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Notes to Consolidated Financial Statements
1: SIGNIFICANT ACCOUNTING POLICIES
Description of business – CVS Caremark Corporation and its subsidiaries (the “Company”) comprise 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 pharmacy benefit management services including
mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management and claims
processing. The Company’s clients are primarily employers, insurance companies, unions, government 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 the Company’s mail order pharma-
cies and national network of approximately 65,000 retail pharmacies to eligible members in the benefits plans maintained by the
Company’s 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 CVS Caremark® and CarePlus CVS/pharmacyTM names.
The PSS also provides health management programs, which include integrated disease management for 28 conditions, through
Alere, L.L.C. and the Company’s Accordant® health management offering.
In addition, through the Company’s 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 administrative services
such as claims processing and formulary management, as well as health care related services such as disease management.
The pharmacy services business operates under the CVS Caremark Pharmacy Services®, Caremark®, CVS CaremarkTM , CarePlus
CVS/pharmacy, CarePlusTM , RxAmerica®, Accordant® and TheraCom® names. As of December 31, 2010, the Pharmacy Services
segment operated 44 retail specialty pharmacy stores, 18 specialty mail order pharmacies and four 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 merchandise,
including over-the-counter drugs, beauty products and cosmetics, photo finishing, seasonal merchandise, greeting cards and
convenience foods, through the Company’s CVS/pharmacy® and Longs Drugs® 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, monitor chronic conditions and deliver vaccinations.
As of December 31, 2010, the retail pharmacy business included 7,182 retail drugstores (of which 7,123 operated a pharmacy)
located in 41 states the District of Columbia and Puerto Rico operating primarily under the CVS/ pharmacy name, the online
retail website, CVS.com and 560 retail health care clinics operating under the MinuteClinic name (of which 550 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 the Company’s executive management, corporate relations, legal, compli-
ance, 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.
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CVS Caremark 2010 Annual Report