage-backed securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 577 | |
Recurring | Residential mortgage-backed securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Commercial mortgage-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 605 | |
Recurring | Commercial mortgage-backed securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Commercial mortgage-backed securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 605 | |
Recurring | Commercial mortgage-backed securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Other asset-backed securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,085 | |
Recurring | Other asset-backed securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Other asset-backed securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 1,085 | |
Recurring | Other asset-backed securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Redeemable preferred securities | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 29 | |
Recurring | Redeemable preferred securities | Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 0 | |
Recurring | Redeemable preferred securities | Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | 22 | |
Recurring | Redeemable preferred securities | Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Total debt securities | $ 7 |
Fair Value - Balance Sheet Grou
Fair Value - Balance Sheet Grouping (Details) - Nonrecurring - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying Value | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Mortgage loans | $ 1,361 | |
Equity securities | 140 | $ 47 |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Investment contracts with a fixed maturity | 5 | |
Investment contracts without a fixed maturity | 382 | |
Long-term debt | 72,709 | 25,726 |
Estimated Fair Value | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Mortgage loans | 1,366 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Investment contracts with a fixed maturity | 5 | |
Investment contracts without a fixed maturity | 357 | |
Long-term debt | 71,252 | 26,756 |
Estimated Fair Value | Level 1 | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Mortgage loans | 0 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Investment contracts with a fixed maturity | 0 | |
Investment contracts without a fixed maturity | 0 | |
Long-term debt | 71,252 | 26,756 |
Estimated Fair Value | Level 2 | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Mortgage loans | 0 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Investment contracts with a fixed maturity | 0 | |
Investment contracts without a fixed maturity | 0 | |
Long-term debt | 0 | 0 |
Estimated Fair Value | Level 3 | ||
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract] | ||
Mortgage loans | 1,366 | |
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract] | ||
Investment contracts with a fixed maturity | 5 | |
Investment contracts without a fixed maturity | 357 | |
Long-term debt | $ 0 | $ 0 |
Fair Value - Separate Accounts
Fair Value - Separate Accounts Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 3,884 | $ 0 |
Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3,693 | |
Recurring | Cash and Cash Equivalents and Account Receivable | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 191 | |
Recurring | Debt securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3,286 | |
Recurring | Equity securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3 | |
Recurring | Common/collective trusts | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 404 | |
Recurring | Level 1 | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 782 | |
Recurring | Level 1 | Debt securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 782 | |
Recurring | Level 1 | Equity securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | |
Recurring | Level 1 | Common/collective trusts | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | |
Recurring | Level 2 | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2,907 | |
Recurring | Level 2 | Debt securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2,500 | |
Recurring | Level 2 | Equity securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3 | |
Recurring | Level 2 | Common/collective trusts | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 404 | |
Recurring | Level 3 | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 4 | |
Recurring | Level 3 | Debt securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 4 | |
Recurring | Level 3 | Equity securities | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | |
Recurring | Level 3 | Common/collective trusts | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 0 |
Fair Value - Offsetting Financi
Fair Value - Offsetting Financial Liabilities (Details) $ in Millions | Dec. 31, 2018USD ($) |
Offsetting [Abstract] | |
Derivative assets subject to offsetting and enforceable master netting arrangements | $ 13 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 02, 2018 | |
Goodwill [Roll Forward] | ||||||||
Balance, beginning of the period | $ 38,451 | $ 38,249 | ||||||
Acquisitions | 46,788 | 385 | ||||||
Foreign currency translation adjustments | (14) | (2) | ||||||
Divestiture of RxCrossroads subsidiary | (398) | |||||||
Impairments | (6,149) | (181) | $ 0 | |||||
Balance, end of the period | $ 78,678 | $ 38,451 | 78,678 | 38,451 | 38,249 | |||
Pharmacy Services | ||||||||
Goodwill [Roll Forward] | ||||||||
Balance, beginning of the period | 21,819 | 21,637 | ||||||
Acquisitions | 1,569 | 182 | ||||||
Foreign currency translation adjustments | 0 | 0 | ||||||
Divestiture of RxCrossroads subsidiary | 0 | |||||||
Impairments | 0 | 0 | ||||||
Balance, end of the period | 23,388 | 21,819 | 23,388 | 21,819 | 21,637 | |||
Retail/LTC | ||||||||
Goodwill [Roll Forward] | ||||||||
Balance, beginning of the period | 16,632 | 16,612 | ||||||
Acquisitions | 735 | 203 | ||||||
Foreign currency translation adjustments | (14) | (2) | ||||||
Divestiture of RxCrossroads subsidiary | (398) | |||||||
Impairments | (6,149) | (181) | ||||||
Balance, end of the period | 10,806 | 16,632 | 10,806 | 16,632 | 16,612 | |||
Health Care Benefits | ||||||||
Goodwill [Roll Forward] | ||||||||
Balance, beginning of the period | 0 | 0 | ||||||
Acquisitions | 44,484 | 0 | ||||||
Foreign currency translation adjustments | 0 | 0 | ||||||
Divestiture of RxCrossroads subsidiary | 0 | |||||||
Impairments | 0 | 0 | ||||||
Balance, end of the period | 44,484 | 0 | 44,484 | 0 | $ 0 | |||
Long-Term Care Reporting Unit | Retail/LTC | ||||||||
Goodwill [Roll Forward] | ||||||||
Impairments | (2,200) | $ (3,900) | ||||||
Balance, end of the period | $ 431 | $ 431 | ||||||
RX Crossroads | ||||||||
Goodwill [Roll Forward] | ||||||||
Impairments | $ (46) | $ (135) | ||||||
TCJA, deferred tax liability, provisional income tax benefit | 47 | |||||||
Increase in carrying amount of reporting unit | $ 47 | |||||||
Disposal consideration received | $ 725 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Nov. 28, 2018 | |
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, accumulated amortization | $ (7,214) | $ (6,299) | |
Intangible assets, gross | 43,738 | 19,929 | |
Intangible assets, net | $ 36,524 | $ 13,630 | |
Weighted Average Life (years) | 15 years 3 months 18 days | 15 years 4 months 24 days | |
Trademarks | |||
Other Intangible Assets[Line Items] | |||
Indefinite-lived intangible assets, Trademarks | $ 10,498 | $ 6,398 | |
Customer contracts/relationships and covenants not to compete | |||
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, gross carrying amount | 26,213 | 12,341 | |
Finite-lived intangible assets, accumulated amortization | (6,349) | (5,536) | |
Finite-lived intangible assets, net carrying amount | $ 19,864 | $ 6,805 | |
Weighted Average Life (years) | 14 years 9 months 18 days | 15 years 3 months 18 days | |
Technology | |||
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, gross carrying amount | $ 1,060 | ||
Finite-lived intangible assets, accumulated amortization | (31) | ||
Finite-lived intangible assets, net carrying amount | $ 1,029 | ||
Weighted Average Life (years) | 3 years | ||
Provider networks | |||
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, gross carrying amount | $ 4,200 | ||
Finite-lived intangible assets, accumulated amortization | (19) | ||
Finite-lived intangible assets, net carrying amount | $ 4,181 | ||
Weighted Average Life (years) | 20 years | ||
Value of Business Acquired | |||
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, gross carrying amount | $ 590 | ||
Finite-lived intangible assets, accumulated amortization | (7) | ||
Finite-lived intangible assets, net carrying amount | $ 583 | ||
Weighted Average Life (years) | 20 years | ||
Favorable leases and other | |||
Other Intangible Assets[Line Items] | |||
Finite-lived intangible assets, gross carrying amount | $ 1,177 | $ 1,190 | |
Finite-lived intangible assets, accumulated amortization | (808) | (763) | |
Finite-lived intangible assets, net carrying amount | $ 369 | $ 427 | |
Weighted Average Life (years) | 17 years 1 month 6 days | 16 years 2 months 12 days | |
Aetna Inc. [Member] | Trademarks | |||
Other Intangible Assets[Line Items] | |||
Indefinite-lived intangible assets, gross fair value | $ 4,100 |
Goodwill and Other Acquired Int
Goodwill and Other Acquired Intangible Assets - Future Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangible assets | $ 1,006 | $ 817 | $ 795 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2019 | 2,563 | ||
2020 | 2,350 | ||
2021 | 2,253 | ||
2022 | 1,879 | ||
2023 | $ 1,844 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Leased Assets [Line Items] | |||
Proceeds from sale-leaseback transactions | $ 0 | $ 265 | $ 230 |
Distribution centers and Corporate Offices | Minimum | |||
Operating Leased Assets [Line Items] | |||
Initial terms of leases | 15 years | ||
Distribution centers and Corporate Offices | Maximum | |||
Operating Leased Assets [Line Items] | |||
Initial terms of leases | 25 years | ||
Equipment | Minimum | |||
Operating Leased Assets [Line Items] | |||
Initial terms of leases | 3 years | ||
Equipment | Maximum | |||
Operating Leased Assets [Line Items] | |||
Initial terms of leases | 10 years |
Leases - Rental Expense (Detail
Leases - Rental Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Leases [Abstract] | |||
Minimum rentals | $ 2,528 | $ 2,455 | $ 2,418 |
Contingent rentals | 28 | 29 | 35 |
Rental expense | 2,556 | 2,484 | 2,453 |
Less: sublease income | (21) | (24) | (24) |
Total rental expense, net | $ 2,535 | $ 2,460 | $ 2,429 |
Leases - Future Minimum Payment
Leases - Future Minimum Payments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Capital Leases | |
2019 | $ 74 |
2020 | 73 |
2021 | 73 |
2022 | 73 |
2023 | 73 |
Thereafter | 875 |
Total future lease payments | 1,241 |
Less: imputed interest | (599) |
Present value of capital lease obligations | 642 |
Operating Leases | |
2019 | 2,690 |
2020 | 2,544 |
2021 | 2,399 |
2022 | 2,233 |
2023 | 2,110 |
Thereafter | 16,004 |
Total future lease payments | 27,980 |
Operating leases, future minimum sublease payments due | 164 |
Operating and capital lease amounts due in excess of remaining estimated economic life of asset | $ 2,100 |
Health Care Costs Payable - Rec
Health Care Costs Payable - Reconciliation of Health Care Costs Payable (Details) - USD ($) $ in Millions | Nov. 28, 2018 | Dec. 31, 2018 |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Health care costs payable, beginning of the period | $ 5 | |
Less: Reinsurance recoverables | 0 | |
Health care costs payable, beginning of the period, net | 5 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Other | $ 5,357 | |
Add: Components of incurred health care costs | ||
Current year | 6,594 | |
Prior years | (42) | |
Total incurred health care costs | 6,552 | |
Less: Claims paid | ||
Current year | 6,303 | |
Prior years | 260 | |
Total claims paid | 6,563 | |
Add: Premium deficiency reserve | 16 | |
Health care costs payable, end of period, net | 6,143 | |
Add: Reinsurance recoverables | 4 | |
Health care costs payable, end of period | 6,147 | |
Health Care Benefits | ||
Less: Claims paid | ||
Add: Reinsurance recoverables | 4 | |
Corporate/Other | ||
Less: Claims paid | ||
Add: Reinsurance recoverables | $ 22 | |
Pharmacy Services | ||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Reclassification from pharmacy claims and discounts payable (1) | $ 776 |
Health Care Costs Payable - Nar
Health Care Costs Payable - Narrative (Details) $ in Billions | Dec. 31, 2018USD ($) |
Health Care Benefits | |
Health Care And Other Insurance Liabilities [Line Items] | |
Short-duration Insurance Contracts, Incurred but Not Reported (IBNR) Claims Liability, Net | $ 4.1 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | May 16, 2016 |
Debt Instrument [Line Items] | |||
Long-term debt gross | $ 74,265 | $ 27,170 | |
Debt Instrument, Unamortized Premium | 302 | 28 | |
Debt Instrument, Unamortized Discount and Debt Issuance Costs, Net | (1,138) | (196) | |
Long-term Debt | 73,429 | 27,002 | |
Short-term Debt | (720) | (1,276) | |
Long-term Debt, Current Maturities | (1,265) | (3,545) | |
Long-term debt | $ 71,444 | 22,181 | |
Senior Notes | 1.9% senior notes due July 2018 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 1.90% | ||
Long-term debt gross | $ 0 | 2,250 | |
Senior Notes | 2.25% senior notes due December 2018 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 2.25% | ||
Long-term debt gross | $ 0 | 1,250 | |
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 | 850 | |
Senior Notes | 3.125% senior notes due March 2020 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 3.125% | ||
Long-term debt gross | $ 2,000 | 0 | |
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% | ||
Long-term debt gross | $ 3,000 | 0 | |
Senior Notes | 4.125% senior notes due May 2021 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 4.125% | ||
Long-term debt gross | $ 550 | 550 | |
Senior Notes | 2.125% senior notes due June 2021 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 2.125% | 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 | 0 | |
Senior Notes | 5.45% senior notes due June 2021 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 5.45% | ||
Long-term debt gross | $ 600 | 0 | |
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 | 0 | |
Senior Notes | 5.45% senior notes due June 2021 | |||
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% | 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 | 0 | |
Senior Notes | 2.8% senior notes due June 2023 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 2.80% | ||
Long-term debt gross | $ 1,300 | 0 | |
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 | 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 | 0 | |
Senior Notes | 5% senior notes due December 2024 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 5.00% | 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 | 0 | |
Senior Notes | 3.875% senior notes due July 2025 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 3.875% | 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% | 2.875% | |
Long-term debt gross | $ 1,750 | 1,750 | |
Senior Notes | 6.25% senior notes due June 2027 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 6.25% | 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 | 0 | |
Senior Notes | 4.875% senior notes due July 2035 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 4.875% | 4.875% | |
Long-term debt gross | $ 652 | 652 | |
Senior Notes | 3.25% senior exchange debentures due December 2035 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 3.25% | ||
Long-term debt gross | $ 0 | 1 | |
Senior Notes | 6.625% senior notes due June 2036 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 6.625% | ||
Long-term debt gross | $ 771 | 0 | |
Senior Notes | 6.75% senior notes due December 2037 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 6.75% | ||
Long-term debt gross | $ 533 | 0 | |
Senior Notes | 4.78% senior notes due March 2038 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 4.78% | ||
Long-term debt gross | $ 5,000 | 0 | |
Senior Notes | 6.125% senior notes due September 2039 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 6.125% | 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% | 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 | 0 | |
Senior Notes | 4.125% senior notes due November 2042 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 4.125% | ||
Long-term debt gross | $ 500 | 0 | |
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 | 0 | |
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 | 0 | |
Senior Notes | 5.05% senior notes due March 2048 | |||
Debt Instrument [Line Items] | |||
Debt interest rate | 5.05% | ||
Long-term debt gross | $ 8,000 | 0 | |
Notes Payable | Floating rate notes due March 2020 | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | 1,000 | 0 | |
Notes Payable | Floating rate notes due March 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | 1,000 | 0 | |
Notes Payable | 3-Year tranche loan due November 2021 | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | 3,000 | 0 | |
Capital Lease Obligations | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | 642 | 670 | |
Other Debt Obligations | |||
Debt Instrument [Line Items] | |||
Long-term debt gross | $ 19 | $ 43 |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2019 | $ 1,985 | |
2020 | 5,775 | |
2021 | 10,427 | |
2022 | 4,178 | |
2023 | 8,581 | |
Thereafter | 43,319 | |
Total | $ 74,265 | $ 27,170 |
Debt - Short-term Debt (Details
Debt - Short-term Debt (Details) - USD ($) | Nov. 29, 2018 | Oct. 26, 2018 | Jan. 03, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 28, 2018 | Mar. 09, 2018 | Dec. 15, 2017 | Dec. 03, 2017 |
Short-term Debt [Line Items] | |||||||||
Short-term debt | $ 720,000,000 | $ 1,276,000,000 | |||||||
Debt face amount | $ 2,000,000,000 | ||||||||
Federal home loan bank advances maximum amount available | 790,000,000 | ||||||||
2018 Senior Notes | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt face amount | $ 40,000,000,000 | ||||||||
Notes Payable | 3-Year and 5-Year Term Loan | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 5,000,000,000 | ||||||||
Debt face amount | $ 5,000,000,000 | ||||||||
Senior Notes | 2018 Senior Notes | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt face amount | 40,000,000,000 | ||||||||
Commercial Paper | |||||||||
Short-term Debt [Line Items] | |||||||||
Short-term debt | $ 720,000,000 | $ 1,300,000,000 | |||||||
Short-term debt, weighted average interest rate | 2.80% | 2.00% | |||||||
Line of Credit | Back-Up Credit Facilities | |||||||||
Short-term Debt [Line Items] | |||||||||
Short-term debt | $ 0 | $ 0 | |||||||
Commitment fee percentage | 0.03% | ||||||||
Line of Credit | Revolving Credit Facility, Expiring May 16, 2019 | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,750,000,000 | ||||||||
Debt term | 364 days | ||||||||
Line of Credit | Revolving Credit Facility, Expiring July 1, 2020 | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,250,000,000 | ||||||||
Debt term | 5 years | ||||||||
Line of Credit | Revolving Credit Facility, Expiring May 18, 2022 | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 1,000,000,000 | ||||||||
Debt term | 5 years | ||||||||
Line of Credit | Revolving Credit Facility, Expiring May 17, 2023 | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,000,000,000 | ||||||||
Debt term | 5 years | ||||||||
Line of Credit | 2017 Revolving Credit Facility | |||||||||
Short-term Debt [Line Items] | |||||||||
Maximum borrowing capacity | $ 2,500,000,000 | ||||||||
Commitment fee percentage | 0.03% | ||||||||
Bridge Loan | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt term | 364 days | ||||||||
Debt face amount | $ 4,000,000,000 | 4,000,000,000 | $ 44,000,000,000 | $ 49,000,000,000 | |||||
Debt issuance cost capitalized | $ 8,000,000 | $ 221,000,000 | |||||||
Amortization of debt issuance costs | $ 173,000,000 | $ 56,000,000 | |||||||
Extinguishment of debt | $ 4,000,000,000 | ||||||||
Federal Home Loan Bank Advances | |||||||||
Short-term Debt [Line Items] | |||||||||
Short-term debt | $ 0 |
Debt - Long-Term Borrowings (De
Debt - Long-Term Borrowings (Details) - USD ($) | Mar. 09, 2018 | Dec. 15, 2017 | Jul. 27, 2016 | May 31, 2016 | May 16, 2016 | Dec. 31, 2018 | Nov. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 28, 2018 |
Debt Instrument [Line Items] | |||||||||||
Debt face amount | $ 2,000,000,000 | ||||||||||
Proceeds from debt net of issuance costs | $ 3,500,000,000 | ||||||||||
Proceeds form derivative instruments | $ 446,000,000 | ||||||||||
Unrealized gain (loss) on derivatives, net of tax | 331,000,000 | ||||||||||
Gain (loss) to be reclassified during next 12 months | $ 18,000,000 | 18,000,000 | |||||||||
Long-term debt gross | 74,265,000,000 | 74,265,000,000 | $ 27,170,000,000 | ||||||||
Loss on extinguishment of debt before write off | $ 97,000,000 | $ 486,000,000 | |||||||||
Write off of debt issuance cost | 4,000,000 | 50,000,000 | |||||||||
Debt extinguishment fees | 6,000,000 | ||||||||||
Loss on early extinguishment of debt | 101,000,000 | 542,000,000 | 0 | 0 | $ 643,000,000 | ||||||
2018 Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | $ 40,000,000,000 | ||||||||||
Proceeds from debt net of issuance costs | 39,400,000,000 | ||||||||||
Senior Notes | 2018 Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 40,000,000,000 | ||||||||||
Senior Notes | 3.125% senior notes due March 2020 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 2,000,000,000 | ||||||||||
Long-term debt gross | $ 2,000,000,000 | $ 2,000,000,000 | 0 | ||||||||
Debt interest rate | 3.125% | 3.125% | |||||||||
Senior Notes | 3.35% senior notes due March 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 3,000,000,000 | ||||||||||
Long-term debt gross | $ 3,000,000,000 | $ 3,000,000,000 | 0 | ||||||||
Debt interest rate | 3.35% | 3.35% | |||||||||
Senior Notes | Floating rate notes due March 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 1,000,000,000 | ||||||||||
Senior Notes | 3.7% senior notes due March 2023 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 6,000,000,000 | ||||||||||
Long-term debt gross | $ 6,000,000,000 | $ 6,000,000,000 | 0 | ||||||||
Debt interest rate | 3.70% | 3.70% | |||||||||
Senior Notes | 4.3% senior notes due March 2028 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 9,000,000,000 | ||||||||||
Long-term debt gross | $ 9,000,000,000 | $ 9,000,000,000 | 0 | ||||||||
Debt interest rate | 4.30% | 4.30% | |||||||||
Senior Notes | 4.78% senior notes due March 2038 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 5,000,000,000 | ||||||||||
Long-term debt gross | $ 5,000,000,000 | $ 5,000,000,000 | 0 | ||||||||
Debt interest rate | 4.78% | 4.78% | |||||||||
Senior Notes | 5.05% senior notes due March 2048 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 8,000,000,000 | ||||||||||
Long-term debt gross | $ 8,000,000,000 | $ 8,000,000,000 | 0 | ||||||||
Debt interest rate | 5.05% | 5.05% | |||||||||
Senior Notes | 4.1% senior notes due March 2025 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 5,000,000,000 | ||||||||||
Long-term debt gross | $ 5,000,000,000 | $ 5,000,000,000 | 0 | ||||||||
Debt interest rate | 4.10% | 4.10% | |||||||||
Senior Notes | 3-Year tranche loan due November 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt term | 3 years | ||||||||||
Senior Notes | 2.125% senior notes due June 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | $ 1,750,000,000 | ||||||||||
Long-term debt gross | $ 1,750,000,000 | $ 1,750,000,000 | 1,750,000,000 | ||||||||
Debt interest rate | 2.125% | 2.125% | 2.125% | ||||||||
Senior Notes | 2.875% senior notes due June 2026 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | $ 1,750,000,000 | ||||||||||
Long-term debt gross | $ 1,750,000,000 | $ 1,750,000,000 | 1,750,000,000 | ||||||||
Debt interest rate | 2.875% | 2.875% | 2.875% | ||||||||
Senior Notes | Any And All Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Extinguishment of debt | $ 1,100,000,000 | 835,000,000 | |||||||||
Senior Notes | Senior Notes, 5.75% Due 2017 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt interest rate | 5.75% | ||||||||||
Senior Notes | Senior Notes, 6.60% Due 2019 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt interest rate | 6.60% | ||||||||||
Senior Notes | Senior Notes, 4.75% Due 2020 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt interest rate | 4.75% | ||||||||||
Senior Notes | Maximum Tender Offer Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Extinguishment of debt | $ 2,250,000,000 | $ 1,500,000,000 | |||||||||
Senior Notes | 4.75% senior notes due December 2022 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 399,000,000 | $ 399,000,000 | 399,000,000 | ||||||||
Debt interest rate | 4.75% | 4.75% | 4.75% | ||||||||
Senior Notes | 5% senior notes due December 2024 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 299,000,000 | $ 299,000,000 | 299,000,000 | ||||||||
Debt interest rate | 5.00% | 5.00% | 5.00% | ||||||||
Senior Notes | 3.875% senior notes due July 2025 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 2,828,000,000 | $ 2,828,000,000 | 2,828,000,000 | ||||||||
Debt interest rate | 3.875% | 3.875% | 3.875% | ||||||||
Senior Notes | 6.25% senior notes due June 2027 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 372,000,000 | $ 372,000,000 | 372,000,000 | ||||||||
Debt interest rate | 6.25% | 6.25% | 6.25% | ||||||||
Senior Notes | 4.875% senior notes due July 2035 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 652,000,000 | $ 652,000,000 | 652,000,000 | ||||||||
Debt interest rate | 4.875% | 4.875% | 4.875% | ||||||||
Senior Notes | 6.125% senior notes due September 2039 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 447,000,000 | $ 447,000,000 | 447,000,000 | ||||||||
Debt interest rate | 6.125% | 6.125% | 6.125% | ||||||||
Senior Notes | 5.75% senior notes due May 2041 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | $ 133,000,000 | $ 133,000,000 | 133,000,000 | ||||||||
Debt interest rate | 5.75% | 5.75% | 5.75% | ||||||||
Notes Payable | Floating rate notes due March 2020 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | $ 1,000,000,000 | ||||||||||
Long-term debt gross | $ 1,000,000,000 | $ 1,000,000,000 | 0 | ||||||||
Notes Payable | Floating rate notes due March 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Long-term debt gross | 1,000,000,000 | 1,000,000,000 | 0 | ||||||||
Notes Payable | 3-Year and 5-Year Term Loan | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 5,000,000,000 | ||||||||||
Maximum borrowing capacity | $ 5,000,000,000 | ||||||||||
Notes Payable | 3-Year tranche loan due November 2021 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt face amount | 3,000,000,000 | ||||||||||
Maximum borrowing capacity | $ 3,000,000,000 | ||||||||||
Debt term | 3 years | 3 years | |||||||||
Long-term debt gross | 3,000,000,000 | $ 3,000,000,000 | $ 0 | ||||||||
Notes Payable | 5-Year tranche loan due November 2023 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Maximum borrowing capacity | $ 2,000,000,000 | ||||||||||
Debt term | 5 years | 5 years | |||||||||
Repayments of Debt | $ 2,000,000,000 | ||||||||||
Aetna Inc. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Assumed debt | $ 8,098,000,000 | ||||||||||
Minimum | Aetna Inc. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt interest rate | 2.20% | ||||||||||
Maximum | Aetna Inc. | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Debt interest rate | 6.75% |
Pension Plans and Other Postr_3
Pension Plans and Other Postretirement Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Defined contribution plan, employer contributions | $ 334 | $ 314 | $ 295 |
Pre-tax settlement gains (losses) | 0 | (187) | 0 |
Pension Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Pre-tax settlement gains (losses) | $ 0 | $ (187) | $ 0 |
Weighted average discount rate | 4.40% | ||
Discount rate | 4.00% | 3.50% | 4.00% |
Expected long-term return on plan assets | 6.60% | 4.00% | 5.50% |
Employer contributions | $ 12 | $ 46 | $ 25 |
Multiemployer plans, plan contributions | 18 | 17 | 15 |
Benefit obligation | 5,841 | 131 | 844 |
Net periodic benefit cost | $ (6) | 208 | $ 27 |
Pension Plan | Equity securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocations | 31.00% | ||
Pension Plan | Debt securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocations | 57.00% | ||
Pension Plan | Real Estate Investment | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocations | 6.00% | ||
Pension Plan | Private equity investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocations | 3.00% | ||
Pension Plan | Hedge Funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Target investment allocations | 3.00% | ||
Pension Plan | Qualified Plan | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.10% | ||
Other Postretirement Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Multiemployer plans, plan contributions | $ 58 | 58 | $ 52 |
Benefit obligation | 228 | 25 | |
Net periodic benefit cost | $ 2 | $ 1 | $ 1 |
Pension Plans and Other Postr_4
Pension Plans and Other Postretirement Plans - Benefit Obligations and Plan Assets (Details) - Pension Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in benefit obligation: | |||
Benefit obligation, beginning of year | $ 131 | $ 844 | |
Acquired benefit obligations | 5,685 | 0 | |
Interest cost | 25 | 20 | $ 27 |
Actuarial loss (gain) | 41 | (31) | |
Benefit payments | (41) | (35) | |
Settlements | 0 | (667) | |
Benefit obligation, end of year | 5,841 | 131 | 844 |
Change in plan assets: | |||
Fair value of plan assets, beginning of year | 0 | 624 | |
Fair value of plan assets acquired | 5,709 | 0 | |
Actual return on plan assets | (17) | 32 | |
Employer contributions | 12 | 46 | 25 |
Benefit payments | (41) | (35) | |
Settlements | 0 | (667) | |
Fair value of plan assets, end of year | 5,663 | 0 | $ 624 |
Funded status | (178) | (131) | |
Assets (liabilities) recognized on the consolidated balance sheet | |||
Accrued benefit assets reflected in other assets | 147 | 0 | |
Accrued benefit liabilities reflected in accrued expenses | (25) | (21) | |
Accrued benefit liabilities reflected in other long-term liabilities | (300) | (110) | |
Net liabilities | $ (178) | $ (131) |
Pension Plans and Other Postr_5
Pension Plans and Other Postretirement Plans - Net Periodic Benefit Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | |||
Settlement losses | $ 0 | $ 187 | $ 0 |
Pension Plan | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | |||
Interest cost | 25 | 20 | 27 |
Expected return on plan assets | (33) | (20) | (32) |
Amortization of net actuarial loss | 2 | 21 | 32 |
Settlement losses | 0 | 187 | 0 |
Net periodic benefit cost | $ (6) | $ 208 | $ 27 |
Pension Plans and Other Postr_6
Pension Plans and Other Postretirement Plans - Fair Value of Pension Plan Assets (Details) - Pension Plan - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 5,663 | $ 0 | $ 624 |
Total pension investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 4,936 | ||
Total pension investments | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,641 | ||
Total pension investments | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 2,865 | ||
Total pension investments | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 430 | ||
Debt securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 3,126 | ||
Debt securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 511 | ||
Debt securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 2,610 | ||
Debt securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 5 | ||
U.s. government securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 549 | ||
U.s. government securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 511 | ||
U.s. government securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 38 | ||
U.s. government securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
States, municipalities and political subdivisions | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 147 | ||
States, municipalities and political subdivisions | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
States, municipalities and political subdivisions | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 147 | ||
States, municipalities and political subdivisions | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
U.S. corporate securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,676 | ||
U.S. corporate securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
U.S. corporate securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,671 | ||
U.S. corporate securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 5 | ||
Foreign securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 177 | ||
Foreign securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Foreign securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 177 | ||
Foreign securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Residential mortgage-backed securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 339 | ||
Residential mortgage-backed securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Residential mortgage-backed securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 339 | ||
Residential mortgage-backed securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Commercial mortgage-backed securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 70 | ||
Commercial mortgage-backed securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Commercial mortgage-backed securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 70 | ||
Commercial mortgage-backed securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other asset-backed securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 162 | ||
Other asset-backed securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other asset-backed securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 162 | ||
Other asset-backed securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Redeemable preferred securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 6 | ||
Redeemable preferred securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Redeemable preferred securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 6 | ||
Redeemable preferred securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Equity securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,130 | ||
Equity securities | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 1,130 | ||
Equity securities | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Equity securities | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
U.S. Domestic | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 744 | ||
U.S. Domestic | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 744 | ||
U.S. Domestic | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
U.S. Domestic | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
International | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 356 | ||
International | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 356 | ||
International | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
International | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Domestic real estate | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 30 | ||
Domestic real estate | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 30 | ||
Domestic real estate | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Domestic real estate | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 680 | ||
Other investments | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Other investments | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 255 | ||
Other investments | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 425 | ||
Real estate | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 425 | ||
Real estate | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Real estate | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Real estate | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 425 | ||
Common/collective trusts | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 253 | ||
Common/collective trusts | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Common/collective trusts | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 253 | ||
Common/collective trusts | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Derivatives | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 2 | ||
Derivatives | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Derivatives | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 2 | ||
Derivatives | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | ||
Common/collective trusts, Equity Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 109 | ||
Common/collective trusts, Debt Securities | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 144 | ||
Cash and cash equivalents | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 98 | ||
Private equity investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 465 | ||
Hedge fund investments | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 164 |
Pension Plans and Other Postr_7
Pension Plans and Other Postretirement Plans - Defined Benefit Plans Expected Benefit (Details) $ in Millions | Dec. 31, 2018USD ($) |
Pension Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | $ 375 |
2020 | 387 |
2021 | 411 |
2022 | 387 |
2023 | 391 |
2024-2028 | 1,916 |
Other Postretirement Benefits | |
Defined Benefit Plan Disclosure [Line Items] | |
2019 | 17 |
2020 | 17 |
2021 | 17 |
2022 | 16 |
2023 | 16 |
2024-2028 | $ 76 |
Income Taxes - Income Tax Narra
Income Taxes - Income Tax Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 529 | |
Valuation allowance | 520 | $ 77 |
Provisional benefit of revaluation of net DTL due to TCJA | $ 1,500 | |
Benefit of revaluation of net DTL due to TCJA | $ 100 |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current taxes: [Abstract] | |||
Federal | $ 1,480 | $ 2,594 | $ 2,803 |
State | 499 | 464 | 511 |
Total current taxes | 1,979 | 3,058 | 3,314 |
Deferred taxes (benefits): [Abstract] | |||
Federal | 22 | (1,435) | 5 |
State | 1 | 14 | (2) |
Total deferred income taxes | 23 | (1,421) | 3 |
Income taxes | $ 2,002 | $ 1,637 | $ 3,317 |
Income Taxes - Income Tax Rate
Income Taxes - Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | |||
Statutory income tax rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 27.70% | 4.10% | 4.10% |
Effect of the Tax Cuts and Jobs Act | (7.10%) | (18.30%) | 0.00% |
Health insurer fee | 2.20% | 0.00% | 0.20% |
Goodwill impairments | 89.50% | 0.80% | 0.00% |
Loss on sale of subsidiary | 5.00% | 0.00% | 0.00% |
Other | 4.10% | (1.80%) | (0.90%) |
Effective income tax rate | 142.40% | 19.80% | 38.40% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred income tax assets: | ||
Lease and rents | $ 277 | $ 291 |
Inventory | 28 | 31 |
Employee benefits | 243 | 246 |
Allowance for doubtful accounts | 243 | 187 |
Retirement benefits | 130 | 40 |
Net operating loss and capital loss carryforwards | 529 | 101 |
Deferred income | 104 | 93 |
Insurance reserves | 467 | 0 |
Investments | 11 | 0 |
Other | 242 | 18 |
Valuation allowance | (520) | (77) |
Total deferred income tax assets | 1,754 | 930 |
Deferred income tax liabilities: | ||
Depreciation and amortization | (9,431) | (3,926) |
Total deferred income tax liabilities | (9,431) | (3,926) |
Net deferred income tax liabilities | $ (7,677) | $ (2,996) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 344 | $ 307 | $ 338 |
Additions based on tax positions related to the current year | 1 | 62 | 68 |
Additions based on tax positions related to prior years | 324 | 32 | 70 |
Reductions for tax positions of prior years | (5) | (28) | (100) |
Expiration of statutes of limitation | (2) | (10) | (22) |
Settlements | (1) | (19) | (47) |
Ending balance | 661 | 344 | 307 |
Income tax penalties and interest expense | 19 | 11 | $ 10 |
Income tax penalties and interest accrued | 80 | $ 34 | |
Unrecognized tax benefits that would impact effective tax rate | $ 597 |
Stock-based Employee Incentiv_3
Stock-based Employee Incentive Plans - Share Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Nov. 28, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Stock-based compensation expense | $ 280 | $ 234 | $ 222 | ||
Shares issued employee stock purchase plan (in shares) | 2,000,000 | ||||
Average purchase price of shares purchased (in dollars per share) | $ 61.40 | ||||
Stock Appreciation Rights (SARs) | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Award vesting period | 3 years | ||||
Accelerated compensation cost | $ 14 | ||||
Expiration period | 10 years | ||||
Employee Stock Options and Stock Appreciation Rights | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Stock-based compensation expense | $ 70 | 65 | 79 | ||
Compensation not yet recognized, options | $ 58 | ||||
Compensation not yet recognized, period for recognition | 1 year 2 months 12 days | ||||
Expected to vest (in shares) | 11,000,000 | ||||
Restricted Stock Units and Performance Share Units | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Stock-based compensation expense | $ 210 | 169 | 143 | ||
Compensation not yet recognized, other than options | $ 491 | ||||
Compensation not yet recognized, period for recognition | 2 years 3 days | ||||
Vested in period, fair value | $ 262 | $ 175 | $ 218 | ||
Employee Stock Option | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Award vesting period | 4 years | ||||
Expiration period | 7 years | ||||
Restricted Stock | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Accelerated compensation cost | $ 27 | ||||
Employee Stock | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Number of shares authorized | 30,000,000 | ||||
Number of shares available for grant | 9,000,000 | ||||
Purchase price of common stock percent | 90.00% | 85.00% | |||
Minimum | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Award vesting period | 3 years | ||||
Maximum | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Award vesting period | 5 years | ||||
CVS Health 2017 Incentive Compensation Plan | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Number of shares authorized | 32,000,000 | ||||
Number of shares available for grant | 26,000,000 | ||||
Aetna Inc 2010 Stock Incentive Plan | |||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Number of shares authorized | 32,000,000 | ||||
Number of shares available for grant | 32,000,000 | ||||
Capital shares reserved for future issuance | 22,000,000 |
Stock-based Employee Incentiv_4
Stock-based Employee Incentive Plans - Valuation and Assumptions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Stock Options and Stock Appreciation Rights | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 2.76% | 2.56% | 1.62% |
Expected volatility | 21.27% | 18.39% | 17.22% |
Risk-free interest rate | 2.77% | 1.77% | 1.24% |
Expected life (in years) | 4 years 9 months 18 days | 4 years 1 month 6 days | 4 years 2 months 12 days |
Weighted-average grant date fair value (in dollars per share) | $ 24.55 | $ 9.43 | $ 13 |
Employee Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 1.45% | 1.24% | 0.88% |
Expected volatility | 28.02% | 22.70% | 20.64% |
Risk-free interest rate | 1.87% | 0.86% | 0.45% |
Expected life (in years) | 15 days | 15 days | 15 days |
Weighted-average grant date fair value (in dollars per share) | $ 12.26 | $ 13.01 | $ 14.98 |
Stock-based Employee Incentiv_5
Stock-based Employee Incentive Plans - Restricted Stock Activity (Details) - Restricted Stock Units and Performance Share Units shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Units | |
Unvested at beginning of period (in shares) | shares | 5,014 |
Granted (in shares) | shares | 10,185 |
Vested (in shares) | shares | (3,757) |
Forfeited (in shares) | shares | (437) |
Unvested at end of period (in shares) | shares | 11,005 |
Weighted average grant date fair value (in dollars per share) | |
Unvested at beginning of year (in dollars per share) | $ / shares | $ 86.92 |
Granted (in dollars per share) | $ / shares | 73.18 |
Vested (in dollars per share) | $ / shares | 68.85 |
Forfeited (in dollars per share) | $ / shares | 76.92 |
Unvested at end of year (in dollars per share) | $ / shares | $ 76.18 |
Stock-based Employee Incentiv_6
Stock-based Employee Incentive Plans - Stock option and SAR Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proceeds from exercise of stock options | $ 242,000 | $ 329,000 | $ 296,000 |
Payments for taxes for net share settlement of equity awards | 97,000 | 71,000 | 72,000 |
Employee Stock Options and Stock Appreciation Rights | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Proceeds from exercise of stock options | 242,000 | 329,000 | 296,000 |
Payments for taxes for net share settlement of equity awards | 97,000 | 71,000 | 72,000 |
Intrinsic value of stock options and SARs exercised | 79,000 | 176,000 | 244,000 |
Fair value of stock options and SARs vested | $ 324,000 | $ 341,000 | $ 298,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Shares, Outstanding at December 31, 2017 | 20,530 | ||
Shares granted | 7,144 | ||
Shares exercised | (2,993) | ||
Shares forfeited | (908) | ||
Shares expired | (864) | ||
Shares, Outstanding at December 31, 2018 | 22,909 | 20,530 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Weighted average exercise price, outstanding at December 31, 2017 ($ per share) | $ 75.32 | ||
Weighted average exercise price, granted ($ per share) | 51.06 | ||
Weighted average exercise price, exercised ($ per share) | 44.62 | ||
Weighted average exercise price, forfeited ($ per share) | 86.97 | ||
Weighted average exercise price, expired ($ per share) | 81.79 | ||
Weighted average exercise price, outstanding at December 31, 2018 ($ per share) | $ 71.15 | $ 75.32 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Weighted average contractual term, outstanding at December 31, 2018 | 4 years 29 days | ||
Aggregate Intrinsic value outstanding at December 31, 2018 | $ 165,245 | ||
Shares exercisable at December 31, 2018 | 11,436 | ||
Weighted average exercise price exercisable at December 31, 2018 | $ 72.69 | ||
Weighted average remaining contractual term exercisable at December 31, 2018 | 2 years 2 months 23 days | ||
Aggregate intrinsic value exercisable at December 31, 2018 | $ 73,784 | ||
Shares vested at December 31, 2018 and expected to vest in the future | 22,532 | ||
Weighted average exercise price vested at December 31, 2018 and expected to vest in the future | $ 71.18 | ||
Weighted average remaining contractual term vested at December 31, 2018 and expected to vest in the future | 4 years 18 days | ||
Aggregate intrinsic value vested at December 31, 2018 and expected to vest in the future | $ 163,596 |
Shareholders' Equity - Repurcha
Shareholders' Equity - Repurchases (Details) - USD ($) shares in Millions | 1 Months Ended | 12 Months Ended | ||||||
Apr. 30, 2017 | Jan. 31, 2017 | Jan. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Aug. 31, 2016 | |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Stock repurchased during the period (in shares) | 55.4 | 47.5 | ||||||
Stock repurchased during the period | $ 4,400,000,000 | $ 4,500,000,000 | ||||||
2016 Repurchase Program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Purchases not to exceed | $ 15,000,000,000 | |||||||
Repurchase authorizations remaining at period end | 13,900,000,000 | |||||||
2014 Repurchase Program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Purchases not to exceed | 10,000,000,000 | |||||||
Repurchase authorizations remaining at period end | $ 0 | |||||||
Accelerated share repurchases agreement amount | $ 725,000,000 | $ 3,600,000,000 | ||||||
Accelerated share repurchases percent of notional amount received in shares | 80.00% | 80.00% | ||||||
Number of shares purchased (in shares) | 36.1 | 6.2 | ||||||
Amount of repurchases under the program | $ 2,900,000,000 | $ 580,000,000 | ||||||
Accelerated share repurchases, maximum number of shares | 9.9 | 9.9 | 1.4 | |||||
Accelerated share repurchases, percent of notional amount in shares to be received at end of program | 20.00% | 20.00% | ||||||
Foreign Exchange Forward | 2014 Repurchase Program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Derivative notional amount | $ 700,000,000 | $ 145,000,000 |
Shareholders' Equity - Dividend
Shareholders' Equity - Dividends (Details) - $ / shares | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 |
Dividends Payable [Line Items] | ||||||||
Total Dividends | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 |
Shareholders' Equity - Statutor
Shareholders' Equity - Statutory Accounting Practices (Details) $ in Millions | 1 Months Ended |
Dec. 31, 2018USD ($) | |
Statutory Accounting Practices [Line Items] | |
Estimated minimum statutory surplus required by regulators | $ 4,991 |
Investments on deposit with regulatory bodies | 630 |
Estimated maximum dividend distributions permitted in 2019 without prior regulatory approval | 480 |
Insurance and HMO | |
Statutory Accounting Practices [Line Items] | |
Combined statutory capital and surplus | 10,100 |
Dividends paid | $ 909 |
Shareholders' Equity NCI (Detai
Shareholders' Equity NCI (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Noncontrolling Interest [Abstract] | ||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 318 | $ 4 |
Other Comprehensive (Loss) In_3
Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | Jan. 01, 2017 | Jan. 01, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | $ 37,695 | $ 36,834 | $ 37,203 | |||
Adoption of new accounting standards (Note 1) | (13) | |||||
Other comprehensive income | 274 | 140 | 53 | |||
Balance at end of period | 58,543 | 37,695 | 36,834 | |||
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-sale, Parent [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | 0 | 0 | 0 | |||
Other comprehensive income (loss), before reclassifications | 97 | 0 | 0 | |||
Amounts reclassified from accumulated other comprehensive (income) loss | 0 | 0 | 0 | |||
Other comprehensive income | 97 | 0 | 0 | |||
Balance at end of period | 97 | 0 | 0 | |||
Other comprehensive income (loss) before reclassifications, pretax | 132 | |||||
Amounts reclassified from accumulated other comprehensive (income) loss, pretax | 1 | |||||
Accumulated Foreign Currency Adjustment Attributable to Parent [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | (129) | (127) | (165) | |||
Other comprehensive income | (29) | (2) | 38 | |||
Balance at end of period | (158) | (129) | (127) | |||
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | (15) | (5) | (7) | |||
Adoption of new accounting standards (Note 1) | $ (3) | $ 0 | $ 0 | |||
Other comprehensive income (loss), before reclassifications | 344 | (11) | 0 | |||
Amounts reclassified from accumulated other comprehensive (income) loss | (14) | 1 | 2 | |||
Other comprehensive income | 330 | (10) | 2 | |||
Balance at end of period | 312 | (15) | (5) | |||
Other comprehensive income (loss) before reclassifications, pretax | 465 | (18) | 0 | |||
Amounts reclassified from accumulated other comprehensive (income) loss, pretax | (19) | 2 | 3 | |||
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member] | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | (21) | (173) | (186) | |||
Adoption of new accounting standards (Note 1) | (4) | 0 | 0 | |||
Other comprehensive income (loss), before reclassifications | (132) | 0 | 0 | |||
Amounts reclassified from accumulated other comprehensive (income) loss | 8 | 152 | 13 | |||
Other comprehensive income | (124) | 152 | 13 | |||
Balance at end of period | (149) | (21) | (173) | |||
Other comprehensive income (loss) before reclassifications, pretax | (178) | 0 | 0 | |||
Amounts reclassified from accumulated other comprehensive (income) loss, pretax | 11 | 249 | 21 | |||
Accumulated Other Comprehensive Income (Loss) | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Balance at beginning of period | (165) | (305) | (358) | |||
Adoption of new accounting standards (Note 1) | (7) | $ (7) | $ 0 | $ 0 | ||
Other comprehensive income | 274 | 140 | 53 | |||
Balance at end of period | $ 102 | $ (165) | $ (305) |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share, Basic and Diluted [Line Items] | |||||||||||
Income (loss) from continuing operations | $ (422) | $ 1,390 | $ (2,562) | $ 998 | $ 3,287 | $ 1,285 | $ 1,097 | $ 962 | $ (596) | $ 6,631 | $ 5,320 |
Income allocated to participating securities | (3) | (24) | (27) | ||||||||
Net (income) loss attributable to noncontrolling interests | 2 | (1) | (2) | ||||||||
Income (loss) from continuing operations attributable to CVS Health | $ (597) | $ 6,606 | $ 5,291 | ||||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||||||
Weighted average shares, basic (in shares) | 1,044 | 1,020 | 1,073 | ||||||||
Effect of dilutive securities (in shares) | 0 | 4 | 6 | ||||||||
Weighted average shares, diluted (in shares) | 1,044 | 1,024 | 1,079 | ||||||||
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | $ (0.37) | $ 1.36 | $ (2.52) | $ 0.98 | $ 3.23 | $ 1.26 | $ 1.07 | $ 0.93 | $ (0.57) | $ 6.48 | $ 4.93 |
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | $ (0.37) | $ 1.36 | $ (2.52) | $ 0.98 | $ 3.22 | $ 1.26 | $ 1.07 | $ 0.92 | $ (0.57) | $ 6.45 | $ 4.91 |
Employee Stock Option | |||||||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 13.2 | 10.4 | 6.7 | ||||||||
Common Equivalent Shares [Member] | |||||||||||
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 3 |
Reinsurance - Narrative (Detail
Reinsurance - Narrative (Details) | 1 Months Ended |
Jan. 31, 2019agreement | |
Reinsurance Disclosures [Abstract] | |
Number of reinsurance contracts entered into | 2 |
Four years reinsurance agreement with unrelated insurer | 4 years |
Reinsurance - Reinsurance Recov
Reinsurance - Reinsurance Recoverables (Details) $ in Millions | Dec. 31, 2018USD ($) |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | $ 4,541 |
Hartford Life And Accident Insurance Company [Member] | |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | 3,470 |
Lincoln Life & Annuity Company of New York | |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | 424 |
Constitution Life | |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | 320 |
VOYA Retirement Insurance and Annuity Company | |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | 186 |
All Other | |
Ceded Credit Risk [Line Items] | |
Total reinsurance recoverables | $ 141 |
Reinsurance - Effects of Reinsu
Reinsurance - Effects of Reinsurance (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Premiums Earned, Net [Abstract] | ||||
Direct | $ 8,365 | |||
Assumed | 38 | |||
Ceded | (219) | |||
Net premiums | 8,184 | |||
Policyholder Benefits and Claims Incurred, Net [Abstract] | ||||
Direct | 6,773 | |||
Assumed | 32 | |||
Ceded | (211) | |||
Net benefit costs | $ 6,594 | $ 6,594 | $ 2,810 | $ 2,179 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Oct. 16, 2018USD ($) | Sep. 30, 2015store | Dec. 31, 2018USD ($)personlease | Mar. 31, 2017USD ($) |
Loss Contingencies [Line Items] | ||||
Guarantor obligations, maximum exposure | $ 250 | |||
Contractual Obligations To Maintain Levels Of Separate Accounts | $ 1,400 | |||
Number of leases guaranteed | lease | 85 | |||
Discounted amount of insurance-related assessment liability | $ 231 | |||
Insurance-related assessment, discount rate | 3.50% | |||
Guaranty liabilities | $ 90 | |||
Number of store locations with subpoenas for documents | store | 8 | |||
Provider Proceedings | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages awarded | $ 150 | |||
CMS Actions | ||||
Loss Contingencies [Line Items] | ||||
Sample size of audit | person | 200 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Aetna Inc. | Customer Concentration Risk | Revenues | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 9.80% | 12.30% | 11.70% |
Segment Reporting - Summarized
Segment Reporting - Summarized financial information of segments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | $ 193,919 | $ 184,765 | $ 177,526 | |||||||||
Net investment income | 660 | 21 | 20 | |||||||||
Total revenues | $ 54,424 | $ 47,490 | $ 46,922 | $ 45,743 | $ 48,391 | $ 46,186 | $ 45,689 | $ 44,520 | $ 194,579 | 194,579 | 184,786 | 177,546 |
Adjusted operating income (loss) | 11,261 | 11,261 | 10,825 | 11,421 | ||||||||
Depreciation and amortization | 2,718 | 2,479 | 2,475 | |||||||||
Additions to property and equipment | 2,123 | 2,049 | 2,279 | |||||||||
Interest income | (536) | 0 | 0 | |||||||||
Proceeds from issuance of 2018 Notes | 44,343 | 0 | 3,455 | |||||||||
Operating Segments | Pharmacy Services | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | 134,736 | 130,822 | 119,267 | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | 134,736 | 134,736 | 130,822 | 119,267 | ||||||||
Adjusted operating income (loss) | 4,955 | 4,955 | 4,628 | 4,380 | ||||||||
Depreciation and amortization | 710 | 710 | 713 | |||||||||
Additions to property and equipment | 326 | 311 | 295 | |||||||||
Co-payments | 11,400 | 10,800 | 10,500 | |||||||||
Operating Segments | Retail/LTC | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | 83,989 | 79,398 | 81,100 | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | 83,989 | 83,989 | 79,398 | 81,100 | ||||||||
Adjusted operating income (loss) | 7,403 | 7,403 | 7,475 | 8,221 | ||||||||
Depreciation and amortization | 1,698 | 1,651 | 1,642 | |||||||||
Additions to property and equipment | 1,350 | 1,398 | 1,732 | |||||||||
Operating Segments | Health Care Benefits | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | 8,904 | 3,582 | 3,069 | |||||||||
Net investment income | 58 | 5 | 2 | |||||||||
Total revenues | 8,962 | 8,962 | 3,587 | 3,071 | ||||||||
Adjusted operating income (loss) | 528 | 528 | 359 | 428 | ||||||||
Depreciation and amortization | 172 | 2 | 1 | |||||||||
Additions to property and equipment | 46 | 0 | 0 | |||||||||
Operating Segments | Corporate/Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | 4 | 0 | 0 | |||||||||
Net investment income | 602 | 16 | 18 | |||||||||
Total revenues | 606 | 606 | 16 | 18 | ||||||||
Adjusted operating income (loss) | (856) | (856) | (896) | (887) | ||||||||
Depreciation and amortization | 138 | 116 | 119 | |||||||||
Additions to property and equipment | 401 | 340 | 252 | |||||||||
Intersegment Eliminations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues from customers | (33,714) | (29,037) | (25,910) | |||||||||
Net investment income | 0 | 0 | 0 | |||||||||
Total revenues | (33,714) | (33,714) | (29,037) | (25,910) | ||||||||
Adjusted operating income (loss) | $ (769) | (769) | (741) | (721) | ||||||||
Depreciation and amortization | 0 | 0 | 0 | |||||||||
Additions to property and equipment | 0 | $ 0 | $ 0 | |||||||||
Senior Notes | Operating Segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Proceeds from issuance of 2018 Notes | 40,000 | |||||||||||
Senior Notes | Operating Segments | Corporate/Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Interest income | $ 536 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of segment financial information adjusted (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 54,424 | $ 47,490 | $ 46,922 | $ 45,743 | $ 48,391 | $ 46,186 | $ 45,689 | $ 44,520 | $ 194,579 | $ 194,579 | $ 184,786 | $ 177,546 |
Cost of products sold | 156,447 | 156,447 | 153,448 | 146,533 | ||||||||
Benefit costs | 6,594 | 6,594 | 2,810 | 2,179 | ||||||||
Operating expenses | 21,368 | 18,809 | 18,448 | |||||||||
Operating income (loss) | $ 824 | 2,574 | (1,373) | 1,996 | 3,114 | 2,504 | 2,121 | 1,799 | 4,021 | 4,021 | 9,538 | 10,386 |
Adjusted operating income (loss) | 11,261 | 11,261 | 10,825 | 11,421 | ||||||||
Goodwill impairment charge | 6,149 | 181 | 0 | |||||||||
Pharmacy Services | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Goodwill impairment charge | 0 | 0 | ||||||||||
Retail/LTC | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Goodwill impairment charge | 6,149 | 181 | ||||||||||
Health Care Benefits | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Goodwill impairment charge | 0 | 0 | ||||||||||
Operating Segments | Pharmacy Services | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 134,736 | 134,736 | 130,822 | 119,267 | ||||||||
Cost of products sold | 128,777 | 125,273 | 113,989 | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 1,352 | 1,249 | 1,135 | |||||||||
Operating income (loss) | 4,607 | 4,300 | 4,143 | |||||||||
Adjusted operating income (loss) | 4,955 | 4,955 | 4,628 | 4,380 | ||||||||
Operating Segments | Retail/LTC | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 83,989 | 83,989 | 79,398 | 81,100 | ||||||||
Cost of products sold | 59,906 | 56,066 | 57,339 | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 17,314 | 16,593 | 16,324 | |||||||||
Operating income (loss) | 620 | 6,558 | 7,437 | |||||||||
Adjusted operating income (loss) | 7,403 | 7,403 | 7,475 | 8,221 | ||||||||
Operating Segments | Health Care Benefits | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 8,962 | 8,962 | 3,587 | 3,071 | ||||||||
Cost of products sold | 147 | 0 | 0 | |||||||||
Benefit costs | 6,678 | 2,810 | 2,179 | |||||||||
Operating expenses | 1,769 | 420 | 465 | |||||||||
Operating income (loss) | 368 | 357 | 427 | |||||||||
Adjusted operating income (loss) | 528 | 528 | 359 | 428 | ||||||||
Operating Segments | Corporate/Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 606 | 606 | 16 | 18 | ||||||||
Cost of products sold | 0 | 0 | 0 | |||||||||
Benefit costs | 22 | 0 | 0 | |||||||||
Operating expenses | 1,389 | 952 | 918 | |||||||||
Operating income (loss) | (805) | (936) | (900) | |||||||||
Adjusted operating income (loss) | (856) | (856) | (896) | (887) | ||||||||
Intersegment Eliminations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | (33,714) | (33,714) | (29,037) | (25,910) | ||||||||
Cost of products sold | (32,383) | (27,891) | (24,795) | |||||||||
Benefit costs | (106) | 0 | 0 | |||||||||
Operating expenses | (456) | (405) | (394) | |||||||||
Operating income (loss) | (769) | (741) | (721) | |||||||||
Adjusted operating income (loss) | (769) | $ (769) | (741) | (721) | ||||||||
As Previously Reported | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 194,579 | 184,765 | 177,526 | |||||||||
Cost of products sold | 156,447 | 153,410 | 146,490 | |||||||||
Benefit costs | 6,594 | 2,810 | 2,179 | |||||||||
Operating expenses | 21,368 | 18,847 | 18,491 | |||||||||
Operating income (loss) | 4,021 | 9,517 | 10,366 | |||||||||
As Previously Reported | Operating Segments | Pharmacy Services | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 134,128 | 130,596 | 119,963 | |||||||||
Cost of products sold | 125,107 | 121,746 | 111,883 | |||||||||
Benefit costs | 2,805 | 2,810 | 2,179 | |||||||||
Operating expenses | 1,517 | 1,285 | 1,225 | |||||||||
Operating income (loss) | 4,699 | 4,755 | 4,676 | |||||||||
As Previously Reported | Operating Segments | Retail/LTC | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 83,989 | 79,398 | 81,100 | |||||||||
Cost of products sold | 59,906 | 56,081 | 57,362 | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 17,314 | 16,667 | 16,436 | |||||||||
Operating income (loss) | 620 | 6,469 | 7,302 | |||||||||
As Previously Reported | Operating Segments | Health Care Benefits | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 5,549 | 0 | 0 | |||||||||
Cost of products sold | 147 | 0 | 0 | |||||||||
Benefit costs | 3,873 | 0 | 0 | |||||||||
Operating expenses | 1,253 | 0 | 0 | |||||||||
Operating income (loss) | 276 | 0 | 0 | |||||||||
As Previously Reported | Operating Segments | Corporate/Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 606 | 0 | 0 | |||||||||
Cost of products sold | 0 | 0 | 0 | |||||||||
Benefit costs | 22 | 0 | 0 | |||||||||
Operating expenses | 1,389 | 966 | 891 | |||||||||
Operating income (loss) | (805) | (966) | (891) | |||||||||
As Previously Reported | Intersegment Eliminations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | (29,693) | (25,229) | (23,537) | |||||||||
Cost of products sold | (28,713) | (24,417) | (22,755) | |||||||||
Benefit costs | (106) | 0 | 0 | |||||||||
Operating expenses | (105) | (71) | (61) | |||||||||
Operating income (loss) | (769) | (741) | (721) | |||||||||
Adjustments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | $ 221 | $ 214 | $ 50 | $ 6 | $ 5 | $ 4 | $ 6 | 0 | 21 | 20 | ||
Cost of products sold | 0 | 38 | 43 | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 0 | (38) | (43) | |||||||||
Operating income (loss) | 0 | 21 | 20 | |||||||||
Adjusted operating income (loss) | 7,240 | 1,287 | 1,035 | |||||||||
Adjustments | Operating Segments | Pharmacy Services | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 608 | 226 | (696) | |||||||||
Cost of products sold | 3,670 | 3,527 | 2,106 | |||||||||
Benefit costs | (2,805) | (2,810) | (2,179) | |||||||||
Operating expenses | (165) | (36) | (90) | |||||||||
Operating income (loss) | (92) | (455) | (533) | |||||||||
Adjusted operating income (loss) | 348 | 328 | 237 | |||||||||
Adjustments | Operating Segments | Retail/LTC | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 0 | 0 | 0 | |||||||||
Cost of products sold | 0 | (15) | (23) | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 0 | (74) | (112) | |||||||||
Operating income (loss) | 0 | 89 | 135 | |||||||||
Adjusted operating income (loss) | 6,783 | 917 | 784 | |||||||||
Adjustments | Operating Segments | Health Care Benefits | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 3,413 | 3,587 | 3,071 | |||||||||
Cost of products sold | 0 | 0 | 0 | |||||||||
Benefit costs | 2,805 | 2,810 | 2,179 | |||||||||
Operating expenses | 516 | 420 | 465 | |||||||||
Operating income (loss) | 92 | 357 | 427 | |||||||||
Adjusted operating income (loss) | 160 | 2 | 1 | |||||||||
Adjustments | Operating Segments | Corporate/Other | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | 0 | 16 | 18 | |||||||||
Cost of products sold | 0 | 0 | 0 | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | 0 | (14) | 27 | |||||||||
Operating income (loss) | 0 | 30 | (9) | |||||||||
Adjusted operating income (loss) | (51) | 40 | 13 | |||||||||
Adjustments | Intersegment Eliminations | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Revenues | (4,021) | (3,808) | (2,373) | |||||||||
Cost of products sold | (3,670) | (3,474) | (2,040) | |||||||||
Benefit costs | 0 | 0 | 0 | |||||||||
Operating expenses | (351) | (334) | (333) | |||||||||
Operating income (loss) | 0 | 0 | 0 | |||||||||
Adjusted operating income (loss) | $ 0 | $ 0 | $ 0 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of operating earnings to net income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||||||||||||
Operating income (GAAP measure) | $ 824 | $ 2,574 | $ (1,373) | $ 1,996 | $ 3,114 | $ 2,504 | $ 2,121 | $ 1,799 | $ 4,021 | $ 4,021 | $ 9,538 | $ 10,386 |
Amortization of intangible assets | 1,006 | 817 | 795 | |||||||||
Acquisition-related transaction and integration costs | 492 | 65 | 291 | |||||||||
Goodwill impairments | 6,149 | 181 | 0 | |||||||||
Impairment of long-lived assets | 43 | 0 | 0 | |||||||||
Loss on divestiture of subsidiary | 86 | 9 | 0 | |||||||||
Interest income on financing for the Aetna Acquisition | (536) | 0 | 0 | |||||||||
Charges in connection with store rationalization | 0 | 215 | 34 | |||||||||
Adjustments to legal reserves in connection with certain legal settlements | 0 | 0 | (85) | |||||||||
Adjusted operating income | $ 11,261 | 11,261 | 10,825 | $ 11,421 | ||||||||
RxCrossroads subsidiary | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Goodwill impairments | 6,149 | $ 181 | ||||||||||
Loss on divestiture of subsidiary | $ 725 |
Quarterly Financial Informati_2
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial information [Line Items] | ||||||||||||
Total revenues | $ 54,424 | $ 47,490 | $ 46,922 | $ 45,743 | $ 48,391 | $ 46,186 | $ 45,689 | $ 44,520 | $ 194,579 | $ 194,579 | $ 184,786 | $ 177,546 |
Operating income (loss) | 824 | 2,574 | (1,373) | 1,996 | 3,114 | 2,504 | 2,121 | 1,799 | 4,021 | 4,021 | 9,538 | 10,386 |
Income (loss) from continuing operations | (422) | 1,390 | (2,562) | 998 | 3,287 | 1,285 | 1,097 | 962 | (596) | 6,631 | 5,320 | |
Net income (loss) attributable to CVS Health | $ (419) | $ 1,390 | $ (2,563) | $ 998 | $ 3,287 | $ 1,285 | $ 1,098 | $ 952 | $ (594) | $ 6,622 | $ 5,317 | |
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | $ (0.37) | $ 1.36 | $ (2.52) | $ 0.98 | $ 3.23 | $ 1.26 | $ 1.07 | $ 0.93 | $ (0.57) | $ 6.48 | $ 4.93 | |
Income (loss) from discontinued operations attributable to CVS Health (in dollars per share) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (0.01) | 0 | (0.01) | 0 | |
Net income (loss) attributable to CVS Health (in dollars per share) | (0.37) | 1.36 | (2.52) | 0.98 | 3.23 | 1.26 | 1.07 | 0.92 | (0.57) | 6.47 | 4.93 | |
Income (loss) from continuing operations attributable to CVS Health (in dollars per share) | (0.37) | 1.36 | (2.52) | 0.98 | 3.22 | 1.26 | 1.07 | 0.92 | (0.57) | 6.45 | 4.91 | |
Income (loss) from discontinued operations attributable to CVS Health (in dollars per share) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (0.01) | 0 | (0.01) | 0 | |
Net income (loss) attributable to CVS Health (in dollars per share) | (0.37) | 1.36 | (2.52) | 0.98 | 3.22 | 1.26 | 1.07 | 0.92 | (0.57) | 6.44 | $ 4.90 | |
Dividends per common share (in dollars per share) | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 2 | $ 2 | ||
Interest expense | $ 2,619 | $ 1,062 | $ 1,078 | |||||||||
Adjustments | ||||||||||||
Quarterly Financial information [Line Items] | ||||||||||||
Total revenues | $ 221 | $ 214 | $ 50 | $ 6 | $ 5 | $ 4 | $ 6 | 0 | 21 | 20 | ||
Operating income (loss) | $ 0 | $ 21 | $ 20 | |||||||||
Interest expense | $ 221 | $ 214 | $ 50 | $ 6 | $ 5 | $ 4 | $ 6 |