CVS 2009 Annual Report Download - page 27

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In addition, through our SilverScript Insurance Company
(“SilverScript”) and Accendo Insurance Company (“Accendo”)
subsidiaries, we are a national provider of drug benefits to
eligible beneficiaries under the Federal Government’s Medicare
Part D program. The Company acquired Accendo in the Longs
Acquisition (defined later in this document), and, effective
January 1, 2009, Accendo replaced RxAmerica
®
as the
Medicare-approved prescription drug plan for the RxAmerica
Medicare Part D drug benefit plans.
Our Pharmacy Services segment generates net revenues
primarily by contracting with clients to provide prescription
drugs to plan members. Prescription drugs are dispensed by
our mail order pharmacies, specialty pharmacies and national
network of retail pharmacies. Net revenues are also generated
by providing additional services to clients, including adminis-
trative services such as claims processing and formulary
management, as well as health care related services such as
disease management.
The Pharmacy Services segment operates under the Caremark
Pharmacy Services
®
, Caremark, CVS Caremark™, CarePlus
CVS/pharmacy, CarePlus™, RxAmerica, Accordant Care™ and
TheraCom
®
names. As of December 31, 2009, the Pharmacy
Services segment operated 49 retail specialty pharmacy stores,
18 specialty mail order pharmacies and six mail service pharma-
cies located in 25 states, Puerto Rico and the District of Columbia.
Overview of Our Retail Pharmacy Segment
Our Retail Pharmacy segment sells prescription drugs and
a wide assortment of general merchandise, including over-
the-counter drugs, beauty products and cosmetics, photo
finishing, seasonal merchandise, greeting cards and conve-
nience foods through our CVS/pharmacy and Longs Drug
retail stores and online through CVS.com.
CVS/pharmacy is one of the nation’s largest retail pharmacy
chains. With more than 40 years of dynamic growth in the retail
pharmacy industry, the Retail Pharmacy segment generates more
than two-thirds of its revenue from prescription sales and is
committed to providing superior customer service by being the
easiest pharmacy retailer for customers to use.
Our Retail Pharmacy segment also provides health care services
through our MinuteClinic health care clinics. MinuteClinics
are staffed by nurse practitioners and physician assistants who
utilize nationally recognized protocols to diagnose and treat
minor health conditions, perform health screenings and deliver
vaccinations. We believe our clinics provide quality services
that are quick, affordable and convenient.
Our proprietary loyalty card program, ExtraCare
®
, has well
over 64 million active cardholders, making it one of the largest
and most successful retail loyalty card programs in the country.
Effective October 20, 2008, we acquired Longs Drug Stores
Corporation, which included 529 retail drug stores (the
“Longs Drug Stores”), RxAmerica, LLC (“RxAmerica”), provides
pharmacy benefit management services and Medicare Part D
benefits, and other related assets (the “Longs Acquisition”).
As of December 31, 2009, our Retail Pharmacy segment
included 7,025 retail drugstores (of which 6,964 operated a
pharmacy) located in 41 states and the District of Columbia
operating primarily under the CVS/pharmacy
®
or Longs Drug
®
names, our online retail website, CVS.com
®
and 569 retail
health care clinics operating under the MinuteClinic
®
name
(of which 557 were located in CVS/pharmacy stores).
Overview of Our Corporate Segment
The Corporate segment provides management and administra-
tive services to support the Company. The Corporate segment
consists of certain aspects of our executive management,
corporate relations, legal, compliance, human resources,
corporate information technology and finance departments.
Results of Operations
Fiscal Year Change. On December 23, 2008, the Board of
Directors of the Company approved a change in the Com-
pany’s fiscal year-end from the Saturday nearest December 31
of each year to December 31 of each year to better reflect the
Company’s position in the health care, rather than the retail,
industry. The fiscal year change was effective beginning with
the fourth quarter of fiscal 2008.
As you review our operating performance, please consider the
impact of the fiscal year change as set forth below:
Fiscal Fiscal Period
Fiscal Year Year-End Fiscal Period Includes
2009 December 31, 2009 January 1, 2009 - 365 days
December 31, 2009
2008 December 31, 2008 December 30, 2007 - 368 days
December 31, 2008
2007 December 29, 2007 December 31, 2006 - 364 days
December 29, 2007
Unless otherwise noted, all references to years relate to the
above fiscal years.
2009 Annual Report 23