Segment Information

6 Months Ended

Jun. 30, 2019

The results of our operations are described through three reportable segments: Commercial & Specialty Business, Government Business and Other, as further described in Note 19, “Segment Information,” to our audited consolidated financial statements as of and for the year ended December 31, 2018 included in our 2018 Annual Report on Form 10-K.

Included in the Other segment is IngenioRx, our PBM, which began its operations during the second quarter of 2019 and the Diversified Business Group, or DBG, our integrated health services business, and unallocated corporate expenses. Based on the FASB guidance, as of June 30, 2019, IngenioRx and DBG do not collectively meet the quantitative thresholds for an operating segment; therefore, they have been included in our Other segment.

Further, during the second quarter of 2019, we reclassified DBG from our Government Business segment to the Other segment to reflect changes in how our segments are being managed. Amounts for 2018 have been reclassified to conform to the current year presentation for comparability.

Affiliated revenues represent revenues or cost for services performed by IngenioRx and DBG to our subsidiaries, are recorded at cost or management’s estimate of fair market value, and are eliminated in consolidation.

For our segment reporting, operating gains (losses) generated from IngenioRx and DBG affiliated activity have been included in our Commercial & Specialty Business and Government Business based upon their utilization of services from IngenioRx and DBG.

Financial data by reportable segment for the three and six months ended June 30, 2019 and 2018 is as follows:



	Commercial & Specialty Business		Government Business		Other			Eliminations			Total
Three Months Ended June 30, 2019
Operating revenue - unaffiliated	$	9,417	$	15,538	$	222		$	—		$	25,177
Operating revenue - affiliated	—		—		572			(572		)	—
Operating gain (loss)	983		478		(28		)	—			1,433
Three Months Ended June 30, 2018
Operating revenue - unaffiliated	$	9,055	$	13,619	$	41		$	—		$	22,715
Operating revenue - affiliated	—		—		309			(309		)	—
Operating gain (loss)	1,048		532		(21		)	—			1,559
Six Months Ended June 30, 2019
Operating revenue - unaffiliated	$	18,809	$	30,464	$	292		$	—		$	49,565
Operating revenue - affiliated	—		—		1,050			(1,050		)	—
Operating gain (loss)	2,581		855		(63		)	—			3,373
Six Months Ended June 30, 2018
Operating revenue - unaffiliated	$	18,006	$	26,972	$	79		$	—		$	45,057
Operating revenue - affiliated	—		—		631			(631		)	—
Operating gain (loss)	2,450		1,021		(44		)	—			3,427

The major product revenues for each of the reportable segments for the three and six months ended June 30, 2019 and 2018 are as follows:



	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Commercial & Specialty Business
Managed care products	$	7,646		$	7,362		$	15,264		$	14,641
Managed care services	1,353			1,304			2,719			2,581
Dental/Vision products and services	327			304			650			608
Other	91			85			176			176
Total Commercial & Specialty Business	9,417			9,055			18,809			18,006
Government Business
Managed care products	15,444			13,510			30,264			26,750
Managed care services	94			109			200			222
Total Government Business	15,538			13,619			30,464			26,972
Other
Other	794			350			1,342			710
Eliminations
Eliminations	(572		)	(309		)	(1,050		)	(631		)
Total product revenues	$	25,177		$	22,715		$	49,565		$	45,057

The classification between managed care products and managed care services in the above table primarily distinguishes between the levels of risk assumed. Managed care products represent insurance products where we bear the insurance risk, whereas managed care services represent product offerings where we provide claims adjudication and other administrative services to the customer, but the customer principally bears the insurance risk.

A reconciliation of reportable segments’ operating revenue to the amounts of total revenues included in our consolidated statements of income for the three and six months ended June 30, 2019 and 2018 is as follows:



	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Reportable segments’ operating revenue	$	25,177		$	22,715		$	49,565		$	45,057
Net investment income	285			229			495			458
Net realized gains (losses) on financial instruments	11			4			89			(22		)
Other-than-temporary impairment losses recognized in income	(7		)	(4		)	(17		)	(12		)
Total revenues	$	25,466		$	22,944		$	50,132		$	45,481

A reconciliation of reportable segments’ operating gain to income before income tax expense included in our consolidated statements of income for the three and six months ended June 30, 2019 and 2018 is as follows:



	Three Months Ended June 30						Six Months Ended June 30
	2019			2018			2019			2018
Reportable segments’ operating gain	$	1,433		$	1,559		$	3,373		$	3,427
Net investment income	285			229			495			458
Net realized gains (losses) on financial instruments	11			4			89			(22		)
Other-than-temporary impairment losses recognized in income	(7		)	(4		)	(17		)	(12		)
Interest expense	(184		)	(192		)	(371		)	(376		)
Amortization of other intangible assets	(85		)	(93		)	(172		)	(173		)
Gain (loss) on extinguishment of debt	—			1			1			(18		)
Income before income tax expense	$	1,453		$	1,504		$	3,398		$	3,284