CVS 2014 Annual Report Download - page 26

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Management’s Discussion and Analysis
of Financial Condition and Results of Operations
24
CVS Health
Overview of Our Corporate Segment
The Corporate Segment provides management and administrative services to support the Company. The Corporate
Segment consists of certain aspects of our executive management, corporate relations, legal, compliance, human
resources, corporate information technology and finance departments.
Results of Operations
Summary of our Consolidated Financial Results
YEAR ENDED DECEMBER 31,
IN MILLIONS, EXCEPT PER COMMON SHARE AMOUNTS 2014 2013 2012
Net revenues
$ 139,367
$ 126,761 $ 123,120
Cost of revenues
114,000
102,978 100,632
Gross profit
25,367
23,783 22,488
Operating expenses
16,568
15,746 15,278
Operating profit
8,799
8,037 7,210
Interest expense, net
600
509 557
Loss on early extinguishment of debt
521
— 348
Income before income tax provision
7,678
7,528 6,305
Income tax provision
3,033
2,928 2,436
Income from continuing operations
4,645
4,600 3,869
Loss from discontinued operations, net of tax
(1)
(8) (7)
Net income
4,644
4,592 3,862
Net loss attributable to noncontrolling interest — — 2
Net income attributable to CVS Health
$ 4,644
$ 4,592 $ 3,864
Diluted earnings per common share:
Income from continuing operations attributable to CVS Health
$ 3.96
$ 3.75 $ 3.02
Loss from discontinued operations attributable to CVS Health
$ —
$ (0.01) $ (0.01)
Net income attributable to CVS Health
$ 3.96
$ 3.74 $ 3.02
Net revenues
increased $12.6 billion in 2014 compared to 2013, and increased $3.6 billion in 2013 compared to
2012. As you review our performance in this area, we believe you should consider the following important information:
• During 2014, net revenues in our Pharmacy Services Segment increased 16.1% and net revenues in our Retail
Pharmacy Segment increased 3.3% compared to the prior year.
• During 2013, net revenues in our Pharmacy Services Segment increased by 3.8% and net revenues in our Retail
Pharmacy Segment increased 3.1% compared to the prior year.
• The increase in our generic dispensing rates in both of our operating segments continued to have an adverse
effect on net revenue in 2014 as compared to 2013, as well as in 2013 as compared to 2012. In 2014, the
Pharmacy Services Segment had a greater impact from net new business as compared to 2013.
Please see the Segment Analysis later in this document for additional information about our net revenues.