Full Press Release Details
| Investor | Valerie Haertel | Media | T.J. Crawford |
| Contact: | Senior Vice President | Contact: | Vice President |
| Investor Relations | External Affairs | ||
| (401) 770-4050 | (212) 457-0583 |
CVS HEALTH REPORTS THIRD QUARTER RESULTS
2019 EPS GUIDANCE RAISED AND NARROWED,
REFLECTING STRONG EXECUTION OF STRATEGIC LONG-TERM PLAN
Third Quarter Year-over-Year Highlights:
Year-to-date Highlights:
2019 Full Year Guidance:
WOONSOCKET, RHODE ISLAND, November 6, 2019 - CVS Health Corporation (NYSE: CVS) today announced operating results for the three months ended September 30, 2019.
President and Chief Executive Officer Larry Merlo stated, "Our third quarter results build on the positive momentum we have seen across the company since the beginning of the year. All of our core businesses performed in line with or above expectations, reflecting strong operational execution. As a result, we delivered strong growth and generated robust operating cash flow, which enabled us to continue to delever while returning capital to our shareholders."
Merlo continued, "Based on strong year-to-date performance, we are raising and narrowing our full-year 2019 Adjusted EPS guidance range to $6.97 to $7.05. As we approach the first anniversary of the Aetna acquisition, we are increasingly confident in the strength of our broad and differentiated assets as a combined company and our ability to deliver compelling value to our customers and the communities we serve. Looking ahead, we remain focused on successful execution of our strategic priorities and integration plans to unleash the full potential of our consumer-centric health care model and create value for all stakeholders."
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The Company presents both GAAP and non-GAAP financial measures in this press release to assist in the comparison of the Company's past financial performance with its current financial performance. See "Non-GAAP Financial Information" on pages 11 through 12 and endnotes (1) through (4) on page 27 for explanations of non-GAAP financial measures presented in this press release. See pages 13 through 17 and 25 through 26 for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure.
Consolidated Third Quarter Results
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| In millions, except per share amounts | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
| Total revenues | $ | 64,810 | $ | 47,490 | $ | 17,320 | $ | 189,887 | $ | 140,155 | $ | 49,732 | |||||||||||
| Operating income | 2,928 | 2,574 | 354 | 8,950 | 3,197 | 5,753 | |||||||||||||||||
| Adjusted operating income (1) | 3,947 | 2,650 | 1,297 | 11,573 | 7,542 | 4,031 | |||||||||||||||||
| Net income (loss) | 1,529 | 1,390 | 139 | 4,887 | (175 | ) | 5,062 | ||||||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | 1.17 | $ | 1.36 | $ | (0.19 | ) | $ | 3.75 | $ | (0.17 | ) | $ | 3.92 | |||||||||
| Adjusted EPS (2) | $ | 1.84 | $ | 1.73 | $ | 0.11 | $ | 5.35 | $ | 4.89 | $ | 0.46 | |||||||||||
| Enterprise prescriptions (5) (6) | 686.6 | 657.0 | 29.6 | 2,049.5 | 1,973.6 | 75.9 |
Pharmacy Services Segment
The Pharmacy Services segment provides a full range of pharmacy benefit management services to employers, health plans, government employee groups and government sponsored programs. The segment results for the three and nine months ended September 30, 2019 and 2018 were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| In millions | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
| Total revenues | $ | 36,018 | $ | 33,864 | $ | 2,154 | $ | 104,418 | $ | 99,837 | $ | 4,581 | |||||||||||
| Operating income | 1,340 | 1,275 | 65 | 3,387 | 3,268 | 119 | |||||||||||||||||
| Adjusted operating income (1) | 1,439 | 1,362 | 77 | 3,682 | 3,530 | 152 | |||||||||||||||||
| Total pharmacy claims processed (6) | 509.5 | 466.3 | 43.2 | 1,480.3 | 1,405.2 | 75.1 | |||||||||||||||||
| Pharmacy network (7) | 430.2 | 394.5 | 35.7 | 1,250.0 | 1,192.2 | 57.8 | |||||||||||||||||
| Mail choice (8) | 79.3 | 71.8 | 7.5 | 230.3 | 213.0 | 17.3 |
See the supplemental information on page 21 for additional information regarding the performance of the Pharmacy Services segment.
The Retail/LTC segment fulfills prescriptions for medications, provides patient care programs, sells a wide-assortment of general merchandise, provides health care services through walk-in clinics and provides services to long-term care facilities. The segment results for the three and nine months ended September 30, 2019 and 2018 were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| In millions | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
| Total revenues | $ | 21,466 | $ | 20,856 | $ | 610 | $ | 64,028 | $ | 61,960 | $ | 2,068 | |||||||||||
| Operating income | 1,095 | 1,491 | (396 | ) | 3,884 | 890 | 2,994 | ||||||||||||||||
| Adjusted operating income (1) | 1,516 | 1,622 | (106 | ) | 4,674 | 5,279 | (605 | ) | |||||||||||||||
| Prescriptions filled (6) | 352.3 | 331.2 | 21.1 | 1,048.2 | 989.7 | 58.5 |
See the supplemental information on page 22 for additional information regarding the performance of the Retail/LTC segment.
Health Care Benefits Segment
The Health Care Benefits segment provides a full range of insured and self-insured ("ASC") medical, pharmacy, dental and behavioral health products and services. For periods prior to the Aetna Acquisition Date, the Health Care Benefits segment consisted solely of the Company's SilverScript Medicare Part D prescription drug plan ("PDP") business. The segment results for the three and nine months ended September 30, 2019 and 2018 were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| In millions, except percentages | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||||||
| Total revenues | $ | 17,181 | $ | 641 | $ | 16,540 | $ | 52,454 | $ | 2,723 | $ | 49,731 | |||||||||||
| Operating income (loss) | 1,036 | 74 | 962 | 3,253 | (64 | ) | 3,317 | ||||||||||||||||
| Adjusted operating income (loss) (1) | 1,423 | 75 | 1,348 | 4,423 | (62 | ) | 4,485 | ||||||||||||||||
| Medical benefit ratio ("MBR") (a) | 83.3 | % | NM | 83.7 | % | NM | |||||||||||||||||
| Medical membership as of September 30, 2019 | 22.8 |
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See the supplemental information on page 23 for additional information regarding the performance of the Health Care Benefits segment.
2019 Full Year Guidance
The Company revised its full year 2019 GAAP operating income guidance range to $11.77 billion to $11.95 billion from $11.82 billion to $12.02 billion and raised and narrowed its guidance range for full year 2019 adjusted operating income to $15.22 billion to $15.40 billion from $15.16 billion to $15.36 billion. The Company revised its full year 2019 GAAP diluted EPS from continuing operations guidance range to $4.90 to $4.98 from $4.93 to $5.04, and raised and narrowed its full year 2019 Adjusted EPS guidance range to $6.97 to $7.05 from $6.89 to $7.00.
The adjustments between GAAP operating income and GAAP diluted EPS from continuing operations and adjusted operating income and Adjusted EPS include, as applicable, adding back amortization of intangible assets, integration costs related to the Aetna Acquisition, store rationalization charges, gains/losses on divestitures and losses on early extinguishment of debt.
Teleconference and Webcast
The Company will be holding a conference call today for investors at 8:00 a.m. (Eastern time) to discuss its third quarter results. An audio webcast of the call will be broadcast simultaneously for all interested parties through the Investor Relations section of the CVS Health website at http://investors.cvshealth.com. This webcast will be archived and available on the website for a one-year period following the conference call.
CVS Health is the nation's premier health innovation company helping people on their path to better health. Whether in one of its pharmacies or through its health services and plans, CVS Health is pioneering a bold new approach to total health by making quality care more affordable, accessible, simple and seamless. CVS Health is community-based and locally focused, engaging consumers with the care they need when and where they need it. The Company has approximately 9,900 retail locations, approximately 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 102 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year and expanding specialty pharmacy services. CVS Health also serves an estimated 38 million people through traditional, voluntary and consumer-directed health insurance products and related services, including rapidly expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan. The Company believes its innovative health care model increases access to quality care, delivers better health outcomes and lowers overall health care costs. Find more information about how CVS Health is shaping the future of health at https://www.cvshealth.com.
Cautionary Statement Concerning Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health Corporation. Statements in this press release that are forward-looking include the information under the heading "2019 Full Year Guidance" and the related endnotes and reconciliations and the information in Mr. Merlo's quoted statement. By their nature, all forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons as described in our Securities and Exchange Commission ("SEC") filings, including those set forth in the Risk Factors section and under the section entitled "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K and in our most recently filed Quarterly Report on Form 10-Q.
You are cautioned not to place undue reliance on CVS Health's forward looking statements. These forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. CVS Health does not assume any duty to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, as of any future date.
CVS HEALTH CORPORATION
Condensed Consolidated Statements of Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions, except per share amounts | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenues: | |||||||||||||||
| Products | $ | 47,149 | $ | 46,334 | $ | 136,023 | $ | 136,035 | |||||||
| Premiums | 15,539 | 627 | 47,612 | 2,684 | |||||||||||
| Services | 1,859 | 308 | 5,447 | 951 | |||||||||||
| Net investment income | 263 | 221 | 805 | 485 | |||||||||||
| Total revenues | 64,810 | 47,490 | 189,887 | 140,155 | |||||||||||
| Operating costs: | |||||||||||||||
| Cost of products sold | 40,437 | 39,502 | 116,654 | 115,883 | |||||||||||
| Benefit costs | 12,850 | 439 | 39,396 | 2,399 | |||||||||||
| Goodwill impairment | - | - | - | 3,921 | |||||||||||
| Operating expenses | 8,595 | 4,975 | 24,887 | 14,755 | |||||||||||
| Total operating costs | 61,882 | 44,916 | 180,937 | 136,958 | |||||||||||
| Operating income | 2,928 | 2,574 | 8,950 | 3,197 | |||||||||||
| Interest expense | 747 | 674 | 2,301 | 1,886 | |||||||||||
| Loss on early extinguishment of debt | 79 | - | 79 | - | |||||||||||
| Other expense (income) | (31 | ) | 1 | (93 | ) | 7 | |||||||||
| Income before income tax provision | 2,133 | 1,899 | 6,663 | 1,304 | |||||||||||
| Income tax provision | 604 | 509 | 1,776 | 1,478 | |||||||||||
| Income (loss) from continuing operations | 1,529 | 1,390 | 4,887 | (174 | ) | ||||||||||
| Loss from discontinued operations, net of tax | - | - | - | (1 | ) | ||||||||||
| Net income (loss) | 1,529 | 1,390 | 4,887 | (175 | ) | ||||||||||
| Net loss attributable to noncontrolling interests | 1 | - | - | - | |||||||||||
| Net income (loss) attributable to CVS Health | $ | 1,530 | $ | 1,390 | $ | 4,887 | $ | (175 | ) | ||||||
| Basic earnings (loss) per share: | |||||||||||||||
| Income (loss) from continuing operations attributable to CVS Health | $ | 1.17 | $ | 1.36 | $ | 3.76 | $ | (0.17 | ) | ||||||
| Loss from discontinued operations attributable to CVS Health | $ | - | $ | - | $ | - | $ | - | |||||||
| Net income (loss) attributable to CVS Health | $ | 1.17 | $ | 1.36 | $ | 3.76 | $ | (0.17 | ) | ||||||
| Weighted average basic shares outstanding | 1,302 | 1,020 | 1,300 | 1,018 | |||||||||||
| Diluted earnings (loss) per share: | |||||||||||||||
| Income (loss) from continuing operations attributable to CVS Health | $ | 1.17 | $ | 1.36 | $ | 3.75 | $ | (0.17 | ) | ||||||
| Loss from discontinued operations attributable to CVS Health | $ | - | $ | - | $ | - | $ | - | |||||||
| Net income (loss) attributable to CVS Health | $ | 1.17 | $ | 1.36 | $ | 3.75 | $ | (0.17 | ) | ||||||
| Weighted average diluted shares outstanding | 1,305 | 1,022 | 1,303 | 1,018 | |||||||||||
| Dividends declared per share | $ | 0.50 | $ | 0.50 | $ | 1.50 | $ | 1.50 |
CVS HEALTH CORPORATION
Condensed Consolidated Balance Sheets
| In millions | September 30, 2019 | December 31, 2018 | |||||
| Assets: | |||||||
| Cash and cash equivalents | $ | 5,193 | $ | 4,059 | |||
| Investments | 2,334 | 2,522 | |||||
| Accounts receivable, net | 19,789 | 17,631 | |||||
| Inventories | 16,028 | 16,450 | |||||
| Other current assets | 4,841 | 4,581 | |||||
| Total current assets | 48,185 | 45,243 | |||||
| Long-term investments | 17,342 | 15,732 | |||||
| Property and equipment, net | 11,651 | 11,349 | |||||
| Operating lease right-of-use assets | 20,757 | - | |||||
| Goodwill | 79,548 | 78,678 | |||||
| Intangible assets, net | 33,655 | 36,524 | |||||
| Separate accounts assets | 4,590 | 3,884 | |||||
| Other assets | 4,385 | 5,046 | |||||
| Total assets | $ | 220,113 | $ | 196,456 | |||
| Liabilities: | |||||||
| Accounts payable | $ | 9,442 | $ | 8,925 | |||
| Pharmacy claims and discounts payable | 13,099 | 11,365 | |||||
| Health care costs payable | 7,014 | 6,147 | |||||
| Policyholders' funds | 2,938 | 2,939 | |||||
| Accrued expenses | 11,615 | 10,711 | |||||
| Other insurance liabilities | 1,790 | 1,937 | |||||
| Current portion of operating lease liabilities | 1,798 | - | |||||
| Short-term debt | 1,070 | 720 | |||||
| Current portion of long-term debt | 3,778 | 1,265 | |||||
| Total current liabilities | 52,544 | 44,009 | |||||
| Long-term operating lease liabilities | 18,826 | - | |||||
| Long-term debt | 64,206 | 71,444 | |||||
| Deferred income taxes | 7,279 | 7,677 | |||||
| Separate accounts liabilities | 4,590 | 3,884 | |||||
| Other long-term insurance liabilities | 7,557 | 8,119 | |||||
| Other long-term liabilities | 2,178 | 2,780 | |||||
| Total liabilities | 157,180 | 137,913 | |||||
| Shareholders' equity: | |||||||
| Preferred stock | - | - | |||||
| Common stock and capital surplus | 45,854 | 45,440 | |||||
| Treasury stock | (28,207 | ) | (28,228 | ) | |||
| Retained earnings | 44,017 | 40,911 | |||||
| Accumulated other comprehensive income | 950 | 102 | |||||
| Total CVS Health shareholders' equity | 62,614 | 58,225 | |||||
| Noncontrolling interests | 319 | 318 | |||||
| Total shareholders' equity | 62,933 | 58,543 | |||||
| Total liabilities and shareholders' equity | $ | 220,113 | $ | 196,456 |
CVS HEALTH CORPORATION
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended September 30, | |||||||
| In millions | 2019 | 2018 | |||||
| Cash flows from operating activities: | |||||||
| Cash receipts from customers | $ | 184,519 | $ | 132,275 | |||
| Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (109,958 | ) | (107,920 | ) | |||
| Insurance benefits paid | (38,812 | ) | (2,400 | ) | |||
| Cash paid to other suppliers and employees | (21,411 | ) | (12,305 | ) | |||
| Interest and investment income received | 756 | 406 | |||||
| Interest paid | (2,675 | ) | (1,759 | ) | |||
| Income taxes paid | (2,205 | ) | (1,911 | ) | |||
| Net cash provided by operating activities | 10,214 | 6,386 | |||||
| Cash flows from investing activities: | |||||||
| Proceeds from sales and maturities of investments | 5,616 | 43 | |||||
| Purchases of investments | (6,011 | ) | (97 | ) | |||
| Purchases of property and equipment | (1,890 | ) | (1,452 | ) | |||
| Acquisitions (net of cash acquired) | (361 | ) | (616 | ) | |||
| Proceeds from sale of subsidiary | - | 725 | |||||
| Other | 16 | 11 | |||||
| Net cash used in investing activities | (2,630 | ) | (1,386 | ) | |||
| Cash flows from financing activities: | |||||||
| Net borrowings (repayments) of short-term debt | 350 | (1,276 | ) | ||||
| Proceeds from issuance of long-term debt | 3,458 | 39,376 | |||||
| Repayments of long-term debt | (8,350 | ) | (2,266 | ) | |||
| Derivative settlements | (25 | ) | 446 | ||||
| Dividends paid | (1,952 | ) | (1,528 | ) | |||
| Proceeds from exercise of stock options | 183 | 214 | |||||
| Payments for taxes related to net share settlement of equity awards | (85 | ) | (39 | ) | |||
| Other | 11 | - | |||||
| Net cash provided by (used in) financing activities | (6,410 | ) | 34,927 | ||||
| Net increase in cash, cash equivalents and restricted cash | 1,174 | 39,927 | |||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 4,295 | 1,900 | |||||
| Cash, cash equivalents and restricted cash at the end of the period | $ | 5,469 | $ | 41,827 |
CVS HEALTH CORPORATION
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended September 30, | |||||||
| In millions | 2019 | 2018 | |||||
| Reconciliation of net income (loss) to net cash provided by operating activities: | |||||||
| Net income (loss) | $ | 4,887 | $ | (175 | ) | ||
| Adjustments required to reconcile net income (loss) to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 3,275 | 1,911 | |||||
| Goodwill impairment | - | 3,921 | |||||
| Stock-based compensation | 355 | 172 | |||||
| Loss on sale of subsidiary | 205 | 86 | |||||
| Loss on early extinguishment of debt | 79 | - | |||||
| Deferred income taxes and other noncash items | (38 | ) | 210 | ||||
| Change in operating assets and liabilities, net of effects from acquisitions: | |||||||
| Accounts receivable, net | (2,312 | ) | (1,725 | ) | |||
| Inventories | 413 | 472 | |||||
| Other assets | (374 | ) | (3 | ) | |||
| Accounts payable and pharmacy claims and discounts payable | 2,330 | 1,839 | |||||
| Health care costs payable and other insurance liabilities | 535 | - | |||||
| Other liabilities | 859 | (322 | ) | ||||
| Net cash provided by operating activities | $ | 10,214 | $ | 6,386 |
Non-GAAP Financial Information
The Company uses non-GAAP financial measures to analyze underlying business performance and trends. The Company believes that providing these non-GAAP financial measures enhances the Company's and investors' ability to compare the Company's past financial performance with its current performance. These non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. The Company's definitions of its non-GAAP financial measures may not be comparable to similarly titled measurements reported by other companies.
Non-GAAP financial measures such as adjusted operating income, adjusted earnings per share (EPS), adjusted income from continuing operations attributable to CVS Health, adjusted revenues and adjusted operating expenses exclude from the relevant GAAP metrics, as applicable: amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance.
For the periods covered in this press release, the following items are excluded from the non-GAAP financial measures described above, as applicable, because the Company believes they neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance:
See endnotes (1) through (4) for definitions of non-GAAP financial measures. Reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure are presented on pages 13 through 17 and 25 through 26.
Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
Adjusted Operating Income
The following are reconciliations of operating income to adjusted operating income:
| Three Months Ended September 30, 2019 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Operating income (loss) (GAAP measure) | $ | 1,340 | $ | 1,095 | $ | 1,036 | $ | (364 | ) | $ | (179 | ) | $ | 2,928 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 99 | 120 | 387 | 1 | - | 607 | |||||||||||||||||
| Acquisition-related integration costs | - | - | - | 111 | - | 111 | |||||||||||||||||
| Store rationalization charge | - | 96 | - | - | - | 96 | |||||||||||||||||
| Loss on divestiture of subsidiary | - | 205 | - | - | - | 205 | |||||||||||||||||
| Adjusted operating income (loss) (1) | $ | 1,439 | $ | 1,516 | $ | 1,423 | $ | (252 | ) | $ | (179 | ) | $ | 3,947 |
| Three Months Ended September 30, 2018 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Operating income (loss) (GAAP measure) | $ | 1,275 | $ | 1,491 | $ | 74 | $ | (70 | ) | $ | (196 | ) | $ | 2,574 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 87 | 127 | 1 | - | - | 215 | |||||||||||||||||
| Acquisition-related transaction and integration costs | - | 4 | - | 66 | - | 70 | |||||||||||||||||
| Interest income on financing for the Aetna Acquisition | - | - | - | (209 | ) | - | (209 | ) | |||||||||||||||
| Adjusted operating income (loss) (1) | $ | 1,362 | $ | 1,622 | $ | 75 | $ | (213 | ) | $ | (196 | ) | $ | 2,650 |
| Nine Months Ended September 30, 2019 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Operating income (loss) (GAAP measure) | $ | 3,387 | $ | 3,884 | $ | 3,253 | $ | (1,053 | ) | $ | (521 | ) | $ | 8,950 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 295 | 354 | 1,170 | 3 | - | 1,822 | |||||||||||||||||
| Acquisition-related integration costs | - | - | - | 365 | - | 365 | |||||||||||||||||
| Store rationalization charges | - | 231 | - | - | - | 231 | |||||||||||||||||
| Loss on divestiture of subsidiary | - | 205 | - | - | - | 205 | |||||||||||||||||
| Adjusted operating income (loss) (1) | $ | 3,682 | $ | 4,674 | $ | 4,423 | $ | (685 | ) | $ | (521 | ) | $ | 11,573 |
| Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Operating income (loss) (GAAP measure) | $ | 3,268 | $ | 890 | $ | (64 | ) | $ | (339 | ) | $ | (558 | ) | $ | 3,197 | ||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Amortization of intangible assets | 262 | 375 | 2 | - | - | 639 | |||||||||||||||||
| Acquisition-related transaction and integration costs | - | 7 | - | 145 | - | 152 | |||||||||||||||||
| Loss on divestiture of subsidiary | - | 86 | - | - | - | 86 | |||||||||||||||||
| Goodwill impairment | - | 3,921 | - | - | - | 3,921 | |||||||||||||||||
| Interest income on financing for the Aetna Acquisition | - | - | - | (453 | ) | - | (453 | ) | |||||||||||||||
| Adjusted operating income (loss) (1) | $ | 3,530 | $ | 5,279 | $ | (62 | ) | $ | (647 | ) | $ | (558 | ) | $ | 7,542 |
Adjusted Earnings Per Share
The following are reconciliations of income (loss) from continuing operations attributable to CVS Health to adjusted income from continuing operations attributable to CVS Health and calculations of GAAP diluted EPS from continuing operations and Adjusted EPS:
| Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | ||||||||||||||
| In millions, except per share amounts | Total Company | Per Common Share | Total Company | Per Common Share | |||||||||||
| Income from continuing operations (GAAP measure) | $ | 1,529 | $ | 1,390 | |||||||||||
| Net loss attributable to noncontrolling interests (GAAP measure) | 1 | - | |||||||||||||
| Income allocable to participating securities (GAAP measure) | - | (1 | ) | ||||||||||||
| Income from continuing operations attributable to CVS Health (GAAP measure) | 1,530 | $ | 1.17 | 1,389 | $ | 1.36 | |||||||||
| Non-GAAP adjustments: | |||||||||||||||
| Amortization of intangible assets | 607 | 0.46 | 215 | 0.21 | |||||||||||
| Acquisition-related transaction and integration costs | 111 | 0.09 | 70 | 0.07 | |||||||||||
| Store rationalization charge | 96 | 0.07 | - | - | |||||||||||
| Loss on divestiture of subsidiary | 205 | 0.16 | - | - | |||||||||||
| Loss on early extinguishment of debt | 79 | 0.06 | - | - | |||||||||||
| Net interest expense on financing for the Aetna Acquisition | - | - | 227 | 0.22 | |||||||||||
| Income tax benefit | (220 | ) | (0.17 | ) | (132 | ) | (0.13 | ) | |||||||
| Income allocable to participating securities, net of tax (a) | (1 | ) | - | (1 | ) | - | |||||||||
| Adjusted income from continuing operations attributable to CVS Health (2) | $ | 2,407 | $ | 1.84 | $ | 1,768 | $ | 1.73 | |||||||
| Weighted average diluted shares outstanding | 1,305 | 1,022 |
_____________________________________________
| Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | ||||||||||||||
| In millions, except per share amounts | Total Company | Per Common Share | Total Company | Per Common Share | |||||||||||
| Income (loss) from continuing operations (GAAP measure) | $ | 4,887 | $ | (174 | ) | ||||||||||
| Net loss attributable to noncontrolling interests (GAAP measure) | - | - | |||||||||||||
| Income allocable to participating securities (GAAP measure) | (3 | ) | (3 | ) | |||||||||||
| Income (loss) from continuing operations attributable to CVS Health (GAAP measure) | 4,884 | $ | 3.75 | (177 | ) | $ | (0.17 | ) | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Amortization of intangible assets | 1,822 | 1.40 | 639 | 0.63 | |||||||||||
| Acquisition-related transaction and integration costs | 365 | 0.28 | 152 | 0.15 | |||||||||||
| Store rationalization charges | 231 | 0.17 | - | - | |||||||||||
| Loss on divestiture of subsidiary | 205 | 0.16 | 86 | 0.08 | |||||||||||
| Loss on early extinguishment of debt | 79 | 0.06 | - | - | |||||||||||
| Goodwill impairment | - | - | 3,921 | 3.84 | |||||||||||
| Net interest expense on financing for the Aetna Acquisition | - | - | 697 | 0.68 | |||||||||||
| Income tax benefit | (611 | ) | (0.47 | ) | (320 | ) | (0.31 | ) | |||||||
| Income allocable to participating securities, net of tax (a) | (2 | ) | - | (7 | ) | (0.01 | ) | ||||||||
| Adjusted income from continuing operations attributable to CVS Health (2) | $ | 6,973 | $ | 5.35 | $ | 4,991 | $ | 4.89 | |||||||
| Weighted average diluted shares outstanding (GAAP) (2) | 1,303 | 1,018 | |||||||||||||
| Adjusted weighted average diluted shares outstanding (non-GAAP) (2) | 1,303 | 1,020 |
_____________________________________________
Adjusted Revenues and Adjusted Operating Expenses
The following is a reconciliation of total revenues to adjusted revenues:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Total revenues (GAAP measure) | $ | 64,810 | $ | 47,490 | $ | 189,887 | $ | 140,155 | |||||||
| Non-GAAP adjustment: | |||||||||||||||
| Interest income on financing for the Aetna Acquisition | - | (209 | ) | - | (453 | ) | |||||||||
| Adjusted revenues (3) | $ | 64,810 | $ | 47,281 | $ | 189,887 | $ | 139,702 |
The following is a reconciliation of operating expenses to adjusted operating expenses:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Operating expenses (GAAP measure) | $ | 8,595 | $ | 4,975 | $ | 24,887 | $ | 14,755 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Amortization of intangible assets | (607 | ) | (215 | ) | (1,822 | ) | (639 | ) | |||||||
| Acquisition-related transaction and integration costs | (111 | ) | (70 | ) | (365 | ) | (152 | ) | |||||||
| Store rationalization charges | (96 | ) | - | (231 | ) | - | |||||||||
| Loss on divestiture of subsidiary | (205 | ) | - | (205 | ) | (86 | ) | ||||||||
| Adjusted operating expenses (4) | $ | 7,576 | $ | 4,690 | $ | 22,264 | $ | 13,878 |
Supplemental Information
The Company's segments maintain separate financial information, and the Company's chief operating decision maker (the "CODM") evaluates the segments' operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance. The CODM evaluates the performance of the Company's segments based on adjusted operating income. Effective for the first quarter of 2019, adjusted operating income is defined as operating income (GAAP measure) excluding the impact of amortization of intangible assets and other items, if any, that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance as further described in endnote (1). Segment financial information for the three and nine months ended September 30, 2018 has been retrospectively adjusted to conform with the current period presentation. The Company uses adjusted operating income as its principal measure of segment performance as it enhances the Company's ability to compare past financial performance with current performance and analyze underlying business performance and trends.
Effective for the first quarter of 2019, the Company realigned the composition of its segments to correspond with changes to its operating model and reflect how the CODM reviews information and manages the business. As a result of this realignment, the Company's SilverScript PDP moved from the Pharmacy Services segment to the Health Care Benefits segment. In addition, the Company moved Aetna's mail order and specialty pharmacy operations from the Health Care Benefits segment to the Pharmacy Services segment. Segment financial information for the three and nine months ended September 30, 2018, has been retrospectively adjusted to reflect these changes as shown below:
| Three Months Ended September 30, 2018 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Revenues, as previously reported | $ | 33,767 | $ | 20,856 | $ | - | $ | 217 | $ | (7,350 | ) | $ | 47,490 | ||||||||||
| Adjustments | 97 | - | 641 | - | (738 | ) | - | ||||||||||||||||
| Revenues, as adjusted | $ | 33,864 | $ | 20,856 | $ | 641 | $ | 217 | $ | (8,088 | ) | $ | 47,490 | ||||||||||
| Cost of products sold (a) | $ | 31,587 | $ | 15,042 | $ | - | $ | - | $ | (7,127 | ) | $ | 39,502 | ||||||||||
| Adjustments | 651 | - | - | - | (651 | ) | - | ||||||||||||||||
| Cost of products sold, as adjusted | $ | 32,238 | $ | 15,042 | $ | - | $ | - | $ | (7,778 | ) | $ | 39,502 | ||||||||||
| Benefit costs (a) | $ | 439 | $ | - | $ | - | $ | - | $ | - | $ | 439 | |||||||||||
| Adjustments | (439 | ) | - | 439 | - | - | - | ||||||||||||||||
| Benefit costs, as adjusted | $ | - | $ | - | $ | 439 | $ | - | $ | - | $ | 439 | |||||||||||
| Operating expenses, as previously reported | $ | 392 | $ | 4,323 | $ | - | $ | 287 | $ | (27 | ) | $ | 4,975 | ||||||||||
| Adjustments | (41 | ) | - | 128 | - | (87 | ) | - | |||||||||||||||
| Operating expenses, as adjusted | $ | 351 | $ | 4,323 | $ | 128 | $ | 287 | $ | (114 | ) | $ | 4,975 | ||||||||||
| Operating income (loss), as previously reported | $ | 1,349 | $ | 1,491 | $ | - | $ | (70 | ) | $ | (196 | ) | $ | 2,574 | |||||||||
| Adjustments | (74 | ) | - | 74 | - | - | - | ||||||||||||||||
| Operating income (loss), as adjusted | 1,275 | 1,491 | 74 | (70 | ) | (196 | ) | 2,574 | |||||||||||||||
| Segment measure adjustments | 87 | 131 | 1 | (143 | ) | - | 76 | ||||||||||||||||
| Adjusted operating income (loss) | $ | 1,362 | $ | 1,622 | $ | 75 | $ | (213 | ) | $ | (196 | ) | $ | 2,650 |
_____________________________________________
| Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
| In millions | Pharmacy Services | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations | Consolidated Totals | |||||||||||||||||
| Revenues, as previously reported | $ | 99,238 | $ | 61,960 | $ | - | $ | 475 | $ | (21,518 | ) | $ | 140,155 | ||||||||||
| Adjustments | 599 | - | 2,723 | - | (3,322 | ) | - | ||||||||||||||||
| Revenues, as adjusted | $ | 99,837 | $ | 61,960 | $ | 2,723 | $ | 475 | $ | (24,840 | ) | $ | 140,155 | ||||||||||
| Cost of products sold (a) | $ | 92,459 | $ | 44,318 | $ | - | $ | - | $ | (20,894 | ) | $ | 115,883 | ||||||||||
| Adjustments | 3,059 | - | - | - | (3,059 | ) | - | ||||||||||||||||
| Cost of products sold, as adjusted | $ | 95,518 | $ | 44,318 | $ | - | $ | - | $ | (23,953 | ) | $ | 115,883 | ||||||||||
| Benefit costs (a) | $ | 2,399 | $ | - | $ | - | $ | - | $ | - | $ | 2,399 | |||||||||||
| Adjustments | (2,399 | ) | - | 2,399 | - | - | - | ||||||||||||||||
| Benefit costs, as adjusted | $ | - | $ | - | $ | 2,399 | $ | - | $ | - | $ | 2,399 | |||||||||||
| Operating expenses, as previously reported | $ | 1,176 | $ | 12,831 | $ | - | $ | 814 | $ | (66 | ) | $ | 14,755 | ||||||||||
| Adjustments | (125 | ) | - | 388 | - | (263 | ) | - | |||||||||||||||
| Operating expenses, as adjusted | $ | 1,051 | $ | 12,831 | $ | 388 | $ | 814 | $ | (329 | ) | $ | 14,755 | ||||||||||
| Operating income (loss), as previously reported | $ | 3,204 | $ | 890 | $ | - | $ | (339 | ) | $ | (558 | ) | $ | 3,197 | |||||||||
| Adjustments | 64 | - | (64 | ) | - | - | - | ||||||||||||||||
| Operating income (loss), as adjusted | 3,268 | 890 | (64 | ) | (339 | ) | (558 | ) | 3,197 | ||||||||||||||
| Segment measure adjustments | 262 | 4,389 | 2 | (308 | ) | - | 4,345 | ||||||||||||||||
| Adjusted operating income (loss) | $ | 3,530 | $ | 5,279 | $ | (62 | ) | $ | (647 | ) | $ | (558 | ) | $ | 7,542 |
_____________________________________________
The following is a reconciliation of financial measures of the Company's segments to the consolidated totals:
| In millions | Pharmacy Services (a) | Retail/ LTC | Health Care Benefits | Corporate/ Other | Intersegment Eliminations (b) | Consolidated Totals | |||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2019 | |||||||||||||||||||||||
| Total revenues | $ | 36,018 | $ | 21,466 | $ | 17,181 | $ | 152 | $ | (10,007 | ) | $ | 64,810 | ||||||||||
| Operating income (loss) | 1,340 | 1,095 | 1,036 | (364 | ) | (179 | ) | 2,928 | |||||||||||||||
| Adjusted operating income (loss) (1) | 1,439 | 1,516 | 1,423 | (252 | ) | (179 | ) | 3,947 | |||||||||||||||
| September 30, 2018 | |||||||||||||||||||||||
| Total revenues | 33,864 | 20,856 | 641 | 217 | (8,088 | ) | 47,490 | ||||||||||||||||
| Operating income (loss) | 1,275 | 1,491 | 74 | (70 | ) | (196 | ) | 2,574 | |||||||||||||||
| Adjusted operating income (loss) (1) | 1,362 | 1,622 | 75 | (213 | ) | (196 | ) | 2,650 | |||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2019 | |||||||||||||||||||||||
| Total revenues | $ | 104,418 | $ | 64,028 | $ | 52,454 | $ | 423 | $ | (31,436 | ) | $ | 189,887 | ||||||||||
| Operating income (loss) | 3,387 | 3,884 | 3,253 | (1,053 | ) | (521 | ) | 8,950 | |||||||||||||||
| Adjusted operating income (loss) (1) | 3,682 | 4,674 | 4,423 | (685 | ) | (521 | ) | 11,573 | |||||||||||||||
| September 30, 2018 | |||||||||||||||||||||||
| Total revenues | 99,837 | 61,960 | 2,723 | 475 | (24,840 | ) | 140,155 | ||||||||||||||||
| Operating income (loss) | 3,268 | 890 | (64 | ) | (339 | ) | (558 | ) | 3,197 | ||||||||||||||
| Adjusted operating income (loss) (1) | 3,530 | 5,279 | (62 | ) | (647 | ) | (558 | ) | 7,542 |
_____________________________________________
Supplemental Information
Pharmacy Services Segment
The following table summarizes the Pharmacy Services segment's performance for the respective periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions, except percentages | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenues: | |||||||||||||||
| Products | $ | 35,883 | $ | 33,746 | $ | 104,056 | $ | 99,493 | |||||||
| Services | 135 | 118 | 362 | 344 | |||||||||||
| Total revenues | 36,018 | 33,864 | 104,418 | 99,837 | |||||||||||
| Cost of products sold | 34,300 | 32,238 | 99,918 | 95,518 | |||||||||||
| Operating expenses | 378 | 351 | 1,113 | 1,051 | |||||||||||
| Operating expenses as a % of total revenues | 1.0 | % | 1.0 | % | 1.1 | % | 1.1 | % | |||||||
| Operating income | $ | 1,340 | $ | 1,275 | $ | 3,387 | $ | 3,268 | |||||||
| Operating income as a % of total revenues | 3.7 | % | 3.8 | % | 3.2 | % | 3.3 | % | |||||||
| Adjusted operating income (1) | $ | 1,439 | $ | 1,362 | $ | 3,682 | $ | 3,530 | |||||||
| Adjusted operating income as a % of total revenues | 4.0 | % | 4.0 | % | 3.5 | % | 3.5 | % | |||||||
| Revenues (by distribution channel): | |||||||||||||||
| Pharmacy network (7) | $ | 22,469 | $ | 21,921 | $ | 66,071 | $ | 64,625 | |||||||
| Mail choice (8) | 13,403 | 11,812 | 37,912 | 34,807 | |||||||||||
| Other | 146 | 131 | 435 | 405 | |||||||||||
| Pharmacy claims processed: (6) | |||||||||||||||
| Total | 509.5 | 466.3 | 1,480.3 | 1,405.2 | |||||||||||
| Pharmacy network (7) | 430.2 | 394.5 | 1,250.0 | 1,192.2 | |||||||||||
| Mail choice (8) | 79.3 | 71.8 | 230.3 | 213.0 | |||||||||||
| Generic dispensing rate: (6) | |||||||||||||||
| Total | 88.1 | % | 87.2 | % | 88.3 | % | 87.5 | % | |||||||
| Pharmacy network (7) | 88.7 | % | 87.8 | % | 88.9 | % | 88.1 | % | |||||||
| Mail choice (8) | 85.3 | % | 83.9 | % | 85.1 | % | 84.0 | % | |||||||
| Mail choice penetration rate (6) (8) | 15.6 | % | 15.4 | % | 15.6 | % | 15.2 | % |
Supplemental Information
The following table summarizes the Retail/LTC segment's performance for the respective periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions, except percentages | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenues: | |||||||||||||||
| Products | $ | 21,273 | $ | 20,676 | $ | 63,403 | $ | 61,382 | |||||||
| Services | 193 | 180 | 625 | 578 | |||||||||||
| Total revenues | 21,466 | 20,856 | 64,028 | 61,960 | |||||||||||
| Cost of products sold | 15,656 | 15,042 | 46,504 | 44,318 | |||||||||||
| Goodwill impairment | - | - | - | 3,921 | |||||||||||
| Operating expenses | 4,715 | 4,323 | 13,640 | 12,831 | |||||||||||
| Operating expenses as a % of total revenues | 22.0 | % | 20.7 | % | 21.3 | % | 20.7 | % | |||||||
| Operating income | $ | 1,095 | $ | 1,491 | $ | 3,884 | $ | 890 | |||||||
| Operating income as a % of total revenues | 5.1 | % | 7.1 | % | 6.1 | % | 1.4 | % | |||||||
| Adjusted operating income (1) | $ | 1,516 | $ | 1,622 | $ | 4,674 | $ | 5,279 | |||||||
| Adjusted operating income as a % of total revenues | 7.1 | % | 7.8 | % | 7.3 | % | 8.5 | % | |||||||
| Revenues (by major goods/service lines): | |||||||||||||||
| Pharmacy | $ | 16,687 | $ | 16,123 | $ | 49,197 | $ | 47,428 | |||||||
| Front Store | 4,614 | 4,557 | 14,288 | 13,990 | |||||||||||
| Other | 165 | 176 | 543 | 542 | |||||||||||
| Prescriptions filled (6) | 352.3 | 331.2 | 1,048.2 | 989.7 | |||||||||||
| Revenues increase: | |||||||||||||||
| Total | 2.9 | % | 6.4 | % | 3.3 | % | 5.9 | % | |||||||
| Pharmacy | 3.5 | % | 8.4 | % | 3.7 | % | 8.0 | % | |||||||
| Front Store | 1.3 | % | 2.0 | % | 2.1 | % | 1.5 | % | |||||||
| Total prescription volume increase (6) | 6.4 | % | 8.9 | % | 5.9 | % | 8.9 | % | |||||||
| Same store sales increase: (9) | |||||||||||||||
| Total | 3.6 | % | 6.7 | % | 3.9 | % | 6.2 | % | |||||||
| Pharmacy | 4.5 | % | 8.7 | % | 4.7 | % | 8.1 | % | |||||||
| Front Store | 0.6 | % | 0.8 | % | 1.3 | % | 0.5 | % | |||||||
| Prescription volume (6) | 7.8 | % | 9.2 | % | 7.3 | % | 9.1 | % | |||||||
| Generic dispensing rate (6) | 88.2 | % | 87.3 | % | 88.7 | % | 87.8 | % |
Supplemental Information
Health Care Benefits Segment
The following table summarizes the Health Care Benefits segment's performance for the respective periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| In millions, except percentages | 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenues: | |||||||||||||||
| Premiums | $ | 15,507 | $ | 627 | $ | 47,543 | $ | 2,684 | |||||||
| Services | 1,528 | 10 | 4,453 | 29 | |||||||||||
| Net investment income | 146 | 4 | 458 | 10 | |||||||||||
| Total revenues | 17,181 | 641 | 52,454 | 2,723 | |||||||||||
| Benefit costs | 12,914 | 439 | 39,815 | 2,399 | |||||||||||
| MBR (Benefit costs as a % of premium revenues) (a) | 83.3 | % | NM | 83.7 | % | NM | |||||||||
| Operating expenses | $ | 3,231 | $ | 128 | $ | 9,386 | $ | 388 | |||||||
| Operating expenses as a % of total revenues | 18.8 | % | 20.0 | % | 17.9 | % | 14.2 | % | |||||||
| Operating income (loss) | $ | 1,036 | $ | 74 | $ | 3,253 | $ | (64 | ) | ||||||
| Operating income (loss) as a % of total revenues (b) | 6.0 | % | 11.5 | % | 6.2 | % | NM | ||||||||
| Adjusted operating income (loss) (1) | $ | 1,423 | $ | 75 | $ | 4,423 | $ | (62 | ) | ||||||
| Adjusted operating income (loss) as a % of total revenues (b) | 8.3 | % | 11.7 | % | 8.4 | % | NM |
_____________________________________________
The following table summarizes the Health Care Benefits segment's medical membership for the respective periods:
| September 30, 2019 | June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||
| In thousands | Insured | ASC | Total | Insured | ASC | Total | Insured | ASC | Total | |||||||||||||||||
| Medical membership: | ||||||||||||||||||||||||||
| Commercial | 3,560 | 14,159 | 17,719 | 3,571 | 14,276 | 17,847 | 3,871 | 13,888 | 17,759 | |||||||||||||||||
| Medicare Advantage | 2,304 | - | 2,304 | 2,264 | - | 2,264 | 1,758 | - | 1,758 | |||||||||||||||||
| Medicare Supplement | 842 | - | 842 | 819 | - | 819 | 793 | - | 793 | |||||||||||||||||
| Medicaid | 1,382 | 562 | 1,944 | 1,344 | 562 | 1,906 | 1,128 | 663 | 1,791 | |||||||||||||||||
| Total medical membership | 8,088 | 14,721 | 22,809 | 7,998 | 14,838 | 22,836 | 7,550 | 14,551 | 22,101 | |||||||||||||||||
| Supplemental membership information: | ||||||||||||||||||||||||||
| Medicare Prescription Drug Plan (standalone) (a) | 5,998 | 6,004 | 6,134 |
_____________________________________________
Supplemental Information
The following table shows the components of the change in health care costs payable during the nine months ended September 30, 2019:
| In millions | |||
| Health care costs payable, beginning of period | $ | 6,147 | |
| Less: Reinsurance recoverables | 4 | ||
| Health care costs payable, beginning of period, net | 6,143 | ||
| Add: Components of incurred health care costs | |||
| Current year | 39,657 | ||
| Prior years (a) | (511 | ) | |
| Total incurred health care costs (b) | 39,146 | ||
| Less: Claims paid | |||
| Current year | 33,032 | ||
| Prior years | 5,253 | ||
| Total claims paid | 38,285 | ||
| Add: Premium deficiency reserve | 6 | ||
| Health care costs payable, end of period, net | 7,010 | ||
| Add: Reinsurance recoverables | 4 | ||
| Health care costs payable, end of period | $ | 7,014 |
_____________________________________________
| Days Claims Payable (Unaudited) | ||||||||
| September 30, 2019 | June 30, 2019 | March 31, 2019 | ||||||
| Days Claims Payable (a) | 51 | 48 | 45 |