Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting Information, Additional Information [Abstract]

Segment Information

Segment Information

Our reportable segments are comprised of Western Region Operations and Government Contracts. Effective January 1, 2013, we closed out our Divested Operations and Services segment as discussed below. Our Western Region Operations reportable segment includes the operations of our commercial, Medicare, Medicaid and dual eligibles health plans, our health and life insurance companies, our pharmaceutical services subsidiaries and certain operations of our behavioral health subsidiaries. These operations are conducted primarily in California, Arizona, Oregon and Washington. As a result of the classification of our Medicare PDP business as discontinued operations, our Western Region Operations reportable segment excludes the operating results of our Medicare PDP business for the year ended December 31, 2012. Our Government Contracts reportable segment includes government-sponsored managed care and administrative services contracts through the TRICARE program, the Department of Defense MFLC program, the VA's PC3 Program and certain other health care-related government contracts. For the year ended December 31, 2012, our Divested Operations and Services reportable segment included the run-out of our Northeast business that was sold in the Northeast Sale on December 11, 2009 and transition-related revenues and expenses of our Medicare PDP business that was sold on April 1, 2012. As of December 31, 2012, we had substantially completed the administration and run-out of our divested businesses. See Note 3 for more information regarding the sale of our Medicare PDP business and the Northeast Sale. In connection with the Cognizant Transaction, we reviewed our reportable segments and determined that no changes to our reportable segments were necessary. See Note 3 for additional information regarding the Cognizant Transaction.

The financial results of our reportable segments are reviewed on a monthly basis by our chief operating decision maker ("CODM"). We continuously monitor our reportable segments to ensure that they reflect how our CODM manages our company.

We evaluate performance and allocate resources based on segment pretax income. Our assets are managed centrally and viewed by our CODM on consolidated basis; therefore, they are not allocated to our segments and our segments are not evaluated for performance based on assets. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies (see Note 2), except that intersegment transactions are not eliminated. We include investment income, administrative services fees and other income and expenses associated with our corporate shared services and other costs in determining our Western Region Operations and Divested Operations and Services reportable segments’ pretax income to reflect the fact that these revenues and expenses are primarily used to support our Western Region Operations and Divested Operations and Services.

We also have a Corporate/Other segment that is not a business operating segment. It is added to our reportable segments to provide a reconciliation to our consolidated results. The Corporate/Other segment includes costs that are excluded from the calculation of segment pretax income because they are not managed within the segments and are not directly identified with a particular operating segment. Accordingly, these costs are not included in the performance evaluation of our reportable segments by our CODM. In addition, certain charges, including but not limited to those related to our continuing efforts to address scale issues, as well as asset impairments, are reported as part of Corporate/Other.

Presented below are segment data for the three years ended December 31, 2014, 2013 and 2012.

2014

	Western Region Operations			Government Contracts		Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	13,361.2		$	604.0	$	—		$	13,965.2
Intersegment revenues	12.4			—		(12.4		)	—
Net investment income	45.2			—		—			45.2
Administrative services fees and other income	(1.7		)	—		—			(1.7		)
Interest expense	31.4			—		—			31.4
Depreciation and amortization	29.7			—		0.1			29.8
Share-based compensation expense	25.0			3.3		—			28.3
Segment pretax income (loss)	315.6			69.5		(185.3		)	199.8

2013

	Western Region Operations		Government Contracts		Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	10,377.1	$	572.3	$	—		$	10,949.4
Intersegment revenues	11.1		—		(11.1		)	—
Net investment income	69.6		—		—			69.6
Administrative services fees and other income	34.8		—		—			34.8
Interest expense	32.6		—		—			32.6
Depreciation and amortization	38.6		—		—			38.6
Share-based compensation expense	26.1		3.8		—			29.9
Segment pretax income (loss)	207.5		74.5		(12.0		)	270.0

 2012

	Western Region Operations		Government Contracts		Divested Operations and Services			Corporate/Other/ Eliminations			Total
	(Dollars in millions)
Revenues from external sources	$	10,459.1	$	689.1	$	—		$	—		$	11,148.2
Intersegment revenues	11.0		—		—			(11.0		)	—
Net investment income	82.4		—		—			—			82.4
Administrative services fees and other income	18.0		—		—			—			18.0
Divested operations and services revenue	—		—		40.5			—			40.5
Interest expense	33.2		—		—			—			33.2
Depreciation and amortization	31.1		—		—			—			31.1
Share-based compensation expense	24.1		4.2		0.6			—			28.9
Segment pretax income (loss)	29.2		89.9		(45.4		)	(42.0		)	31.7

Our health plan services premium revenue by line of business is as follows:

	Year Ended December 31,
	2014		2013		2012
	(Dollars in millions)
Commercial premium revenue	$	5,443.1	$	5,175.4	5,705.5
Medicare premium revenue	3,044.3		2,771.4		2,790.5
Medicaid premium revenue	4,755.9		2,430.3		1,963.1
Dual Eligibles premium revenue	117.9		—		—
Total health plan services premiums	$	13,361.2	$	10,377.1	$	10,459.1