Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information [Abstract]

Segment Information [Text Block]

Note 23 – Segment Information

See Note 1 for a description of our segments. Effective with the first quarter of 2019, the Company began allocating compensation cost for stock options to the segments. Prior year segment information was not restated for this change. A description of our basis for reporting segment operating results is outlined below. Intersegment transactions primarily reflect pharmacy sales to insured customers of the Integrated Medical segment. These and other transactions are eliminated in consolidation.

The Company uses “pre-tax adjusted income from operations” and “adjusted revenues” as its principal financial measures of segment operating performance because management believes they best reflect the underlying results of business operations and permit analysis of trends in underlying revenue, expenses and profitability. Pre-tax adjusted income from operations is defined as income before taxes excluding realized investment results, amortization of acquired intangible assets, results of Anthem and Coventry Health Care, Inc. (the “transitioning clients”) and special items. Income or expense amounts that are excluded from adjusted income from operations because they are not indicative of underlying performance or the responsibility of operating segment management include:

Realized investment gains (losses) including changes in market values of certain financial instruments between balance sheet dates, as well as gains and losses associated with invested asset sales

Amortization of acquired intangible assets because these relate to costs incurred for acquisitions

Results of transitioning clients because those results are not indicative of ongoing results

Special items, if any, that management believes are not representative of the underlying results of operations due to the nature or size of these matters.

The Company does not report total assets by segment since this is not a metric used to allocate resources or evaluate segment performance.

Adjusted revenues is defined as revenues excluding: 1) revenue contributions from transitioning clients; 2) the Company’s share of certain realized investment results of its joint ventures reported in the International Markets segment using the equity method of accounting and 3) special items, if any.

The following tables present the special items recorded by the Company in 2019, 2018 and 2017.

(In millions)
Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)			After-tax		Before-tax
Year ended December 31, 2019
	Total integration and transaction-related costs (Selling, general and administrative expenses)	$	427	$	552
	Charge for organizational efficiency plan (Selling, general and administrative expenses)	$	162	$	207
	Charges associated with litigation matters (Selling, general and administrative expenses)	$	41	$	51
Year ended December 31, 2018
	Integration and transaction-related costs
	- Selling, general and administrative expenses	$	587	$	748
	- Interest expense and other		179		227
	- Net investment income		(97)		(123)
	Total integration and transaction-related costs	$	669	$	852
	Charges associated with litigation matters (Selling, general and administrative expenses)	$	19	$	25
	Charges associated with U.S. tax reform
	- Selling, general and administrative expenses	$	1	$	2
	- Tax (benefit)		(3)
	Total (benefits) charges associated with U.S. tax reform	$	(2)	$	2
Year ended December 31, 2017
	Integration and transaction-related costs
	- Selling, general and administrative expenses	$	92	$	126
	- Tax (benefit)		(59)
	Total integration and transaction-related costs	$	33	$	126
	Charges associated with U.S. tax reform
	- Selling, general and administrative expenses	$	(36)	$	(56)
	- Tax expense		232
	Total charges (benefits) associated with U.S. tax reform	$	196	$	(56)
	Debt extinguishment costs	$	209	$	321
	Long-term care guaranty fund assessment (Selling, general and administrative expenses)	$	83	$	129

Summarized segment financial information for the years ended December 31 was as follows:

(In millions)	Health Services		Integrated Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2019
Revenues from external customers (1)	$	107,354	$	34,861	$	5,500	$	4,461	$	-	$	152,176
Inter-segment revenues		2,380		1,180		-		26		(3,586)
Net investment income		60		478		159		695		(2)		1,390
Total revenues		109,794		36,519		5,659		5,182		(3,588)		153,566
Revenue contributions from transitioning clients		(13,347)		-		-		-		-		(13,347)
Net realized investment results from equity method subsidiaries (2)		-		-		(44)		-		-		(44)
Adjusted revenues	$	96,447	$	36,519	$	5,615	$	5,182	$	(3,588)	$	140,175
Depreciation and amortization	$	3,071	$	449	$	87	$	41	$	3	$	3,651
Income (loss) before taxes	$	3,983	$	3,904	$	785	$	562	$	(2,664)	$	6,570
Pre-tax adjustments to reconcile to adjusted income from operations
Adjustment for transitioning clients		(1,726)		-		-		-		-		(1,726)
(Income) attributable to noncontrolling interests		(4)		-		(16)		-		-		(20)
Net realized investment (gains) (2)		-		(112)		(43)		(66)		-		(221)
Amortization of acquired intangible assets		2,839		69		36		5		-		2,949
Special items
Integration and transaction-related costs		-		-		-		-		552		552
Charge for organizational efficiency plan		-		-		-		-		207		207
Charges associated with litigation matters		-		(30)		-		-		81		51
Pre-tax adjusted income (loss) from operations	$	5,092	$	3,831	$	762	$	501	$	(1,824)	$	8,362
(In millions)	Health Services		Integrated Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2018
Revenues from external customers (1)	$	5,902	$	31,759	$	5,174	$	4,335	$	-	$	47,170
Inter-segment revenues		1,154		573		-		14		(1,741)
Net investment income		9		459		149		712		151		1,480
Total revenues	$	7,065	$	32,791	$	5,323	$	5,061	$	(1,590)	$	48,650
Revenue contributions from transitioning clients		(459)		-		-		-		-		(459)
Net realized investment results from equity method subsidiaries (2)		-		-		43		-		-		43
Special items reported in integration and transaction-related costs		-		-		-		-		(123)		(123)
Adjusted revenues	$	6,606	$	32,791	$	5,366	$	5,061	$	(1,713)	$	48,111
Depreciation and amortization	$	120	$	466	$	55	$	53	$	1	$	695
Income (loss) before taxes	$	329	$	3,342	$	670	$	497	$	(1,257)	$	3,581
Pre-tax adjustments to reconcile to adjusted income from operations
Adjustment for transitioning clients		(62)		-		-		-		-		(62)
(Income) attributable to noncontrolling interests		-		-		(14)		-		-		(14)
Net realized investment losses(2)		-		36		61		25		2		124
Amortization of acquired intangible assets		113		99		18		5		-		235
Special items
Integration and transaction-related costs		-		-		-		-		852		852
Charges associated with litigation matters		-		25		-		-		-		25
U.S. tax reform		-		-		-		2		-		2
Pre-tax adjusted income (loss) from operations	$	380	$	3,502	$	735	$	529	$	(403)	$	4,743
(1) Includes the Company’s share of the earnings of its joint ventures reported in the International Markets segment using the equity method of accounting.
(2) Beginning in 2018, includes the Company's share of certain realized investment gains (losses) of its joint ventures reported using the equity method of accounting.

(In millions)	Health Services		Integrated Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2017
Revenues from external customers (1)	$	3,250	$	28,193	$	4,774	$	4,363	$	-	$	40,580
Inter-segment revenues		988		476		-		12		(1,476)
Net investment income		3		366		127		700		30		1,226
Total revenues	$	4,241	$	29,035	$	4,901	$	5,075	$	(1,446)	$	41,806
Adjusted revenues	$	4,241	$	29,035	$	4,901	$	5,075	$	(1,446)	$	41,806
Depreciation and amortization	$	-	$	470	$	61	$	31	$	4	$	566
Income (loss) before taxes	$	288	$	2,859	$	667	$	614	$	(822)	$	3,606
Pre-tax adjustments to reconcile to adjusted income from operations
Loss attributable to noncontrolling interests		-		1		1		-		-		2
Net realized investment (gains)		-		(137)		(31)		(69)		-		(237)
Amortization of acquired intangible assets		-		93		17		5		-		115
Special items
Debt extinguishment costs		-		-		-		-		321		321
Long-term care guaranty fund assessment		-		106		-		23		-		129
Integration and transaction-related costs		-		-		-		-		126		126
U.S. tax reform		-		-		-		(56)		-		(56)
Pre-tax adjusted income (loss) from operations	$	288	$	2,922	$	654	$	517	$	(375)	$	4,006
(1) Includes the Company’s share of the earnings of its joint ventures reported in the International Markets segment using the equity method of accounting.

Revenue from external customers includes pharmacy revenues, premiums and fees and other revenues. The following table presents these revenues by product, premium and service type for the twelve months ended December 31:

(In millions)	2019		2018		2017
Products (Pharmacy revenues) (ASC 606)
Network revenues	$	50,431	$	1,415	$	-
Home delivery and specialty revenues		47,768		3,997		2,979
Other		4,900		67		-
Total pharmacy revenues		103,099		5,479		2,979
Integrated Medical premiums (ASC 944)
Commercial
Health Insurance		12,523		10,710		9,439
Stop loss		4,328		4,008		3,483
Other		1,040		1,038		917
Government
Medicare Advantage		6,314		5,832		5,534
Medicare Part D		1,699		764		764
Other		4,185		4,496		3,494
Total Integrated Medical premiums		30,089		26,848		23,631
International Markets premiums		5,266		5,043		4,619
Domestic disability, life and accident premiums		4,225		4,000		3,973
Other premiums		134		222		268
Total premiums		39,714		36,113		32,491
Services (ASC 606)
Fees		9,229		5,558		5,053
Other external revenues		134		20		57
Total services		9,363		5,578		5,110
Total revenues from external customers	$	152,176	$	47,170	$	40,580

Foreign and U.S. revenues from external customers for the three years ended December 31 are shown below. The Company’s foreign revenues are generated by its foreign operating entities. In the periods shown, no foreign country contributed more than 5% of consolidated revenues from external customers.

(In millions)	2019		2018		2017
United States	$	147,332	$	42,773	$	36,555
South Korea		2,022		2,093		1,892
All other foreign countries		2,822		2,304		2,133
Total	$	152,176	$	47,170	$	40,580