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Accounting Policies (Tables) | 9 Months Ended
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Sep. 30, 2018
Schedule of accounts receivable |
|  | September 30, |  | December 31,
In millions |  | 2018 |  | 2017
Trade receivables |  | $ | 7,258 |  | $ | 7,873
Vendor and manufacturer receivables |  |  | 6,991 |  |  | 5,109
Other receivables |  |  | 588 |  |  | 199
Total accounts receivable, net |  | $ | 14,837 |  | $ | 13,181
Schedule of revenue disaggregation |
|  | Pharmacy |  |  |  | Intersegment |  | Consolidated
In millions |  | Services |  | Retail/LTC |  | Eliminations |  | Totals
Three Months Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Major goods/services lines: |  |  |  |  |  |  |  |  |  |  |  |
Pharmacy |  | $ | 32,995 |  | $ | 16,123 |  | $ | (7,350) |  | $ | 41,768
Front Store |  |  | — |  |  | 4,557 |  |  | — |  |  | 4,557
Other |  |  | 768 |  |  | 176 |  |  | — |  |  | 944
Total |  | $ | 33,763 |  | $ | 20,856 |  | $ | (7,350) |  | $ | 47,269
Pharmacy Services distribution channel: |  |  |  |  |  |  |  |  |  |  |  |
Mail choice (1) |  | $ | 11,812 |  |  |  |  |  |  |  |  |
Pharmacy network (2) |  |  | 21,183 |  |  |  |  |  |  |  |  |
Other |  |  | 768 |  |  |  |  |  |  |  |  |
Total |  | $ | 33,763 |  |  |  |  |  |  |  |  |
Nine Months Ended September 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Major goods/services lines: |  |  |  |  |  |  |  |  |  |  |  |
Pharmacy |  | $ | 96,110 |  | $ | 47,428 |  | $ | (21,518) |  | $ | 122,020
Front Store |  |  | — |  |  | 13,990 |  |  | — |  |  | 13,990
Other |  |  | 3,118 |  |  | 542 |  |  | — |  |  | 3,660
Total |  | $ | 99,228 |  | $ | 61,960 |  | $ | (21,518) |  | $ | 139,670
Pharmacy Services distribution channel: |  |  |  |  |  |  |  |  |  |  |  |
Mail choice (1) |  | $ | 34,807 |  |  |  |  |  |  |  |  |
Pharmacy network (2) |  |  | 61,303 |  |  |  |  |  |  |  |  |
Other |  |  | 3,118 |  |  |  |  |  |  |  |  |
Total |  | $ | 99,228 |  |  |  |  |  |  |  |  |
| (1) |  | Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect® claims picked up at retail, as well as prescriptions filled at our retail pharmacies under the Maintenance Choice® program.
| (2) |  | Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including our retail pharmacies and long-term care pharmacies, but excluding Maintenance Choice activity, which is included within the mail choice category.
Schedule of contract balances and activity | Contract Balances Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example ExtraBucks® Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the retail 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:
|  | September 30, |  | December 31,
In millions |  | 2018 |  | 2017
Trade receivables (included in accounts receivable, net) |  | $ | 7,258 |  | $ | 7,873
Contract liabilities (included in accrued expenses) |  |  | 63 |  |  | 53
During the nine months ended September 30, 2018, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of the changes:
In millions |  |
Balance, December 31, 2017 |  | $ | 53
Adoption of ASU 2014-09 |  |  | 17
Loyalty program earnings and gift card issuances |  |  | 236
Redemption and breakage |  |  | (243)
Balance, September 30, 2018 |  | $ | 63
Schedule of new accounting pronouncements and changes in accounting principles |
|  | September 30, |  | December 31,
In millions |  | 2018 |  | 2017
Cash and cash equivalents |  | $ | 41,587 |  | $ | 1,696
Restricted cash (included in other current assets) |  |  | 11 |  |  | 14
Restricted cash (included in other assets) |  |  | 229 |  |  | 190
Total cash, cash equivalents and restricted cash in the statement of cash flows |  | $ | 41,827 |  | $ | 1,900
Reconciliation of condensed consolidated statement of cash flows |
|  | As Previously |  |  |  |  |  |
In millions |  | Reported |  | Adjustments |  | As Revised
Nine Months Ended September 30, 2017 |  |  |  |  |  |  |  |  |
Acquisitions (net of cash acquired) and other investments |  | $ | (502) |  | $ | 41 |  | $ | (461)
Net cash used in investing activities |  |  | (1,608) |  |  | 41 |  |  | (1,567)
Net decrease in cash, cash equivalents and restricted cash (1) |  |  | (886) |  |  | 41 |  |  | (845)
Cash, cash equivalents, and restricted cash at the beginning of the period (1) |  |  | 3,371 |  |  | 149 |  |  | 3,520
Cash, cash equivalents, and restricted cash at the end of the period (1) |  |  | 2,485 |  |  | 190 |  |  | 2,675
| (1) |  | Prior to the adoption of ASU 2016-18, these financial statement captions excluded restricted cash. The financial statement captions have been renamed to reflect the inclusion of restricted cash subsequent to the adoption of ASU 2016-18 on January 1, 2018.
ASU 2014-09 |
Schedule of new accounting pronouncements and changes in accounting principles |
|  | Impact of Change in Accounting Policy
|  | As Reported |  |  |  |  | Adjusted
In millions |  | December 31, 2017 |  | Adjustments |  | January 1, 2018
Condensed Consolidated Balance Sheet: |  |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 6,609 |  | $ | 17 |  | $ | 6,626
Deferred income taxes |  |  | 2,996 |  |  | (4) |  |  | 2,992
Total liabilities |  |  | 57,436 |  |  | 13 |  |  | 57,449
Retained earnings |  |  | 43,556 |  |  | (13) |  |  | 43,543
Total CVS Health shareholders' equity |  |  | 37,691 |  |  | (13) |  |  | 37,678
Total shareholders' equity |  |  | 37,695 |  |  | (13) |  |  | 37,682
The following tables compare the reported condensed consolidated balance sheet, statements of operations, and statement of cash flows to the pro forma amounts had the previous revenue accounting guidance remained in effect:
|  | Impact of Change in Accounting Policy
|  | As Reported |  |  |  |  | Balances
|  | For the |  |  |  |  | Without
|  | Three Months Ended |  |  |  |  | Adoption of
In millions |  | September 30, 2018 |  | Adjustments |  | Topic 606
Condensed Consolidated Statement of Operations: |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 47,269 |  | $ | (6) |  | $ | 47,263
Cost of revenues |  |  | 39,941 |  |  | (3) |  |  | 39,938
Gross profit |  |  | 7,328 |  |  | (3) |  |  | 7,325
Operating profit |  |  | 2,353 |  |  | (3) |  |  | 2,350
Income before income tax provision |  |  | 1,899 |  |  | (3) |  |  | 1,896
Income tax provision |  |  | 509 |  |  | (1) |  |  | 508
Income from continuing operations |  |  | 1,390 |  |  | (2) |  |  | 1,388
Net income |  |  | 1,390 |  |  | (2) |  |  | 1,388
Net income attributable to CVS Health |  |  | 1,390 |  |  | (2) |  |  | 1,388
|  | Impact of Change in Accounting Policy
|  | As Reported |  |  |  |  | Balances
|  | As of/For the |  |  |  |  | Without
|  | Nine Months Ended |  |  |  |  | Adoption of
In millions |  | September 30, 2018 |  | Adjustments |  | Topic 606
Condensed Consolidated Statement of Operations: |  |  |  |  |  |  |  |  |
Net revenues |  | $ | 139,670 |  | $ | 4 |  | $ | 139,674
Cost of revenues |  |  | 118,282 |  |  | 3 |  |  | 118,285
Gross profit |  |  | 21,388 |  |  | 1 |  |  | 21,389
Operating profit |  |  | 2,712 |  |  | 1 |  |  | 2,713
Income before income tax provision |  |  | 1,304 |  |  | 1 |  |  | 1,305
Income tax provision |  |  | 1,478 |  |  | — |  |  | 1,478
Loss from continuing operations |  |  | (174) |  |  | 1 |  |  | (173)
Net loss |  |  | (175) |  |  | 1 |  |  | (174)
Net loss attributable to CVS Health |  |  | (175) |  |  | 1 |  |  | (174)
Condensed Consolidated Balance Sheet: |  |  |  |  |  |  |  |  |
Accrued expenses |  |  | 6,160 |  |  | (18) |  |  | 6,142
Deferred income taxes |  |  | 3,052 |  |  | 4 |  |  | 3,056
Total liabilities |  |  | 94,884 |  |  | (14) |  |  | 94,870
Retained earnings |  |  | 41,843 |  |  | 14 |  |  | 41,857
Total CVS Health shareholders' equity |  |  | 36,618 |  |  | 14 |  |  | 36,632
Total shareholders' equity |  |  | 36,622 |  |  | 14 |  |  | 36,636
Condensed Consolidated Statement of Cash Flow: |  |  |  |  |  |  |  |  |
Reconciliation of net loss to net cash provided by operating activities: |  |  |  |  |  |  |  |  |
Net loss |  |  | (175) |  |  | 1 |  |  | (174)
Accrued expenses |  |  | (341) |  |  | (1) |  |  | (342)

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