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2008 ANNUAL REPORT 23
PHARMACY SERVICES SEGMENT
The following table summarizes our Pharmacy Services Segment’s performance for the respective periods:
Fiscal Year Ended
In millions 2008(3) 2007 2006
Net revenues $ 43,769.2 $ 34,938.4 $ 3,691.3
Gross profi t 3,550.0 2,997.1 458.8
Gross profi t % of net revenues 8.1% 8.6% 12.4%
Operating expenses 987.5 895.1 140.7
Operating expenses % of net revenues 2.3% 2.6% 3.8%
Operating profi t 2,562.5 2,102.0 318.1
Operating profi t % of net revenues 5.9% 6.0% 8.6%
Net revenues:
Mail service $ 14,901.1 $ 13,835.5 $ 2,935.4
Retail network
28,489.3 20,831.3 732.7
Other 378.8 271.6 23.2
Comparable Financial Information(1)
Net revenues $ 43,769.2 $ 43,349.0 $ 40,514.0
Gross profi t 3,550.0 3,557.6 2,848.8
Gross profi t % of net revenues 8.1% 8.2% 7.0%
Operating expenses 987.5 1,271.6 982.2
Merger and integration costs(2) (22.3) (273.2) –
Total operating expenses 965.2 998.4 982.2
Operating expenses % of net revenues 2.2% 2.3% 2.4%
Operating profi t 2,584.8 2,559.2 1,866.6
Operating profi t % of net revenues 5.9% 5.9% 4.6%
Net revenues:
Mail service $ 14,901.1 $ 16,790.7 $ 15,519.4
Retail network 28,489.3 26,218.9 24,668.3
Other 378.8 339.4 326.3
Pharmacy claims processed:
Total 633.4 607.2 605.9
Mail service 60.9 73.9 73.3
Retail network 572.5 533.3 532.6
Generic dispensing rate:
Total 65.1% 60.1% 55.8%
Mail service 54.4% 48.1% 43.3%
Retail network 66.2% 61.7% 57.4%
Mail order penetration rate 22.9% 28.2% 28.0%
(1) The Comparable Financial Information above combines the historical Pharmacy Services Segment results of CVS and Caremark assuming the Caremark
Merger occurred at the beginning of each period presented. In each period presented, the comparable results include incremental depreciation and amor-
tization expense resulting from the fi xed and intangible assets recorded in connection with the Caremark Merger and exclude merger-related expenses and
integration costs. The comparable fi nancial information has been provided for illustrative purposes only and does not purport to be indicative of the
actual results that would have been achieved by the combined business segment for the periods presented or that will be achieved by the combined
business segment in the future.
(2) Merger and integration costs for 2008 primarily include severance and retention, system integration and facility consolidation costs. Merger and integration
costs for 2007 primarily include $80.3 million of stock option expense associated with the accelerated vesting of certain Caremark stock options, which
vested upon consummation of the merger due to the change-in-control provisions of the underlying Caremark stock option plans, $42.9 million of change-
in-control payments due upon the consummation of the Caremark Merger, resulting from the change-in-control provisions in certain Caremark employment
agreements, and merger-related costs of $150.1 million.
(3) 2008 includes the results of RxAmerica from the acquisition date (October 20, 2008) forward.