Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-01011 | |
Entity Registrant Name | CVS HEALTH CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 05-0494040 | |
Entity Address, Address Line One | One CVS Drive, | |
Entity Address, City or Town | Woonsocket, | |
Entity Address, State or Province | RI | |
Entity Address, Postal Zip Code | 02895 | |
City Area Code | (401) | |
Local Phone Number | 765-1500 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | CVS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,308,913,498 | |
Entity Central Index Key | 0000064803 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Premiums | $ 17,182 | $ 15,539 | $ 51,749 | $ 47,612 |
Net investment income | 204 | 263 | 550 | 805 |
Total revenues | 67,056 | 64,810 | 199,152 | 189,887 |
Operating costs: | ||||
Cost of products sold | 40,940 | 40,437 | 121,529 | 116,654 |
Benefit costs | 14,396 | 12,850 | 40,534 | 39,396 |
Operating expenses | 8,471 | 8,595 | 25,702 | 24,887 |
Total operating costs | 63,807 | 61,882 | 187,765 | 180,937 |
Operating income | 3,249 | 2,928 | 11,387 | 8,950 |
Interest expense | 731 | 747 | 2,229 | 2,301 |
Loss on early extinguishment of debt | 766 | 79 | 766 | 79 |
Other income | (54) | (31) | (153) | (93) |
Income before income tax provision | 1,806 | 2,133 | 8,545 | 6,663 |
Income tax provision | 587 | 604 | 2,328 | 1,776 |
Net income | 1,219 | 1,529 | 6,217 | 4,887 |
Net (income) loss attributable to noncontrolling interests | 5 | 1 | (11) | 0 |
Net income attributable to CVS Health | $ 1,224 | $ 1,530 | $ 6,206 | $ 4,887 |
Net income per share attributable to CVS Health: | ||||
Net income per share attributable to CVS Health, basic (in dollars per share) | $ 0.93 | $ 1.17 | $ 4.74 | $ 3.76 |
Net income per share attributable to CVS Health, diluted (in dollars per share) | $ 0.93 | $ 1.17 | $ 4.72 | $ 3.75 |
Weighted average shares outstanding: | ||||
Weighted average basic shares outstanding (in shares) | 1,310 | 1,302 | 1,308 | 1,300 |
Weighted average diluted shares outstanding (in shares) | 1,315 | 1,305 | 1,314 | 1,303 |
Dividends declared per share (in dollars per share) | $ 0.50 | $ 0.50 | $ 1.50 | $ 1.50 |
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Products | ||||
Revenues: | ||||
Revenues | $ 47,738 | $ 47,149 | $ 141,096 | $ 136,023 |
Services | ||||
Revenues: | ||||
Revenues | $ 1,932 | $ 1,859 | $ 5,757 | $ 5,447 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 1,219 | $ 1,529 | $ 6,217 | $ 4,887 |
Other comprehensive income, net of tax: | ||||
Net unrealized investment gains | 44 | 136 | 257 | 721 |
Foreign currency translation adjustments | 1 | 153 | (5) | 157 |
Net cash flow hedges | (3) | (23) | (15) | (30) |
Pension and other postretirement benefits | 0 | 0 | (1) | 0 |
Other comprehensive income | 42 | 266 | 236 | 848 |
Comprehensive income | 1,261 | 1,795 | 6,453 | 5,735 |
Comprehensive (income) loss attributable to noncontrolling interests | 5 | 1 | (11) | 0 |
Comprehensive income attributable to CVS Health | $ 1,266 | $ 1,796 | $ 6,442 | $ 5,735 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and cash equivalents | $ 9,256 | $ 5,683 |
Investments | 2,831 | 2,373 |
Accounts receivable, net | 23,816 | 19,617 |
Inventories | 17,478 | 17,516 |
Other current assets | 5,830 | 5,113 |
Total current assets | 59,211 | 50,302 |
Long-term investments | 20,216 | 17,314 |
Property and equipment, net | 12,349 | 12,044 |
Operating lease right-of-use assets | 20,484 | 20,860 |
Goodwill | 79,579 | 79,749 |
Intangible assets, net | 31,697 | 33,121 |
Separate accounts assets | 4,793 | 4,459 |
Other assets | 4,569 | 4,600 |
Total assets | 232,898 | 222,449 |
Liabilities: | ||
Accounts payable | 11,677 | 10,492 |
Pharmacy claims and discounts payable | 15,722 | 13,601 |
Health care costs payable | 7,593 | 6,879 |
Policyholders’ funds | 3,964 | 2,991 |
Accrued expenses | 14,329 | 12,133 |
Other insurance liabilities | 1,527 | 1,830 |
Current portion of operating lease liabilities | 1,789 | 1,596 |
Current portion of long-term debt | 5,443 | 3,781 |
Total current liabilities | 62,044 | 53,303 |
Long-term operating lease liabilities | 18,489 | 18,926 |
Long-term debt | 61,552 | 64,699 |
Deferred income taxes | 7,253 | 7,294 |
Separate accounts liabilities | 4,793 | 4,459 |
Other long-term insurance liabilities | 7,135 | 7,436 |
Other long-term liabilities | 2,520 | 2,162 |
Total liabilities | 163,786 | 158,279 |
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; 1,732 shares issued and 1,309 shares outstanding at September 30, 2020 and 1,727 shares issued and 1,302 shares outstanding at December 31, 2019 and capital surplus | 46,388 | 45,972 |
Treasury stock, at cost: 423 shares at September 30, 2020 and 425 shares at December 31, 2019 | (28,164) | (28,235) |
Retained earnings | 49,328 | 45,108 |
Accumulated other comprehensive income | 1,255 | 1,019 |
Total CVS Health shareholders’ equity | 68,807 | 63,864 |
Noncontrolling interests | 305 | 306 |
Total shareholders’ equity | 69,112 | 64,170 |
Total liabilities and shareholders’ equity | $ 232,898 | $ 222,449 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 100,000 | 100,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 3,200,000,000 | 3,200,000,000 |
Common Stock, Shares, Issued | 1,732,000,000 | 1,727,000,000 |
Common Stock, Shares, Outstanding | 1,309,000,000 | 1,302,000,000 |
Treasury Stock, Shares | 423,000,000 | 425,000,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Cash receipts from customers | $ 195,554 | $ 184,519 |
Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (116,590) | (109,958) |
Insurance benefits paid | (40,221) | (38,812) |
Cash paid to other suppliers and employees | (22,185) | (21,411) |
Interest and investment income received | 622 | 756 |
Interest paid | (2,517) | (2,675) |
Income taxes paid | (2,365) | (2,205) |
Net cash provided by operating activities | 12,298 | 10,214 |
Cash flows from investing activities: | ||
Proceeds from sales and maturities of investments | 3,790 | 5,616 |
Purchases of investments | (6,377) | (6,011) |
Purchases of property and equipment | (1,724) | (1,890) |
Acquisitions (net of cash acquired) | (828) | (361) |
Proceeds from sale of subsidiary | 834 | 0 |
Other | 5 | 16 |
Net cash used in investing activities | (4,300) | (2,630) |
Cash flows from financing activities: | ||
Net borrowings of short-term debt | 0 | 350 |
Proceeds from issuance of long-term debt | 7,919 | 3,458 |
Repayments of long-term debt | (10,493) | (8,350) |
Derivative settlements | 7 | 25 |
Dividends paid | (1,980) | (1,952) |
Proceeds from exercise of stock options | 249 | 183 |
Payments for taxes related to net share settlement of equity awards | (75) | (85) |
Other | (33) | 11 |
Net cash used in financing activities | (4,420) | (6,410) |
Net increase in cash, cash equivalents and restricted cash | 3,578 | 1,174 |
Cash, cash equivalents and restricted cash at the beginning of the period | 5,954 | 4,295 |
Cash, cash equivalents and restricted cash at the end of the period | 9,532 | 5,469 |
Reconciliation of net income to net cash provided by operating activities: | ||
Net income | 6,217 | 4,887 |
Adjustments required to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 3,302 | 3,275 |
Stock-based compensation | 288 | 355 |
(Gain) loss on sale of subsidiary | (271) | 205 |
Loss on early extinguishment of debt | 766 | 79 |
Deferred income taxes and other noncash items | (25) | (38) |
Change in operating assets and liabilities, net of effects from acquisitions: | ||
Accounts receivable, net | (3,564) | (2,312) |
Inventories | 45 | 413 |
Other assets | (211) | (374) |
Accounts payable and pharmacy claims and discounts payable | 3,495 | 2,330 |
Health care costs payable and other insurance liabilities | (474) | 535 |
Other liabilities | $ 2,730 | $ 859 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock | Common Stock Including Capital Surplus | Retained Earnings | Accumulated Other Comprehensive Income | Total CVS Health Shareholders’ Equity | Noncontrolling Interests | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings | Cumulative Effect, Period of Adoption, AdjustmentTotal CVS Health Shareholders’ Equity | ||||||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2018 | 1,720 | (425) | [1] | ||||||||||||||
Balance at beginning of period at Dec. 31, 2018 | $ 58,543 | $ (28,228) | [1] | $ 45,440 | [2] | $ 40,911 | $ 102 | $ 58,225 | $ 318 | $ 178 | [3] | $ 178 | [3] | $ 178 | [3] | ||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 1,427 | 1,421 | 1,421 | 6 | |||||||||||||
Other comprehensive income (loss) | 331 | 331 | 331 | ||||||||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||||||||
Stock option activity, stock awards and other | 175 | 175 | [2] | 175 | |||||||||||||
ESPP issuances, net of purchase of treasury shares (in shares) | [1] | 1 | |||||||||||||||
ESPP issuances, net of purchase of treasury shares | 7 | $ 7 | [1] | 7 | |||||||||||||
Common stock dividends | (651) | (651) | (651) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | (4) | (4) | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Mar. 31, 2019 | 1,722 | (424) | [1] | ||||||||||||||
Balance at end of period at Mar. 31, 2019 | 60,006 | $ (28,221) | [1] | 45,615 | [2] | 41,859 | 433 | 59,686 | 320 | ||||||||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2018 | 1,720 | (425) | [1] | ||||||||||||||
Balance at beginning of period at Dec. 31, 2018 | 58,543 | $ (28,228) | [1] | 45,440 | [2] | 40,911 | 102 | 58,225 | 318 | 178 | [3] | 178 | [3] | 178 | [3] | ||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Other comprehensive income (loss) | 848 | ||||||||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2019 | 1,725 | (424) | [1] | ||||||||||||||
Balance at end of period at Sep. 30, 2019 | 62,933 | $ (28,207) | [1] | 45,854 | [2] | 44,017 | 950 | 62,614 | 319 | ||||||||
Shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2019 | 1,722 | (424) | [1] | ||||||||||||||
Balance at beginning of period at Mar. 31, 2019 | 60,006 | $ (28,221) | [1] | 45,615 | [2] | 41,859 | 433 | 59,686 | 320 | ||||||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 1,931 | 1,936 | 1,936 | (5) | |||||||||||||
Other comprehensive income (loss) | 251 | 251 | 251 | ||||||||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||||||||
Stock option activity, stock awards and other | 104 | 104 | [2] | 104 | |||||||||||||
Purchases of treasury shares, net of ESPP issuances (in shares) | [1] | (1) | |||||||||||||||
Purchase of treasury shares, net of ESPP issuances | (36) | $ (36) | [1] | (36) | |||||||||||||
Common stock dividends | (659) | (659) | (659) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | 2 | 2 | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Jun. 30, 2019 | 1,724 | (425) | [1] | ||||||||||||||
Balance at end of period at Jun. 30, 2019 | 61,599 | $ (28,257) | [1] | 45,719 | [2] | 43,136 | 684 | 61,282 | 317 | ||||||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 1,529 | 1,530 | 1,530 | (1) | |||||||||||||
Other comprehensive income (loss) | 266 | 266 | 266 | ||||||||||||||
Stock option activity, stock awards and other (in shares) | 1 | ||||||||||||||||
Stock option activity, stock awards and other | 135 | 135 | [2] | 135 | |||||||||||||
ESPP issuances, net of purchase of treasury shares (in shares) | [1] | 1 | |||||||||||||||
ESPP issuances, net of purchase of treasury shares | 50 | $ 50 | [1] | 50 | |||||||||||||
Common stock dividends | (649) | (649) | (649) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | 3 | 3 | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2019 | 1,725 | (424) | [1] | ||||||||||||||
Balance at end of period at Sep. 30, 2019 | 62,933 | $ (28,207) | [1] | 45,854 | [2] | 44,017 | 950 | 62,614 | 319 | ||||||||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2019 | 1,727 | (425) | [4] | ||||||||||||||
Balance at beginning of period at Dec. 31, 2019 | 64,170 | $ (28,235) | [4] | 45,972 | [5] | 45,108 | 1,019 | 63,864 | 306 | (3) | (3) | (3) | |||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 2,012 | 2,007 | 2,007 | 5 | |||||||||||||
Other comprehensive income (loss) | (332) | (332) | (332) | ||||||||||||||
Stock option activity, stock awards and other (in shares) | 2 | ||||||||||||||||
Stock option activity, stock awards and other | 208 | 208 | [5] | 208 | |||||||||||||
ESPP issuances, net of purchase of treasury shares (in shares) | [4] | 1 | |||||||||||||||
ESPP issuances, net of purchase of treasury shares | 53 | $ 53 | [4] | 53 | |||||||||||||
Common stock dividends | (657) | (657) | (657) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | 23 | 23 | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Mar. 31, 2020 | 1,729 | (424) | [4] | ||||||||||||||
Balance at end of period at Mar. 31, 2020 | 65,474 | $ (28,182) | [4] | 46,180 | [5] | 46,455 | 687 | 65,140 | 334 | ||||||||
Shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2019 | 1,727 | (425) | [4] | ||||||||||||||
Balance at beginning of period at Dec. 31, 2019 | 64,170 | $ (28,235) | [4] | 45,972 | [5] | 45,108 | 1,019 | 63,864 | 306 | $ (3) | $ (3) | $ (3) | |||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Other comprehensive income (loss) | 236 | ||||||||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2020 | 1,732 | (423) | [4] | ||||||||||||||
Balance at end of period at Sep. 30, 2020 | 69,112 | $ (28,164) | [4] | 46,388 | [5] | 49,328 | 1,255 | 68,807 | 305 | ||||||||
Shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2020 | 1,729 | (424) | [4] | ||||||||||||||
Balance at beginning of period at Mar. 31, 2020 | 65,474 | $ (28,182) | [4] | 46,180 | [5] | 46,455 | 687 | 65,140 | 334 | ||||||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 2,986 | 2,975 | 2,975 | 11 | |||||||||||||
Other comprehensive income (loss) | 526 | 526 | 526 | ||||||||||||||
Stock option activity, stock awards and other (in shares) | 3 | ||||||||||||||||
Stock option activity, stock awards and other | 96 | 96 | [5] | 96 | |||||||||||||
Purchases of treasury shares, net of ESPP issuances (in shares) | [4] | (1) | |||||||||||||||
Purchase of treasury shares, net of ESPP issuances | (53) | $ (53) | [4] | (53) | |||||||||||||
Common stock dividends | (662) | (662) | (662) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | (12) | (12) | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Jun. 30, 2020 | 1,732 | (425) | [4] | ||||||||||||||
Balance at end of period at Jun. 30, 2020 | 68,355 | $ (28,235) | [4] | 46,276 | [5] | 48,768 | 1,213 | 68,022 | 333 | ||||||||
Shareholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 1,219 | 1,224 | 1,224 | (5) | |||||||||||||
Other comprehensive income (loss) | 42 | 42 | 42 | ||||||||||||||
Stock option activity, stock awards and other | 112 | 112 | [5] | 112 | |||||||||||||
ESPP issuances, net of purchase of treasury shares (in shares) | [4] | 2 | |||||||||||||||
ESPP issuances, net of purchase of treasury shares | 71 | $ 71 | [4] | 71 | |||||||||||||
Common stock dividends | (664) | (664) | (664) | ||||||||||||||
Other increases (decreases) in noncontrolling interests | (23) | (23) | |||||||||||||||
Shares outstanding, balance at end of period (in shares) at Sep. 30, 2020 | 1,732 | (423) | [4] | ||||||||||||||
Balance at end of period at Sep. 30, 2020 | $ 69,112 | $ (28,164) | [4] | $ 46,388 | [5] | $ 49,328 | $ 1,255 | $ 68,807 | $ 305 | ||||||||
[1] | Treasury shares include 1 million shares held in trust and treasury stock includes $29 million related to shares held in trust as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018. | ||||||||||||||||
[2] | Common stock and capital surplus includes the par value of common stock of $17 million as of September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018. | ||||||||||||||||
[3] | Reflects the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which resulted in an increase to retained earnings of $178 million during the three months ended March 31, 2019. | ||||||||||||||||
[4] | Treasury shares include 1 million shares held in trust and treasury stock includes $29 million related to shares held in trust as of September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019. | ||||||||||||||||
[5] | Common stock and capital surplus includes the par value of common stock of $17 million as of September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019. |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders' Equity (Parentheticals) - USD ($) shares in Millions, $ in Millions | 9 Months Ended | ||||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | ||
Treasury shares held in trust (in shares) | 1 | 1 | |||||||
Treasury Stock, Value, Shares Held In Trust | $ 29 | $ 29 | $ 29 | $ 29 | $ 29 | $ 29 | $ 29 | ||
Common Stock, Value, Issued | 17 | 17 | 17 | $ 17 | 17 | 17 | 17 | 17 | |
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ 69,112 | 68,355 | 65,474 | 64,170 | 62,933 | 61,599 | 60,006 | 58,543 | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | ||||||||
Retained Earnings | |||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ 49,328 | $ 48,768 | $ 46,455 | 45,108 | $ 44,017 | $ 43,136 | $ 41,859 | 40,911 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | (3) | 178 | [1] | ||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | |||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ (3) | $ 178 | [1] | ||||||
[1] | Reflects the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which resulted in an increase to retained earnings of $178 million during the three months ended March 31, 2019. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Description of Business CVS Health Corporation (“CVS Health”), together with its subsidiaries (collectively, the “Company”), has more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 103 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. The Company also serves an estimated 33 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs. The coronavirus disease 2019 (“COVID-19”) pandemic has severely impacted the economies of the U.S. and other countries around the world. The impact of COVID-19 on the Company’s businesses, operating results, cash flows and financial condition in the three and nine months ended September 30, 2020, as well as information regarding certain expected impacts of COVID-19 on the Company, is discussed throughout this Quarterly Report on Form 10-Q. The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services. Retail/LTC Segment The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic ® walk-in medical clinics, provides medical diagnostic testing and conducts long-term care pharmacy (“LTC”) operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to long-term care facilities and other care settings. As of September 30, 2020, the Retail/LTC segment operated more than 9,900 retail locations, approximately 1,100 MinuteClinic locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment The Health Care Benefits segment is one of the nation’s leading diversified health care benefits providers. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services and health information technology products and services. The Health Care Benefits segment also provided workers’ compensation administrative services through its Coventry Health Care Workers’ Compensation business (“Workers’ Compensation business”) prior to the sale of this business on July 31, 2020. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of: • Management and administrative expenses to support the Company’s overall operations, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments, expenses associated with the Company’s investments in its transformation and enterprise modernization programs and acquisition-related integration costs; and • Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of CVS Health and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. Because of the influence of various factors on the Company’s operations, including business combinations, certain holidays and other seasonal influences, net income for any interim period may not be comparable to the same interim period in previous years or necessarily indicative of income for the full year. Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of 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. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. Restricted Cash Restricted cash included in other assets on the unaudited condensed consolidated balance sheets represents amounts held in a trust in one of the Company’s captive insurance companies to satisfy collateral requirements associated with the assignment of certain insurance policies. All restricted cash is invested in time deposits, money market funds or commercial paper. The following is a reconciliation of cash and cash equivalents on the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash on the unaudited condensed consolidated statements of cash flows: In millions September 30, December 31, Cash and cash equivalents $ 9,256 $ 5,683 Restricted cash (included in other assets) 276 271 Total cash, cash equivalents and restricted cash in the statements of cash flows $ 9,532 $ 5,954 Accounts Receivable Accounts receivable are stated net of allowances for credit losses, customer credit allowances, contractual allowances and estimated terminations. Accounts receivable, net is composed of the following: In millions September 30, December 31, Trade receivables $ 7,265 $ 6,717 Vendor and manufacturer receivables 10,528 7,856 Premium receivables 2,852 2,663 Other receivables 3,171 2,381 Total accounts receivable, net $ 23,816 $ 19,617 The Company’s allowance for credit losses was $363 million as of September 30, 2020. When developing an estimate of the Company’s expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The Company’s accounts receivable are short duration in nature and typically settle in less than 30 days. The Company’s allowance for doubtful accounts was $319 million as of December 31, 2019. Revenue Recognition Disaggregation of Revenue The following tables disaggregate the Company’s revenue by major source in each segment for the three and nine months ended September 30, 2020 and 2019: In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2020 Major goods/services lines: Pharmacy $ 35,505 $ 17,608 $ — $ — $ (10,051) $ 43,062 Front Store — 4,740 — — — 4,740 Premiums — — 17,165 17 — 17,182 Net investment income — — 121 83 — 204 Other 206 377 1,412 16 (143) 1,868 Total $ 35,711 $ 22,725 $ 18,698 $ 116 $ (10,194) $ 67,056 Pharmacy Services distribution channel: Pharmacy network (1) $ 21,473 Mail choice (2) 14,032 Other 206 Total $ 35,711 Three Months Ended September 30, 2019 Major goods/services lines: Pharmacy (3) $ 35,872 $ 16,687 $ — $ — $ (9,999) $ 42,560 Front Store — 4,614 — — — 4,614 Premiums — — 15,507 32 — 15,539 Net investment income — — 146 117 — 263 Other (3) 146 165 1,528 3 (8) 1,834 Total $ 36,018 $ 21,466 $ 17,181 $ 152 $ (10,007) $ 64,810 Pharmacy Services distribution channel: Pharmacy network (1) (3) $ 22,411 Mail choice (2) (3) 13,461 Other 146 Total $ 36,018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Nine Months Ended September 30, 2020 Major goods/services lines: Pharmacy $ 104,924 $ 51,833 $ — $ — $ (30,032) $ 126,725 Front Store — 14,601 — — — 14,601 Premiums — — 51,699 50 — 51,749 Net investment income — — 341 209 — 550 Other 659 702 4,324 33 (191) 5,527 Total $ 105,583 $ 67,136 $ 56,364 $ 292 $ (30,223) $ 199,152 Pharmacy Services distribution channel: Pharmacy network (1) $ 63,109 Mail choice (2) 41,815 Other 659 Total $ 105,583 Nine Months Ended September 30, 2019 Major goods/services lines: Pharmacy (3) $ 103,983 $ 49,197 $ — $ — $ (31,416) $ 121,764 Front Store — 14,288 — — — 14,288 Premiums — — 47,543 69 — 47,612 Net investment income — — 458 347 — 805 Other (3) 435 543 4,453 7 (20) 5,418 Total $ 104,418 $ 64,028 $ 52,454 $ 423 $ (31,436) $ 189,887 Pharmacy Services distribution channel: Pharmacy network (1) (3) $ 65,917 Mail choice (2) (3) 38,066 Other 435 Total $ 104,418 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. Maintenance Choice 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 mail choice is defined as claims filled at a Pharmacy Services mail order facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a retail pharmacy, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program. (3) Certain prior year amounts have been reclassified for consistency with the current period presentation. Contract Balances Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, and include ExtraBucks ® Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the customer. In addition, the Company recognizes breakage on Company gift cards based on historical redemption patterns. The following table provides information about receivables and contract liabilities from contracts with customers: In millions September 30, December 31, Trade receivables (included in accounts receivable, net) $ 7,265 $ 6,717 Contract liabilities (included in accrued expenses) 75 73 During the nine months ended September 30, 2020 and 2019, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes: Nine Months Ended In millions 2020 2019 Contract liabilities, beginning of the period $ 73 $ 67 Rewards earnings and gift card issuances 266 269 Redemption and breakage (264) (264) Contract liabilities, end of the period $ 75 $ 72 Health Insurer Fee Since January 1, 2014, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) has imposed an annual premium-based health insurer fee (the “HIF”). The HIF, which is payable each September, is not deductible for federal income tax purposes. There was no expense related to the HIF in the three and nine months ended September 30, 2019, since there was a one-year suspension of the HIF for 2019. In the three and nine months ended September 30, 2020, operating expenses included $255 million and $774 million, respectively, related to the Company’s share of the 2020 HIF. The Company paid approximately $1.0 billion, representing the Company’s portion of the non tax-deductible HIF in 2020. In December 2019, the HIF was repealed for calendar years after 2020. Related Party Transactions The Company has an equity method investment in SureScripts, LLC (“SureScripts”), which operates a clinical health information network. The Company utilizes this clinical health information network in providing services to its client plan members and retail customers. The Company expensed fees for the use of this network of $5 million and $14 million in the three months ended September 30, 2020 and 2019, respectively, and expensed fees for the use of this network of approximately $28 million and $26 million in the nine months ended September 30, 2020 and 2019, 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, LLC (“Heartland”). Heartland operates several LTC pharmacies in four states. Heartland paid the Company $15 million and $20 million for pharmaceutical inventory purchases during the three months ended September 30, 2020 and 2019, respectively, and $58 million and $72 million for pharmaceutical inventory purchases during the nine months ended September 30, 2020 and 2019, respectively. Additionally, the Company performs certain collection functions for Heartland and then transfers those customer cash collections to Heartland. The Company’s investment in and equity in the earnings of Heartland for all periods presented is immaterial. New Accounting Pronouncements Recently Adopted Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires the use of a forward-looking expected credit loss impairment model for trade and other receivables, held-to-maturity debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements. The Company adopted this new accounting standard on January 1, 2020. The Company adopted the credit loss impairment model on a modified retrospective basis and recorded a $3 million cumulative effect adjustment to reduce retained earnings as of the adoption date. The Company adopted the available-for-sale debt security impairment model on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated operating results, cash flows or financial condition. Refer to “Accounts Receivable” above for a discussion of the Company’s expected credit loss impairment policy for its accounts receivable. The following is a discussion of the Company’s available-for-sale debt security impairment policy and expected credit loss impairment policy for mortgage loans under the new credit loss impairment standard: 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 12 months, in which case it is classified as current within the unaudited condensed consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value. If a debt security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the security before recovery of its amortized cost basis, the amortized cost basis of the security is written down to its fair value and the difference is recognized in net income. If a debt security is in an unrealized loss position and the Company does not have the intent to sell and it is more likely than not that the Company will not have to sell such security before recovery of its amortized cost basis, the Company bifurcates the impairment into credit-related and non-credit related components. In evaluating whether a credit related loss exists, the Company considers a variety of factors including: the extent to which the fair value is less than the amortized cost basis; adverse conditions specifically related to the issuer of a security, an industry or geographic area; the payment structure of the security; the failure of the issuer of the security to make scheduled interest or principle payments; and any changes to the rating of the security by a rating agency. The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other comprehensive income. Interest is not accrued on debt securities when management believes the collection of interest is unlikely. The credit-related component is determined by comparing the present value of cash flows expected to be collected from the security, considering all reasonably available information relevant to the collectability of the security, with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, the Company records an allowance for credit losses, which is limited by the amount that the fair value is less than amortized cost basis. For mortgage-backed and other asset-backed securities, the Company recognizes income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The Company’s investment in the security is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the security, with adjustments recognized in net income. Mortgage Loans Mortgage loan investments are valued at the unpaid principal balance, net of an allowance for credit losses. Mortgage loans with a maturity date or a committed prepayment date within twelve months are classified as current on the unaudited condensed consolidated balance sheets. The Company assesses whether its loans share similar risk characteristics and, if so, groups such loans in a risk pool when measuring expected credit losses. The Company considers the following characteristics when evaluating whether its loans share similar risk characteristics: loan-to-value ratios, property type (e.g., office, retail, apartment, industrial), geographic location, vacancy rates and property condition. Credit loss reserves are determined using a loss rate method that multiplies the unpaid principal balance of each loan within a risk pool group by an estimated loss rate percentage. The loss rate percentage considers both the expected loan loss severity and the probability of loan default. For periods where the Company is able to make or obtain reasonable and supportable forecasts of expected economic conditions (e.g., gross domestic product, employment), the Company adjusts its expected loss rates to reflect these forecasted economic conditions. For periods beyond which the Company is able to make or obtain reasonable and supportable forecasts of expected economic conditions, the Company reverts to historical loss rates in determining expected credit losses. Interest income on a potential problem loan (i.e., high probability of default) 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 (i.e., more than 60 days delinquent, in bankruptcy or in process of foreclosure) is recognized on a cash basis. Cash payments on loans in the process of foreclosure are treated as a return of principal. Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The Company adopted this new accounting guidance on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated operating results, cash flows, financial condition or related disclosures. New Accounting Pronouncements Not Yet Adopted Targeted Improvements to the Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This standard requires the Company to review cash flow assumptions for its long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount the Company’s liability for future policy benefits will be based on an estimate of the yield for an upper-medium grade fixed-income instrument with a duration profile matching that of the Company’s liabilities. In addition, this standard changes the amortization method for deferred acquisition costs and requires additional disclosures regarding the long duration insurance contract liabilities in the Company’s interim and annual financial statements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures. |
Divestitures
Divestitures | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Divestiture of Workers’ Compensation Business On July 31, 2020, the Company sold its Workers’ Compensation business for $850 million, subject to a working capital adjustment. The results of this business have historically been reported within the Health Care Benefits segment. The Company recorded a pre-tax gain on the divestiture of $271 million in the three and nine months ended September 30, 2020, which is reflected as a reduction in operating expenses in the Company’s unaudited condensed consolidated statement of operations within the Health Care Benefits segment. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Investments | Investments Total investments at September 30, 2020 and December 31, 2019 were as follows: September 30, 2020 December 31, 2019 In millions Current Long-term Total Current Long-term Total Debt securities available for sale $ 2,578 $ 17,820 $ 20,398 $ 2,251 $ 14,671 $ 16,922 Mortgage loans 253 871 1,124 122 1,091 1,213 Other investments — 1,525 1,525 — 1,552 1,552 Total investments $ 2,831 $ 20,216 $ 23,047 $ 2,373 $ 17,314 $ 19,687 Debt Securities Debt securities available for sale at September 30, 2020 and December 31, 2019 were as follows: In millions Gross Allowance for Credit Losses (1) Net Gross Gross Fair September 30, 2020 Debt securities: U.S. government securities $ 2,455 $ — $ 2,455 $ 146 $ — $ 2,601 States, municipalities and political subdivisions 2,393 — 2,393 150 (3) 2,540 U.S. corporate securities 7,665 (4) 7,661 878 (15) 8,524 Foreign securities 2,479 — 2,479 252 (10) 2,721 Residential mortgage-backed securities 680 — 680 33 — 713 Commercial mortgage-backed securities 930 — 930 82 — 1,012 Other asset-backed securities 2,239 — 2,239 33 (10) 2,262 Redeemable preferred securities 22 — 22 3 — 25 Total debt securities (2) $ 18,863 $ (4) $ 18,859 $ 1,577 $ (38) $ 20,398 December 31, 2019 Debt securities: U.S. government securities $ 1,791 $ — $ 1,791 $ 62 $ (1) $ 1,852 States, municipalities and political subdivisions 2,202 — 2,202 108 (1) 2,309 U.S. corporate securities 7,167 — 7,167 573 (3) 7,737 Foreign securities 2,149 — 2,149 200 (1) 2,348 Residential mortgage-backed securities 508 — 508 25 — 533 Commercial mortgage-backed securities 654 — 654 46 — 700 Other asset-backed securities 1,397 — 1,397 13 (5) 1,405 Redeemable preferred securities 30 — 30 8 — 38 Total debt securities (2) $ 15,898 $ — $ 15,898 $ 1,035 $ (11) $ 16,922 _____________________________________________ (1) Effective January 1, 2020, the Company adopted the available-for-sale debt security impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The new impairment model requires the write down of amortized cost through an allowance for credit losses, rather than through a reduction of the amortized cost basis of the available-for-sale debt security. As the Company adopted the new available-for-sale debt security impairment model on a prospective basis, there was no allowance for credit losses recorded on available-for-sale debt securities at December 31, 2019. (2) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At September 30, 2020, debt securities with a fair value of $928 million, gross unrealized capital gains of $122 million and gross unrealized capital losses of $1 million and at December 31, 2019, debt securities with a fair value of $965 million, gross unrealized capital gains of $83 million and no gross unrealized capital losses were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income. The net amortized cost and fair value of debt securities at September 30, 2020 are 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 Net Fair Due to mature: Less than one year $ 1,588 $ 1,604 One year through five years 6,009 6,329 After five years through ten years 3,466 3,774 Greater than ten years 3,947 4,704 Residential mortgage-backed securities 680 713 Commercial mortgage-backed securities 930 1,012 Other asset-backed securities 2,239 2,262 Total $ 18,859 $ 20,398 Summarized below are the debt securities the Company held at September 30, 2020 and December 31, 2019 that were in an unrealized capital loss position, aggregated by the length of time the investments have been in that position: Less than 12 months Greater than 12 months Total In millions, except number of securities Number of Securities Fair Unrealized Number of Securities Fair Unrealized Number of Securities Fair Unrealized September 30, 2020 Debt securities: U.S. government securities 58 $ 311 $ — — $ — $ — 58 $ 311 $ — States, municipalities and political subdivisions 95 196 3 — — — 95 196 3 U.S. corporate securities 704 639 15 4 2 — 708 641 15 Foreign securities 198 312 10 — — — 198 312 10 Residential mortgage-backed securities 19 70 — 3 — — 22 70 — Commercial mortgage-backed securities 28 106 — — — — 28 106 — Other asset-backed securities 288 543 7 90 80 3 378 623 10 Total debt securities 1,390 $ 2,177 $ 35 97 $ 82 $ 3 1,487 $ 2,259 $ 38 December 31, 2019 Debt securities: U.S. government securities 52 $ 168 $ 1 — $ — $ — 52 $ 168 $ 1 States, municipalities and political subdivisions 66 115 1 2 5 — 68 120 1 U.S. corporate securities 181 305 2 2 — 1 183 305 3 Foreign securities 39 75 1 — — — 39 75 1 Residential mortgage-backed securities 30 16 — 9 — — 39 16 — Commercial mortgage-backed securities 16 49 — — — — 16 49 — Other asset-backed securities 138 254 1 187 182 4 325 436 5 Total debt securities 522 $ 982 $ 6 200 $ 187 $ 5 722 $ 1,169 $ 11 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 business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. Unrealized capital losses at September 30, 2020 were generally caused by the widening of credit spreads on these securities relative to the interest rates on U.S. Treasury securities, driven by the adverse economic conditions in the U.S. and abroad caused by the COVID-19 pandemic. As of September 30, 2020, 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 the anticipated recovery of their amortized cost basis. The maturity dates for debt securities in an unrealized capital loss position at September 30, 2020 were as follows: Supporting Supporting Total In millions Fair Unrealized Fair Unrealized Fair Unrealized Due to mature: Less than one year $ — $ — $ 36 $ — $ 36 $ — One year through five years 1 — 623 7 624 7 After five years through ten years 11 1 493 12 504 13 Greater than ten years 11 — 285 8 296 8 Residential mortgage-backed securities — — 70 — 70 — Commercial mortgage-backed securities 2 — 104 — 106 — Other asset-backed securities 7 — 616 10 623 10 Total $ 32 $ 1 $ 2,227 $ 37 $ 2,259 $ 38 Mortgage Loans The Company’s mortgage loans are collateralized by commercial real estate. During the three and nine months ended September 30, 2020 and 2019, the Company had the following activity in its mortgage loan portfolio: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 New mortgage loans $ 31 $ 12 $ 55 $ 90 Mortgage loans fully repaid 37 56 114 127 Mortgage loans foreclosed — — — — The Company assesses mortgage loans on a regular basis for credit impairments, and assigns a credit quality indicator to each loan. The Company’s credit quality indicator is internally developed and categorizes each loan in its portfolio on a scale from 1 to 7. These indicators are based upon several factors, including current loan-to-value ratios, current and future property cash flow, property condition, market trends, creditworthiness of the borrower and deal structure. • Category 1 - Represents loans of superior quality. • Categories 2 to 4 - Represent loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes. • Categories 5 and 6 - Represent loans where credit risk is not substantial, but these loans warrant management’s close attention. • Category 7 - Represents loans where collections are potentially at risk; if necessary, an impairment is recorded. Based on the Company’s assessments at September 30, 2020 and December 31, 2019, the amortized cost basis of the Company's mortgage loans within each credit quality indicator by year of origination was as follows: Amortized Cost Basis by Year of Origination In millions, except credit quality indicator 2020 2019 2018 2017 2016 Prior Total September 30, 2020 1 $ — $ — $ — $ 23 $ — $ 39 $ 62 2 to 4 57 95 90 129 129 516 1,016 5 and 6 — — 4 4 — 29 37 7 — — — 9 — — 9 Total $ 57 $ 95 $ 94 $ 165 $ 129 $ 584 $ 1,124 December 31, 2019 1 $ — $ — $ 15 $ — $ 43 $ 58 2 to 4 93 93 206 140 611 1,143 5 and 6 — — — — 12 12 7 — — — — — — Total $ 93 $ 93 $ 221 $ 140 $ 666 $ 1,213 Net Investment Income Sources of net investment income for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Debt securities $ 151 $ 145 $ 441 $ 437 Mortgage loans 15 19 45 54 Other investments 37 60 64 163 Gross investment income 203 224 550 654 Investment expenses (8) (10) (25) (28) Net investment income (excluding net realized capital gains or losses) 195 214 525 626 Net realized capital gains (1) 9 49 25 179 Net investment income (2) $ 204 $ 263 $ 550 $ 805 _____________________________________________ (1) Net realized capital gains include credit-related and yield-related impairment losses on debt securities of $1 million and $2 million, respectively, in the three months ended September 30, 2020. Net realized capital gains include credit-related and yield-related impairment losses on debt securities of $4 million and $44 million, respectively, in the nine months ended September 30, 2020. Net realized capital gains are net of other than temporary impairment losses on debt securities of $9 million and $22 million, respectively, in the three and nine months ended September 30, 2019. (2) Net investment income includes $10 million and $31 million for the three and nine months ended September 30, 2020, respectively, and $10 million and $33 million for the three and nine months ended September 30, 2019, respectively, related to investments supporting experience-rated products. Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Proceeds from sales $ 905 $ 1,325 $ 2,324 $ 4,087 Gross realized capital gains 17 55 60 127 Gross realized capital losses 3 9 59 13 |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value The preparation of the Company’s unaudited condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. The Company’s assets and liabilities carried at fair value have been classified within one of three levels of a hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of valuation information (“valuation inputs”) that qualifies a financial asset or liability for each level: • Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets. • Level 2 – Valuation inputs other than Level 1 that are based on observable market data. These include: quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets, valuation inputs that are observable that are not prices (such as interest rates and credit risks) and valuation inputs that are derived from or corroborated by observable markets. • Level 3 – Developed from unobservable data, reflecting the Company’s assumptions. For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 “Fair Value” in the 2019 Form 10-K. There were no financial liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2020 or December 31, 2019. Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2020 and December 31, 2019 were as follows: In millions Level 1 Level 2 Level 3 Total September 30, 2020 Cash and cash equivalents $ 5,670 $ 3,586 $ — $ 9,256 Debt securities: U.S. government securities 2,498 103 — 2,601 States, municipalities and political subdivisions — 2,540 — 2,540 U.S. corporate securities — 8,476 48 8,524 Foreign securities — 2,721 — 2,721 Residential mortgage-backed securities — 713 — 713 Commercial mortgage-backed securities — 1,012 — 1,012 Other asset-backed securities — 2,262 — 2,262 Redeemable preferred securities — 24 1 25 Total debt securities 2,498 17,851 49 20,398 Equity securities 20 — 26 46 Total $ 8,188 $ 21,437 $ 75 $ 29,700 December 31, 2019 Cash and cash equivalents $ 3,397 $ 2,286 $ — $ 5,683 Debt securities: U.S. government securities 1,785 67 — 1,852 States, municipalities and political subdivisions — 2,309 — 2,309 U.S. corporate securities — 7,700 37 7,737 Foreign securities — 2,348 — 2,348 Residential mortgage-backed securities — 533 — 533 Commercial mortgage-backed securities — 700 — 700 Other asset-backed securities — 1,405 — 1,405 Redeemable preferred securities — 26 12 38 Total debt securities 1,785 15,088 49 16,922 Equity securities 34 — 39 73 Total $ 5,216 $ 17,374 $ 88 $ 22,678 During the three and nine months ended September 30, 2020 and 2019, there were no transfers into or out of Level 3. The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the condensed consolidated balance sheets at adjusted cost or contract value at September 30, 2020 and December 31, 2019 were as follows: Carrying Estimated Fair Value In millions Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Mortgage loans $ 1,124 $ — $ — $ 1,148 $ 1,148 Equity securities (1) 146 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 322 — — 370 370 Long-term debt 66,995 76,642 — — 76,642 December 31, 2019 Assets: Mortgage loans $ 1,213 $ — $ — $ 1,239 $ 1,239 Equity securities (1) 149 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 372 — — 392 392 Long-term debt 68,480 74,306 — — 74,306 _____________________________________________ (1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies. Separate Accounts assets relate to the Company’s 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. Separate Accounts financial assets as of September 30, 2020 and December 31, 2019 were as follows: September 30, 2020 December 31, 2019 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2 $ 72 $ — $ 74 $ 2 $ 143 $ — $ 145 Debt securities 1,538 2,576 — 4,114 1,224 2,589 — 3,813 Equity securities — 2 — 2 — 2 — 2 Common/collective trusts — 603 — 603 — 499 — 499 Total $ 1,540 $ 3,253 $ — $ 4,793 $ 1,226 $ 3,233 $ — $ 4,459 |
Health Care Costs Payable
Health Care Costs Payable | 9 Months Ended |
Sep. 30, 2020 | |
Health Care and Other Insurance Liabilities [Abstract] | |
Health Care Costs Payable | Health Care Costs Payable The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2020 and 2019: Nine Months Ended In millions 2020 2019 Health care costs payable, beginning of the period $ 6,879 $ 6,147 Less: Reinsurance recoverables 5 4 Health care costs payable, beginning of the period, net 6,874 6,143 Acquisition 444 — Add: Components of incurred health care costs Current year 40,777 39,657 Prior years (448) (511) Total incurred health care costs (1) 40,329 39,146 Less: Claims paid Current year 34,198 33,032 Prior years 5,865 5,253 Total claims paid 40,063 38,285 Add: Premium deficiency reserve 1 6 Health care costs payable, end of the period, net 7,585 7,010 Add: Reinsurance recoverables 8 4 Health care costs payable, end of the period $ 7,593 $ 7,014 _____________________________________________ (1) Total incurred health care costs for the nine months ended September 30, 2020 and 2019 in the table above exclude (i) $1 million and $6 million, respectively, related to a premium deficiency reserve related to the Company’s Medicaid products, (ii) $31 million and $31 million, respectively, of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets and (iii) $173 million and $213 million, respectively, of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets. The Company’s estimates of prior years’ health care costs payable decreased by $448 million and $511 million, respectively, in the nine months ended September 30, 2020 and 2019, because claims were settled for amounts less than originally estimated (i.e., the amount of claims incurred was lower than originally estimated), primarily due to lower health care cost trends as well as the actual claim submission time being faster than originally assumed (i.e., the Company’s completion factors were higher than originally assumed) in estimating health care costs payable at the end of the prior year. At September 30, 2020, the Company’s liabilities for the ultimate cost of (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 (collectively, “IBNR”) plus expected development on reported claims totaled approximately $5.8 billion. Substantially all of the Company’s liabilities for IBNR plus expected development on reported claims at September 30, 2020 related to the current year. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The following table is a summary of the Company’s borrowings at September 30, 2020 and December 31, 2019: In millions September 30, December 31, Long-term debt 3.125% senior notes due March 2020 $ — $ 723 Floating rate notes due March 2020 (2.515% at December 31, 2019) — 277 2.8% senior notes due July 2020 — 2,750 3.35% senior notes due March 2021 2,038 2,038 Floating rate notes due March 2021 (0.968% at September 30, 2020 and 2.605% at December 31, 2019) 1,000 1,000 4.125% senior notes due May 2021 222 222 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 203 203 5.45% senior notes due June 2021 187 187 3.5% senior notes due July 2022 1,500 1,500 2.75% senior notes due November 2022 1,000 1,000 2.75% senior notes due December 2022 1,250 1,250 4.75% senior notes due December 2022 399 399 3.7% senior notes due March 2023 3,723 6,000 2.8% senior notes due June 2023 1,300 1,300 4% senior notes due December 2023 527 1,250 3.375% senior notes due August 2024 650 650 2.625% senior notes due August 2024 1,000 1,000 3.5% senior notes due November 2024 750 750 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 2,000 5,000 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 3% senior notes due August 2026 750 750 3.625% senior notes due April 2027 750 — 6.25% senior notes due June 2027 372 372 1.3% senior notes due August 2027 1,500 — 4.3% senior notes due March 2028 9,000 9,000 3.25% senior notes due August 2029 1,750 1,750 3.75% senior notes due April 2030 1,500 — 1.75% senior notes due August 2030 1,250 — 4.875% senior notes due July 2035 652 652 6.625% senior notes due June 2036 771 771 6.75% senior notes due December 2037 533 533 4.78% senior notes due March 2038 5,000 5,000 6.125% senior notes due September 2039 447 447 4.125% senior notes due April 2040 1,000 — 2.7% senior notes due August 2040 1,250 — 5.75% senior notes due May 2041 133 133 4.5% senior notes due May 2042 500 500 4.125% senior notes due November 2042 500 500 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 375 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 1,000 5.05% senior notes due March 2048 8,000 8,000 4.25% senior notes due April 2050 750 — Finance lease obligations 1,036 808 Other 276 279 Total debt principal 67,721 69,246 Debt premiums 245 262 Debt discounts and deferred financing costs (971) (1,028) 66,995 68,480 Less: Current portion of long-term debt (5,443) (3,781) Long-term debt $ 61,552 $ 64,699 Long-term Borrowings 2020 Notes On August 21, 2020, the Company issued $1.5 billion aggregate principal amount of 1.3% unsecured senior notes due August 21, 2027, $1.25 billion aggregate principal amount of 1.75% unsecured senior notes due August 21, 2030 and $1.25 billion aggregate principal amount of 2.7% unsecured senior notes due August 21, 2040 (collectively, the “August 2020 Notes”) for total proceeds of approximately $3.97 billion, net of discounts and underwriting fees. On March 31, 2020, the Company issued $750 million aggregate principal amount of 3.625% unsecured senior notes due April 1, 2027, $1.5 billion aggregate principal amount of 3.75% unsecured senior notes due April 1, 2030, $1.0 billion aggregate principal amount of 4.125% unsecured senior notes due April 1, 2040 and $750 million aggregate principal amount of 4.25% unsecured senior notes due April 1, 2050 (collectively, the “March 2020 Notes”) for total proceeds of approximately $3.95 billion, net of discounts and underwriting fees.. The net proceeds of these offerings will be used for general corporate purposes, which may include working capital, capital expenditures, as well as the repurchase and/or repayment of indebtedness. Net proceeds from these offerings that had not been used for these purposes were held in cash or temporarily invested in cash equivalents and short-term investment-grade securities from the date of issuance through September 30, 2020. During March 2020, the Company entered into several interest rate swap transactions to manage interest rate risk. These agreements were designated as cash flow hedges and were used to hedge the exposure to variability in future cash flows resulting from changes in interest rates related to the anticipated issuance of the March 2020 Notes. In connection with the issuance of the March 2020 Notes, the Company terminated all outstanding cash flow hedges. The Company paid a net amount of $7 million to the hedge counterparties upon termination, which was recorded as a loss, net of tax, of $5 million in accumulated other comprehensive income and will be reclassified as interest expense over the life of the March 2020 Notes. See Note 8 ‘‘Other Comprehensive Income’’ for additional information. Early Extinguishments of Debt In August 2020, the Company purchased $6.0 billion of its outstanding senior notes through cash tender offers. The senior notes purchased included the following: $723 million of its 4.0% senior notes due 2023, $2.3 billion of its 3.7% senior notes due 2023 and $3.0 billion of its 4.1% senior notes due 2025. In connection with the purchase of such senior notes, the Company paid a premium of $706 million in excess of the aggregate principal amount of the senior notes that were purchased, wrote-off $47 million of unamortized deferred financing costs and incurred $13 million in fees, for a total loss on early extinguishment of debt of $766 million. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Repurchases On November 2, 2016, CVS Health’s Board of Directors (the “Board”) authorized the 2016 share repurchase program (“2016 Repurchase Program”) for up to $15.0 billion of the Company’s common shares. The 2016 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions. The 2016 Repurchase Program can be modified or terminated by the Board at any time. During the nine months ended September 30, 2020 and 2019, the Company did not repurchase any shares of its common stock. At September 30, 2020, the Company had remaining authorization to repurchase an aggregate of up to approximately $13.9 billion of its common shares under the 2016 Repurchase Program. |
Other Comprehensive Income
Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Other Comprehensive Income | Other Comprehensive Income Shareholders’ equity included the following activity in accumulated other comprehensive income for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Net unrealized investment gains: Beginning of period balance $ 987 $ 682 $ 774 $ 97 Other comprehensive income before reclassifications ($83, $214, $278 and $933 pretax) 52 192 218 799 Amounts reclassified from accumulated other comprehensive income ($(10), $(63), $47 and $(93) pretax) (1) (8) (56) 39 (78) Other comprehensive income 44 136 257 721 End of period balance 1,031 818 1,031 818 Foreign currency translation adjustments: Beginning of period balance (2) (154) 4 (158) Other comprehensive income (loss) before reclassifications 1 (1) (5) 3 Amounts reclassified from accumulated other comprehensive income (loss) (2) — 154 — 154 Other comprehensive income (loss) 1 153 (5) 157 End of period balance (1) (1) (1) (1) Net cash flow hedges: Beginning of period balance 267 305 279 312 Other comprehensive loss before reclassifications ($0, $(25), $(7) and $(25) pretax) — (18) (5) (18) Amounts reclassified from accumulated other comprehensive income ($(4), $(7), $(14) and $(16) pretax) (3) (3) (5) (10) (12) Other comprehensive loss (3) (23) (15) (30) End of period balance 264 282 264 282 Pension and other postretirement benefits: Beginning of period balance (39) (149) (38) (149) Other comprehensive loss before reclassifications ($0, $0, $(8) and $0 pretax) — — (6) — Amounts reclassified from accumulated other comprehensive loss ($0, $0, $7 and $0 pretax) (4) — — 5 — Other comprehensive loss — — (1) — End of period balance (39) (149) (39) (149) Total beginning of period accumulated other comprehensive income 1,213 684 1,019 102 Total other comprehensive income 42 266 236 848 Total end of period accumulated other comprehensive income $ 1,255 $ 950 $ 1,255 $ 950 _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income in the unaudited condensed consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive income (loss) represent the elimination of the cumulative translation adjustment associated with the sale of Onofre, which was sold on July 1, 2019. The loss on the divestiture of Onofre is reflected in operating expenses in the unaudited condensed consolidated statements of operations. (3) Amounts reclassified from accumulated other comprehensive income for specifically identified cash flow hedges are included in interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $15 million, net of tax, in net gains associated with its cash flow hedges into net income within the next 12 months. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Earnings per share is computed using the two-class method. Stock appreciation rights and options to purchase 17 million and 16 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2020, respectively, because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, stock appreciation rights and options to purchase 18 million and 19 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 2019, respectively. The following is a reconciliation of basic and diluted earnings per share for the respective periods: Three Months Ended Nine Months Ended In millions, except per share amounts 2020 2019 2020 2019 Numerator for earnings per share calculation: Net income $ 1,219 $ 1,529 $ 6,217 $ 4,887 Income allocated to participating securities — — — (3) Net (income) loss attributable to noncontrolling interests 5 1 (11) — Net income attributable to CVS Health $ 1,224 $ 1,530 $ 6,206 $ 4,884 Denominator for earnings per share calculation: Weighted average shares, basic 1,310 1,302 1,308 1,300 Effect of dilutive securities 5 3 6 3 Weighted average shares, diluted 1,315 1,305 1,314 1,303 Earnings per share: Basic $ 0.93 $ 1.17 $ 4.74 $ 3.76 Diluted $ 0.93 $ 1.17 $ 4.72 $ 3.75 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies COVID-19 The COVID-19 pandemic continues to evolve. We believe COVID-19’s impact on our businesses, operating results, cash flows and/or financial condition primarily will be driven by the geographies impacted and the severity and duration of the pandemic; the pandemic’s impact on the U.S. and global economies and consumer behavior and health care utilization patterns; and the timing, scope and impact of stimulus legislation as well as other federal, state and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control. As a result, the impact COVID-19 will have on our businesses, operating results, cash flows and/or financial condition is uncertain, but the impact could be adverse and material. COVID-19 also may result in legal and regulatory proceedings, investigations and claims against us. 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 for the initial lease term and any extension thereof pursuant to a renewal option provided for in the lease prior to the time of the disposition. 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, and any significant adverse impact of COVID-19 on such purchasers and/or former subsidiaries increases the risk that the Company will be required to satisfy those obligations. As of September 30, 2020, the Company guaranteed 76 such store leases (excluding the lease guarantees related to Linens ‘n Things, which have been recorded as a liability on the unaudited condensed consolidated balance sheets), with the maximum remaining lease term extending through 2030. 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 and life insurers as well as health insurers. The Company’s assessments generally are based on a formula relating to the Company’s health care premiums in the state compared to the premiums of other insurers. Certain states allow assessments to be recovered over time as offsets to premium taxes. Some states have similar laws relating to HMOs and/or other payors such as not-for-profit consumer-governed health plans established under the ACA. In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and one of its subsidiaries (collectively, “Penn Treaty”) in rehabilitation, an intermediate action before insolvency, and subsequently petitioned a state court to convert the rehabilitation into a liquidation. Penn Treaty was placed in liquidation in March 2017. The Company has recorded a liability for its estimated share of future assessments by applicable life and health insurance guaranty associations. It is reasonably possible that in the future the Company may record a liability and expense relating to other insolvencies which could have a material adverse effect on the Company’s operating results, financial condition and cash flows, and this risk is heightened by any significant adverse impact of the COVID-19 pandemic on the solvency of other insurers, including long-term care insurers and life insurers. 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 limit future offsets. HMOs in certain states in which the Company does business are subject to assessments, including market stabilization and other risk-sharing pools, for which the Company is assessed charges based on incurred claims, demographic membership mix and other factors. The Company establishes liabilities for these assessments based on applicable laws and regulations. In certain states, the ultimate assessments the Company pays are dependent upon the Company’s experience relative to other entities subject to the assessment, and the ultimate liability is not known at the financial statement date. While the ultimate amount of the assessment is dependent upon the experience of all pool participants, the Company believes it has adequate reserves to cover such assessments. Litigation and Regulatory Proceedings The Company is a party to numerous legal proceedings, investigations, audits and claims arising, for the most part, in the ordinary course of its businesses, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial condition. Except as otherwise noted, the Company cannot predict with certainty the timing or outcome of the legal matters described below, and the Company is unable to reasonably estimate a possible loss or range of possible loss in excess of amounts already accrued for these matters. It is reasonably possible that the outcome of such legal matters could be material to the Company. Usual and Customary Litigation The Company is named as a defendant in a number of lawsuits, including the cases below, that allege that the Company’s retail stores overcharged for 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, and related theories. 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 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 the Company on plaintiffs’ claims in their entirety and certified certain subclasses in September 2017. In June 2019, the U.S. Court of Appeals for the Ninth Circuit reversed the U.S. District Court’s grant of summary judgment and reversed the U.S. District Court’s narrowing of the requested class. The Corcoran case is proceeding to a trial on a six state class basis, and trial is scheduled to occur in 2021. 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. State of Mississippi v. CVS Health Corporation, et al. (Circuit Court of DeSoto County, Mississippi, Third Judicial District). In July 2016, the Company was served with a complaint filed on behalf of the State of Mississippi. The complaint alleged that CVS retail pharmacies in Mississippi submitted false claims for reimbursement to the Mississippi Medicaid program by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. In June 2019, the Company’s motion for judgment on the pleadings was granted in part and denied in part. Also in June 2019, the State of Mississippi’s motion to dismiss the Company’s counterclaim for declaratory relief was granted. In April 2020, the Company’s motion to dismiss the State of Mississippi’s second amended complaint was denied. Blue Cross and Blue Shield of Alabama , et al. v. CVS Health Corporation , et al. and Horizon Healthcare Services, Inc. (d/b/a Horizon Blue Cross Blue Shield of New Jersey) et al. v. CVS Health Corporation, et al. (U.S. District Court for the District of Rhode Island). In May 2020, eight Blue Cross Blue Shield entities from six states filed a lawsuit against the Company alleging fraud and other state causes of action premised on a theory that the Company’s retail stores overcharged for prescription drugs by not submitting accurate usual and customary prices, including by not submitting the price available to members of the former CVS Health Savings Pass program. In October 2020, two Horizon Blue Cross Blue Shield entities from New Jersey filed an almost identical lawsuit premised on the same theories. PBM Litigation and Investigations The Company is named as a defendant in a number of lawsuits and is subject to a number of investigations concerning its PBM practices. 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 was consolidated with a similar matter and was proceeding as In re EpiPen ERISA Litigation . In October 2020, the lawsuit was voluntarily dismissed with prejudice following denial of the plaintiffs’ motion for class certification. County of Harris, Texas v. Eli Lilly and Company, et al. (U.S. District Court for the Southern District of Texas). This lawsuit was filed against Caremark, Aetna, the manufacturers of insulin and other PBMs in November 2019 by Harris County. Harris County alleges that it was overcharged for insulin as a result of a “price fixing conspiracy” between the manufacturers and PBMs to artificially increase the price of insulin and other diabetes medications. The complaint alleges violations of RICO and claims that the manufacturers and PBMs engaged in an “Insulin Pricing Scheme” whereby the manufacturers artificially increased the reported prices of their insulin products while “secretly” paying rebates to the PBMs in exchange for preferred treatment on the PBMs’ drug formularies. The Company is defending itself against these claims. In re Direct Purchaser EpiPen Litigation (U.S. District Court for the District of Minnesota). This putative class action (originally captioned as Rochester Drug Cooperative, Inc. v. Mylan Inc., et al. ) was filed in March 2020 against Caremark, other PBMs and the manufacturer of EpiPen products and their authorized generics on behalf of purported classes of direct purchasers of these products. The complaint alleges violations of RICO and claims that rebate agreements between the drug manufacturer and PBMs caused the direct purchasers to pay inflated prices for these drug products. A nearly identical case was separately filed in the same court ( Dakota Drug, Inc. v. Mylan Inc., et al.). The court granted a motion to consolidate the two complaints. The Company is defending itself against these claims. In re Direct Purchaser Insulin Pricing Litigation (U.S. District Court for the District of New Jersey). This putative class action (originally captioned as Rochester Drug Cooperative, Inc. v. Eli Lilly and Co., et al. ) was filed in March 2020 against Caremark, other PBMs and the manufacturers of analog insulin products on behalf of purported classes of direct purchasers of these products. The complaint alleges violations of RICO and claims that rebate agreements between the drug manufacturers and PBMs caused the direct purchasers to pay inflated prices for these drug products. Two nearly identical cases were separately filed in the same court ( FWK Holdings, LLC v. Novo Nordisk, et al. and Value Drug Company v. Eli Lilly & Co., et al. ). The court granted a motion to consolidate all three complaints. The Company is defending itself against these claims. United States ex rel. Behnke v. CVS Caremark Corporation, et al. (U.S. District Court for the Eastern District of Pennsylvania). In April 2018, the Court unsealed a complaint filed in February 2014. The government has declined to intervene in this case. The relator alleges that the Company submitted, or caused to be submitted, to Part D of the Medicare program Prescription Drug Event data and/or Direct and Indirect Remuneration reports that misrepresented true prices paid by the Company’s PBM to pharmacies for drugs dispensed to Part D beneficiaries with prescription benefits administered by the Company’s PBM. In April 2020, the Company’s motion to dismiss was granted in part and denied in part. The Company is defending itself against these claims. The Company has received subpoenas, civil investigative demands (“CIDs”) and other requests for documents and information from, and is being investigated by, Attorneys General of several states regarding its PBM practices, including pricing and rebates. In addition, the Company has received inquiries from congressional committees regarding insulin pricing. The Company has been providing documents and information in response to these subpoenas, CIDs and requests for information. Controlled Substances Litigation, Audits and Subpoenas In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against various defendants by plaintiffs such as counties, cities, hospitals, Indian tribes and third-party payors, alleging claims generally concerning the impacts of widespread prescription opioid abuse. The consolidated multidistrict litigation captioned In re National Prescription Opiate Litigation (MDL No. 2804) is pending in the U.S. District Court for the Northern District of Ohio. This multidistrict litigation presumptively includes hundreds of relevant federal court cases that name the Company as a defendant. A significant number of similar cases that name the Company as a defendant in some capacity are pending in state courts. In addition, the Company has been named as a defendant in similar cases brought by certain state Attorneys General. The Company is defending itself against all such claims. Additionally, the Company has received subpoenas, CIDs and/or other requests for information regarding opioids from state Attorneys General and insurance and other regulators of several states. The Company has been cooperating with the government with respect to these subpoenas, CIDs and other requests for information. The Company routinely is audited by the U.S. Drug Enforcement Administration (the “DEA”). In some instances, the Company is in discussions with the DEA and U.S. Attorney’s Offices concerning allegations that the Company violated certain requirements of the federal Controlled Substances Act. In January 2020, the DOJ served the Company with a DEA administrative subpoena. The subpoena seeks documents relating to practices with respect to prescription opioids and other controlled substances at CVS Pharmacy locations in connection with an investigation concerning potential violations of the federal Controlled Substances Act and the federal False Claims Act. The Company has been cooperating with the government with respect to this subpoena. Prescription Processing Litigation and Investigations U.S. ex rel. Bassan et al. v. Omnicare, Inc. and CVS Health Corp. and U.S. ex rel. Mohajer et al. v. Omnicare, Inc. and CVS Health Corp. (U.S. District Court for the Southern District of New York). In December 2019, the U.S. Attorney’s Office for the Southern District of New York (the “SDNY”) filed complaints-in-intervention in these two previously sealed qui tam cases. With respect to the Bassan complaint, all states and Washington, D.C. have declined to intervene at this time. The government’s investigation related to these complaints included the previously disclosed CID that the Company received in October 2015 from the SDNY concerning the Company’s Omnicare pharmacies’ cycle fill process for assisted living facilities. The complaints allege that for certain non-skilled nursing facilities, Omnicare improperly filled prescriptions beyond one year where a valid prescription did not exist and that these dispensing events violated the federal False Claims Act. The Mohajer relators have amended their complaint to include claims based on similar theories related to certain skilled nursing facilities. The Company is defending itself against these claims. In July 2017, the Company also received a subpoena from the California Department of Insurance requesting documents concerning the Company’s Omnicare pharmacies’ cycle fill process for assisted living facilities. 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 SDNY 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. The Company also has received subpoenas and/or requests for documents and other information from, and been investigated by, state Attorneys General and other state and/or federal regulators, legislators and agencies relating to, and the Company is involved in other litigation regarding, its out-of-network benefit payment and administration practices. It is reasonably possible that others could initiate additional litigation or additional regulatory action against the Company with respect to its out-of-network benefit payment and/or administration practices. CMS Actions The U.S. Centers for Medicare & Medicaid Services (“CMS”) regularly audits the Company’s performance to determine its compliance with CMS’s regulations and its contracts with CMS and to assess the quality of services it provides to Medicare beneficiaries. CMS uses various payment mechanisms to allocate and adjust premium payments to the Company’s and other companies’ Medicare plans by considering the applicable health status of Medicare members as supported by information prepared, maintained and provided by health care providers. The Company collects claim and encounter data from providers and generally relies on providers to appropriately code their submissions to the Company and document their medical records, including the diagnosis data submitted to the Company with claims. CMS pays increased premiums to Medicare Advantage plans and Medicare PDP plans for members who have certain medical conditions identified with specific diagnosis codes. Federal regulators review and audit the providers’ medical records to determine whether those records support the related diagnosis codes that determine the members’ health status and the resulting risk-adjusted premium payments to the Company. In that regard, CMS has instituted risk adjustment data validation (“RADV”) audits of various Medicare Advantage plans, including certain of the Company’s plans, to validate coding practices and supporting medical record documentation maintained by health care providers and the resulting risk adjusted premium payments to the plans. CMS may require the Company to refund premium payments if the Company’s risk adjusted premiums are not properly supported by medical record data. The Office of the Inspector General of Health and Human Services (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 extrapolate 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 extrapolate 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, and the number of RADV audits continues to increase. The Company is currently unable to predict which of its Medicare Advantage contracts will be selected for future audit, the amounts of any retroactive refunds of, or prospective adjustments to, Medicare Advantage premium payments made to the Company, the effect of any such refunds or adjustments on the actuarial soundness of the Company’s Medicare Advantage bids, or whether any RADV audit findings would require the Company to change its method of estimating future premium revenue in future bid submissions to CMS or compromise premium assumptions made in the Company’s bids for prior contract years, the current contract year or future contract years. Any premium or fee refunds or adjustments resulting from regulatory audits, whether as a result of RADV, Public Exchange related or other audits by CMS, the OIG, the U.S. Department of Health and Human Services or otherwise, including audits of the Company’s minimum medical loss ratio (“MLR”) rebates, methodology and/or reports, could be material and could adversely affect the Company’s operating results, cash flows and/or financial condition. Medicare and Medicaid 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. In April 2020, the Company received a CID from the Office of the Washington Attorney General, Medicaid Fraud Control Division, on behalf of the State of Washington and all other states, as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands. The investigation involves, among other things, possible retention of overpayments and possible submission of false claims for Medicaid reimbursement relating to drugs prescribed by providers who were excluded by the applicable federal and/or state Medicaid programs. The Company is cooperating with the government with respect to this investigation. Stockholder Matters The Company and/or its current and/or former directors and/or executive officers are named as defendants in a number of lawsuits and a request for access to information initiated by holders or putative holders of CVS Health common stock. Between February and August 2019, six class action complaints were filed by putative plaintiffs against the Company and certain current and former officers and directors: Anarkat v. CVS Health Corp ., et al. (U.S. District Court for the District of Rhode Island); Labourers’ Pension Fund of Central and Eastern Canada v. CVS Health Corp. , et al. (New York Supreme Court); City of Warren Police and Fire Retirement Sys. v. CVS Health Corp. , et. al. (Rhode Island Superior Court); Cambria Co. Employees Retirement Sys. v. CVS Health Corp. , et al. (New York Supreme Court); Freundlich v. CVS Health Corp. , et al. (Rhode Island Superior Court); and In re CVS Health Corp. Securities Act Litigation (formerly captioned Waterford Twp. Police & Fire Retirement Sys. v. CVS Health Corp. , et al.) (U.S. District Court for the District of Rhode Island). The plaintiffs in these cases assert a variety of causes of action under federal securities laws that are premised on allegations that the defendants made certain omissions and misrepresentations relating to the performance of the Company’s LTC business unit, which allegedly injured investors who acquired CVS Health securities between February 9, 2016 and February 20, 2019. The Labourers’ Pension Fund and Cambria County cases have been consolidated into a single action based on the Labourers’ Pension Fund complaint. The Freundlich and City of Warren cases have been consolidated into In re CVS Health Corp. Securities Litigation and stayed in favor of the earlier-filed Anarkat and Labourers’ Pension Fund cases. The Company is defending itself against these claims. In January 2020 , a derivative complaint was filed against the Company’s directors and current and former executive officers in the U.S. District Court for the District of Rhode Island by a stockholder. Lovoi v. Aguirre, et al. makes allegations similar to those contained the six stockholder class action complaints described above, including that the Company made false or misleading statements about its LTC business unit’s financial health. The Lovoi complaint alleges claims for breach of fiduciary duty against the Company’s directors and certain of its current and former executive officers and for violation of the federal securities laws. The Lovoi complaint seeks damages, restitution and equitable relief on behalf of the Company. The Lovoi case has been stayed pending the resolution of the two federal class action complaints described above. The Company’s directors and current and former executive officers are defending themselves against these claims. In August and September 2020, two ERISA class actions were filed in the U.S. District Court in the District of Connecticut against CVS Health Corp., Aetna Inc., and several current and former executives, directors and/or members of Aetna’s Compensation and Talent Management Committee: Radcliffe v. Aetna Inc., et al. and Flaim v. Aetna Inc., et al. The plaintiffs in these cases assert a variety of causes of action premised on allegations that the defendants breached fiduciary duties and engaged in prohibited transactions relating to participants in the Aetna 401(k) plan’s investment in company stock between December 3, 2017 and February 20, 2019, claiming losses related to the performance of the Company’s LTC business unit. The Company also received a related document request pursuant to ERISA § 104(b). The Company is evaluating these matters. Other Legal and Regulatory Proceedings The Company is also a party to other legal proceedings and is subject to government investigations, inquiries and audits and has received and is cooperating with the government in response to CIDs, subpoenas or similar process from various governmental agencies requesting information, arising, for the most part, in the ordinary course of its businesses. These other legal proceedings and government actions include claims of or relating to bad faith, medical or professional malpractice, claims processing, dispensing of medications, non-compliance with state and federal regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits, provider network structure (including the use of performance-based networks and termination of provider contracts), rescission of insurance coverage, improper disclosure or use of personal information, anticompetitive practices, general contractual matters, product liability, intellectual property litigation and employment litigation. Some of these other legal proceedings are or are purported to be class actions or derivative claims. The Company is defending itself against the claims brought in these matters. Awards to the Company and others of certain government contracts, particularly Medicaid contracts and other contracts with government customers in the Company’s Health Care Benefits segment, frequently are subject to protests by unsuccessful bidders. These protests may result in awards to the Company being reversed, delayed or modified. The loss or delay in implementation of any government contract could adversely affect the Company’s operating results. The Company will continue to defend contract awards it receives. There also continues to be a heightened level of review and/or audit by regulatory authorities and legislators of, and increased litigation regarding, the Company’s and the rest of the health care and related benefits industry’s business and reporting practices, including premium rate increases, utilization management, development and application of medical policies, complaint, grievance and appeal processing, information privacy, provider network structure (including provider network adequacy, the use of performance-based networks and termination of provider contracts), provider directory accuracy, calculation of minimum medical loss ratios and/or payment of related rebates, delegated arrangements, rescission of insurance coverage, limited benefit health products, student health products, pharmacy benefit management practices (including manufacturers’ rebates, pricing, the use of narrow networks and the placement of drugs in formulary tiers), sales practices, customer service practices, vendor oversight and claim payment practices (including payments to out-of-network providers). As a leading national health care company, the Company regularly is the subject of government actions of the types described above. These government actions may prevent or delay the Company from implementing planned premium rate increases and may result, and have resulted, in restrictions on the Company’s businesses, changes to or clarifications of the Company’s business practices, retroactive adjustments to prem |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the Company’s chief operating decision maker (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, which 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. See the reconciliations of 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. The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals: In millions Pharmacy Services (1) Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2020 Revenues from external customers $ 33,492 $ 14,770 $ 18,557 $ 33 $ — $ 66,852 Intersegment revenues 2,219 7,955 20 — (10,194) — Net investment income — — 121 83 — 204 Total revenues 35,711 22,725 18,698 116 (10,194) 67,056 Adjusted operating income (loss) 1,619 1,412 1,080 (303) (186) 3,622 September 30, 2019 Revenues from external customers $ 33,680 $ 13,805 $ 17,027 $ 35 $ — $ 64,547 Intersegment revenues 2,338 7,661 8 — (10,007) — Net investment income — — 146 117 — 263 Total revenues 36,018 21,466 17,181 152 (10,007) 64,810 Adjusted operating income (loss) 1,439 1,516 1,423 (252) (179) 3,947 Nine Months Ended September 30, 2020 Revenues from external customers $ 98,233 $ 44,314 $ 55,972 $ 83 $ — $ 198,602 Intersegment revenues 7,350 22,822 51 — (30,223) — Net investment income — — 341 209 — 550 Total revenues 105,583 67,136 56,364 292 (30,223) 199,152 Adjusted operating income (loss) 4,127 4,371 6,035 (931) (539) 13,063 September 30, 2019 Revenues from external customers $ 95,494 $ 41,536 $ 51,976 $ 76 $ — $ 189,082 Intersegment revenues 8,924 22,492 20 — (31,436) — Net investment income — — 458 347 — 805 Total revenues 104,418 64,028 52,454 423 (31,436) 189,887 Adjusted operating income (loss) 3,682 4,674 4,423 (685) (521) 11,573 _____________________________________________ (1) Total revenues of the Pharmacy Services segment include approximately $2.5 billion and $2.7 billion of retail co-payments for the three months ended September 30, 2020 and 2019, respectively, and $8.5 billion and $8.9 billion of retail co-payments for the nine months ended September 30, 2020 and 2019, respectively. The following are reconciliations of consolidated operating income to adjusted operating income for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Operating income (GAAP measure) $ 3,249 $ 2,928 $ 11,387 $ 8,950 Amortization of intangible assets (1) 587 607 1,751 1,822 Acquisition-related integration costs (2) 57 111 196 365 (Gain) loss on divestiture of subsidiary (3) (271) 205 (271) 205 Store rationalization charges (4) — 96 — 231 Adjusted operating income $ 3,622 $ 3,947 $ 13,063 $ 11,573 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. (2) During the three and nine months ended September 30, 2020 and 2019, acquisition-related integration costs relate to the Aetna Acquisition. The acquisition-related integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Corporate/Other segment. (3) During the three and nine months ended September 30, 2020, the gain on divestiture of subsidiary represents the pre-tax gain on the sale of the Workers’ Compensation business, which the Company sold on July 31, 2020 for approximately $850 million. The gain on divestiture is reflected as a reduction in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Health Care Benefits segment. During the three and nine months ended September 30, 2019, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of Onofre, which occurred on July 1, 2019. The loss on divestiture primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event The ACA established a temporary risk corridor program, which expired at the end of 2016, for qualified individual and small group health insurance plans. Under this program, health insurance companies were to make payments to, or receive payments from, the U.S. Department of Health and Human Services (“HHS”) based on their ratio of allowable costs to target costs (as defined by the ACA). The Company filed a lawsuit in August 2019 to recover the $313 million it was owed under the ACA’s risk corridor program, which had been stayed pending the Supreme Court decision. In April 2020, the U.S. Supreme Court ruled that health insurance companies may sue the federal government for amounts owed as calculated under the ACA’s temporary risk corridor program. At September 30, 2020, the Company did not record any ACA risk corridor receivables because payment was uncertain. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below. Pharmacy Services Segment The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services. Retail/LTC Segment The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic ® walk-in medical clinics, provides medical diagnostic testing and conducts long-term care pharmacy (“LTC”) operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to long-term care facilities and other care settings. As of September 30, 2020, the Retail/LTC segment operated more than 9,900 retail locations, approximately 1,100 MinuteClinic locations as well as online retail pharmacy websites, LTC pharmacies and onsite pharmacies. Health Care Benefits Segment The Health Care Benefits segment is one of the nation’s leading diversified health care benefits providers. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services and health information technology products and services. The Health Care Benefits segment also provided workers’ compensation administrative services through its Coventry Health Care Workers’ Compensation business (“Workers’ Compensation business”) prior to the sale of this business on July 31, 2020. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of: • Management and administrative expenses to support the Company’s overall operations, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments, expenses associated with the Company’s investments in its transformation and enterprise modernization programs and acquisition-related 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 The accompanying unaudited condensed consolidated financial statements of CVS Health and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. Because of the influence of various factors on the Company’s operations, including business combinations, certain holidays and other seasonal influences, net income for any interim period may not be comparable to the same interim period in previous years or necessarily indicative of income for the full year. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed 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. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. |
Restricted Cash | Restricted CashRestricted cash included in other assets on the unaudited condensed consolidated balance sheets represents amounts held in a trust in one of the Company’s captive insurance companies to satisfy collateral requirements associated with the assignment of certain insurance policies. All restricted cash is invested in time deposits, money market funds or commercial paper. |
Accounts Receivable | Accounts ReceivableAccounts receivable are stated net of allowances for credit losses, customer credit allowances, contractual allowances and estimated terminations |
Accounts Receivable, Expected Credit Losses | The Company’s allowance for credit losses was $363 million as of September 30, 2020. When developing an estimate of the Company’s expected credit losses, the Company considers all available relevant information regarding the collectability of cash flows, including historical information, current conditions and reasonable and supportable forecasts of future economic conditions over the contractual life of the receivable. The Company’s accounts receivable are short duration in nature and typically settle in less than 30 days. The Company’s allowance for doubtful accounts was $319 million as of December 31, 2019. |
Revenue Recognition | Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, and include ExtraBucks ® Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the customer. In addition, the Company recognizes breakage on Company gift cards based on historical redemption patterns. |
Health Insurer Fee | Health Insurer FeeSince January 1, 2014, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) has imposed an annual premium-based health insurer fee (the “HIF”). The HIF, which is payable each September, is not deductible for federal income tax purposes. There was no expense related to the HIF in the three and nine months ended September 30, 2019, since there was a one-year suspension of the HIF for 2019. In the three and nine months ended September 30, 2020, operating expenses included $255 million and $774 million, respectively, related to the Company’s share of the 2020 HIF. The Company paid approximately $1.0 billion, representing the Company’s portion of the non tax-deductible HIF in 2020. In December 2019, the HIF was repealed for calendar years after 2020. |
Related Party Transactions | Related Party Transactions The Company has an equity method investment in SureScripts, LLC (“SureScripts”), which operates a clinical health information network. The Company utilizes this clinical health information network in providing services to its client plan members and retail customers. The Company expensed fees for the use of this network of $5 million and $14 million in the three months ended September 30, 2020 and 2019, respectively, and expensed fees for the use of this network of approximately $28 million and $26 million in the nine months ended September 30, 2020 and 2019, 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, LLC (“Heartland”). Heartland operates several LTC pharmacies in four states. Heartland paid the Company $15 million and $20 million for pharmaceutical inventory purchases during the three months ended September 30, 2020 and 2019, respectively, and $58 million and $72 million for pharmaceutical inventory purchases during the nine months ended September 30, 2020 and 2019, respectively. Additionally, the Company performs certain collection functions for Heartland and then transfers those customer cash collections to Heartland. The Company’s investment in and equity in the earnings of Heartland for all periods presented is immaterial. |
New Accounting Pronouncements Recently Adopted and Not Yet Adopted | New Accounting Pronouncements Recently Adopted Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires the use of a forward-looking expected credit loss impairment model for trade and other receivables, held-to-maturity debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements. The Company adopted this new accounting standard on January 1, 2020. The Company adopted the credit loss impairment model on a modified retrospective basis and recorded a $3 million cumulative effect adjustment to reduce retained earnings as of the adoption date. The Company adopted the available-for-sale debt security impairment model on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated operating results, cash flows or financial condition. Refer to “Accounts Receivable” above for a discussion of the Company’s expected credit loss impairment policy for its accounts receivable. The following is a discussion of the Company’s available-for-sale debt security impairment policy and expected credit loss impairment policy for mortgage loans under the new credit loss impairment standard: 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 12 months, in which case it is classified as current within the unaudited condensed consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value. If a debt security is in an unrealized loss position and the Company has the intent to sell the security, or it is more likely than not that the Company will have to sell the security before recovery of its amortized cost basis, the amortized cost basis of the security is written down to its fair value and the difference is recognized in net income. If a debt security is in an unrealized loss position and the Company does not have the intent to sell and it is more likely than not that the Company will not have to sell such security before recovery of its amortized cost basis, the Company bifurcates the impairment into credit-related and non-credit related components. In evaluating whether a credit related loss exists, the Company considers a variety of factors including: the extent to which the fair value is less than the amortized cost basis; adverse conditions specifically related to the issuer of a security, an industry or geographic area; the payment structure of the security; the failure of the issuer of the security to make scheduled interest or principle payments; and any changes to the rating of the security by a rating agency. The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other comprehensive income. Interest is not accrued on debt securities when management believes the collection of interest is unlikely. The credit-related component is determined by comparing the present value of cash flows expected to be collected from the security, considering all reasonably available information relevant to the collectability of the security, with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, the Company records an allowance for credit losses, which is limited by the amount that the fair value is less than amortized cost basis. For mortgage-backed and other asset-backed securities, the Company recognizes income using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The Company’s investment in the security is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the security, with adjustments recognized in net income. Mortgage Loans Mortgage loan investments are valued at the unpaid principal balance, net of an allowance for credit losses. Mortgage loans with a maturity date or a committed prepayment date within twelve months are classified as current on the unaudited condensed consolidated balance sheets. The Company assesses whether its loans share similar risk characteristics and, if so, groups such loans in a risk pool when measuring expected credit losses. The Company considers the following characteristics when evaluating whether its loans share similar risk characteristics: loan-to-value ratios, property type (e.g., office, retail, apartment, industrial), geographic location, vacancy rates and property condition. Credit loss reserves are determined using a loss rate method that multiplies the unpaid principal balance of each loan within a risk pool group by an estimated loss rate percentage. The loss rate percentage considers both the expected loan loss severity and the probability of loan default. For periods where the Company is able to make or obtain reasonable and supportable forecasts of expected economic conditions (e.g., gross domestic product, employment), the Company adjusts its expected loss rates to reflect these forecasted economic conditions. For periods beyond which the Company is able to make or obtain reasonable and supportable forecasts of expected economic conditions, the Company reverts to historical loss rates in determining expected credit losses. Interest income on a potential problem loan (i.e., high probability of default) 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 (i.e., more than 60 days delinquent, in bankruptcy or in process of foreclosure) is recognized on a cash basis. Cash payments on loans in the process of foreclosure are treated as a return of principal. Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The Company adopted this new accounting guidance on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated operating results, cash flows, financial condition or related disclosures. New Accounting Pronouncements Not Yet Adopted Targeted Improvements to the Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This standard requires the Company to review cash flow assumptions for its long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount the Company’s liability for future policy benefits will be based on an estimate of the yield for an upper-medium grade fixed-income instrument with a duration profile matching that of the Company’s liabilities. In addition, this standard changes the amortization method for deferred acquisition costs and requires additional disclosures regarding the long duration insurance contract liabilities in the Company’s interim and annual financial statements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures. Simplifying the Accounting for Income Taxes In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | The following is a reconciliation of cash and cash equivalents on the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash on the unaudited condensed consolidated statements of cash flows: In millions September 30, December 31, Cash and cash equivalents $ 9,256 $ 5,683 Restricted cash (included in other assets) 276 271 Total cash, cash equivalents and restricted cash in the statements of cash flows $ 9,532 $ 5,954 |
Accounts Receivable, Net | Accounts receivable, net is composed of the following: In millions September 30, December 31, Trade receivables $ 7,265 $ 6,717 Vendor and manufacturer receivables 10,528 7,856 Premium receivables 2,852 2,663 Other receivables 3,171 2,381 Total accounts receivable, net $ 23,816 $ 19,617 |
Disaggregation of Revenue | The following tables disaggregate the Company’s revenue by major source in each segment for the three and nine months ended September 30, 2020 and 2019: In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2020 Major goods/services lines: Pharmacy $ 35,505 $ 17,608 $ — $ — $ (10,051) $ 43,062 Front Store — 4,740 — — — 4,740 Premiums — — 17,165 17 — 17,182 Net investment income — — 121 83 — 204 Other 206 377 1,412 16 (143) 1,868 Total $ 35,711 $ 22,725 $ 18,698 $ 116 $ (10,194) $ 67,056 Pharmacy Services distribution channel: Pharmacy network (1) $ 21,473 Mail choice (2) 14,032 Other 206 Total $ 35,711 Three Months Ended September 30, 2019 Major goods/services lines: Pharmacy (3) $ 35,872 $ 16,687 $ — $ — $ (9,999) $ 42,560 Front Store — 4,614 — — — 4,614 Premiums — — 15,507 32 — 15,539 Net investment income — — 146 117 — 263 Other (3) 146 165 1,528 3 (8) 1,834 Total $ 36,018 $ 21,466 $ 17,181 $ 152 $ (10,007) $ 64,810 Pharmacy Services distribution channel: Pharmacy network (1) (3) $ 22,411 Mail choice (2) (3) 13,461 Other 146 Total $ 36,018 In millions Pharmacy Retail/ Health Care Corporate/ Intersegment Consolidated Nine Months Ended September 30, 2020 Major goods/services lines: Pharmacy $ 104,924 $ 51,833 $ — $ — $ (30,032) $ 126,725 Front Store — 14,601 — — — 14,601 Premiums — — 51,699 50 — 51,749 Net investment income — — 341 209 — 550 Other 659 702 4,324 33 (191) 5,527 Total $ 105,583 $ 67,136 $ 56,364 $ 292 $ (30,223) $ 199,152 Pharmacy Services distribution channel: Pharmacy network (1) $ 63,109 Mail choice (2) 41,815 Other 659 Total $ 105,583 Nine Months Ended September 30, 2019 Major goods/services lines: Pharmacy (3) $ 103,983 $ 49,197 $ — $ — $ (31,416) $ 121,764 Front Store — 14,288 — — — 14,288 Premiums — — 47,543 69 — 47,612 Net investment income — — 458 347 — 805 Other (3) 435 543 4,453 7 (20) 5,418 Total $ 104,418 $ 64,028 $ 52,454 $ 423 $ (31,436) $ 189,887 Pharmacy Services distribution channel: Pharmacy network (1) (3) $ 65,917 Mail choice (2) (3) 38,066 Other 435 Total $ 104,418 _____________________________________________ (1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice ® activity, which is included within the mail choice category. Maintenance Choice 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 mail choice is defined as claims filled at a Pharmacy Services mail order facility, which includes specialty mail claims inclusive of Specialty Connect ® claims picked up at a retail pharmacy, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program. (3) Certain prior year amounts have been reclassified for consistency with the current period presentation. |
Contracts With Customers, Assets and Liabilities | The following table provides information about receivables and contract liabilities from contracts with customers: In millions September 30, December 31, Trade receivables (included in accounts receivable, net) $ 7,265 $ 6,717 Contract liabilities (included in accrued expenses) 75 73 During the nine months ended September 30, 2020 and 2019, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes: Nine Months Ended In millions 2020 2019 Contract liabilities, beginning of the period $ 73 $ 67 Rewards earnings and gift card issuances 266 269 Redemption and breakage (264) (264) Contract liabilities, end of the period $ 75 $ 72 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Total Investments | Total investments at September 30, 2020 and December 31, 2019 were as follows: September 30, 2020 December 31, 2019 In millions Current Long-term Total Current Long-term Total Debt securities available for sale $ 2,578 $ 17,820 $ 20,398 $ 2,251 $ 14,671 $ 16,922 Mortgage loans 253 871 1,124 122 1,091 1,213 Other investments — 1,525 1,525 — 1,552 1,552 Total investments $ 2,831 $ 20,216 $ 23,047 $ 2,373 $ 17,314 $ 19,687 |
Debt Securities Available For Sale | Debt securities available for sale at September 30, 2020 and December 31, 2019 were as follows: In millions Gross Allowance for Credit Losses (1) Net Gross Gross Fair September 30, 2020 Debt securities: U.S. government securities $ 2,455 $ — $ 2,455 $ 146 $ — $ 2,601 States, municipalities and political subdivisions 2,393 — 2,393 150 (3) 2,540 U.S. corporate securities 7,665 (4) 7,661 878 (15) 8,524 Foreign securities 2,479 — 2,479 252 (10) 2,721 Residential mortgage-backed securities 680 — 680 33 — 713 Commercial mortgage-backed securities 930 — 930 82 — 1,012 Other asset-backed securities 2,239 — 2,239 33 (10) 2,262 Redeemable preferred securities 22 — 22 3 — 25 Total debt securities (2) $ 18,863 $ (4) $ 18,859 $ 1,577 $ (38) $ 20,398 December 31, 2019 Debt securities: U.S. government securities $ 1,791 $ — $ 1,791 $ 62 $ (1) $ 1,852 States, municipalities and political subdivisions 2,202 — 2,202 108 (1) 2,309 U.S. corporate securities 7,167 — 7,167 573 (3) 7,737 Foreign securities 2,149 — 2,149 200 (1) 2,348 Residential mortgage-backed securities 508 — 508 25 — 533 Commercial mortgage-backed securities 654 — 654 46 — 700 Other asset-backed securities 1,397 — 1,397 13 (5) 1,405 Redeemable preferred securities 30 — 30 8 — 38 Total debt securities (2) $ 15,898 $ — $ 15,898 $ 1,035 $ (11) $ 16,922 _____________________________________________ (1) Effective January 1, 2020, the Company adopted the available-for-sale debt security impairment model under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The new impairment model requires the write down of amortized cost through an allowance for credit losses, rather than through a reduction of the amortized cost basis of the available-for-sale debt security. As the Company adopted the new available-for-sale debt security impairment model on a prospective basis, there was no allowance for credit losses recorded on available-for-sale debt securities at December 31, 2019. (2) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At September 30, 2020, debt securities with a fair value of $928 million, gross unrealized capital gains of $122 million and gross unrealized capital losses of $1 million and at December 31, 2019, debt securities with a fair value of $965 million, gross unrealized capital gains of $83 million and no gross unrealized capital losses were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income. |
Fair Value of Debt Securities by Contractual Maturity | The net amortized cost and fair value of debt securities at September 30, 2020 are 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 Net Fair Due to mature: Less than one year $ 1,588 $ 1,604 One year through five years 6,009 6,329 After five years through ten years 3,466 3,774 Greater than ten years 3,947 4,704 Residential mortgage-backed securities 680 713 Commercial mortgage-backed securities 930 1,012 Other asset-backed securities 2,239 2,262 Total $ 18,859 $ 20,398 |
Debt Securities In An Unrealized Capital Loss Position | Summarized below are the debt securities the Company held at September 30, 2020 and December 31, 2019 that were in an unrealized capital loss position, aggregated by the length of time the investments have been in that position: Less than 12 months Greater than 12 months Total In millions, except number of securities Number of Securities Fair Unrealized Number of Securities Fair Unrealized Number of Securities Fair Unrealized September 30, 2020 Debt securities: U.S. government securities 58 $ 311 $ — — $ — $ — 58 $ 311 $ — States, municipalities and political subdivisions 95 196 3 — — — 95 196 3 U.S. corporate securities 704 639 15 4 2 — 708 641 15 Foreign securities 198 312 10 — — — 198 312 10 Residential mortgage-backed securities 19 70 — 3 — — 22 70 — Commercial mortgage-backed securities 28 106 — — — — 28 106 — Other asset-backed securities 288 543 7 90 80 3 378 623 10 Total debt securities 1,390 $ 2,177 $ 35 97 $ 82 $ 3 1,487 $ 2,259 $ 38 December 31, 2019 Debt securities: U.S. government securities 52 $ 168 $ 1 — $ — $ — 52 $ 168 $ 1 States, municipalities and political subdivisions 66 115 1 2 5 — 68 120 1 U.S. corporate securities 181 305 2 2 — 1 183 305 3 Foreign securities 39 75 1 — — — 39 75 1 Residential mortgage-backed securities 30 16 — 9 — — 39 16 — Commercial mortgage-backed securities 16 49 — — — — 16 49 — Other asset-backed securities 138 254 1 187 182 4 325 436 5 Total debt securities 522 $ 982 $ 6 200 $ 187 $ 5 722 $ 1,169 $ 11 The maturity dates for debt securities in an unrealized capital loss position at September 30, 2020 were as follows: Supporting Supporting Total In millions Fair Unrealized Fair Unrealized Fair Unrealized Due to mature: Less than one year $ — $ — $ 36 $ — $ 36 $ — One year through five years 1 — 623 7 624 7 After five years through ten years 11 1 493 12 504 13 Greater than ten years 11 — 285 8 296 8 Residential mortgage-backed securities — — 70 — 70 — Commercial mortgage-backed securities 2 — 104 — 106 — Other asset-backed securities 7 — 616 10 623 10 Total $ 32 $ 1 $ 2,227 $ 37 $ 2,259 $ 38 |
Activity in Mortgage Loan Portfolio | During the three and nine months ended September 30, 2020 and 2019, the Company had the following activity in its mortgage loan portfolio: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 New mortgage loans $ 31 $ 12 $ 55 $ 90 Mortgage loans fully repaid 37 56 114 127 Mortgage loans foreclosed — — — — |
Mortgage Loan Internal Credit Rating | Based on the Company’s assessments at September 30, 2020 and December 31, 2019, the amortized cost basis of the Company's mortgage loans within each credit quality indicator by year of origination was as follows: Amortized Cost Basis by Year of Origination In millions, except credit quality indicator 2020 2019 2018 2017 2016 Prior Total September 30, 2020 1 $ — $ — $ — $ 23 $ — $ 39 $ 62 2 to 4 57 95 90 129 129 516 1,016 5 and 6 — — 4 4 — 29 37 7 — — — 9 — — 9 Total $ 57 $ 95 $ 94 $ 165 $ 129 $ 584 $ 1,124 December 31, 2019 1 $ — $ — $ 15 $ — $ 43 $ 58 2 to 4 93 93 206 140 611 1,143 5 and 6 — — — — 12 12 7 — — — — — — Total $ 93 $ 93 $ 221 $ 140 $ 666 $ 1,213 |
Net Investment Income | Sources of net investment income for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Debt securities $ 151 $ 145 $ 441 $ 437 Mortgage loans 15 19 45 54 Other investments 37 60 64 163 Gross investment income 203 224 550 654 Investment expenses (8) (10) (25) (28) Net investment income (excluding net realized capital gains or losses) 195 214 525 626 Net realized capital gains (1) 9 49 25 179 Net investment income (2) $ 204 $ 263 $ 550 $ 805 _____________________________________________ (1) Net realized capital gains include credit-related and yield-related impairment losses on debt securities of $1 million and $2 million, respectively, in the three months ended September 30, 2020. Net realized capital gains include credit-related and yield-related impairment losses on debt securities of $4 million and $44 million, respectively, in the nine months ended September 30, 2020. Net realized capital gains are net of other than temporary impairment losses on debt securities of $9 million and $22 million, respectively, in the three and nine months ended September 30, 2019. |
Proceeds and Related Gross Realized Capital Gains and Losses From the Sale of Debt Securities | Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three and nine months ended September 30, 2020 and 2019 were as follows: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Proceeds from sales $ 905 $ 1,325 $ 2,324 $ 4,087 Gross realized capital gains 17 55 60 127 Gross realized capital losses 3 9 59 13 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at September 30, 2020 and December 31, 2019 were as follows: In millions Level 1 Level 2 Level 3 Total September 30, 2020 Cash and cash equivalents $ 5,670 $ 3,586 $ — $ 9,256 Debt securities: U.S. government securities 2,498 103 — 2,601 States, municipalities and political subdivisions — 2,540 — 2,540 U.S. corporate securities — 8,476 48 8,524 Foreign securities — 2,721 — 2,721 Residential mortgage-backed securities — 713 — 713 Commercial mortgage-backed securities — 1,012 — 1,012 Other asset-backed securities — 2,262 — 2,262 Redeemable preferred securities — 24 1 25 Total debt securities 2,498 17,851 49 20,398 Equity securities 20 — 26 46 Total $ 8,188 $ 21,437 $ 75 $ 29,700 December 31, 2019 Cash and cash equivalents $ 3,397 $ 2,286 $ — $ 5,683 Debt securities: U.S. government securities 1,785 67 — 1,852 States, municipalities and political subdivisions — 2,309 — 2,309 U.S. corporate securities — 7,700 37 7,737 Foreign securities — 2,348 — 2,348 Residential mortgage-backed securities — 533 — 533 Commercial mortgage-backed securities — 700 — 700 Other asset-backed securities — 1,405 — 1,405 Redeemable preferred securities — 26 12 38 Total debt securities 1,785 15,088 49 16,922 Equity securities 34 — 39 73 Total $ 5,216 $ 17,374 $ 88 $ 22,678 During the three and nine months ended September 30, 2020 and 2019, there were no transfers into or out of Level 3. |
Fair Value, by Balance Sheet Grouping | The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the condensed consolidated balance sheets at adjusted cost or contract value at September 30, 2020 and December 31, 2019 were as follows: Carrying Estimated Fair Value In millions Level 1 Level 2 Level 3 Total September 30, 2020 Assets: Mortgage loans $ 1,124 $ — $ — $ 1,148 $ 1,148 Equity securities (1) 146 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 322 — — 370 370 Long-term debt 66,995 76,642 — — 76,642 December 31, 2019 Assets: Mortgage loans $ 1,213 $ — $ — $ 1,239 $ 1,239 Equity securities (1) 149 N/A N/A N/A N/A Liabilities: Investment contract liabilities: With a fixed maturity 5 — — 5 5 Without a fixed maturity 372 — — 392 392 Long-term debt 68,480 74,306 — — 74,306 _____________________________________________ |
Schedule of Fair Value of Separate Accounts by Major Category of Investment | Separate Accounts financial assets as of September 30, 2020 and December 31, 2019 were as follows: September 30, 2020 December 31, 2019 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2 $ 72 $ — $ 74 $ 2 $ 143 $ — $ 145 Debt securities 1,538 2,576 — 4,114 1,224 2,589 — 3,813 Equity securities — 2 — 2 — 2 — 2 Common/collective trusts — 603 — 603 — 499 — 499 Total $ 1,540 $ 3,253 $ — $ 4,793 $ 1,226 $ 3,233 $ — $ 4,459 |
Health Care Costs Payable (Tabl
Health Care Costs Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Health Care and Other Insurance Liabilities [Abstract] | |
Schedule of Liability for Unpaid Claims and Claims Adjustment Expense | The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2020 and 2019: Nine Months Ended In millions 2020 2019 Health care costs payable, beginning of the period $ 6,879 $ 6,147 Less: Reinsurance recoverables 5 4 Health care costs payable, beginning of the period, net 6,874 6,143 Acquisition 444 — Add: Components of incurred health care costs Current year 40,777 39,657 Prior years (448) (511) Total incurred health care costs (1) 40,329 39,146 Less: Claims paid Current year 34,198 33,032 Prior years 5,865 5,253 Total claims paid 40,063 38,285 Add: Premium deficiency reserve 1 6 Health care costs payable, end of the period, net 7,585 7,010 Add: Reinsurance recoverables 8 4 Health care costs payable, end of the period $ 7,593 $ 7,014 _____________________________________________ (1) Total incurred health care costs for the nine months ended September 30, 2020 and 2019 in the table above exclude (i) $1 million and $6 million, respectively, related to a premium deficiency reserve related to the Company’s Medicaid products, (ii) $31 million and $31 million, respectively, of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets and (iii) $173 million and $213 million, respectively, of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the Company’s unaudited condensed consolidated balance sheets. |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Company's Borrowings | The following table is a summary of the Company’s borrowings at September 30, 2020 and December 31, 2019: In millions September 30, December 31, Long-term debt 3.125% senior notes due March 2020 $ — $ 723 Floating rate notes due March 2020 (2.515% at December 31, 2019) — 277 2.8% senior notes due July 2020 — 2,750 3.35% senior notes due March 2021 2,038 2,038 Floating rate notes due March 2021 (0.968% at September 30, 2020 and 2.605% at December 31, 2019) 1,000 1,000 4.125% senior notes due May 2021 222 222 2.125% senior notes due June 2021 1,750 1,750 4.125% senior notes due June 2021 203 203 5.45% senior notes due June 2021 187 187 3.5% senior notes due July 2022 1,500 1,500 2.75% senior notes due November 2022 1,000 1,000 2.75% senior notes due December 2022 1,250 1,250 4.75% senior notes due December 2022 399 399 3.7% senior notes due March 2023 3,723 6,000 2.8% senior notes due June 2023 1,300 1,300 4% senior notes due December 2023 527 1,250 3.375% senior notes due August 2024 650 650 2.625% senior notes due August 2024 1,000 1,000 3.5% senior notes due November 2024 750 750 5% senior notes due December 2024 299 299 4.1% senior notes due March 2025 2,000 5,000 3.875% senior notes due July 2025 2,828 2,828 2.875% senior notes due June 2026 1,750 1,750 3% senior notes due August 2026 750 750 3.625% senior notes due April 2027 750 — 6.25% senior notes due June 2027 372 372 1.3% senior notes due August 2027 1,500 — 4.3% senior notes due March 2028 9,000 9,000 3.25% senior notes due August 2029 1,750 1,750 3.75% senior notes due April 2030 1,500 — 1.75% senior notes due August 2030 1,250 — 4.875% senior notes due July 2035 652 652 6.625% senior notes due June 2036 771 771 6.75% senior notes due December 2037 533 533 4.78% senior notes due March 2038 5,000 5,000 6.125% senior notes due September 2039 447 447 4.125% senior notes due April 2040 1,000 — 2.7% senior notes due August 2040 1,250 — 5.75% senior notes due May 2041 133 133 4.5% senior notes due May 2042 500 500 4.125% senior notes due November 2042 500 500 5.3% senior notes due December 2043 750 750 4.75% senior notes due March 2044 375 375 5.125% senior notes due July 2045 3,500 3,500 3.875% senior notes due August 2047 1,000 1,000 5.05% senior notes due March 2048 8,000 8,000 4.25% senior notes due April 2050 750 — Finance lease obligations 1,036 808 Other 276 279 Total debt principal 67,721 69,246 Debt premiums 245 262 Debt discounts and deferred financing costs (971) (1,028) 66,995 68,480 Less: Current portion of long-term debt (5,443) (3,781) Long-term debt $ 61,552 $ 64,699 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | Shareholders’ equity included the following activity in accumulated other comprehensive income for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Net unrealized investment gains: Beginning of period balance $ 987 $ 682 $ 774 $ 97 Other comprehensive income before reclassifications ($83, $214, $278 and $933 pretax) 52 192 218 799 Amounts reclassified from accumulated other comprehensive income ($(10), $(63), $47 and $(93) pretax) (1) (8) (56) 39 (78) Other comprehensive income 44 136 257 721 End of period balance 1,031 818 1,031 818 Foreign currency translation adjustments: Beginning of period balance (2) (154) 4 (158) Other comprehensive income (loss) before reclassifications 1 (1) (5) 3 Amounts reclassified from accumulated other comprehensive income (loss) (2) — 154 — 154 Other comprehensive income (loss) 1 153 (5) 157 End of period balance (1) (1) (1) (1) Net cash flow hedges: Beginning of period balance 267 305 279 312 Other comprehensive loss before reclassifications ($0, $(25), $(7) and $(25) pretax) — (18) (5) (18) Amounts reclassified from accumulated other comprehensive income ($(4), $(7), $(14) and $(16) pretax) (3) (3) (5) (10) (12) Other comprehensive loss (3) (23) (15) (30) End of period balance 264 282 264 282 Pension and other postretirement benefits: Beginning of period balance (39) (149) (38) (149) Other comprehensive loss before reclassifications ($0, $0, $(8) and $0 pretax) — — (6) — Amounts reclassified from accumulated other comprehensive loss ($0, $0, $7 and $0 pretax) (4) — — 5 — Other comprehensive loss — — (1) — End of period balance (39) (149) (39) (149) Total beginning of period accumulated other comprehensive income 1,213 684 1,019 102 Total other comprehensive income 42 266 236 848 Total end of period accumulated other comprehensive income $ 1,255 $ 950 $ 1,255 $ 950 _____________________________________________ (1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income in the unaudited condensed consolidated statements of operations. (2) Amounts reclassified from accumulated other comprehensive income (loss) represent the elimination of the cumulative translation adjustment associated with the sale of Onofre, which was sold on July 1, 2019. The loss on the divestiture of Onofre is reflected in operating expenses in the unaudited condensed consolidated statements of operations. (3) Amounts reclassified from accumulated other comprehensive income for specifically identified cash flow hedges are included in interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $15 million, net of tax, in net gains associated with its cash flow hedges into net income within the next 12 months. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | The following is a reconciliation of basic and diluted earnings per share for the respective periods: Three Months Ended Nine Months Ended In millions, except per share amounts 2020 2019 2020 2019 Numerator for earnings per share calculation: Net income $ 1,219 $ 1,529 $ 6,217 $ 4,887 Income allocated to participating securities — — — (3) Net (income) loss attributable to noncontrolling interests 5 1 (11) — Net income attributable to CVS Health $ 1,224 $ 1,530 $ 6,206 $ 4,884 Denominator for earnings per share calculation: Weighted average shares, basic 1,310 1,302 1,308 1,300 Effect of dilutive securities 5 3 6 3 Weighted average shares, diluted 1,315 1,305 1,314 1,303 Earnings per share: Basic $ 0.93 $ 1.17 $ 4.74 $ 3.76 Diluted $ 0.93 $ 1.17 $ 4.72 $ 3.75 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Summarized Financial Information Of Segments | The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals: In millions Pharmacy Services (1) Retail/ Health Care Corporate/ Intersegment Consolidated Three Months Ended September 30, 2020 Revenues from external customers $ 33,492 $ 14,770 $ 18,557 $ 33 $ — $ 66,852 Intersegment revenues 2,219 7,955 20 — (10,194) — Net investment income — — 121 83 — 204 Total revenues 35,711 22,725 18,698 116 (10,194) 67,056 Adjusted operating income (loss) 1,619 1,412 1,080 (303) (186) 3,622 September 30, 2019 Revenues from external customers $ 33,680 $ 13,805 $ 17,027 $ 35 $ — $ 64,547 Intersegment revenues 2,338 7,661 8 — (10,007) — Net investment income — — 146 117 — 263 Total revenues 36,018 21,466 17,181 152 (10,007) 64,810 Adjusted operating income (loss) 1,439 1,516 1,423 (252) (179) 3,947 Nine Months Ended September 30, 2020 Revenues from external customers $ 98,233 $ 44,314 $ 55,972 $ 83 $ — $ 198,602 Intersegment revenues 7,350 22,822 51 — (30,223) — Net investment income — — 341 209 — 550 Total revenues 105,583 67,136 56,364 292 (30,223) 199,152 Adjusted operating income (loss) 4,127 4,371 6,035 (931) (539) 13,063 September 30, 2019 Revenues from external customers $ 95,494 $ 41,536 $ 51,976 $ 76 $ — $ 189,082 Intersegment revenues 8,924 22,492 20 — (31,436) — Net investment income — — 458 347 — 805 Total revenues 104,418 64,028 52,454 423 (31,436) 189,887 Adjusted operating income (loss) 3,682 4,674 4,423 (685) (521) 11,573 _____________________________________________ (1) Total revenues of the Pharmacy Services segment include approximately $2.5 billion and $2.7 billion of retail co-payments for the three months ended September 30, 2020 and 2019, respectively, and $8.5 billion and $8.9 billion of retail co-payments for the nine months ended September 30, 2020 and 2019, respectively. |
Reconciliation of Operating Earnings to Net Income | The following are reconciliations of consolidated operating income to adjusted operating income for the three and nine months ended September 30, 2020 and 2019: Three Months Ended Nine Months Ended In millions 2020 2019 2020 2019 Operating income (GAAP measure) $ 3,249 $ 2,928 $ 11,387 $ 8,950 Amortization of intangible assets (1) 587 607 1,751 1,822 Acquisition-related integration costs (2) 57 111 196 365 (Gain) loss on divestiture of subsidiary (3) (271) 205 (271) 205 Store rationalization charges (4) — 96 — 231 Adjusted operating income $ 3,622 $ 3,947 $ 13,063 $ 11,573 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. (2) During the three and nine months ended September 30, 2020 and 2019, acquisition-related integration costs relate to the Aetna Acquisition. The acquisition-related integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Corporate/Other segment. (3) During the three and nine months ended September 30, 2020, the gain on divestiture of subsidiary represents the pre-tax gain on the sale of the Workers’ Compensation business, which the Company sold on July 31, 2020 for approximately $850 million. The gain on divestiture is reflected as a reduction in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Health Care Benefits segment. During the three and nine months ended September 30, 2019, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of Onofre, which occurred on July 1, 2019. The loss on divestiture primarily relates to the elimination of the cumulative translation adjustment from accumulated other comprehensive income and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statements of operations within the Retail/LTC segment. |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) person in Millions, patient in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2020USD ($)patientclinicstatepersonbuilding | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)patientSegmentclinicstatepersonbuilding | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | ||
Significant Accounting Policies [Line Items] | |||||||||||
Number of pharmacy plan members | person | 103 | 103 | |||||||||
Number of patients served per year | patient | 1 | 1 | |||||||||
Number of reportable segments | Segment | 4 | ||||||||||
Allowance for credit losses | $ 363 | $ 363 | $ 319 | ||||||||
Health insurer fee | 255 | 774 | |||||||||
Non tax-deductible health insurance fee | 1,000 | ||||||||||
Related party transaction, expenses from transactions with related party | 5 | $ 14 | 28 | $ 26 | |||||||
Related party transaction, other revenues from transactions with related party | 15 | 20 | $ 58 | 72 | |||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | ||||||||||
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected [Extensible List] | us-gaap:AccountingStandardsUpdate201615ProspectiveMember | ||||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ 69,112 | 62,933 | $ 69,112 | 62,933 | $ 68,355 | $ 65,474 | 64,170 | $ 61,599 | $ 60,006 | $ 58,543 | |
Heartland Healthcare Services | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of states in which entity operates | state | 4 | 4 | |||||||||
Retail/ LTC | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of stores | building | 9,900 | 9,900 | |||||||||
Number of walk in medical clinics | clinic | 1,100 | 1,100 | |||||||||
Health Care Benefits | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Number of people served through health insurance products and related services | person | 33 | 33 | |||||||||
Retained Earnings | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ 49,328 | $ 44,017 | $ 49,328 | $ 44,017 | $ 48,768 | $ 46,455 | 45,108 | $ 43,136 | $ 41,859 | 40,911 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | (3) | 178 | [1] | ||||||||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | |||||||||||
Significant Accounting Policies [Line Items] | |||||||||||
Cumulative adjustment to retained earnings as a result of new accounting standard adoption | $ (3) | $ 178 | [1] | ||||||||
[1] | Reflects the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which resulted in an increase to retained earnings of $178 million during the three months ended March 31, 2019. |
Significant Accounting Polici_5
Significant Accounting Policies - Cash and Cash Equivalents, Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 9,256 | $ 5,683 | ||
Restricted cash (included in other assets) | 276 | 271 | ||
Total cash, cash equivalents and restricted cash in the statements of cash flows | $ 9,532 | $ 5,954 | $ 5,469 | $ 4,295 |
Significant Accounting Polici_6
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Trade receivables | $ 7,265 | $ 6,717 |
Vendor and manufacturer receivables | 10,528 | 7,856 |
Premium receivables | 2,852 | 2,663 |
Other receivables | 3,171 | 2,381 |
Total accounts receivable, net | $ 23,816 | $ 19,617 |
Significant Accounting Polici_7
Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net investment income | $ 204 | $ 263 | $ 550 | $ 805 |
Total revenues | 67,056 | 64,810 | 199,152 | 189,887 |
Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 35,711 | 36,018 | 105,583 | 104,418 |
Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 22,725 | 21,466 | 67,136 | 64,028 |
Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 18,698 | 17,181 | 56,364 | 52,454 |
Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net investment income | 83 | 117 | 209 | 347 |
Total revenues | 116 | 152 | 292 | 423 |
Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 43,062 | 42,560 | 126,725 | 121,764 |
Pharmacy | Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Front Store | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,740 | 4,614 | 14,601 | 14,288 |
Front Store | Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17,182 | 15,539 | 51,749 | 47,612 |
Premiums | Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17 | 32 | 50 | 69 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,868 | 1,834 | 5,527 | 5,418 |
Other | Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16 | 3 | 33 | 7 |
Operating Segments | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 35,711 | 36,018 | 105,583 | 104,418 |
Operating Segments | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 22,725 | 21,466 | 67,136 | 64,028 |
Operating Segments | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Net investment income | 121 | 146 | 341 | 458 |
Total revenues | 18,698 | 17,181 | 56,364 | 52,454 |
Operating Segments | Pharmacy | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 35,505 | 35,872 | 104,924 | 103,983 |
Operating Segments | Pharmacy | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17,608 | 16,687 | 51,833 | 49,197 |
Operating Segments | Pharmacy | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating Segments | Front Store | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating Segments | Front Store | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,740 | 4,614 | 14,601 | 14,288 |
Operating Segments | Front Store | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating Segments | Premiums | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17,165 | 15,507 | 51,699 | 47,543 |
Operating Segments | Other | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 206 | 146 | 659 | 435 |
Operating Segments | Other | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 377 | 165 | 702 | 543 |
Operating Segments | Other | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,412 | 1,528 | 4,324 | 4,453 |
Operating Segments | Pharmacy network | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 21,473 | 22,411 | 63,109 | 65,917 |
Operating Segments | Mail choice | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 14,032 | 13,461 | 41,815 | 38,066 |
Operating Segments | Other | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 206 | 146 | 659 | 435 |
Intersegment Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | (10,194) | (10,007) | (30,223) | (31,436) |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | (10,194) | (10,007) | (30,223) | (31,436) |
Intersegment Eliminations | Pharmacy Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,219 | 2,338 | 7,350 | 8,924 |
Intersegment Eliminations | Retail/ LTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 7,955 | 7,661 | 22,822 | 22,492 |
Intersegment Eliminations | Health Care Benefits | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 20 | 8 | 51 | 20 |
Intersegment Eliminations | Corporate/ Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Intersegment Eliminations | Pharmacy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | (10,051) | (9,999) | (30,032) | (31,416) |
Intersegment Eliminations | Front Store | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Intersegment Eliminations | Premiums | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Intersegment Eliminations | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ (143) | $ (8) | $ (191) | $ (20) |
Significant Accounting Polici_8
Significant Accounting Policies - Receivables and Contracted Balances (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Trade receivables | $ 7,265 | $ 6,717 | ||
Contract liabilities (included in accrued expenses) | $ 75 | $ 73 | $ 72 | $ 67 |
Significant Accounting Polici_9
Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Contract liabilities (included in accrued expenses) beginning balance | $ 73 | $ 67 |
Rewards earnings and gift card issuances | 266 | 269 |
Redemption and breakage | (264) | (264) |
Contract liabilities (included in accrued expenses) ending balance | $ 75 | $ 72 |
Divestitures (Details)
Divestitures (Details) $ in Millions | Jul. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jul. 01, 2019store |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of subsidiary | $ 834 | $ 0 | ||||
Gain (loss) on divestiture, pretax | $ 271 | $ (205) | 271 | $ (205) | ||
Discontinued Operations, Disposed of by Sale | Coventry Health Care Workers Compensation business | Health Care Benefits | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Proceeds from sale of subsidiary | $ 850 | |||||
Gain (loss) on divestiture, pretax | 271 | $ 271 | ||||
Discontinued Operations, Disposed of by Sale | Drogaria onofre Ltda. | Retail/ LTC | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of retail pharmacy stores | store | 50 | |||||
Gain (loss) on divestiture, pretax | $ (205) |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Total Investments [Line Items] | ||
Current investments | $ 2,831 | $ 2,373 |
Long-term investments | 20,216 | 17,314 |
Total investments | 23,047 | 19,687 |
Debt securities available for sale | ||
Total Investments [Line Items] | ||
Current investments | 2,578 | 2,251 |
Long-term investments | 17,820 | 14,671 |
Total investments | 20,398 | 16,922 |
Mortgage loans | ||
Total Investments [Line Items] | ||
Current investments | 253 | 122 |
Long-term investments | 871 | 1,091 |
Total investments | 1,124 | 1,213 |
Other investments | ||
Total Investments [Line Items] | ||
Current investments | 0 | 0 |
Long-term investments | 1,525 | 1,552 |
Total investments | $ 1,525 | $ 1,552 |
Investments - Debt Securities (
Investments - Debt Securities (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | $ 18,863,000,000 | $ 15,898,000,000 |
Allowance for Credit Losses | (4,000,000) | 0 |
Net Amortized Cost | 18,859,000,000 | 15,898,000,000 |
Gross Unrealized Gains | 1,577,000,000 | 1,035,000,000 |
Gross Unrealized Losses | (38,000,000) | (11,000,000) |
Fair Value | 20,398,000,000 | 16,922,000,000 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 2,455,000,000 | 1,791,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 2,455,000,000 | 1,791,000,000 |
Gross Unrealized Gains | 146,000,000 | 62,000,000 |
Gross Unrealized Losses | 0 | (1,000,000) |
Fair Value | 2,601,000,000 | 1,852,000,000 |
States, municipalities and political subdivisions | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 2,393,000,000 | 2,202,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 2,393,000,000 | 2,202,000,000 |
Gross Unrealized Gains | 150,000,000 | 108,000,000 |
Gross Unrealized Losses | (3,000,000) | (1,000,000) |
Fair Value | 2,540,000,000 | 2,309,000,000 |
U.S. corporate securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 7,665,000,000 | 7,167,000,000 |
Allowance for Credit Losses | (4,000,000) | 0 |
Net Amortized Cost | 7,661,000,000 | 7,167,000,000 |
Gross Unrealized Gains | 878,000,000 | 573,000,000 |
Gross Unrealized Losses | (15,000,000) | (3,000,000) |
Fair Value | 8,524,000,000 | 7,737,000,000 |
Foreign securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 2,479,000,000 | 2,149,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 2,479,000,000 | 2,149,000,000 |
Gross Unrealized Gains | 252,000,000 | 200,000,000 |
Gross Unrealized Losses | (10,000,000) | (1,000,000) |
Fair Value | 2,721,000,000 | 2,348,000,000 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 680,000,000 | 508,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 680,000,000 | 508,000,000 |
Gross Unrealized Gains | 33,000,000 | 25,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 713,000,000 | 533,000,000 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 930,000,000 | 654,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 930,000,000 | 654,000,000 |
Gross Unrealized Gains | 82,000,000 | 46,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 1,012,000,000 | 700,000,000 |
Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 2,239,000,000 | 1,397,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 2,239,000,000 | 1,397,000,000 |
Gross Unrealized Gains | 33,000,000 | 13,000,000 |
Gross Unrealized Losses | (10,000,000) | (5,000,000) |
Fair Value | 2,262,000,000 | 1,405,000,000 |
Redeemable preferred securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Amortized Cost | 22,000,000 | 30,000,000 |
Allowance for Credit Losses | 0 | 0 |
Net Amortized Cost | 22,000,000 | 30,000,000 |
Gross Unrealized Gains | 3,000,000 | 8,000,000 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 25,000,000 | 38,000,000 |
Supporting experience-rated products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Gross Unrealized Gains | 122,000,000 | 83,000,000 |
Gross Unrealized Losses | (1,000,000) | 0 |
Fair Value | $ 928,000,000 | $ 965,000,000 |
Investments - Debt Securities b
Investments - Debt Securities by Maturity (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Net Amortized Cost | ||
Less than one year | $ 1,588 | |
One year through five years | 6,009 | |
After five years through ten years | 3,466 | |
Greater than ten years | 3,947 | |
Net Amortized Cost | 18,859 | $ 15,898 |
Fair Value | ||
Less than one year | 1,604 | |
One year through five years | 6,329 | |
After five years through ten years | 3,774 | |
Greater than ten years | 4,704 | |
Total | 20,398 | 16,922 |
Residential mortgage-backed securities | ||
Net Amortized Cost | ||
Debt securities, maturity, without single maturity date | 680 | |
Net Amortized Cost | 680 | 508 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 713 | |
Total | 713 | 533 |
Commercial mortgage-backed securities | ||
Net Amortized Cost | ||
Debt securities, maturity, without single maturity date | 930 | |
Net Amortized Cost | 930 | 654 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 1,012 | |
Total | 1,012 | 700 |
Other asset-backed securities | ||
Net Amortized Cost | ||
Debt securities, maturity, without single maturity date | 2,239 | |
Net Amortized Cost | 2,239 | 1,397 |
Fair Value | ||
Debt securities, maturity, without single maturity date | 2,262 | |
Total | $ 2,262 | $ 1,405 |
Investments - Unrealized Loss P
Investments - Unrealized Loss Position (Details) $ in Millions | Sep. 30, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Number of Securities | ||
Number of Securities, Less than 12 months | security | 1,390 | 522 |
Number of Securities, Greater than 12 months | security | 97 | 200 |
Number of Securities | security | 1,487 | 722 |
Fair Value | ||
Fair Value, Less than 12 months | $ 2,177 | $ 982 |
Fair Value, Greater than 12 months | 82 | 187 |
Fair Value | 2,259 | 1,169 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 35 | 6 |
Unrealized Losses, Greater than 12 months | 3 | 5 |
Unrealized Losses | $ 38 | $ 11 |
U.S. government securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 58 | 52 |
Number of Securities, Greater than 12 months | security | 0 | 0 |
Number of Securities | security | 58 | 52 |
Fair Value | ||
Fair Value, Less than 12 months | $ 311 | $ 168 |
Fair Value, Greater than 12 months | 0 | 0 |
Fair Value | 311 | 168 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 0 | 1 |
Unrealized Losses, Greater than 12 months | 0 | 0 |
Unrealized Losses | $ 0 | $ 1 |
States, municipalities and political subdivisions | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 95 | 66 |
Number of Securities, Greater than 12 months | security | 0 | 2 |
Number of Securities | security | 95 | 68 |
Fair Value | ||
Fair Value, Less than 12 months | $ 196 | $ 115 |
Fair Value, Greater than 12 months | 0 | 5 |
Fair Value | 196 | 120 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 3 | 1 |
Unrealized Losses, Greater than 12 months | 0 | 0 |
Unrealized Losses | $ 3 | $ 1 |
U.S. corporate securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 704 | 181 |
Number of Securities, Greater than 12 months | security | 4 | 2 |
Number of Securities | security | 708 | 183 |
Fair Value | ||
Fair Value, Less than 12 months | $ 639 | $ 305 |
Fair Value, Greater than 12 months | 2 | 0 |
Fair Value | 641 | 305 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 15 | 2 |
Unrealized Losses, Greater than 12 months | 0 | 1 |
Unrealized Losses | $ 15 | $ 3 |
Foreign securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 198 | 39 |
Number of Securities, Greater than 12 months | security | 0 | 0 |
Number of Securities | security | 198 | 39 |
Fair Value | ||
Fair Value, Less than 12 months | $ 312 | $ 75 |
Fair Value, Greater than 12 months | 0 | 0 |
Fair Value | 312 | 75 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 10 | 1 |
Unrealized Losses, Greater than 12 months | 0 | 0 |
Unrealized Losses | $ 10 | $ 1 |
Residential mortgage-backed securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 19 | 30 |
Number of Securities, Greater than 12 months | security | 3 | 9 |
Number of Securities | security | 22 | 39 |
Fair Value | ||
Fair Value, Less than 12 months | $ 70 | $ 16 |
Fair Value, Greater than 12 months | 0 | 0 |
Fair Value | 70 | 16 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 0 | 0 |
Unrealized Losses, Greater than 12 months | 0 | 0 |
Unrealized Losses | $ 0 | $ 0 |
Commercial mortgage-backed securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 28 | 16 |
Number of Securities, Greater than 12 months | security | 0 | 0 |
Number of Securities | security | 28 | 16 |
Fair Value | ||
Fair Value, Less than 12 months | $ 106 | $ 49 |
Fair Value, Greater than 12 months | 0 | 0 |
Fair Value | 106 | 49 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 0 | 0 |
Unrealized Losses, Greater than 12 months | 0 | 0 |
Unrealized Losses | $ 0 | $ 0 |
Other asset-backed securities | ||
Number of Securities | ||
Number of Securities, Less than 12 months | security | 288 | 138 |
Number of Securities, Greater than 12 months | security | 90 | 187 |
Number of Securities | security | 378 | 325 |
Fair Value | ||
Fair Value, Less than 12 months | $ 543 | $ 254 |
Fair Value, Greater than 12 months | 80 | 182 |
Fair Value | 623 | 436 |
Unrealized Losses | ||
Unrealized Losses, Less than 12 months | 7 | 1 |
Unrealized Losses, Greater than 12 months | 3 | 4 |
Unrealized Losses | $ 10 | $ 5 |
Investments - Unrealized Loss_2
Investments - Unrealized Loss Position Maturities (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | $ 36 | |
One year through five years | 624 | |
After five years through ten years | 504 | |
Greater than ten years | 296 | |
Fair Value | 2,259 | $ 1,169 |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 7 | |
After five years through ten years | 13 | |
Greater than ten years | 8 | |
Unrealized Losses | 38 | 11 |
Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 70 | |
Fair Value | 70 | 16 |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Unrealized Losses | 0 | 0 |
Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 106 | |
Fair Value | 106 | 49 |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Unrealized Losses | 0 | 0 |
Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 623 | |
Fair Value | 623 | 436 |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 10 | |
Unrealized Losses | 10 | $ 5 |
Supporting experience-rated products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | 0 | |
One year through five years | 1 | |
After five years through ten years | 11 | |
Greater than ten years | 11 | |
Fair Value | 32 | |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 0 | |
After five years through ten years | 1 | |
Greater than ten years | 0 | |
Unrealized Losses | 1 | |
Supporting experience-rated products | Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 0 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting experience-rated products | Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 2 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting experience-rated products | Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 7 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting remaining products | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than one year | 36 | |
One year through five years | 623 | |
After five years through ten years | 493 | |
Greater than ten years | 285 | |
Fair Value | 2,227 | |
Unrealized Losses | ||
Less than one year | 0 | |
One year through five years | 7 | |
After five years through ten years | 12 | |
Greater than ten years | 8 | |
Unrealized Losses | 37 | |
Supporting remaining products | Residential mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 70 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting remaining products | Commercial mortgage-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 104 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | 0 | |
Supporting remaining products | Other asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities, maturity, without single maturity date, fair value | 616 | |
Unrealized Losses | ||
Debt securities, maturity, without single maturity date, unrealized losses | $ 10 |
Investments - Mortgage Loans (D
Investments - Mortgage Loans (Details) - Commercial Real Estate - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Mortgage Loans on Real Estate [Line Items] | ||||
New mortgage loans | $ 31 | $ 12 | $ 55 | $ 90 |
Mortgage loans fully repaid | 37 | 56 | 114 | 127 |
Mortgage loans foreclosed | $ 0 | $ 0 | $ 0 | $ 0 |
Investments - Mortgage Loans Cr
Investments - Mortgage Loans Credit Ratings Indicator (Details) - Commercial Real Estate - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | $ 1,124 | $ 1,213 |
Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 62 | 58 |
Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 1,016 | 1,143 |
Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 37 | 12 |
Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 9 | 0 |
2020 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 57 | |
2020 | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | |
2020 | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 57 | |
2020 | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | |
2020 | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | |
2019 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 95 | 93 |
2019 | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2019 | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 95 | 93 |
2019 | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2019 | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2018 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 94 | 93 |
2018 | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2018 | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 90 | 93 |
2018 | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 4 | 0 |
2018 | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2017 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 165 | 221 |
2017 | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 23 | 15 |
2017 | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 129 | 206 |
2017 | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 4 | 0 |
2017 | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 9 | 0 |
2016 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 129 | 140 |
2016 | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2016 | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 129 | 140 |
2016 | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
2016 | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 0 | 0 |
Prior | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 584 | 666 |
Prior | Category 1 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 39 | 43 |
Prior | Category 2 to 4 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 516 | 611 |
Prior | Categories 5 and 6 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | 29 | 12 |
Prior | Category 7 | ||
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items] | ||
Mortgage loans | $ 0 | $ 0 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 203,000,000 | $ 224,000,000 | $ 550,000,000 | $ 654,000,000 |
Investment expenses | (8,000,000) | (10,000,000) | (25,000,000) | (28,000,000) |
Net investment income (excluding net realized capital gains or losses) | 195,000,000 | 214,000,000 | 525,000,000 | 626,000,000 |
Net realized capital gains | 9,000,000 | 49,000,000 | 25,000,000 | 179,000,000 |
Net investment income | 204,000,000 | 263,000,000 | 550,000,000 | 805,000,000 |
Credit-related impairment loss (reversal of loss) | 1,000,000 | 4,000,000 | ||
Yield-related impairment loss | 2,000,000 | 44,000,000 | ||
Other-than-temporary impairment loss | 9,000,000 | 22,000,000 | ||
Supporting experience-rated products | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Net investment income | 10,000,000 | 10,000,000 | 31,000,000 | 33,000,000 |
Debt securities | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 151,000,000 | 145,000,000 | 441,000,000 | 437,000,000 |
Mortgage loans | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 15,000,000 | 19,000,000 | 45,000,000 | 54,000,000 |
Other investments | ||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 37,000,000 | $ 60,000,000 | $ 64,000,000 | $ 163,000,000 |
Investments - Realized Gains (D
Investments - Realized Gains (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investments [Abstract] | ||||
Proceeds from sales | $ 905 | $ 1,325 | $ 2,324 | $ 4,087 |
Gross realized capital gains | 17 | 55 | 60 | 127 |
Gross realized capital losses | $ 3 | $ 9 | $ 59 | $ 13 |
Fair Value - Measurement on a R
Fair Value - Measurement on a Recurring Basis (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 20,398,000,000 | $ 16,922,000,000 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial liabilities at fair value on a recurring basis | 0 | 0 |
Cash and cash equivalents | 9,256,000,000 | 5,683,000,000 |
Debt securities | 20,398,000,000 | 16,922,000,000 |
Equity securities | 46,000,000 | 73,000,000 |
Total | 29,700,000,000 | 22,678,000,000 |
Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 5,670,000,000 | 3,397,000,000 |
Debt securities | 2,498,000,000 | 1,785,000,000 |
Equity securities | 20,000,000 | 34,000,000 |
Total | 8,188,000,000 | 5,216,000,000 |
Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 3,586,000,000 | 2,286,000,000 |
Debt securities | 17,851,000,000 | 15,088,000,000 |
Equity securities | 0 | 0 |
Total | 21,437,000,000 | 17,374,000,000 |
Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Debt securities | 49,000,000 | 49,000,000 |
Equity securities | 26,000,000 | 39,000,000 |
Total | 75,000,000 | 88,000,000 |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,601,000,000 | 1,852,000,000 |
U.S. government securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,601,000,000 | 1,852,000,000 |
U.S. government securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,498,000,000 | 1,785,000,000 |
U.S. government securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 103,000,000 | 67,000,000 |
U.S. government securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
States, municipalities and political subdivisions | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,540,000,000 | 2,309,000,000 |
States, municipalities and political subdivisions | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,540,000,000 | 2,309,000,000 |
States, municipalities and political subdivisions | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
States, municipalities and political subdivisions | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,540,000,000 | 2,309,000,000 |
States, municipalities and political subdivisions | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
U.S. corporate securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 8,524,000,000 | 7,737,000,000 |
U.S. corporate securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 8,524,000,000 | 7,737,000,000 |
U.S. corporate securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
U.S. corporate securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 8,476,000,000 | 7,700,000,000 |
U.S. corporate securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 48,000,000 | 37,000,000 |
Foreign securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,721,000,000 | 2,348,000,000 |
Foreign securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,721,000,000 | 2,348,000,000 |
Foreign securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Foreign securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,721,000,000 | 2,348,000,000 |
Foreign securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Residential mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 713,000,000 | 533,000,000 |
Residential mortgage-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 713,000,000 | 533,000,000 |
Residential mortgage-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Residential mortgage-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 713,000,000 | 533,000,000 |
Residential mortgage-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Commercial mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,012,000,000 | 700,000,000 |
Commercial mortgage-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,012,000,000 | 700,000,000 |
Commercial mortgage-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Commercial mortgage-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 1,012,000,000 | 700,000,000 |
Commercial mortgage-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Other asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,262,000,000 | 1,405,000,000 |
Other asset-backed securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,262,000,000 | 1,405,000,000 |
Other asset-backed securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Other asset-backed securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 2,262,000,000 | 1,405,000,000 |
Other asset-backed securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Redeemable preferred securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 25,000,000 | 38,000,000 |
Redeemable preferred securities | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 25,000,000 | 38,000,000 |
Redeemable preferred securities | Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 0 |
Redeemable preferred securities | Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 24,000,000 | 26,000,000 |
Redeemable preferred securities | Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 1,000,000 | $ 12,000,000 |
Fair Value - Carrying Value and
Fair Value - Carrying Value and Fair Value Classified by Level (Details) - Nonrecurring - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Carrying Value | ||
Assets: | ||
Mortgage loans | $ 1,124 | $ 1,213 |
Equity securities | 146 | 149 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 322 | 372 |
Long-term debt | 66,995 | 68,480 |
Level 1 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 0 | 0 |
Investment contracts liabilities without a fixed maturity | 0 | 0 |
Long-term debt | 76,642 | 74,306 |
Level 2 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 0 | 0 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 0 | 0 |
Investment contracts liabilities without a fixed maturity | 0 | 0 |
Long-term debt | 0 | 0 |
Level 3 | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 1,148 | 1,239 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 370 | 392 |
Long-term debt | 0 | 0 |
Total | Estimated Fair Value | ||
Assets: | ||
Mortgage loans | 1,148 | 1,239 |
Liabilities: | ||
Investment contracts liabilities with a fixed maturity | 5 | 5 |
Investment contracts liabilities without a fixed maturity | 370 | 392 |
Long-term debt | $ 76,642 | $ 74,306 |
Fair Value - Separate Accounts
Fair Value - Separate Accounts Fair Value (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 4,793 | $ 4,459 |
Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 4,793 | 4,459 |
Cash and cash equivalents | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 74 | 145 |
Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 4,114 | 3,813 |
Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2 | 2 |
Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 603 | 499 |
Level 1 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 1,540 | 1,226 |
Level 1 | Cash and cash equivalents | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2 | 2 |
Level 1 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 1,538 | 1,224 |
Level 1 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 1 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 2 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 3,253 | 3,233 |
Level 2 | Cash and cash equivalents | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 72 | 143 |
Level 2 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2,576 | 2,589 |
Level 2 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 2 | 2 |
Level 2 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 603 | 499 |
Level 3 | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 3 | Cash and cash equivalents | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 3 | Debt securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 3 | Equity securities | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | 0 | 0 |
Level 3 | Common/collective trusts | Recurring | ||
Fair Value, Separate Account Investment [Line Items] | ||
Separate accounts assets | $ 0 | $ 0 |
Health Care Costs Payable - Com
Health Care Costs Payable - Components of Change in Health Care Costs Payable (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Health care costs payable, beginning of the period, net | $ 6,879 | |
Less: Claims paid | ||
Health care costs payable, end of the period, net | 7,593 | |
Health Insurance Product Line | ||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Health care costs payable, beginning of the period | 6,879 | $ 6,147 |
Less: Reinsurance recoverables | 5 | 4 |
Health care costs payable, beginning of the period, net | 6,874 | 6,143 |
Acquisition | 444 | 0 |
Add: Components of incurred health care costs | ||
Current year | 40,777 | 39,657 |
Prior years | (448) | (511) |
Total incurred health care costs | 40,329 | 39,146 |
Less: Claims paid | ||
Current year | 34,198 | 33,032 |
Prior years | 5,865 | 5,253 |
Total claims paid | 40,063 | 38,285 |
Add: Premium deficiency reserve | 1 | 6 |
Health care costs payable, end of the period, net | 7,585 | 7,010 |
Add: Reinsurance recoverables | 8 | 4 |
Health care costs payable, end of the period | 7,593 | 7,014 |
Premium deficiency reserve | 1 | 6 |
Health Care Benefits | ||
Less: Claims paid | ||
Benefit costs recorded in other insurance liabilities | 31 | 31 |
Corporate / Other | ||
Less: Claims paid | ||
Benefit costs recorded in other insurance liabilities | $ 173 | $ 213 |
Health Care Costs Payable - Nar
Health Care Costs Payable - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Incurred but not reported (IBNR) claims liability, net | $ 5,800 | |
Health Insurance Product Line | ||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||
Decrease in prior years' healthcare costs payable | $ (448) | $ (511) |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Aug. 31, 2020 | Aug. 21, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 31, 2019 |
Debt Instrument [Line Items] | ||||||
Finance lease obligations | $ 1,036 | $ 808 | ||||
Total debt principal | 67,721 | 69,246 | ||||
Debt premiums | 245 | 262 | ||||
Debt discounts and deferred financing costs | (971) | (1,028) | ||||
Long-term debt and lease obligation | 66,995 | 68,480 | ||||
Current portion of long-term debt | (5,443) | (3,781) | ||||
Long-term debt | 61,552 | $ 64,699 | ||||
Senior Notes | 3.125% senior notes due March 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.125% | 3.125% | ||||
Long-term debt | 0 | $ 723 | ||||
Senior Notes | 2.8% senior notes due July 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.80% | |||||
Long-term debt | $ 0 | $ 2,750 | ||||
Senior Notes | 3.35% senior notes due March 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.35% | 3.35% | ||||
Long-term debt | $ 2,038 | 2,038 | ||||
Senior Notes | 4.125% senior notes due May 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.125% | 4.125% | ||||
Long-term debt | $ 222 | 222 | ||||
Senior Notes | 2.125% senior notes due June 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.125% | |||||
Long-term debt | $ 1,750 | 1,750 | ||||
Senior Notes | 4.125% senior notes due June 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.125% | 4.125% | ||||
Long-term debt | $ 203 | 203 | ||||
Senior Notes | 5.45% senior notes due June 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.45% | 5.45% | ||||
Long-term debt | $ 187 | 187 | ||||
Senior Notes | 3.5% senior notes due July 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.50% | |||||
Long-term debt | $ 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 | $ 1,000 | 1,000 | ||||
Senior Notes | 2.75% senior notes due December 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.75% | |||||
Long-term debt | $ 1,250 | 1,250 | ||||
Senior Notes | 4.75% senior notes due December 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.75% | |||||
Long-term debt | $ 399 | 399 | ||||
Senior Notes | 3.7% senior notes due March 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.70% | 3.70% | ||||
Long-term debt | $ 3,723 | 6,000 | ||||
Senior Notes | 2.8% senior notes due June 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.80% | |||||
Long-term debt | $ 1,300 | 1,300 | ||||
Senior Notes | 4% senior notes due December 2023 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.00% | 4.00% | ||||
Long-term debt | $ 527 | 1,250 | ||||
Senior Notes | 3.375% senior notes due August 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.375% | |||||
Long-term debt | $ 650 | 650 | ||||
Senior Notes | 2.625% senior notes due August 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.625% | |||||
Long-term debt | $ 1,000 | 1,000 | ||||
Senior Notes | 3.5% senior notes due November 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.50% | |||||
Long-term debt | $ 750 | 750 | ||||
Senior Notes | 5% senior notes due December 2024 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.00% | |||||
Long-term debt | $ 299 | 299 | ||||
Senior Notes | 4.1% senior notes due March 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.10% | 4.10% | ||||
Long-term debt | $ 2,000 | 5,000 | ||||
Senior Notes | 3.875% senior notes due July 2025 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.875% | |||||
Long-term debt | $ 2,828 | 2,828 | ||||
Senior Notes | 2.875% senior notes due June 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.875% | |||||
Long-term debt | $ 1,750 | 1,750 | ||||
Senior Notes | 3% senior notes due August 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.00% | |||||
Long-term debt | $ 750 | 750 | ||||
Senior Notes | 3.625% senior notes due April 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.625% | 3.625% | ||||
Long-term debt | $ 750 | 0 | ||||
Senior Notes | 6.25% senior notes due June 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 6.25% | |||||
Long-term debt | $ 372 | 372 | ||||
Senior Notes | 1.3% senior notes due August 2027 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 1.30% | 1.30% | ||||
Long-term debt | $ 1,500 | 0 | ||||
Senior Notes | 4.3% senior notes due March 2028 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.30% | |||||
Long-term debt | $ 9,000 | 9,000 | ||||
Senior Notes | 3.25% senior notes due August 2029 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.25% | |||||
Long-term debt | $ 1,750 | 1,750 | ||||
Senior Notes | 3.75% senior notes due April 2030 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 3.75% | 3.75% | ||||
Long-term debt | $ 1,500 | 0 | ||||
Senior Notes | 1.75% senior notes due August 2030 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 1.75% | 1.75% | ||||
Long-term debt | $ 1,250 | 0 | ||||
Senior Notes | 4.875% senior notes due July 2035 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.875% | |||||
Long-term debt | $ 652 | 652 | ||||
Senior Notes | 6.625% senior notes due June 2036 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 6.625% | |||||
Long-term debt | $ 771 | 771 | ||||
Senior Notes | 6.75% senior notes due December 2037 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 6.75% | |||||
Long-term debt | $ 533 | 533 | ||||
Senior Notes | 4.78% senior notes due March 2038 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.78% | |||||
Long-term debt | $ 5,000 | 5,000 | ||||
Senior Notes | 6.125% senior notes due September 2039 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 6.125% | |||||
Long-term debt | $ 447 | 447 | ||||
Senior Notes | 4.125% senior notes due April 2040 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.125% | 4.125% | ||||
Long-term debt | $ 1,000 | 0 | ||||
Senior Notes | 2.7% senior notes due August 2040 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.70% | 2.70% | ||||
Long-term debt | $ 1,250 | 0 | ||||
Senior Notes | 5.75% senior notes due May 2041 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.75% | |||||
Long-term debt | $ 133 | 133 | ||||
Senior Notes | 4.5% senior notes due May 2042 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.50% | |||||
Long-term debt | $ 500 | 500 | ||||
Senior Notes | 4.125% senior notes due November 2042 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.125% | |||||
Long-term debt | $ 500 | 500 | ||||
Senior Notes | 5.3% senior notes due December 2043 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.30% | |||||
Long-term debt | $ 750 | 750 | ||||
Senior Notes | 4.75% senior notes due March 2044 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.75% | |||||
Long-term debt | $ 375 | 375 | ||||
Senior Notes | 5.125% senior notes due July 2045 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.125% | |||||
Long-term debt | $ 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 | $ 1,000 | 1,000 | ||||
Senior Notes | 5.05% senior notes due March 2048 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 5.05% | |||||
Long-term debt | $ 8,000 | 8,000 | ||||
Senior Notes | 4.25% senior notes due April 2050 | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 4.25% | 4.25% | ||||
Long-term debt | $ 750 | $ 0 | ||||
Floating Rate Notes | Floating rate notes due March 2020 (2.515% at December 31, 2019) | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 2.515% | |||||
Long-term debt | $ 0 | $ 277 | ||||
Floating Rate Notes | Floating rate notes due March 2021 (0.968% at September 30, 2020 and 2.605% at December 31, 2019) | ||||||
Debt Instrument [Line Items] | ||||||
Debt interest rate | 0.968% | 2.605% | ||||
Long-term debt | $ 1,000 | $ 1,000 | ||||
Other Debt Obligations | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 276 | $ 279 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) | Aug. 21, 2020 | Mar. 31, 2020 | Aug. 31, 2020 | Mar. 31, 2020 | Aug. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||||||||
Proceeds from debt | $ 3,970,000,000 | $ 3,950,000,000 | ||||||||
Derivative settlements | $ 7,000,000 | $ 7,000,000 | $ 25,000,000 | |||||||
Loss on net cash flow hedges | 5,000,000 | |||||||||
Premium paid in excess of debt principal | $ 706,000,000 | $ 76,000,000 | ||||||||
Debt extinguishment fees | 13,000,000 | 8,000,000 | ||||||||
Write off of deferred debt issuance cost | 47,000,000 | 5,000,000 | ||||||||
Loss on early extinguishment of debt | 766,000,000 | 79,000,000 | $ 766,000,000 | $ 79,000,000 | $ 766,000,000 | $ 79,000,000 | ||||
Senior Notes | 1.3% senior notes due August 2027 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,500,000,000 | |||||||||
Debt interest rate | 1.30% | 1.30% | 1.30% | |||||||
Senior Notes | 1.75% senior notes due August 2030 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,250,000,000 | |||||||||
Debt interest rate | 1.75% | 1.75% | 1.75% | |||||||
Senior Notes | 2.7% senior notes due August 2040 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,250,000,000 | |||||||||
Debt interest rate | 2.70% | 2.70% | 2.70% | |||||||
Senior Notes | 3.625% senior notes due April 2027 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 750,000,000 | $ 750,000,000 | ||||||||
Debt interest rate | 3.625% | 3.625% | 3.625% | 3.625% | ||||||
Senior Notes | 3.75% senior notes due April 2030 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,500,000,000 | $ 1,500,000,000 | ||||||||
Debt interest rate | 3.75% | 3.75% | 3.75% | 3.75% | ||||||
Senior Notes | 4.125% senior notes due April 2040 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 1,000,000,000 | $ 1,000,000,000 | ||||||||
Debt interest rate | 4.125% | 4.125% | 4.125% | 4.125% | ||||||
Senior Notes | 4.25% senior notes due April 2050 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Face amount of debt | $ 750,000,000 | $ 750,000,000 | ||||||||
Debt interest rate | 4.25% | 4.25% | 4.25% | 4.25% | ||||||
Senior Notes | Outstanding Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal of debt extinguished | $ 6,000,000,000 | $ 4,000,000,000 | ||||||||
Senior Notes | 3.125% senior notes due March 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 3.125% | 3.125% | ||||||||
Aggregate principal of debt extinguished | $ 1,300,000,000 | |||||||||
Senior Notes | 4.125% senior notes due May 2021 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 4.125% | 4.125% | 4.125% | |||||||
Aggregate principal of debt extinguished | $ 328,000,000 | |||||||||
Senior Notes | 4.125% senior notes due June 2021 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 4.125% | 4.125% | 4.125% | |||||||
Aggregate principal of debt extinguished | $ 297,000,000 | |||||||||
Senior Notes | 5.45% senior notes due June 2021 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 5.45% | 5.45% | 5.45% | |||||||
Aggregate principal of debt extinguished | $ 413,000,000 | |||||||||
Senior Notes | 3.35% senior notes due March 2021 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 3.35% | 3.35% | 3.35% | |||||||
Aggregate principal of debt extinguished | $ 962,000,000 | |||||||||
Senior Notes | 3.7% senior notes due March 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 3.70% | 3.70% | 3.70% | |||||||
Aggregate principal of debt extinguished | $ 2,300,000,000 | |||||||||
Senior Notes | 4% senior notes due December 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 4.00% | 4.00% | 4.00% | |||||||
Aggregate principal of debt extinguished | $ 723,000,000 | |||||||||
Senior Notes | 4.1% senior notes due March 2025 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 4.10% | 4.10% | 4.10% | |||||||
Aggregate principal of debt extinguished | $ 3,000,000,000 | |||||||||
Floating Rate Notes [Member] | Floating rate notes due March 2020 (2.515% at December 31, 2019) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal of debt extinguished | $ 723,000,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Nov. 02, 2016 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchased during period (in shares) | 0 | 0 | |||
Dividends declared per share (in dollars per share) | $ 0.50 | $ 0.50 | $ 1.50 | $ 1.50 | |
2016 Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 15,000,000,000 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 13,900,000,000 | $ 13,900,000,000 |
Other Comprehensive Income (Det
Other Comprehensive Income (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | $ 68,355 | $ 65,474 | $ 64,170 | $ 61,599 | $ 60,006 | $ 58,543 | $ 64,170 | $ 58,543 | |
Other comprehensive income (loss) before reclassifications, net of tax | $ (5) | ||||||||
Other comprehensive income (loss), net of tax | 42 | 526 | (332) | 266 | 251 | 331 | 236 | 848 | |
Balance at end of period | $ 65,474 | 69,112 | 68,355 | 65,474 | 62,933 | 61,599 | 60,006 | 69,112 | 62,933 |
Net unrealized investment gains (losses) | |||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | 987 | 774 | 682 | 97 | 774 | 97 | |||
Other comprehensive income (loss) before reclassifications, net of tax | 52 | 192 | 218 | 799 | |||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (8) | (56) | 39 | (78) | |||||
Other comprehensive income (loss), net of tax | 44 | 136 | 257 | 721 | |||||
Balance at end of period | 1,031 | 987 | 818 | 682 | 1,031 | 818 | |||
OCI before Reclass, pre-tax | 83 | 214 | 278 | 933 | |||||
Amounts reclassified, pre-tax | (10) | (63) | 47 | (93) | |||||
Foreign currency translation adjustments | |||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | (2) | 4 | (154) | (158) | 4 | (158) | |||
Other comprehensive income (loss) before reclassifications, net of tax | 1 | (1) | (5) | 3 | |||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 0 | 154 | 0 | 154 | |||||
Other comprehensive income (loss), net of tax | 1 | 153 | (5) | 157 | |||||
Balance at end of period | (1) | (2) | (1) | (154) | (1) | (1) | |||
Net cash flow hedges | |||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | 267 | 279 | 305 | 312 | 279 | 312 | |||
Other comprehensive income (loss) before reclassifications, net of tax | 0 | (18) | (5) | (18) | |||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (3) | (5) | (10) | (12) | |||||
Other comprehensive income (loss), net of tax | (3) | (23) | (15) | (30) | |||||
Balance at end of period | 264 | 267 | 282 | 305 | 264 | 282 | |||
Amount expected to be reclassified | 15 | 15 | |||||||
OCI before Reclass, pre-tax | 0 | (25) | (7) | (25) | |||||
Amounts reclassified, pre-tax | (4) | (7) | (14) | (16) | |||||
Pension and OPEB plans | |||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | (39) | (38) | (149) | (149) | (38) | (149) | |||
Other comprehensive income (loss) before reclassifications, net of tax | 0 | 0 | (6) | 0 | |||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | 0 | 0 | 5 | 0 | |||||
Other comprehensive income (loss), net of tax | 0 | 0 | (1) | 0 | |||||
Balance at end of period | (39) | (39) | (149) | (149) | (39) | (149) | |||
OCI before Reclass, pre-tax | 0 | 0 | (8) | 0 | |||||
Amounts reclassified, pre-tax | 0 | 0 | 7 | 0 | |||||
AOCI Including Portion Attributable to Noncontrolling Interest | |||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||
Balance at beginning of period | 1,213 | $ 1,019 | 684 | $ 102 | 1,019 | 102 | |||
Balance at end of period | $ 1,255 | $ 1,213 | $ 950 | $ 684 | $ 1,255 | $ 950 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of EPS (in shares) | 17 | 18 | 16 | 19 |
Numerator for earnings per share calculation: | ||||
Net income | $ 1,219 | $ 1,529 | $ 6,217 | $ 4,887 |
Income allocated to participating securities | 0 | 0 | 0 | (3) |
Net (income) loss attributable to noncontrolling interests | 5 | 1 | (11) | 0 |
Net income attributable to CVS Health | $ 1,224 | $ 1,530 | $ 6,206 | $ 4,884 |
Denominator for earnings per share calculation: | ||||
Weighted average shares, basic (in shares) | 1,310 | 1,302 | 1,308 | 1,300 |
Effect of dilutive securities (in shares) | 5 | 3 | 6 | 3 |
Weighted average shares, diluted (in shares) | 1,315 | 1,305 | 1,314 | 1,303 |
Earnings per share: | ||||
Earnings per share, basic (in dollars per share) | $ 0.93 | $ 1.17 | $ 4.74 | $ 3.76 |
Earnings per share, diluted (in dollars per share) | $ 0.93 | $ 1.17 | $ 4.72 | $ 3.75 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | 7 Months Ended | ||
Oct. 31, 2020entity | May 31, 2020stateentity | Mar. 31, 2013member | Aug. 31, 2019claim | Sep. 30, 2020store | |
Loss Contingencies [Line Items] | |||||
Guarantor obligations, number of leases | store | 76 | ||||
Sample size | member | 200 | ||||
Number of pending claims | claim | 6 | ||||
Blue Cross and Blue Shield of Alabama vs. CVS Health Corporation | Pending Litigation | |||||
Loss Contingencies [Line Items] | |||||
Number of entities filing claims | 8 | ||||
Number of states in which entities filed claims | state | 6 | ||||
Blue Cross And Blue Shield Of New Jersey [Member] | Pending Litigation | Subsequent Event | |||||
Loss Contingencies [Line Items] | |||||
Number of entities filing claims | 2 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2020Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Financial Measures of Segments to Consolidated Totals (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | $ 66,852 | $ 64,547 | $ 198,602 | $ 189,082 |
Net investment income | 204 | 263 | 550 | 805 |
Total revenues | 67,056 | 64,810 | 199,152 | 189,887 |
Adjusted operating income (loss) | 3,622 | 3,947 | 13,063 | 11,573 |
Pharmacy Services | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 35,711 | 36,018 | 105,583 | 104,418 |
Retail/ LTC | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 22,725 | 21,466 | 67,136 | 64,028 |
Health Care Benefits | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 18,698 | 17,181 | 56,364 | 52,454 |
Corporate/ Other | ||||
Revenue, Major Customer [Line Items] | ||||
Net investment income | 83 | 117 | 209 | 347 |
Total revenues | 116 | 152 | 292 | 423 |
Operating Segments | Pharmacy Services | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 33,492 | 33,680 | 98,233 | 95,494 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 35,711 | 36,018 | 105,583 | 104,418 |
Adjusted operating income (loss) | 1,619 | 1,439 | 4,127 | 3,682 |
Net revenues, retail copayments | 2,500 | 2,700 | 8,500 | 8,900 |
Operating Segments | Retail/ LTC | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 14,770 | 13,805 | 44,314 | 41,536 |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | 22,725 | 21,466 | 67,136 | 64,028 |
Adjusted operating income (loss) | 1,412 | 1,516 | 4,371 | 4,674 |
Operating Segments | Health Care Benefits | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 18,557 | 17,027 | 55,972 | 51,976 |
Net investment income | 121 | 146 | 341 | 458 |
Total revenues | 18,698 | 17,181 | 56,364 | 52,454 |
Adjusted operating income (loss) | 1,080 | 1,423 | 6,035 | 4,423 |
Operating Segments | Corporate/ Other | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues from customers | 33 | 35 | 83 | 76 |
Adjusted operating income (loss) | (303) | (252) | (931) | (685) |
Intersegment Eliminations | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | (10,194) | (10,007) | (30,223) | (31,436) |
Net investment income | 0 | 0 | 0 | 0 |
Total revenues | (10,194) | (10,007) | (30,223) | (31,436) |
Adjusted operating income (loss) | (186) | (179) | (539) | (521) |
Intersegment Eliminations | Pharmacy Services | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 2,219 | 2,338 | 7,350 | 8,924 |
Intersegment Eliminations | Retail/ LTC | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 7,955 | 7,661 | 22,822 | 22,492 |
Intersegment Eliminations | Health Care Benefits | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 20 | 8 | 51 | 20 |
Intersegment Eliminations | Corporate/ Other | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Segment Reporting - Reconcili_2
Segment Reporting - Reconciliation from Operating Income to Adjusted Operating Income (Details) $ in Millions | Jul. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($)store | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($)store |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Operating income (GAAP measure) | $ 3,249 | $ 2,928 | $ 11,387 | $ 8,950 | |
Amortization of intangible assets | 587 | 607 | 1,751 | 1,822 | |
Acquisition-related integration costs | 57 | 111 | 196 | 365 | |
(Gain) loss on sale of subsidiary | (271) | 205 | (271) | 205 | |
Store rationalization charges | 0 | 96 | 0 | 231 | |
Adjusted operating income (loss) | 3,622 | $ 3,947 | 13,063 | 11,573 | |
Proceeds from sale of subsidiary | 834 | $ 0 | |||
Retail/ LTC | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Number of under performing stores | store | 22 | 22 | |||
Health Care Benefits | Discontinued Operations, Disposed of by Sale | Coventry Health Care Workers Compensation business | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
(Gain) loss on sale of subsidiary | $ (271) | $ (271) | |||
Proceeds from sale of subsidiary | $ 850 | ||||
Pharmacy Services | |||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||||
Number of under performing stores | store | 46 |
Subsequent Event (Details)
Subsequent Event (Details) - U.S. Department of Health and Human Services, ACA Risk Corridor Receivables - USD ($) $ in Millions | Oct. 22, 2020 | Dec. 31, 2020 | Aug. 31, 2019 |
Pending Litigation | |||
Subsequent Event [Line Items] | |||
Gain contingency, unrecorded amount | $ 313 | ||
Pending Litigation | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Amount awarded from other party | $ 313 | ||
Settled Litigation | Premium Revenue | Forecast | |||
Subsequent Event [Line Items] | |||
Former gain contingency, recognized in current period, before tx | $ 305 | ||
Former gain contingency, recognized in current period, net of tax | $ 220 |