Segment Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

See Note 1 for a description of our segments. A description of our basis for reporting segment operating results is outlined below. Intersegment revenues primarily reflect pharmacy related transactions between the Evernorth and U.S. Medical segments. Effective with the first quarter of 2019, the Company began allocating compensation cost for stock options to segments. Prior year segment information was not restated for this change. A description of our basis for reporting segment operating results is outlined below.

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, special items and, for periods prior to 2020, earnings contribution from transitioning clients Anthem Inc. and Coventry Health Care, Inc. (the “transitioning clients”). As of December 31, 2019, the transition of these clients was substantially complete; therefore, beginning in 2020, we no longer exclude results of transitioning clients from our adjusted revenues and adjusted income from operations. 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, for periods prior to 2020, because those results were 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 because this is not a metric used to allocate resources or evaluate segment performance.

Adjusted revenues is defined as revenues excluding: 1) revenue contribution from transitioning clients for periods prior to 2020; 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 2020, 2019 and 2018.

Three Months Ended

(In millions)	2020				2019				2018
Description of Special Item Charges (Benefits) and Financial Statement Line Item(s)	After-tax		Before-tax		After-tax		Before-tax		After-tax		Before-tax
Integration and transaction-related costs:
- Selling, general and administrative expenses	$	404	$	527	$	427	$	552	$	587	$	748
- Interest expense and other	—		—		—		—		179		227
- Net investment income	—		—		—		—		(97)		(123)
Integration and transaction-related costs	$	404	$	527	$	427	$	552	$	669	$	852
Debt extinguishment costs	$	151	$	199	$	—	$	—	$	—	$	—
Charge for organizational efficiency plan (Selling, general and administrative expenses)	24		31		162		207		—		—
Charges associated with litigation matters (Selling, general and administrative expenses)	19		25		41		51		19		25
Risk corridors recovery (Selling, general and administrative expenses)	(76)		(101)		—		—		—		—
Contractual adjustment for a former client (Pharmacy revenues)	(155)		(204)		—		—		—		—
(Gain) on sale of business	(3,217)		(4,203)		—		—		—		—
Charges (benefits) associated with tax reform:
- Selling, general and administrative expenses	$	—	$	—	$	—	$	—	$	1	$	2
- Tax (benefit)	—		—		—		—		(3)		—
Charges (benefits) associated with tax reform	$	—	$	—	$	—	$	—	$	(2)	$	2
Total impact from special items	$	(2,850)	$	(3,726)	$	630	$	810	$	686	$	879

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

(In millions)	Evernorth		U.S. Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2020
Revenues from external customers	$	112,647	$	36,027	$	5,853	$	4,630	$	—	$	159,157
Inter-segment revenues	3,655		1,977		—		23		(5,655)
Net investment income	32		447		154		611		—		1,244
Total revenues	$	116,334	$	38,451	$	6,007	$	5,264	$	(5,655)	$	160,401
Net realized investment results from certain equity method investments	—		—		(130)		—		—		(130)
Special item related to contractual adjustment for a former client	(204)		—		—		—		—		(204)
Adjusted revenues	$	116,130	$	38,451	$	5,877	$	5,264	$	(5,655)	$	160,067
Depreciation and amortization	$	2,248	$	426	$	68	$	35	$	25	$	2,802
Income (loss) before taxes	$	3,684	$	3,956	$	1,048	$	4,514	$	(2,334)	$	10,868
Pre-tax adjustments to reconcile to adjusted income from operations
(Income) attributable to noncontrolling interests	(17)		—		(20)		—		—		(37)
Net realized investment (gains) losses (1)	(17)		(77)		(161)		(24)		—		(279)
Amortization of acquired intangible assets	1,917		29		33		3		—		1,982
Special items
Integration and transaction-related costs	—		—		—		—		527		527
Debt extinguishment costs	—		—		—		—		199		199
Charge for organizational efficiency plan	—		—		—		—		31		31
Charges associated with litigation matters	—		—		—		—		25		25
Risk corridors recovery	—		(101)		—		—		—		(101)
Contractual adjustment for a former client	(204)		—		—		—		—		(204)
(Gain) on sale of business	—		—		—		(4,203)		—		(4,203)
Pre-tax adjusted income (loss) from operations	$	5,363	$	3,807	$	900	$	290	$	(1,552)	$	8,808
(In millions)	Evernorth		U.S. Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2019
Revenues from external customers	$	107,354	$	34,861	$	5,500	$	4,461	$	—	$	152,176
Inter-segment revenues	2,380		1,180		—		26		(3,586)
Net investment income (loss)	60		478		159		695		(2)		1,390
Total revenues	$	109,794	$	36,519	$	5,659	$	5,182	$	(3,588)	$	153,566
Revenue contribution from transitioning clients	(13,347)		—		—		—		—		(13,347)
Net realized investment results from certain equity method investments	—		—		(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) losses (1)	—		(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

(1)Includes the Company's share of certain realized investment gains (losses) of its joint ventures reported using the equity method of accounting.

(In millions)	Evernorth		U.S. Medical		International Markets		Group Disability and Other		Corporate and Eliminations		Total
2018
Revenues from external customers	$	5,902	$	31,759	$	5,174	$	4,335	$	—	$	47,170
Inter-segment revenues	1,154		573		—		14		(1,741)
Net investment income (loss)	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 certain equity method investments	—		—		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 (gains) losses (1)	—		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
Charges (benefits) associated with 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 certain realized investment gains (losses) of its joint ventures reported 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 years ended December 31:

(In millions)	2020		2019		2018
Products (Pharmacy revenues) (ASC 606)
Network revenues	$	53,574	$	50,431	$	1,415
Home delivery and specialty revenues	48,792		47,768		3,997
Other	5,403		4,900		67
Total pharmacy revenues	$	107,769	$	103,099	$	5,479
Insurance premiums (ASC 944)
U.S. Medical premiums
U.S. Commercial
Health Insurance	13,389		12,523		10,710
Stop loss	4,614		4,328		4,008
Other	1,135		1,040		1,038
U.S. Government
Medicare Advantage	7,565		6,314		5,832
Medicare Part D	1,593		1,699		764
Other	4,301		4,185		4,496
Total U.S. Medical premiums	32,597		30,089		26,848
International Markets premiums	5,511		5,266		5,043
Domestic disability, life and accident premiums	4,423		4,225		4,000
Other premiums	96		134		222
Total premiums	42,627		39,714		36,113
Services (ASC 606)
Fees	8,532		9,229		5,558
Other external revenues	229		134		20
Total services	8,761		9,363		5,578
Total revenues from external customers	$	159,157	$	152,176	$	47,170

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)	2020		2019		2018
United States	$	154,042	$	147,332	$	42,773
South Korea	2,123		2,022		2,093
All other foreign countries	2,992		2,822		2,304
Total	$	159,157	$	152,176	$	47,170

Revenues from U.S. Federal Government agencies, under a number of contracts, were 15% of consolidated revenues in 2020, 14% in 2019 and 16% in 2018