CVSCVS Health

Please remove dividends declared per share from your consolidated statements of operations and instead present this information in your consolidated statements of stockholders' equity and/or footnotes. Similarly revise your Forms 10-Q and earnings releases. Refer to ASC 505-10-S99-1, ASC 260-10-45-5 and SEC Release No. 33- 10532.

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Your disclosure in the last paragraph on page 80 indicates that "[b]ased on the Company's membership at December 31, 2022, 21% of the Company's Medicare Advantage members were in plans with 2023 star ratings of at least 4.0 stars, compared to 87% of the Company's Medicare Advantage members being in plans with 2022 star ratings of at least 4.0 stars based on the Company's membership at December 31, 2021." We also

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note that your 2023 star ratings will be used to determine which of your Medicare Advantage plans have four stars or higher and qualify for bonus payments in 2024. Please revise to quantify, if material, the impact that the significant decline in your plans with four stars or higher could have on your bonus payments in future periods.

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We note your presentation of adjusted net income includes an adjustment for amortization of intangible assets. Please tell us how you determined that this adjustment does not substitute individually tailored recognition and measurement methods for those of GAAP. Refer to Question 100.04 of the Division's Non-GAAP Financial Measures Compliance and Disclosure Interpretations.

CVS Health Corporation (the “Company”) has received a comment letter dated June 18, 2019 (the “Comment Letter”) from the staff of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) concerning the

Company’s annual report on Form 10-K for the fiscal year ended December 31, 2018 filed on February 28, 2019 (the “Form 10-K”) and Form 8-K filed May 1, 2019

(the “Form 8-K”).

As discussed with the Staff on June 27, 2019, this letter confirms that the Staff has granted the Company’s request for an extension to on or before

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July 19, 2019, to respond to the Comment Letter relating to the Company’s Form 10-K and Form 8-K.

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We note your response to prior comment 1 and your proposed enhanced disclosure related to the non-GAAP financial measure you identify as adjusted net income that excludes the amortization of acquired intangibles.

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It is not clear why you exclude amortization of acquired intangible assets on the basis that it does not directly result from your core operations, considering that these measures include revenue from core operations generated in part by acquired assets. Please explain and revise your disclosures to more clearly describe the nature of the amortization being excluded and why, and clarify that although amortization of these acquired intangibles is being excluded, revenue generated from these assets is not.

We acknowledge the Staff’s comment and respectfully submit that in future filings we will revise our disclosures to more clearly describe (i) the nature of the amortization being excluded from the related non-GAAP financial measure (ii) why the amortization of acquired intangibles is excluded from the related non-GAAP financial measure and (iii) that although amortization of acquired intangibles is being excluded from the related non-GAAP financial measure, revenue generated from these assets is not excluded from the related non-GAAP financial measure.

As described in the Company’s prior

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letter to the Staff, the Company has completed a number of acquisitions, including Caremark Rx, Inc. in 2007, Omnicare, Inc. in 2015 and Aetna Inc. in 2018, which have resulted in the recognition of intangible assets as required under the acquisition method of accounting. These intangible assets include trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. The Company’s intangible assets are recorded at their respective fair values at the date of acquisition and are amortized over their estimated useful lives. Unless an intangible asset becomes impaired or the Company’s estimated useful life of an intangible asset is revised, the Company’s expected amortization expense is based on an amortization schedule established as of the date of acquisition and is not affected by operations of any particular period. While these intangible assets contribute to revenue generation, the amortization of these intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services during a particular period. In addition, intangible asset amortization expense can fluctuate, and historically has fluctuated, based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets in calculating certain non-GAAP financial measures enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends.

We have revised our disclosures to incorporate the items described above. For your reference, below is the relevant section of our revised disclosure to be included in future filings.

The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s statements of operations in operating expenses within each segment. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the underwriting of the Company’s insurance products, the services performed for the Company’s customers or the sale of the Company’s products or services. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the

Company’s GAAP financial statements and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

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If you have any additional questions or comments, please do not hesitate to contact me at 401-770-5554.

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Significant Accounting Policies Accounts Receivable, page 38 1. You state that your accounts receivable balance primarily includes amounts due from third party providers (e.g. pharmacy benefit managers, insurance companies, governmental agencies and long-term care facilities), clients, members and private pay customers, as well as vendors and manufacturers.

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Please tell us why you have not separately disclosed your accounts receivable due from vendors and manufacturers pursuant to Rule 5-02.3 of Regulation S-X.

We acknowledge the Staff’s comment and respectfully advise the Staff that in future filings we will provide footnote disclosure quantifying separately receivables from customers (trade receivables), receivables from vendors and manufacturers, and receivables from others. We anticipate disclosure within our Note 1 – Significant Accounting Policies within our Form 10-Ks and Form 10-Qs substantially in the form below, including our Form 10-Q for the period ended June 30, 2018 which we intend to file on or about August 8, 2018:

Accounts receivables, net

Included within accounts receivable, net

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are the following, which are reflected net of allowance for doubtful accounts, customer credit allowances, and contractual allowances:

June 30,

December 31,

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Please supplementally provide us with copies of any reports or presentations provided to the board in connection with the board’s evaluation of the proposed transaction.

to the Staff’s request, CVS Health respectfully informs the Staff that a copy of each presentation provided by Barclays Capital Inc.

(“Barclays”) and Goldman Sachs & Co. LLC (“Goldman Sachs”) to the board of CVS Health in connection with the board’s evaluation of the proposed transaction is being provided directly to the Staff by

Sullivan & Cromwell LLP (“Sullivan & Cromwell”), as counsel to Barclays and Goldman Sachs, under separate cover on a confidential and supplemental basis pursuant to Rule 418 of the Securities Act of 1933, as amended

(“Rule 418”), and Rule 12b-4 under the

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Securities Exchange Act of 1934, as amended (“Rule 12b-4”). In accordance with such Rules, such presentations are being provided together with a request that such presentations be returned promptly following completion of the Staff’s review thereof. Such presentations are not, and will not be, filed with or deemed to be part of the Form S-4, including any amendments thereto. A request for confidential treatment of such presentations pursuant to the provisions of 17 C.F.R. §200.83 is also being made by Sullivan & Cromwell on behalf of each of Barclays and Goldman Sachs.

CVS Health further respectfully informs the Staff that a copy of the presentation provided by Centerview

Partners LLC (“Centerview”) to the board of CVS Health in connection with the board’s evaluation of the proposed transaction is being provided directly to the Staff by Kirkland & Ellis LLP (“Kirkland &

Ellis”), as counsel to Centerview, under separate cover on a confidential and supplemental basis pursuant to Rule 418 and Rule 12b-4. In accordance with such Rules, such presentation is being provided together with a request that such presentation be returned promptly following completion of the Staff’s review thereof. Such presentation is not, and will not be, filed with or deemed to be part of the Form S-4, including any amendments thereto. A request for confidential treatment of such presentation pursuant to the provisions of 17 C.F.R. §200.83 is also being made by Kirkland & Ellis on behalf of Centerview.

CVS Health further respectfully informs the SEC staff that a copy of each presentation provided by Allen & Company LLC (“Allen &

Company”) and Lazard Frères & Co. LLC (“Lazard”) to the board of directors of Aetna Inc. in connection with the board’s evaluation of the proposed transaction is being provided directly to the Staff under separate cover by counsel for Allen & Company and Lazard on a confidential and supplemental basis pursuant to Rule 418 and Rule 12b-4. In accordance with such rules, counsel for Allen & Company and Lazard is requesting that these materials be returned promptly following completion of the Staff’s review thereof and such materials are not, and will not be, filed with or deemed to be a part of the Form S-4, including any amendments thereto. By separate letter, counsel for

Allen & Company and Lazard is also requesting confidential treatment of these materials pursuant to the provisions of 17 C.F.R. §200.83.

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We note the disclosure of the amount and percent of shares of CVS owned by executive officers, directors and their affiliates. Please revise to add to this disclosure the vote required for approval of the proposed transaction, as required by Item 3(h) of Form S-4. Revise similar disclosure regarding Aetna’s executive officers, directors and their affiliates on page 20.

to the Staff’s comment, the disclosure has been revised on pages 19 and 20 of Amendment No. 1. Read in the reply ↗

We note on November 7 and 8, 2017 your board of directors met and discussed the increase in the cash component of the proposed purchase price. Additionally, we note on November 11, 2017 you conveyed to representatives of Aetna the increase in the cash component to 70% with the remaining 30% to be paid in shares of your common stock.

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Please revise to discuss the material discussions and negotiations that took place regarding the increase in the cash component.

to the Staff’s comment, the disclosure has been revised on page 95 of Amendment No. 1. Read in the reply ↗

Please disclose how you determined the various assumptions such as the perpetuity growth rates, and EBITDA multiples used in your calculations. Provide similar disclosure on page 117 for CVS, pages 123 and 126 in the Allen & Company opinion, pages 139 and 141 in the Barclays opinion, and pages 150 and 152 in the Centerview opinion.

to the Staff’s comment, the disclosure has been revised on pages 114, 115, 117, 123, 124,

126, 140, 141, 150, 151, 152 and 153 of Amendment No. 1. Read in the reply ↗

We note that the disclosure in this section presents the fairness opinions of both Barclays and Goldman Sachs. However, we note that only the analysis of Goldman Sachs has been disclosed in this section. Please revise to add the analysis of Barclays.

to the Staff’s comment, CVS Health acknowledges that the disclosure in this section presents the fairness opinions of both Barclays and Goldman Sachs, which sometimes include joint analyses and sometimes include analyses that were conducted only by Barclays or Goldman Sachs, as indicated throughout this section. As described in the disclosure, both Barclays and Goldman Sachs jointly conducted certain Transaction Premium Analyses. However, only Goldman Sachs calculated a range of implied equity values per Aetna common share as part of its Transaction Premium

Analyses.

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For this reason, Barclays is not mentioned in the final paragraph of the Transaction Premium Analysis, which describes such calculations by Goldman Sachs.

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We note your statement that the representations, warranties and covenants are not intended to be relied on as public disclosures. Please be advised that we regard all of the provisions of material agreements as disclosure to investors, and as such it is not appropriate to state or imply that investors cannot rely on these statements. Please revise or remove the disclaimer as appropriate.

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Please also revise the first sentence of the second paragraph under the explanatory note.

to the Staff’s comment, the disclosure has been revised on page 177 of Amendment No. 1. Read in the reply ↗

We note your statement that “the terms and information in the merger agreement are not intended to provide any other public disclosure of factual information....” Please revise to remove any potential implication that the referenced merger agreement does not constitute public disclosure under the federal securities laws.

to the Staff’s comment, the disclosure has been revised on page 177 of Amendment No. 1. Read in the reply ↗

We note the disclosure schedules referenced in this agreement. Please revise to add a list briefly identifying the contents of all omitted schedules, as required by Item 601(b)(2) of Regulation S-K.

to the Staff’s comment, the disclosure has been revised on page A-95 of Amendment No. 1. Read in the reply ↗

Please file an executed opinion. Please also file an executed opinion for Allen & Company LLC in Annex C.

to the Staff’s comment, executed opinions have been filed in Annexes B and C of Amendment No. 1. Read in the reply ↗

Please provide, on a supplemental basis, copies of all the complaints.

to the Staff’s request, a copy of each complaint referenced in the Form S-4 is being provided directly to the Staff by Shearman & Sterling LLP, as counsel to CVS Health, under separate cover concurrently with the delivery of this letter.

SHEARMAN.COM

Shearman & Sterling LLP is a limited liability partnership organized in the United States under the laws of the state of Delaware, which laws limit the personal liability of partners. Read in the reply ↗

We note your response to comment 5. Please clarify in this section that Barclays did not calculate the implied equity values as part of its Transaction Premium Analysis and clarify the analysis Barclays did undertake for transaction premiums.

to the Staff’s comment, the disclosure has been revised on pages 138 and 139 of Amendment No. 2. Read in the reply ↗

Please reconcile the 2018 unlevered free cash flow from the table on page 159, the 2018E revenues from the table on page 160, and the adjusted EPS for 2019E, 2020E and 2021E from the table on page 160 with the board books provided supplementally in response to prior comment one.

to the Staff’s comment, CVS Health respectfully informs the

Staff of the following:

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The 2018 projected Aetna unlevered free cash flow figure disclosed in the table on page 159 of Amendment No. 1 was prepared by CVS Health as part of CVS Health’s adjusted version of the Aetna management projections, which adjusted projections were provided by CVS Health to its financial advisors, Barclays Capital Inc. (“Barclays”), Goldman Sachs & Co. LLC (“Goldman Sachs”) and Centerview Partners LLC

(“Centerview”), as disclosed on page 159 of Amendment No.

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1, and not to Aetna or its financial advisors, Lazard Frères & Co. LLC and Allen & Company LLC. The 2018 projected Aetna unlevered free cash flow figure referenced in the presentation or preliminary discussion materials of Aetna’s financial advisors is based on the Aetna management projections and disclosed on page 157 of Amendment No. 1.

The 2018 projected CVS Health net revenue figure disclosed in the table on page 160 of Amendment No. 1 as part of the CVS Health management projections was the net revenue figure utilized by Centerview in its applicable financial analyses, as shown on pages 19 and 34 of Centerview’s presentation materials. Centerview did not utilize for its financial analyses the preliminary 2018 projected CVS Health net revenue figure provided to Centerview by CVS

Health and shown on page 8 of Centerview’s presentation materials.

As disclosed in note (4) to the table on page 160 of Amendment No. 1, the respective financial analyses and opinions of Barclays and Goldman Sachs utilized certain further adjustments to the CVS Health management projections set forth in such table related to the sale of RxCrossroads, which further adjustments were approved by management of CVS Health. These further adjustments had the impact of reducing CVS Health adjusted earnings per share by

$0.02 per share for each of the years ending December 31, 2018 through 2022. This is the reason that the projected CVS Health earnings per share figures shown in the presentation or preliminary discussion materials of Barclays and Goldman Sachs are lower than the corresponding figures in the table on page 160 of Amendment No. 1. Such lower projected CVS Health earnings per share figures were not utilized by Centerview in its financial analyses. Centerview utilized in its financial analyses the CVS Health adjusted earnings per share figures disclosed in the table on page 160 of Amendment No. 1, as shown on page 34 of Centerview’s presentation materials.

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