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1
CVS CAREMARK 2012 ANNUAL REPORT
56
Notes to Consolidated Financial StatementsNotes to Consolidated Financial Statements
 SignicantAccountingPolicies
DESCRIPTION OF BUSINESS – CVS Caremark Corporation and its subsidiaries (the “Company”) is the largest integrated
pharmacy health care provider in the United States based upon revenues 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 provides 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 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
pharmacies and national network of approximately 67,000 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’ 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 17 conditions,
through the Company’s Accordant® health management offering.
In addition, through the Company’s SilverScript Insurance Company (“SilverScript”) and Pennsylvania Life Insurance
Company (“Pennsylvania Life”) subsidiaries, the PSS is a national provider 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 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 Caremark®,
CarePlus CVS/pharmacy®, RxAmerica® and Accordant® names. As of December 31, 2012, the PSS operated 31 retail
specialty pharmacy stores, 12 specialty mail order pharmacies and five mail service pharmacies located in 22 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 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.