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Segment Reporting | 12 Months Ended
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Dec. 31, 2019
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the CODM evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company’s segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance. Segment financial information has been retrospectively adjusted to conform with the current period presentation. See the reconciliation of consolidated operating income (GAAP measure) to adjusted operating income below for further context regarding the items excluded from operating income in determining adjusted operating income. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company’s ability to compare past financial performance with current performance and analyze underlying business performance and trends. Non-GAAP financial measures the Company discloses, such as consolidated adjusted operating income, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how its CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ for further discussion of this realignment. Segment financial information has been retrospectively adjusted to reflect these changes. In 2018 and 2017, approximately 9.8% and 12.3%, respectively, of the Company’s consolidated revenues were from Aetna, a Pharmacy Services segment client. On November 28, 2018, the Company completed the Aetna Acquisition. Subsequent to the Aetna Acquisition, transactions with Aetna continue to be reported within the Pharmacy Services segment, but are eliminated in the Company’s consolidated financial statements.
In millions | Pharmacy Services (1) |  | Retail/ LTC |  | Health Care Benefits |  | Corporate/ Other |  | Intersegment Eliminations (2) |  | Consolidated Totals
2019: |  |  |  |  |  |  |  |  |  |  |
Revenues from customers | $ | 141,491 |  |  | $ | 86,608 |  |  | $ | 69,005 |  |  | $ | 100 |  |  | $ | (41,439 | ) |  | $ | 255,765 |
Net investment income | — |  |  | — |  |  | 599 |  |  | 412 |  |  | — |  |  | 1,011 |
Total revenues | 141,491 |  |  | 86,608 |  |  | 69,604 |  |  | 512 |  |  | (41,439 | ) |  | 256,776 |
Adjusted operating income (loss) | 5,129 |  |  | 6,705 |  |  | 5,202 |  |  | (1,000 | ) |  | (697 | ) |  | 15,339 |
Depreciation and amortization | 766 |  |  | 1,723 |  |  | 1,721 |  |  | 161 |  |  | — |  |  | 4,371 |
Additions to property and equipment | 332 |  |  | 1,212 |  |  | 533 |  |  | 404 |  |  | — |  |  | 2,481 |
2018: |  |  |  |  |  |  |  |  |  |  |
Revenues from customers | 134,736 |  |  | 83,989 |  |  | 8,904 |  |  | 4 |  |  | (33,714 | ) |  | 193,919 |
Net investment income | — |  |  | — |  |  | 58 |  |  | 602 |  |  | — |  |  | 660 |
Total revenues | 134,736 |  |  | 83,989 |  |  | 8,962 |  |  | 606 |  |  | (33,714 | ) |  | 194,579 |
Adjusted operating income (loss) | 4,955 |  |  | 7,403 |  |  | 528 |  |  | (856 | ) |  | (769 | ) |  | 11,261 |
Depreciation and amortization | 710 |  |  | 1,698 |  |  | 172 |  |  | 138 |  |  | — |  |  | 2,718 |
Additions to property and equipment | 326 |  |  | 1,350 |  |  | 46 |  |  | 401 |  |  | — |  |  | 2,123 |
2017: |  |  |  |  |  |  |  |  |  |  |
Revenues from customers | 130,822 |  |  | 79,398 |  |  | 3,582 |  |  | — |  |  | (29,037 | ) |  | 184,765 |
Net investment income | — |  |  | — |  |  | 5 |  |  | 16 |  |  | — |  |  | 21 |
Total revenues | 130,822 |  |  | 79,398 |  |  | 3,587 |  |  | 16 |  |  | (29,037 | ) |  | 184,786 |
Adjusted operating income (loss) | 4,628 |  |  | 7,475 |  |  | 359 |  |  | (896 | ) |  | (741 | ) |  | 10,825 |
Depreciation and amortization | 710 |  |  | 1,651 |  |  | 2 |  |  | 116 |  |  | — |  |  | 2,479 |
Additions to property and equipment | 311 |  |  | 1,398 |  |  | — |  |  | 340 |  |  | — |  |  | 2,049 |
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(1) | Total revenues of the Pharmacy Services segment include approximately $11.5 billion, $11.4 billion and $10.8 billion of retail co-payments for 2019, 2018 and 2017, respectively. See Note 1 ‘‘Significant Accounting Policies’’ for additional information about retail co-payments.
(2) | Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment, the Retail/LTC segment and/or the Health Care Benefits segment.
The following is a reconciliation of consolidated operating income to adjusted operating income for the years ended December 31, 2019, 2018 and 2017:
In millions | 2019 |  | 2018 |  | 2017
Operating income (GAAP measure) | $ | 11,987 |  |  | $ | 4,021 |  |  | $ | 9,538 |
Amortization of intangible assets (1) | 2,436 |  |  | 1,006 |  |  | 817 |
Acquisition-related transaction and integration costs (2) | 480 |  |  | 492 |  |  | 65 |
Store rationalization charges (3) | 231 |  |  | — |  |  | 215 |
Loss on divestiture of subsidiary (4) | 205 |  |  | 86 |  |  | 9 |
Goodwill impairments (5) | — |  |  | 6,149 |  |  | 181 |
Impairment of long-lived assets (6) | — |  |  | 43 |  |  | — |
Interest income on financing for the Aetna Acquisition (7) | — |  |  | (536 | ) |  | — |
Adjusted operating income | $ | 15,339 |  |  | $ | 11,261 |  |  | $ | 10,825 |
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(1) | The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.
(2) | In 2019, 2018 and 2017, acquisition-related transaction and integration costs relate to the Aetna Acquisition. In 2018 and 2017, acquisition-related transaction and integration costs also relate to the acquisition of Omnicare. The acquisition-related transaction and integration costs are reflected in the Company’s consolidated statements of operations in operating expenses within the Corporate/Other segment and the Retail/LTC segment.
(3) | In 2019, the store rationalization charges relate to the planned closure of 46 underperforming retail pharmacy stores during the second quarter of 2019 and the planned closure of 22 underperforming retail pharmacy stores during the first quarter of 2020. In 2019, the store rationalization charges primarily relate to operating lease right-of-use asset impairment charges and are reflected in the Company’s consolidated statements of operations in operating expenses within the Retail/LTC segment. In 2017, the store rationalization charges related to the Company’s enterprise streamlining initiative and are reflected in the Company’s consolidated statements of operations in operating expenses within the Retail/LTC segment.
(4) | In 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. In 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million on January 2, 2018. In 2017, the loss on divestiture of subsidiary represents transaction costs associated with the sale of RxCrossroads. The losses on divestiture of subsidiary are reflected in the Company’s consolidated statements of operations in operating expenses within the Retail/LTC segment and Corporate/Other segment.
(5) | In 2018, the goodwill impairments relate to the LTC reporting unit within the Retail/LTC segment. In 2017, the goodwill impairments relate to the RxCrossroads reporting unit within the Retail/LTC segment.
(6) | In 2018, impairment of long-lived assets primarily relates to the impairment of property and equipment within the Retail/LTC segment and is reflected in operating expenses in the Company’s consolidated statements of operations.
(7) In 2018, the Company recorded interest income of $536 million on the proceeds of the $40 billion of unsecured senior notes it issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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