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CVS CAREMARK 2012 ANNUAL REPORT
27
Segment Analysis
We evaluate the performance of our Pharmacy Services and Retail Pharmacy segments based on net revenues, gross
profit and operating profit before the effect of certain intersegment activities and charges. The Company evaluates the
performance of its Corporate Segment based on operating expenses before the effect of discontinued operations and
certain intersegment activities and charges. The following is a reconciliation of the Company’s business segments to the
consolidated financial statements:
Pharmacy Retail
Services Pharmacy Corporate Intersegment Consolidated
in millions Segment (1) (2) Segment (2) Segment Eliminations (2) Totals
2012:
Net revenues $ 73,444 $ 63,654 $ — $ (13,965) $ 123,133
Gross profit 3,808 19,109 — (411) 22,506
Operating profit 2,679 5,654 (694) (411) 7,228
2011:
Net revenues $ 58,874 $ 59,599 $ — $ (11,373) $ 107,100
Gross profit 3,279 17,468 — (186) 20,561
Operating profit 2,220 4,912 (616) (186) 6,330
2010:
Net revenues $ 47,145 $ 57,345 $ — $ (8,712) $ 95,778
Gross profit 3,315 17,039 — (135) 20,219
Operating profit 2,361 4,537 (626) (135) 6,137
(1) Net revenues of the Pharmacy Services Segment include approximately $8.4 billion, $7.9 billion and $6.6 billion of Retail Co-Payments for 2012, 2011 and
2010, respectively. See Note 1 to the consolidated financial statements for additional information about Retail Co-Payments.
(2) Intersegment eliminations relate to two types of transactions: (i) Intersegment revenues that occur when Pharmacy Services Segment customers use
Retail Pharmacy Segment stores to purchase covered products. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the
revenue on a standalone basis, and (ii) Intersegment revenues, gross profit and operating profit that occur when Pharmacy Services Segment customers,
through the Company’s intersegment activities (such as the Maintenance Choice® program), elect to pick up their maintenance prescriptions at Retail
Pharmacy Segment stores instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail Pharmacy segments
record the revenue, gross profit and operating profit on a standalone basis. Beginning in the fourth quarter of 2011, the Maintenance Choice eliminations
reflect all discounts available for the purchase of mail order prescription drugs. The following amounts are eliminated in consolidation in connection with the
item (ii) intersegment activity: net revenues of $3.4 billion, $2.6 billion and $1.8 billion for the years ended December 31, 2012, 2011 and 2010, respectively;
gross profit and operating profit of $411 million, $186 million and $135 million for the years ended December 31, 2012, 2011 and 2010, respectively.