CVS 2013 Annual Report Download - page 35

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33
2013 Annual Report
As you review our Pharmacy Services Segment’s performance in this area, we believe you should consider the
following important information:
• Operating expenses increased $22 million or 1.9%, to $1.2 billion, in the year ended December 31, 2013, compared
to the prior year. The increase in operating expenses is primarily related to costs associated with the remediation of
Medicare Part D sanctions and coverage determination issues discussed previously. The increase was partially
offset by the Pharmacy Services Segment’s $11 million share of a gain on a legal settlement recorded in the third
quarter of 2013.
• During 2012, the increase in operating expenses of $70 million or 6.6%, to $1.1 billion compared to 2011, is
primarily related to increased costs associated with the expansion of our Medicare Part D business. The decrease
in operating expenses as a percentage of net revenues from 1.8% to 1.5% is primarily due to expense leverage
from net revenue growth and expense control initiatives.
Retail Pharmacy Segment
The following table summarizes our Retail Pharmacy Segment’s performance for the respective periods:
YEAR ENDED DECEMBER 31,
In millions
2013 2012 2011
Net revenues
$ 65,618
$ 63,641 $ 59,579
Gross profit
$ 20,112
$ 19,091 $ 17,469
Gross profit % of net revenues
30.6 %
30.0 % 29.3 %
Operating expenses
$ 13,844
$ 13,455 $ 12,556
Operating expenses % of net revenues
21.1 %
21.1 % 21.1 %
Operating profit
$ 6,268
$ 5,636 $ 4,913
Operating profit % of net revenues
9.6 %
8.9 % 8.2 %
Retail prescriptions filled (90 Day = 1 prescription)
734.3
717.4 657.7
Retail prescriptions filled (90 Day = 3 prescriptions) (1)
890.1
845.8 763.6
Net revenue increase:
Total
3.1 %
6.8 % 3.9 %
Pharmacy
4.1 %
7.6 % 4.3 %
Front Store
1.0 %
5.1 % 3.0 %
Total prescription volume (90 Day = 1 prescription)
2.4 %
9.1 % 3.4 %
Total prescription volume (90 Day = 3 prescriptions) (1)
5.2 %
11.0 % 5.5 %
Same store sales increase:
Total
1.7 %
5.6 % 2.3 %
Pharmacy
2.6 %
6.6 % 3.0 %
Front Store
(0.5)%
3.4 % 0.8 %
Prescription volume (90 Day = 1 prescription)
1.5 %
8.1 % 2.3 %
Prescription volume (90 Day = 3 prescriptions) (1)
4.4 %
10.0 % 4.3 %
Generic dispensing rates
81.4 %
79.2 % 75.6 %
Pharmacy % of net revenues
69.5 %
68.8 % 68.3 %
Third party % of pharmacy revenue
97.9 %
97.5 % 97.8 %
(1) Includes the adjustment to convert 90-day prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these
prescriptions include approximately three times the amount of product days supplied compared to a normal prescription.