CVS 2015 Annual Report Download - page 24

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Management’s Discussion and Analysis
of Financial Condition and Results of Operations
22 CVS Health
The following discussion and analysis should be read in conjunction with our audited consolidated financial state-
ments and Cautionary Statement Concerning Forward-Looking Statements that are included in this Annual Report.
Overview of Our Business
CVS Health Corporation, together with its subsidiaries (collectively “CVS Health,” the “Company,” “we,” “our” or
“us”), is a pharmacy innovation company helping people on their path to better health. At the forefront of a changing
health care landscape, the Company has an unmatched suite of capabilities and the expertise needed to drive
innovations that will help shape the future of health.
We are currently the only integrated pharmacy health care company with the ability to impact consumers, payors,
and providers with innovative, channel-agnostic solutions. We have a deep understanding of their diverse needs
through our unique integrated model, and we are bringing them innovative solutions that help increase access to
quality care, deliver better health outcomes, and lower overall health care costs.
Through our approximately 9,600 retail pharmacies, more than 1,100 walk-in health care clinics, a leading pharmacy
benefits manager with more than 75 million plan members, a dedicated senior pharmacy care business serving
more than one million patients per year, and expanding specialty pharmacy services, we enable people, businesses,
and communities to manage health in more affordable, effective ways. We are delivering break-through products and
services, from advising patients on their medications at our CVS Pharmacy® locations, to introducing unique programs
to help control costs for our clients at CVS Caremark®, to innovating how care is delivered to our patients with complex
conditions through CVS SpecialtyTM, to improving pharmacy care for the senior community through Omnicare®, or by
expanding access to high-quality, low-cost care at CVS MinuteClinicTM.
On August 18, 2015, the Company acquired 100% of the outstanding common shares and voting interests of
Omnicare, Inc. (“Omnicare”), for $98 per share for a total of $9.6 billion and assumed long-term debt with a fair
value of approximately $3.1 billion. Omnicare is a leading pharmaceutical care company that specializes in the
management of long-term care pharmacy services. As a result of the acquisition of Omnicare, the Company’s
segments have been expanded. The Company’s Pharmacy Services Segment now also includes the specialty
pharmacy operations of Omnicare. The Company’s Retail Pharmacy Segment has been renamed the “Retail/LTC
Segment” and now also includes the long-term care (“LTC”) operations, as well as the commercialization services
of Omnicare. The LTC operations include the distribution of pharmaceuticals, related pharmacy consulting and
other ancillary services to chronic care facilities and other care settings.
On December 16, 2015, we completed our acquisition of the pharmacy and clinic businesses of Target Corporation
(“Target”). This acquisition expands our pharmacy and clinic presence in existing and new markets. It allows us to
increase patient access and is an investment in our core business to drive growth. The results of the Target pharma-
cies and clinics are included in our Retail/LTC Segment.
We have three reportable segments: Pharmacy Services, Retail/LTC and Corporate.
Overview of Our Pharmacy Services Segment
Our Pharmacy Services business generates revenue from a full range of pharmacy benefit management (“PBM”)
solutions, including plan design and administration, formulary management, Medicare Part D services, mail order,
specialty pharmacy and infusion services, retail pharmacy network management services, prescription management
systems, clinical services, disease management services and medical spend management.
Our clients are primarily employers, insurance companies, unions, government employee groups, health plans,
Managed Medicaid plans and other sponsors of health benefit plans, and individuals throughout the United States.
A portion of covered lives primarily within the Managed Medicaid, health plan and employer markets have access
to our services through public and private exchanges.