Income allocated to participating securities

  
14.Earnings Per Share  
Earnings per share is computed using the two-class method. SARs and options to purchase 7 million, 15 million, and 17 million shares of common stock were outstanding, but were excluded from the calculation of diluted earnings per share for the years ended December 31, 2021, 2020 and 2019, respectively, because their exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive.   
The following is a reconciliation of basic and diluted earnings per share from continuing operations for the years ended December 31, 2021, 2020 and 2019:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| In millions, except per share amounts | 2021 |  | 2020 |  | 2019 |
| Numerator for earnings per share calculation: |  |  |  |  |  |
| Income from continuing operations | $ | 7,898  |  |  | $ | 7,201  |  |  | $ | 6,631  |  |
| Income allocated to participating securities | —  |  |  | —  |  |  | (5) |  |
| Net (income) loss attributable to noncontrolling interests | 12  |  |  | (13) |  |  | 3  |  |
| Income from continuing operations attributable to CVS Health | $ | 7,910  |  |  | $ | 7,188  |  |  | $ | 6,629  |  |
|  |  |  |  |  |  |
| Denominator for earnings per share calculation: |  |  |  |  |  |
| Weighted average shares, basic | 1,319  |  |  | 1,309  |  |  | 1,301  |  |
| Effect of dilutive securities | 10  |  |  | 5  |  |  | 4  |  |
| Weighted average shares, diluted | 1,329  |  |  | 1,314  |  |  | 1,305  |  |
|  |  |  |  |  |  |
| Earnings per share from continuing operations: |  |  |  |  |  |
| Basic | $ | 6.00  |  |  | $ | 5.49  |  |  | $ | 5.10  |  |
| Diluted | $ | 5.95  |  |  | $ | 5.47  |  |  | $ | 5.08  |  |

  
15.Reinsurance  
The Company utilizes reinsurance agreements primarily to: (a) reduce required capital and (b) facilitate the acquisition or disposition of certain insurance contracts. Ceded reinsurance agreements permit the Company to recover a portion of its losses from reinsurers, although they do not discharge the Company’s primary liability as the direct insurer of the risks reinsured.  
On November 30, 2018, the Company completed the sale of Aetna’s standalone Medicare Part D prescription drug plans to a subsidiary of WellCare Health Plans, Inc. (“WellCare”), effective December 31, 2018. In connection with that sale, subsidiaries of WellCare and Aetna entered into reinsurance agreements under which WellCare ceded to Aetna 100% of the insurance risk related to the divested standalone Medicare Part D prescription drug plans for the 2019 PDP plan year.  
In January 2022, the Company entered into two four-year reinsurance agreements with an unrelated reinsurer that allow it to reduce required capital and provide collateralized excess of loss reinsurance coverage on a portion of the Health Care Benefits segment’s group Commercial Insured business.  
Reinsurance recoverables (recorded as other current assets or other assets on the consolidated balance sheets) at December 31, 2021 and 2020 were as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| In millions | 2021 |  | 2020 |
| Reinsurer |  |  |  |
| Hartford Life and Accident Insurance Company | $ | 1,887  |  |  | $ | 2,364  |  |
| Lincoln Life & Annuity Company of New York | 395  |  |  | 406  |  |
| VOYA Retirement Insurance and Annuity Company  | 167  |  |  | 170  |  |
| All Other | 100  |  |  | 115  |  |
| Total | $ | 2,549  |  |  | $ | 3,055  |  |

  
  
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