CVS 2009 Annual Report Download - page 53

The pharmacy services business operates under the Caremark
Pharmacy Services
®
, Caremark, CVS Caremark
TM
, CarePlus
CVS/pharmacy, CarePlus
TM
, RxAmerica, Accordant Care™
and TheraCom
®
names. As of December 31, 2009, the Phar-
macy Services segment operated 49 retail specialty pharmacy
stores, 18 specialty mail order pharmacies and six mail service
pharmacies located in 25 states, Puerto Rico and the District
of Columbia.
Retail Pharmacy Segment (the “RPS”). The RPS sells
prescription drugs and a wide assortment of general merchan-
dise, including over-the-counter drugs, beauty products and
cosmetics, photo finishing, seasonal merchandise, greeting
cards and convenience foods, through our CVS/pharmacy
and Longs Drug retail stores and online through CVS.com
®
.
The RPS also provides health care services through its
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.
As of December 31, 2009, the retail pharmacy business
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
®
name, the
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).
Corporate Segment. The Corporate segment provides
management and administrative 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.
Principles of Consolidation. The consolidated financial
statements include the accounts of the Company and its
majority owned subsidiaries. All intercompany balances
and transactions have been eliminated.
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.
Note 1 Significant Accounting Policies
Description of business. CVS Caremark Corporation (“Com-
pany”) is the largest pharmacy health care provider (based
on revenues and prescriptions filled) in the United States.
Pharmacy Services Segment (the “PSS”). The PSS provides
a full range of prescription benefit management services
including mail order pharmacy services, specialty pharmacy
services, plan design and administration, formulary manage-
ment and claims processing. The Company’s clients are
primarily employers, insurance companies, unions, govern-
ment employee groups, managed care organizations and other
sponsors of health benefit plans and individuals throughout
the United States.
As a pharmacy benefits manager, the PSS manages the dispensing
of pharmaceuticals through our mail order pharmacies and
national network of approximately 64,000 retail pharmacies
to eligible members in the benefits plans maintained by our
clients and utilizes its information systems to perform, among
other things, safety checks, drug interaction screenings and
brand to generic substitutions.
The PSS’s specialty pharmacies support individuals that
require complex and expensive drug therapies. The specialty
pharmacy business includes mail order and retail specialty
pharmacies that operate under the Caremark
®
and CarePlus
CVS/pharmacy
TM
names.
The PSS also provides health management programs, which
include integrated disease management for 27 conditions,
through Alere
®
and our Accordant
®
health management offering.
In addition, through our SilverScript Insurance Company
(“SilverScript”) and Accendo Insurance Company (“Accendo”)
subsidiaries, the PSS is a national provider of drug benefits to
eligible beneficiaries under the Federal Government’s Medicare
Part D program. The PSS acquired Accendo in the Longs
Acquisition (defined later in Note 2), and, effective January 1,
2009, Accendo replaced RxAmerica
®
as the Medicare-approved
prescription drug plan for the RxAmerica Medicare Part D drug
benefit plans.
The pharmacy services business generates net revenues
primarily by contracting with clients to provide prescription
drugs to plan members. Prescription drugs are dispensed by
the 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.
Notes to Consolidated Financial Statements
2009 Annual Report 49