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CVS CAREMARK 2012 ANNUAL REPORT
82
Notes to Consolidated Financial Statements
14 Segment Reporting
The Company currently has three reportable segments: Pharmacy Services, Retail Pharmacy and Corporate.
The Company evaluates its Pharmacy Services and Retail Pharmacy segment performance based on net revenue, 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. See Note 1 for a description of the Pharmacy Services, Retail Pharmacy and
Corporate segments and related significant accounting policies.
The following table 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
Depreciation and amortization 517 1,153 83 — 1,753
Total assets 36,057 29,183 1,408 (736) 65,912
Goodwill 19,646 6,749 — — 26,395
Additions to property and equipment 422 1,555 53 — 2,030
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
Depreciation and amortization 433 1,060 75 — 1,568
Total assets 35,704 28,323 1,121 (605) 64,543
Goodwill 19,657 6,801 — — 26,458
Additions to property and equipment 461 1,353 58 — 1,872
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
Depreciation and amortization 390 1,016 63 — 1,469
Total assets 32,254 28,927 1,439 (451) 62,169
Goodwill 18,868 6,801 — — 25,669
Additions to property and equipment 234 1,708 63 — 2,005
(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 the years ended
December 31, 2012, 2011 and 2010, respectively.
(2) Intersegment eliminations relate to two types of transactions: (i) Intersegment revenues that occur when Pharmacy Services Segment clients 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 clients,
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.
14