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The pharmacy services business operates under the CVS
Caremark ® Pharmacy Services, Caremark®, CVS Caremark®,
CarePlus CVS/pharmacy ®, CarePlusTM, RxAmerica ® and
Accordant ® names. As of December 31, 2011, the PSS oper-
ated 31 retail specialty pharmacy stores, 12 specialty mail
order pharmacies and 4 mail service pharmacies located in
22 states, Puerto Rico and the District of Columbia.
Retail Pharmacy Segment (the “RPS”) – The RPS sells pre-
scription drugs and a wide assortment of general merchan-
dise, including over-the-counter drugs, beauty products and
cosmetics, photo finishing, seasonal merchandise, greet-
ing 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, 2011, the retail pharmacy business
included 7,327 retail drugstores (of which 7,271 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 657 retail
health care clinics operating under the MinuteClinic® name
(of which 648 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, corpo-
rate 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.
Use of estimates – The preparation of financial statements
in conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the reported amounts
in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
1 SIGNIFICANT ACCOUNTING POLICIES
Description of business – CVS Caremark Corporation and
its subsidiaries (the “Company”) is the largest pharmacy
health care provider in the United States based upon rev-
enues and prescriptions filled. The Company currently has
three reportable business segments, Pharmacy Services,
Retail Pharmacy and Corporate, which are described below.
Pharmacy Services Segment (the “PSS”) – The PSS pro-
vides a full range of pharmacy 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 pri-
marily 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 dis-
pensing of pharmaceuticals through the Company’s mail order
pharmacies 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 informa-
tion systems to perform, among other things, safety checks,
drug interaction screenings and brand to generic substitutions.
The PSS’ 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/pharmacy ® names.
The PSS also provides health management programs, which
include integrated disease management for 28 conditions,
through our strategic alliance with Alere, L.L.C. and the
Company’s Accordant ® health management offering.
In addition, through the Company’s SilverScript Insurance
Company (“SilverScript”), Accendo Insurance Company
(“Accendo”) and Pennsylvania Life Insurance Company
(“Pennsylvania Life”) subsidiaries, the PSS is a national pro-
vider of drug benefits to eligible beneficiaries under the
Federal Government’s Medicare Part D program.
The PSS generates net revenues primarily by contracting
with clients to provide prescription drugs to plan members.
Prescription drugs are dispensed by the mail order phar-
macies, 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.
Notes to Consolidated Financial Statements
CVS CAREMARK 52 2011 ANNUAL REPORT
127087_Financial.indd 52 3/9/12 9:42 PM