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58 CVS Health
Notes to Consolidated Financial Statements
1 | Significant Accounting Policies
Description of business CVS Health 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/LTC and Corporate, which are
described below.
Changes in Segment Definition
As a result of the acquisition of Omnicare, Inc. (“Omnicare”) on August 18, 2015,
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 former Retail Pharmacy Segment now also
includes the long-term care (“LTC”) operations, as well as the commercialization services of Omnicare, and has
been renamed the “Retail/LTC Segment.” The LTC operations include the distribution of pharmaceuticals, related
pharmacy consulting and other ancillary services to chronic care facilities and other care settings. The Company’s
Corporate Segment now also includes certain aspects of Omnicare’s corporate expenses.
On December 16, 2015, the Company completed its acquisition of the pharmacy and clinic businesses of Target
Corporation (“Target”). See Note 3, “Acquisitions.” The results of the Target pharmacies and clinics are included in
the Retail/LTC Segment.
Pharmacy Services Segment (the “PSS”)
The PSS provides a full range of pharmacy benefit management services
including mail order pharmacy services, specialty pharmacy and infusion services, plan design and administration,
formulary management and claims processing. The Company’s clients are primarily employers, insurance compa-
nies, unions, government employee groups, health plans, Managed Medicaid plans 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 more than 68,000 retail pharmacies, consisting of approximately 41,000
chain pharmacies and 27,000 independent 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 interac-
tion screenings and brand to generic substitutions.
The PSS’ specialty pharmacies support individuals that require complex and expensive drug therapies. The spe-
cialty pharmacy business includes mail order and retail specialty pharmacies that operate under the CVS Caremark®,
CarePlus CVS PharmacyTM, Navarro® Health Services and Advanced Care Scripts names. In January 2014, the
Company enhanced its offerings of specialty infusion services and began offering enteral nutrition services through
Coram LLC and its subsidiaries. In August 2015, the Company further expanded its specialty offerings with the
acquisition of Advanced Care Scripts which was part of the Omnicare acquisition. See Note 3, “Acquisitions”.
The PSS also provides health management programs, which include integrated disease management for 17 condi-
tions, through the Company’s Accordant® rare disease management offering.
In addition, through the Company’s SilverScript Insurance Company (“SilverScript”) subsidiary, 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 CaremarkTM,
CarePlus CVS PharmacyTM, Accordant®, SilverScript®, Coram®, CVS SpecialtyTM, NovoLogix®, Navarro® Health
Services and Advanced Care Scripts names. As of December 31, 2015, the PSS operated 24 retail specialty