10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to_________

Commission File Number: 001-01011

CVS HEALTH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	05-0494040 (I.R.S. Employer Identification No.)
One CVS Drive, Woonsocket, Rhode Island (Address of principal executive offices)	02895 (Zip Code)
(401) 765-1500
(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report: N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYesoNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þYesoNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
	Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYesþNo

There were 1,299,092,100 shares of the registrant’s voting common stock with a par value of $0.01 per share outstanding at April 23, 2019.

TABLE OF CONTENTS		Page
Part I	Financial Information
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	58
Part II	Other Information
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
Signatures		61

Part I. Financial Information

Item 1. Financial Statements

Index to Condensed Consolidated Financial Statements

	Page
Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2019 and 2018	2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2019 and 2018	3
Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2019 and December 31, 2018	4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2019 and 2018	5
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) for the three months ended March 31, 2019 and 2018	7
Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Report of the Independent Registered Public Accounting Firm	39

1

CVS Health Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,
In millions, except per share amounts	2019			2018
Revenues:
Products	$	43,343		$	44,049
Premiums	16,282			1,306
Services	1,772			338
Net investment income	249			50
Total revenues	61,646			45,743
Operating costs:
Cost of products sold	37,247			37,505
Benefit costs	13,459			1,329
Operating expenses	8,250			4,913
Total operating costs	58,956			43,747
Operating income	2,690			1,996
Interest expense	782			523
Other expense (income)	(31		)	3
Income before income tax provision	1,939			1,470
Income tax provision	512			472
Net income	1,427			998
Net income attributable to noncontrolling interests	(6		)	—
Net income attributable to CVS Health	$	1,421		$	998
Net income per share attributable to CVS Health:
Basic	$	1.09		$	0.98
Diluted	$	1.09		$	0.98
Weighted average shares outstanding:
Basic	1,298			1,016
Diluted	1,302			1,019
Dividends declared per share	$	0.50		$	0.50

See accompanying notes to condensed consolidated financial statements (unaudited).

2

CVS Health Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended March 31,
In millions	2019			2018
Net income	$	1,427		$	998
Other comprehensive income (loss), net of tax:
Net unrealized investment gains	334			—
Foreign currency translation adjustments	1			1
Net cash flow hedges	(4		)	343
Other comprehensive income	331			344
Comprehensive income	1,758			1,342
Comprehensive income attributable to noncontrolling interests	(6		)	—
Comprehensive income attributable to CVS Health	$	1,752		$	1,342

See accompanying notes to condensed consolidated financial statements (unaudited).

3

CVS Health Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

In millions, except per share amounts	March 31, 2019			December 31, 2018
Assets:
Cash and cash equivalents	$	5,896		$	4,059
Investments	2,426			2,522
Accounts receivable, net	19,509			17,631
Inventories	15,448			16,450
Other current assets	4,578			4,581
Total current assets	47,857			45,243
Long-term investments	16,410			15,732
Property and equipment, net	11,348			11,349
Operating lease right-of-use assets	20,992			—
Goodwill	79,075			78,678
Intangible assets, net	35,147			36,524
Separate accounts assets	4,074			3,884
Other assets	4,865			5,046
Total assets	$	219,768		$	196,456
Liabilities:
Accounts payable	$	8,290		$	8,925
Pharmacy claims and discounts payable	11,827			11,365
Health care costs payable	6,701			6,147
Policyholders’ funds	2,732			2,939
Accrued expenses	10,443			10,711
Other insurance liabilities	1,937			1,937
Current portion of operating lease liabilities	1,803			—
Short-term debt	3,005			720
Current portion of long-term debt	3,893			1,265
Total current liabilities	50,631			44,009
Long-term operating lease liabilities	18,961			—
Long-term debt	67,888			71,444
Deferred income taxes	7,540			7,677
Separate accounts liabilities	4,074			3,884
Other long-term insurance liabilities	8,052			8,119
Other long-term liabilities	2,616			2,780
Total liabilities	159,762			137,913
Shareholders’ equity:
Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding	—			—
Common stock, par value $0.01: 3,200 shares authorized; 1,722 shares issued and 1,298 shares outstanding at March 31, 2019 and 1,720 shares issued and 1,295 shares outstanding at December 31, 2018	45,615			45,440
Treasury stock, at cost: 424 shares at March 31, 2019 and 425 shares at December 31, 2018	(28,221		)	(28,228		)
Retained earnings	41,859			40,911
Accumulated other comprehensive income	433			102
Total CVS Health shareholders’ equity	59,686			58,225
Noncontrolling interests	320			318
Total shareholders’ equity	60,006			58,543
Total liabilities and shareholders’ equity	$	219,768		$	196,456

See accompanying notes to condensed consolidated financial statements (unaudited).

4

CVS Health Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
In millions	2019			2018
Cash flows from operating activities:
Cash receipts from customers	$	58,873		$	43,369
Cash paid for inventory and prescriptions dispensed by retail network pharmacies	(35,645		)	(35,102		)
Insurance benefits paid	(12,951		)	(1,093		)
Cash paid to other suppliers and employees	(7,403		)	(4,271		)
Interest and investment income received	250			50
Interest paid	(1,123		)	(545		)
Income taxes paid	(53		)	(53		)
Net cash provided by operating activities	1,948			2,355
Cash flows from investing activities:
Proceeds from sales and maturities of investments	1,986			10
Purchases of investments	(2,047		)	(33		)
Purchases of property and equipment	(716		)	(482		)
Acquisitions (net of cash acquired)	(124		)	(353		)
Proceeds from sale of subsidiary	—			725
Other	10			2
Net cash used in investing activities	(891		)	(131		)
Cash flows from financing activities:
Net borrowings (repayments) of short-term debt	2,285			(1,276		)
Proceeds from issuance of long-term debt	—			39,376
Repayments of long-term debt	(882		)	(1		)
Derivative settlements	—			446
Dividends paid	(649		)	(508		)
Proceeds from exercise of stock options	101			107
Payments for taxes related to net share settlement of equity awards	(44		)	(4		)
Other	5			—
Net cash provided by financing activities	816			38,140
Net increase in cash, cash equivalents and restricted cash	1,873			40,364
Cash, cash equivalents and restricted cash at the beginning of the period	4,295			1,900
Cash, cash equivalents and restricted cash at the end of the period	$	6,168		$	42,264

5

CVS Health Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
In millions	2019			2018
Reconciliation of net income to net cash provided by operating activities:
Net income	$	1,427		$	998
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,111			644
Stock-based compensation	114			55
Deferred income taxes and other noncash items	153			62
Change in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net	(1,989		)	(857		)
Inventories	1,001			464
Other assets	(389		)	(57		)
Accounts payable and pharmacy claims and discounts payable	(22		)	(178		)
Health care costs payable and other insurance liabilities	553			236
Other liabilities	(11		)	988
Net cash provided by operating activities	$	1,948		$	2,355

See accompanying notes to condensed consolidated financial statements (unaudited).

6

CVS Health Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

				Attributable to CVS Health
	Number of shares outstanding			Common								Accumulated			Total
				Stock and								Other			CVS Health
	Common	Treasury		Capital		Treasury			Retained			Comprehensive			Shareholders’			Noncontrolling			Total
In millions	Shares	Shares (1)		Surplus (2)		Stock (1)			Earnings			Income (Loss)			Equity			Interests			Equity
Three Months Ended March 31, 2019
Balance at December 31, 2018	1,720	(425	)	$	45,440	$	(28,228	)	$	40,911		$	102		$	58,225		$	318		$	58,543
Adoption of new accounting standard (Note 1)	—	—		—		—			178			—			178			—			178
Net income	—	—		—		—			1,421			—			1,421			6			1,427
Other comprehensive income (Note 8)	—	—		—		—			—			331			331			—			331
Stock option activity, stock awards and other	2	—		175		—			—			—			175			—			175
Purchase of treasury shares, net of ESPP issuances	—	1		—		7			—			—			7			—			7
Common stock dividends	—	—		—		—			(651		)	—			(651		)	—			(651		)
Other decreases in noncontrolling interests	—	—		—		—			—			—			—			(4		)	(4		)
Balance at March 31, 2019	1,722	(424	)	$	45,615	$	(28,221	)	$	41,859		$	433		$	59,686		$	320		$	60,006
Three Months Ended March 31, 2018
Balance at December 31, 2017	1,712	(698	)	$	32,096	$	(37,796	)	$	43,556		$	(165	)	$	37,691		$	4		$	37,695
Adoption of new accounting standards (3)	—	—		—		—			(6		)	(7		)	(13		)	—			(13		)
Net income	—	—		—		—			998			—			998			—			998
Other comprehensive income (Note 8)	—	—		—		—			—			344			344			—			344
Stock option activity, stock awards and other	2	—		112		—			—			—			112			—			112
Purchase of treasury shares, net of ESPP issuances	—	—		—		49			—			—			49			—			49
Common stock dividends	—	—		—		—			(508		)	—			(508		)	—			(508		)
Balance at March 31, 2018	1,714	(698	)	$	32,208	$	(37,747	)	$	44,040		$	172		$	38,673		$	4		$	38,677

^{_____________________________________________} 

(1) Treasury shares include 1 million shares held in trust as of March 31, 2019 and 2018 and December 31, 2018 and 2017. Treasury stock includes $29 million related to shares held in trust as of March 31, 2019 and December 31, 2018, and $31 million related to shares held in trust as of March 31, 2018 and December 31, 2017.

(2) Common stock and capital surplus includes the par value of common stock of $17 million as of March 31, 2019 and 2018 and December 31, 2018 and 2017.

(3) Reflects the adoption of ASU 2014-09, Revenue from Contracts with Customers, which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a reduction to accumulated other comprehensive income and an increase to retained earnings of $7 million.

See accompanying notes to condensed consolidated financial statements (unaudited).

7

Notes to Condensed Consolidated Financial Statements

1. Significant Accounting Policies

Description of business 

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is the nation’s premier health innovation company helping people on their path to better health. Whether in one of its pharmacies or through its health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 94 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

On November 28, 2018 (the “Aetna Acquisition Date”), the Company acquired Aetna Inc. (“Aetna”). As a result of the acquisition of Aetna (the “Aetna Acquisition”), the Company added the Health Care Benefits segment. Certain aspects of Aetna’s operations, including products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products, are included in the Company’s Corporate/Other segment.

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how its Chief Operating Decision Maker (the “CODM”) reviews information and manages the business. As a result of this realignment, the Company’s SilverScript^® PDP moved from the Pharmacy Services segment to the Health Care Benefits segment. In addition, the Company moved Aetna’s mail order and specialty pharmacy operations from the Health Care Benefits segment to the Pharmacy Services segment. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes.

The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below.

Pharmacy Services Segment

The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services.

Retail/LTC Segment

The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic^®walk-in medical clinics and conducts long-term care (“LTC”) pharmacy operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. As of March 31, 2019, 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, serving an estimated 38 million people as of March 31, 2019. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services, workers’ compensation administrative services

8

and health information technology products and services. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.”

Corporate/Other Segment

The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of:

• Management and administrative expenses to support the overall operations of the Company, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs; and

• Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in Exhibit 13.1 to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018 (the “2018 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 CVS Health Corporation and its majority-owned subsidiaries and the variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.

The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary.

Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Restricted Cash

Restricted cash included in other current assets in the unaudited condensed consolidated balance sheets represents amounts held in escrow accounts in connection with certain recent acquisitions. Restricted cash included in other assets in the unaudited condensed consolidated balance sheets represents amounts held in a trust in one of the Company’s captive insurance companies

9

to satisfy collateral requirements associated with the assignment of certain insurance polices. All restricted cash is invested in time deposits, money market funds or commercial paper. The following represents a reconciliation of cash and cash equivalents in the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash in the unaudited condensed consolidated statements of cash flows:

In millions	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	5,896	$	4,059
Restricted cash (included in other current assets)	6		6
Restricted cash (included in other assets)	266		230
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	6,168	$	4,295

Accounts Receivable

Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations. Accounts receivable, net is composed of the following:

In millions	March 31, 2019		December 31, 2018
Trade receivables	$	7,158	$	6,896
Vendor and manufacturer receivables	8,901		7,655
Premium receivables	2,582		2,259
Other receivables	868		821
Total accounts receivable, net	$	19,509	$	17,631

Revenue Recognition

The following is a discussion of the Company’s revenue recognition policies by segment.

Pharmacy Services Segment

The Pharmacy Services segment sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through the Company’s retail pharmacy network. The Company’s pharmacy benefit arrangements are accounted for in a manner consistent with a master supply arrangement as there are no contractual minimum volumes and each prescription is considered a separate purchasing decision and distinct performance obligation transferred at a point in time. PBM services performed in connection with each prescription claim are considered part of a single performance obligation which culminates in the dispensing of prescription drugs.

The Company recognizes revenue using the gross method at the contract price negotiated with its clients when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescriptions dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while also performing the related PBM services.

Revenues include (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any discounts earned on brand name drugs or other discounts and refunds paid back to the client (see “Drug Discounts” and “Guarantees” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions and the price paid to retail network pharmacies by client plan members for retail prescriptions (“Retail Co-Payments”), and (iii) claims based administrative fees for retail pharmacy network contracts. Sales taxes are not included in revenue.

The Company recognizes revenue when control of the prescription drugs is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those prescription drugs. The following revenue recognition policies have been established for the Pharmacy Services segment:

• Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription drug is delivered to the client plan member. At the time of delivery, the Company has performed substantially

10

all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.

• Revenues generated from prescription drugs sold by third-party pharmacies in the Company’s retail pharmacy network and associated administrative fees are recognized at the Company’s point-of-sale, which is when the claim is adjudicated by the Company’s online claims processing system and the Company has transferred control of the prescription drug and performed all of its performance obligations.

For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client plan member, revenue is recognized using the net method.

Drug Discounts

The Pharmacy Services segment records revenue net of manufacturers’ rebates earned by its clients based on their plan members’ utilization of brand name formulary drugs. The Pharmacy Services segment estimates these rebates at period-end based on actual and estimated claims data and its estimates of the manufacturers’ rebates earned by its clients. The estimates are based on the best available data at period-end and recent history for the various factors that can affect the amount of rebates due to the client. The Pharmacy Services segment adjusts its rebates payable to clients to the actual amounts paid when these rebates are paid or as significant events occur. Any cumulative effect of these adjustments is recorded against revenues as identified. Adjustments generally result from contract changes with clients or manufacturers that have retroactive rebate adjustments, differences between the estimated and actual product mix subject to rebates, or whether the brand name drug was included in the applicable formulary. The effect of adjustments between estimated and actual manufacturers’ rebate amounts has not been material to the Company’s operating results or financial condition.

Guarantees

The Pharmacy Services segment also adjusts revenues for refunds owed to clients resulting from pricing guarantees and performance against defined service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition.

Retail/LTC Segment

Retail Pharmacy

The Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims under other retail network arrangements. Revenues are adjusted for refunds owed to third party payers for pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition.

Revenue from Company gift cards purchased by customers is deferred as a contract liability until goods or services are transferred. Any amounts not expected to be redeemed by customers (i.e., breakage) are recognized based on historical redemption patterns.

Customer returns are not material to the Company’s operating results or financial condition. Sales taxes are not included in revenue.

Loyalty Program

The Company’s customer loyalty program, ExtraCare^®, consists of two components, ExtraSavings^TM and ExtraBucks^® Rewards. ExtraSavings are coupons that are recorded as a reduction of revenue when redeemed as the Company has concluded that they do not represent a promise to the customer to deliver additional goods or services at the time of issuance because they are not tied to a specific transaction or spending level.

ExtraBucks Rewards are accumulated by customers based on their historical spending levels. Thus, the Company has determined that there is an additional performance obligation to those customers at the time of the initial transaction. The Company allocates the transaction price to the initial transaction and the ExtraBucks Rewards transaction based upon the relative standalone selling price, which considers historical redemption patterns for the rewards. Revenue allocated to ExtraBucks Rewards is recognized as those rewards are redeemed. At the end of each period, unredeemed rewards are reflected as a contract liability.

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Long-term Care

Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. A significant portion of Long-term Care revenue from sales of pharmaceutical and medical products is reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue at the revenue recognition date to properly account for the variable consideration due to anticipated differences between billed and reimbursed amounts. Accordingly, the total revenues and receivables reported in the Company’s unaudited condensed consolidated financial statements are recorded at the amount expected to be ultimately received from these payors.

Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third-party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of normal billing procedures and subject to normal accounts receivable collections procedures.

Walk-In Medical Clinics

For services provided by the Company’s walk-in medical clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third-party payor contractual obligations and patient direct bill historical collection rates.

Health Care Benefits Segment

Premium Revenue

Premiums are recognized as revenue in the month in which the enrollee is entitled to receive health care services. Premiums are reported net of an allowance for estimated terminations and uncollectible amounts. Additionally, premium revenue subject to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010’s (as amended, collectively, the “ACA’s”) minimum medical loss ratio (“MLR”) rebate requirements is recorded net of the estimated minimum MLR rebates for the current calendar year. Premiums related to unexpired contractual coverage periods (unearned premiums) are reported as other insurance liabilities on the unaudited condensed consolidated balance sheets and recognized as revenue when earned.

Some of the Company’s contracts allow for premiums to be adjusted to reflect actual experience or the relative health status of Insured members. Such adjustments are reasonably estimable at the outset of the contract, and adjustments to those estimates are made based on actual experience of the customer emerging under the contract and the terms of the underlying contract.

Services Revenue

Services revenue relates to contracts that can include various combinations of services or series of services which generally are capable of being distinct and accounted for as separate performance obligations. Health Care Benefits segment services revenue consists of the following components:

• ASC fees are received in exchange for performing certain claim processing and member services for ASC members. ASC fee revenue is recognized over the period the service is provided. Some of the Company’s administrative services contracts include guarantees with respect to certain functions, such as customer service response time, claim processing accuracy and claim processing turnaround time, as well as certain guarantees that a plan sponsor’s benefit claim experience will fall within a certain range. With any of these guarantees, the Company is financially at risk if the conditions of the arrangements are not met, although the maximum amount at risk is typically limited to a percentage of the fees otherwise payable to the Company by the customer involved. Each period the Company estimates its obligations under the terms of these guarantees and records its estimate as an offset to service revenues.

• Workers’ compensation administrative services consist of fee-based managed care services. Workers’ compensation administrative services revenue is recognized once the service is provided.

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Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source in each segment for the three months ended March 31, 2019 and 2018:

	Pharmacy		Retail/		Health Care		Corporate/		Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other		Eliminations			Totals
Three Months Ended March 31, 2019
Major goods/services lines:
Pharmacy	$	33,413	$	16,118	$	—	$	—	$	(11,007	)	$	38,524
Front Store	—		4,799		—		—		—			4,799
Premiums	—		—		16,259		23		—			16,282
Net investment income	—		—		164		85		—			249
Other	145		198		1,447		2		—			1,792
Total	$	33,558	$	21,115	$	17,870	$	110	$	(11,007	)	$	61,646
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,574
Mail choice (2)	11,839
Other	145
Total	$	33,558
Three Months Ended March 31, 2018
Major goods/services lines:
Pharmacy	$	32,406	$	15,500	$	—	$	—	$	(8,601	)	$	39,305
Front Store	—		4,726		—		—		—			4,726
Premiums	—		—		1,306		—		—			1,306
Net investment income	—		—		2		48		—			50
Other	140		206		10		—		—			356
Total	$	32,546	$	20,432	$	1,318	$	48	$	(8,601	)	$	45,743
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,198
Mail choice (2)	11,208
Other	140
Total	$	32,546

^{_____________________________________________} 

(1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice^® activity, which is included within the mail choice category.

(2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect^® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order.

Contract Balances

Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example ExtraBucks^® Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the customer. In addition, the Company recognizes breakage on Company gift cards based on historical redemption patterns.

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The following table provides information about receivables and contract liabilities from contracts with customers:

In millions	March 31, 2019		December 31, 2018
Trade receivables (included in accounts receivable, net)	$	7,158	$	6,896
Contract liabilities (included in accrued expenses)	75		67

During the three months endedMarch 31, 2019, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes:

In millions
Balance at December 31, 2018	$	67
Loyalty program earnings and gift card issuances	90
Redemption and breakage	(82		)
Balance at March 31, 2019	$	75

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 approximately $10 million and $22 million in the three months endedMarch 31, 2019 and 2018, respectively. The Company’s investment in and equity in the earnings of SureScripts for all periods presented is immaterial.

The Company has an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several LTC pharmacies in four states. Heartland paid the Company approximately $25 million and $35 million for pharmaceutical inventory purchases during the three months endedMarch 31, 2019 and 2018, respectively. Additionally, the Company performs certain collection functions for Heartland and then passes those customer cash collections back to Heartland. The Company’s investment in and equity in the earnings of Heartland for all periods presented is immaterial.

New Accounting Pronouncements Recently Adopted

Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard that was adopted in 2018.

The Company adopted this new accounting standard on January 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On January 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $178 million ($241 million prior to tax effect). The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company’s consolidated operating results and had no impact on the Company’s cash flows.

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The following is a discussion of the Company’s lease policy under the new lease accounting standard:

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, determined by class of underlying asset, to discount the lease payments.The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives.

The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years each. For real estate leases, the options to extend are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and regularly opens or closes stores to align with its operating strategy. Generally, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

For real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities.

See Note 5 ‘‘Leases’’ for additional information.

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Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2019:

	Impact of Change in Accounting Policy
	As Reported					Adjusted
In millions	December 31, 2018		Adjustments			January 1, 2019
Condensed Consolidated Balance Sheets:
Other current assets	$	4,581	$	(48	)	$	4,533
Total current assets	45,243		(48		)	45,195
Property and equipment, net	11,349		11			11,360
Operating lease right-of-use assets	—		20,987			20,987
Intangible assets, net	36,524		(217		)	36,307
Other assets	5,046		(521		)	4,525
Total assets	196,456		20,212			216,668
Accrued expenses	10,711		(52		)	10,659
Current portion of operating lease liabilities	—		1,803			1,803
Current portion of long-term debt	1,265		2			1,267
Total current liabilities	44,009		1,753			45,762
Long-term operating lease liabilities	—		18,832			18,832
Long-term debt	71,444		(96		)	71,348
Deferred income taxes	7,677		63			7,740
Other long-term liabilities	2,780		(518		)	2,262
Total liabilities	137,913		20,034			157,947
Retained earnings	40,911		178			41,089
Total CVS Health shareholders’ equity	58,225		178			58,403
Total shareholders’ equity	58,543		178			58,721

Accounting for Interest Associated with the Purchase of Callable Debt Securities

In March 2017, the FASB issued ASU 2017-08, Accounting for Interest Associated with the Purchase of Callable Debt Securities (Topic 310). Under this standard, premiums on callable debt securities are amortized to the earliest call date rather than to the contractual maturity date. Callable debt securities held at a discount will continue to be amortized to the contractual maturity date. The Company adopted this new accounting guidance on January 1, 2019 on a modified retrospective basis and recorded an immaterial cumulative effect adjustment from accumulated other comprehensive income to retained earnings on the condensed consolidated balance sheet.

New Accounting Pronouncements Not Yet Adopted

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires the use of a forward-looking expected loss impairment model for trade and other receivables, held-to-maturity debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company 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.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is

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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.

Targeted Improvements to the Accounting for Long-Duration Insurance Contracts

In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This standard requires the Company to review cash flow assumptions for its long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount the Company’s liability for future policy benefits will be based on an estimate of the yield for an upper-medium-grade fixed-income instrument. In addition, this standard changes the amortization method for deferred acquisition costs and requires additional disclosures regarding the long duration insurance contract liabilities in the Company’s interim and annual financial statements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures.

2. Acquisition of Aetna

On the Aetna Acquisition Date, the Company acquired 100% of the outstanding shares and voting interests of Aetna for a combination of cash and stock. Under the terms of the merger agreement, Aetna shareholders received $145.00 in cash and 0.8378 CVS Health shares for each Aetna share. The transaction valued Aetna at approximately $212 per share or approximately $70 billion. Including the assumption of Aetna’s debt, the total value of the transaction was approximately $78 billion. The Company financed the cash portion of the purchase price through a combination of cash on hand and by issuing approximately $45 billion of new debt, including senior notes and term loans. Aetna is a leading health care benefits company that offers a broad range of traditional, voluntary, and consumer-directed health insurance products and related services. The Company acquired Aetna to help improve the consumer health care experience by combining Aetna’s health care benefits products and services with CVS Health’s more than 9,900 retail locations, approximately 1,100 walk-in medical clinics and integrated pharmacy capabilities with the goal of becoming the new, trusted front door to health care.

The transaction has been accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values at the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

In millions
Cash and cash equivalents	$	6,565
Accounts receivable	4,089
Other current assets	3,896
Investments (current and long-term)	17,984
Goodwill	47,082
Intangible assets	23,086
Other long-term assets	8,249
Total assets acquired	110,951
Health care costs payable	5,293
Other current liabilities	9,982
Debt (current and long-term)	8,098
Deferred income taxes	4,414
Other long-term liabilities	13,078
Total liabilities assumed	40,865
Noncontrolling interests	320
Total consideration transferred	$	69,766

The assessment of fair value is preliminary and is based on information that was available to management at the time the unaudited condensed consolidated financial statements were prepared. The most significant open items included the valuation of certain intangible assets, the accounting for income taxes and the accounting for contingencies as management is awaiting

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additional information to complete its assessment of these matters. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Measurement period adjustments to assets acquired and liabilities assumed during the three months endedMarch 31, 2019 primarily related to additional information received related to certain valuations and contingencies and the related impact on the accounting for income taxes and goodwill. There were no material income statement measurement period adjustments recorded during the three months endedMarch 31, 2019.

Unaudited pro forma financial information

The following unaudited pro forma information presents a summary of the Company’s combined operating results for the three months March 31, 2018 as if the Aetna acquisition and the related financing transactions had occurred on January 1, 2017. The following pro forma financial information is not necessarily indicative of the Company’s operating results as they would have been had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

In millions, except per share amounts
Total revenues	$	59,093
Net income attributable to CVS Health	1,807
Net income per share attributable to CVS Health:
Basic	$	1.40
Diluted	$	1.39

The pro forma results for the three months ended March 31, 2018 include adjustments related to the following purchase accounting and acquisition-related items:

• Elimination of intercompany transactions between CVS Health and Aetna;

• Elimination of estimated foregone interest income associated with (i) cash assumed to have been used to partially fund the Aetna Acquisition and (ii) adjusting the amortized cost of Aetna’s investment portfolio to fair value as of the completion of the Aetna Acquisition;

• Elimination of historical intangible asset, deferred acquisition cost and capitalized software amortization expense and addition of amortization expense based on the current preliminary values of identified intangible assets;

• Additional interest expense from (i) the long-term debt issued to partially fund the Aetna Acquisition and (ii) the amortization of the fair value adjustment to assumed long-term debt.

• Additional depreciation expense related to the adjustment of Aetna’s property and equipment to fair value;

• Adjustments to align CVS Health’s and Aetna’s accounting policies;

• Elimination of transaction related costs; and

• Tax effects of the adjustments noted above.

3. Investments

Total investments at March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019						December 31, 2018
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,286	$	13,611	$	15,897	$	2,359	$	12,896	$	15,255
Mortgage loans	123		1,215		1,338		145		1,216		1,361
Other investments	17		1,584		1,601		18		1,620		1,638
Total investments	$	2,426	$	16,410	$	18,836	$	2,522	$	15,732	$	18,254

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Debt Securities

Debt securities available for sale at March 31, 2019 and December 31, 2018 were as follows:

In millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
Debt securities:
U.S. government securities	$	1,704	$	40	$	—		$	1,744
States, municipalities and political subdivisions	2,246		71		—			2,317
U.S. corporate securities	6,777		288		(1		)	7,064
Foreign securities	2,243		110		—			2,353
Residential mortgage-backed securities	577		18		—			595
Commercial mortgage-backed securities	608		29		—			637
Other asset-backed securities	1,148		8		(7		)	1,149
Redeemable preferred securities	32		6		—			38
Total debt securities (1)	$	15,335	$	570	$	(8	)	$	15,897
December 31, 2018
Debt securities:
U.S. government securities	$	1,662	$	26	$	—		$	1,688
States, municipalities and political subdivisions	2,370		30		(1		)	2,399
U.S. corporate securities	6,444		61		(16		)	6,489
Foreign securities	2,355		31		(3		)	2,383
Residential mortgage-backed securities	567		10		—			577
Commercial mortgage-backed securities	594		11		—			605
Other asset-backed securities	1,097		3		(15		)	1,085
Redeemable preferred securities	30		—		(1		)	29
Total debt securities (1)	$	15,119	$	172	$	(36	)	$	15,255

^{_____________________________________________} 

(1) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At March 31, 2019, debt securities with a fair value of $939 million, gross unrealized capital gains of $45 million and no gross unrealized capital losses and at December 31, 2018, debt securities with a fair value of $916 million, gross unrealized capital gains of $12 million and gross unrealized capital losses of $2 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income.

The fair value of debt securities at March 31, 2019 is shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.

In millions	Amortized Cost		Fair Value
Due to mature:
Less than one year	$	990	$	993
One year through five years	5,511		5,630
After five years through ten years	2,991		3,125
Greater than ten years	3,510		3,768
Residential mortgage-backed securities	577		595
Commercial mortgage-backed securities	608		637
Other asset-backed securities	1,148		1,149
Total	$	15,335	$	15,897

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Summarized below are the debt securities the Company held at March 31, 2019 and December 31, 2018 that were in an unrealized capital loss position:

In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses
March 31, 2019
Debt securities:
U.S. government securities	12	$	30	$	—
States, municipalities and political subdivisions	26	39		—
U.S. corporate securities	70	94		1
Foreign securities	39	47		—
Residential mortgage-backed securities	23	—		—
Commercial mortgage-backed securities	1	2		—
Other asset-backed securities	487	486		7
Redeemable preferred securities	1	6		—
Total debt securities	659	$	704	$	8
December 31, 2018
Debt securities:
U.S. government securities	8	$	26	$	—
States, municipalities and political subdivisions	54	86		1
U.S. corporate securities	1,399	1,431		16
Foreign securities	243	314		3
Residential mortgage-backed securities	45	1		—
Other asset-backed securities	516	528		15
Redeemable preferred securities	14	23		1
Total debt securities	2,279	$	2,409	$	36

Since Aetna’s investment portfolio was measured at fair value as of the Aetna Acquisition Date, each of the securities in the table above were in an unrealized loss position for less than 12 months. The Company reviewed the securities in the tables above and concluded that these are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of March 31, 2019, the Company did not intend to sell these securities, and did not believe it was more likely than not that it would be required to sell these securities prior to anticipated recovery of their amortized cost basis.

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The maturity dates for debt securities in an unrealized capital loss position at March 31, 2019 were as follows:

	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	1	$	—	$	20	$	—	$	21	$	—
One year through five years	—		—		43		1		43		1
After five years through ten years	6		—		82		—		88		—
Greater than ten years	4		—		60		—		64		—
Residential mortgage-backed securities	—		—		—		—		—		—
Commercial mortgage-backed securities	—		—		2		—		2		—
Other asset-backed securities	—		—		486		7		486		7
Total	$	11	$	—	$	693	$	8	$	704	$	8

Mortgage Loans

The Company’s mortgage loans are collateralized by commercial real estate. The Company did not have any mortgage loans during the three months ended March 31, 2018. During the three months ended March 31, 2019, the Company had the following activity in its mortgage loan portfolio:

In millions
New mortgage loans	$	41
Mortgage loans fully repaid	52
Mortgage loans foreclosed	—

The Company assesses mortgage loans on a regular basis for credit impairments, and annually assigns a credit quality indicator to each loan. The Company’s credit quality indicator is internally developed and categorizes its portfolio on a scale from 1 to 7. These indicators are based upon several factors, including current loan to value ratios, property condition, market trends, creditworthiness of the borrower and deal structure. The vast majority of the Company’s mortgage loans fall into categories 2 to 4.

• Category 1 - Represents loans of superior quality.

• Categories 2 to 4 - Represent loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes.

• Categories 5 and 6 - Represent loans where credit risk is not substantial, but these loans warrant management’s close attention.

• Category 7 - Represents loans where collections are potentially at risk; if necessary, an impairment is recorded.

Based upon the most recent assessments at March 31, 2019 and December 31, 2018, the Company’s mortgage loans were given the following credit quality indicators:

In millions, except credit ratings indicator	March 31, 2019		December 31, 2018
1	$	41	$	42
2 to 4	1,283		1,301
5 and 6	14		18
7	—		—
Total	$	1,338	$	1,361

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Net Investment Income

Sources of net investment income for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended March 31,
In millions	2019			2018
Debt securities	$	156		$	50
Mortgage loans	17			—
Other investments	26			—
Gross investment income	199			50
Investment expenses	(9		)	—
Net investment income (excluding net realized capital gains or losses)	190			50
Net realized capital gains (1)	59			—
Net investment income (2)	$	249		$	50

^{_____________________________________________} 

(1) Other-than-temporary impairment (“OTTI”) losses on debt securities recognized in the unaudited condensed consolidated statements of operations were $7 million for the three months ended March 31, 2019. There were no OTTI losses on debt securities for the three months ended March 31, 2018.

(2) Net investment income includes $11 million for the three months ended March 31, 2019 related to investments supporting experience-rated products. The Company had no investments supporting experience-rated products during the three months ended March 31, 2018.

The portion of unrealized capital gains and losses recognized during the three months ended March 31, 2019 related to investments in equity securities held as of the reporting date was not material.

The Company did not have any material proceeds from the sale of available for sale debt securities or related gross realized capital gains or losses for the three months ended March 31, 2018. Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three months endedMarch 31, 2019 were as follows:

In millions
Proceeds from sales	$	1,489
Gross realized capital gains	35
Gross realized capital losses	2

4. Fair Value

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. The Company’s assets and liabilities carried at fair value have been classified within one of three levels of a hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of valuation information (“valuation inputs”) that qualifies a financial asset or liability for each level:

• Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets.

• Level 2 – Valuation inputs other than Level 1 that are based on observable market data.  These include: quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets, valuation inputs that are observable that are not prices (such as interest rates and credit risks) and valuation inputs that are derived from or corroborated by observable markets.

• Level 3 – Developed from unobservable data, reflecting the Company’s assumptions.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 “Fair Value” of Notes to Consolidated Financial Statements in Exhibit 13.1 to the 2018 Form 10-K.

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There were no financial liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at March 31, 2019 or December 31, 2018. Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 were as follows:

In millions	Level 1		Level 2		Level 3		Total
March 31, 2019
Debt securities:
U.S. government securities	$	1,665	$	79	$	—	$	1,744
States, municipalities and political subdivisions	—		2,317		—		2,317
U.S. corporate securities	—		7,006		58		7,064
Foreign securities	—		2,350		3		2,353
Residential mortgage-backed securities	—		595		—		595
Commercial mortgage-backed securities	—		637		—		637
Other asset-backed securities	—		1,149		—		1,149
Redeemable preferred securities	—		27		11		38
Total debt securities	1,665		14,160		72		15,897
Equity securities	9		—		71		80
Total	$	1,674	$	14,160	$	143	$	15,977
December 31, 2018
Debt securities:
U.S. government securities	$	1,597	$	91	$	—	$	1,688
States, municipalities and political subdivisions	—		2,399		—		2,399
U.S. corporate securities	—		6,422		67		6,489
Foreign securities	—		2,380		3		2,383
Residential mortgage-backed securities	—		577		—		577
Commercial mortgage-backed securities	—		605		—		605
Other asset-backed securities	—		1,085		—		1,085
Redeemable preferred securities	—		22		7		29
Total debt securities	1,597		13,581		77		15,255
Equity securities	19		—		54		73
Total	$	1,616	$	13,581	$	131	$	15,328

There were no transfers between Levels 1 and 2 during the three months ended March 31, 2019 or 2018. During the three months endedMarch 31, 2019 and 2018, there were no transfers into or out of Level 3.

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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 March 31, 2019 and December 31, 2018 were as follows:

	Carrying Value		Estimated Fair Value
In millions			Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Mortgage loans	$	1,338	$	—	$	—	$	1,350	$	1,350
Equity securities (1)	135		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	377		—		—		364		364
Long-term debt	71,781		72,376		—		—		72,376
December 31, 2018
Assets:
Mortgage loans	$	1,361	$	—	$	—	$	1,366	$	1,366
Equity securities (1)	140		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	382		—		—		357		357
Long-term debt	72,709		71,252		—		—		71,252

^{_____________________________________________} 

(1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies.

Separate Accounts assets related to the Company’s large case pensions products represent funds maintained to meet specific objectives of contract holders. Since contract holders bear the investment risk of these assets, a corresponding Separate Accounts liability has been established equal to the assets. These assets and liabilities are carried at fair value. Separate Accounts financial assets as of March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019								December 31, 2018
In millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Debt securities	$	983	$	2,445	$	—	$	3,428	$	782	$	2,500	$	4	$	3,286
Equity securities	—		3		—		3		—		3		—		3
Common/collective trusts	—		415		—		415		—		404		—		404
Total (1)	$	983	$	2,863	$	—	$	3,846	$	782	$	2,907	$	4	$	3,693

^{_____________________________________________} 

(1) Excludes $228 million and $191 million of cash and cash equivalents and accounts receivable at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019, the Company had an immaterial amount of Level 3 Separate Accounts financial assets.

5. Leases

The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years. The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years.

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The Company maintains certain lease agreements for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased. For these pharmacy lease agreements, the Company concluded that for accounting purposes the lease term was the remaining economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases.

The following table is a summary of the Company’s components of net lease cost for the three months ended March 31, 2019:

In millions
Operating lease cost	$	682
Finance lease cost:
Amortization of right-of-use assets	9
Interest on lease liabilities	10
Total finance lease costs	19
Short-term lease costs	6
Variable lease costs	142
Less: sublease income	12
Net lease cost	$	837

Supplemental cash flow information related to leases for the three months endedMarch 31, 2019 is as follows:

In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	670
Operating cash flows paid for interest portion of finance leases	10
Financing cash flows paid for principal portion of finance leases	7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	556
Finance leases	12

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Supplemental balance sheet information related to leases as of March 31, 2019 is as follows:

In millions, except lease term and discount rate
Operating leases:
Operating lease right-of-use assets	$	20,992
Current portion of operating lease liabilities	$	1,803
Long-term operating lease liabilities	18,961
Total operating lease liabilities	$	20,764
Finance leases: (1)
Property and equipment, net	$	509
Current portion of long-term debt	$	25
Long-term debt	535
Total finance lease liabilities	$	560
Weighted average remaining lease term
Operating leases	14.2
Finance leases	20.3
Weighted average discount rate
Operating leases	4.7		%
Finance leases	7.5		%

^{_____________________________________________} 

(1) Finance lease right-of-use assets are included within property and equipment, net and the respective finance lease liabilities are included in the current portion of long-term debt and long-term debt lines on the unaudited condensed consolidated balance sheets.

The following table summarizes the maturity of lease liabilities under finance and operating leases as of March 31, 2019:

	Finance			Operating
In millions	Leases			Leases (1)			Total
2019 (remaining nine months)	$	50		$	2,035		$	2,085
2020	65			2,612			2,677
2021	62			2,477			2,539
2022	58			2,316			2,374
2023	56			2,203			2,259
Thereafter	786			16,588			17,374
Total lease payments (2)	1,077			28,231			29,308
Less: imputed interest	(517		)	(7,467		)	(7,984		)
Total lease liabilities	$	560		$	20,764		$	21,324

^{_____________________________________________} 

(1) Future operating lease payments have not been reduced by minimum sublease rentals of $182 million due in the future under noncancelable subleases.

(2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.1 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement.

The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the table above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Sale-leaseback transactions resulted in an

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immaterial gain and proceeds of $5 million in the three months ended March 31, 2019. There were no sale-leaseback transactions in the three months ended March 31, 2018.

Store Rationalization Charge

During the three months ended March 31, 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the operating lease right-of-use assets. Accordingly, an interim long lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC Segment.

6. Health Care Costs Payable

Prior to the Aetna Acquisition, the Company’s health care costs payable balance was immaterial and related to unpaid pharmacy claims for its SilverScript PDP. Accordingly, the Company has not included disclosures for health care costs payable for periods prior to the Aetna Acquisition Date.

The following table shows the components of the change in health care costs payable during the three months ended March 31, 2019:

In millions
Health care costs payable, beginning of the period	$	6,147
Less: Reinsurance recoverables	4
Health care costs payable, beginning of the period, net	6,143
Add: Components of incurred health care costs
Current year	13,804
Prior years	(446		)
Total incurred health care costs (1)	13,358
Less: Claims paid
Current year	8,004
Prior years	4,812
Total claims paid	12,816
Add: Premium deficiency reserve	11
Health care costs payable, end of period, net	6,696
Add: Reinsurance recoverables	5
Health care costs payable, end of period	$	6,701

^{_____________________________________________} 

(1) Total incurred health care costs during the three months ended March 31, 2019 in the table above exclude (i) $11 million related to a premium deficiency reserve for the 2019 coverage year related to the Company’s Medicaid products, (ii) $10 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet and (iii) $80 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet.

The Company’s estimates of prior years’ health care costs payable decreased by $446 million in the three months ended March 31, 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 March 31, 2019, the Company’s liabilities for the ultimate cost of (i) services rendered to members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid (collectively, “IBNR”) plus expected development on reported claims totaled approximately $5.1 billion. The majority of the Company’s liabilities for IBNR plus expected development on reported claims at March 31, 2019 related to the current year.

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7. Shareholders’ Equity

Share Repurchases

On November 2, 2016, the Company’s Board of Directors (the “Board”) authorized the 2016 share repurchase program (“2016 Repurchase Program”) for up to $15.0 billion of the Company’s common shares. The 2016 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions. The 2016 Repurchase Program can be modified or terminated by the Board at any time.

During the three months ended March 31, 2019 and 2018, the Company did not repurchase any shares of its common stock. At March 31, 2019, the Company had remaining authorization to repurchase an aggregate of up to approximately $13.9 billion of its common shares under the 2016 Repurchase Program.

Dividends

The quarterly cash dividend declared by the Board was $0.50 per share in the three-month periods ended March 31, 2019 and 2018. CVS Health has paid cash dividends every quarter since becoming a public company. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.

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8. Other Comprehensive Income

Shareholders’ equity included the following activity in accumulated other comprehensive income for the three months endedMarch 31, 2019 and 2018:

	Three Months Ended March 31,
In millions	2019			2018
Net unrealized investment gains (losses):
Beginning of period balance	$	97		$	—
Other comprehensive income before reclassifications ($410 and $0 pretax)	348			—
Amounts reclassified from accumulated other comprehensive income ($(19) and $0 pretax)(1)	(14		)	—
Other comprehensive income	334			—
End of period balance	431			—
Foreign currency translation adjustments:
Beginning of period balance	(158		)	(129		)
Other comprehensive income	1			1
Other comprehensive income	1			1
End of period balance	(157		)	(128		)
Net cash flow hedges:
Beginning of period balance	312			(15		)
Adoption of new accounting standard (2)	—			(3		)
Other comprehensive income before reclassifications ($0 and $464 pretax)	—			344
Amounts reclassified from accumulated other comprehensive income (loss) ($(5) and $(1) pretax)(3)	(4		)	(1		)
Other comprehensive income (loss)	(4		)	343
End of period balance	308			325
Pension and OPEB plans:
Beginning of period balance	(149		)	(21		)
Adoption of new accounting standard (2)	—			(4		)
Other comprehensive income	—			—
End of period balance	(149		)	(25		)
Total beginning of period accumulated other comprehensive income (loss)	102			(165		)
Adoption of new accounting standard (2)	—			(7		)
Total other comprehensive income	331			344
Total end of period accumulated other comprehensive income	$	433		$	172

^{_____________________________________________} 

(1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income within the unaudited condensed consolidated statements of operations.

(2) Reflects the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income during the first quarter of 2018.

(3) Amounts reclassified from accumulated other comprehensive loss for specifically identified cash flow hedges are included within interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $18 million, net of tax, in gains associated with its cash flow hedges into net income within the next 12 months.

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9. Earnings Per Share

Earnings per share is computed using the two-class method. Stock appreciation rights and options to purchase 15.3 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2019 because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase 13.2 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2018.

The following is a reconciliation of basic and diluted earnings per share for the respective periods:

	Three Months Ended March 31,
In millions, except per share amounts	2019			2018
Numerator for earnings per share calculation:
Net income	$	1,427		$	998
Income allocated to participating securities	(2		)	(2		)
Net income attributable to noncontrolling interest	(6		)	—
Net income attributable to CVS Health	$	1,419		$	996
Denominator for earnings per share calculation:
Weighted average shares, basic	1,298			1,016
Effect of dilutive securities	4			3
Weighted average shares, diluted	1,302			1,019
Earnings per share:
Basic	$	1.09		$	0.98
Diluted	$	1.09		$	0.98

10. Reinsurance

The Company utilizes reinsurance agreements primarily to reduce required capital and to facilitate the acquisition or disposition of certain insurance contracts. Ceded reinsurance agreements permit the Company to recover a portion of its losses from reinsurers, although they do not discharge the Company’s primary liability as the direct insurer of the risks reinsured.

On November 30, 2018, Aetna completed the sale of its standalone Medicare Part D prescription drug plans to a subsidiary of WellCare, effective December 31, 2018. In connection with that sale, subsidiaries of WellCare and Aetna entered into reinsurance agreements under which WellCare has ceded to Aetna 100% of the insurance risk related to the divested standalone Medicare Part D prescription drug plans for the 2019 PDP plan year.

In January 2019, the Company entered into two four-year reinsurance agreements with an unrelated reinsurer that allow it to reduce required capital and provide collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business.

11. Commitments and Contingencies

Lease Guarantees

Between 1995 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores and Linens ‘n Things, each of which subsequently filed for bankruptcy, and Marshalls. In many cases, when a former subsidiary leased a store, the Company provided a guarantee of the former subsidiary’s lease obligations. When the subsidiaries were disposed of and accounted for as discontinued operations, the Company’s guarantees remained in place, although each initial purchaser agreed to indemnify the Company for any lease obligations the Company was required to satisfy. If any of the purchasers or any of the former subsidiaries fail to make the required payments under a store lease, the Company could be required to satisfy those obligations. As of March 31, 2019, the Company guaranteed approximately 80 such store leases (excluding the lease guarantees

30

related to Linens ‘n Things, which have been recorded as a liability on the unaudited condensed consolidated balance sheet), with the maximum remaining lease term extending through 2029.

Guaranty Fund Assessments, Market Stabilization and Other Non-Voluntary Risk Sharing Pools

Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (in most states up to prescribed limits) for certain obligations of insolvent insurance companies to policyholders and claimants. The life and health insurance guaranty associations in which the Company participates that operate under these laws respond to insolvencies of long-term care insurers as well as health insurers. The Company’s assessments generally are based on a formula relating to the Company’s health care premiums in the state compared to the premiums of other insurers. Certain states allow assessments to be recovered over time as offsets to premium taxes. Some states have similar laws relating to HMOs and/or other payors such as not-for-profit consumer-governed health plans established under the ACA.

In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and one of its subsidiaries (collectively, “Penn Treaty”) in rehabilitation, an intermediate action before insolvency, and subsequently petitioned a state court to convert the rehabilitation into a liquidation. Penn Treaty was placed in liquidation in March 2017. The Company has recorded a liability for its estimated share of future assessments by applicable life and health guaranty associations. It is reasonably possible that in the future the Company may record a liability and expense relating to other insolvencies which could have a material adverse effect on the Company’s operating results, financial condition and cash flows. While historically the Company has ultimately recovered more than half of guaranty fund assessments through statutorily permitted premium tax offsets, significant increases in assessments could lead to legislative and/or regulatory actions that may limit future offsets.

HMOs in certain states in which the Company does business are subject to assessments, including market stabilization and other risk-sharing pools, for which the Company is assessed charges based on incurred claims, demographic membership mix and other factors. The Company establishes liabilities for these assessments based on applicable laws and regulations. In certain states, the ultimate assessments the Company pays are dependent upon the Company’s experience relative to other entities subject to the assessment, and the ultimate liability is not known at the financial statement date. While the ultimate amount of the assessment is dependent upon the experience of all pool participants, the Company believes it has adequate reserves to cover such assessments.

Litigation and Regulatory Proceedings

The Company is a party to numerous legal proceedings, investigations, audits and claims arising, for the most part, in the ordinary course of its businesses, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial condition.

Except as otherwise noted, the Company cannot predict with certainty the timing or outcome of the legal matters described below, and the Company is unable to reasonably estimate a possible loss or range of possible loss in excess of amounts already accrued for these matters. It is reasonably possible that the outcome of such legal matters could be material to the Company.

Usual and Customary Litigation

The Company is named as a defendant in a number of litigations that allege that the Company’s retail stores overcharged for prescription drugs by not providing the correct usual and customary charge.

State of Texas ex rel. Myron Winkelman and Stephani Martinson, et al. v. CVS Health Corporation (Travis County Texas District Court). In February 2012, the Attorney General of the State of Texas issued Civil Investigative Demands (“CIDs”) to the Company and subsequently has issued a series of requests for documents and information in connection with its investigation concerning the CVS Health Savings Pass program and other pricing practices with respect to claims for reimbursement from the Texas Medicaid program. In January 2017, the Travis County Court unsealed a first amended qui tam petition filed in April 2014. The government has intervened in this case. The amended petition alleges the Company violated the Texas Medicaid Fraud Prevention Act by submitting false claims for reimbursement to the Texas Medicaid program by, among other things, failing to use the price available to members of the CVS Health Savings Pass program as the pharmacies’

31

usual and customary price. The amended petition was unsealed following the Company’s December 2016 filing of CVS Pharmacy, Inc. v. Charles Smith, et al. (Travis County Texas District Court), a declaratory judgment action against the State of Texas seeking a declaration that the prices charged to members of the CVS Health Savings Pass program do not constitute usual and customary prices under the applicable Medicaid regulation. In March 2018, the Travis County Court denied the State of Texas’s request for temporary injunctive relief. The Company is defending itself against these claims.

Corcoran et al. v. CVS Health Corporation (U.S. District Court for the Northern District of California) and Podgorny et al. v. CVS Health Corporation (U.S. District Court for the Northern District of Illinois). These putative class actions were filed against the Company in July and September 2015. The cases were consolidated in the U.S. District Court for the Northern District of California. Plaintiffs seek damages and injunctive relief under the consumer protection statutes and common laws of certain states on behalf of a class of consumers who purchased certain prescription drugs. Several third-party payors filed similar putative class actions on behalf of payors captioned Sheet Metal Workers Local No. 20 Welfare and Benefit Fund v. CVS Health Corp. and Plumbers Welfare Fund, Local 130 v. CVS Health Corporation (both pending in the U.S. District Court for the District of Rhode Island) in February and August 2016. In all of these cases the plaintiffs allege the Company overcharged for certain prescription drugs by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. In the Corcoran case, the U.S. District Court granted summary judgment to CVS on plaintiffs’ claims in their entirety and certified certain subclasses in September 2017. The Corcoran plaintiffs have appealed the District Court’s decision to the Ninth Circuit. The Sheet Metal Workers plaintiffs have amended their complaint to assert a claim under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) premised on an alleged conspiracy between the Company and other PBMs. The Company is defending itself against these claims.

State of California ex rel. Matthew Omlansky v. CVS Caremark Corporation (Superior Court of the State of California, County of Sacramento). In April 2016, the California Superior Court unsealed a first amended qui tam complaint filed in July 2013. The government has declined to intervene in this case. The relator alleges that the Company submitted false claims for payment to the California Medicaid program in connection with reimbursement for drugs available through the CVS Health Savings Pass program as well as certain other generic drugs. The case has been stayed pending the relator’s appeal of the judgment against him in a similar case against another retailer. The Company is defending itself against these claims.

State of Mississippi v. CVS Health Corporation, et al. (Chancery Court of DeSoto County, Mississippi, Third Judicial District). In July 2016, the Company was served with a complaint filed on behalf of the State of Mississippi alleging that CVS retail pharmacies in Mississippi submitted false claims for reimbursement to the Mississippi Medicaid program by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. The Company has responded to the complaint, moved for judgment on the pleadings, filed a counterclaim and moved the case to Mississippi Circuit Court. The Company’s motion for judgment on the pleadings remains pending. The Company is defending itself against these claims.

PBM Litigation and Investigations

The Company is named as a defendant in a number of lawsuits and is subject to a number of investigations concerning its PBM practices.

Bewley, et al. v. CVS Health Corporation, et al. and Prescott, et al. v. CVS Health Corporation, et al. (both pending in the U.S. District Court for the Western District of Washington). These putative class actions were filed against the Company and other PBMs and manufacturers of glucagon kits (Bewley) and diabetes test strips (Prescott) in May 2017.Both cases allege that, by contracting for rebates with the manufacturers of these diabetes products, the Company and other PBMs caused list prices for these products to increase, thereby harming certain consumers. The plaintiffs’ primary claims are made under federal antitrust laws, RICO, state unfair competition and consumer protection laws and the federal Employee Retirement Income Security Act of 1974 (“ERISA”). Both of these cases have been transferred to the U.S. District Court for the District of New Jersey on defendants’ motions. In April 2019, the named plaintiffs in both the Bewley and Prescott cases voluntarily dismissed all of their claims without prejudice, ending both cases.

Klein, et al. v. Prime Therapeutics, et al. (U.S. District Court for the District of Minnesota). This putative class action was filed against the Company and other PBMs in June 2017 on behalf of ERISA plan members who purchased and paid for EpiPen or EpiPen Jr. Plaintiffs allege that the PBMs are ERISA fiduciaries to plan members and have violated ERISA by allegedly causing higher inflated prices for EpiPens through the process of negotiating increased rebates from EpiPen manufacturer Mylan. This case has been consolidated with a similar matter and is now proceeding as In re EpiPen ERISA Litigation. The Company is defending itself against these claims.

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The Company has received subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, Attorneys General of several states regarding its PBM practices, including pricing and rebates. In addition, the Company received an inquiry from the U.S. Senate Committee on Finance regarding insulin pricing. The Company has been providing documents and information in response to these subpoenas, CIDs and requests for information.

Controlled Substances Litigation, Audits and Subpoenas

In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against various defendants by plaintiffs such as counties, cities, hospitals, Indian tribes and third-party payors, alleging claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation captioned In re National Prescription Opiate Litigation (MDL No. 2804) is pending in the U.S. District Court for the Northern District of Ohio. This multidistrict litigation presumptively includes hundreds of relevant federal court cases that name the Company as a defendant. A significant number of similar cases that name the Company as a defendant in some capacity are pending in state courts. The Company is defending itself against all such claims. Additionally, the Company has received subpoenas, CIDs and/or other requests for information regarding opioids from the Attorneys General of several states. The Company has been cooperating with the government with respect to these subpoenas, CIDs and other requests for information.

The Company routinely is audited by the United States Drug Enforcement Administration (“DEA”). In some instances, the Company is in discussions with the DEA and U.S. Attorney’s Offices concerning allegations that the Company violated certain requirements of the Controlled Substance Act.

In September 2015, the DEA served the Company with an administrative subpoena. The subpoena seeks documents related to controlled substance policies, procedures and practices at eight Omnicare pharmacy locations from May 2012 to the present. In September 2017, the DEA expanded the investigation to include an additional Omnicare pharmacy location. The Company has been cooperating with the government and providing documents and witnesses in response to this subpoena.

Prescription Processing Investigations

In October 2015, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning the Company’s Omnicare pharmacies’ cycle fill process for assisted living facilities. The Company has been cooperating with the government and providing documents and information in response to this CID. In July 2017, the Company also received a subpoena from the California Department of Insurance requesting documents concerning similar subject matter. The Company has been cooperating with the California Department of Insurance and providing documents and information in response to this subpoena.

In December 2016, the Company received a CID from the U.S. Attorney’s Office for the Northern District of New York requesting documents and information in connection with a federal False Claims Act investigation concerning whether the Company’s retail pharmacies improperly submitted certain insulin claims to Part D of the Medicare program rather than Part B of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to this CID.

In May 2017, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning possible false claims submitted to Medicare in connection with reimbursements for prescription drugs under the Medicare Part D program. The Company has been cooperating with the government and providing documents and information in response to this CID.

Provider Proceedings

The Company is named as a defendant in purported class actions and individual lawsuits arising out of its practices related to the payment of claims for services rendered to its members by health care providers with whom the Company has a contract and with whom the Company does not have a contract (“out-of-network providers”). Among other things, these lawsuits allege that the Company paid too little to its health plan members and/or providers for these services and/or otherwise allege that the Company failed to timely or appropriately pay or administer claims and benefits (including the Company’s post payment audit and collection practices and reductions in payments to providers due to sequestration). Other major health insurers are the subject of similar litigation or have settled similar litigation.

On October 28, 2016, Aetna was named as a respondent in an arbitration proceeding that had commenced as a lawsuit in Florida state court on August 25, 2015. The arbitration proceeding was brought by hospitals owned by HCA Holdings, Inc. with

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respect to Aetna’s out-of-network benefit payment and administration practices in Florida relating to services and care rendered to members in Aetna’s individual Public Exchange products from 2014 through 2016. Coverage under Aetna’s individual Public Exchange products in Florida was not available after December 31, 2016. On October 15, 2018, the trial arbitrator awarded the claimant hospitals approximately $150 million. Aetna appealed the trial arbitrator’s decision. On March 28, 2019, the appellate arbitrator reduced the award to approximately $86 million. The proceeding has ended. During the three months ended March 31, 2019, the Company recorded the reduction in the required reserve amount for this proceeding as a measurement period adjustment to its Aetna Acquisition accounting and recorded a reduction to goodwill.

The Company also has received subpoenas and/or requests for documents and other information from, and been investigated by, Attorneys General and other state and/or federal regulators, legislators and agencies relating to, and the Company is involved in other litigation regarding, its out-of-network benefit payment and administration practices. It is reasonably possible that others could initiate additional litigation or additional regulatory action against the Company with respect to its out-of-network benefit payment and/or administration practices.

CMS Actions

The United States Centers for Medicare & Medicaid Services (“CMS”) regularly audits the Company’s performance to determine its compliance with CMS’s regulations and its contracts with CMS and to assess the quality of services it provides to Medicare beneficiaries. CMS uses various payment mechanisms to allocate and adjust premium payments to the Company’s and other companies’ Medicare plans by considering the applicable health status of Medicare members as supported by information prepared, maintained and provided by health care providers. The Company collects claim and encounter data from providers and generally relies on providers to appropriately code their submissions to the Company and document their medical records, including the diagnosis data submitted to the Company with claims. CMS pays increased premiums to Medicare Advantage plans and Medicare PDP plans for members who have certain medical conditions identified with specific diagnosis codes. Federal regulators review and audit the providers’ medical records to determine whether those records support the related diagnosis codes that determine the members’ health status and the resulting risk-adjusted premium payments to the Company. In that regard, CMS has instituted risk adjustment data validation (“RADV”) audits of various Medicare Advantage plans, including certain of the Company’s plans, to validate coding practices and supporting medical record documentation maintained by health care providers and the resulting risk adjusted premium payments to the plans. CMS may require the Company to refund premium payments if the Company’s risk adjusted premiums are not properly supported by medical record data. The Office of Inspector General (the “OIG”) also is auditing the Company’s risk adjustment-related data and that of other companies. The Company expects CMS and the OIG to continue these types of audits.

In 2012, CMS revised its audit methodology for RADV audits to determine refunds payable by Medicare Advantage plans for contract year 2011 and forward. Under the revised methodology, among other things, CMS will project the error rate identified in the audit sample of approximately 200 members to all risk adjusted premium payments made under the contract being audited. For contract years prior to 2011, CMS did not project sample error rates to the entire contract. As a result, the revised methodology may increase the Company’s exposure to premium refunds to CMS based on incomplete medical records maintained by providers. Since 2013, CMS has selected certain of the Company’s Medicare Advantage contracts for various contract years for RADV audit. The Company is currently unable to predict which of its Medicare Advantage contracts will be selected for future audit, the amounts of any retroactive refunds of, or prospective adjustments to, Medicare Advantage premium payments made to the Company, the effect of any such refunds or adjustments on the actuarial soundness of the Company’s Medicare Advantage bids, or whether any RADV audit findings would require the Company to change its method of estimating future premium revenue in future bid submissions to CMS or compromise premium assumptions made in the Company’s bids for prior contract years, the current contract year or future contract years. Any premium or fee refunds or adjustments resulting from regulatory audits, whether as a result of RADV, Public Exchange related or other audits by CMS, the OIG, the United States Department of Health and Human Services or otherwise, including audits of the Company’s minimum MLR rebates, methodology and/or reports, could be material and could adversely affect the Company’s operating results, financial condition and/or cash flows.

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Medicare CIDs

The Company has received CIDs from the Civil Division of the DOJ in connection with a current investigation of the Company’s patient chart review processes in connection with risk adjustment data submissions under Parts C and D of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to these CIDs.

Tunney Act Proceeding

On October 10, 2018, the Company and Aetna entered into a consent decree with the DOJ that allowed CVS Health’s proposed acquisition of Aetna to proceed, provided Aetna agreed to sell its individual standalone Medicare Part D prescription drug plans. As permitted by the asset preservation stipulation and order dated October 25, 2018, CVS Health completed its acquisition of Aetna on November 28, 2018, and Aetna completed the sale of such plans on November 30, 2018. The consent decree remains subject to the court approval process under the Antitrust Procedures and Penalties Act, which could result in a revision in or delay in receiving approval of the consent decree. The approval process is for the limited purpose of determining whether the consent decree is in the public interest. The Company believes that the consent decree will not have a material impact on the Company’s operating results, cash flows or financial condition.

Shareholder Matters

In February and March 2019, two putative class action complaints were filed by putative plaintiffs against the Company and certain of its current and former officers. Anarkat v. CVS Health Corp., et al., was filed in the U.S. District Court for the Southern District of New York, and Labourers’ Pension Fund of Central and Eastern Canada v. CVS Health Corp., et al., was filed in the Supreme Court of the State of New York, County of New York. 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 May 21, 2015 and February 20, 2019. The Company is defending itself against these claims.

Other Legal and Regulatory Proceedings.

The Company is also a party to other legal proceedings and is subject to government investigations, inquiries and audits and has received and is cooperating with the government in response to CIDs, subpoenas or similar process from various governmental agencies requesting information, all arising in the ordinary course of its businesses. These other legal proceedings include claims of or relating to bad faith, medical malpractice, non-compliance with state and federal regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits, provider network structure (including the use of performance-based networks and termination of provider contracts), rescission of insurance coverage, improper disclosure or use of personal information, anticompetitive practices, general contractual matters, product liability, intellectual property litigation and employment litigation. Some of these other legal proceedings are or are purported to be class actions or derivative claims. The Company is defending itself against the claims brought in these matters.

Awards to the Company and others of certain government contracts, particularly Medicaid contracts and other contracts with government customers in the Company’s Health Care Benefits segment, are subject to increasingly frequent protests by unsuccessful bidders. These protests may result in awards to the Company being reversed, delayed or modified. The loss or delay in implementation of any government contract could adversely affect the Company’s operating results. The Company will continue to defend contract awards it receives.

There also continues to be a heightened level of review and/or audit by regulatory authorities and legislators of, and increased litigation regarding, the Company’s and the rest of the health care and related benefits industry’s business and reporting practices, including premium rate increases, utilization management, development and application of medical policies, complaint, grievance and appeal processing, information privacy, provider network structure (including provider network adequacy, the use of performance-based networks and termination of provider contracts), provider directory accuracy, calculation of minimum medical loss ratios and/or payment of related rebates, delegated arrangements, rescission of insurance coverage, limited benefit health products, student health products, pharmacy benefit management practices (including manufacturers’ rebates, pricing, the use of narrow networks and the placement of drugs in formulary tiers), sales practices, customer service practices, vendor oversight and claim payment practices (including payments to out-of-network providers).

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As a leading national health care company, the Company regularly is the subject of government actions of the types described above. These government actions may prevent or delay the Company from implementing planned premium rate increases and may result, and have resulted, in restrictions on the Company’s businesses, changes to or clarifications of the Company’s business practices, retroactive adjustments to premiums, refunds or other payments to members, beneficiaries, states or the federal government, withholding of premium payments to the Company by government agencies, assessments of damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/or suspension or exclusion from participation in government programs.

The Company can give no assurance, however, that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business practices, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; (v) adverse developments in any pending qui tam lawsuit against the Company, whether sealed or unsealed, or in any future qui tam lawsuit that may be filed against the Company; or (vi) adverse developments in pending or future legal proceedings against the Company or affecting one or more of the industries in which the Company competes and/or the health care industry generally.

12. Segment Reporting

The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the CODM evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company’s segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Segment financial information for the three months ended March 31, 2018 has been retrospectively adjusted to conform with the current period presentation. See the reconciliation of consolidated operating income (GAAP measure) to adjusted operating income below for further context regarding the items excluded from operating income in determining adjusted operating income. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company’s ability to compare past financial performance with current performance and analyze underlying business performance and trends. Non-GAAP financial measures the Company discloses, such as consolidated adjusted operating income, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP.

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Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ for further discussion. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes as shown below:

	Three Months Ended March 31, 2018
	Pharmacy			Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services			LTC		Benefits			Other			Eliminations			Totals
Revenues, as previously reported	$	32,220		$	20,432	$	—		$	48		$	(6,957	)	$	45,743
Adjustments	326			—		1,318			—			(1,644		)	—
Revenues, as adjusted	$	32,546		$	20,432	$	1,318		$	48		$	(8,601	)	$	45,743
Cost of products sold (1)	$	29,751		$	14,516	$	—		$	—		$	(6,762	)	$	37,505
Adjustments	1,556			—		—			—			(1,556		)	—
Cost of products sold	$	31,307		$	14,516	$	—		$	—		(8,318		)	$	37,505
Benefit costs (1)	$	1,329		$	—	$	—		$	—		$	—		$	1,329
Adjustments	(1,329		)	—		1,329			—			—			—
Benefit costs	$	—		$	—	$	1,329		$	—		$	—		$	1,329
Operating expenses, as previously reported	$	377		$	4,292	$	—		$	264		$	(20	)	$	4,913
Adjustments	(39		)	—		127			—			(88		)	—
Operating expenses, as adjusted	$	338		$	4,292	$	127		$	264		$	(108	)	$	4,913
Operating income (loss), as previously reported	$	763		$	1,624	$	—		$	(216	)	$	(175	)	$	1,996
Adjustments	138			—		(138		)	—			—			—
Operating income (loss), as adjusted	901			1,624		(138		)	(216		)	(175		)	1,996
Adjustments	86			212		1			(2		)	—			297
Adjusted operating income (loss)	$	987		$	1,836	$	(137	)	$	(218	)	$	(175	)	$	2,293

^{_____________________________________________} 

(1) The total of cost of products sold and benefit costs were previously reported as cost of revenues.

The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals:

	Pharmacy		Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services(1)		LTC		Benefits			Other			Eliminations(2)			Totals
Three Months Ended
March 31, 2019
Revenues from customers	$	33,558	$	21,115	$	17,706		$	25		$	(11,007	)	$	61,397
Net investment income	—		—		164			85			—			249
Total revenues	33,558		21,115		17,870			110			(11,007		)	61,646
Adjusted operating income (loss)	947		1,489		1,562			(231		)	(172		)	3,595
March 31, 2018
Revenues from customers	$	32,546	$	20,432	$	1,316		$	—		$	(8,601	)	$	45,693
Net investment income	—		—		2			48			—			50
Total revenues	32,546		20,432		1,318			48			(8,601		)	45,743
Adjusted operating income (loss)	987		1,836		(137		)	(218		)	(175		)	2,293

^{_____________________________________________} 

(1) Revenues of the Pharmacy Services segment include approximately $3.3 billion of retail co-payments for each of the three-month periods ended March 31, 2019 and 2018.

(2) Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment and the Retail/LTC segment for the three months ended March 31, 2018. Effective November 28, 2018, intersegment eliminations also relate to intersegment revenue generating activities that occur between the Health Care Benefits segment and the Pharmacy Services segment and/or the Retail/LTC segment.

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The following is a reconciliation of consolidated operating income to adjusted operating income for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31,
In millions	2019		2018
Operating income (GAAP measure)	$	2,690	$	1,996
Amortization of intangible assets (1)	622		210
Acquisition-related transaction and integration costs (2)	148		43
Store rationalization charge (3)	135		—
Loss on divestiture of subsidiary (4)	—		86
Interest income on financing for the Aetna Acquisition (5)	—		(42		)
Adjusted operating income	$	3,595	$	2,293

^{_____________________________________________} 

(1) Intangible assets relate to the Company's acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company's unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company's business operations.

(2) During the three months ended March 31, 2019, acquisition-related integration costs relate to the Aetna Acquisition. During the three months ended March 31, 2018, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment.

(3) During the three months ended March 31, 2019, the store rationalization charge primarily relates to operating lease right-of-use asset impairment charges in connection with the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charge is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment.

(4) During the three months ended March 31, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statement of operations within the Retail/LTC segment.

(5) During the three months ended March 31, 2018, the Company recorded interest income of $42 million on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of CVS Health Corporation

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of CVS Health Corporation (the Company) as of March 31, 2019, the related condensed consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for the three-month periods ended March 31, 2019 and 2018, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2018, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year then ended, and the related notes (not presented herein) and in our report dated February 28, 2019, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Adoption of ASU 2016-02

As discussed in Note 1 to the condensed consolidated interim financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU 2016-02, Leases.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Ernst & Young LLP

Boston, Massachusetts

May 1, 2019

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Overview of Business

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is the nation’s premier health innovation company helping people on their path to better health. Whether in one of its pharmacies or through its health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 94 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

On November 28, 2018 (the “Aetna Acquisition Date”), the Company acquired Aetna Inc. (“Aetna”). As a result of the acquisition of Aetna (the “Aetna Acquisition”), the Company added the Health Care Benefits segment. Certain aspects of Aetna’s operations, including products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products, are included in the Company’s Corporate/Other segment.

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how its Chief Operating Decision Maker (the “CODM”) reviews information and manages the business. As a result of this realignment, the Company’s SilverScript^® PDP moved from the Pharmacy Services segment to the Health Care Benefits segment. In addition, the Company moved Aetna’s mail order and specialty pharmacy operations from the Health Care Benefits segment to the Pharmacy Services segment. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes.

The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below.

Overview of the 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 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. During the three months endedMarch 31, 2019, the Company’s PBM filled or managed 482 million prescriptions on a 30-day equivalent basis.

Overview of the Retail/LTC Segment

The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic^® walk-in medical clinics and conducts long-term care (“LTC”) pharmacy operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. As of March 31, 2019, 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. During the three months endedMarch 31, 2019, the Retail/LTC segment filled 347 million prescriptions on a 30-day equivalent basis.

Overview of the Health Care Benefits Segment

The Health Care Benefits segment is one of the nation’s leading diversified health care benefits providers, serving an estimated 38 million people as of March 31, 2019. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care

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Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services, workers’ compensation administrative services and health information technology products and services. 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.”

Overview of the Corporate/Other Segment

The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of:

• Management and administrative expenses to support the overall operations of the Company, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs; and

• Products for which the Company no longer solicits or accepts new customers such as large case pensions and long-term care insurance products.

Operating Results

The following discussion explains the material changes in the Company’s operating results for the three months ended March 31, 2019 and 2018, and the significant developments affecting the Company’s financial condition since December 31, 2018. We strongly recommend that you read our audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”).

Summary of Consolidated Financial Results

	Three Months Ended March 31,					Change
In millions	2019			2018		$			%
Revenues:
Products	$	43,343		$	44,049	$	(706	)	(1.6	)%
Premiums	16,282			1,306		14,976			1,146.7	%
Services	1,772			338		1,434			424.3	%
Net investment income	249			50		199			398.0	%
Total revenues	61,646			45,743		15,903			34.8	%
Operating costs:
Cost of products sold	37,247			37,505		(258		)	(0.7	)%
Benefit costs	13,459			1,329		12,130			912.7	%
Operating expenses	8,250			4,913		3,337			67.9	%
Total operating costs	58,956			43,747		15,209			34.8	%
Operating income	2,690			1,996		694			34.8	%
Interest expense	782			523		259			49.5	%
Other expense (income)	(31		)	3		(34		)	(1,133.3	)%
Income before income tax provision	1,939			1,470		469			31.9	%
Income tax provision	512			472		40			8.5	%
Net income	1,427			998		429			43.0	%
Net income attributable to noncontrolling interests	(6		)	—		(6		)	100.0	%
Net income attributable to CVS Health	$	1,421		$	998	$	423		42.4	%

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Commentary

Revenues

• Total revenues increased $15.9 billion or 34.8% in the three months ended March 31, 2019, as compared to the prior year. The increase in total revenues was driven by the impact of the Aetna Acquisition (primarily reflected in the Health Care Benefits segment) which occurred in November 2018, a 3.1% increase in Pharmacy Services segment revenue, and a 3.3% increase in Retail/LTC segment revenue.

• Please see “Segment Analysis” later in this report for additional information about the revenues of the Company’s segments.

Operating expenses

• Operating expenses increased $3.3 billion or 67.9% in the three months ended March 31, 2019 compared to the prior year. Operating expenses as a percentage of total revenues were 13.4% in the three months ended March 31, 2019, an increase of 270 basis points compared to the prior year. The increase in operating expenses was primarily driven by the impact of the Aetna Acquisition (including intangible asset amortization), higher operating expenses in the Retail/LTC segment and an increase in acquisition-related integration costs.

• Please see “Segment Analysis” later in this report for additional information about the operating expenses of the Company’s segments.

Operating income

• Operating income increased $694 million or 34.8% in the three months ended March 31, 2019 compared to the prior year. The increase was primarily due to the Aetna Acquisition, partially offset by reimbursement pressure and higher operating expenses in the Retail/LTC segment, continued price compression in the Pharmacy Services segment and an increase in acquisition-related integration costs.

• Please see “Segment Analysis” later in this report for additional information about the operating income of the Company’s segments.

Interest expense

• Interest expense increased $259 million in the three months ended March 31, 2019 compared to the prior year, primarily due to financing activity associated with the Aetna Acquisition. See “Liquidity and Capital Resources” later in this report for additional information.

Income tax provision

• The Company’s effective income tax rate was 26.4% in the three months ended March 31, 2019 compared to 32.1% for the prior year. The decrease in the effective income tax rate compared to the prior year was primarily due to the impact of the non-deductible goodwill included in the loss associated with the divestiture of the Company’s RxCrossroads subsidiary during the three months ended March 31, 2018.

Outlook for 2019

The Company expects 2019 to be a transition year as it integrates the Aetna Acquisition and focuses on key pillars of its growth

strategy. The Company believes that it is on track to exceed its 2020 target for synergies from the Aetna Acquisition. The Company also expects that the following challenges may have a disproportionate adverse impact on, and reduce, the operating income of its Pharmacy Services and Retail/LTC segments in 2019 compared to 2018:

• Ongoing pharmacy reimbursement pressure in the Pharmacy Services and Retail/LTC segments and reductions in the traditional offsets to those pressures, including a declining benefit from the introduction of new multi-source generic prescription drugs and lower benefits from generic dispensing rate increases;

• The reimbursement pressure in the Pharmacy Services segment is projected to be exacerbated by the cumulative effect on rebate guarantees of lower brand name drug price inflation and a modest 2019 selling season; and

• The Retail/LTC segment is projected to be impacted by structural and Company specific challenges in the long-term care space as well as the annualization of the Company’s 2018 investment of a portion of the savings from the Tax Cuts and Job Act (the “TCJA”) in wages and benefits.

The Company is taking specific actions designed to address these challenges and position it well in 2020 and beyond. These actions include new product and service initiatives in its Pharmacy Services and Retail/LTC segments, introducing a new PBM client contracting model, accelerating the action plan designed to improve the performance of the LTC business and initiating a

42

new enterprise cost reduction effort. The Company also is continuing to evaluate its assets and the roles they play in enabling the Company’s core strategies.

The Company’s current expectations described above are forward-looking statements. Please see “Cautionary Statement Concerning Forward-Looking Statements” in this report for information regarding important factors that may cause the Company’s actual results to differ from those currently projected and/or otherwise materially affect the Company.

Segment Analysis

The following discussion of segment operating results is presented based on the Company’s reportable segments in accordance with the accounting guidance for segment reporting and is consistent with our segment disclosure in Note 12 ‘‘Segment Reporting’’ to the unaudited condensed consolidated financial statements.

The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the CODM evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company’s segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Segment financial information for the three months ended March 31, 2018 has been retrospectively adjusted to conform with the current period presentation. 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.

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ to the unaudited condensed consolidated financial statements for further discussion. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes as shown in Note 12 ‘‘Segment Reporting’’ to the unaudited condensed consolidated financial statements.

The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals:

	Pharmacy		Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services(1)		LTC		Benefits			Other			Eliminations(2)			Totals
Three Months Ended
March 31, 2019
Total revenues	$	33,558	$	21,115	$	17,870		$	110		$	(11,007	)	$	61,646
Adjusted operating income (loss)	947		1,489		1,562			(231		)	(172		)	3,595
March 31, 2018
Total revenues	32,546		20,432		1,318			48			(8,601		)	45,743
Adjusted operating income (loss)	987		1,836		(137		)	(218		)	(175		)	2,293

^{_____________________________________________} 

(1) Revenues of the Pharmacy Services segment include approximately $3.3 billion of retail co-payments for each of the three-month periods ended March 31, 2019 and 2018.

(2) Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment and the Retail/LTC segment for the three months ended March 31, 2018. Effective November 28, 2018, intersegment eliminations also relate to intersegment revenue generating activities that occur between the Health Care Benefits segment and the Pharmacy Services segment and/or the Retail/LTC segment.

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The following is a reconciliation of operating income to adjusted operating income for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31, 2019
	Pharmacy		Retail/		Health Care		Corporate/			Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other			Eliminations			Totals
Operating income (GAAP measure)	$	850	$	1,238	$	1,155	$	(381	)	$	(172	)	$	2,690
Non-GAAP adjustments:
Amortization of intangible assets (1)	97		116		407		2			—			622
Acquisition-related integration costs (2)	—		—		—		148			—			148
Store rationalization charge (3)	—		135		—		—			—			135
Adjusted operating income	$	947	$	1,489	$	1,562	$	(231	)	$	(172	)	$	3,595

	Three Months Ended March 31, 2018
	Pharmacy		Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services		LTC		Benefits			Other			Eliminations			Totals
Operating income (GAAP measure)	$	901	$	1,624	$	(138	)	$	(216	)	$	(175	)	$	1,996
Non-GAAP adjustments:
Amortization of intangible assets (1)	86		123		1			—			—			210
Acquisition-related transaction and integration costs (2)	—		3		—			40			—			43
Loss on divestiture of subsidiary (4)	—		86		—			—			—			86
Interest income on financing for the Aetna Acquisition (5)	—		—		—			(42		)	—			(42		)
Adjusted operating income	$	987	$	1,836	$	(137	)	$	(218	)	$	(175	)	$	2,293

^{_____________________________________________} 

(1) Intangible assets relate to the Company's acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company's unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company's business operations.

(2) During the three months ended March 31, 2019, acquisition-related integration costs relate to the Aetna Acquisition. During the three months ended March 31, 2018, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment.

(3) During the three months ended March 31, 2019, the store rationalization charge primarily relates to operating lease right-of-use asset impairment charges in connection with the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charge is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment.

(4) During the three months ended March 31, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statement of operations within the Retail/LTC segment.

(5) During the three months ended March 31, 2018, the Company recorded interest income of $42 million on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition (the “2018 Notes”). 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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Pharmacy Services Segment

The following table summarizes the Pharmacy Services segment’s performance for the respective periods:

	Three Months Ended
	March 31,						Change
In millions, except percentages	2019			2018			$			%
Revenues:
Products	$	33,450		$	32,431		$	1,019		3.1	%
Services	108			115			(7		)	(6.1	)%
Total revenues	33,558			32,546			1,012			3.1	%
Cost of products sold	32,339			31,307			1,032			3.3	%
Operating expenses	369			338			31			9.2	%
Operating expenses as a % of revenues	1.1		%	1.0		%
Operating income	$	850		$	901		$	(51	)	(5.7	)%
Operating income as a % of revenues	2.5		%	2.8		%
Adjusted operating income (1)	$	947		$	987		$	(40	)	(4.2	)%
Adjusted operating income as a % of revenues	2.8		%	3.0		%
Revenues (by distribution channel):
Pharmacy network (2)	$	21,574		$	21,198		$	376		1.8	%
Mail choice (3)	11,839			11,208			631			5.6	%
Other	145			140			5			3.6	%
Pharmacy claims processed: (4)
Total	481.8			468.8			13.0			2.8	%
Pharmacy network (2)	407.7			399.5			8.2			2.1	%
Mail choice (3)	74.1			69.3			4.8			6.9	%
Generic dispensing rate: (4)
Total	88.3		%	87.6		%
Pharmacy network (2)	88.9		%	88.3		%
Mail choice (3)	84.8		%	83.9		%
Mail choice penetration rate (4)	15.4		%	14.8		%

^{_____________________________________________} 

(1) See “Segment Analysis” above in this report for a reconciliation of operating income (GAAP measure) to adjusted operating income for the Pharmacy Services segment.

(2) Pharmacy network revenues, pharmacy claims processed and generic dispensing rate do not include Maintenance Choice^® activity, which is included within the mail choice category. Pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and long-term care pharmacies, but excluding Maintenance Choice activity. 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.

(3) 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 retail, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program.

(4) Includes an adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

Commentary

Revenues

• Total revenues increased $1.0 billion, or 3.1%, to $33.6 billion for the three months ended March 31, 2019 compared to the prior year. The increase was primarily due to brand name drug price inflation as well as increased total pharmacy claims volume, partially offset by continued price compression and an increased generic dispensing rate.

• As you review the Pharmacy Services segment’s performance in this area, you should consider the following important information about the business:

• The Company’s mail choice claims processed, on a 30-day equivalent basis, increased 6.9% to 74.1 million claims in the three months ended March 31, 2019 compared to 69.3 million in the prior year. The increase in mail choice claims was primarily driven by the continued adoption of Maintenance Choice offerings.

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• During the three months ended March 31, 2019, the average revenue per mail choice claim, on a 30-day equivalent basis, decreased by 1.1% compared to the prior year as a result of continued price compression.

• The Company’s pharmacy network claims processed, on a 30-day equivalent basis, increased 2.1% to 407.7 million claims in the three months ended March 31, 2019, compared to 399.5 million claims in the prior year. The increase in the pharmacy network claim volume was primarily due to net new business.

• During the three months ended March 31, 2019, the average revenue per pharmacy network claim processed, on a 30-day equivalent basis, decreased 0.3% compared to the prior year as a result of continued price compression.

• The Company’s total generic dispensing rate increased to 88.3% in the three months ended March 31, 2019 compared to 87.6% in the prior year. The continued increase in the Company’s generic dispensing rate was primarily due to the impact of new generic drug introductions and the Company’s ongoing efforts to encourage plan members to use generic drugs when they are available and clinically appropriate. The Company believes its generic dispensing rate will continue to increase in future periods, albeit at a slower pace. This increase will be affected by, among other things, the number of new brand and generic drug introductions and the Company’s success at encouraging plan members to utilize generic drugs when they are available and clinically appropriate.

Operating expenses

• Operating expenses in the Pharmacy Services segment include selling, general and administrative expenses; depreciation and amortization related to selling, general and administrative activities; and expenses related to specialty retail pharmacies, which include store and administrative payroll, employee benefits and occupancy costs.

• Operating expenses increased $31 million, or 9.2%, in the three months ended March 31, 2019 compared to the prior year. The year over year increase in operating expenses was primarily due to operating expenses associated with Aetna’s mail order and specialty pharmacy operations (including intangible amortization) and investments related to the Company’s agreement with Anthem, Inc. (“Anthem”) during the three months ended March 31, 2019.

• Operating expenses as a percentage of total revenues remained relatively consistent at 1.1% and 1.0% in the three months ended March 31, 2019 and 2018, respectively.

Operating income and adjusted operating income

• Operating income decreased $51 million, or 5.7%, and adjusted operating income decreased $40 million, or 4.2%, in the three months ended March 31, 2019 compared to the prior year. The decrease in both operating income and adjusted operating income was primarily driven by continued price compression and investments related to the Company’s agreement with Anthem during the three months ended March 31, 2019. The decrease in operating income also was due to increased intangible amortization related to Aetna’s mail order and specialty pharmacy operations.

• As you review the Pharmacy Services segment’s performance in this area, you should consider the following important information about the business:

• The Company’s efforts to (i) retain existing clients, (ii) obtain new business and (iii) maintain or improve the rebates and/or discounts the Company receives from manufacturers, wholesalers and retail pharmacies continue to have an impact on operating income. In particular, competitive pressures in the PBM industry have caused the Company and other PBMs to continue to share with clients a larger portion of rebates and/or discounts received from pharmaceutical manufacturers. In addition, marketplace dynamics and regulatory changes have limited the Company’s ability to offer plan sponsors pricing that includes retail network “differential” or “spread,” and the Company expects these trends to continue. The “differential” or “spread” is any difference between the drug price charged to plan sponsors, including Medicare Part D plan sponsors, by a PBM and the price paid for the drug by the PBM to the dispensing provider.

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Retail/LTC Segment

The following table summarizes the Retail/LTC segment’s performance for the respective periods:

	Three Months Ended
	March 31,						Change
In millions, except percentages	2019			2018			$			%
Revenues:
Products	$	20,900		$	20,219		$	681		3.4	%
Services	215			213			2			0.9	%
Total revenues	21,115			20,432			683			3.3	%
Cost of products sold	15,297			14,516			781			5.4	%
Operating expenses	4,580			4,292			288			6.7	%
Operating expenses as a % of revenues	21.7		%	21.0		%
Operating income	$	1,238		$	1,624		$	(386	)	(23.8	)%
Operating income as a % of revenues	5.9		%	7.9		%
Adjusted operating income (1)	$	1,489		$	1,836		$	(347	)	(18.9	)%
Adjusted operating income as a % of revenues	7.1		%	9.0		%
Revenues (by major goods/service lines):
Pharmacy	$	16,118		$	15,500		$	618		4.0	%
Front Store	4,799			4,726			73			1.5	%
Other	198			206			(8		)	(3.9	)%
Prescriptions filled (2)	346.8			328.8			18.0			5.5	%
Revenues increase:
Total	3.3		%	5.6		%
Pharmacy	4.0		%	7.4		%
Front Store	1.5		%	2.3		%
Total prescription volume increase (2)	5.5		%	8.5		%
Same store sales increase: (3)
Total	3.8		%	5.8		%
Pharmacy	4.9		%	7.3		%
Front Store	0.4		%	1.6		%
Prescription volume (2)	6.7		%	8.5		%
Generic dispensing rate (2)	88.7		%	88.1		%

^{_____________________________________________} 

(1) See “Segment Analysis” above in this report for a reconciliation of operating income (GAAP measure) to adjusted operating income for the Retail/LTC segment.

(2) Includes an adjustment to convert 90-day non-specialty prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.

(3) Same store sales and prescription volume exclude revenues from MinuteClinic, and revenue and prescriptions from stores in Brazil and LTC operations.

Commentary

Revenues

• Total revenues increased $683 million, or 3.3%, to $21.1 billion in the three months ended March 31, 2019 compared to the prior year. The increase was primarily driven by increased prescription volume and brand name drug price inflation, partially offset by continued reimbursement pressure and the impact of generic drug introductions.

• As you review the Retail/LTC segment’s performance in this area, you should consider the following important information about the business:

• Front store same store sales increased 0.4% in the three months ended March 31, 2019 compared to the prior year. The increase in front store revenues in 2019 was primarily driven by increases in health product sales.

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• Pharmacy same store sales increased 4.9% in the three months ended March 31, 2019 compared to the prior year. The increase was driven by the 6.7% increase in pharmacy same store prescription volumes on a 30-day equivalent basis driven mainly by (i) continued adoption of patient care programs, (ii) collaborations with PBMs, and (iii) the Company’s preferred status in a number of Medicare Part D networks.

• Pharmacy revenue continues to be adversely affected by the conversion of brand name drugs to equivalent generic drugs, which typically have a lower selling price. The generic dispensing rate grew to 88.7% in the three months ended March 31, 2019 compared to 88.1% in the prior year. Pharmacy revenue growth also has been negatively affected by continued reimbursement pressure.

• Pharmacy revenue growth has been adversely affected by industry challenges in the LTC business, such as continuing lower occupancy rates at skilled nursing facilities, as well as the deteriorating financial health of many skilled nursing facilities.

• Pharmacy revenue in 2019 continued to benefit from the Company’s ability to attract and retain managed care customers and the increased use of pharmaceuticals by an aging population as the first line of defense for health care.

Operating expenses

• Operating expenses in the Retail/LTC segment include store payroll, store employee benefits, store occupancy costs, selling expenses, advertising expenses, depreciation and amortization expense and certain administrative expenses.

• Operating expenses increased $288 million, or 6.7%, in the three months ended March 31, 2019 compared to the prior year. The increase in operating expenses in the three months ended March 31, 2019 was primarily due to the following:

• A $135 million store rationalization charge recorded during the first quarter of 2019 primarily related to operating lease right-of-use asset impairment charges in connection with the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019;

• The investment of a portion of the savings from the TCJA in wages and benefits; and

• The increased prescription volume described previously;

• Partially offset by the absence of the $86 million pre-tax loss on the sale of the Company’s RxCrossroads subsidiary recorded in the three months ended March 31, 2018.

• Operating expenses as a percentage of total revenues were 21.7% in the three months ended March 31, 2019 compared to 21.0% in the prior year. The increase in operating expenses as a percentage of total revenues was primarily driven by the store rationalization charge and the impact of the investment of a portion of the savings from the TCJA in wages and benefits in the three months ended March 31, 2019, partially offset by the absence of a pre-tax loss on the sale of the Company’s RxCrossroads subsidiary recorded in the three months ended March 31, 2018.

Operating income and adjusted operating income

• Operating income decreased $386 million, or 23.8%, and adjusted operating income decreased $347 million, or 18.9%, in the three months ended March 31, 2019 compared to the prior year. The decrease in both operating income and adjusted operating income was primarily due to (i) continued reimbursement pressure, (ii) increased operating expenses associated with the investment of a portion of the savings from the TCJA in wages and benefits described above and higher legal costs and (iii) declining year-over-year performance in our long-term care business. The decrease in operating income also was driven by the $135 million store rationalization charge described above, partially offset by the absence of the $86 million pre-tax loss on the sale of the Company’s RxCrossroads subsidiary recorded in the three months ended March 31, 2018.

• As you review the Retail/LTC segment’s performance in this area, you should consider the following important information about the business:

• The Company’s pharmacy operating income has been adversely affected by the efforts of managed care organizations, PBMs and governmental and other third-party payors to reduce their prescription drug costs, including the use of restrictive networks, as well as changes in the mix of business within the pharmacy portion of the Retail/LTC Segment. If the reimbursement pressure accelerates, the Company may not be able grow revenues, and its operating income could be adversely affected.

• The increased use of generic drugs has positively impacted the Company’s operating income but has resulted in third-party payors augmenting their efforts to reduce reimbursement payments to retail pharmacies for prescriptions. This trend, which the Company expects to continue, reduces the benefit the Company realizes from brand to generic drug conversions.

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Health Care Benefits Segment

For periods prior to the Aetna Acquisition (which occurred on November 28, 2018), the Health Care Benefits segment consisted solely of the Company’s SilverScript PDP business. The following table summarizes the Health Care Benefits segment’s performance for the respective periods:

	Three Months Ended
	March 31,						Change
In millions, except percentages	2019			2018			$		%
Revenues:
Premiums	$	16,259		$	1,306		$	14,953	1,144.9	%
Services	1,447			10			1,437		14,370.0	%
Net investment income	164			2			162		8,100.0	%
Total revenues	17,870			1,318			16,552		1,255.8	%
Benefit costs	13,655			1,329			12,326		927.5	%
MBR (Benefit costs as a % of premium revenues) (1)	84.0		%	NM
Operating expenses	$	3,060		$	127		$	2,933	2,309.4	%
Operating expenses as a % of revenues	17.1		%	9.6		%
Operating income (loss)	$	1,155		$	(138	)	$	1,293	937.0	%
Operating income (loss) as a % of revenues	6.5		%	NM
Adjusted operating income (loss) (2)	$	1,562		$	(137	)	$	1,699	1,240.1	%
Adjusted operating income (loss) as a % of revenues	8.7		%	NM

^{_____________________________________________} 

(1) The Health Care Benefits segment for the three months ended March 31, 2018 consisted solely of the Company’s SilverScript PDP business. Accordingly, the MBR for the three months ended March 31, 2018 is not meaningful and not directly comparable to the MBR for the three months ended March 31, 2019.

(2) See “Segment Analysis” above in this report for a reconciliation of operating income (GAAP measure) to adjusted operating income for the Health Care Benefits segment.

Commentary

Revenues

• Total revenues increased $16.6 billion for the three months ended March 31, 2019 compared to the prior year primarily driven by the Aetna Acquisition. Revenues for the three months ended March 31, 2019 reflect strong membership growth in the Health Care Benefits segment's Medicare products.

Operating expenses

• Operating expenses in the Health Care Benefits segment include selling, general and administrative expenses and depreciation and amortization expenses.

• Operating expenses increased $2.9 billion in the three months ended March 31, 2019 compared to the prior year primarily driven by the Aetna Acquisition (including the amortization of intangible assets).

Operating income (loss) and adjusted operating income (loss)

• Operating income and adjusted operating income increased $1.3 billion and $1.7 billion, respectively, in the three months ended March 31, 2019 compared to the prior year. The increases were primarily driven by the Aetna Acquisition. The increase in operating income was partially offset by an increase in intangible amortization related to the Aetna Acquisition. Operating loss and adjusted operating loss for the three months ended March 31, 2018 reflect the seasonality of earnings for the Company's SilverScript PDP business. The quarterly earnings of the Company’s SilverScript PDP business generally increase as the year progresses.

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Health Care Benefits segment’s medical membership as of March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019			December 31, 2018
In thousands	Insured	ASC	Total	Insured	ASC	Total
Medical membership:
Commercial	3,611	14,302	17,913	3,871	13,888	17,759
Medicare Advantage	2,231	—	2,231	1,758	—	1,758
Medicare Supplement	804	—	804	793	—	793
Medicaid	1,315	571	1,886	1,128	663	1,791
Total medical membership	7,961	14,873	22,834	7,550	14,551	22,101
Supplementary membership information:
Medicare Prescription Drug Plan (standalone) (1)			6,044			6,134

^{_____________________________________________} 

(1) Represents the Company’s SilverScript PDP membership only. Excludes 2.4 million and 2.3 million members as of March 31, 2019 and December 31, 2018, respectively, related to Aetna’s standalone PDPs that were sold effective December 31, 2018. The Company will retain the financial results of the divested plans through 2019 through a reinsurance agreement.

Medical Membership

Medical membership as of March 31, 2019 increased compared with December 31, 2018, reflecting increases in Medicare, Commercial ASC and Medicaid products, partially offset by declines in Commercial Insured products.

Medicare Update

On April 1, 2019, the United States Centers for Medicare & Medicaid Services (“CMS”) issued its final notice detailing final 2020 Medicare Advantage benchmark payment rates (the “Final Notice”). Overall the Company projects the benchmark rates in the Final Notice will increase funding for its Medicare Advantage business, excluding the impact of the health insurer fee, by approximately 2.0% in 2020 compared to 2019.

Corporate/Other Segment

Commentary

Revenues

• Total revenues increased $62 million in the three months ended March 31, 2019 compared to the prior year.

• In 2019, revenues relate to products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products, that were acquired in the Aetna Acquisition. In 2018, revenues relate to interest income related to the $40 billion of 2018 Notes issued to partially fund the Aetna Acquisition.

Operating expenses

• Operating expenses within the Corporate/Other segment include certain aspects of costs related to executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs. After the Aetna Acquisition Date, such operating expenses also include operating costs to support the large case pensions and long-term care insurance products acquired in the Aetna Acquisition.

• Operating expenses increased $148 million in the three months ended March 31, 2019 compared to the prior year. The increase was primarily driven by an increase in acquisition-related integration costs of $108 million in the three months ended March 31, 2019 as compared to the prior period and incremental operating expenses to support the large case pensions and long-term care insurance products described above.

Liquidity and Capital Resources

Cash Flows

The Company maintains a level of liquidity sufficient to allow it to meet its cash needs in the short-term. Over the long term, the Company manages its cash and capital structure to maximize shareholder return, maintain its financial condition and maintain flexibility for future strategic initiatives. The Company continuously assesses its regulatory capital requirements, working capital needs, debt and leverage levels, debt maturity schedule, capital expenditure requirements, dividend payouts,

50

potential share repurchases and future investments or acquisitions. The Company believes its operating cash flows, commercial paper program, credit facilities, sale-leaseback program, as well as any potential future borrowings, will be sufficient to fund these future payments and long-term initiatives.

The net change in cash, cash equivalents and restricted cash is as follows:

	Three Months Ended March 31,						Change
In millions	2019			2018			$			%
Net cash provided by operating activities	$	1,948		$	2,355		$	(407	)	(17.3	)%
Net cash used in investing activities	(891		)	(131		)	(760		)	580.2	%
Net cash provided by financing activities	816			38,140			(37,324		)	(97.9	)%
Net increase in cash, cash equivalents and restricted cash	$	1,873		$	40,364		$	(38,491	)	95.4	%

Commentary

• Net cash provided by operating activities decreased by $407 million in the three months ended March 31, 2019 due primarily to the timing of client and customer payments as well as the timing of payments from CMS, partially offset by the Aetna Acquisition. Net cash provided by operating activities for the three months ended March 31, 2018 reflects an advance payment from CMS received in March 2018 related to April 2018.

• Net cash used in investing activities increased by $760 million in the three months ended March 31, 2019 largely driven by the three months ended March 31, 2018 reflecting $725 million in proceeds from the sale of RxCrossroads.

• Net cash provided by financing activities was $816 million in the three months ended March 31, 2019 compared to $38.1 billion in the prior year. The decrease in cash provided by financing activities primarily related to long-term borrowings during 2018 to partially fund the Aetna Acquisition, as well as a $500 million partial repayment of the term loan used to partially fund the Aetna Acquisition and the repayment of $375 million of senior notes that matured during the three months ended March 31, 2019.

Short-term Borrowings

Commercial Paper and Back-up Credit Facilities

The Company had approximately $3.0 billion of commercial paper outstanding at a weighted average interest rate of 2.74% as of March 31, 2019. In connection with its commercial paper program, the Company maintains a $1.75 billion 364-day unsecured back-up revolving credit facility, which expires on May 16, 2019, a $1.25 billion, five-year unsecured back-up revolving credit facility, which expires on July 1, 2020, a $1.0 billion, five-year unsecured back-up revolving credit facility, which expires on May 18, 2022, and a $2.0 billion, five-year unsecured back-up revolving credit facility, which expires on May 17, 2023. The Company intends to renew its 364-day unsecured back-up revolving credit facility prior to its expiration. The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately .03%, regardless of usage. As of March 31, 2019, there were no borrowings outstanding under any of the back-up credit facilities.

Bridge Loan Facility

On December 3, 2017, in connection with the Aetna Acquisition, the Company entered into a $49.0 billion unsecured bridge loan facility commitment. The Company paid $221 million in fees upon entering into the agreement. The fees were capitalized in other current assets and were amortized as interest expense over the period the bridge loan facility commitment was outstanding. The bridge loan facility commitment was reduced to $44.0 billion on December 15, 2017 upon the Company entering into a $5.0 billion term loan agreement. On March 9, 2018, the Company issued the 2018 Notes with an aggregate principal amount of $40.0 billion (see “Long-term Borrowings - 2018 Notes” below). At that time, the bridge loan facility commitment was reduced to $4.0 billion, and the Company paid $8 million in fees to retain the bridge loan facility commitment through the Aetna Acquisition Date. Those fees were capitalized in other current assets and were amortized as interest expense over the period the bridge loan facility commitment was outstanding. The Company recorded $161 million of amortization of the bridge loan facility commitment fees during the three months ended March 31, 2018, which was recorded in interest expense in the unaudited condensed consolidated statement of operations. On October 26, 2018, the Company entered into a $4.0 billion unsecured 364-day bridge term loan agreement to formalize the bridge loan facility discussed above. On November 28, 2018, in connection with the Aetna Acquisition, the $4.0 billion unsecured 364-day bridge term loan agreement terminated.

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Federal Home Loan Bank of Boston

Since the Aetna Acquisition Date, a subsidiary of the Company is a member of the Federal Home Loan Bank of Boston (the “FHLBB”). As a member, the subsidiary has the ability to obtain cash advances, subject to certain minimum collateral requirements. The maximum borrowing capacity available from the FHLBB as of March 31, 2019, was approximately $860 million. As of March 31, 2019, there were no outstanding advances from the FHLBB.

Long-term Borrowings

2018 Notes

On March 9, 2018, the Company issued an aggregate of $40.0 billion in principal amount of the 2018 Notes for total proceeds of approximately $39.4 billion, net of discounts and underwriting fees. The net proceeds of the 2018 Notes were used to fund a portion of the Aetna Acquisition. The 2018 Notes consist of the following:

In millions
3.125% senior notes due March 2020	$	2,000
Floating rate notes due March 2020	1,000
3.35% senior notes due March 2021	3,000
Floating rate notes due March 2021	1,000
3.7% senior notes due March 2023	6,000
4.1% senior notes due March 2025	5,000
4.3% senior notes due March 2028	9,000
4.78% senior notes due March 2038	5,000
5.05% senior notes due March 2048	8,000
Total debt principal	$	40,000

Term Loan Agreement

On December 15, 2017, in connection with the Aetna Acquisition, the Company entered into a $5.0 billion term loan agreement. The term loan facility under the term loan agreement consists of a $3.0 billion three-year tranche and a $2.0 billion five-year tranche. The term loan agreement allows for borrowings at various rates that are dependent, in part, on the Company’s debt ratings. In connection with the Aetna Acquisition, the Company borrowed $5.0 billion (a $3.0 billion three-year tranche and a $2.0 billion five-year tranche) under the term loan agreement in November 2018. The Company terminated the $2.0 billion five-year tranche in December 2018 with the repayment of the borrowing. In March 2019, the Company made a payment of $500 million on the three-year tranche. As of March 31, 2019, the Company had $2.5 billion outstanding under the term loan agreement.

Aetna Related Debt

Upon the closing of the Aetna Acquisition, the Company assumed long-term debt with a fair value of $8.1 billion with stated interest rates ranging from 2.2% to 6.75%.

Debt Covenants

The Company’s back-up revolving credit facilities, unsecured senior notes, unsecured floating rate notes and term loan agreement contain customary restrictive financial and operating covenants. These covenants do not include an acceleration of the Company’s debt maturities in the event of a downgrade in the Company’s credit ratings. The covenants do not materially affect the Company’s financial or operating flexibility. As of March 31, 2019, the Company was in compliance with all of its debt covenants.

Debt Ratings

As of March 31, 2019, the Company’s long-term debt was rated “Baa2” by Moody’s and “BBB” by Standard & Poor’s (“S&P”), and its commercial paper program was rated “P-2” by Moody’s and “A-2” by S&P. In assessing the Company’s credit strength, the Company believes that both Moody’s and S&P considered, among other things, the Company’s capital structure and financial policies as well as its consolidated balance sheet, its historical acquisition activity and other financial information. Although the Company currently believes its long-term debt ratings will remain investment grade, it cannot guarantee the future

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actions of Moody’s and/or S&P. The Company’s debt ratings have a direct impact on its future borrowing costs, access to capital markets and new store operating lease costs.

Share Repurchase Programs

During the three months ended March 31, 2019 and 2018, the Company did not repurchase any shares of common stock. See Note 7 ‘‘Shareholders’ Equity’’ to the unaudited condensed consolidated financial statements for additional information on the Company’s share repurchase program.

Off-Balance Sheet Arrangements

See Note 11 ‘‘Commitments and Contingencies’’ to the unaudited condensed consolidated financial statements for information on the Company’s lease guarantees.

Critical Accounting Policies

The Company prepares the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles, which require management to make certain estimates and apply judgment. Estimates and judgments are based on historical experience, current trends and other factors that management believes to be important at the time the unaudited condensed consolidated financial statements are prepared. On a regular basis, the Company reviews its accounting policies and how they are applied and disclosed in the unaudited condensed consolidated financial statements. While the Company believes the historical experience, current trends and other factors considered by management support the preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles, actual results could differ from estimates, and such differences could be material.

Leases

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard that was adopted in 2018. See the New Accounting Pronouncements Recently Adopted section of Note 1 ‘‘Significant Accounting Policies’’ to the unaudited condensed consolidated financial statements for a detailed discussion of the adoption of this new lease standard.

Goodwill

During 2018, the LTC reporting unit continued to experience industry wide challenges that have impacted management’s ability to grow the business at the rate that was originally estimated when the Company acquired Omnicare. Those challenges included lower client retention rates, lower occupancy rates in skilled nursing facilities, the deteriorating financial health of numerous skilled nursing facility customers which resulted in a number of customer bankruptcies in 2018, and continued facility reimbursement pressures. In June 2018, LTC management submitted its initial budget for 2019 and updated the 2018 annual forecast which showed a projected deterioration in the financial results for the remainder of 2018 and in 2019, which also caused management to update its long-term forecast beyond 2019. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be impaired and, accordingly, management performed an interim goodwill impairment test as of June 30, 2018. The results of that interim impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in a $3.9 billion pre-tax goodwill impairment charge in the second quarter of 2018.

During the third quarter of 2018, the Company performed its required annual impairment tests of goodwill and concluded there was no impairment of goodwill.

During the fourth quarter of 2018, the LTC reporting unit missed its forecast primarily due to operational issues and customer liquidity issues, including one significant customer bankruptcy. Additionally, LTC management submitted an updated final

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budget for 2019 which showed significant additional deterioration in the projected financial results for 2019 compared to the analyses performed in the second and third quarters of 2018 primarily due to continued industry and operational challenges, which also caused management to make further updates to its long-term forecast beyond 2019. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be further impaired and, accordingly, an interim goodwill impairment test was performed during the fourth quarter of 2018. The results of that impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in an additional $2.2 billion goodwill impairment charge in the fourth quarter of 2018.

The fair value of the LTC reporting unit was determined using a combination of a discounted cash flow method and a market multiple method. In addition to the lower financial projections, changes in risk-free interest rates and lower market multiples of peer group companies also contributed to the amount of the 2018 goodwill impairment charges.

As of March 31, 2019, the remaining goodwill balance in the LTC reporting unit is approximately $431 million.

Although the Company believes the financial projections used to determine the fair value of the LTC reporting unit in the fourth quarter of 2018 were reasonable and achievable, the LTC reporting unit may continue to face challenges that may affect the Company’s ability to grow the LTC reporting unit’s business at the rate estimated when such goodwill impairment test was performed. These challenges and some of the key assumptions included in the Company’s financial projections to determine the estimated fair value of the LTC reporting unit include client retention rates, occupancy rates in skilled nursing facilities, the financial health of skilled nursing facility customers, facility reimbursement pressures, the Company’s ability to execute its senior living initiative, the Company’s ability to make acquisitions and integrate those businesses into its LTC operations in an orderly manner, as well as the Company’s ability to extract cost savings from labor productivity and other initiatives. The fair value of the LTC reporting unit also is dependent on market multiples of peer group companies and the risk-free interest rate environment, which impacts the discount rate used in the discounted cash flow valuation method. If the Company does not achieve its forecasts, it is reasonably possible in the near term that the goodwill of the LTC reporting unit could be deemed to be impaired again by a material amount.

For a full description of the Company’s other critical accounting policies, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the 2018 Form 10-K.

Cautionary Statement Concerning Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the “Reform Act”) provides a safe harbor for forward-looking statements made by or on behalf of the Company. In addition, the Company and its representatives may, from time to time, make written or verbal forward-looking statements, including statements contained in the Company’s filings with the United States Securities and Exchange Commission (the “SEC”) and in its reports to stockholders, press releases, webcasts, conference calls, meetings and other communications. Generally, the inclusion of the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “should,” “will” and similar expressions identify statements that constitute forward-looking statements. All statements addressing operating performance of CVS Health Corporation or any subsidiary, events or developments that the Company projects, expects or anticipates will occur in the future, including statements relating to corporate strategy; revenue growth; adjusted revenue growth, earnings or earnings per common share growth; adjusted operating income or adjusted earnings per common share growth; free cash flow; debt ratings; inventory levels; inventory turn and loss rates; store development; relocations and new market entries; retail pharmacy business, sales results and/or trends and operations; PBM business, sales results and/or trends and operations; specialty pharmacy business, sales trends and operations; LTC pharmacy business, sales results and/or trends and operations; Health Care Benefits business, sales results and/or trends, medical cost trends, medical membership growth, medical benefit ratios and operations; the Company’s ability to attract or retain customers and clients; Medicare Advantage and/or Medicare Part D competitive bidding, enrollment and operations; new product development; and the impact of industry and regulatory developments, as well as statements expressing optimism or pessimism about future operating results or events, are forward-looking statements within the meaning of the Reform Act.

The forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

By their nature, all forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons as described in the Company’s SEC filings, including those set forth in the Risk Factors section of the 2018 Form 10-K, and including, but not limited to:

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• Risks to our brand and reputation, the Aetna Acquisition, data governance risks, effectiveness of our talent management and alignment of talent to our business needs, and potential changes in public policy, laws and regulations present overarching risks to our enterprise in 2019 and beyond.

• Our brand and reputation are two of our most important assets; negative public perception of the industries in which we operate, or of our industries’ or our practices, can adversely affect our businesses, results of operations, cash flows and prospects.

• Data governance failures can adversely affect our reputation, businesses and prospects. Our use and disclosure of members’, customers’ and other constituents’ sensitive information is subject to complex regulations at multiple levels. We would be adversely affected if we or our business associates or other vendors fail to adequately protect members’, customers’ or other constituents’ sensitive information.

• We face significant competition in attracting and retaining talented employees. Further, managing succession for, and retention of, key executives is critical to our success, and our failure to do so could adversely affect our future performance.

• We are subject to potential changes in public policy, laws and regulations, including reform of the United States health care system, that can adversely affect the markets for our products and services and our businesses, operations, results of operations, cash flows and prospects.

• Our enterprise strategy may not be an effective response to the changing dynamics in the industries in which we operate, or we may not be able to implement our strategy and related strategic projects.

• Efforts to reduce reimbursement levels and alter health care financing practices could adversely affect our businesses.

• Gross margins in the industries in which we operate may decline.

• Our results of operations are affected by the health of the economy in general and in the geographies we serve.

• We operate in a highly competitive business environment. Competitive and economic pressures may limit our ability to increase pricing to reflect higher costs or may force us to accept lower margins. If customers elect to self-insure, reduce benefits or adversely renegotiate or amend their agreements with us, our revenues and results of operations will be adversely affected. We may not be able to obtain appropriate pricing on new or renewal business.

• We may lose clients and/or fail to win new business. If we fail to compete effectively in the geographies and product areas in which we operate, including maintaining or increasing membership in our Health Care Benefits segment, our results of operations, financial condition and cash flows could be materially and adversely affected.

• We are exposed to risks relating to the solvency of our customers and of other insurers.

• We face risks relating to the market availability, pricing, suppliers and safety profiles of prescription drugs that we purchase and sell.

• We face risks related to the frequency and rate of the introduction and pricing of generic drugs and brand name prescription drug products.

• Possible changes in industry pricing benchmarks and drug pricing generally can adversely affect our PBM business.

• Product liability, product recall or personal injury issues could damage our reputation.

• We face challenges in growing our Medicare Advantage and Medicare Part D membership.

• We face challenges in growing our Medicaid membership, and expanding our Medicaid membership exposes us to additional risks.

• A change in our Health Care Benefits product mix may adversely affect our profit margins.

• We may not be able to accurately forecast health care and other benefit costs, which could adversely affect our Health Care Benefits segment’s results of operations. There can be no assurance that the future health care and other benefit costs of our Insured Health Care Benefits products will not exceed our projections.

• A number of factors, many of which are beyond our control, contribute to rising health care and other benefit costs. If we are unable to satisfactorily manage our health care and other benefit costs, our Health Care Benefits segment’s results of operations and competitiveness will be adversely affected.

• The reserves we hold for expected claims in our Insured Health Care Benefits products are based on estimates that involve an extensive degree of judgment and are inherently variable. Any reserve, including a premium deficiency reserve, may be insufficient. If actual claims exceed our estimates, our results of operations could be materially adversely affected, and our ability to take timely corrective actions to limit future costs may be limited.

• Extreme events, or the threat of extreme events, could materially increase our health care (including behavioral health) costs. We cannot predict whether or when any such events will occur.

• Legislative and regulatory changes could create significant challenges to our Medicare Advantage and Medicare Part D revenues and results of operations, and proposed changes to these programs could create significant additional challenges. Entitlement program reform, if it occurs, could have a material adverse effect on our businesses, operations and/or results of operations.

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• We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, which would have an adverse effect on our revenues, MBRs and results of operations and could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes.

• Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs. Challenges to our minimum MLR rebate methodology and/or reports could adversely affect our results of operations.

• Our business activities are highly regulated. Our Pharmacy Services, Medicare Advantage, Medicare Part D, Medicaid, dual eligible, dual eligible special needs plan, small group and certain other products are subject to particularly extensive and complex regulations. If we fail to comply with applicable laws and regulations, we could be subject to significant adverse regulatory actions or suffer brand and reputational harm which may have a material adverse effect on our businesses. Compliance with existing and future laws, regulations and/or judicial decisions may reduce our profitability and limit our growth.

• If our compliance or other systems and processes fail or are deemed inadequate, we may suffer brand and reputational harm and become subject to regulatory actions or litigation which could adversely affect our businesses, results of operations, cash flows and/or financial condition.

• Our litigation and regulatory risk profile are changing as a result of the Aetna Acquisition and as we offer new products and services and expand in business areas beyond our historical core businesses of Retail/LTC and Pharmacy Services.

• We routinely are subject to litigation and other adverse legal proceedings, including class actions and qui tam actions. Many of these proceedings seek substantial damages which may not be covered by insurance. These proceedings may be costly to defend, result in changes in our business practices, harm our brand and reputation and adversely affect our businesses and results of operations.

• We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions.

• We are subject to retroactive adjustments to and/or withholding of certain premiums and fees, including as a result of CMS RADV audits. We generally rely on health care providers to appropriately code claim submissions and document their medical records. If these records do not appropriately support our risk adjusted premiums, we may be required to refund premium payments to CMS and/or pay fines and penalties under the False Claims Act.

• Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues. The U.S. federal government and our other government customers may reduce funding for health care or other programs, cancel or decline to renew contracts with us, or make changes that adversely affect the number of persons eligible for certain programs, the services provided to enrollees in such programs, our premiums and our administrative and health care and other benefit costs, any of which could have a material adverse effect on our businesses, results of operations and cash flows. In addition, an extended federal government shutdown or a delay by Congress in raising the federal government’s debt ceiling could lead to a delay, reduction, suspension or cancellation of federal government spending and a significant increase in interest rates that could, in turn, have a material adverse effect on our businesses, results of operations and cash flows.

• Our results of operations may be adversely affected by changes in laws and policies governing employers and by union organizing activity.

• We must develop and maintain a relevant omni-channel experience for our retail customers.

• We must maintain and improve our relationships with our retail and specialty pharmacy customers and increase the demand for our products and services, including proprietary brands. If we fail to develop new products, differentiate our products from those of our competitors or demonstrate the value of our products to our customers and members, our ability to retain or grow our customer base may be adversely affected.

• In order to be competitive in the increasingly consumer-oriented marketplace for our health care products and services, we will need to develop and deploy consumer-friendly products and services and make investments in consumer engagement, reduce our cost structure and compete successfully with new entrants into our businesses. If we are unsuccessful, our future growth and profitability may be adversely affected.

• Our results of operations may be adversely affected if we are unable to contract with manufacturers, providers, suppliers and vendors on competitive terms and develop and maintain attractive networks with high quality providers.

• If our service providers fail to meet their contractual obligations to us or to comply with applicable laws or regulations, we may be exposed to brand and reputational harm, litigation or regulatory action. This risk is particularly high in our Medicare, Medicaid, dual eligible and dual eligible special needs plan programs.

• Continuing consolidation and integration among providers and other suppliers may increase our medical and other covered benefits costs, make it difficult for us to compete in certain geographies and create new competitors.

• We may experience increased medical and other benefit costs, litigation risk and customer and member dissatisfaction when providers that do not have contracts with us render services to our Health Care Benefits members.

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• Customers, particularly large sophisticated customers, expect us to implement their contracts and onboard their employees and members efficiently and effectively. Failure to do so could adversely affect our reputation, businesses, results of operations, cash flows and prospects. If we or our vendors fail to provide our customers with quality service that meets their expectations, our ability to retain and grow our membership and customer base will be adversely affected.

• We are subject to payment-related risks that could increase our operating costs, expose us to fraud or theft, subject us to potential liability and disrupt our business operations.

• Our and our vendors’ operations are subject to a variety of business continuity hazards and risks, any of which could interrupt our operations or otherwise adversely affect our performance and results of operations.

• We and our vendors have experienced cyber attacks. We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security (including cybersecurity) risks or threats in the future.

• The failure or disruption of our information technology systems or the failure of our information technology infrastructure to support our businesses could adversely affect our reputation, businesses, results of operations and cash flows.

• Our business success and results of operations depend in part on effective information technology systems and on continuing to develop and implement improvements in technology. Pursuing multiple initiatives simultaneously could make this continued development and implementation significantly more challenging.

• Sales of our products and services are dependent on our ability to attract and motivate internal sales personnel and independent third-party brokers, consultants and agents. New distribution channels create new disintermediation risk. We may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products.

• We also face other risks that could adversely affect our businesses, results of operations, financial condition and/or cash flows, which include:

• Failure of our corporate governance policies or procedures, for example significant financial decisions being made at an inappropriate level in our organization;

• Inappropriate application of accounting principles or a significant failure of internal control over financial reporting, which could lead to a restatement of our results of operations and/or a deterioration in the soundness and accuracy of our reported results of operations; and

• Failure to adequately manage our run-off businesses and/or our regulatory and financial exposure to businesses we have sold, including Aetna’s divested standalone Medicare Part D, domestic group life insurance, group disability insurance and absence management businesses.

• Goodwill and other intangible assets could, in the future, become impaired.

• We would be adversely affected if we do not effectively deploy our capital. Downgrades or potential downgrades in our credit ratings, should they occur, could adversely affect our brand and reputation, businesses, cash flows, financial condition and results of operations.

• Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative investments and other investments, our results of operations and/or our financial condition.

• We have limited experience in the insurance and managed health care industry, which may hinder our ability to achieve our objectives as a combined company.

• The Aetna Acquisition may not be accretive, and may be dilutive, to our earnings per share, which may adversely affect our stock price.

• We may fail to successfully combine the businesses and operations of CVS Health and Aetna to realize the anticipated benefits and cost savings of the Aetna Acquisition within the anticipated timeframe or at all, which could adversely affect our stock price.

• Our future results may be adversely impacted if we do not effectively manage our expanded operations following completion of the Aetna Acquisition.

• We may have difficulty attracting, motivating and retaining executives and other key employees following completion of the Aetna Acquisition.

• The Aetna integration process could disrupt our ongoing businesses and/or operations.

• Our indebtedness following completion of the Aetna Acquisition is substantially greater than our indebtedness on a stand-alone basis and greater than the combined indebtedness of CVS Health and Aetna existing prior to the announcement of the transaction. This increased level of indebtedness could adversely affect our business flexibility and increase our borrowing costs.

• We will continue to incur significant integration-related costs in connection with the Aetna Acquisition.

• We expect to continue to pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things.

• We may be unable to successfully integrate companies we acquire.

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• As a result of our expanded international operations, we face political, legal and compliance, operational, regulatory, economic and other risks that we do not face or are more significant than in our domestic operations.

The foregoing list is not exhaustive. There can be no assurance that the Company has correctly identified all the risks that affect it. Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial also may adversely affect the Company’s businesses. Should any risks or uncertainties develop into actual events, these developments could have a material adverse effect on the Company’s businesses, operating results, cash flows and/or financial condition. For these reasons, you are cautioned not to place undue reliance on the Company’s forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company has not experienced any material changes in exposures to market risk since December 31, 2018. See the information contained in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of the Company’s exposures to market risk.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures: The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a‑15(f) and 15d‑15(f)) as of March 31, 2019, have concluded that as of such date the Company’s disclosure controls and procedures were adequate and effective and designed to provide reasonable assurance that material information relating to the Company and its subsidiaries would be made known to such officers on a timely basis.

Changes in internal control over financial reporting: On November 28, 2018, the Company completed its acquisition of Aetna. The Company is in the process of integrating the historical internal control over financial reporting of Aetna with the rest of the Company. In addition, the Company implemented controls related to the adoption of, ASU 2016-02, Leases (Topic 842) and the related financial statement reporting.

Other than the foregoing, there has been no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that occurred in the three months ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

I. Legal Proceedings

The information contained in Note 11 ‘‘Commitments and Contingencies’’ contained in “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated by reference herein.

Item 1A. Risk Factors

There have been no material changes to the “Risk Factors” disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Those risk factors could adversely affect the Company’s business, financial condition and operating results as well as the market price of the Company’s common shares.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Stock Repurchases

The following table presents the total number of shares purchased in the three months ended March 31, 2019, the average price paid per share and the approximate dollar value of shares that still could have been purchased at the end of the applicable fiscal period, pursuant to the 2016 Repurchase Program. See “Note 7 ‘‘Shareholders’ Equity’’ contained in “Notes to Condensed Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

					Approximate Dollar
				Total Number of Shares	Value of Shares that
	Total Number	Average		Purchased as Part of	May Yet Be
	of Shares	Price Paid per		Publicly Announced	Purchased Under the
Fiscal Period	Purchased	Share		Plans or Programs	Plans or Programs
January 1, 2019 through January 31, 2019	—	$	—	—	$	13,869,392,446
February 1, 2019 through February 28, 2019	—	$	—	—	$	13,869,392,446
March 1, 2019 through March 31, 2019	—	$	—	—	$	13,869,392,446
	—			—

Item 3.        Defaults Upon Senior Securities

None.

Item 4.        Mine Safety Disclosures

Not Applicable.

Item 5.        Other Information

None.

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Item 6. Exhibits

The exhibits listed in this Item 6 are filed as part of this Quarterly Report on Form 10-Q. Exhibits marked with an asterisk (*) are management contracts or compensatory plans or arrangements. Exhibits other than those listed are omitted because they are not required to be listed or are not applicable. Pursuant to Item 601(b)(4)(iii) of regulation S-K, the Registrant hereby agrees to furnish to the Securities and Exchange Commission a copy of any omitted instrument that is not required to be listed.

INDEX TO EXHIBITS

10
10.1	Change in Control Agreement effective as of July 19, 2010 between the Registrant and Eva Boratto.*
10.2	Restrictive Covenant Agreement dated May 17, 2017 between the Registrant and Eva Boratto.*
10.3	Change in Control Agreement dated as of November 10, 2017 between the Registrant and Derica Rice.*
10.4	Restrictive Covenant Agreement dated March 31, 2018 between the Registrant and Derica Rice.*
15	Letter re: unaudited interim financial information
15.1	Letter from Ernst & Young LLP acknowledging awareness of the use of a report dated May 1, 2019 related to their reviews of interim financial information.
31	Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification by the Chief Executive Officer.
31.2	Certification by the Chief Financial Officer.
32	Section 1350 Certifications
32.1	Certification by the Chief Executive Officer.
32.2	Certification by the Chief Financial Officer.
101	Interactive Data File
101	The following materials from the CVS Health Corporation Quarterly Report on Form 10-Q for the three months ended March 31, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash flows, (v) the Condensed Consolidated Statements of Shareholders’ Equity and (vi) the related Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CVS HEALTH CORPORATION

Date:	May 1, 2019	By:	/s/ Eva C. Boratto
			Eva C. Boratto
			Executive Vice President and Chief Financial Officer

EX-10.1

Exhibit 10.1

CVS CAREMARK CORPORATION

Change in Control Agreement for

Eva Boratto

CONFIDENTIAL    JULY 2010

		Page
1.	Definitions .................................................................................................................	2
2.	Term of Agreement ...................................................................................................	6
3.	Entitlement to Severance Benefit .............................................................................	6
4.	Confidentiality; Cooperation with Regard to Litigation; Non-disparagement ............	8
5.	Non-solicitation .........................................................................................................	9
6.	Remedies .................................................................................................................	10
7.	Effect of Agreement on Other Benefits and Obligations ...........................................	10
8.	Not an Employment Agreement ...............................................................................	10
9.	Resolution of Disputes .............................................................................................	10
10.	Assignability; Binding Nature ....................................................................................	10
11.	Representation .........................................................................................................	11
12.	Entire Agreement ......................................................................................................	11
13.	Amendment or Waiver, Code Section 409A .............................................................	11
14.	Severability ...............................................................................................................	11
15.	Survivorship ..............................................................................................................	11
16.	Beneficiaries/References .........................................................................................	12
17.	Governing Law/Jurisdiction ......................................................................................	12
18.	Notices .....................................................................................................................	12
19.	Headings ..................................................................................................................	12
20.	Counterparts .............................................................................................................	13

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This Change in Control Agreement ("Agreement") is effective as of July 19, 2010 between CVS Pharmacy, Inc. ("CVS") and Eva Boratto (the "Executive").

WHEREAS, the Board of Directors (the "Board") of CVS Caremark Corporation ("CVS Caremark") believes it is necessary and desirable for the CVS Caremark and its Subsidiaries and affiliates (collectively, the "Company") to be able to rely upon Executive to continue serving in his or her position with the Company in the event of a pending or actual change in control of CVS Caremark;

WHEREAS, Executive is employed by a Subsidiary of CVS Caremark, and this Agreement shall not alter Executive's status as an employee at will;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, CVS and Executive (individually a "Party" and together the "Parties) agree as follows:

1. Definitions.

a. "Base Salary" shall mean Executive's annual rate of base salary at the time of Executive's termination of employment or, if greater, as in effect immediately prior to a Change in Control.

b. "Cause" shall exist if:

i. Executive willfully and materially breaches Sections 4 or 5 of this Agreement;

ii. Executive is convicted of a felony involving moral turpitude; or

iii. Executive engages in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out Executive's duties under this Agreement, resulting, in either case, in material harm to the financial condition or reputation of the Company.

For purposes of this Agreement an act or failure to act on Executive's part shall be considered "willful" if it was done or omitted to be done by Executive not in good faith, and shall not include any act or failure to act resulting from any incapacity of Executive. A termination for Cause shall not take effect absent compliance with the provisions of this paragraph. Executive shall be given written notice by the Company of its intention to terminate Executive's employment for Cause, such notice (A) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (B) to be given within 90 days of the Company's learning of such act or acts or failure or failures to act. Executive shall have 20 days after the date that such written notice has been given to Executive in which to cure such conduct, to extent such cure is possible. If Executive fails to cure such conduct, Executive shall then be entitled to a hearing before the Committee, or an officer or officers designated by the Committee, at which Executive is entitled to appear. Such hearing shall be held within 25 days of such notice to Executive, provided Executive requests such hearing within 10 days of the written notice from the Company of the intention to terminate Executive for Cause. If, within five days following such hearing, Executive is furnished written notice by the Committee confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, Executive shall thereupon be terminated for Cause. Executive's right to cure in accordance with this provision applies only in the event of a Change in Control as defined in Section 1(c) below and does not alter Executive's "at will" employment status.

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c. A "Change in Control” shall be deemed to have occurred if:

(i) any Person (other than (w) the Company, (x) any trustee or other fiduciary holding securities under any employee benefit plan of the Company, (y) any company owned, directly or indirectly, by the stockholders of the Company immediately after the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such occurrence or (z) any surviving or resulting entity from a merger or consolidation referred to in clause (iii) below that does not constitute a Change in Control under clause (iii) below) becomes the Beneficial Owner (except that a Person shall be deemed to be the Beneficial Owner of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the sixty day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or of any subsidiary owning directly or indirectly all or substantially all of the consolidated assets of the Company (a "Significant Subsidiary"), representing 30% or more of the combined voting power of the Company's or such Significant Subsidiary's then outstanding securities;

(ii) during any period of twelve (12) consecutive months, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the twelve (12) month period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

(iii) the consummation of a merger or consolidation of the Company or any Significant Subsidiary with any other entity, other than a merger or consolidation which would result in the voting securities of the Company or a Significant Subsidiary outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after such merger or consolidation; or

(iv) the consummation of a transaction (or series of transactions within a 12 month period) which constitutes the sale or disposition of all or substantially all of the consolidated assets of the Company but in no event assets having a gross fair market value of less than 40% of the total gross fair market value of all of the consolidated assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such sale or disposition)

For purposes of this definition:

(A) The term "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act (including

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any successor to such Rule).

(B) The term "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

(C) The term "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof.

d. "Committee" shall mean the Management Planning and Development Committee of the Board, or the corresponding committee of the board of directors of a successor to CVS Caremark.

e. "Company" shall mean, collectively, CVS Caremark and any Subsidiary or affiliate of CVS Caremark.

f. "Confidential Information" shall have the meaning set forth in Section 4 below.

g. "Constructive Termination Without Cause" shall mean a termination of the Executive's employment at Executive's initiative following the occurrence, without the Executive's written consent, of one or more of the following events (except as a result of a prior termination):

i. an assignment of any duties to Executive that is inconsistent with Executive's status as a member of the senior management of CVS Caremark;

ii. a material decrease in Executive's annual base salary or target annual incentive award opportunity;

iii. any failure to secure the agreement of any successor to CVS Caremark to fully assume the Company's obligations under this Agreement; or

iv. a relocation of Executive's principal place of employment more than 35 miles from Executive's place of employment before such relocation.

h. "Disability" shall mean disability as that term is defined in the Company's Long-Term Disability Plan.

i. "Effective Date" shall have the meaning set forth in Section 2 below.

j. "Original Term" shall have the meaning set forth in Section 2 below.

k. "Renewal Term" shall have the meaning set forth in Section 2 below.

I. "Severance Period" shall mean the period of 18 months following the termination of Executive's employment with the Company.

m. "Subsidiary" shall have the meaning set forth in Section 4 below.

n. "Term" shall have the meaning set forth in Section 2 below.

o . "termination of employment", "employment is terminated" and other similar words shall mean with respect to Executive:

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(i)    for any plan or arrangement that is subject to the rules of Section 409A of the Internal Revenue Code (the "Code") a "Separation from Service" as such term is defined in the Income Tax Regulations under Section 409A (the "409A Regulations") of the Code as modified by the rules described below:

(A) except in the case where Executive is on a bona fide leave of absence pursuant to the Company's policies as provided below, Executive is deemed to have incurred a Separation from Service on a date if the company and Executive reasonably anticipate that the level of services to be performed by Executive after such date would be permanently reduced to 20% or less of the average services rendered by Executive during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which Executive was on a bona fide leave of absence;

(B) if Executive is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to the Company's policies, Executive shall incur a Separation from Service on the first date that the rules of (A), above, are satisfied following the later of (i) the six-month anniversary of the commencement of the leave or (ii) the expiration of Executive's right, if any, to reemployment under statute, contract or Company policy;

(C) Executive shall be considered to continue employment and to not have a Separation from Service while on a bona fide leave of absence pursuant to the Company's policies if the leave does not exceed 6 consecutive months (12) months for a disability leave of absence) or, if longer, so long as the Executive retains a right to reemployment with the Company or an Affiliate under an applicable statute, contract or Company policy. For this purpose, a "disability leave of absence" is an absence due to any medically determinable physical or mental impairment of Executive that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes the Participant to be unable to perform the duties of his job or a substantially similar job;

(D) for purposes of determining whether another organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative;

(E) the Company specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to Executive providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Section 409A of the Code; or

(ii) for any plan or arrangement that is not subject to the rules of Section 409A of the Code, the complete cessation of providing service to the Company or any Affiliate as an employee.

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2. Term of Agreement.

The term of this Agreement shall commence on the date of this Agreement (the "Effective Date") and end on the third anniversary of such date (the "Original Term"). The Original Term shall be automatically renewed for successive one-year terms (the "Renewal Terms") unless at least 180 days prior to the expiration of the Original Term or any Renewal Term, either Party notifies the other Party in writing that he/she or it is electing to terminate this Agreement at the expiration of the then current Term. "Term" shall mean the Original Term and all Renewal Terms. If a Change in Control shall have occurred during the Term, notwithstanding any other provision of this Section 2, the Term shall not expire earlier than two years after such Change in Control.

3. Entitlement toSeverance Benefit.

a. SeveranceBenefit. In the event Executive's employment with the Company is Terminated Without Cause, other than due to death, or Disability, or in the event there is

a Constructive Termination Without Cause within two years following a Change in Control, Executive shall be entitled to receive:

i. Base Salary through the date of termination of Executive's employment, which shall be paid in a cash lump sum not later than 15 days following Executive's termination of employment;

ii. An amount equal to 1.5 times Executive's Base Salary in effect on the date of termination of Executive's employment (or in the event a reduction in Base Salary is a basis for a Constructive Termination Without Cause, then the Base Salary in effect immediately prior to such reduction), payable in a cash lump sum promptly (but in no event later than 15 days) following Executive's termination of employment;

iii. An amount equal to the sum of (A) the most recently established target annual cash incentive bonus amount, pro rated based on the portion of the performance year that Executive has worked as of the date of Executive's termination, plus

(B) 25% of Base Salary (which represents an amount equal to the cash value of

the target annual Performance-Based Restricted Stock unit award for the year in which termination occurs), pro rated based on the portion of the performance year that Executive has worked as of the date of his/her termination. The Base Salary will be determined in accordance with Section 3.a.ii. Such payment of a pro rata annual cash incentive bonus and cash in lieu of Performance-Based Restricted Stock will be payable in a cash lump sum promptly (but in no event later than 15 days) following Executive's termination of employment;

iv. An amount equal to 1.5 times the sum of (A) the most recently established target annual incentive cash bonus amount plus (B) 25% of Base Salary (determined in accordance with Section 3.a.ii above), payable in a cash lump sum promptly {but in no event later than 15 days) following the Executive's termination of employment;

v. Elimination of all restrictions on any restricted stock or restricted stock unit awards outstanding at the time of termination of employment (other than awards under the Company's Partnership Equity Program, which shall be governed by the terms of such awards);

vi. Immediate vesting of all outstanding stock options and the right to exercise such stock options for the remainder of the full term of such option (other than awards

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under the Company's Partnership Equity Program, which shall be governed by the terms of such awards);

vii. The balance of any incentive awards earned as of December 31 of the prior year (but not yet paid), which shall be paid in a single lump sum not later than 15 days following Executive's termination of employment;

viii. Settlement of all deferred compensation arrangements in accordance with any then applicable deferred compensation plan or election form;

ix. Continued participation in all medical, health and life insurance plans at the same benefit level at which Executive was participating on the date of termination of Executive's employment until the earlier of:

1. the end of the Severance Period; or

2. the date, or dates, Executive receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by­ coverage, or benefit-by-benefit, basis);

provided that (1) if Executive is precluded from continuing Executive's participation in any employee benefit plan or program as provided in this clause (ix) of this Section 3.a, Executive shall receive cash payments equal on an after­ tax basis to the cost to Executive of obtaining the benefits provided under the plan or program in which Executive is unable to participate for the period specified in this clause (ix)of this Section 3.a, (2) such cost shall be deemed to be the lowest reasonable cost that would be incurred by Executive in obtaining such benefit on an individual basis, and (3) payment of such amounts shall be made quarterly in advance; and

x. other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

b. ChangeinControl Best Payments Determination. In the event the Severance Benefits described in Section 3(a) are payable to Executive in connection with a Change in Control and, if paid, could subject Executive to an excise tax under Section 4999 of the Internal Revenue Code (the "Excise Tax"), then notwithstanding the provisions of Section 3(a) the Company shall reduce the Severance Benefits (the "Benefit Reduction") under Section 3(a) by the amount necessary to result in the Executive not being subject to the Excise Tax if such reduction would result in the Executive's "Net After-Tax Amount" attributable to the Severance Benefits described in Section 3(a) being greater than it would be if no Benefit Reduction was effected. For this purpose "Net After-Tax Amount" shall mean the net amount of Severance Benefits Executive is entitled to receive under this Agreement after giving effect to all Federal, state and local taxes which would be applicable to such payments, including, but not limited to, the Excise Tax. The determination of whether any such Benefit Reduction shall be effected shall be made by a nationally recognized public accounting firm selected by the Company (the "Accounting Firm") prior to the occurrence of the Change in Control and such determination shall be binding on both Executive and the Company. In the event it is determined that a Benefit Reduction is required, such reduction of items described in Section 3(a) above shall be done first by reducing cash severance determined in accordance with Section 3(a)(ii), 3(a)(iii) and 3(a)(iv); to the extent a further Benefit Reduction is necessary, then Severance Benefits will be reduced from the amounts determined in accordance with Section 3(a)(v) and 3(a)(vi), all as determined by the Accounting Firm.

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c. No Mitigation; No Offset. In the event of any termination of employment under this Section 3, Executive shall be under no obligation to seek other employment, and the amounts due Executive under this Agreement shall not be offset by any remuneration attributable to any subsequent employment that Executive may obtain.

d. Nature of Payments. Any amounts due under this Section 3 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

e. Exclusivityof Severance Benefit. Upon termination of Executive's employment following a Change in Control, Executive shall not be entitled to any severance payments or severance benefits from the Company, or any other payments by the Company pursuant to any other agreement or arrangement between Executive and the Company, other than the Severance Benefit provided in this Section 3, except as required by law.

f. General Release of Claims. Executive agrees, as a condition of payment of the Severance Benefit provided for in this Section 3, that Executive will execute within 60 days of Executive's termination of employment a separation agreement, in a form reasonably satisfactory to the Company, that includes a general release of any and all claims arising out of Executive’s employment or termination of employment with the Company, other than claims for (i) enforcement of this Agreement, (ii) enforcement of Executive's rights under any of the Company's incentive compensation, equity and/or employee benefit plans and programs to which Executive is entitled under this Agreement, and (iii) any tort for personal injury not arising out of or related to Executive's employment or termination of employment.

g. Subject to the provisions of Section 13(b), all payments to be made pursuant to this Section 3 upon the termination of employment of Executive shall be made or commence, as the case may be, within 75 days after the Executive's termination of employment provided, however, that if such termination of employment is after October 15 of a year, the payment or first payment, as the case may be, shall be made at the end of such 75 day period.

4. Confidentiality; CooperationwithRegardtoLitigation: Non-disparagement.

a. During the Term and thereafter, Executive shall not, without the prior written consent of the Company, disclose to anyone (except in good faith in the ordinary course of business to a person who will be advised by Executive to keep such information confidential) or make use of any confidential information except in the performance of Executive's duties hereunder or when required to do so by legal process, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) that requires Executive to divulge, disclose or make accessible such information. In the event that Executive is so ordered, Executive shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such order.

b. During the Term and thereafter, Executive shall not disclose the existence or contents of this Agreement beyond what is disclosed in the proxy statement or documents filed with the government unless and to the extent such disclosure is required by law, by a governmental agency, or in a document required by law to be filed with a governmental agency or in connection with enforcement of his/her rights under this Agreement. In the event that disclosure is so required, Executive shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such requirement. This restriction shall not apply to such disclosure by Executive to members of his/her immediate family, his/her tax, legal or financial advisors, any lender,

8

or tax authorities, or to potential future employers to the extent necessary, each of whom shall be advised not to disclose such information.

c. "Confidential Information" shall mean all information concerning the business of the Company or any Subsidiary relating to any of their products, product development, trade secrets, customers, suppliers, finances, and business plans and strategies. Excluded from the definition of Confidential Information is information (i) that is or becomes part of the public domain, other than through the breach of this Agreement by Executive or (ii) regarding the Company's business or industry properly acquired by Executive in the course of Executive's career as an Executive in the Company's industry and independent of Executive's employment by the Company. For this purpose, information known or available generally within the trade or industry of the Company or any Subsidiary shall be deemed to be known or available to the public.

d. "Subsidiary" shall mean any corporation or other business entity owned or controlled directly or indirectly by CVS Caremark.

e. Executive agrees to cooperate with the Company, during the Term and thereafter (including following Executive's termination of employment for any reason), by being reasonably available to testify on behalf of the Company or any Subsidiary in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any Subsidiary, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any Subsidiary as requested; provided, however that the same does not materially interfere with Executive's then current professional activities. The Company agrees to reimburse Executive on an after tax basis, for all reasonable expenses actually incurred in connection with Executive's provision of testimony or assistance.

f. Executive agrees that, during the Term and thereafter (including following Executive's termination of employment for any reason) Executive will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company or any Subsidiary or their respective officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

5. Non-solicitation.

During the period beginning with the Effective Date and ending 18 months following the termination of Executive's employment with the Company, Executive, whether acting on Executive's own behalf or by, through or on behalf of any third party, shall not (a) hire any employees of the Company or any Subsidiary, or recruit or solicit any such employees or encourage them to terminate their employment with the Company or any Subsidiary; (b) accept business from any customers of the Company or any Subsidiary, or solicit or encourage any customers, joint venture partners or investors of the Company or any Subsidiary to terminate or diminish their relationship with the Company or any Subsidiary or to violate any agreement with the Company or any Subsidiary. For purposes of subsection 5(a), an employee of the Company or any Subsidiary means any person who was employed by the Company or any Subsidiary within 180 days of such hiring, recruitment, solicitation or encouragement. Executive agrees to make any employer with whom Executive becomes employed during the 18-month period following Executive's termination with the Company aware of this non-solicitation obligation upon commencing employment with such subsequent entity.

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6. Remedies.

In addition to whatever other rights and remedies the Company may have at equity or in law, the Company (a) shall have the right to immediately terminate all payments and benefits due under this Agreement if Executive breaches any of the provisions contained in Sections 4 or 5 above, and (b) shall have the right to seek injunctive relief in any court of competent jurisdiction if Executive breaches or threatens to breach any of the provisions contained in Sections 4or 5 above. Executive acknowledges that such a breach would cause irreparable injury and that money damages would not provide an adequate remedy for the Company; provided, however, the foregoing shall not prevent Executive from contesting the issuance of any such injunction on the ground that no violation or threatened violation of Sections 4 or 5 has occurred.

7. Effect of Agreement on Other Benefits andObligations.

Except as specifically provided in this Agreement, the existence of this Agreement shall not be interpreted to preclude, prohibit or restrict the Executive's participation in any other employee benefit or other plans or programs in which he /she currently participates. Except as specifically provided in this Agreement, the terms of Sections 4 and 5 of this Agreement shall not be deemed to restrict or supersede prior to a Change in Control any similar obligations Executive may have to the Company or its subsidiaries under any other agreement.

8. Not an Employment Agreement.

This Agreement is not, and nothing herein shall be deemed to create, a contract of employment between Executive and the Company. The Company may terminate the employment of Executive at any time and for any reason, subject to the terms of any employment agreement between the Company and Executive that may then be in effect.

9. Resolution of Disputes.

Any controversy or claim arising out of or relating to this Agreement or any breach or asserted breach hereof or questioning the validity and binding effect hereof arising under or in connection with this Agreement, other than seeking injunctive relief under Sections 4 or 5, shall be resolved by binding arbitration, to be held at an office closest to the Company's principal offices in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Pending the resolution of any arbitration or court proceeding, the company shall continue payment of all amounts and benefits due Executive under this Agreement. All reasonable costs and expenses of any arbitration or court proceeding (including fees and disbursements of counsel) shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that no reimbursement shall be made of such expenses if and to the extent the arbitrator(s) determine(s) that any of Executive's litigation assertions or defenses were in bad faith or frivolous.

10. Assignability; Binding Nature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of Executive) and permitted assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred in connection with the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this agreement, either contractually or as a matter of law. The Company further agrees that, in the event of a sale or transfer of assets as described in the preceding sentence, it shall take whatever

10

action it legally can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than his/her, rights to compensation and benefits, which may be transferred only by will or operation of law, except as provided in Section 16 below.

11. Representation.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization.

12. Entire Agreement.

This Agreement contains the entire understanding and agreement between the Parties concerning the parties' rights and obligations in connection with the subject matter of this Agreement in the event of a Change in Control and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto.

13. Amendment: Waiver;Code Section 409A.

(a) No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be.

(b) Executive and Company agree that it is the intent of the parties that this Agreement not violate any applicable provision of, or result in any additional tax or penalty under, Section 409A of the Code, as amended, and that to the extent any provisions of this Agreement do not comply with such Code Section 409A the parties will make such changes as are mutually agreed upon in order to comply with Code Section 409A. In all events, to the extent required to avoid a violation of any of the applicable rules under Code Section 409A by reason of Code Section 409A(a)(2)(B)(i), payment of any amounts subject to Code Section 409A shall be delayed until the relevant date of payment that will result in compliance with the rules of Code Section 409A(a)(2)(B)(i).

14. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

15. Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any termination of Executive's employment to the extent necessary to the intended preservation of such rights and obligations.

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16. Beneficiaries/References.

Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of Executive's incompetence, references in this Agreement to Executive shall be deemed, where appropriate, to refer to Executive's beneficiary, estate or other legal representative.

17. Governing Law/Jurisdiction.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of Rhode Island without reference to principles of conflict of laws. Subject to Section 6, the Company and Executive hereby consent to the jurisdiction of any or all of the following courts for purposes of resolving any dispute under this Agreement: (i) the United States District Court for Rhode Island or (ii) any of the courts of the State of Rhode Island. The Company and Executive further agree that any service of process or notice requirements in such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which

it or Executive may now or hereafter have to such jurisdiction and any defense of inconvenient forum.

18. Notices.

Any notice given to a Party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to, such changed address as such Party may subsequently give such notice of:

lf to CVS:

CVS Pharmacy, Inc.

One CVS Drive Woonsocket, RI 02895

Attention: Corporate Secretary

If to Executive:

Eva Boratto

XXXXXXXXXXXXX

XXXXXXXXXXXXXXXXXX

19. Headings.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

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20. Counterparts.

This Agreement may be executed in two or more counterparts.

In WITNESS WHEREOF, the undersigned have executed this Agreement to be effective as of the date first written above.

CVS Pharmacy, Inc.

By:

/s/ Lisa Bisaccia

Name: Lisa Bisaccia

Title: SVP and Chief Human

Resources Officer

Date: 7/14/2010

Executive:

/s/ Eva Boratto

Eva Boratto

SVP, Finance, PBM

Date:

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EX-10.2

Exhibit 10.2

CVS Pharmacy, Inc.

Restrictive Covenant Agreement

I, Eva C. Boratto, enter into this Restrictive Covenant Agreement ("Agreement") with CVS Pharmacy, Inc., on its own behalf and on behalf of its subsidiaries and affiliates ("CVS" or "Corporation"), which is effective as of the date I sign the Agreement ("Effective Date"). In consideration of the mutual promises in this Agreement, the parties agree as follows:

1.Consideration for Agreement. In connection with my duties and responsibilities at CVS, the Corporation will provide me with the Corporation's Confidential Information ("Confidential Information") and/or access to the Corporation's customers and clients and the opportunity to develop and maintain relationships and goodwill with them. In addition, the Corporation has awarded me restricted stock units contingent on the execution of this Agreement and compliance with its terms.

2. Non-Competition. During my employment by the Corporation and during the Non-Competition Period following the termination of my employment for any reason, I will not, directly or indirectly, engage in Competition or provide Consulting or Audit Services within the Restricted Area.

a.    Competition. Engaging in "Competition" means providing services to a Competitor of the Corporation (whether as an employee, independent contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a shareholder of less than one percent of a publicly traded company) that: (i) are the same or similar in function or purpose to the services I provided to the Corporation at any time during the last two years of my employment by the Corporation; or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use of Confidential Information on behalf of a Competitor. If a representative of the Corporation, during my employment or the Non­ Competition Period, requests that I identify the company or business to which I will be or am providing services, or with which I will be or am employed, and requests that Iprovide information about the services that I am or will be providing to such entity, I shall provide the Corporation with a written statement detailing the identity of the entity and the nature of the services that I am or will be providing to such entity with sufficient detail to allow the Corporation to independently assess whether I am or will be in violation of this Agreement. Such statement shall be delivered to the Corporation's Chief Human Resources Officer or her authorized delegate via personal delivery or overnight delivery within five calendar days of my receipt of such request.

b.    Competitor. A "Competitor" for purposes of this Agreement shall mean any person, corporation or other entity that competes with one or more of the business offerings of the Corporation As of the Effective Date, the Corporation's business offerings include: (i) pharmacy benefits management (" PBM"), including: (a) the administration of pharmacy benefits for businesses, government agencies and health plans; ( b) mail order pharmacy; (c) specialty pharmacy; (d) the procurement of prescription drugs at a negotiated rate for dispensing; and (e) Medicare Part D services; (ii) retail, which includes the sale of prescription drugs, over-the-counter medications, beauty products and cosmetics, digital and traditional photo finishing services, digital and other online offerings, seasonal and other general merchandise, greeting cards, convenience foods and other product lines and services which are sold by the Corporation's retail division ("Retail"); (iii) retail health clinics ("MinuteClinic"); (iv) the provision of pharmaceutical products and ancillary services, including specialty pharmaceutical products and support services and the provision of related pharmacy consulting, data management services and medical supplies to long-term care facilities, other healthcare service providers and recipients of services from such facilities ("Long-Term Care" ); (v) the provision of prescription infusion drugs and related services ("Infusion"); and (vi) any other business in which Corporation is engaged or imminently will be engaged.

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For the purpose of assessing whether I am engaging in "Competition" under Section 2 (a) (i) above, a person, corporation or other entity shall not be considered a Retail Competitor if such entity derives annual gross revenues from its business in an amount which is less than 2% of the Corporation's gross revenues from Retail, during its most recently completed fiscal year. For avoidance of doubt, this exclusion does not apply to a determination of whether I am engaging in "Competition" as set forth in Section 2 (a) (ii) above.

The Parties acknowledge that both the Corporation's products and services and the entities which compete with the Corporation's products and services evolve and an entity will be considered a Competitor if it provides products or services competitive with the products and services provided by the Corporation within the last two years of my employment.

I agree to this enterprise-wide definition of non-competition which may prevent me from providing services to any of the Corporation's PBM, Retail, MinuteClinic, Long-Term Care and Infusion Competitors or any combination thereof during the Non-Competition period.

c.    Consulting or Audit Services. "Consulting or Audit Services" shall mean any activity which involves providing audit review or other consulting or advisory services with respect to any relationship or prospective relationship between the Corporation and any third party that is likely to result in the use or disclosure of Confidential Information.

d.    Non-Competition Period. The "Non-Competition Period" shall be the period of 18 months following the termination of my employment with the Corporation for any reason.

e.    Restricted Area. "Restricted Area" refers to those states within the United States in which the Corporation conducts its business, as well as the District of Columbia and Puerto Rico. To the extent I worked on international projects in Brazil or other countries where the Corporation may conduct business, the Restricted Area includes those countries and prospective countries.

3.Non-Solicitation. During the Non-Solicitation Period, which shall be 18 months following the termination of my employment with the Corporation for any reason, I will not, unless a duly authorized officer of the Corporation gives me written authorization to do so:

a.    interfere with the Corporation's relationship with its Business Partners by soliciting or communicating (regardless of who initiates the communication) with a Business Partner to: (i) induce or encourage the Business Partner to stop doing business or reduce its business with the Corporation, or (ii) buy a product or service that competes with a product or service offered by the Corporation's business. "Business Partner" means: a customer (person or entity), prospective customer (person or entity), supplier, manufacturer, broker, hospital, hospital system, long-term care facility, and/or pharmaceutical manufacturer with whom the Corporation has a business relationship and with which I had business­ related contact or dealings, or about which I received Confidential Information, in the two years prior to the termination of my employment with the Corporation. A Business Partner does not include a customer, supplier, manufacturer, broker, hospital, hospital system, long-term care facility and/or pharmaceutical manufacturer which has fully and finally ceased doing any business with the Corporation independent of any conduct or communications by me or breach of this Agreement and such full cessation of business has been in effect for at least I year prior to my separation from employment with the Corporation. Nothing in this Paragraph 3(a) shall prevent me from working as a staff pharmacist or in another retail position wherein I would be providing or selling prescriptions or other products directly to consumers.

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b.    work on a Corporation account on behalf of a Business Partner or serve as the representative of a Business Partner for the Corporation.

c.    interfere with the Corporation's relationship with any employee or contractor of the Corporation by: (i) soliciting or communicating with the employee or contractor to induce or encourage him or her to leave the Corporation's employ or engagement (regardless of who first initiates the communication); (ii) helping another person or entity evaluate such employee or contractor as an employment or contractor candidate; or (iii) otherwise helping any person or entity hire an employee or contractor away from the Corporation.

4. Non-Disclosure of Confidential Information.

a.    Subject to Section 8 below, I will not at any time, whether during or after the termination of my employment, disclose to any person or entity any of the Corporation's Confidential Information, except as may be appropriately required in the ordinary course of performing my duties as an employee of the Corporation. The Corporation's Confidential Information includes but is not limited to the following non-public information: trade secrets; computer code generated or developed by the Corporation; software or programs and related documentation; strategic compilations and analysis; strategic processes; business or financial methods, practices and plans; non-public costs and prices; operating margins; marketing, merchandising and selling techniques and information; customer lists; details of customer agreements; pricing arrangements with pharmaceutical manufacturers, distributors or suppliers including but not limited to any discounts and/or rebates; pharmacy reimbursement rates; expansion strategies; real estate strategies; operating strategies; sources of supply; patient records; and confidential information of third parties which is given to the Corporation pursuant to an obligation or agreement to keep such information confidential (collectively, "Confidential Information''). I shall not use or attempt to use any Confidential Information on behalf of any person or entity other than the Corporation, or in any manner which may injure or cause loss or may be calculated to injure or cause loss, whether directly or indirectly, to the Corporation. If, at any time over the last two years of my employment at CVS, my position included access to Confidential Information, as described above, specifically related to the Corporation's procurement of prescription drugs, I understand and agree my employment with a pharmaceutical manufacturer, distributor or supplier ("Pharmaceutical Entity") would place a substantial risk of use and/or disclosure of Confidential Information with which I have been or will be entrusted during my employment with the Corporation. In light of this risk of disclosure, I acknowledge and agree that the Corporation will be entitled to immediate injunctive relief to prevent me from disclosing any such Confidential Information in the course of my employment with any such Pharmaceutical Entity, in the event I have disclosed or am at a substantial risk of disclosing, such Confidential Information in the course of my duties for such Pharmaceutical Entity. I agree that the disclosure of such Confidential Information, to Corporation's PBM Competitors with which one may negotiate in the course of employment with such Pharmaceutical Entity, would cause immediate and irreparable harm to the Corporation. For employees residing in Connecticut, these restrictions on use or disclosure of Confidential Information will only apply for three (3) years after the end of my employment where information that does not qualify as a trade secret is concerned; however, the restrictions will continue to apply to trade secret information for as long as the information at issue remains qualified as a trade secret.

b.    During my employment, I shall not make, use, or permit to be used, any materials of any nature relating to any matter within the scope of the business of the Corporation or concerning any of its dealings or affairs other than for the benefit of the Corporation. I shall not, after the termination of my employment, use or permit to be used any such materials and shall return same in accordance with Section 5 below.

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5.Ownership and Return of the Corporation's Property. On or before my final date of employment with the Corporation, I shall return to the Corporation all property of the Corporation in my possession, custody or control, including but not limited to the originals and copies of any information provided to or acquired by me in connection with the performance of my duties for the Corporation, such as files, correspondence, communications, memoranda, e-mails, slides, records, and all other documents, no matter how produced or reproduced, all computer equipment, communication devices (including but not limited to any mobile phone or other portable digital assistant or device), computer programs and/or files, and all office keys and access cards. I agree that all the items described in this Section are the sole property of the Corporation.

6. Rights to Inventions, Works.

a.    Assignment of Inventions. All inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether patentable or otherwise protectable under similar law, made, conceived or developed by me, whether alone or jointly with others, from the date of my initial employment by the Corporation and continuing until the end of any period during which I am employed by the Corporation, relating or pertaining in any way to my employment with or the business of the Corporation (collectively referred to as "Inventions") shall be promptly disclosed in writing to the Corporation. I hereby assign to the Corporation, or its designee, all of my rights, title and interest to such Inventions. All original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Corporation and which are protectable by copyright are "works made for hire," as that term is defined in the United States Copyright Act and as such are the sole property of the Corporation. The decision whether to commercialize or market any Invention developed by me solely or jointly with others is within the Corporation's sole discretion and for the Corporation's sole benefit and no royalty will be due to me as a result of the Corporation's efforts to commercialize or market any such Invention.

b.    Inventions Retained and Licensed. I have attached hereto as Exhibit A, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by me prior to my employment with the Corporation ("Prior Inventions"), which belong to me and are not assigned to the Corporation hereunder. If no such list is attached, I represent that there are no such Prior Inventions. I will not incorporate, or permit to be incorporated, any Prior Invention owned by me or in which I have an interest into a Corporation product, process or machine without the Corporation's prior written consent. Notwithstanding the foregoing sentence, if, in the course of my employment with the Corporation, I incorporate into a Corporation product, process or machine a Prior Invention owned by me or in which I have an interest, the Corporation is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process or machine.

c.    Patent and Copyright Registrations. I will assist the Corporation, or its designee, at the Corporation's expense, in every proper way to secure the Corporation's rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto, including, but not limited to, the disclosure to the Corporation of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Corporation shall deem necessary in order to apply for and obtain such rights and in orderto assign and convey to the Corporation, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. My obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after my employment ends for any reason and/or after the termination of this Agreement. If the Corporation is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any

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application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Corporation as above, then I hereby irrevocably designate and appoint the Corporation and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by me.

d.    Exception to Assignments. I understand that if I am an employee in Illinois, Kansas, North Carolina, Utah or Minnesota, I should refer to Exhibit B (incorporated herein for all purposes) for important limitations on the scope of the provisions of this Agreement concerning assignment of Inventions. I will advise the Corporation promptly in writing of any inventions that I believe meet the criteria in Exhibit B and that are not otherwise disclosed on Exhibit A.

7. Cooperation.

a.    In the event I receive a subpoena, deposition notice, interview request, or other process or order to testify or produce Confidential Information or any other information or property of the Corporation, I shall promptly: (a) notify the Corporation of the item, document, or information sought by such subpoena, deposition notice, interview request, or other process or order; (b) furnish the Corporation with a copy of said subpoena, deposition notice, interview request, or other process or order; and (c) provide reasonable cooperation with respect to any procedure that the Corporation may initiate to protect Confidential Information or other interests. If the Corporation objects to the subpoena, deposition notice, interview request, process, or order, I shall cooperate to ensure that there shall be no disclosure until the court or other applicable entity has ruled upon the objection, and then only in accordance with the ruling so made. If no such objection is made despite a reasonable opportunity to do so, I shall be entitled to comply with the subpoena, deposition, notice, interview request, or other process or order provided that I have fulfilled the above obligations.

b.    I will cooperate fully with the Corporation, its affiliates, and their legal counsel in connection with any action, proceeding, or dispute arising out of matters with which I was directly or indirectly involved while serving as an employee of the Corporation, its predecessors, subsidiaries or affiliates. This cooperation shall include, but shall not be limited to, meeting with, and providing information to, the Corporation and its legal counsel, maintaining the confidentiality of any past or future privileged communications with the Corporation's legal counsel (outside and in-house), and making myself available to testify truthfully by affidavit, in depositions, or in any other forum on behalf of the Corporation. The Corporation agrees to reimburse me for any reasonable and necessary out-of- pocket costs associated with my cooperation.

8.Limitation on Restrictions. Nothing in this Agreement is intended to or shall interfere with my right to file charges or participate in a proceeding with any appropriate federal, state or local government agency, Occupational Safety and Health Administration ("OSHA"), National Labor Relations Board ("NLRB") or the Securities and Exchange Commission ("SEC"), or to exercise rights under Section 7 of the National Labor Relations Act ("NLRA"), or interfere with my right to file a charge or complaint with or participate or cooperate in an investigation or proceeding with the US Equal Employment Opportunity Commission ("EEOC") or comparable state or local agencies; such agencies have authority to carry out their statutory duties by investigating a charge, issuing a determination, filing a lawsuit, or taking any other action authorized by law. I retain the right to participate in any such action and retain the right to communicate with, NLRB, SEC, EEOC, OSHA and comparable state or local agencies and such communication shall not be limited by any provision in this Agreement. Nothing in this Agreement limits my right to receive an award for information provided to a government agency such as the SEC and OSHA. In addition, nothing in this Agreement is intended to interfere with or restrain the immunity

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provided under 18 U.S.C. § I833(b) for confidential disclosures of trade secrets to government officials, or lawyers, solely for the purpose of reporting or investigating a suspected violation of law; or in a sealed filing in court or other proceeding.

9.Eligibility for Severance Pay. If my employment with the Corporation terminates under circumstances in which I am eligible for severance under the Corporation's Severance Plan for Non-Store Employees (the "Severance Plan"), the Corporation will offer me severance in accordance with the Severance Plan and the length of the Non-Competition Period will match the length of the severance period. I acknowledge that the Severance Plan sets forth pre-requisites I must meet in order to receive severance, including but not limited to execution of the Corporation's standard separation agreement and release of claims. In the event that the Corporation fails to comply with its obligations to offer me severance according to the Severance Plan, then Section 2 of this Agreement shall be of no further effect. I agree that if I decline the Corporation's offer of severance, I shall continue to be subject to the restrictions in Section 2.

10.Injunctive Relief. Any breach of this Agreement by me will cause irreparable damage to the Corporation and, in the event of such breach, the Corporation shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent the violation of my obligations hereunder, and without providing a bond to the extent permitted by the applicable rules of civil procedure.

11.No Right of Continued Employment. This Agreement does not create an obligation on the Corporation or any other person or entity to continue my employment.

12.No Conflicting Agreements. I represent that the performance of my job duties with the Corporation and my compliance with all of theterms of this Agreement does not and will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Corporation.

13.Entire Agreement/No Reliance/No Modifications. This Agreement and any compensation, benefit or equity plan or agreement referred to herein or under which equity was granted, including the CVS Health Corporation Change in Control Agreement ("CIC Agreement"), to the extent those other agreements apply to me, set forth the entire agreement between the parties hereto and fully supersede any and all prior and/or supplemental understandings, whether written or oral, between the parties concerning the subject matter of this Agreement. This Agreement shall not have any effect on any prior existing agreements between the Corporation and me that do not deal exclusively with the subject matter of this Agreement, including but not limited to any agreement made previously by me and the Corporation to arbitrate workplace legal disputes, and any such agreements remain in force notwithstanding the existence of this Agreement. Notwithstanding the foregoing, if I am a party to the CIC Agreement, then I understand that in the event of a Change in Control, as that term is defined in the CIC, Paragraph 2 of this Agreement shall be null and void. I agree and acknowledge that I have not relied on any representations, promises or agreements of any kind in connection with my decision to accept the terms of this Agreement, except for the representations, promises and agreements herein. Any modification to this Agreement must be made in writing and signed by me and the Corporation's Chief Human Resources Officer or her authorized representative.

14.No Waiver. Any waiver by the Corporation of a breach of any provision of this Agreement, or of any other similar agreement with any other current or former employee of the Corporation, shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

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15.Severability. The parties hereby agree that each provision herein shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein. Moreover, if one or more of the provisions of this Agreement are for any reason held to be excessively broad as to scope, activity, duration, subject or otherwise so as to be unenforceable at law, the parties consent to such provision or provisions being modified or limited by the appropriate judicial body (where allowed by applicable law), so as to be enforceable to the maximum extent compatible with the applicable law.

16.Survival of Employee's Obligations. My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination and shall be binding upon my heirs, personal representatives, executors, administrators and legal representatives.

17.Corporation's Right to Assign Agreement. The Corporation has the right to assign this Agreement to its successors and assigns without the need for further agreement or consent by me, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

18.Non-Assignment. I shall not assign my rights and obligations under this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of the Corporation, and any such assignment contrary to the terms hereof shall be null and void and of no force or effect.

19.Governing Law; Venue; Headings. This Agreement shall be governed by and construed in accordance with the laws of the state of Rhode Island. I agree that any claim or dispute I may have against the corporation must be resolved by a court located in the state of Rhode Island. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

20.Tolling. In the event I violate one of the time-limited restrictions in this Agreement, I agree that the time period for such violated restriction shall be extended by one day for each day I have violated the restriction, up to a maximum extension equal to the length of the original period of the restricted covenant.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as a sealed instrument as of the date set forth below.

/s/ Eva C. Boratto        /s/ Lisa Bisaccia        

Eva C. Boratto                         Lisa Bisaccia

...........................                        Chief Human Resources Officer

XXXXXXXXXX                        CVS Pharmacy, Inc.

Employee ID

Date: 5/7/2017

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EXHIBIT A

List of Prior Inventions - See Section 6

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EXHIBIT B

Notice Regarding Invention Assignment

I.    For an employee residing in Illinois, Kansas, or North Carolina, you are hereby advised:

Notice.No provision in this Agreement requires you to assign any of your rights to an invention for which no equipment, supplies, facility, or trade secret information of the Corporation was used and which was developed entirely on your own time, unless (a) the invention relates (i) to the business of the Corporation or (ii) to the Corporation's actual or demonstrably anticipated research or development,or (b) the invention results from any work performed by you for the Corporation. Illinois 765ILCS1060/1 -3, "Employees Patent Act"; Kansas Statutes Section 44-130; North Carolina General Statutes Article 10A, Chapter 66, Commerce and Business, Section 66-57.1.

2. For an employee residing in Utah, you are hereby advised:

Notice.No provision in this Agreement requires you to assign any of your rights to an invention which was created entirely on your own time, and which is not (a) conceived, developed, reduced to practice, or created by you (i) within the scope of your employment with the Corporation, (ii) on the Corporation's time, or (iii) with the aid, assistance, or use of any of the Corporation's property, equipment, facilities, supplies, resources, or patents, trade secrets, know-how, technology, confidential information, ideas, copy rights, trademarks and service marks and any and all rights, applications and registrations relating to them, (b) the results of any work, services, or duties performed by you for the Corporation, (c) related to the industry or trade of the Corporation, or (d) related to the current or demonstrably anticipated business, research, or development of the Corporation . Utah Code Sections 34-39-1 through 34-39-3, "Employee Inventions Act."

3. For an employee residing in Minnesota, you are hereby advised:

Notice.No provision in this Agreement requires you to assign any of your rights to an invention for which no equipment, supplies, facility, or trade secret information of the Corporation was used, and which was developed entirely on your own time, and (a) which does not relate (i) directly to the business of the Corporation, or (ii) to the Corporation's actual or demonstrably anticipated research or development , or (b) which does not result from any work performed by you for the Corporation. Minnesota Statutes 13A Section 181.78.

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EX-10.3

Exhibit 10.3

CVS HEALTH CORPORATION

Change in Control Agreement for

Derica Rice

CONFIDENTIAL    Revised 2017

		Page
1.	Definitions .................................................................................................................	1
2.	Term of Agreement ...................................................................................................	4
3.	Entitlement to Severance Benefit .............................................................................	5
4.	Confidentiality; Cooperation with Regard to Litigation; Non-disparagement ............	7
5.	Non-solicitation .........................................................................................................	8
6.	Remedies .................................................................................................................	8
7.	Effect of Agreement on Other Benefits .....................................................................	9
8.	Not an Employment Agreement ...............................................................................	9
9.	Resolution of Disputes .............................................................................................	9
10.	Assignability; Binding Nature ....................................................................................	9
11.	Representation .........................................................................................................	9
12.	Amendment or Waiver, Section 409A .......................................................................	9
13.	Severability ...............................................................................................................	10
14.	Survivorship ..............................................................................................................	10
15.	Beneficiaries/References .........................................................................................	10
16.	Governing Law/Jurisdiction ......................................................................................	10
17.	Notices .....................................................................................................................	10
18.	Headings ..................................................................................................................	11
19.	Counterparts .............................................................................................................	11

This Change in Control Agreement ("Agreement") is made and entered into as of November 10, 2017, between CVS Pharmacy, Inc. ("CVS") and Derica Rice (the "Executive").

WHEREAS, the Board of Directors (the "Board") of CVS Health Corporation ("CVS" or the "Company") believes it is necessary and desirable for the Company to be able to rely upon Executive to continue serving in Executive's position with the Company in the event of a pending or actual change in control of CVS;

WHEREAS, Executive is employed by a Subsidiary of CVS, and this Agreement shall not alter Executive's status as an employee at will;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, CVS and the Executive (individually a "Party" and together the "Parties") agree as follows:

1. Definitions.

a. "Base Salary" shall mean Executive's annual rate of base salary at the time of Executive's termination of employment or, if greater, as in effect immediately prior to a Change in Control.

b. "Cause" shall exist if:

i. Executive willfully and materially breaches Sections 4 or 5 of this Agreement;

ii. Executive is convicted of a felony involving moral turpitude; or

iii. Executive engages in conduct that constitutes willful gross neglect or willful gross misconduct in carrying out Executive's duties under this Agreement, resulting, in either case, in material harm to the financial condition or reputation of the Company.

For purposes of this Agreement, an act or failure to act on Executive's part shall be considered "willful" if it was done or omitted to be done by Executive not in good faith, and shall not include any act or failure to act resulting from any incapacity of Executive. A termination for Cause shall not take effect absent compliance with the provisions of this paragraph. Executive shall be given written notice by the Company of its intention to terminate Executive's employment for Cause, such notice (A) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (B) to be given within 90 days of the Company's learning of such act or acts or failure or failures to act. Executive shall have 20 days after the date that such written notice has been given to Executive in which to cure such conduct, to extent such cure is possible. If Executive fails to cure such conduct, Executive shall then be entitled to a hearing before the Committee, or an officer or officers designated by the Committee, at which Executive is entitled to appear. Such hearing shall be held within 25 days of such notice to Executive, provided Executive requests such hearing within 10 days of the written notice from the Company of the intention to terminate Executive for Cause. If, within five days following such hearing, Executive is furnished written notice by the Committee confirming that, in its judgment, grounds for Cause on the basis of the original notice exist, Executive shall thereupon be terminated for Cause. Executive's right to cure in accordance with this provision applies only in the event of a Change in Control as defined in Section 1(c) below and does not alter Executive's "at will" employment status.

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c. A "Change in Control" shall be deemed to have occurred if:

(i) any Person (other than (a) the Company, (b) any trustee or other fiduciary holding securities under any employee benefit plan of the Company, (c) any company owned, directly or indirectly, by the stockholders of the Company immediately after the occurrence with respect to which the evaluation is being made in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such occurrence or (d) any surviving or resulting entity from a merger or consolidation referred to in clause (iii) below that does not constitute a Change of Control under clause (iii) below) becomes the Beneficial Owner (except that a Person shall be deemed to be the Beneficial Owner of all shares that any such Person has the right to acquire pursuant to any agreement or arrangement or upon exercise of conversion rights, warrants or options or otherwise, without regard to the sixty day period referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or of any subsidiary owning directly or indirectly all or substantially all of the consolidated assets of the Company (a "Significant Subsidiary"), representing 30% or more of the combined voting power of the Company's or such Significant Subsidiary's then outstanding securities;

(ii) during any period of twelve (12) consecutive months, individuals who at the beginning of such period constitute the Board, and any new director whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the twelve (12) month period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;

(iii) the consummation of a merger or consolidation of the Company or any Significant Subsidiary with any other entity, other than a merger or consolidation which would result in the voting securities of the Company or a Significant Subsidiary outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after such merger or consolidation; or

(iv) the consummation of a transaction (or series of transactions within a 12 month period) which constitutes the sale or disposition of all or substantially all of the consolidated assets of the Company but in no event assets having a gross fair market value of less than 40% of the total gross fair market value of all of the consolidated assets of the Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company immediately prior to such sale or disposition).

For purposes of this definition:

(A) The term "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act (including any successor to such Rule).

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(B) The term "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

(C) The term "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof.

d. "Committee" shall mean the Management Planning and Development Committee of the Board, or the corresponding committee of the board of directors of a successor to CVS.

e. "Company" shall mean, collectively, CVS and any Subsidiary or affiliate of CVS.

f. "Confidential Information" shall have the meaning set forth in Section 4 below.

g. "Constructive Termination Without Cause" shall mean a termination of the Executive's employment at Executive's initiative following the occurrence, without the Executive's written consent, of one or more of the following events (except as a result of a prior termination):

i. an assignment of any duties to Executive that is materially inconsistent with Executive's status as a member of the senior management of CVS;

ii. a material decrease in Executive's annual base salary or target annual incentive award opportunity;

iii. any failure to secure the agreement of any successor to CVS to fully assume the Company's material obligations under this Agreement; or

iv. a relocation of Executive's principal place of employment more than 35 miles from Executive's place of employment before such relocation.

In all cases, no Constructive Termination Without Cause shall be deemed to have occurred unless (a) the Executive provides written notice to the Company that an event described in subsections i. through iv. has occurred, and such notice identifies such event and is provided within 30 days of the initial occurrence of such event, (b) a cure period of 45 days following the Company's receipt of such notice expires and the Company has not cured such event within such cure period and (c) the Executive actually terminates his/her employment within 30 days of the expiration of the cure period.

h. "Disability" shall mean disability as that term is defined in the Company's Long-Term Disability Plan.

i. "Effective Date" shall have the meaning set forth in Section 2 below.

j. "Original Term" shall have the meaning set forth in Section 2 below.

k. "Renewal Term" shall have the meaning set forth in Section 2 below.

I. "Severance Period" shall mean the period of 18 months following the termination of Executive's employment with the Company.

m. "Subsidiary" shall have the meaning set forth in Section 4 below.

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n. "Term" shall have the meaning set forth in Section 2 below.

o. "termination of employment", "employment is terminated" and other similar words shall mean with respect to Executive

(i)    for any plan or arrangement that is subject to the rules of Section 409A of the Internal Revenue Code (the "Code") a "Separation from Service" as such term is defined in the Income Tax Regulations under Section 409A (the "409A Regulations") of the Code as modified by the rules described below:

(A) except in the case where Executive is on a bona fide leave of absence pursuant to the Company's policies as provided below, Executive is deemed to have incurred a Separation from Service on a date if the company and Executive reasonably anticipate that the level of services to be performed by Executive after such date would be permanently reduced to 20% or less of the average services rendered by Executive during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which Executive was on a bona fide leave of absence;

(B) if Executive is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to the Company's policies, Executive shall incur a Separation from Service on the first date that the rules of (A), above, are satisfied following the later of (i) the six-month anniversary of the commencement of the leave or (ii) the expiration of Executive's right, if any, to reemployment under statute, contract or Company policy;

(C) Executive shall be considered to continue employment and to not have a Separation from Service while on a bona fide leave of absence pursuant to the Company's policies if the leave does not exceed 6 consecutive months (12) months for a disability leave of absence) or, if longer, so long as the Executive retains a right to reemployment with the Company or an Affiliate under an applicable statute, contract or Company policy. For this purpose, a "disability leave of absence" is an absence due to any medically determinable physical or mental impairment of Executive that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes Executive to be unable to perform the duties of Executive's job or a substantially similar job;

(D) for purposes of determining whether another organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative;

(E) the Company specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to Executive providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Section 409A of the Code; or

(ii) for any plan or arrangement that is not subject to the rules of Section 409A of the Code, the complete cessation of providing service to the Company or any Affiliate as an employee.

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2. Term of Agreement.

The term of this Agreement shall commence on the date of this Agreement (the "Effective Date") and end on the third anniversary of such date (the "Original Term"). The Original Term shall be automatically renewed for successive one-year terms (the "Renewal Terms") unless at least 180 days prior to the expiration of the Original Term or any Renewal Term, either Party notifies the other Party in writing that he/she or it is electing to terminate this Agreement at the expiration of the then current Term. "Term" shall mean the Original Term and all Renewal Terms. If a Change in Control shall have occurred during the Term, notwithstanding any other provision of this Section 2, the Term shall not expire earlier than two years after such Change in Control.

3. EntitlementtoSeverance Benefit.

a. Severance Benefit. In the event Executive's employment with the Company is Terminated Without Cause, other than due to death, or Disability, or in the event there is a Constructive Termination Without Cause, in each case within two years following a Change in Control, Executive shall be entitled to receive:

i. Base Salary through the date of termination of Executive's employment, which shall be paid in a cash lump sum not later than 15 days following Executive's termination of employment;

ii. An amount equal to 1.5 times Executive's Base Salary in effect on the date of termination of Executive's employment (or in the event a reduction in Base Salary is a basis for a Constructive Termination Without Cause, then the Base Salary in effect immediately prior to such reduction), payable in a cash lump sum following Executive's termination of employment;

iii. An amount equal to the most recently established target annual cash incentive bonus amount, prorated based on the portion of the performance year that Executive has worked as of the date of Executive’s termination. Such payment of a pro rata annual cash incentive bonus will be payable in a cash lump sum following Executive's termination of employment;

iv. An amount equal to 1.5 times the most recently established target annual incentive cash bonus amount, payable in a cash lump sum following the Executive's termination of employment;

v. Elimination of all restrictions on any restricted stock or restricted stock unit awards outstanding at the time of termination of employment (other than awards under the Company's Partnership Equity Program, which shall be governed by the terms of such awards);

vi. Immediate vesting of all outstanding stock options and the right to exercise such stock options for the remainder of the full term of such option (other than awards under the Company's Partnership Equity Program, which shall be governed by the terms of such awards);

vii. The balance of any incentive awards earned as of December 31 of the prior year but not yet paid, which shall be paid in a single lump sum not later than 15 days following Executive's termination of employment;

viii. Settlement of all deferred compensation arrangements in accordance with any then applicable deferred compensation plan or election form;

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ix. Continued participation in all medical, health and life insurance plans at the same benefit level at which Executive was participating on the date of termination of Executive's employment until the earlier of:

1. the end of the Severance Period; or

2. the date, or dates, Executive receives equivalent coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a coverage-by­ coverage, or benefit-by-benefit, basis);

provided that (1) if Executive is precluded from continuing Executive's participation in any employee benefit plan or program as provided in this clause (ix) of this Section 3.a, Executive shall receive cash payments equal on an after­ tax basis to the cost to Executive of obtaining the benefits provided under the plan or program in which Executive is unable to participate for the period specified in this clause (ix) of this Section 3.a, (2) such cost shall be deemed to be the lowest reasonable cost that would be incurred by Executive in obtaining such benefit on an individual basis, and (3) payment of such amounts shall be made quarterly in advance; and

x. other or additional benefits then due or earned in accordance with applicable plans and programs of the Company.

b. Change in Control Best Payments Determination. In the event the Severance Benefits described in Section 3(a) are payable to Executive in connection with a Change in Control and, if paid, could subject Executive to an excise tax under Section 4999 of the Internal Revenue Code (the "Excise Tax"), then notwithstanding the provisions of Section 3(a) the Company shall reduce the Severance Benefits (the "Benefit Reduction") under Section 3(a) by the amount necessary to result in the Executive not being subject to the Excise Tax, if such reduction would result in the Executive's "Net After-Tax Amount" attributable to the Severance Benefits described in Section 3(a) being greater than it would be if no Benefit Reduction was effected. For this purpose "Net After-Tax Amount" shall mean the net amount of Severance Benefits Executive is entitled to receive under this Agreement after giving effect to all Federal, state and local taxes which would be applicable to such payments, including, but not limited to, the Excise Tax. The determination of whether any such Benefit Reduction shall be effected shall be made by a nationally recognized public accounting firm selected by the Company (the "Accounting Firm ") prior to the occurrence of the Change in Control and such determination shall be binding on both Executive and the Company. In the event it is determined that a Benefit Reduction is required, such reduction of items described in Section 3(a) above shall be done first by reducing cash severance determined in accordance with Section 3(a)(ii), 3(a)(iii) and 3(a)(iv); to the extent a further Benefit Reduction is necessary, then Severance Benefits will be reduced from the amounts determined in accordance with Section 3(a)(v) and 3(a)(vi), all as determined by the Accounting Firm.

c. No Mitigation; No Offset. In the event of any termination of employment under this Section 3, Executive shall be under no obligation to seek other employment, and the amounts due Executive under this Agreement shall not be offset by any remuneration attributable to any subsequent employment that Executive may obtain.

d. Natureof Payments. Any amounts due under this Section 3 are in the nature of severance payments considered to be reasonable by the Company and are not in the nature of a penalty.

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e. ExclusivityofSeveranceBenefit.Upon termination of Executive's employment during the Term, Executive shall not be entitled to any severance payments or severance benefits from the Company, or any other payments by the Company, other than the Severance Benefit provided in this Section 3, except as required by law.

f. General Release of Claims. Executive agrees, as a condition of payment of the Severance Benefit provided for in this Section 3, that Executive will execute within 60 days of Executive's termination of employment a separation agreement, in a form reasonably satisfactory to the Company, that includes a general release of any and all claims arising out of Executive's employment or termination of employment with the Company, other than claims for (i) enforcement of this Agreement, (ii) enforcement of Executive's rights under any of the Company's incentive compensation, equity and/or employee benefit plans and programs to which Executive is entitled under this Agreement, and {iii) any tort for personal injury not arising out of or related to Executive's employment or termination of employment.

g. Subject to the provisions of Section 12(b), all payments to be made pursuant to this Section 3 upon the termination of employment of Executive shall be made or commence, as the case may be, within 75 days after the Executive's termination of employment provided, however, that if such termination of employment is after October 15 of a year, the payout or first payment, as the case may be, shall be made at the end of such 75 day period.

4. Confidentiality; Cooperation with Regard to Litigation; Non-disparagement.

a. During the Term and thereafter, Executive shall not, without the prior written consent of the Company, disclose to anyone (except in good faith in the ordinary course of business to a person who will be advised by Executive to keep such information confidential) or make use of any confidential information except in the performance of Executive's duties hereunder or when required to do so by legal process, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) that requires Executive to divulge, disclose or make accessible such information. In the event that Executive is so ordered, Executive shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such order.

b. During the Term and thereafter, Executive shall not disclose the existence or contents of this Agreement beyond what is disclosed in the proxy statement or documents filed with the government unless and to the extent such disclosure is required by law, by a governmental agency, or in a document required by law to be filed with a governmental agency or in connection with enforcement of Executive's rights under this Agreement. In the event that disclosure is so required, Executive shall give prompt written notice to the Company in order to allow the Company the opportunity to object to or otherwise resist such requirement. This restriction shall not apply to such disclosure by Executive to members of Executive's immediate family, Executive's tax, legal or financial advisors, any lender, or tax authorities, or to potential future employers to the extent necessary, each of whom shall be advised not to disclose such information.

c. Confidential Information" shall mean all information concerning the business of the Company or any Subsidiary relating to any of their products, product development, trade secrets, customers, suppliers, finances, and business plans and strategies. Excluded from the definition of Confidential Information is information (i) that is or becomes part of the public domain, other than through the breach of this Agreement by Executive or (ii) regarding the Company's business or industry properly acquired by Executive in the course of Executive's career as an Executive in the Company's industry and independent of Executive's employment by the Company. For this purpose, information known or

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available generally within the trade or industry of the Company or any Subsidiary shall be deemed to be known or available to the public.

d. "Subsidiary" shall mean any corporation or other business entity owned or controlled directly or indirectly by CVS.

e. Executive agrees to cooperate with the Company, during the Term and thereafter (including following Executive's termination of employment for any reason), by being reasonably available to testify on behalf of the Company or any Subsidiary in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any Subsidiary, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board or its representatives or counsel, or representatives or counsel to the Company, or any Subsidiary as requested; provided, however that the same does not materially interfere with Executive's then current professional activities. The Company agrees to reimburse Executive on an after tax basis, for all reasonable expenses actually incurred in connection with Executive's provision of testimony or assistance.

f. Executive agrees that, during the Term and thereafter (including following Executive's termination of employment for any reason) Executive will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company or any Subsidiary or their respective officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

5. Non-solicitation.

During the period beginning with the Effective Date and ending 18 months following the termination of Executive's employment with the Company, Executive, whether acting on Executive's own behalf or by, through or on behalf of any third party, shall not (a) hire any employees of the Company or any Subsidiary, or recruit or solicit any such employees or encourage them to terminate their employment with the Company or any Subsidiary; (b) accept business from any customers of the Company or any Subsidiary, or solicit or encourage any customers, joint venture partners or investors of the Company or any Subsidiary to terminate or diminish their relationship with the Company or any Subsidiary or to violate any agreement with the Company or any Subsidiary. For purposes of subsection 5(a), an employee of the Company or any Subsidiary means any person who was employed by the Company or any Subsidiary within 180 days of such hiring, recruitment, solicitation or encouragement. Executive agrees to make any employer with whom Executive becomes employed during the 18-month period following Executive's termination with the Company aware of this non-solicitation obligation upon commencing employment with such subsequent entity.

6. Remedies.

In addition to whatever other rights and remedies the Company may have at equity or in law, the Company (a) shall have the right to immediately terminate all payments and benefits due under this Agreement if Executive breaches any of the provisions contained in Sections 4 or 5 above, and (b) shall have the right to seek injunctive relief in any court of competent jurisdiction if Executive breaches or threatens to breach any of the provisions contained in Sections 4 or 5 above. Executive acknowledges that such a breach would cause irreparable injury and that money damages would not provide an adequate remedy for the Company; provided, however, the foregoing shall not prevent Executive from contesting the issuance of any such injunction on the ground that no violation or threatened violation of Sections 4 or 5 has occurred.

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7. Effect of Agreement on Other Benefits.

Except as specifically provided in this Agreement,the existence of this Agreement shall not be interpreted to preclude, prohibit or restrict the Executive's participation in any other employee benefit or other plans or programs in which he /she currently participates.

8. Not an Employment Agreement.

This Agreement is not, and nothing herein shall be deemed to create, a contract of employment between Executive and the Company. The Company may terminate the employment of Executive at any time and for any reason, subject to the terms of any employment agreement between the Company and Executive that may then be in effect.

9. Resolution of Disputes.

Any controversy or claim arising out of or relating to this Agreement or any breach or asserted breach hereof or questioning the validity and binding effect hereof arising under or in connection with this Agreement, other than seeking injunctive relief under Sections 4 or 5, shall be resolved by binding arbitration, to be held at an office closest to the Company's principal offices in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Pending the resolution of any arbitration or court proceeding, the company shall continue payment of all amounts and benefits due Executive under this Agreement. All reasonable costs and expenses of any arbitration or court proceeding (including fees and disbursementsof counsel) shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that no reimbursement shall be made of such expenses if and to the extent the arbitrator(s) determine(s) that any of Executive's litigation assertions or defenses were in bad faith or frivolous.

10. Assignability;BindingNature.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of Executive) and permitted assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred in connection with the sale or transfer of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this agreement, either contractually or as a matter of law. The Company further agrees that, in the event of a sale or transfer of assets as described in the preceding sentence, it shall take whatever action it legally can in order to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Company hereunder. No rights or obligations of Executive under this Agreement may be assigned or transferred by Executive other than Executive's rights to compensation and benefits, which may be transferred only by will or operation of law, except as provided in Section 15 below.

11. Representation.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization.

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12. Amendment orWaiver;Section 409A.

(a) No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by Executive and an authorized officer of the Company. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be.

(b) Executive and Company agree that it is the intent of the Parties that this Agreement not violate any applicable provision of, or result in any additional tax or penalty under, Section 409A of the Code, as amended, and that to the extent any provisions of this Agreement do not comply with such Code Section 409A the Parties will make such changes as are mutually agreed upon in order to comply with Code Section 409A. In all events, to the extent required to avoid a violation of the applicable rules under all Section 409A by reason of Code Section 409A(a)(2)(B)(i), payment of any amounts subject to Code Section 409A shall be delayed until the relevant date of payment that will result in compliance with the rules of Code Section 409A(a)(2)(B)(i).

13. Severability.

In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

14. Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any termination of Executive's employment to the extent necessary to the intended preservation of such rights and obligations.

15. Beneficiaries/References.

Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of Executive's incompetence, references in this Agreement to Executive shall be deemed, where appropriate, to refer to Executive's beneficiary, estate or other legal representative.

16. Governing Law/Jurisdiction.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of Rhode Island without reference to principles of conflict of laws. Subject to Section 6, the Company and Executive hereby consent to the jurisdiction of any or all of the following courts for purposes of resolving any dispute under this Agreement: (i) the United States District Court for Rhode Island or (ii) any of the courts of the State of Rhode Island. The Company and Executive further agree that any service of process or notice requirements in such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest extent permitted by applicable law, any objection which it or he/she may now or hereafter have to such jurisdiction and any defense of inconvenient forum.

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17. Notices.

Any notice given to a Party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give written notice of:

If to CVS:

CVS Pharmacy, Inc.

One CVS Drive

Woonsocket, RI 02895

Attention: Corporate Secretary

If to Executive:

Derica Rice

XXXXXXXXXXXXXXXX

XXXXXXXXXXX

18. Headings.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

19. Counterparts.

This Agreement may be executed in two or more counterparts.

In WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

CVS Pharmacy, Inc.

By: /s/ Lisa Bisaccia

Name:     Lisa Bisaccia

Title:     Executive Vice President and

Chief Human Resources Officer

Executive:

/s/ Derica W. Rice

Derica Rice

Executive Vice President and President,

CVS Caremark

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EX-10.4

Exhibit 10.4

NOTICE: This agreement will be signed by the colleague electronically. Upon electronic signing by the colleague and the start of his/her employment, this document will be the controlling document between the parties concerning its subject matter, will be maintained electronically and will be the document of record. To the extent that this agreement and another agreement executed at the time of hire contain conflicting provisions, the provisions in this agreement will control.

CVS Pharmacy, Inc.

Restrictive Covenant Agreement

I, Derica Rice, enter into this Restrictive Covenant Agreement (“Agreement”) with CVS Pharmacy, Inc., on its own behalf and on behalf of its subsidiaries and affiliates, which is effective as of the date I sign the Agreement (“Effective Date”). In consideration of the mutual promises in this Agreement, the parties agree as follows:

1.Consideration for Agreement. In connection with my duties and responsibilities at CVS Pharmacy, Inc., or one of its subsidiaries or affiliates, including but not limited to Caremark, LLC and Coram, LLC (collectively, “CVS” or the “Corporation”), the Corporation will provide me with Confidential Information and/or access to the Corporation’s customers and clients and the opportunity to develop and maintain relationships and goodwill with them. In consideration of the foregoing, and in consideration of my new role with the Corporation and the mutual promises in this Agreement, I hereby agree with CVS to comply with the terms of this Agreement.

2.Non-Competition. During my employment by the Corporation and during the Non-Competition Period following the termination of my employment for any reason, I will not, directly or indirectly, engage in Competition or provide Consulting or Audit Services within the Restricted Area.

a.    Competition. Engaging in “Competition” means providing services to a Competitor of the Corporation (whether as an employee, independent contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a shareholder of less than one percent of a publicly traded company) that: (i) are the same or similar in function or purpose to the services I provided to the Corporation at any time during the last two years of my employment by the Corporation; or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use of Confidential Information on behalf of a Competitor. If a representative of the Corporation, during my employment or the Non-Competition Period, requests that I identify the company or business to which I will be or am providing services, or with which I will be or am employed, and requests that I provide information about the services that I am or will be providing to such entity, I shall provide the Corporation with a written statement detailing the identity of the entity and the nature of the services that I am or will be providing to such entity with sufficient detail to allow the Corporation to independently assess whether I am or will be in violation of this Agreement. Such statement shall be delivered to the Corporation’s Chief Human Resources Officer or her authorized delegate via personal delivery or overnight delivery within five calendar days of my receipt of such request.

b.    Competitor. A “Competitor” for purposes of this Agreement shall mean any person, corporation or other entity that competes with one or more of the business offerings of the Corporation As of the Effective Date, the Corporation’s business offerings include: (i) pharmacy benefits management (“PBM”), including: (a) the administration of pharmacy benefits for businesses, government agencies and health plans; (b) mail order pharmacy; (c) specialty pharmacy; (d) the procurement of prescription drugs at a negotiated rate for dispensing; and (e) Medicare Part D services; (ii) retail, which includes the sale of prescription drugs, over-the-counter medications, beauty products and cosmetics, digital and traditional photo finishing services, digital and other online offerings, seasonal and other general merchandise, greeting cards, convenience foods and other product lines and services which are sold by the Corporation’s retail division (“Retail”); (iii) retail health clinics (“MinuteClinic”); (iv) the provision of pharmaceutical products and ancillary services, including specialty pharmaceutical products and

support services and the provision of related pharmacy consulting, data management services and medical supplies to long-term care facilities, other healthcare service providers and recipients of services from such facilities (“Long-Term Care”); (v) the provision of prescription infusion drugs and related services (“Infusion”); and (vi) any other business in which Corporation is engaged or imminently will be engaged.

For the purpose of assessing whether I am engaging in “Competition” under Section 2 (a) (i) above, a person, corporation or other entity shall not be considered a Retail Competitor if such entity derives annual gross revenues from its business in an amount which is less than 2% of the Corporation’s gross revenues from Retail, during its most recently completed fiscal year. For avoidance of doubt, this exclusion does not apply to a determination of whether I am engaging in “Competition” as set forth in Section 2 (a) (ii) above.

The Parties acknowledge that both the Corporation’s products and services and the entities which compete with the Corporation’s products and services evolve and an entity will be considered a Competitor if it provides products or services competitive with the products and services provided by the Corporation within the last two years of my employment.

I agree to this enterprise-wide definition of non-competition which may prevent me from providing services to any of the Corporation’s PBM, Retail, MinuteClinic, Long-Term Care and Infusion Competitors or any combination thereof during the Non-Competition period.

c.    Consulting or Audit Services. “Consulting or Audit Services” shall mean any activity which involves providing audit review or other consulting or advisory services with respect to any relationship or prospective relationship between the Corporation and any third party that is likely to result in the use or disclosure of Confidential Information.

d.    Non-Competition Period. The “Non-Competition Period” shall be the period of 18 months following the termination of my employment with the Corporation for any reason.

e.    Restricted Area. “Restricted Area” refers to those states within the United States in which the Corporation conducts its business, as well as the District of Columbia and Puerto Rico. To the extent I worked on international projects in Brazil or other countries where the Corporation may conduct business, the Restricted Area includes those countries and prospective countries.

3.Non-Solicitation. During the Non-Solicitation Period, which shall be 18 months following the termination of my employment with the Corporation for any reason, I will not, unless a duly authorized officer of the Corporation gives me written authorization to do so:

a.    interfere with the Corporation’s relationship with its Business Partners by soliciting or communicating (regardless of who initiates the communication) with a Business Partner to: (i) induce or encourage the Business Partner to stop doing business or reduce its business with the Corporation, or (ii) buy a product or service that competes with a product or service offered by the Corporation’s business. “Business Partner” means: a customer (person or entity), prospective customer (person or entity), supplier, manufacturer, broker, hospital, hospital system, long-term care facility, and/or pharmaceutical manufacturer with whom the Corporation has a business relationship and with which I had business- related contact or dealings, or about which I received Confidential Information, in the two years prior to the termination of my employment with the Corporation. A Business Partner does not include a customer, supplier, manufacturer, broker, hospital, hospital system, long-term care facility and/or pharmaceutical manufacturer which has fully and finally ceased doing any business with the Corporation independent of any conduct or communications by me or breach of this Agreement and such full cessation of business has been in effect for at least 1 year prior to my separation from employment with the

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2017 E-SVP RCA (4)

Corporation. Nothing in this Paragraph 3(a) shall prevent me from working as a staff pharmacist or in another retail position wherein I would be providing or selling prescriptions or other products directly to consumers.

b.    work on a Corporation account on behalf of a Business Partner or serve as the representative of a Business Partner for the Corporation.

c.    interfere with the Corporation’s relationship with any employee or contractor of the Corporation by: (i) soliciting or communicating with the employee or contractor to induce or encourage him or her to leave the Corporation’s employ or engagement (regardless of who first initiates the communication); (ii) helping another person or entity evaluate such employee or contractor as an employment or contractor candidate; or (iii) otherwise helping any person or entity hire an employee or contractor away from the Corporation.

4. Non-Disclosure of Confidential Information.

a.    Subject to Sections 7 and 8 below, I will not at any time, whether during or after the termination of my employment, disclose to any person or entity any of the Corporation’s Confidential Information, except as may be appropriately required in the ordinary course of performing my duties as an employee of the Corporation. The Corporation’s Confidential Information includes but is not limited to the following non-public information: trade secrets; computer code generated or developed by the Corporation; software or programs and related documentation; strategic compilations and analysis; strategic processes; business or financial methods, practices and plans; non-public costs and prices; operating margins; marketing, merchandising and selling techniques and information; customer lists; details of customer agreements; pricing arrangements with pharmaceutical manufacturers, distributors or suppliers including but not limited to any discounts and/or rebates; pharmacy reimbursement rates; expansion strategies; real estate strategies; operating strategies; sources of supply; patient records; and confidential information of third parties which is given to the Corporation pursuant to an obligation or agreement to keep such information confidential (collectively, “Confidential Information”). I shall not use or attempt to use any Confidential Information on behalf of any person or entity other than the Corporation, or in any manner which may injure or cause loss or may be calculated to injure or cause loss, whether directly or indirectly, to the Corporation. If, at any time over the last two years of my employment at CVS, my position included access to Confidential Information, as described above, specifically related to the Corporation’s procurement of prescription drugs, I understand and agree my employment with a pharmaceutical manufacturer, distributor or supplier (“Pharmaceutical Entity”) would place a substantial risk of use and/or disclosure of Confidential Information with which I have been or will be entrusted during my employment with the Corporation. In light of this risk of disclosure, I acknowledge and agree that the Corporation will be entitled to immediate injunctive relief to prevent me from disclosing any such Confidential Information in the course of my employment with any such Pharmaceutical Entity, in the event I have disclosed or am at a substantial risk of disclosing, such Confidential Information in the course of my duties for such Pharmaceutical Entity. I agree that the disclosure of such Confidential Information, to Corporation’s PBM Competitors with which one may negotiate in the course of employment with such Pharmaceutical Entity, would cause immediate and irreparable harm to the Corporation. For employees residing in Connecticut, these restrictions on use or disclosure of Confidential Information will only apply for three (3) years after the end of my employment where information that does not qualify as a trade secret is concerned; however, the restrictions will continue apply to trade secret information for as long as the information at issue remains qualified as a trade secret.

b.    During my employment, I shall not make, use, or permit to be used, any materials of any nature relating to any matter within the scope of the business of the Corporation or concerning any of its

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2017 E-SVP RCA (4)

dealings or affairs other than for the benefit of the Corporation. I shall not, after the termination of my employment, use or permit to be used any such materials and shall return same in accordance with Section 5 below.

5.Ownership and Return of the Corporation’s Property. On or before my final date of employment with the Corporation, I shall return to the Corporation all property of the Corporation in my possession, custody or control, including but not limited to the originals and copies of any information provided to or acquired by me in connection with the performance of my duties for the Corporation,such as files, correspondence, communications, memoranda, e-mails, slides, records, and all other documents, no matter how produced or reproduced, all computer equipment, communication devices (including but not limited to any mobile phone or other portable digital assistant or device), computer programs and/or files, and all office keys and access cards. I agree that all the items described in this Section are the sole property of the Corporation.

6. Rights to Inventions, Works.

a.    Assignment of Inventions. All inventions, original works of authorship, developments, concepts, improvements, designs, discoveries, ideas, trademarks or trade secrets, whether patentable or otherwise protectable under similar law, made, conceived or developed by me, whether alone or jointly with others, from the date of my initial employment by the Corporation and continuing until the end of any period during which I am employed by the Corporation, relating or pertaining in any way to my employment with or the business of the Corporation (collectively referred to as “Inventions”) shall be promptly disclosed in writing to the Corporation. I hereby assign to the Corporation, or its designee, all of my rights, title and interest to such Inventions. All original works of authorship which are made by me (solely or jointly with others) within the scope of and during the period of my employment with the Corporation and which are protectable by copyright are “works made for hire,” as that term is defined in the United States Copyright Act and as such are the sole property of the Corporation. The decision whether to commercialize or market any Invention developed by me solely or jointly with others is within the Corporation’s sole discretion and for the Corporation’s sole benefit and no royalty will be due to me as a result of the Corporation’s efforts to commercialize or market any such Invention.

b.    Inventions Retained and Licensed. I have attached hereto as Exhibit A, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by me prior to my employment with the Corporation (“Prior Inventions”), which belong to me and are not assigned to the Corporation hereunder. If no such list is attached, I represent that there are no such Prior Inventions. I will not incorporate, or permit to be incorporated, any Prior Invention owned by me or in which I have an interest into a Corporation product, process or machine without the Corporation’s prior written consent. Notwithstanding the foregoing sentence, if, in the course of my employment with the Corporation, I incorporate into a Corporation product, process or machine a Prior Invention owned by me or in which I have an interest, the Corporation is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Invention as part of or in connection with such product, process or machine.

c.    Patent and Copyright Registrations. I will assist the Corporation, or its designee, at the Corporation’s expense, in every proper way to secure the Corporation’s rights in the Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating thereto, including, but not limited to, the disclosure to the Corporation of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other instruments which the Corporation shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Corporation, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, mask work rights or other

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2017 E-SVP RCA (4)

intellectual property rights relating thereto. My obligation to execute or cause to be executed, when it is in my power to do so, any such instrument or papers shall continue after my employment ends for any reason and/or after the termination of this Agreement. If the Corporation is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Corporation as above, then I hereby irrevocably designate and appoint the Corporation and its duly authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by me.

d.    Exception to Assignments. I understand that if I am an employee in Illinois, Kansas, North Carolina, Utah or Minnesota, I should refer to Exhibit B (incorporated herein for all purposes) for important limitations on the scope of the provisions of this Agreement concerning assignment of Inventions. I will advise the Corporation promptly in writing of any inventions that I believe meet the criteria in Exhibit B and that are not otherwise disclosed on Exhibit A.

7. Cooperation.

a.    In the event I receive a subpoena, deposition notice, interview request, or other process or order to testify or produce Confidential Information or any other information or property of the Corporation, I shall promptly: (a) notify the Corporation of the item, document, or information sought by such subpoena, deposition notice, interview request, or other process or order; (b) furnish the Corporation with a copy of said subpoena, deposition notice, interview request, or other process or order; and (c) provide reasonable cooperation with respect to any procedure that the Corporation may initiate to protect Confidential Information or other interests. If the Corporation objects to the subpoena, deposition notice, interview request, process, or order, I shall cooperate to ensure that there shall be no disclosure until the court or other applicable entity has ruled upon the objection, and then only in accordance with the ruling so made. If no such objection is made despite a reasonable opportunity to do so, I shall be entitled to comply with the subpoena, deposition, notice, interview request, or other process or order provided that I have fulfilled the above obligations.

b.    I will cooperate fully with the Corporation, its affiliates, and their legal counsel in connection with any action, proceeding, or dispute arising out of matters with which I was directly or indirectly involved while serving as an employee of the Corporation, its predecessors, subsidiaries or affiliates. This cooperation shall include, but shall not be limited to, meeting with, and providing information to, the Corporation and its legal counsel, maintaining the confidentiality of any past or future privileged communications with the Corporation’s legal counsel (outside and in-house), and making myself available to testify truthfully by affidavit, in depositions, or in any other forum on behalf of the Corporation. The Corporation agrees to reimburse me for any reasonable and necessary out-of-pocket costs associated with my cooperation.

8.Limitation on Restrictions. Nothing in this Agreement is intended to or shall interfere with my right to file charges or participate in a proceeding with any appropriate federal, state or local government agency, Occupational Safety and Health Administration (“OSHA”), National Labor Relations Board (“NLRB”) or the Securities and Exchange Commission (“SEC”), or to exercise rights under Section 7 of the National Labor Relations Act (“NLRA”), or interfere with my right to file a charge or complaint with or participate or cooperate in an investigation or proceeding with the US Equal Employment Opportunity Commission (“EEOC”) or comparable state or local agencies; such agencies have authority to carry out their statutory duties by investigating a charge, issuing a determination, filing a lawsuit, or taking any other action authorized by law. I retain the right to participate in any such action and retain the right to

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2017 E-SVP RCA (4)

communicate with, NLRB, SEC, EEOC, OSHA and comparable state or local agencies and such communication shall not be limited by any provision in this Agreement. Nothing in this Agreement limits my right to receive an award for information provided to a government agency such as the SEC and OSHA. In addition, nothing in this Agreement is intended to interfere with or restrain the immunity provided under 18 U.S.C. § 1833(b) for confidential disclosures of trade secrets to government officials, or lawyers, solely for the purpose of reporting or investigating a suspected violation of law; or in a sealed filing in court or other proceeding.

9.Eligibility for Severance Pay. If my employment with the Corporation terminates under circumstances in which I am eligible for severance under the Corporation’s Severance Plan for Non-Store Employees (the “Severance Plan”), the Corporation will offer me severance in accordance with the Severance Plan and the length of the Non-Competition Period will match the length of the severance period. I acknowledge that the Severance Plan sets forth pre-requisites I must meet in order to receive severance, including but not limited to execution of the Corporation’s standard separation agreement and release of claims. In the event that the Corporation fails to comply with its obligations to offer me severance according to the Severance Plan, then Section 2 of this Agreement shall be of no further effect. I agree that if I decline the Corporation’s offer of severance, I shall continue to be subject to the restrictions in Section 2.

10.Injunctive Relief. Any breach of this Agreement by me will cause irreparable damage to the Corporation and, in the event of such breach, the Corporation shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent the violation of my obligations hereunder, and without providing a bond to the extent permitted by the applicable rules of civil procedure.

11.No Right of Continued Employment. This Agreement does not create an obligation on the Corporation or any other person or entity to continue my employment.

12.No Conflicting Agreements. I represent that the performance of my job duties with the Corporation and my compliance with all of the terms of this Agreement does not and will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Corporation.

13.Entire Agreement/No Reliance/No Modifications. This Agreement and any compensation, benefit or equity plan or agreement referred to herein or under which equity was granted, including the CVS Health Corporation Change in Control Agreement (“CIC Agreement”), to the extent those other agreements apply to me, set forth the entire agreement between the parties hereto and fully supersede any and all prior and/or supplemental understandings, whether written or oral, between the parties concerning the subject matter of this Agreement. This Agreement shall not have any effect on any prior existing agreements between the Corporation and me that do not deal exclusively with the subject matter of this Agreement, including but not limited to any agreement made previously by me and the Corporation to arbitrate workplace legal disputes, and any such agreements remain in force notwithstanding the existence of this Agreement. Notwithstanding the foregoing, if I am a party to the CIC Agreement, then I understand that in the event of a Change in Control, as that term is defined in the CIC, Paragraph 2 of this Agreement shall be null and void. I agree and acknowledge that I have not relied on any representations, promises or agreements of any kind in connection with my decision to accept the terms of this Agreement, except for the representations, promises and agreements herein. Any modification to this Agreement must be made in writing and signed by me and the Corporation’s Chief Human Resources Officer or her authorized representative.

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2017 E-SVP RCA (4)

14.No Waiver. Any waiver by the Corporation of a breach of any provision of this Agreement, or of any other similar agreement with any other current or former employee of the Corporation, shall not operate or be construed as a waiver of any subsequent breach of such provision or any other provision hereof.

15.Severability. The parties hereby agree that each provision herein shall be treated as a separate and independent clause, and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein. Moreover, if one or more of the provisions of this Agreement are for any reason held to be excessively broad as to scope, activity, duration, subject or otherwise so as to be unenforceable at law, the parties consent to such provision or provisions being modified or limited by the appropriate judicial body (where allowed by applicable law), so as to be enforceable to the maximum extent compatible with the applicable law.

16.Survival of Employee’s Obligations. My obligations under this Agreement shall survive the termination of my employment regardless of the manner of such termination and shall be binding upon my heirs, personal representatives, executors, administrators and legal representatives.

17.Corporation’s Right to Assign Agreement. The Corporation has the right to assign this Agreement to its successors and assigns without the need for further agreement or consent by me, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

18.Non-Assignment. I shall not assign my rights and obligations under this Agreement, in whole or in part, whether by operation of law or otherwise, without the prior written consent of the Corporation, and any such assignment contrary to the terms hereof shall be null and void and of no force or effect.

19.Governing Law; Venue; Headings. This Agreement shall be governed by and construed in accordance with the laws of the state of Rhode Island. I agree that any claim or dispute I may have against the corporation must be resolved by a court located in the state of Rhode Island. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

20.Tolling. In the event I violate one of the time-limited restrictions in this Agreement, I agree that the time period for such violated restriction shall be extended by one day for each day I have violated the restriction, up to a maximum extension equal to the length of the original period of the restricted covenant.

IN WITNESS WHEREOF, the undersigned has executed this Agreement as a sealed instrument as of the date set forth below.

/s/ Derica Rice/s/ Lisa Bisaccia

Derica Rice                         Lisa Bisaccia

.....................                        Chief Human Resources Officer

XXXXXXXX                CVS Pharmacy, Inc.

Employee ID

Date: 03/31/2018

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2017 E-SVP RCA (4)

EXHIBIT A

List of Prior Inventions – See Section 6

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2017 E-SVP RCA (4)

EXHIBIT B

Notice Regarding Invention Assignment

1. For an employee residing in Illinois, Kansas, or North Carolina, you are hereby advised:

Notice. No provision in this Agreement requires you to assign any of your rights to an invention for which no equipment, supplies, facility, or trade secret information of the Corporation was used and which was developed entirely on your own time, unless (a) the invention relates (i) to the business of the Corporation or (ii) to the Corporation’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by you for the Corporation. Illinois 765ILCS1060/1-3, “Employees Patent Act”; Kansas Statutes Section 44-130; North Carolina General Statutes Article 10A, Chapter 66, Commerce and Business, Section 66-57.1.

2. For an employee residing in Utah, you are hereby advised:

Notice. No provision in this Agreement requires you to assign any of your rights to an invention which was created entirely on your own time, and which is not (a) conceived, developed, reduced to practice, or created by you (i) within the scope of your employment with the Corporation, (ii) on the Corporation’s time, or (iii) with the aid, assistance, or use of any of the Corporation’s property, equipment, facilities, supplies, resources, or patents, trade secrets, know-how, technology, confidential information, ideas, copy rights, trademarks and service marks and any and all rights, applications and registrations relating to them, (b) the results of any work, services, or duties performed by you for the Corporation, (c) related to the industry or trade of the Corporation, or (d) related to the current or demonstrably anticipated business, research, or development of the Corporation. Utah Code Sections 34-39-1 through 34-39-3, “Employee Inventions Act.”

3. For an employee residing in Minnesota, you are hereby advised:

Notice.No provision in this Agreement requires you to assign any of your rights to an invention for which no equipment, supplies, facility, or trade secret information of the Corporation was used, and which was developed entirely on your own time, and (a) which does not relate (i) directly to the business of the Corporation, or (ii) to the Corporation’s actual or demonstrably anticipated research or development, or (b) which does not result from any work performed by you for the Corporation. Minnesota Statutes 13A Section 181.78.

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2017 E-SVP RCA (4)

EX-15.1

Exhibit 15.1

Letter re: Unaudited Interim Financial Information

May 1, 2019

To the Shareholders and the Board of Directors of CVS Health Corporation

We are aware of the incorporation by reference in the Registration Statements (Form S-3ASR No. 333-217596 and Form S-8 Nos. 333-230035, 333-228622, 333-167746, 333-217853, 333-208805, 333-141481, 333-139470, 333-63664, 333-91253, 333-49407, 333-34927, and 333-28043) of CVS Health Corporation of our report dated May 1, 2019, relating to the unaudited condensed consolidated interim financial statements of CVS Health Corporation that is included in its Form 10-Q for the quarter ended March 31, 2019.

/s/ Ernst & Young LLP

Boston, Massachusetts

EX-31.1

Exhibit 31.1

Certification

I, Larry J. Merlo, President and Chief Executive Officer of CVS Health Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CVS Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 1, 2019	/S/     LARRY J. MERLO
		Larry J. Merlo
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Eva C. Boratto, Executive Vice President and Chief Financial Officer of CVS Health Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CVS Health Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 1, 2019	/S/     EVA C. BORATTO
		Eva C. Boratto
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

The certification set forth below is being submitted in connection with the Quarterly Report of CVS Health Corporation (the "Company") on Form 10-Q for the period ended March 31, 2019 (the “Report”) solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

I, Larry J. Merlo, President and Chief Executive Officer of the Company, certify that, to the best of my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 1, 2019	/S/    LARRY J. MERLO
		Larry J. Merlo
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION

The certification set forth below is being submitted in connection with the Quarterly Report of CVS Health Corporation (the "Company") on Form 10-Q for the period ended March 31, 2019 (the “Report”) solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

I, Eva C. Boratto, Executive Vice President and Chief Financial Officer of the Company, certify that, to the best of my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 1, 2019	/S/    EVA C. BORATTO
		Eva C. Boratto
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information Document - shares	3 Months Ended
	Mar. 31, 2019	Apr. 23, 2019
Entity Information [Line Items]
Entity Registrant Name	CVS HEALTH CORPORATION /DE/
Entity Central Index Key	0000064803
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		1,299,092,100
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Emerging Growth Company	false
Entity Small Business	false

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Revenues	$ 61,397	$ 45,693
Net investment income	249	50
Total revenues	61,646	45,743
Operating costs:
Cost of products sold	37,247	37,505
Benefit costs	13,459	1,329
Operating expenses	8,250	4,913
Total operating cost	58,956	43,747
Operating income	2,690	1,996
Interest expense	782	523
Other expense (income)	(31)	3
Income before income taxes	1,939	1,470
Income tax provision	512	472
Net income	1,427	998
Net income attributable to noncontrolling interest	$ (6)	$ 0
Net income per share attributable to CVS Health
Basic	$ 1.09	$ 0.98
Diluted	$ 1.09	$ 0.98
Weighted average shares outstanding
Weighted Average Shares Outstanding, Basic	1,298	1,016
Weighted Average Shares Outstanding, Diluted	1,302	1,019
Dividends declared per share	$ 0.50	$ 0.50
Product
Revenues:
Revenues	$ 43,343	$ 44,049
Premiums
Revenues:
Revenues	16,282	1,306
Service
Revenues:
Revenues	$ 1,772	$ 338

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net income	$ 1,427	$ 998
Net unrealized investment gains	334	0
Foreign currency translation adjustments	1	1
Net cash flow hedges	(4)	343
Other Comprehensive Income	331	344
Comprehensive Income	1,758	1,342
Net income attributable to noncontrolling interest	(6)	0
Comprehensive Income attributable to CVS Health	$ 1,752	$ 1,342

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Assets:
Cash and cash equivalents	$ 5,896	$ 4,059
Investments	2,426	2,522
Total accounts receivable, net	19,509	17,631
Inventories	15,448	16,450
Other current assets	4,578	4,581
Total current assets	47,857	45,243
Long-term investments	16,410	15,732
Property and equipment, net	11,348	11,349
Operating lease right-of-use assets	20,992	0
Goodwill	79,075	78,678
Intangible assets, net	35,147	36,524
Separate account assets	4,074	3,884
Other assets	4,865	5,046
Total assets	219,768	196,456
Liabilities:
Accounts payable	8,290	8,925
Pharmacy claims and discounts payable	11,827	11,365
Health care costs payable	6,701	6,147
Other Policyholder Funds	2,732	2,939
Accrued expenses	10,443	10,711
Other insurance liabilities	1,937	1,937
Current portion of operating lease liabilities	1,803	0
Short-term debt	3,005	720
Current portion of long-term debt	3,893	1,265
Total current liabilities	50,631	44,009
Long-term operating lease liabilities	18,961	0
Long-term debt	67,888	71,444
Deferred income taxes	7,540	7,677
Separate accounts liabilities	4,074	3,884
Other long-term insurance liabilities	8,052	8,119
Other long-term liabilities	2,616	2,780
Total liabilities	159,762	137,913
CVS Health shareholders' equity:
Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding	0	0
Common stock, par value $0.01: 3,200 shares authorized; 1,722 shares issued and 1,298 shares outstanding at March 31, 2019 and 1,720 shares issued and 1,295 shares outstanding at December 31, 2018	45,615	45,440
Treasury stock, at cost: 424 shares at March 31, 2019 and 425 shares at December 31, 2018	(28,221)	(28,228)
Retained earnings	41,859	40,911
Accumulated other comprehensive income	433	102
Total CVS health shareholders' equity	59,686	58,225
Noncontrolling interests	320	318
Total shareholders' equity	60,006	58,543
Total liabilities and equity	$ 219,768	$ 196,456

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Condensed Consolidated Balance Sheets (Paranthetical) - $ / shares shares in Millions	Mar. 31, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	0.1	0.1
Preferred stock, shares issued (in shares)	0.0	0.0
Preferred stock, shares outstanding (in shares)	0.0	0.0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	3,200.0	3,200.0
Common stock, shares issued (in shares)	1,722.0	1,720.0
Common stock, shares outstanding (in shares)	1,298.0	1,295.0
Treasury stock (in shares)	424.0	425.0

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Cash receipts from customers	$ 58,873.0	$ 43,369.0
Cash paid for inventory and prescriptions dispensed by retail network pharmacies	(35,645.0)	(35,102.0)
Insurance benefits paid	(12,951.0)	(1,093.0)
Cash paid to other suppliers and employees	(7,403.0)	(4,271.0)
Interest and investment income received	250.0	50.0
Interest Paid	(1,123.0)	(545.0)
Income taxes paid	(53.0)	(53.0)
Net cash provided by operating activities	1,948.0	2,355.0
Cash flows from investing activities:
Proceeds from sales and maturities of investments	1,986.0	10.0
Purchase of investments	(2,047.0)	(33.0)
Purchases of property and equipment	(716.0)	(482.0)
Acquisitions (net of cash acquired)	(124.0)	(353.0)
Proceeds from sale of subsidiary	0.0	725.0
Other	10.0	2.0
Net cash used in investing activities	(891.0)	(131.0)
Cash flows from financing activities:
Net borrowings (repayments) of short-term debt	2,285.0	(1,276.0)
Proceeds from issuance of long-term debt	0.0	39,376.0
Repayments of long-term debt	(882.0)	(1.0)
Derivative settlements	0.0	446.0
Dividends paid	(649.0)	(508.0)
Proceeds from exercise of stock options	101.0	107.0
Payments for taxes related to net share settlement of equity awards	(44.0)	(4.0)
Other	5.0	0.0
Net cash provided by financing activities	816.0	38,140.0
Cash and cash equivalents at the beginning of the period	4,295.0	1,900.0
Cash and cash equivalents at the end of the period	6,168.0	42,264.0
Reconciliation of net income to net cash provided by operating activities:
Net income	1,427.0	998.0
Adjustments required to reconcile net income to net cash provided by operating activities: [Abstract]
Depreciation and amortization	1,111.0	644.0
Stock-based compensation	114.0	55.0
Deferred income taxes and other noncash items	153.0	62.0
Change in operating assets and liabilities, net of effects from acquisitions: [Abstract]
Accounts receivable, net	(1,989.0)	(857.0)
Inventories	1,001.0	464.0
Other assets	(389.0)	(57.0)
Accounts payable and pharmacy claims and discounts payable	(22.0)	(178.0)
Health care costs payable and other insurance liabilities	553.0	236.0
Other liabilities	(11.0)	988.0
Net cash provided by operating activities	1,948.0	2,355.0
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease)	$ 1,873.0	$ 40,364.0

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions		Total	Common Stock [Member]	Treasury Stock [Member]		Common Stock Including Additional Paid in Capital [Member]	[2]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss	CVS Health Shareholders' Equity	Noncontrolling Interest [Member]
Common stock, balance at beginning of period (in shares) at Dec. 31, 2017			1,712.0
Treasury shares, balance at beginning of period (in shares) at Dec. 31, 2017	[1]			(698.0)
Balance at beginning of period at Dec. 31, 2017				$ 37,796	[1]	$ (32,096)		$ (43,556)	$ 165	$ (37,691)
Total equity at beginning of period at Dec. 31, 2017		$ (37,695)
Shareholders' Equity [Roll Forward]
Net income attributable to CVS Health								998		998
Net income attributable to noncontrolling interest		0
Net income		998
Other Comprehensive Income		344							344	344
Stockholders' Equity Attributable to Noncontrolling Interest at beginning of period at Dec. 31, 2017											$ 4
Shareholders' Equity [Roll Forward]
Stock option activity, stock awards and other (in shares)			2.0
Stock option activity, stock awards and other		112				112				112
Treasury Stock, Shares, Acquired, Cost Method, Net Of ESPP Issuance	[1]			0.0
Treasury Stock, Value, Acquired, Cost Method, Net Of ESPP Issuance		49		$ 49	[1]					49
Dividends declared		(508)						508		508
Common stock, balance at end of period (in shares) at Mar. 31, 2018			1,714.0
Treasury shares, balance at end of period (in shares) at Mar. 31, 2018	[1]			(698.0)
Balance at end of period at Mar. 31, 2018				$ 37,747	[1]	(32,208)		(44,040)	(172)	(38,673)
Stockholders' Equity Attributable to Noncontrolling Interest at end of period at Mar. 31, 2018											4
Total equity at end of period at Mar. 31, 2018		(38,677)
Shareholders' Equity [Roll Forward]
Adoption of new accounting standard	[3]	$ (13)						(6)	(7)	(13)
Common stock, balance at beginning of period (in shares) at Dec. 31, 2018		1,295.0	1,720.0
Treasury shares, balance at beginning of period (in shares) at Dec. 31, 2018	[1]			(425.0)
Balance at beginning of period at Dec. 31, 2018		$ 58,225		$ 28,228	[1]	(45,440)		(40,911)	(102)	(58,225)
Total equity at beginning of period at Dec. 31, 2018		58,543
Shareholders' Equity [Roll Forward]
Net income attributable to CVS Health								1,421		1,421
Net income attributable to noncontrolling interest		(6)									6
Net income		1,427
Other Comprehensive Income		331							331	331
Stockholders' Equity Attributable to Noncontrolling Interest at beginning of period at Dec. 31, 2018		318									318
Shareholders' Equity [Roll Forward]
Stock option activity, stock awards and other (in shares)			2.0
Stock option activity, stock awards and other		175				175				175
Treasury Stock, Shares, Acquired, Cost Method, Net Of ESPP Issuance	[1]			1.0
Treasury Stock, Value, Acquired, Cost Method, Net Of ESPP Issuance		7		$ 7	[1]					7
Dividends declared		(651)						651		651
Other decreases in noncontrolling interest		$ (4)									(4)
Common stock, balance at end of period (in shares) at Mar. 31, 2019		1,298.0	1,722.0
Treasury shares, balance at end of period (in shares) at Mar. 31, 2019	[1]			(424.0)
Balance at end of period at Mar. 31, 2019		$ 59,686		$ 28,221	[1]	$ (45,615)		$ (41,859)	(433)	(59,686)
Stockholders' Equity Attributable to Noncontrolling Interest at end of period at Mar. 31, 2019		320									$ 320
Total equity at end of period at Mar. 31, 2019		60,006
Shareholders' Equity [Roll Forward]
Adoption of new accounting standard		$ 178							$ 0	$ 178

[1] (1)Treasury shares include 1 million shares held in trust as of March 31, 2019 and 2018 and December 31, 2018 and 2017. Treasury stock includes $29 million related to shares held in trust as of March 31, 2019 and December 31, 2018, and $31 million related to shares held in trust as of March 31, 2018 and December 31, 2017.

[2] (2)Common stock and capital surplus includes the par value of common stock of $17 million as of March 31, 2019 and 2018 and December 31, 2018 and 2017.

[3] (3)Reflects the adoption of ASU 2014-09, Revenue from Contracts with Customers, which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a reduction to accumulated other comprehensive income and an increase to retained earnings of $7 million.

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Condensed Consolidated Statements of Shareholder's Equity (Parentheticals) (Parentheticals) - USD ($) shares in Millions, $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018		Dec. 31, 2017
Treasury Stock, Shares, Held in Trust	1	1	1		1
Treasury Stock, Value, Shares Held In Trust	$ 29	$ 29	$ 31		$ 31
Common Stock, Value, Issued	17	$ 17	17		$ 17
Adoption of new accounting standard	178		(13)	[1]
CVS Health Shareholders' Equity
Adoption of new accounting standard	178		(13)	[1]
Accumulated Other Comprehensive Loss
Adoption of new accounting standard	$ 0		$ (7)	[1]

[1] (3)Reflects the adoption of ASU 2014-09, Revenue from Contracts with Customers, which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a reduction to accumulated other comprehensive income and an increase to retained earnings of $7 million.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Significant Accounting Policies

Description of business 

CVS Health Corporation, together with its subsidiaries (collectively, “CVS Health,” the “Company,” “we,” “our” or “us”), is the nation’s premier health innovation company helping people on their path to better health. Whether in one of its pharmacies or through its health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has more than 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 94 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”). The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs.

On November 28, 2018 (the “Aetna Acquisition Date”), the Company acquired Aetna Inc. (“Aetna”). As a result of the acquisition of Aetna (the “Aetna Acquisition”), the Company added the Health Care Benefits segment. Certain aspects of Aetna’s operations, including products for which the Company no longer solicits or accepts new customers, such as large case pensions and long-term care insurance products, are included in the Company’s Corporate/Other segment.

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how its Chief Operating Decision Maker (the “CODM”) reviews information and manages the business. As a result of this realignment, the Company’s SilverScript^® PDP moved from the Pharmacy Services segment to the Health Care Benefits segment. In addition, the Company moved Aetna’s mail order and specialty pharmacy operations from the Health Care Benefits segment to the Pharmacy Services segment. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes.

The Company has four reportable segments: Pharmacy Services, Retail/LTC, Health Care Benefits and Corporate/Other, which are described below.

Pharmacy Services Segment

The Pharmacy Services segment provides a full range of pharmacy benefit management (“PBM”) solutions, including plan design offerings and administration, formulary management, retail pharmacy network management services, mail order pharmacy, specialty pharmacy and infusion services, clinical services, disease management services and medical spend management. The Pharmacy Services segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, plans offered on public health insurance exchanges (“Public Exchanges”) and private health insurance exchanges, other sponsors of health benefit plans and individuals throughout the United States. The Pharmacy Services segment operates retail specialty pharmacy stores, specialty mail order pharmacies, mail order dispensing pharmacies, compounding pharmacies and branches for infusion and enteral nutrition services.

Retail/LTC Segment

The Retail/LTC segment sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products, cosmetics and personal care products, provides health care services through its MinuteClinic^®walk-in medical clinics and conducts long-term care (“LTC”) pharmacy operations, which distribute prescription drugs and provide related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. As of March 31, 2019, 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, serving an estimated 38 million people as of March 31, 2019. The Health Care Benefits segment has the information and resources to help members, in consultation with their health care professionals, make more informed decisions about their health care. The Health Care Benefits segment offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, medical management capabilities, Medicare Advantage and Medicare Supplement plans, PDPs, Medicaid health care management services, workers’ compensation administrative services and health information technology products and services. The Health Care Benefits segment’s customers include employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers (“providers”), governmental units, government-sponsored plans, labor groups and expatriates. The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.”

Corporate/Other Segment

The Company presents the remainder of its financial results in the Corporate/Other segment, which consists of:

• Management and administrative expenses to support the overall operations of the Company, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources, information technology and finance departments and acquisition-related transaction and integration costs; and

• Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of CVS Health Corporation and its subsidiaries have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. In accordance with such rules and regulations, certain information and accompanying note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, which are included in Exhibit 13.1 to the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018 (the “2018 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 CVS Health Corporation and its majority-owned subsidiaries and the variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated.

The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary.

Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s unaudited condensed consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation.

Restricted Cash

Restricted cash included in other current assets in the unaudited condensed consolidated balance sheets represents amounts held in escrow accounts in connection with certain recent acquisitions. Restricted cash included in other assets in the unaudited condensed consolidated balance sheets represents amounts held in a trust in one of the Company’s captive insurance companies to satisfy collateral requirements associated with the assignment of certain insurance polices. All restricted cash is invested in time deposits, money market funds or commercial paper. The following represents a reconciliation of cash and cash equivalents in the unaudited condensed consolidated balance sheets to total cash, cash equivalents and restricted cash in the unaudited condensed consolidated statements of cash flows:

In millions	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	5,896	$	4,059
Restricted cash (included in other current assets)	6		6
Restricted cash (included in other assets)	266		230
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	6,168	$	4,295

Accounts Receivable

Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations. Accounts receivable, net is composed of the following:

In millions	March 31, 2019		December 31, 2018
Trade receivables	$	7,158	$	6,896
Vendor and manufacturer receivables	8,901		7,655
Premium receivables	2,582		2,259
Other receivables	868		821
Total accounts receivable, net	$	19,509	$	17,631

Revenue Recognition

The following is a discussion of the Company’s revenue recognition policies by segment.

Pharmacy Services Segment

The Pharmacy Services segment sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through the Company’s retail pharmacy network. The Company’s pharmacy benefit arrangements are accounted for in a manner consistent with a master supply arrangement as there are no contractual minimum volumes and each prescription is considered a separate purchasing decision and distinct performance obligation transferred at a point in time. PBM services performed in connection with each prescription claim are considered part of a single performance obligation which culminates in the dispensing of prescription drugs.

The Company recognizes revenue using the gross method at the contract price negotiated with its clients when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescriptions dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while also performing the related PBM services.

Revenues include (i) the portion of the price the client pays directly to the Pharmacy Services segment, net of any discounts earned on brand name drugs or other discounts and refunds paid back to the client (see “Drug Discounts” and “Guarantees” below), (ii) the price paid to the Pharmacy Services segment by client plan members for mail order prescriptions and the price paid to retail network pharmacies by client plan members for retail prescriptions (“Retail Co-Payments”), and (iii) claims based administrative fees for retail pharmacy network contracts. Sales taxes are not included in revenue.

The Company recognizes revenue when control of the prescription drugs is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those prescription drugs. The following revenue recognition policies have been established for the Pharmacy Services segment:

• Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription drug is delivered to the client plan member. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.

• Revenues generated from prescription drugs sold by third-party pharmacies in the Company’s retail pharmacy network and associated administrative fees are recognized at the Company’s point-of-sale, which is when the claim is adjudicated by the Company’s online claims processing system and the Company has transferred control of the prescription drug and performed all of its performance obligations.

For contracts under which the Pharmacy Services segment acts as an agent or does not control the prescription drugs prior to transfer to the client plan member, revenue is recognized using the net method.

Drug Discounts

The Pharmacy Services segment records revenue net of manufacturers’ rebates earned by its clients based on their plan members’ utilization of brand name formulary drugs. The Pharmacy Services segment estimates these rebates at period-end based on actual and estimated claims data and its estimates of the manufacturers’ rebates earned by its clients. The estimates are based on the best available data at period-end and recent history for the various factors that can affect the amount of rebates due to the client. The Pharmacy Services segment adjusts its rebates payable to clients to the actual amounts paid when these rebates are paid or as significant events occur. Any cumulative effect of these adjustments is recorded against revenues as identified. Adjustments generally result from contract changes with clients or manufacturers that have retroactive rebate adjustments, differences between the estimated and actual product mix subject to rebates, or whether the brand name drug was included in the applicable formulary. The effect of adjustments between estimated and actual manufacturers’ rebate amounts has not been material to the Company’s operating results or financial condition.

Guarantees

The Pharmacy Services segment also adjusts revenues for refunds owed to clients resulting from pricing guarantees and performance against defined service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition.

Retail/LTC Segment

Retail Pharmacy

The Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales, each prescription claim is its own arrangement with the customer and is a performance obligation, separate and distinct from other prescription claims under other retail network arrangements. Revenues are adjusted for refunds owed to third party payers for pricing guarantees and performance against defined value-based service and performance metrics. The inputs to these estimates are not subject to a high degree of subjectivity or volatility. The effect of adjustments between estimated and actual pricing and performance refund amounts has not been material to the Company’s operating results or financial condition.

Revenue from Company gift cards purchased by customers is deferred as a contract liability until goods or services are transferred. Any amounts not expected to be redeemed by customers (i.e., breakage) are recognized based on historical redemption patterns.

Customer returns are not material to the Company’s operating results or financial condition. Sales taxes are not included in revenue.

Loyalty Program

The Company’s customer loyalty program, ExtraCare^®, consists of two components, ExtraSavings^TM and ExtraBucks^® Rewards. ExtraSavings are coupons that are recorded as a reduction of revenue when redeemed as the Company has concluded that they do not represent a promise to the customer to deliver additional goods or services at the time of issuance because they are not tied to a specific transaction or spending level.

ExtraBucks Rewards are accumulated by customers based on their historical spending levels. Thus, the Company has determined that there is an additional performance obligation to those customers at the time of the initial transaction. The Company allocates the transaction price to the initial transaction and the ExtraBucks Rewards transaction based upon the relative standalone selling price, which considers historical redemption patterns for the rewards. Revenue allocated to ExtraBucks Rewards is recognized as those rewards are redeemed. At the end of each period, unredeemed rewards are reflected as a contract liability.

Long-term Care

Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods or services. Each prescription claim represents a separate performance obligation of the Company, separate and distinct from other prescription claims under customer arrangements. A significant portion of Long-term Care revenue from sales of pharmaceutical and medical products is reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third-party insurance payors, and reduces revenue at the revenue recognition date to properly account for the variable consideration due to anticipated differences between billed and reimbursed amounts. Accordingly, the total revenues and receivables reported in the Company’s unaudited condensed consolidated financial statements are recorded at the amount expected to be ultimately received from these payors.

Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third-party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of normal billing procedures and subject to normal accounts receivable collections procedures.

Walk-In Medical Clinics

For services provided by the Company’s walk-in medical clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third-party payor contractual obligations and patient direct bill historical collection rates.

Health Care Benefits Segment

Premium Revenue

Premiums are recognized as revenue in the month in which the enrollee is entitled to receive health care services. Premiums are reported net of an allowance for estimated terminations and uncollectible amounts. Additionally, premium revenue subject to the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010’s (as amended, collectively, the “ACA’s”) minimum medical loss ratio (“MLR”) rebate requirements is recorded net of the estimated minimum MLR rebates for the current calendar year. Premiums related to unexpired contractual coverage periods (unearned premiums) are reported as other insurance liabilities on the unaudited condensed consolidated balance sheets and recognized as revenue when earned.

Some of the Company’s contracts allow for premiums to be adjusted to reflect actual experience or the relative health status of Insured members. Such adjustments are reasonably estimable at the outset of the contract, and adjustments to those estimates are made based on actual experience of the customer emerging under the contract and the terms of the underlying contract.

Services Revenue

Services revenue relates to contracts that can include various combinations of services or series of services which generally are capable of being distinct and accounted for as separate performance obligations. Health Care Benefits segment services revenue consists of the following components:

• ASC fees are received in exchange for performing certain claim processing and member services for ASC members. ASC fee revenue is recognized over the period the service is provided. Some of the Company’s administrative services contracts include guarantees with respect to certain functions, such as customer service response time, claim processing accuracy and claim processing turnaround time, as well as certain guarantees that a plan sponsor’s benefit claim experience will fall within a certain range. With any of these guarantees, the Company is financially at risk if the conditions of the arrangements are not met, although the maximum amount at risk is typically limited to a percentage of the fees otherwise payable to the Company by the customer involved. Each period the Company estimates its obligations under the terms of these guarantees and records its estimate as an offset to service revenues.

• Workers’ compensation administrative services consist of fee-based managed care services. Workers’ compensation administrative services revenue is recognized once the service is provided.

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source in each segment for the three months ended March 31, 2019 and 2018:

	Pharmacy		Retail/		Health Care		Corporate/		Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other		Eliminations			Totals
Three Months Ended March 31, 2019
Major goods/services lines:
Pharmacy	$	33,413	$	16,118	$	—	$	—	$	(11,007	)	$	38,524
Front Store	—		4,799		—		—		—			4,799
Premiums	—		—		16,259		23		—			16,282
Net investment income	—		—		164		85		—			249
Other	145		198		1,447		2		—			1,792
Total	$	33,558	$	21,115	$	17,870	$	110	$	(11,007	)	$	61,646
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,574
Mail choice (2)	11,839
Other	145
Total	$	33,558
Three Months Ended March 31, 2018
Major goods/services lines:
Pharmacy	$	32,406	$	15,500	$	—	$	—	$	(8,601	)	$	39,305
Front Store	—		4,726		—		—		—			4,726
Premiums	—		—		1,306		—		—			1,306
Net investment income	—		—		2		48		—			50
Other	140		206		10		—		—			356
Total	$	32,546	$	20,432	$	1,318	$	48	$	(8,601	)	$	45,743
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,198
Mail choice (2)	11,208
Other	140
Total	$	32,546

^{_____________________________________________} 

(1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice^® activity, which is included within the mail choice category.

(2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect^® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order.

Contract Balances

Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration, for example ExtraBucks^® Rewards and unredeemed Company gift cards. The consideration received remains a contract liability until goods or services have been provided to the customer. In addition, the Company recognizes breakage on Company gift cards based on historical redemption patterns.

The following table provides information about receivables and contract liabilities from contracts with customers:

In millions	March 31, 2019		December 31, 2018
Trade receivables (included in accounts receivable, net)	$	7,158	$	6,896
Contract liabilities (included in accrued expenses)	75		67

During the three months endedMarch 31, 2019, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes:

In millions
Balance at December 31, 2018	$	67
Loyalty program earnings and gift card issuances	90
Redemption and breakage	(82		)
Balance at March 31, 2019	$	75

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 approximately $10 million and $22 million in the three months endedMarch 31, 2019 and 2018, respectively. The Company’s investment in and equity in the earnings of SureScripts for all periods presented is immaterial.

The Company has an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several LTC pharmacies in four states. Heartland paid the Company approximately $25 million and $35 million for pharmaceutical inventory purchases during the three months endedMarch 31, 2019 and 2018, respectively. Additionally, the Company performs certain collection functions for Heartland and then passes those customer cash collections back to Heartland. The Company’s investment in and equity in the earnings of Heartland for all periods presented is immaterial.

New Accounting Pronouncements Recently Adopted

Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard that was adopted in 2018.

The Company adopted this new accounting standard on January 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On January 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $178 million ($241 million prior to tax effect). The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company’s consolidated operating results and had no impact on the Company’s cash flows.

The following is a discussion of the Company’s lease policy under the new lease accounting standard:

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its incremental borrowing rate, determined by class of underlying asset, to discount the lease payments.The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives.

The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years each. For real estate leases, the options to extend are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic incentives of exercising the renewal options, and regularly opens or closes stores to align with its operating strategy. Generally, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the right-of-use asset and lease liability. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

For real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the right-of-use assets and lease liabilities.

See Note 5 ‘‘Leases’’ for additional information.

Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2019:

	Impact of Change in Accounting Policy
	As Reported					Adjusted
In millions	December 31, 2018		Adjustments			January 1, 2019
Condensed Consolidated Balance Sheets:
Other current assets	$	4,581	$	(48	)	$	4,533
Total current assets	45,243		(48		)	45,195
Property and equipment, net	11,349		11			11,360
Operating lease right-of-use assets	—		20,987			20,987
Intangible assets, net	36,524		(217		)	36,307
Other assets	5,046		(521		)	4,525
Total assets	196,456		20,212			216,668
Accrued expenses	10,711		(52		)	10,659
Current portion of operating lease liabilities	—		1,803			1,803
Current portion of long-term debt	1,265		2			1,267
Total current liabilities	44,009		1,753			45,762
Long-term operating lease liabilities	—		18,832			18,832
Long-term debt	71,444		(96		)	71,348
Deferred income taxes	7,677		63			7,740
Other long-term liabilities	2,780		(518		)	2,262
Total liabilities	137,913		20,034			157,947
Retained earnings	40,911		178			41,089
Total CVS Health shareholders’ equity	58,225		178			58,403
Total shareholders’ equity	58,543		178			58,721

Accounting for Interest Associated with the Purchase of Callable Debt Securities

In March 2017, the FASB issued ASU 2017-08, Accounting for Interest Associated with the Purchase of Callable Debt Securities (Topic 310). Under this standard, premiums on callable debt securities are amortized to the earliest call date rather than to the contractual maturity date. Callable debt securities held at a discount will continue to be amortized to the contractual maturity date. The Company adopted this new accounting guidance on January 1, 2019 on a modified retrospective basis and recorded an immaterial cumulative effect adjustment from accumulated other comprehensive income to retained earnings on the condensed consolidated balance sheet.

New Accounting Pronouncements Not Yet Adopted

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This standard requires the use of a forward-looking expected loss impairment model for trade and other receivables, held-to-maturity debt securities, loans and other instruments. This standard also requires impairments and recoveries for available-for-sale debt securities to be recorded through an allowance account and revises certain disclosure requirements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company 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.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and other - Internal-Use Software (Topic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Topic 350-40 to determine which implementation costs to capitalize as assets. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. 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.

Targeted Improvements to the Accounting for Long-Duration Insurance Contracts

In August 2018, the FASB issued ASU 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (Topic 944). This standard requires the Company to review cash flow assumptions for its long-duration insurance contracts at least annually and recognize the effect of changes in future cash flow assumptions in net income. This standard also requires the Company to update discount rate assumptions quarterly and recognize the effect of changes in these assumptions in other comprehensive income. The rate used to discount the Company’s liability for future policy benefits will be based on an estimate of the yield for an upper-medium-grade fixed-income instrument. In addition, this standard changes the amortization method for deferred acquisition costs and requires additional disclosures regarding the long duration insurance contract liabilities in the Company’s interim and annual financial statements. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated operating results, cash flows, financial condition and related disclosures.

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Acquisitions

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisition of Aetna

Acquisition of Aetna

On the Aetna Acquisition Date, the Company acquired 100% of the outstanding shares and voting interests of Aetna for a combination of cash and stock. Under the terms of the merger agreement, Aetna shareholders received $145.00 in cash and 0.8378 CVS Health shares for each Aetna share. The transaction valued Aetna at approximately $212 per share or approximately $70 billion. Including the assumption of Aetna’s debt, the total value of the transaction was approximately $78 billion. The Company financed the cash portion of the purchase price through a combination of cash on hand and by issuing approximately $45 billion of new debt, including senior notes and term loans. Aetna is a leading health care benefits company that offers a broad range of traditional, voluntary, and consumer-directed health insurance products and related services. The Company acquired Aetna to help improve the consumer health care experience by combining Aetna’s health care benefits products and services with CVS Health’s more than 9,900 retail locations, approximately 1,100 walk-in medical clinics and integrated pharmacy capabilities with the goal of becoming the new, trusted front door to health care.

The transaction has been accounted for using the acquisition method of accounting which requires, among other things, the assets acquired and liabilities assumed to be recognized at their fair values at the date of acquisition. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

In millions
Cash and cash equivalents	$	6,565
Accounts receivable	4,089
Other current assets	3,896
Investments (current and long-term)	17,984
Goodwill	47,082
Intangible assets	23,086
Other long-term assets	8,249
Total assets acquired	110,951
Health care costs payable	5,293
Other current liabilities	9,982
Debt (current and long-term)	8,098
Deferred income taxes	4,414
Other long-term liabilities	13,078
Total liabilities assumed	40,865
Noncontrolling interests	320
Total consideration transferred	$	69,766

The assessment of fair value is preliminary and is based on information that was available to management at the time the unaudited condensed consolidated financial statements were prepared. The most significant open items included the valuation of certain intangible assets, the accounting for income taxes and the accounting for contingencies as management is awaiting additional information to complete its assessment of these matters. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Measurement period adjustments to assets acquired and liabilities assumed during the three months endedMarch 31, 2019 primarily related to additional information received related to certain valuations and contingencies and the related impact on the accounting for income taxes and goodwill. There were no material income statement measurement period adjustments recorded during the three months endedMarch 31, 2019.

Unaudited pro forma financial information

The following unaudited pro forma information presents a summary of the Company’s combined operating results for the three months March 31, 2018 as if the Aetna acquisition and the related financing transactions had occurred on January 1, 2017. The following pro forma financial information is not necessarily indicative of the Company’s operating results as they would have been had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

In millions, except per share amounts
Total revenues	$	59,093
Net income attributable to CVS Health	1,807
Net income per share attributable to CVS Health:
Basic	$	1.40
Diluted	$	1.39

The pro forma results for the three months ended March 31, 2018 include adjustments related to the following purchase accounting and acquisition-related items:

• Elimination of intercompany transactions between CVS Health and Aetna;

• Elimination of estimated foregone interest income associated with (i) cash assumed to have been used to partially fund the Aetna Acquisition and (ii) adjusting the amortized cost of Aetna’s investment portfolio to fair value as of the completion of the Aetna Acquisition;

• Elimination of historical intangible asset, deferred acquisition cost and capitalized software amortization expense and addition of amortization expense based on the current preliminary values of identified intangible assets;

• Additional interest expense from (i) the long-term debt issued to partially fund the Aetna Acquisition and (ii) the amortization of the fair value adjustment to assumed long-term debt.

• Additional depreciation expense related to the adjustment of Aetna’s property and equipment to fair value;

• Adjustments to align CVS Health’s and Aetna’s accounting policies;

• Elimination of transaction related costs; and

• Tax effects of the adjustments noted above.

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Investments

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Investments

Investments

Total investments at March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019						December 31, 2018
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,286	$	13,611	$	15,897	$	2,359	$	12,896	$	15,255
Mortgage loans	123		1,215		1,338		145		1,216		1,361
Other investments	17		1,584		1,601		18		1,620		1,638
Total investments	$	2,426	$	16,410	$	18,836	$	2,522	$	15,732	$	18,254

Debt Securities

Debt securities available for sale at March 31, 2019 and December 31, 2018 were as follows:

In millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
Debt securities:
U.S. government securities	$	1,704	$	40	$	—		$	1,744
States, municipalities and political subdivisions	2,246		71		—			2,317
U.S. corporate securities	6,777		288		(1		)	7,064
Foreign securities	2,243		110		—			2,353
Residential mortgage-backed securities	577		18		—			595
Commercial mortgage-backed securities	608		29		—			637
Other asset-backed securities	1,148		8		(7		)	1,149
Redeemable preferred securities	32		6		—			38
Total debt securities (1)	$	15,335	$	570	$	(8	)	$	15,897
December 31, 2018
Debt securities:
U.S. government securities	$	1,662	$	26	$	—		$	1,688
States, municipalities and political subdivisions	2,370		30		(1		)	2,399
U.S. corporate securities	6,444		61		(16		)	6,489
Foreign securities	2,355		31		(3		)	2,383
Residential mortgage-backed securities	567		10		—			577
Commercial mortgage-backed securities	594		11		—			605
Other asset-backed securities	1,097		3		(15		)	1,085
Redeemable preferred securities	30		—		(1		)	29
Total debt securities (1)	$	15,119	$	172	$	(36	)	$	15,255

^{_____________________________________________} 

(1) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At March 31, 2019, debt securities with a fair value of $939 million, gross unrealized capital gains of $45 million and no gross unrealized capital losses and at December 31, 2018, debt securities with a fair value of $916 million, gross unrealized capital gains of $12 million and gross unrealized capital losses of $2 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income.

The fair value of debt securities at March 31, 2019 is shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.

In millions	Amortized Cost		Fair Value
Due to mature:
Less than one year	$	990	$	993
One year through five years	5,511		5,630
After five years through ten years	2,991		3,125
Greater than ten years	3,510		3,768
Residential mortgage-backed securities	577		595
Commercial mortgage-backed securities	608		637
Other asset-backed securities	1,148		1,149
Total	$	15,335	$	15,897

Summarized below are the debt securities the Company held at March 31, 2019 and December 31, 2018 that were in an unrealized capital loss position:

In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses
March 31, 2019
Debt securities:
U.S. government securities	12	$	30	$	—
States, municipalities and political subdivisions	26	39		—
U.S. corporate securities	70	94		1
Foreign securities	39	47		—
Residential mortgage-backed securities	23	—		—
Commercial mortgage-backed securities	1	2		—
Other asset-backed securities	487	486		7
Redeemable preferred securities	1	6		—
Total debt securities	659	$	704	$	8
December 31, 2018
Debt securities:
U.S. government securities	8	$	26	$	—
States, municipalities and political subdivisions	54	86		1
U.S. corporate securities	1,399	1,431		16
Foreign securities	243	314		3
Residential mortgage-backed securities	45	1		—
Other asset-backed securities	516	528		15
Redeemable preferred securities	14	23		1
Total debt securities	2,279	$	2,409	$	36

Since Aetna’s investment portfolio was measured at fair value as of the Aetna Acquisition Date, each of the securities in the table above were in an unrealized loss position for less than 12 months. The Company reviewed the securities in the tables above and concluded that these are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of March 31, 2019, the Company did not intend to sell these securities, and did not believe it was more likely than not that it would be required to sell these securities prior to anticipated recovery of their amortized cost basis.

The maturity dates for debt securities in an unrealized capital loss position at March 31, 2019 were as follows:

	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	1	$	—	$	20	$	—	$	21	$	—
One year through five years	—		—		43		1		43		1
After five years through ten years	6		—		82		—		88		—
Greater than ten years	4		—		60		—		64		—
Residential mortgage-backed securities	—		—		—		—		—		—
Commercial mortgage-backed securities	—		—		2		—		2		—
Other asset-backed securities	—		—		486		7		486		7
Total	$	11	$	—	$	693	$	8	$	704	$	8

Mortgage Loans

The Company’s mortgage loans are collateralized by commercial real estate. The Company did not have any mortgage loans during the three months ended March 31, 2018. During the three months ended March 31, 2019, the Company had the following activity in its mortgage loan portfolio:

In millions
New mortgage loans	$	41
Mortgage loans fully repaid	52
Mortgage loans foreclosed	—

The Company assesses mortgage loans on a regular basis for credit impairments, and annually assigns a credit quality indicator to each loan. The Company’s credit quality indicator is internally developed and categorizes its portfolio on a scale from 1 to 7. These indicators are based upon several factors, including current loan to value ratios, property condition, market trends, creditworthiness of the borrower and deal structure. The vast majority of the Company’s mortgage loans fall into categories 2 to 4.

• Category 1 - Represents loans of superior quality.

• Categories 2 to 4 - Represent loans where credit risk is minimal to acceptable; however, these loans may display some susceptibility to economic changes.

• Categories 5 and 6 - Represent loans where credit risk is not substantial, but these loans warrant management’s close attention.

• Category 7 - Represents loans where collections are potentially at risk; if necessary, an impairment is recorded.

Based upon the most recent assessments at March 31, 2019 and December 31, 2018, the Company’s mortgage loans were given the following credit quality indicators:

In millions, except credit ratings indicator	March 31, 2019		December 31, 2018
1	$	41	$	42
2 to 4	1,283		1,301
5 and 6	14		18
7	—		—
Total	$	1,338	$	1,361

Net Investment Income

Sources of net investment income for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended March 31,
In millions	2019			2018
Debt securities	$	156		$	50
Mortgage loans	17			—
Other investments	26			—
Gross investment income	199			50
Investment expenses	(9		)	—
Net investment income (excluding net realized capital gains or losses)	190			50
Net realized capital gains (1)	59			—
Net investment income (2)	$	249		$	50

^{_____________________________________________} 

(1) Other-than-temporary impairment (“OTTI”) losses on debt securities recognized in the unaudited condensed consolidated statements of operations were $7 million for the three months ended March 31, 2019. There were no OTTI losses on debt securities for the three months ended March 31, 2018.

(2) Net investment income includes $11 million for the three months ended March 31, 2019 related to investments supporting experience-rated products. The Company had no investments supporting experience-rated products during the three months ended March 31, 2018.

The portion of unrealized capital gains and losses recognized during the three months ended March 31, 2019 related to investments in equity securities held as of the reporting date was not material.

The Company did not have any material proceeds from the sale of available for sale debt securities or related gross realized capital gains or losses for the three months ended March 31, 2018. Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three months endedMarch 31, 2019 were as follows:

In millions
Proceeds from sales	$	1,489
Gross realized capital gains	35
Gross realized capital losses	2

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Fair Value

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Fair Value

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires certain assets and liabilities to be reflected at their fair value and others to be reflected on another basis, such as an adjusted historical cost basis. The Company’s assets and liabilities carried at fair value have been classified within one of three levels of a hierarchy established by GAAP. The following are the levels of the hierarchy and a brief description of the type of valuation information (“valuation inputs”) that qualifies a financial asset or liability for each level:

• Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets.

• Level 2 – Valuation inputs other than Level 1 that are based on observable market data.  These include: quoted prices for similar assets in active markets, quoted prices for identical assets in inactive markets, valuation inputs that are observable that are not prices (such as interest rates and credit risks) and valuation inputs that are derived from or corroborated by observable markets.

• Level 3 – Developed from unobservable data, reflecting the Company’s assumptions.

For a description of the methods and assumptions that are used to estimate the fair value and determine the fair value hierarchy classification of each class of financial instrument, see Note 4 “Fair Value” of Notes to Consolidated Financial Statements in Exhibit 13.1 to the 2018 Form 10-K.

There were no financial liabilities measured at fair value on a recurring basis on the condensed consolidated balance sheets at March 31, 2019 or December 31, 2018. Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 were as follows:

In millions	Level 1		Level 2		Level 3		Total
March 31, 2019
Debt securities:
U.S. government securities	$	1,665	$	79	$	—	$	1,744
States, municipalities and political subdivisions	—		2,317		—		2,317
U.S. corporate securities	—		7,006		58		7,064
Foreign securities	—		2,350		3		2,353
Residential mortgage-backed securities	—		595		—		595
Commercial mortgage-backed securities	—		637		—		637
Other asset-backed securities	—		1,149		—		1,149
Redeemable preferred securities	—		27		11		38
Total debt securities	1,665		14,160		72		15,897
Equity securities	9		—		71		80
Total	$	1,674	$	14,160	$	143	$	15,977
December 31, 2018
Debt securities:
U.S. government securities	$	1,597	$	91	$	—	$	1,688
States, municipalities and political subdivisions	—		2,399		—		2,399
U.S. corporate securities	—		6,422		67		6,489
Foreign securities	—		2,380		3		2,383
Residential mortgage-backed securities	—		577		—		577
Commercial mortgage-backed securities	—		605		—		605
Other asset-backed securities	—		1,085		—		1,085
Redeemable preferred securities	—		22		7		29
Total debt securities	1,597		13,581		77		15,255
Equity securities	19		—		54		73
Total	$	1,616	$	13,581	$	131	$	15,328

There were no transfers between Levels 1 and 2 during the three months ended March 31, 2019 or 2018. During the three months endedMarch 31, 2019 and 2018, there were no transfers into or out of Level 3.

The carrying value and estimated fair value classified by level of fair value hierarchy for financial instruments carried on the condensed consolidated balance sheets at adjusted cost or contract value at March 31, 2019 and December 31, 2018 were as follows:

	Carrying Value		Estimated Fair Value
In millions			Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Mortgage loans	$	1,338	$	—	$	—	$	1,350	$	1,350
Equity securities (1)	135		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	377		—		—		364		364
Long-term debt	71,781		72,376		—		—		72,376
December 31, 2018
Assets:
Mortgage loans	$	1,361	$	—	$	—	$	1,366	$	1,366
Equity securities (1)	140		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	382		—		—		357		357
Long-term debt	72,709		71,252		—		—		71,252

^{_____________________________________________} 

(1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies.

Separate Accounts assets related to the Company’s large case pensions products represent funds maintained to meet specific objectives of contract holders. Since contract holders bear the investment risk of these assets, a corresponding Separate Accounts liability has been established equal to the assets. These assets and liabilities are carried at fair value. Separate Accounts financial assets as of March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019								December 31, 2018
In millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Debt securities	$	983	$	2,445	$	—	$	3,428	$	782	$	2,500	$	4	$	3,286
Equity securities	—		3		—		3		—		3		—		3
Common/collective trusts	—		415		—		415		—		404		—		404
Total (1)	$	983	$	2,863	$	—	$	3,846	$	782	$	2,907	$	4	$	3,693

^{_____________________________________________} 

(1) Excludes $228 million and $191 million of cash and cash equivalents and accounts receivable at March 31, 2019 and December 31, 2018, respectively.

During the three months ended March 31, 2019, the Company had an immaterial amount of Level 3 Separate Accounts financial assets.

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Leases (Notes)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years. The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years.

The Company maintains certain lease agreements for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased. For these pharmacy lease agreements, the Company concluded that for accounting purposes the lease term was the remaining economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases.

The following table is a summary of the Company’s components of net lease cost for the three months ended March 31, 2019:

In millions
Operating lease cost	$	682
Finance lease cost:
Amortization of right-of-use assets	9
Interest on lease liabilities	10
Total finance lease costs	19
Short-term lease costs	6
Variable lease costs	142
Less: sublease income	12
Net lease cost	$	837

Supplemental cash flow information related to leases for the three months endedMarch 31, 2019 is as follows:

In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	670
Operating cash flows paid for interest portion of finance leases	10
Financing cash flows paid for principal portion of finance leases	7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	556
Finance leases	12

Supplemental balance sheet information related to leases as of March 31, 2019 is as follows:

In millions, except lease term and discount rate
Operating leases:
Operating lease right-of-use assets	$	20,992
Current portion of operating lease liabilities	$	1,803
Long-term operating lease liabilities	18,961
Total operating lease liabilities	$	20,764
Finance leases: (1)
Property and equipment, net	$	509
Current portion of long-term debt	$	25
Long-term debt	535
Total finance lease liabilities	$	560
Weighted average remaining lease term
Operating leases	14.2
Finance leases	20.3
Weighted average discount rate
Operating leases	4.7		%
Finance leases	7.5		%

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(1) Finance lease right-of-use assets are included within property and equipment, net and the respective finance lease liabilities are included in the current portion of long-term debt and long-term debt lines on the unaudited condensed consolidated balance sheets.

The following table summarizes the maturity of lease liabilities under finance and operating leases as of March 31, 2019:

	Finance			Operating
In millions	Leases			Leases (1)			Total
2019 (remaining nine months)	$	50		$	2,035		$	2,085
2020	65			2,612			2,677
2021	62			2,477			2,539
2022	58			2,316			2,374
2023	56			2,203			2,259
Thereafter	786			16,588			17,374
Total lease payments (2)	1,077			28,231			29,308
Less: imputed interest	(517		)	(7,467		)	(7,984		)
Total lease liabilities	$	560		$	20,764		$	21,324

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(1) Future operating lease payments have not been reduced by minimum sublease rentals of $182 million due in the future under noncancelable subleases.

(2) The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.1 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement.

The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the table above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Sale-leaseback transactions resulted in an immaterial gain and proceeds of $5 million in the three months ended March 31, 2019. There were no sale-leaseback transactions in the three months ended March 31, 2018.

Store Rationalization Charge

During the three months ended March 31, 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the operating lease right-of-use assets. Accordingly, an interim long lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC Segment.

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Health Care Costs Payable

3 Months Ended

Mar. 31, 2019

Health Care and Other Insurance Liabilities [Abstract]

Short-Duration Insurance and Deposit Contracts [Text Block]

Health Care Costs Payable

Prior to the Aetna Acquisition, the Company’s health care costs payable balance was immaterial and related to unpaid pharmacy claims for its SilverScript PDP. Accordingly, the Company has not included disclosures for health care costs payable for periods prior to the Aetna Acquisition Date.

The following table shows the components of the change in health care costs payable during the three months ended March 31, 2019:

In millions
Health care costs payable, beginning of the period	$	6,147
Less: Reinsurance recoverables	4
Health care costs payable, beginning of the period, net	6,143
Add: Components of incurred health care costs
Current year	13,804
Prior years	(446		)
Total incurred health care costs (1)	13,358
Less: Claims paid
Current year	8,004
Prior years	4,812
Total claims paid	12,816
Add: Premium deficiency reserve	11
Health care costs payable, end of period, net	6,696
Add: Reinsurance recoverables	5
Health care costs payable, end of period	$	6,701

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(1) Total incurred health care costs during the three months ended March 31, 2019 in the table above exclude (i) $11 million related to a premium deficiency reserve for the 2019 coverage year related to the Company’s Medicaid products, (ii) $10 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet and (iii) $80 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet.

The Company’s estimates of prior years’ health care costs payable decreased by $446 million in the three months ended March 31, 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 March 31, 2019, the Company’s liabilities for the ultimate cost of (i) services rendered to members but not yet reported to the Company and (ii) claims which have been reported to the Company but not yet paid (collectively, “IBNR”) plus expected development on reported claims totaled approximately $5.1 billion. The majority of the Company’s liabilities for IBNR plus expected development on reported claims at March 31, 2019 related to the current year.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2019

Statement of Stockholders' Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Shareholders’ Equity

Share Repurchases

On November 2, 2016, the Company’s Board of Directors (the “Board”) authorized the 2016 share repurchase program (“2016 Repurchase Program”) for up to $15.0 billion of the Company’s common shares. The 2016 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase transactions, and/or other derivative transactions. The 2016 Repurchase Program can be modified or terminated by the Board at any time.

During the three months ended March 31, 2019 and 2018, the Company did not repurchase any shares of its common stock. At March 31, 2019, the Company had remaining authorization to repurchase an aggregate of up to approximately $13.9 billion of its common shares under the 2016 Repurchase Program.

Dividends

The quarterly cash dividend declared by the Board was $0.50 per share in the three-month periods ended March 31, 2019 and 2018. CVS Health has paid cash dividends every quarter since becoming a public company. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.

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Other Comprehensive (Loss) Income

3 Months Ended

Mar. 31, 2019

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Other Comprehensive (Loss) Income

Other Comprehensive Income

Shareholders’ equity included the following activity in accumulated other comprehensive income for the three months endedMarch 31, 2019 and 2018:

	Three Months Ended March 31,
In millions	2019			2018
Net unrealized investment gains (losses):
Beginning of period balance	$	97		$	—
Other comprehensive income before reclassifications ($410 and $0 pretax)	348			—
Amounts reclassified from accumulated other comprehensive income ($(19) and $0 pretax)(1)	(14		)	—
Other comprehensive income	334			—
End of period balance	431			—
Foreign currency translation adjustments:
Beginning of period balance	(158		)	(129		)
Other comprehensive income	1			1
Other comprehensive income	1			1
End of period balance	(157		)	(128		)
Net cash flow hedges:
Beginning of period balance	312			(15		)
Adoption of new accounting standard (2)	—			(3		)
Other comprehensive income before reclassifications ($0 and $464 pretax)	—			344
Amounts reclassified from accumulated other comprehensive income (loss) ($(5) and $(1) pretax)(3)	(4		)	(1		)
Other comprehensive income (loss)	(4		)	343
End of period balance	308			325
Pension and OPEB plans:
Beginning of period balance	(149		)	(21		)
Adoption of new accounting standard (2)	—			(4		)
Other comprehensive income	—			—
End of period balance	(149		)	(25		)
Total beginning of period accumulated other comprehensive income (loss)	102			(165		)
Adoption of new accounting standard (2)	—			(7		)
Total other comprehensive income	331			344
Total end of period accumulated other comprehensive income	$	433		$	172

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(1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income within the unaudited condensed consolidated statements of operations.

(2) Reflects the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income during the first quarter of 2018.

(3) Amounts reclassified from accumulated other comprehensive loss for specifically identified cash flow hedges are included within interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $18 million, net of tax, in gains associated with its cash flow hedges into net income within the next 12 months.

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Share

Earnings per share is computed using the two-class method. Stock appreciation rights and options to purchase 15.3 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2019 because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase 13.2 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2018.

The following is a reconciliation of basic and diluted earnings per share for the respective periods:

	Three Months Ended March 31,
In millions, except per share amounts	2019			2018
Numerator for earnings per share calculation:
Net income	$	1,427		$	998
Income allocated to participating securities	(2		)	(2		)
Net income attributable to noncontrolling interest	(6		)	—
Net income attributable to CVS Health	$	1,419		$	996
Denominator for earnings per share calculation:
Weighted average shares, basic	1,298			1,016
Effect of dilutive securities	4			3
Weighted average shares, diluted	1,302			1,019
Earnings per share:
Basic	$	1.09		$	0.98
Diluted	$	1.09		$	0.98

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Reinsurance

3 Months Ended

Mar. 31, 2019

Reinsurance Disclosures [Abstract]

Reinsurance

Reinsurance

The Company utilizes reinsurance agreements primarily to reduce required capital and to facilitate the acquisition or disposition of certain insurance contracts. Ceded reinsurance agreements permit the Company to recover a portion of its losses from reinsurers, although they do not discharge the Company’s primary liability as the direct insurer of the risks reinsured.

On November 30, 2018, Aetna completed the sale of its standalone Medicare Part D prescription drug plans to a subsidiary of WellCare, effective December 31, 2018. In connection with that sale, subsidiaries of WellCare and Aetna entered into reinsurance agreements under which WellCare has ceded to Aetna 100% of the insurance risk related to the divested standalone Medicare Part D prescription drug plans for the 2019 PDP plan year.

In January 2019, the Company entered into two four-year reinsurance agreements with an unrelated reinsurer that allow it to reduce required capital and provide collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Guarantees

Between 1995 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores and Linens ‘n Things, each of which subsequently filed for bankruptcy, and Marshalls. In many cases, when a former subsidiary leased a store, the Company provided a guarantee of the former subsidiary’s lease obligations. When the subsidiaries were disposed of and accounted for as discontinued operations, the Company’s guarantees remained in place, although each initial purchaser agreed to indemnify the Company for any lease obligations the Company was required to satisfy. If any of the purchasers or any of the former subsidiaries fail to make the required payments under a store lease, the Company could be required to satisfy those obligations. As of March 31, 2019, the Company guaranteed approximately 80 such store leases (excluding the lease guarantees related to Linens ‘n Things, which have been recorded as a liability on the unaudited condensed consolidated balance sheet), with the maximum remaining lease term extending through 2029.

Guaranty Fund Assessments, Market Stabilization and Other Non-Voluntary Risk Sharing Pools

Under guaranty fund laws existing in all states, insurers doing business in those states can be assessed (in most states up to prescribed limits) for certain obligations of insolvent insurance companies to policyholders and claimants. The life and health insurance guaranty associations in which the Company participates that operate under these laws respond to insolvencies of long-term care insurers as well as health insurers. The Company’s assessments generally are based on a formula relating to the Company’s health care premiums in the state compared to the premiums of other insurers. Certain states allow assessments to be recovered over time as offsets to premium taxes. Some states have similar laws relating to HMOs and/or other payors such as not-for-profit consumer-governed health plans established under the ACA.

In 2009, the Pennsylvania Insurance Commissioner placed long-term care insurer Penn Treaty Network America Insurance Company and one of its subsidiaries (collectively, “Penn Treaty”) in rehabilitation, an intermediate action before insolvency, and subsequently petitioned a state court to convert the rehabilitation into a liquidation. Penn Treaty was placed in liquidation in March 2017. The Company has recorded a liability for its estimated share of future assessments by applicable life and health guaranty associations. It is reasonably possible that in the future the Company may record a liability and expense relating to other insolvencies which could have a material adverse effect on the Company’s operating results, financial condition and cash flows. While historically the Company has ultimately recovered more than half of guaranty fund assessments through statutorily permitted premium tax offsets, significant increases in assessments could lead to legislative and/or regulatory actions that may limit future offsets.

HMOs in certain states in which the Company does business are subject to assessments, including market stabilization and other risk-sharing pools, for which the Company is assessed charges based on incurred claims, demographic membership mix and other factors. The Company establishes liabilities for these assessments based on applicable laws and regulations. In certain states, the ultimate assessments the Company pays are dependent upon the Company’s experience relative to other entities subject to the assessment, and the ultimate liability is not known at the financial statement date. While the ultimate amount of the assessment is dependent upon the experience of all pool participants, the Company believes it has adequate reserves to cover such assessments.

Litigation and Regulatory Proceedings

The Company is a party to numerous legal proceedings, investigations, audits and claims arising, for the most part, in the ordinary course of its businesses, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial condition.

Except as otherwise noted, the Company cannot predict with certainty the timing or outcome of the legal matters described below, and the Company is unable to reasonably estimate a possible loss or range of possible loss in excess of amounts already accrued for these matters. It is reasonably possible that the outcome of such legal matters could be material to the Company.

Usual and Customary Litigation

The Company is named as a defendant in a number of litigations that allege that the Company’s retail stores overcharged for prescription drugs by not providing the correct usual and customary charge.

State of Texas ex rel. Myron Winkelman and Stephani Martinson, et al. v. CVS Health Corporation (Travis County Texas District Court). In February 2012, the Attorney General of the State of Texas issued Civil Investigative Demands (“CIDs”) to the Company and subsequently has issued a series of requests for documents and information in connection with its investigation concerning the CVS Health Savings Pass program and other pricing practices with respect to claims for reimbursement from the Texas Medicaid program. In January 2017, the Travis County Court unsealed a first amended qui tam petition filed in April 2014. The government has intervened in this case. The amended petition alleges the Company violated the Texas Medicaid Fraud Prevention Act by submitting false claims for reimbursement to the Texas Medicaid program by, among other things, failing to use the price available to members of the CVS Health Savings Pass program as the pharmacies’ usual and customary price. The amended petition was unsealed following the Company’s December 2016 filing of CVS Pharmacy, Inc. v. Charles Smith, et al. (Travis County Texas District Court), a declaratory judgment action against the State of Texas seeking a declaration that the prices charged to members of the CVS Health Savings Pass program do not constitute usual and customary prices under the applicable Medicaid regulation. In March 2018, the Travis County Court denied the State of Texas’s request for temporary injunctive relief. The Company is defending itself against these claims.

Corcoran et al. v. CVS Health Corporation (U.S. District Court for the Northern District of California) and Podgorny et al. v. CVS Health Corporation (U.S. District Court for the Northern District of Illinois). These putative class actions were filed against the Company in July and September 2015. The cases were consolidated in the U.S. District Court for the Northern District of California. Plaintiffs seek damages and injunctive relief under the consumer protection statutes and common laws of certain states on behalf of a class of consumers who purchased certain prescription drugs. Several third-party payors filed similar putative class actions on behalf of payors captioned Sheet Metal Workers Local No. 20 Welfare and Benefit Fund v. CVS Health Corp. and Plumbers Welfare Fund, Local 130 v. CVS Health Corporation (both pending in the U.S. District Court for the District of Rhode Island) in February and August 2016. In all of these cases the plaintiffs allege the Company overcharged for certain prescription drugs by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. In the Corcoran case, the U.S. District Court granted summary judgment to CVS on plaintiffs’ claims in their entirety and certified certain subclasses in September 2017. The Corcoran plaintiffs have appealed the District Court’s decision to the Ninth Circuit. The Sheet Metal Workers plaintiffs have amended their complaint to assert a claim under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) premised on an alleged conspiracy between the Company and other PBMs. The Company is defending itself against these claims.

State of California ex rel. Matthew Omlansky v. CVS Caremark Corporation (Superior Court of the State of California, County of Sacramento). In April 2016, the California Superior Court unsealed a first amended qui tam complaint filed in July 2013. The government has declined to intervene in this case. The relator alleges that the Company submitted false claims for payment to the California Medicaid program in connection with reimbursement for drugs available through the CVS Health Savings Pass program as well as certain other generic drugs. The case has been stayed pending the relator’s appeal of the judgment against him in a similar case against another retailer. The Company is defending itself against these claims.

State of Mississippi v. CVS Health Corporation, et al. (Chancery Court of DeSoto County, Mississippi, Third Judicial District). In July 2016, the Company was served with a complaint filed on behalf of the State of Mississippi alleging that CVS retail pharmacies in Mississippi submitted false claims for reimbursement to the Mississippi Medicaid program by not submitting the price available to members of the CVS Health Savings Pass program as the pharmacy’s usual and customary price. The Company has responded to the complaint, moved for judgment on the pleadings, filed a counterclaim and moved the case to Mississippi Circuit Court. The Company’s motion for judgment on the pleadings remains pending. The Company is defending itself against these claims.

PBM Litigation and Investigations

The Company is named as a defendant in a number of lawsuits and is subject to a number of investigations concerning its PBM practices.

Bewley, et al. v. CVS Health Corporation, et al. and Prescott, et al. v. CVS Health Corporation, et al. (both pending in the U.S. District Court for the Western District of Washington). These putative class actions were filed against the Company and other PBMs and manufacturers of glucagon kits (Bewley) and diabetes test strips (Prescott) in May 2017.Both cases allege that, by contracting for rebates with the manufacturers of these diabetes products, the Company and other PBMs caused list prices for these products to increase, thereby harming certain consumers. The plaintiffs’ primary claims are made under federal antitrust laws, RICO, state unfair competition and consumer protection laws and the federal Employee Retirement Income Security Act of 1974 (“ERISA”). Both of these cases have been transferred to the U.S. District Court for the District of New Jersey on defendants’ motions. In April 2019, the named plaintiffs in both the Bewley and Prescott cases voluntarily dismissed all of their claims without prejudice, ending both cases.

Klein, et al. v. Prime Therapeutics, et al. (U.S. District Court for the District of Minnesota). This putative class action was filed against the Company and other PBMs in June 2017 on behalf of ERISA plan members who purchased and paid for EpiPen or EpiPen Jr. Plaintiffs allege that the PBMs are ERISA fiduciaries to plan members and have violated ERISA by allegedly causing higher inflated prices for EpiPens through the process of negotiating increased rebates from EpiPen manufacturer Mylan. This case has been consolidated with a similar matter and is now proceeding as In re EpiPen ERISA Litigation. The Company is defending itself against these claims.

The Company has received subpoenas, CIDs, and other requests for documents and information from, and is being investigated by, Attorneys General of several states regarding its PBM practices, including pricing and rebates. In addition, the Company received an inquiry from the U.S. Senate Committee on Finance regarding insulin pricing. The Company has been providing documents and information in response to these subpoenas, CIDs and requests for information.

Controlled Substances Litigation, Audits and Subpoenas

In December 2017, the U.S. Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against various defendants by plaintiffs such as counties, cities, hospitals, Indian tribes and third-party payors, alleging claims generally concerning the impacts of widespread opioid abuse. The consolidated multidistrict litigation captioned In re National Prescription Opiate Litigation (MDL No. 2804) is pending in the U.S. District Court for the Northern District of Ohio. This multidistrict litigation presumptively includes hundreds of relevant federal court cases that name the Company as a defendant. A significant number of similar cases that name the Company as a defendant in some capacity are pending in state courts. The Company is defending itself against all such claims. Additionally, the Company has received subpoenas, CIDs and/or other requests for information regarding opioids from the Attorneys General of several states. The Company has been cooperating with the government with respect to these subpoenas, CIDs and other requests for information.

The Company routinely is audited by the United States Drug Enforcement Administration (“DEA”). In some instances, the Company is in discussions with the DEA and U.S. Attorney’s Offices concerning allegations that the Company violated certain requirements of the Controlled Substance Act.

In September 2015, the DEA served the Company with an administrative subpoena. The subpoena seeks documents related to controlled substance policies, procedures and practices at eight Omnicare pharmacy locations from May 2012 to the present. In September 2017, the DEA expanded the investigation to include an additional Omnicare pharmacy location. The Company has been cooperating with the government and providing documents and witnesses in response to this subpoena.

Prescription Processing Investigations

In October 2015, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning the Company’s Omnicare pharmacies’ cycle fill process for assisted living facilities. The Company has been cooperating with the government and providing documents and information in response to this CID. In July 2017, the Company also received a subpoena from the California Department of Insurance requesting documents concerning similar subject matter. The Company has been cooperating with the California Department of Insurance and providing documents and information in response to this subpoena.

In December 2016, the Company received a CID from the U.S. Attorney’s Office for the Northern District of New York requesting documents and information in connection with a federal False Claims Act investigation concerning whether the Company’s retail pharmacies improperly submitted certain insulin claims to Part D of the Medicare program rather than Part B of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to this CID.

In May 2017, the Company received a CID from the U.S. Attorney’s Office for the Southern District of New York requesting documents and information concerning possible false claims submitted to Medicare in connection with reimbursements for prescription drugs under the Medicare Part D program. The Company has been cooperating with the government and providing documents and information in response to this CID.

Provider Proceedings

The Company is named as a defendant in purported class actions and individual lawsuits arising out of its practices related to the payment of claims for services rendered to its members by health care providers with whom the Company has a contract and with whom the Company does not have a contract (“out-of-network providers”). Among other things, these lawsuits allege that the Company paid too little to its health plan members and/or providers for these services and/or otherwise allege that the Company failed to timely or appropriately pay or administer claims and benefits (including the Company’s post payment audit and collection practices and reductions in payments to providers due to sequestration). Other major health insurers are the subject of similar litigation or have settled similar litigation.

On October 28, 2016, Aetna was named as a respondent in an arbitration proceeding that had commenced as a lawsuit in Florida state court on August 25, 2015. The arbitration proceeding was brought by hospitals owned by HCA Holdings, Inc. with respect to Aetna’s out-of-network benefit payment and administration practices in Florida relating to services and care rendered to members in Aetna’s individual Public Exchange products from 2014 through 2016. Coverage under Aetna’s individual Public Exchange products in Florida was not available after December 31, 2016. On October 15, 2018, the trial arbitrator awarded the claimant hospitals approximately $150 million. Aetna appealed the trial arbitrator’s decision. On March 28, 2019, the appellate arbitrator reduced the award to approximately $86 million. The proceeding has ended. During the three months ended March 31, 2019, the Company recorded the reduction in the required reserve amount for this proceeding as a measurement period adjustment to its Aetna Acquisition accounting and recorded a reduction to goodwill.

The Company also has received subpoenas and/or requests for documents and other information from, and been investigated by, Attorneys General and other state and/or federal regulators, legislators and agencies relating to, and the Company is involved in other litigation regarding, its out-of-network benefit payment and administration practices. It is reasonably possible that others could initiate additional litigation or additional regulatory action against the Company with respect to its out-of-network benefit payment and/or administration practices.

CMS Actions

The United States Centers for Medicare & Medicaid Services (“CMS”) regularly audits the Company’s performance to determine its compliance with CMS’s regulations and its contracts with CMS and to assess the quality of services it provides to Medicare beneficiaries. CMS uses various payment mechanisms to allocate and adjust premium payments to the Company’s and other companies’ Medicare plans by considering the applicable health status of Medicare members as supported by information prepared, maintained and provided by health care providers. The Company collects claim and encounter data from providers and generally relies on providers to appropriately code their submissions to the Company and document their medical records, including the diagnosis data submitted to the Company with claims. CMS pays increased premiums to Medicare Advantage plans and Medicare PDP plans for members who have certain medical conditions identified with specific diagnosis codes. Federal regulators review and audit the providers’ medical records to determine whether those records support the related diagnosis codes that determine the members’ health status and the resulting risk-adjusted premium payments to the Company. In that regard, CMS has instituted risk adjustment data validation (“RADV”) audits of various Medicare Advantage plans, including certain of the Company’s plans, to validate coding practices and supporting medical record documentation maintained by health care providers and the resulting risk adjusted premium payments to the plans. CMS may require the Company to refund premium payments if the Company’s risk adjusted premiums are not properly supported by medical record data. The Office of Inspector General (the “OIG”) also is auditing the Company’s risk adjustment-related data and that of other companies. The Company expects CMS and the OIG to continue these types of audits.

In 2012, CMS revised its audit methodology for RADV audits to determine refunds payable by Medicare Advantage plans for contract year 2011 and forward. Under the revised methodology, among other things, CMS will project the error rate identified in the audit sample of approximately 200 members to all risk adjusted premium payments made under the contract being audited. For contract years prior to 2011, CMS did not project sample error rates to the entire contract. As a result, the revised methodology may increase the Company’s exposure to premium refunds to CMS based on incomplete medical records maintained by providers. Since 2013, CMS has selected certain of the Company’s Medicare Advantage contracts for various contract years for RADV audit. The Company is currently unable to predict which of its Medicare Advantage contracts will be selected for future audit, the amounts of any retroactive refunds of, or prospective adjustments to, Medicare Advantage premium payments made to the Company, the effect of any such refunds or adjustments on the actuarial soundness of the Company’s Medicare Advantage bids, or whether any RADV audit findings would require the Company to change its method of estimating future premium revenue in future bid submissions to CMS or compromise premium assumptions made in the Company’s bids for prior contract years, the current contract year or future contract years. Any premium or fee refunds or adjustments resulting from regulatory audits, whether as a result of RADV, Public Exchange related or other audits by CMS, the OIG, the United States Department of Health and Human Services or otherwise, including audits of the Company’s minimum MLR rebates, methodology and/or reports, could be material and could adversely affect the Company’s operating results, financial condition and/or cash flows.

Medicare CIDs

The Company has received CIDs from the Civil Division of the DOJ in connection with a current investigation of the Company’s patient chart review processes in connection with risk adjustment data submissions under Parts C and D of the Medicare program. The Company has been cooperating with the government and providing documents and information in response to these CIDs.

Tunney Act Proceeding

On October 10, 2018, the Company and Aetna entered into a consent decree with the DOJ that allowed CVS Health’s proposed acquisition of Aetna to proceed, provided Aetna agreed to sell its individual standalone Medicare Part D prescription drug plans. As permitted by the asset preservation stipulation and order dated October 25, 2018, CVS Health completed its acquisition of Aetna on November 28, 2018, and Aetna completed the sale of such plans on November 30, 2018. The consent decree remains subject to the court approval process under the Antitrust Procedures and Penalties Act, which could result in a revision in or delay in receiving approval of the consent decree. The approval process is for the limited purpose of determining whether the consent decree is in the public interest. The Company believes that the consent decree will not have a material impact on the Company’s operating results, cash flows or financial condition.

Shareholder Matters

In February and March 2019, two putative class action complaints were filed by putative plaintiffs against the Company and certain of its current and former officers. Anarkat v. CVS Health Corp., et al., was filed in the U.S. District Court for the Southern District of New York, and Labourers’ Pension Fund of Central and Eastern Canada v. CVS Health Corp., et al., was filed in the Supreme Court of the State of New York, County of New York. 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 May 21, 2015 and February 20, 2019. The Company is defending itself against these claims.

Other Legal and Regulatory Proceedings.

The Company is also a party to other legal proceedings and is subject to government investigations, inquiries and audits and has received and is cooperating with the government in response to CIDs, subpoenas or similar process from various governmental agencies requesting information, all arising in the ordinary course of its businesses. These other legal proceedings include claims of or relating to bad faith, medical malpractice, non-compliance with state and federal regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits, provider network structure (including the use of performance-based networks and termination of provider contracts), rescission of insurance coverage, improper disclosure or use of personal information, anticompetitive practices, general contractual matters, product liability, intellectual property litigation and employment litigation. Some of these other legal proceedings are or are purported to be class actions or derivative claims. The Company is defending itself against the claims brought in these matters.

Awards to the Company and others of certain government contracts, particularly Medicaid contracts and other contracts with government customers in the Company’s Health Care Benefits segment, are subject to increasingly frequent protests by unsuccessful bidders. These protests may result in awards to the Company being reversed, delayed or modified. The loss or delay in implementation of any government contract could adversely affect the Company’s operating results. The Company will continue to defend contract awards it receives.

There also continues to be a heightened level of review and/or audit by regulatory authorities and legislators of, and increased litigation regarding, the Company’s and the rest of the health care and related benefits industry’s business and reporting practices, including premium rate increases, utilization management, development and application of medical policies, complaint, grievance and appeal processing, information privacy, provider network structure (including provider network adequacy, the use of performance-based networks and termination of provider contracts), provider directory accuracy, calculation of minimum medical loss ratios and/or payment of related rebates, delegated arrangements, rescission of insurance coverage, limited benefit health products, student health products, pharmacy benefit management practices (including manufacturers’ rebates, pricing, the use of narrow networks and the placement of drugs in formulary tiers), sales practices, customer service practices, vendor oversight and claim payment practices (including payments to out-of-network providers).

As a leading national health care company, the Company regularly is the subject of government actions of the types described above. These government actions may prevent or delay the Company from implementing planned premium rate increases and may result, and have resulted, in restrictions on the Company’s businesses, changes to or clarifications of the Company’s business practices, retroactive adjustments to premiums, refunds or other payments to members, beneficiaries, states or the federal government, withholding of premium payments to the Company by government agencies, assessments of damages, civil or criminal fines or penalties, or other sanctions, including the possible suspension or loss of licensure and/or suspension or exclusion from participation in government programs.

The Company can give no assurance, however, that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business practices, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; (v) adverse developments in any pending qui tam lawsuit against the Company, whether sealed or unsealed, or in any future qui tam lawsuit that may be filed against the Company; or (vi) adverse developments in pending or future legal proceedings against the Company or affecting one or more of the industries in which the Company competes and/or the health care industry generally.

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

Segment Reporting

The Company has three operating segments, Pharmacy Services, Retail/LTC and Health Care Benefits, as well as a Corporate/Other segment. The Company’s segments maintain separate financial information, and the CODM evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company’s segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Segment financial information for the three months ended March 31, 2018 has been retrospectively adjusted to conform with the current period presentation. See the reconciliation of consolidated operating income (GAAP measure) to adjusted operating income below for further context regarding the items excluded from operating income in determining adjusted operating income. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company’s ability to compare past financial performance with current performance and analyze underlying business performance and trends. Non-GAAP financial measures the Company discloses, such as consolidated adjusted operating income, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP.

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ for further discussion. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes as shown below:

	Three Months Ended March 31, 2018
	Pharmacy			Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services			LTC		Benefits			Other			Eliminations			Totals
Revenues, as previously reported	$	32,220		$	20,432	$	—		$	48		$	(6,957	)	$	45,743
Adjustments	326			—		1,318			—			(1,644		)	—
Revenues, as adjusted	$	32,546		$	20,432	$	1,318		$	48		$	(8,601	)	$	45,743
Cost of products sold (1)	$	29,751		$	14,516	$	—		$	—		$	(6,762	)	$	37,505
Adjustments	1,556			—		—			—			(1,556		)	—
Cost of products sold	$	31,307		$	14,516	$	—		$	—		(8,318		)	$	37,505
Benefit costs (1)	$	1,329		$	—	$	—		$	—		$	—		$	1,329
Adjustments	(1,329		)	—		1,329			—			—			—
Benefit costs	$	—		$	—	$	1,329		$	—		$	—		$	1,329
Operating expenses, as previously reported	$	377		$	4,292	$	—		$	264		$	(20	)	$	4,913
Adjustments	(39		)	—		127			—			(88		)	—
Operating expenses, as adjusted	$	338		$	4,292	$	127		$	264		$	(108	)	$	4,913
Operating income (loss), as previously reported	$	763		$	1,624	$	—		$	(216	)	$	(175	)	$	1,996
Adjustments	138			—		(138		)	—			—			—
Operating income (loss), as adjusted	901			1,624		(138		)	(216		)	(175		)	1,996
Adjustments	86			212		1			(2		)	—			297
Adjusted operating income (loss)	$	987		$	1,836	$	(137	)	$	(218	)	$	(175	)	$	2,293

^{_____________________________________________} 

(1) The total of cost of products sold and benefit costs were previously reported as cost of revenues.

The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals:

	Pharmacy		Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services(1)		LTC		Benefits			Other			Eliminations(2)			Totals
Three Months Ended
March 31, 2019
Revenues from customers	$	33,558	$	21,115	$	17,706		$	25		$	(11,007	)	$	61,397
Net investment income	—		—		164			85			—			249
Total revenues	33,558		21,115		17,870			110			(11,007		)	61,646
Adjusted operating income (loss)	947		1,489		1,562			(231		)	(172		)	3,595
March 31, 2018
Revenues from customers	$	32,546	$	20,432	$	1,316		$	—		$	(8,601	)	$	45,693
Net investment income	—		—		2			48			—			50
Total revenues	32,546		20,432		1,318			48			(8,601		)	45,743
Adjusted operating income (loss)	987		1,836		(137		)	(218		)	(175		)	2,293

^{_____________________________________________} 

(1) Revenues of the Pharmacy Services segment include approximately $3.3 billion of retail co-payments for each of the three-month periods ended March 31, 2019 and 2018.

(2) Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services segment and the Retail/LTC segment for the three months ended March 31, 2018. Effective November 28, 2018, intersegment eliminations also relate to intersegment revenue generating activities that occur between the Health Care Benefits segment and the Pharmacy Services segment and/or the Retail/LTC segment.

The following is a reconciliation of consolidated operating income to adjusted operating income for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31,
In millions	2019		2018
Operating income (GAAP measure)	$	2,690	$	1,996
Amortization of intangible assets (1)	622		210
Acquisition-related transaction and integration costs (2)	148		43
Store rationalization charge (3)	135		—
Loss on divestiture of subsidiary (4)	—		86
Interest income on financing for the Aetna Acquisition (5)	—		(42		)
Adjusted operating income	$	3,595	$	2,293

^{_____________________________________________} 

(1) Intangible assets relate to the Company's acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company's unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company's business operations.

(2) During the three months ended March 31, 2019, acquisition-related integration costs relate to the Aetna Acquisition. During the three months ended March 31, 2018, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment.

(3) During the three months ended March 31, 2019, the store rationalization charge primarily relates to operating lease right-of-use asset impairment charges in connection with the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charge is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment.

(4) During the three months ended March 31, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statement of operations within the Retail/LTC segment.

(5) During the three months ended March 31, 2018, the Company recorded interest income of $42 million on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment.

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Summary of Significant Accounting Policies Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Total cash, cash equivalents, and restricted cash

In millions	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	5,896	$	4,059
Restricted cash (included in other current assets)	6		6
Restricted cash (included in other assets)	266		230
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	6,168	$	4,295

Accounts receivable, net

In millions	March 31, 2019		December 31, 2018
Trade receivables	$	7,158	$	6,896
Vendor and manufacturer receivables	8,901		7,655
Premium receivables	2,582		2,259
Other receivables	868		821
Total accounts receivable, net	$	19,509	$	17,631

Disaggregation of revenue

The following table disaggregates the Company’s revenue by major source in each segment for the three months ended March 31, 2019 and 2018:

	Pharmacy		Retail/		Health Care		Corporate/		Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other		Eliminations			Totals
Three Months Ended March 31, 2019
Major goods/services lines:
Pharmacy	$	33,413	$	16,118	$	—	$	—	$	(11,007	)	$	38,524
Front Store	—		4,799		—		—		—			4,799
Premiums	—		—		16,259		23		—			16,282
Net investment income	—		—		164		85		—			249
Other	145		198		1,447		2		—			1,792
Total	$	33,558	$	21,115	$	17,870	$	110	$	(11,007	)	$	61,646
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,574
Mail choice (2)	11,839
Other	145
Total	$	33,558
Three Months Ended March 31, 2018
Major goods/services lines:
Pharmacy	$	32,406	$	15,500	$	—	$	—	$	(8,601	)	$	39,305
Front Store	—		4,726		—		—		—			4,726
Premiums	—		—		1,306		—		—			1,306
Net investment income	—		—		2		48		—			50
Other	140		206		10		—		—			356
Total	$	32,546	$	20,432	$	1,318	$	48	$	(8,601	)	$	45,743
Pharmacy Services distribution channel:
Pharmacy network (1)	$	21,198
Mail choice (2)	11,208
Other	140
Total	$	32,546

^{_____________________________________________} 

(1) Pharmacy Services pharmacy network is defined as claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, but excluding Maintenance Choice^® activity, which is included within the mail choice category.

(2) Pharmacy Services mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect^® claims picked up at a CVS Pharmacy retail store, as well as prescriptions filled at the Company’s retail pharmacies under the Maintenance Choice program, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS Pharmacy retail store for the same price as mail order.

Contracts with customers, assets and liabilities

The following table provides information about receivables and contract liabilities from contracts with customers:

In millions	March 31, 2019		December 31, 2018
Trade receivables (included in accounts receivable, net)	$	7,158	$	6,896
Contract liabilities (included in accrued expenses)	75		67

During the three months endedMarch 31, 2019, the contract liabilities balance includes increases related to customers’ earnings in ExtraBucks Rewards or issuances of Company gift cards and decreases for revenues recognized during the period as a result of the redemption of ExtraBucks Rewards or Company gift cards and breakage of Company gift cards. Below is a summary of such changes:

In millions
Balance at December 31, 2018	$	67
Loyalty program earnings and gift card issuances	90
Redemption and breakage	(82		)
Balance at March 31, 2019	$	75

Impact of new lease standard on balance sheet line items

Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2019:

	Impact of Change in Accounting Policy
	As Reported					Adjusted
In millions	December 31, 2018		Adjustments			January 1, 2019
Condensed Consolidated Balance Sheets:
Other current assets	$	4,581	$	(48	)	$	4,533
Total current assets	45,243		(48		)	45,195
Property and equipment, net	11,349		11			11,360
Operating lease right-of-use assets	—		20,987			20,987
Intangible assets, net	36,524		(217		)	36,307
Other assets	5,046		(521		)	4,525
Total assets	196,456		20,212			216,668
Accrued expenses	10,711		(52		)	10,659
Current portion of operating lease liabilities	—		1,803			1,803
Current portion of long-term debt	1,265		2			1,267
Total current liabilities	44,009		1,753			45,762
Long-term operating lease liabilities	—		18,832			18,832
Long-term debt	71,444		(96		)	71,348
Deferred income taxes	7,677		63			7,740
Other long-term liabilities	2,780		(518		)	2,262
Total liabilities	137,913		20,034			157,947
Retained earnings	40,911		178			41,089
Total CVS Health shareholders’ equity	58,225		178			58,403
Total shareholders’ equity	58,543		178			58,721

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Estimated fair values of the assets acquired and liabilities assumed

In millions
Cash and cash equivalents	$	6,565
Accounts receivable	4,089
Other current assets	3,896
Investments (current and long-term)	17,984
Goodwill	47,082
Intangible assets	23,086
Other long-term assets	8,249
Total assets acquired	110,951
Health care costs payable	5,293
Other current liabilities	9,982
Debt (current and long-term)	8,098
Deferred income taxes	4,414
Other long-term liabilities	13,078
Total liabilities assumed	40,865
Noncontrolling interests	320
Total consideration transferred	$	69,766

Unaudited pro forma financial information

In millions, except per share amounts
Total revenues	$	59,093
Net income attributable to CVS Health	1,807
Net income per share attributable to CVS Health:
Basic	$	1.40
Diluted	$	1.39

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Investments (Tables)

3 Months Ended

Mar. 31, 2019

Investments [Abstract]

Total investments

Total investments at March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019						December 31, 2018
In millions	Current		Long-term		Total		Current		Long-term		Total
Debt securities available for sale	$	2,286	$	13,611	$	15,897	$	2,359	$	12,896	$	15,255
Mortgage loans	123		1,215		1,338		145		1,216		1,361
Other investments	17		1,584		1,601		18		1,620		1,638
Total investments	$	2,426	$	16,410	$	18,836	$	2,522	$	15,732	$	18,254

Debt and equity securities available for sale

Debt securities available for sale at March 31, 2019 and December 31, 2018 were as follows:

In millions	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2019
Debt securities:
U.S. government securities	$	1,704	$	40	$	—		$	1,744
States, municipalities and political subdivisions	2,246		71		—			2,317
U.S. corporate securities	6,777		288		(1		)	7,064
Foreign securities	2,243		110		—			2,353
Residential mortgage-backed securities	577		18		—			595
Commercial mortgage-backed securities	608		29		—			637
Other asset-backed securities	1,148		8		(7		)	1,149
Redeemable preferred securities	32		6		—			38
Total debt securities (1)	$	15,335	$	570	$	(8	)	$	15,897
December 31, 2018
Debt securities:
U.S. government securities	$	1,662	$	26	$	—		$	1,688
States, municipalities and political subdivisions	2,370		30		(1		)	2,399
U.S. corporate securities	6,444		61		(16		)	6,489
Foreign securities	2,355		31		(3		)	2,383
Residential mortgage-backed securities	567		10		—			577
Commercial mortgage-backed securities	594		11		—			605
Other asset-backed securities	1,097		3		(15		)	1,085
Redeemable preferred securities	30		—		(1		)	29
Total debt securities (1)	$	15,119	$	172	$	(36	)	$	15,255

^{_____________________________________________} 

(1) Investment risks associated with the Company’s experience-rated products generally do not impact the Company’s consolidated operating results. At March 31, 2019, debt securities with a fair value of $939 million, gross unrealized capital gains of $45 million and no gross unrealized capital losses and at December 31, 2018, debt securities with a fair value of $916 million, gross unrealized capital gains of $12 million and gross unrealized capital losses of $2 million were included in total debt securities, but support experience-rated products. Changes in net unrealized capital gains (losses) on these securities are not reflected in accumulated other comprehensive income.

Fair value of debt securities by contractual maturity

The fair value of debt securities at March 31, 2019 is shown below by contractual maturity. Actual maturities may differ from contractual maturities because securities may be restructured, called or prepaid, or the Company intends to sell a security prior to maturity.

In millions	Amortized Cost		Fair Value
Due to mature:
Less than one year	$	990	$	993
One year through five years	5,511		5,630
After five years through ten years	2,991		3,125
Greater than ten years	3,510		3,768
Residential mortgage-backed securities	577		595
Commercial mortgage-backed securities	608		637
Other asset-backed securities	1,148		1,149
Total	$	15,335	$	15,897

Debt and Equity Securities in an Unrealized Capital Loss Position

Summarized below are the debt securities the Company held at March 31, 2019 and December 31, 2018 that were in an unrealized capital loss position:

In millions, except number of securities	Number of Securities	Fair Value		Unrealized Losses
March 31, 2019
Debt securities:
U.S. government securities	12	$	30	$	—
States, municipalities and political subdivisions	26	39		—
U.S. corporate securities	70	94		1
Foreign securities	39	47		—
Residential mortgage-backed securities	23	—		—
Commercial mortgage-backed securities	1	2		—
Other asset-backed securities	487	486		7
Redeemable preferred securities	1	6		—
Total debt securities	659	$	704	$	8
December 31, 2018
Debt securities:
U.S. government securities	8	$	26	$	—
States, municipalities and political subdivisions	54	86		1
U.S. corporate securities	1,399	1,431		16
Foreign securities	243	314		3
Residential mortgage-backed securities	45	1		—
Other asset-backed securities	516	528		15
Redeemable preferred securities	14	23		1
Total debt securities	2,279	$	2,409	$	36

Maturity dates for debt securities

Since Aetna’s investment portfolio was measured at fair value as of the Aetna Acquisition Date, each of the securities in the table above were in an unrealized loss position for less than 12 months. The Company reviewed the securities in the tables above and concluded that these are performing assets generating investment income to support the needs of the Company’s business. In performing this review, the Company considered factors such as the quality of the investment security based on research performed by the Company’s internal credit analysts and external rating agencies and the prospects of realizing the carrying value of the security based on the investment’s current prospects for recovery. As of March 31, 2019, the Company did not intend to sell these securities, and did not believe it was more likely than not that it would be required to sell these securities prior to anticipated recovery of their amortized cost basis.

The maturity dates for debt securities in an unrealized capital loss position at March 31, 2019 were as follows:

	Supporting experience-rated products				Supporting remaining products				Total
In millions	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Due to mature:
Less than one year	$	1	$	—	$	20	$	—	$	21	$	—
One year through five years	—		—		43		1		43		1
After five years through ten years	6		—		82		—		88		—
Greater than ten years	4		—		60		—		64		—
Residential mortgage-backed securities	—		—		—		—		—		—
Commercial mortgage-backed securities	—		—		2		—		2		—
Other asset-backed securities	—		—		486		7		486		7
Total	$	11	$	—	$	693	$	8	$	704	$	8

Activity in mortgage loan portfolio

The Company’s mortgage loans are collateralized by commercial real estate. The Company did not have any mortgage loans during the three months ended March 31, 2018. During the three months ended March 31, 2019, the Company had the following activity in its mortgage loan portfolio:

In millions
New mortgage loans	$	41
Mortgage loans fully repaid	52
Mortgage loans foreclosed	—

Mortgage loan internal credit rating

Based upon the most recent assessments at March 31, 2019 and December 31, 2018, the Company’s mortgage loans were given the following credit quality indicators:

In millions, except credit ratings indicator	March 31, 2019		December 31, 2018
1	$	41	$	42
2 to 4	1,283		1,301
5 and 6	14		18
7	—		—
Total	$	1,338	$	1,361

Net Investment Income

Sources of net investment income for the three months ended March 31, 2019 and 2018 were as follows:

	Three Months Ended March 31,
In millions	2019			2018
Debt securities	$	156		$	50
Mortgage loans	17			—
Other investments	26			—
Gross investment income	199			50
Investment expenses	(9		)	—
Net investment income (excluding net realized capital gains or losses)	190			50
Net realized capital gains (1)	59			—
Net investment income (2)	$	249		$	50

^{_____________________________________________} 

(1) Other-than-temporary impairment (“OTTI”) losses on debt securities recognized in the unaudited condensed consolidated statements of operations were $7 million for the three months ended March 31, 2019. There were no OTTI losses on debt securities for the three months ended March 31, 2018.

(2) Net investment income includes $11 million for the three months ended March 31, 2019 related to investments supporting experience-rated products. The Company had no investments supporting experience-rated products during the three months ended March 31, 2018.

Proceeds and related gross realized capital gains and losses from the sale of debt securities

The Company did not have any material proceeds from the sale of available for sale debt securities or related gross realized capital gains or losses for the three months ended March 31, 2018. Excluding amounts related to experience-rated products, proceeds from the sale of available for sale debt securities and the related gross realized capital gains and losses for the three months endedMarch 31, 2019 were as follows:

In millions
Proceeds from sales	$	1,489
Gross realized capital gains	35
Gross realized capital losses	2

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Financial assets measured at fair value on a recurring basis on the condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 were as follows:

In millions	Level 1		Level 2		Level 3		Total
March 31, 2019
Debt securities:
U.S. government securities	$	1,665	$	79	$	—	$	1,744
States, municipalities and political subdivisions	—		2,317		—		2,317
U.S. corporate securities	—		7,006		58		7,064
Foreign securities	—		2,350		3		2,353
Residential mortgage-backed securities	—		595		—		595
Commercial mortgage-backed securities	—		637		—		637
Other asset-backed securities	—		1,149		—		1,149
Redeemable preferred securities	—		27		11		38
Total debt securities	1,665		14,160		72		15,897
Equity securities	9		—		71		80
Total	$	1,674	$	14,160	$	143	$	15,977
December 31, 2018
Debt securities:
U.S. government securities	$	1,597	$	91	$	—	$	1,688
States, municipalities and political subdivisions	—		2,399		—		2,399
U.S. corporate securities	—		6,422		67		6,489
Foreign securities	—		2,380		3		2,383
Residential mortgage-backed securities	—		577		—		577
Commercial mortgage-backed securities	—		605		—		605
Other asset-backed securities	—		1,085		—		1,085
Redeemable preferred securities	—		22		7		29
Total debt securities	1,597		13,581		77		15,255
Equity securities	19		—		54		73
Total	$	1,616	$	13,581	$	131	$	15,328

Fair Value, by Balance Sheet Grouping [Table Text Block]

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 March 31, 2019 and December 31, 2018 were as follows:

	Carrying Value		Estimated Fair Value
In millions			Level 1		Level 2		Level 3		Total
March 31, 2019
Assets:
Mortgage loans	$	1,338	$	—	$	—	$	1,350	$	1,350
Equity securities (1)	135		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	377		—		—		364		364
Long-term debt	71,781		72,376		—		—		72,376
December 31, 2018
Assets:
Mortgage loans	$	1,361	$	—	$	—	$	1,366	$	1,366
Equity securities (1)	140		N/A		N/A		N/A		N/A
Liabilities:
Investment contract liabilities:
With a fixed maturity	5		—		—		5		5
Without a fixed maturity	382		—		—		357		357
Long-term debt	72,709		71,252		—		—		71,252

^{_____________________________________________} 

(1) It was not practical to estimate the fair value of these cost-method investments as it represents shares of unlisted companies.

Schedule of Fair Value of Separate Accounts by Major Category of Investment [Table Text Block]

Separate Accounts financial assets as of March 31, 2019 and December 31, 2018 were as follows:

	March 31, 2019								December 31, 2018
In millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Debt securities	$	983	$	2,445	$	—	$	3,428	$	782	$	2,500	$	4	$	3,286
Equity securities	—		3		—		3		—		3		—		3
Common/collective trusts	—		415		—		415		—		404		—		404
Total (1)	$	983	$	2,863	$	—	$	3,846	$	782	$	2,907	$	4	$	3,693

^{_____________________________________________} 

(1) Excludes $228 million and $191 million of cash and cash equivalents and accounts receivable at March 31, 2019 and December 31, 2018, respectively.

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Lease, Cost [Table Text Block]

In millions
Operating lease cost	$	682
Finance lease cost:
Amortization of right-of-use assets	9
Interest on lease liabilities	10
Total finance lease costs	19
Short-term lease costs	6
Variable lease costs	142
Less: sublease income	12
Net lease cost	$	837

Supplemental cash flow information related to leases for the three months endedMarch 31, 2019 is as follows:

In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	670
Operating cash flows paid for interest portion of finance leases	10
Financing cash flows paid for principal portion of finance leases	7
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	556
Finance leases	12

Lessee, Lease [Table Text Block]

In millions, except lease term and discount rate
Operating leases:
Operating lease right-of-use assets	$	20,992
Current portion of operating lease liabilities	$	1,803
Long-term operating lease liabilities	18,961
Total operating lease liabilities	$	20,764
Finance leases: (1)
Property and equipment, net	$	509
Current portion of long-term debt	$	25
Long-term debt	535
Total finance lease liabilities	$	560
Weighted average remaining lease term
Operating leases	14.2
Finance leases	20.3
Weighted average discount rate
Operating leases	4.7		%
Finance leases	7.5		%

Lease Liability Maturity [Table Text Block]

	Finance			Operating
In millions	Leases			Leases (1)			Total
2019 (remaining nine months)	$	50		$	2,035		$	2,085
2020	65			2,612			2,677
2021	62			2,477			2,539
2022	58			2,316			2,374
2023	56			2,203			2,259
Thereafter	786			16,588			17,374
Total lease payments (2)	1,077			28,231			29,308
Less: imputed interest	(517		)	(7,467		)	(7,984		)
Total lease liabilities	$	560		$	20,764		$	21,324

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Health Care Costs Payable (Tables)

3 Months Ended

Mar. 31, 2019

Health Care Benefits Segment [Member]

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

The following table shows the components of the change in health care costs payable during the three months ended March 31, 2019:

In millions
Health care costs payable, beginning of the period	$	6,147
Less: Reinsurance recoverables	4
Health care costs payable, beginning of the period, net	6,143
Add: Components of incurred health care costs
Current year	13,804
Prior years	(446		)
Total incurred health care costs (1)	13,358
Less: Claims paid
Current year	8,004
Prior years	4,812
Total claims paid	12,816
Add: Premium deficiency reserve	11
Health care costs payable, end of period, net	6,696
Add: Reinsurance recoverables	5
Health care costs payable, end of period	$	6,701

^{_____________________________________________} 

(1) Total incurred health care costs during the three months ended March 31, 2019 in the table above exclude (i) $11 million related to a premium deficiency reserve for the 2019 coverage year related to the Company’s Medicaid products, (ii) $10 million of benefit costs recorded in the Health Care Benefits segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet and (iii) $80 million of benefit costs recorded in the Corporate/Other segment that are included in other insurance liabilities on the unaudited condensed consolidated balance sheet.

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Other Comprehensive (Loss) Income (Tables)

3 Months Ended

Mar. 31, 2019

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

Shareholders’ equity included the following activity in accumulated other comprehensive income for the three months endedMarch 31, 2019 and 2018:

	Three Months Ended March 31,
In millions	2019			2018
Net unrealized investment gains (losses):
Beginning of period balance	$	97		$	—
Other comprehensive income before reclassifications ($410 and $0 pretax)	348			—
Amounts reclassified from accumulated other comprehensive income ($(19) and $0 pretax)(1)	(14		)	—
Other comprehensive income	334			—
End of period balance	431			—
Foreign currency translation adjustments:
Beginning of period balance	(158		)	(129		)
Other comprehensive income	1			1
Other comprehensive income	1			1
End of period balance	(157		)	(128		)
Net cash flow hedges:
Beginning of period balance	312			(15		)
Adoption of new accounting standard (2)	—			(3		)
Other comprehensive income before reclassifications ($0 and $464 pretax)	—			344
Amounts reclassified from accumulated other comprehensive income (loss) ($(5) and $(1) pretax)(3)	(4		)	(1		)
Other comprehensive income (loss)	(4		)	343
End of period balance	308			325
Pension and OPEB plans:
Beginning of period balance	(149		)	(21		)
Adoption of new accounting standard (2)	—			(4		)
Other comprehensive income	—			—
End of period balance	(149		)	(25		)
Total beginning of period accumulated other comprehensive income (loss)	102			(165		)
Adoption of new accounting standard (2)	—			(7		)
Total other comprehensive income	331			344
Total end of period accumulated other comprehensive income	$	433		$	172

^{_____________________________________________} 

(1) Amounts reclassified from accumulated other comprehensive income for specifically identified debt securities are included in net investment income within the unaudited condensed consolidated statements of operations.

(2) Reflects the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income during the first quarter of 2018.

(3) Amounts reclassified from accumulated other comprehensive loss for specifically identified cash flow hedges are included within interest expense in the unaudited condensed consolidated statements of operations. The Company expects to reclassify approximately $18 million, net of tax, in gains associated with its cash flow hedges into net income within the next 12 months.

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Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2019

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 March 31,
In millions, except per share amounts	2019			2018
Numerator for earnings per share calculation:
Net income	$	1,427		$	998
Income allocated to participating securities	(2		)	(2		)
Net income attributable to noncontrolling interest	(6		)	—
Net income attributable to CVS Health	$	1,419		$	996
Denominator for earnings per share calculation:
Weighted average shares, basic	1,298			1,016
Effect of dilutive securities	4			3
Weighted average shares, diluted	1,302			1,019
Earnings per share:
Basic	$	1.09		$	0.98
Diluted	$	1.09		$	0.98

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Earnings per share is computed using the two-class method. Stock appreciation rights and options to purchase 15.3 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2019 because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. For the same reason, options to purchase 13.2 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share, for the three months endedMarch 31, 2018.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. See Note 1 ‘‘Significant Accounting Policies’’ for further discussion. Segment financial information for the three months ended March 31, 2018, has been retrospectively adjusted to reflect these changes as shown below:

	Three Months Ended March 31, 2018
	Pharmacy			Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services			LTC		Benefits			Other			Eliminations			Totals
Revenues, as previously reported	$	32,220		$	20,432	$	—		$	48		$	(6,957	)	$	45,743
Adjustments	326			—		1,318			—			(1,644		)	—
Revenues, as adjusted	$	32,546		$	20,432	$	1,318		$	48		$	(8,601	)	$	45,743
Cost of products sold (1)	$	29,751		$	14,516	$	—		$	—		$	(6,762	)	$	37,505
Adjustments	1,556			—		—			—			(1,556		)	—
Cost of products sold	$	31,307		$	14,516	$	—		$	—		(8,318		)	$	37,505
Benefit costs (1)	$	1,329		$	—	$	—		$	—		$	—		$	1,329
Adjustments	(1,329		)	—		1,329			—			—			—
Benefit costs	$	—		$	—	$	1,329		$	—		$	—		$	1,329
Operating expenses, as previously reported	$	377		$	4,292	$	—		$	264		$	(20	)	$	4,913
Adjustments	(39		)	—		127			—			(88		)	—
Operating expenses, as adjusted	$	338		$	4,292	$	127		$	264		$	(108	)	$	4,913
Operating income (loss), as previously reported	$	763		$	1,624	$	—		$	(216	)	$	(175	)	$	1,996
Adjustments	138			—		(138		)	—			—			—
Operating income (loss), as adjusted	901			1,624		(138		)	(216		)	(175		)	1,996
Adjustments	86			212		1			(2		)	—			297
Adjusted operating income (loss)	$	987		$	1,836	$	(137	)	$	(218	)	$	(175	)	$	2,293

^{_____________________________________________} 

(1) The total of cost of products sold and benefit costs were previously reported as cost of revenues.

Summarized financial information of segments

The following is a reconciliation of financial measures of the Company’s segments to the consolidated totals:

	Pharmacy		Retail/		Health Care			Corporate/			Intersegment			Consolidated
In millions	Services(1)		LTC		Benefits			Other			Eliminations(2)			Totals
Three Months Ended
March 31, 2019
Revenues from customers	$	33,558	$	21,115	$	17,706		$	25		$	(11,007	)	$	61,397
Net investment income	—		—		164			85			—			249
Total revenues	33,558		21,115		17,870			110			(11,007		)	61,646
Adjusted operating income (loss)	947		1,489		1,562			(231		)	(172		)	3,595
March 31, 2018
Revenues from customers	$	32,546	$	20,432	$	1,316		$	—		$	(8,601	)	$	45,693
Net investment income	—		—		2			48			—			50
Total revenues	32,546		20,432		1,318			48			(8,601		)	45,743
Adjusted operating income (loss)	987		1,836		(137		)	(218		)	(175		)	2,293

^{_____________________________________________} 

(1) Revenues of the Pharmacy Services segment include approximately $3.3 billion of retail co-payments for each of the three-month periods ended March 31, 2019 and 2018.

(2)

Reconciliation of Operating Earnings to Net Income

The following is a reconciliation of consolidated operating income to adjusted operating income for the three months ended March 31, 2019 and 2018:

	Three Months Ended
	March 31,
In millions	2019		2018
Operating income (GAAP measure)	$	2,690	$	1,996
Amortization of intangible assets (1)	622		210
Acquisition-related transaction and integration costs (2)	148		43
Store rationalization charge (3)	135		—
Loss on divestiture of subsidiary (4)	—		86
Interest income on financing for the Aetna Acquisition (5)	—		(42		)
Adjusted operating income	$	3,595	$	2,293

^{_____________________________________________} 

(1) Intangible assets relate to the Company's acquisition activities and are amortized over their useful lives. The amortization of intangible assets is reflected in the Company's unaudited GAAP condensed consolidated statements of operations in operating expenses within each segment. The amortization of intangible assets is not directly related to the core performance of the Company's business operations.

(2) During the three months ended March 31, 2019, acquisition-related integration costs relate to the Aetna Acquisition. During the three months ended March 31, 2018, acquisition-related transaction and integration costs relate to the acquisitions of Aetna and Omnicare, Inc. The acquisition-related transaction and integration costs are reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses primarily within the Corporate/Other segment.

(3) During the three months ended March 31, 2019, the store rationalization charge primarily relates to operating lease right-of-use asset impairment charges in connection with the planned closure of 46 underperforming retail pharmacy stores in the second quarter of 2019. The store rationalization charge is reflected in the Company’s unaudited GAAP condensed consolidated statements of operations in operating expenses within the Retail/LTC segment.

(4) During the three months ended March 31, 2018, the loss on divestiture of subsidiary represents the pre-tax loss on the sale of the Company’s RxCrossroads subsidiary for $725 million and is reflected in operating expenses in the Company’s unaudited GAAP condensed consolidated statement of operations within the Retail/LTC segment.

(5) During the three months ended March 31, 2018, the Company recorded interest income of $42 million on the proceeds of its unsecured senior notes issued in March 2018 to partially fund the Aetna Acquisition. All amounts are for the periods prior to the close of the Aetna Acquisition, which occurred on November 28, 2018, and were recorded within the Corporate/Other segment.

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Summary of Significant Accounting Policies Significant Accounting Policies - Narrative (Details) person in Millions, patient in Millions, Plans in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) person Plans building clinic patient Segment state	Mar. 31, 2018 USD ($)
Accounting Policies - Narrative [Abstract]
Number of Stores | building	9,900
Number of Walk In Medical Clinics | clinic	1,100
Number of Pharmacy Plan Members | Plans	94
Number of Patients Served per Year | patient	1
Number of People Served through Health Insurance Products and Related Services | person	38
Number of Reportable Segments | Segment	4
Related Party Transaction, Expenses from Transactions with Related Party	$ 10	$ 22
Number of States in which Entity Operates | state	4
Related Party Transaction, Other Revenues from Transactions with Related Party	$ 25	$ 35

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Summary of Significant Accounting Policies Cash and Cash Equivalents, Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Cash and cash equivalents	$ 5,896	$ 4,059
Restricted cash (included in other current assets)	6	6
Restricted cash (included in other assets)	266	230
Total cash, cash equivalents and restricted cash in the statements of cash flows	$ 6,168	$ 4,295	$ 42,264	$ 1,900

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Summary of Significant Accounting Policies Accounts Receivable (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Trade receivables	$ 7,158	$ 6,896
Vendor and manufacturer receivables	8,901	7,655
Premiums receivables	2,582	2,259
Other receivables	868	821
Total accounts receivable, net	$ 19,509	$ 17,631

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Summary of Significant Accounting Policies Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 61,397	$ 45,693
Net investment income	249	50
Total revenues	61,646	45,743
Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	33,558	32,546
Net investment income	0	0
Total revenues	33,558	32,546
Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Net investment income	0	0
Total revenues	21,115	20,432
Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	17,870	1,318
Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Total revenues	110	48
Pharmacy
Disaggregation of Revenue [Line Items]
Revenues	38,524	39,305
Pharmacy | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	33,413	32,406
Pharmacy | Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	16,118	15,500
Pharmacy | Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Pharmacy | Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Front Store
Disaggregation of Revenue [Line Items]
Revenues	4,799	4,726
Front Store | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Front Store | Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,799	4,726
Front Store | Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Front Store | Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Premiums
Disaggregation of Revenue [Line Items]
Revenues	16,282	1,306
Premiums | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Premiums | Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0
Premiums | Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	16,259	1,306
Premiums | Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	23	0
Other
Disaggregation of Revenue [Line Items]
Revenues	1,792	356
Other | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	145	140
Other | Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	198	206
Other | Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,447	10
Other | Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	2	0
Pharmacy network | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	21,574	21,198
Mail choice | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	11,839	11,208
Other | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	145	140
Operating Segments [Member] | Pharmacy Services Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	33,558	32,546
Total revenues	33,558	32,546
Operating Segments [Member] | Retail Long-Term Care Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	21,115	20,432
Total revenues	21,115	20,432
Operating Segments [Member] | Health Care Benefits Segment [Member]
Disaggregation of Revenue [Line Items]
Revenues	17,706	1,316
Net investment income	164	2
Total revenues	17,870	1,318
Operating Segments [Member] | Corporate / Other [Member]
Disaggregation of Revenue [Line Items]
Revenues	25	0
Net investment income	85	48
Total revenues	110	48
Intersegment Eliminations [Member]
Disaggregation of Revenue [Line Items]
Revenues	(11,007)	(8,601)
Net investment income	0	0
Total revenues	(11,007)	(8,601)
Intersegment Eliminations [Member] | Front Store
Disaggregation of Revenue [Line Items]
Revenues	0	0
Intersegment Eliminations [Member] | Premiums
Disaggregation of Revenue [Line Items]
Revenues	0	0
Intersegment Eliminations [Member] | Other
Disaggregation of Revenue [Line Items]
Revenues	$ 0	$ 0

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Summary of Significant Accounting Policies Contract Balances (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Trade receivables		$ 7,158	$ 6,896
Contract liabilities (included in accrued expenses)	$ 67	$ 75	$ 67
Change in Contract with Customer, Liability [Abstract]
Contract liabilities (included in accrued expenses) beginning balance	67
Loyalty program earnings and gift card issuances	90
Redemption and breakage	(82)
Contract liabilities (included in accrued expenses) ending balance	$ 75

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Summary of Significant Accounting Policies Impact of New Lease Standard On Balance Sheet Line Items (Details) - USD ($) $ in Millions	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other current assets	$ 4,578	$ 4,533	$ 4,581
Total current assets	47,857	45,195	45,243
Property and equipment, net	11,348	11,360	11,349
Operating lease right-of-use assets	20,992	20,987	0
Intangible assets, net	35,147	36,307	36,524
Other assets	4,865	4,525	5,046
Total assets	219,768	216,668	196,456
Accrued expenses	10,443	10,659	10,711
Current portion of operating lease liabilities	1,803	1,803	0
Current portion of long-term debt	3,893	1,267	1,265
Total current liabilities	50,631	45,762	44,009
Long-term operating lease liabilities	18,961	18,832	0
Long-term debt	67,888	71,348	71,444
Deferred income taxes	7,540	7,740	7,677
Other long-term liabilities	2,616	2,262	2,780
Total liabilities	159,762	157,947	137,913
Retained earnings	41,859	41,089	40,911
Total CVS health shareholders' equity	59,686	58,403	58,225
Total shareholders' equity	$ 60,006	58,721	$ 58,543	$ (38,677)	$ (37,695)
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other current assets		(48)
Total current assets		(48)
Property and equipment, net		11
Operating lease right-of-use assets		20,987
Intangible assets, net		(217)
Other assets		(521)
Total assets		20,212
Accrued expenses		(52)
Current portion of operating lease liabilities		1,803
Current portion of long-term debt		2
Total current liabilities		1,753
Long-term operating lease liabilities		18,832
Long-term debt		(96)
Deferred income taxes		63
Other long-term liabilities		(518)
Total liabilities		20,034
Retained Earnings (Accumulated Deficit), Pre-Tax		241
Total CVS health shareholders' equity		178
Total shareholders' equity		$ 178

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Acquisitions (Details) $ / shares in Units, $ in Billions	Nov. 29, 2018 USD ($)	Mar. 31, 2019 building clinic	Nov. 28, 2018 USD ($) $ / shares
Business Acquisition [Line Items]
Number of Stores | building		9,900
Number of Walk In Medical Clinics | clinic		1,100
Aetna Inc. [Member]
Business Acquisition [Line Items]
Business Combination, Per Share Exchange Ratio | $ / shares			$ 0.8378
Business Combination, Acquisition Value Per Share Acquired | $ / shares			212
Business Combination, Consideration Transferred | $	$ 70
Business Acquisition, Share Price | $ / shares			$ 145.00
Business Combination Acquisition Assigned Value Of Acquiree | $			$ 78
Long-term Debt | $			$ 45

XML

Acquisitions Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018	Nov. 28, 2018
Fair Value of Assets Acquired and Liabilities Assumed
Goodwill	$ 79,075	$ 78,678
Aetna Inc. [Member]
Fair Value of Assets Acquired and Liabilities Assumed
Cash and cash equivalents			$ 6,565
Accounts Receivable			4,089
Other current assets			3,896
Investments (current and long-term)			17,984
Goodwill			47,082
Intangible assets			23,086
Other long-term assets			8,249
Total assets acquired			110,951
Health care costs payable			5,293
Other current liabilities			9,982
Debt (current and long-term)			8,098
Deferred income taxes			4,414
Other long-term liabilities			13,078
Total liabilities assumed			40,865
Noncontrolling interests			320
Total consideration transferred			$ 69,766

XML

Acquisitions Pro Forma Financials (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares
Pro Forma Financials [Abstract]
Total revenues | $	$ 59,093
Net Income attributable to CVS Health | $	$ 1,807
Net income per share attributable to CVS Health
Basic | $ / shares	$ 1.40
Diluted | $ / shares	$ 1.39

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Investments (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Total Investments [Line Items]
Current investments	$ 2,426	$ 2,522
Long-term investments	16,410	15,732
Total investments	18,836	18,254
Debt And Equity Securities Available For Sale [Member]
Total Investments [Line Items]
Current investments	2,286	2,359
Long-term investments	13,611	12,896
Total investments	15,897	15,255
Mortgage Loans [Member]
Total Investments [Line Items]
Current investments	123	145
Long-term investments	1,215	1,216
Total investments	1,338	1,361
Other Investments [Member]
Total Investments [Line Items]
Current investments	17	18
Long-term investments	1,584	1,620
Total investments	$ 1,601	$ 1,638

XML

Investments - Debt and Equity Securities (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Gross Unrealized Gain	$ 45	$ 12
Available-for-sale Securities, Gross Unrealized Loss	0	(2)
Available-for-sale Securities, Fair Value	939	916
Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	15,335	15,119
Available-for-sale Securities, Gross Unrealized Gain	570	172
Available-for-sale Securities, Gross Unrealized Loss	(8)	(36)
Available-for-sale Securities, Fair Value	15,897	15,255
US Government Agencies Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,704	1,662
Available-for-sale Securities, Gross Unrealized Gain	40	26
Available-for-sale Securities, Gross Unrealized Loss	0	0
Available-for-sale Securities, Fair Value	1,744	1,688
US States and Political Subdivisions Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,246	2,370
Available-for-sale Securities, Gross Unrealized Gain	71	30
Available-for-sale Securities, Gross Unrealized Loss	0	(1)
Available-for-sale Securities, Fair Value	2,317	2,399
Debt Security, Corporate, US [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	6,777	6,444
Available-for-sale Securities, Gross Unrealized Gain	288	61
Available-for-sale Securities, Gross Unrealized Loss	(1)	(16)
Available-for-sale Securities, Fair Value	7,064	6,489
Debt Security, Corporate, Non-US [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,243	2,355
Available-for-sale Securities, Gross Unrealized Gain	110	31
Available-for-sale Securities, Gross Unrealized Loss	0	(3)
Available-for-sale Securities, Fair Value	2,353	2,383
Residential Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	577	567
Available-for-sale Securities, Gross Unrealized Gain	18	10
Available-for-sale Securities, Gross Unrealized Loss	0	0
Available-for-sale Securities, Fair Value	595	577
Commercial Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	608	594
Available-for-sale Securities, Gross Unrealized Gain	29	11
Available-for-sale Securities, Gross Unrealized Loss	0	0
Available-for-sale Securities, Fair Value	637	605
Other Asset-Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,148	1,097
Available-for-sale Securities, Gross Unrealized Gain	8	3
Available-for-sale Securities, Gross Unrealized Loss	(7)	(15)
Available-for-sale Securities, Fair Value	1,149	1,085
Redeemable Preferred Stock [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Amortized Cost Basis	32	30
Available-for-sale Securities, Gross Unrealized Gain	6	0
Available-for-sale Securities, Gross Unrealized Loss	0	(1)
Available-for-sale Securities, Fair Value	$ 38	$ 29

XML

Investments - Debt Securities by Maturity (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, within One Year, Amortized Cost	$ 990
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after One Through Five Years, Amortized Cost	5,511
Debt Securities, Available-for-sale, Maturity, Allocated and Single Maturity Date, after Five Through Ten Years, Amortized Cost	2,991
Debt Securities, Available-for-sale, Allocated and Single Maturity Date, Maturity, after 10 Years, Amortized Cost	3,510
Debt Securities, Available-for-sale, Amortized Cost	15,335
Available-for-sale Securities With Established Maturities [Member]
Debt Securities, Available-for-sale [Line Items]
Due To Mature Less Than One Year	993
Due to mature one year through five years	5,630
Due to mature after five years through ten years	3,125
Due to mature greater than ten years	3,768
Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	704	$ 2,409
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	8	36
Available-for-sale Securities, Fair Value	15,897	15,255
Residential Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	0
Available-for-sale Securities, Fair Value	595	577
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Amortized Cost	577
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value	595
Commercial Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Available-for-sale Securities, Fair Value	637	605
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Amortized Cost	608
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value	637
Other Asset-Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	486	528
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	7	15
Available-for-sale Securities, Fair Value	1,149	1,085
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Amortized Cost	1,148
Debt Securities, Available-for-sale, Maturity, without Single Maturity Date, Fair Value	1,149
Other Asset-Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	486
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	7
Commercial Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Residential Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Maturing in Less than one Year [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	21
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Maturing in One Through Five Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	43
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1
Maturing After Five Years Through Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	88
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Maturing in Greater Than Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	64
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Fair Value	939	$ 916
Supporting Experience Rated Products [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	11
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Other Asset-Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Commercial Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Residential Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Maturing in Less than one Year [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Maturing in One Through Five Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Maturing After Five Years Through Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	6
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Experience Rated Products [Member] | Maturing in Greater Than Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	4
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Remaining Products [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	693
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	8
Supporting Remaining Products [Member] | Other Asset-Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	486
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	7
Supporting Remaining Products [Member] | Commercial Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Remaining Products [Member] | Residential Mortgage Backed Securities [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Remaining Products [Member] | Maturing in Less than one Year [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	20
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Remaining Products [Member] | Maturing in One Through Five Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	43
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1
Supporting Remaining Products [Member] | Maturing After Five Years Through Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	82
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Supporting Remaining Products [Member] | Maturing in Greater Than Ten Years [Member] | Debt Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	60
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 0

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Investments - Unrealized Loss Position (Details) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Supporting Experience Rated Products [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 2
Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	659	2,279
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 704	$ 2,409
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	8	36
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	8	$ 36
Debt Securities [Member] | Supporting Experience Rated Products [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	11
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Debt Securities [Member] | Supporting Remaining Products [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	693
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 8
US Government Agencies Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	12	8
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 30	$ 26
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 0
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	26	54
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 39	$ 86
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 1
Debt Security, Corporate, US [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	70	1,399
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 94	$ 1,431
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1	16
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 1	$ 16
Debt Security, Corporate, Non-US [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	39	243
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 47	$ 314
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	3
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 3
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	23	45
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 0	$ 1
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	0
Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 2
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 0
Other Asset-Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	487	516
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 486	$ 528
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	7	15
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 7	$ 15
Redeemable Preferred Stock [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	1	14
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 6	$ 23
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	0	1
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 0	$ 1

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Investments - Unrealized Loss Position Maturities (Details) - Debt Securities [Member] - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 704	$ 2,409
Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	11
Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	693
Maturing in Less than one Year [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	21
Maturing in Less than one Year [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1
Maturing in Less than one Year [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	20
Maturing in One Through Five Years [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	43
Maturing in One Through Five Years [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Maturing in One Through Five Years [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	43
Maturing After Five Years Through Ten Years [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	88
Maturing After Five Years Through Ten Years [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	6
Maturing After Five Years Through Ten Years [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	82
Maturing in Greater Than Ten Years [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	64
Maturing in Greater Than Ten Years [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	4
Maturing in Greater Than Ten Years [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	60
Residential Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Residential Mortgage Backed Securities [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Residential Mortgage Backed Securities [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Commercial Mortgage Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2
Commercial Mortgage Backed Securities [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Commercial Mortgage Backed Securities [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2
Other Asset-Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	486
Other Asset-Backed Securities [Member] | Supporting Experience Rated Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	0
Other Asset-Backed Securities [Member] | Supporting Remaining Products [Member]
Debt Securities, Available-for-sale [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 486

XML

Investments - Mortgage Loans (Details) - Commercial Real Estate [Member] $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
New Mortgage Loans	$ 41
Mortgage Loans Fully Repaid	52
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans Foreclosed	$ 0

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Investments Mortgage Loans Credit Ratings Indicator (Details) - Commercial Real Estate [Member] - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Mortgage loans	$ 1,338	$ 1,361
Category 1 [Member]
Mortgage loans	41	42
Category 2 to 4 [Member]
Mortgage loans	1,283	1,301
Categories 5 and 6 [Member]
Mortgage loans	14	18
Category 7 [Member]
Mortgage loans	$ 0	$ 0

XML

Investments - Investment Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 199	$ 50
Investment expenses	(9)	0
Investment Income, Excluding Capital Gains or Losses	190	50
Realized Investment Gains (Losses)	59	0
Net investment income	249	50
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	(7)	0
Supporting Experience Rated Products [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Net investment income	11	0
Debt Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	156	50
Mortgage Loans [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	17	0
Other Investments [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 26	$ 0

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Investments - Realized Gains (Details) - Debt Securities [Member] $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Debt Securities, Available-for-sale [Line Items]
Proceeds On Sales	$ 1,489
Gross Realized Capital Gains	35
Gross Realized Capital Losses	$ 2

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Fair Value Fair Value - Measurement on a recurring basis (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
US Government Agencies Debt Securities [Member]
Available-for-sale Securities, Fair Value	$ 1,744	$ 1,688
US States and Political Subdivisions Debt Securities [Member]
Available-for-sale Securities, Fair Value	2,317	2,399
Debt Security, Corporate, US [Member]
Available-for-sale Securities, Fair Value	7,064	6,489
Debt Security, Corporate, Non-US [Member]
Available-for-sale Securities, Fair Value	2,353	2,383
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Fair Value	595	577
Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Fair Value	637	605
Other Asset-Backed Securities [Member]
Available-for-sale Securities, Fair Value	1,149	1,085
Redeemable Preferred Stock [Member]
Available-for-sale Securities, Fair Value	38	29
Debt Securities [Member]
Available-for-sale Securities, Fair Value	15,897	15,255
Recurring
Assets, Fair Value Disclosure	15,977	15,328
Recurring | Level 1
Assets, Fair Value Disclosure	1,674	1,616
Recurring | Level 2
Assets, Fair Value Disclosure	14,160	13,581
Recurring | Level 3
Assets, Fair Value Disclosure	143	131
Recurring | US Government Agencies Debt Securities [Member]
Available-for-sale Securities, Fair Value	1,744	1,688
Recurring | US Government Agencies Debt Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	1,665	1,597
Recurring | US Government Agencies Debt Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	79	91
Recurring | US Government Agencies Debt Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	0	0
Recurring | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale Securities, Fair Value	2,317	2,399
Recurring | US States and Political Subdivisions Debt Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | US States and Political Subdivisions Debt Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	2,317	2,399
Recurring | US States and Political Subdivisions Debt Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	0	0
Recurring | Debt Security, Corporate, US [Member]
Available-for-sale Securities, Fair Value	7,064	6,489
Recurring | Debt Security, Corporate, US [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Debt Security, Corporate, US [Member] | Level 2
Available-for-sale Securities, Fair Value	7,006	6,422
Recurring | Debt Security, Corporate, US [Member] | Level 3
Available-for-sale Securities, Fair Value	58	67
Recurring | Debt Security, Corporate, Non-US [Member]
Available-for-sale Securities, Fair Value	2,353	2,383
Recurring | Debt Security, Corporate, Non-US [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Debt Security, Corporate, Non-US [Member] | Level 2
Available-for-sale Securities, Fair Value	2,350	2,380
Recurring | Debt Security, Corporate, Non-US [Member] | Level 3
Available-for-sale Securities, Fair Value	3	3
Recurring | Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Fair Value	595	577
Recurring | Residential Mortgage Backed Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Residential Mortgage Backed Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	595	577
Recurring | Residential Mortgage Backed Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	0	0
Recurring | Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Fair Value	637	605
Recurring | Commercial Mortgage Backed Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Commercial Mortgage Backed Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	637	605
Recurring | Commercial Mortgage Backed Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	0	0
Recurring | Other Asset-Backed Securities [Member]
Available-for-sale Securities, Fair Value	1,149	1,085
Recurring | Other Asset-Backed Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Other Asset-Backed Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	1,149	1,085
Recurring | Other Asset-Backed Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	0	0
Recurring | Redeemable Preferred Stock [Member]
Available-for-sale Securities, Fair Value	38	29
Recurring | Redeemable Preferred Stock [Member] | Level 1
Available-for-sale Securities, Fair Value	0	0
Recurring | Redeemable Preferred Stock [Member] | Level 2
Available-for-sale Securities, Fair Value	27	22
Recurring | Redeemable Preferred Stock [Member] | Level 3
Available-for-sale Securities, Fair Value	11	7
Recurring | Debt Securities [Member]
Available-for-sale Securities, Fair Value	15,897	15,255
Recurring | Debt Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	1,665	1,597
Recurring | Debt Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	14,160	13,581
Recurring | Debt Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	72	77
Recurring | Equity Securities [Member]
Available-for-sale Securities, Fair Value	80	73
Recurring | Equity Securities [Member] | Level 1
Available-for-sale Securities, Fair Value	9	19
Recurring | Equity Securities [Member] | Level 2
Available-for-sale Securities, Fair Value	0	0
Recurring | Equity Securities [Member] | Level 3
Available-for-sale Securities, Fair Value	$ 71	$ 54

XML

Fair Value Fair Value - Carrying Value and Fair Value Classified by Level (Details) - Nonrecurring - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Carrying value
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Mortgages Held-for-sale, Fair Value Disclosure	$ 1,338	$ 1,361
Equity Securities without Readily Determinable Fair Value, Amount	135	140
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Investment Contracts With Fixed Maturity	5	5
Investment Contracts Without A Fixed Maturity	377	382
Long-term debt	71,781	72,709
Estimated Fair Value | Level 1
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Mortgages Held-for-sale, Fair Value Disclosure	0	0
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Investment Contracts With Fixed Maturity	0	0
Investment Contracts Without A Fixed Maturity	0	0
Long-term debt	72,376	71,252
Estimated Fair Value | Level 2
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Mortgages Held-for-sale, Fair Value Disclosure	0	0
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Investment Contracts With Fixed Maturity	0	0
Investment Contracts Without A Fixed Maturity	0	0
Long-term debt	0	0
Estimated Fair Value | Level 3
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Mortgages Held-for-sale, Fair Value Disclosure	1,350	1,366
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Investment Contracts With Fixed Maturity	5	5
Investment Contracts Without A Fixed Maturity	364	357
Long-term debt	0	0
Estimated Fair Value | Fair Value, Inputs, Level 1, 2 and 3 [Member]
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Mortgages Held-for-sale, Fair Value Disclosure	1,350	1,366
Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]
Investment Contracts With Fixed Maturity	5	5
Investment Contracts Without A Fixed Maturity	364	357
Long-term debt	$ 72,376	$ 71,252

XML

Fair Value - Separate Accounts Fair Value (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	$ 4,074	$ 3,884
Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	3,846	3,693
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	3,428	3,286
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	3	3
Common/Collective Trusts [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	415	404
Cash and Cash Equivalents [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	228	191
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	983	782
Fair Value, Inputs, Level 1 [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	983	782
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	0	0
Fair Value, Inputs, Level 1 [Member] | Common/Collective Trusts [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	0	0
Level 2 | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	2,863	2,907
Level 2 | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	2,445	2,500
Level 2 | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	3	3
Level 2 | Common/Collective Trusts [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	415	404
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	0	4
Fair Value, Inputs, Level 3 [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	0	4
Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	0	0
Fair Value, Inputs, Level 3 [Member] | Common/Collective Trusts [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Separate account assets	$ 0	$ 0

XML

Leases Summary of the components of net lease cost (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Lease, Cost [Abstract]
Operating Lease, Cost	$ 682
Finance Lease, Right-of-Use Asset, Amortization	9
Finance Lease, Interest Expense	10
Finance Lease Cost	19
Short-term Lease, Cost	6
Variable Lease, Cost	142
Sublease Income	12
Lease, Cost	$ 837

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Leases Supplemental Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Jan. 01, 2019	Dec. 31, 2018
Supplemental cash flow information related to leases [Abstract]
Operating Lease, Payments	$ 670
Finance Lease, Interest Payment on Liability	10
Finance Lease, Principal Payments	7
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	556
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	12
Supplemental balance sheet information related to leases [Abstract]
Operating lease right-of-use assets	20,992		$ 20,987	$ 0
Current portion of operating lease liabilities	1,803		1,803	0
Long-term operating lease liabilities	18,961		$ 18,832	$ 0
Operating Lease, Liability	20,764
Finance Lease, Right-of-Use Asset	509
Finance Lease, Liability, Current	25
Finance Lease, Liability, Noncurrent	535
Finance Lease, Liability	$ 560
Operating Lease, Weighted Average Remaining Lease Term	14 years 2 months 12 days
Finance Lease, Weighted Average Remaining Lease Term	20 years 3 months 18 days
Operating Lease, Weighted Average Discount Rate, Percent	4.70%
Finance Lease, Weighted Average Discount Rate, Percent	7.50%
Sale Leaseback Transaction, Net Proceeds, Investing Activities	$ 5
Store Rationalization Charges	$ 135	$ 0
Retail stores, mail order facilities and certain distribution centers and corp offices | Minimum [Member]
Lessee, Operating Lease, Term of Contract	15 years
Retail stores, mail order facilities and certain distribution centers and corp offices | Maximum [Member]
Lessee, Operating Lease, Term of Contract	25 years
Equipment and other assets | Minimum [Member]
Lessee, Operating Lease, Term of Contract	3 years
Equipment and other assets | Maximum [Member]
Lessee, Operating Lease, Term of Contract	10 years

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Leases Maturity of lease liabilities (Details) $ in Millions	Mar. 31, 2019 USD ($)
Finance Lease Liabilities, Payments, Due [Abstract]
Finance Lease, Liability, Payments, Remainder of Fiscal Year	$ 50
Finance Lease, Liability, Payments, Due Year Two	65
Finance Lease, Liability, Payments, Due Year Three	62
Finance Lease, Liability, Payments, Due Year Four	58
Finance Lease, Liability, Payments, Due Year Five	56
Finance Lease, Liability, Payments, Due after Year Five	786
Finance Lease, Liability, Payments, Due	1,077
Finance Lease, Liability, Undiscounted Excess Amount	(517)
Finance Lease, Liability	560
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	2,035
Lessee, Operating Lease, Liability, Payments, Due Year Two	2,612
Lessee, Operating Lease, Liability, Payments, Due Year Three	2,477
Lessee, Operating Lease, Liability, Payments, Due Year Four	2,316
Lessee, Operating Lease, Liability, Payments, Due Year Five	2,203
Lessee, Operating Lease, Liability, Payments, Due after Year Five	16,588
Lessee, Operating Lease, Liability, Payments, Due	28,231
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(7,467)
Operating Lease, Liability	20,764
Lessee, Liability, Payments, Remainder of Fiscal Year	2,085
Lessee, Liability, Payments, Due Year Two	2,677
Lessee, Liability, Payments, Due Year Three	2,539
Lessee, Liability, Payments, Due Year Four	2,374
Lessee, Liability, Payments, Due Year Five	2,259
Lessee, Liability, Payments, Due After Year Five	17,374
Lessee, Liability, Payments, Due	29,308
Lessee, Liability, Undiscounted Excess Amount	(7,984)
Lease, Liability	21,324
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals	182
Operating And Capital Leases, Amount Due In Excess Of Remaining Estimated Economic Life	$ 2,100

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Health Care Costs Payable (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Health care costs payable, beginning of the period	$ 6,147
Reinsurance recoverables	4
Health care costs payable, beginning of the period, net	6,143
Add Components Of Incurred Health Care Costs [Abstract]
Current year incurred health care costs	13,804
Prior year incurred health care costs	(446)
Policyholder Benefits and Claims Incurred, Net, Health	13,358
Less Claims Paid [Abstract]
Current year claims paid	8,004
Prior year claims paid	4,812
Total claims paid	12,816
Premium Deficiency Reserves	11
Health care costs payable, end of the period, net	6,696
Reinsurance recoverables	5
Health care costs payable, end of the period	6,701
Incurred but Not Reported (IBNR) Claims Liability, Net	5,100
Health Care Benefits Segment [Member]
Less Claims Paid [Abstract]
Benefit costs recorded in other insurance liabilities	10
Corporate / Other [Member]
Less Claims Paid [Abstract]
Benefit costs recorded in other insurance liabilities	$ 80

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Shareholders' Equity Shareholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Billions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock Repurchase Program, Authorized Amount	$ 15.0
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 13.9
Dividends declared per share	$ 0.50	$ 0.50
Stock Repurchased During Period, Shares	0.0	0.0

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Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018		Dec. 31, 2018	Dec. 31, 2017
Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ 433			$ 102
Net unrealized investment gains	334	$ 0
Other Comprehensive Income	331	344
Foreign currency translation adjustments	1	1
Adoption of new accounting standard	178	(13)	[1]
Net cash flow hedges	(4)	343
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 months, net	18
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
Comprehensive Income Loss [Line Items]
Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, before Tax	0	464
Cumulative Effect of New Accounting Principle in Period of Adoption, before tax	0	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	(5)	(1)
Accumulated Other Comprehensive Income (Loss), Net of Tax	308	325		312	$ (15)
Adoption of new accounting standard	0	(3)
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax	0	344
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	(4)	(1)
Net Unrealized Gains (Losses) Previously Impaired Securities [Member]
Comprehensive Income Loss [Line Items]
Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, before Tax	410	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	(19)	0
Accumulated Other Comprehensive Income (Loss), Net of Tax	431	0		97	0
Other Comprehensive Income (Loss), Securities, Available-for-Sale, Unrealized Holding Gain (Loss) Arising During Period, after Tax	348	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Net of Tax	(14)	0
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	(157)	(128)		(158)	(129)
Other Comprehensive Income	1	1
Foreign Currency and Derivative Gain (Loss) [Member]
Comprehensive Income Loss [Line Items]
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss), before Reclassification and Tax	0	0
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, before Tax	0	0
Pension and OPEB Plan [Member]
Comprehensive Income Loss [Line Items]
Cumulative Effect of New Accounting Principle in Period of Adoption, before tax	0	0
Accumulated Other Comprehensive Income (Loss), Net of Tax	(149)	(25)		(149)	(21)
Other Comprehensive Income	0	0
Adoption of new accounting standard	0	(4)
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, before Tax	0	0
Accumulated Other Comprehensive Loss
Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income (Loss), Net of Tax	433	172		$ 102	$ (165)
Accumulated Other Comprehensive Loss
Comprehensive Income Loss [Line Items]
Other Comprehensive Income	331	344
Adoption of new accounting standard	$ 0	$ (7)	[1]

[1] (3)Reflects the adoption of ASU 2014-09, Revenue from Contracts with Customers, which resulted in a reduction to retained earnings of $13 million and the adoption of ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which resulted in a reduction to accumulated other comprehensive income and an increase to retained earnings of $7 million.

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Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	15.3	13.2
Numerator for earnings per share calculation [Abstract]
Net income	$ 1,427	$ 998
Participating Securities, Distributed and Undistributed Earnings (Loss), Diluted	(2)	(2)
Net income attributable to noncontrolling interest	(6)	0
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	$ 1,419	$ 996
Denominator for earnings per share calculation [Abstract]
Weighted Average Shares Outstanding, Basic	1,298.0	1,016.0
Dilutive effect of outstanding stock-based compensation awards (in shares)	4.0	3.0
Weighted average shares used to compute diluted EPS (in shares)	1,302.0	1,019.0
Earnings Per Share, Basic and Diluted [Abstract]
Basic EPS (in dollars per share)	$ 1.09	$ 0.98
Diluted EPS (in dollars per share)	$ 1.09	$ 0.98
Retained Earnings [Member]
Numerator for earnings per share calculation [Abstract]
Net income attributable to CVS Health	$ 1,421	$ 998

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Commitments and Contingencies (Details) $ in Millions			1 Months Ended	12 Months Ended
	Mar. 28, 2019 USD ($)	Oct. 15, 2018 USD ($)	Sep. 30, 2015 store	Dec. 31, 2018 memeber	Mar. 31, 2019 store
Loss Contingencies [Line Items]
Guarantor Obligations, Number of Leases					80
Loss Contingency, Number Of Locations With Subpoena For Documents			8
Loss Contingency, Audit Methodology Sample Size | memeber				200
Provider Proceedings [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages Awarded, Value | $	$ 86	$ 150

XML

Segment Information - Retrospective Adjustment (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Total revenues	$ 61,646	$ 45,743
Revenues	61,397	45,693
Cost of products sold	37,247	37,505
Benefit Costs	13,459	1,329
Operating expenses	8,250	4,913
Operating income	2,690	1,996
Adjusted Operating Income (Loss)	3,595	2,293
Corporate / Other [Member]
Total revenues	110	48
Pharmacy Services Segment [Member]
Total revenues	33,558	32,546
Revenues	33,558	32,546
Retail Long-Term Care Segment [Member]
Total revenues	21,115	20,432
Health Care Benefits Segment [Member]
Total revenues	17,870	1,318
Intersegment Eliminations [Member]
Total revenues	(11,007)	(8,601)
Revenues	(11,007)	(8,601)
Cost of products sold		(8,318)
Benefit Costs		0
Operating expenses		(108)
Operating income		(175)
Adjusted Operating Income (Loss)	(172)	(175)
Operating Segments [Member] | Corporate / Other [Member]
Total revenues	110	48
Revenues	25	0
Cost of products sold		0
Benefit Costs		0
Operating expenses		264
Operating income		(216)
Adjusted Operating Income (Loss)	(231)	(218)
Operating Segments [Member] | Pharmacy Services Segment [Member]
Total revenues	33,558	32,546
Revenues	33,558	32,546
Cost of products sold		31,307
Benefit Costs		0
Operating expenses		338
Operating income		901
Adjusted Operating Income (Loss)	947	987
Operating Segments [Member] | Retail Long-Term Care Segment [Member]
Total revenues	21,115	20,432
Revenues	21,115	20,432
Cost of products sold		14,516
Benefit Costs		0
Operating expenses		4,292
Operating income		1,624
Adjusted Operating Income (Loss)	1,489	1,836
Operating Segments [Member] | Health Care Benefits Segment [Member]
Total revenues	17,870	1,318
Revenues	17,706	1,316
Cost of products sold		0
Benefit Costs		1,329
Operating expenses		127
Operating income		(138)
Adjusted Operating Income (Loss)	$ 1,562	(137)
Previously Reported [Member]
Total revenues		45,743
Cost of products sold		37,505
Benefit Costs		1,329
Operating expenses		4,913
Operating income		1,996
Previously Reported [Member] | Intersegment Eliminations [Member]
Total revenues		(6,957)
Cost of products sold		(6,762)
Benefit Costs		0
Operating expenses		(20)
Operating income		(175)
Previously Reported [Member] | Operating Segments [Member] | Corporate / Other [Member]
Total revenues		48
Cost of products sold		0
Benefit Costs		0
Operating expenses		264
Operating income		(216)
Previously Reported [Member] | Operating Segments [Member] | Pharmacy Services Segment [Member]
Total revenues		32,220
Cost of products sold		29,751
Benefit Costs		1,329
Operating expenses		377
Operating income		763
Previously Reported [Member] | Operating Segments [Member] | Retail Long-Term Care Segment [Member]
Total revenues		20,432
Cost of products sold		14,516
Benefit Costs		0
Operating expenses		4,292
Operating income		1,624
Previously Reported [Member] | Operating Segments [Member] | Health Care Benefits Segment [Member]
Total revenues		0
Cost of products sold		0
Benefit Costs		0
Operating expenses		0
Operating income		0
Restatement Adjustment [Member]
Total revenues		0
Cost of products sold		0
Benefit Costs		0
Operating expenses		0
Operating income		0
Adjusted Operating Income (Loss)		297
Restatement Adjustment [Member] | Intersegment Eliminations [Member]
Total revenues		(1,644)
Cost of products sold		(1,556)
Benefit Costs		0
Operating expenses		(88)
Operating income		0
Adjusted Operating Income (Loss)		0
Restatement Adjustment [Member] | Operating Segments [Member] | Corporate / Other [Member]
Total revenues		0
Cost of products sold		0
Benefit Costs		0
Operating expenses		0
Operating income		0
Adjusted Operating Income (Loss)		(2)
Restatement Adjustment [Member] | Operating Segments [Member] | Pharmacy Services Segment [Member]
Total revenues		326
Cost of products sold		1,556
Benefit Costs		(1,329)
Operating expenses		(39)
Operating income		138
Adjusted Operating Income (Loss)		86
Restatement Adjustment [Member] | Operating Segments [Member] | Retail Long-Term Care Segment [Member]
Total revenues		0
Cost of products sold		0
Benefit Costs		0
Operating expenses		0
Operating income		0
Adjusted Operating Income (Loss)		212
Restatement Adjustment [Member] | Operating Segments [Member] | Health Care Benefits Segment [Member]
Total revenues		1,318
Cost of products sold		0
Benefit Costs		1,329
Operating expenses		127
Operating income		(138)
Adjusted Operating Income (Loss)		$ 1

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Segment Information - Reconciliation of Financial Measures of Segments to Consolidated Totals (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 61,397	$ 45,693
Net investment income	249	50
Total revenues	61,646	45,743
Adjusted Operating Income (Loss)	3,595	2,293
Pharmacy Services Segment [Member]
Revenues	33,558	32,546
Net investment income	0	0
Total revenues	33,558	32,546
Retail Long-Term Care Segment [Member]
Net investment income	0	0
Total revenues	21,115	20,432
Health Care Benefits Segment [Member]
Total revenues	17,870	1,318
Corporate / Other [Member]
Total revenues	110	48
Operating Segments [Member] | Pharmacy Services Segment [Member]
Net Revenues, Retail CoPayments	3,300	3,300
Revenues	33,558	32,546
Total revenues	33,558	32,546
Adjusted Operating Income (Loss)	947	987
Operating Segments [Member] | Retail Long-Term Care Segment [Member]
Revenues	21,115	20,432
Total revenues	21,115	20,432
Adjusted Operating Income (Loss)	1,489	1,836
Operating Segments [Member] | Health Care Benefits Segment [Member]
Revenues	17,706	1,316
Net investment income	164	2
Total revenues	17,870	1,318
Adjusted Operating Income (Loss)	1,562	(137)
Operating Segments [Member] | Corporate / Other [Member]
Revenues	25	0
Net investment income	85	48
Total revenues	110	48
Adjusted Operating Income (Loss)	(231)	(218)
Intersegment Eliminations [Member]
Revenues	(11,007)	(8,601)
Net investment income	0	0
Total revenues	(11,007)	(8,601)
Adjusted Operating Income (Loss)	$ (172)	$ (175)

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Segment Information Segment Information - Reconciliation from Operating Income to Adjusted Operating Income (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) store	Mar. 31, 2018 USD ($)
Operating income	$ 2,690	$ 1,996
Amortization of intangible assets	622	210
Acquisition-related transaction and integration costs	148	43
Store Rationalization Charges	135	0
Loss on divestiture of subsidiary	0	86
Interest income on financing for the Aetna Acquisition	0	(42)
Adjusted Operating Income (Loss)	$ 3,595	2,293
Retail Long-Term Care Segment [Member]
Number of Under Performing Stores | store	46
Loss on divestiture of subsidiary		$ 725

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Label	Element	Value
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 178,000,000