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Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Cash, Cash Equivalents, and Restricted Cash

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	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	6,063	$	4,059
Restricted cash (included in other current assets)	6		6
Restricted cash (included in other assets)	269		230
Total cash, cash equivalents and restricted cash in the statements of cash flows	$	6,338	$	4,295

Accounts Receivable, Net

Accounts receivable, net is composed of the following:



In millions	June 30, 2019		December 31, 2018
Trade receivables	$	6,966	$	6,896
Vendor and manufacturer receivables	8,358		7,655
Premium receivables	2,098		2,259
Other receivables	752		821
Total accounts receivable, net	$	18,174	$	17,631

Disaggregation of Revenue

The following tables disaggregate the Company’s revenue by major source in each segment for the three and six months ended June 30, 2019 and 2018:



	Pharmacy		Retail/		Health Care		Corporate/		Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other		Eliminations			Totals
Three Months Ended June 30, 2019
Major goods/services lines:
Pharmacy	$	34,698	$	16,392	$	—	$	—	$	(10,422	)	$	40,668
Front Store	—		4,875		—		—		—			4,875
Premiums	—		—		15,777		14		—			15,791
Net investment income	—		—		148		145		—			293
Other	144		180		1,478		2		—			1,804
Total	$	34,842	$	21,447	$	17,403	$	161	$	(10,422	)	$	63,431

Pharmacy Services distribution channel:
Pharmacy network ⁽¹⁾	$	22,028
Mail choice⁽²⁾	12,670
Other	144
Total	$	34,842

Three Months Ended June 30, 2018
Major goods/services lines:
Pharmacy	$	33,293	$	15,805	$	—	$	—	$	(8,151	)	$	40,947
Front Store	—		4,707		—		—		—			4,707
Premiums	—		—		751		—		—			751
Net investment income	—		—		4		210		—			214
Other	134		160		9		—		—			303
Total	$	33,427	$	20,672	$	764	$	210	$	(8,151	)	$	46,922

Pharmacy Services distribution channel:
Pharmacy network ⁽¹⁾	$	21,506
Mail choice⁽²⁾	11,787
Other	134
Total	$	33,427

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(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.



	Pharmacy		Retail/		Health Care		Corporate/		Intersegment			Consolidated
In millions	Services		LTC		Benefits		Other		Eliminations			Totals
Six Months Ended June 30, 2019
Major goods/services lines:
Pharmacy	$	68,111	$	32,510	$	—	$	—	$	(21,429	)	$	79,192
Front Store	—		9,674		—		—		—			9,674
Premiums	—		—		32,036		37		—			32,073
Net investment income	—		—		312		230		—			542
Other	289		378		2,925		4		—			3,596
Total	$	68,400	$	42,562	$	35,273	$	271	$	(21,429	)	$	125,077

Pharmacy Services distribution channel:
Pharmacy network ⁽¹⁾	$	43,602
Mail choice⁽²⁾	24,509
Other	289
Total	$	68,400

Six Months Ended June 30, 2018
Major goods/services lines:
Pharmacy	$	65,699	$	31,305	$	—	$	—	$	(16,752	)	$	80,252
Front Store	—		9,433		—		—		—			9,433
Premiums	—		—		2,057		—		—			2,057
Net investment income	—		—		6		258		—			264
Other	274		366		19		—		—			659
Total	$	65,973	$	41,104	$	2,082	$	258	$	(16,752	)	$	92,665

Pharmacy Services distribution channel:
Pharmacy network ⁽¹⁾	$	42,704
Mail choice⁽²⁾	22,995
Other	274
Total	$	65,973

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(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)

Contracts With Customers, Assets and Liabilities

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




In millions	June 30, 2019		December 31, 2018
Trade receivables (included in accounts receivable, net)	$	6,966	$	6,896
Contract liabilities (included in accrued expenses)	76		67

During the six months ended June 30, 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	181
Redemption and breakage	(172		)
Balance at June 30, 2019	$	76

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