Caremark 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 Caremark annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

What happens
when you start
with heart?
2015 Annual Report

Table of contents

  • Page 1
    What happens when you start with heart? 2015 Annual Report

  • Page 2
    1 Letter to Shareholders 7 Start with Heart 21 2015 Financial Report Financial highlights (in millions, except per share figures) 2015 2014 % change Net revenues Operating profit Net income Diluted EPS from continuing operations Free cash flow* Stock price at year-end Market capitalization at ...

  • Page 3
    ... on creating superior value for patients, payors, and providers through an unmatched suite of integrated assets. From our nationwide retail footprint to our leading pharmacy benefits management (PBM) and specialty businesses, and now our leading presence in long-term pharmacy care, we have forged...

  • Page 4
    ... a 98 percent client retention rate, net new client business for 2016 totaled $12.7 billion. ADDING SHAREHOLDER VALUE CVS Health generated $6.5 billion in free cash ï¬,ow during 2015 and returned more than $6 billion to shareholders through dividends and share repurchases. We are winning with our...

  • Page 5
    ... to start 2016 Total $14.8 B $40 billion CVS Pharmacy filled in revenues from specialty drugs dispensed and managed across the enterprise n 84% Health Plan n 12% Employer n 4% Government With a client retention rate of 98%, net new business for 2016 totaled $12.7B of all retail prescriptions...

  • Page 6
    ..., we opened 161 new stores in 2015. Factoring in closings, net units increased by 130 stores. For our PBM business, members now have approximately 9,600 CVS Pharmacy locations to choose from. That's up from about 7,800 in 2014. This enhances the relevance of Pharmacy Advisor, Maintenance Choice, and...

  • Page 7
    ... to patients returning home. We are developing integrated solutions for the assisted living, independent living, and home care markets as well. Before signing off, I must note with pride the more than $80 million we contributed to our communities in 2015 through the CVS Health Foundation, CVS Health...

  • Page 8
    6 CVS Health

  • Page 9
    Health care is our business, and better health is our purpose. So when we develop solutions for the substantial challenges facing patients, payors, and providers, we begin with more than just a focus on the bottom line. We also start ...with heart. Every day, CVS Health has the opportunity to make a...

  • Page 10
    ... convenient CVS Pharmacy® and 11 specialty mail locations, but we are also a leader in pharmacy order pharmacies. benefits, specialty pharmacy, infusion, retail clinics, and now long-term pharmacy care. This Our unique clinical programs combination has allowed us to partner more help patients stay...

  • Page 11
    ... Patients Providers billion $153 5 1.9 million billion customers per day in our retail pharmacies prescriptions dispensed or managed annually in enterprise revenue in 2015, more than 85% in health care s s ss e e c cc A Ac Omnicare® is a leading provider of pharmacy services to the long-term...

  • Page 12
    ...with easy access to CVS Pharmacy locations from coast to coast, members benefit from our unique, integrated solutions. Take Maintenance Choice, which gives plan members the option of receiving their maintenance medications by mail or picking them up at one of our retail stores. Helping customers get...

  • Page 13
    ... CVS Caremark plan designs. The result has been improved health care access for members and lower costs for clients. N JA More than 28 million patient visits have taken place at MinuteClinic since its inception, and our physicians assistants and nurse practitioners continue to provide high-quality...

  • Page 14
    ... health. 6 12 CVS Pharmacy adherence rates are, on average, percentage points better than for our peers for diabetes, cholesterol, and hypertension therapies Lack of adherence costs the U.S. health care system an estimated ScriptSync enrolled $300 billion annually 600,000 patients in 2015 CVS...

  • Page 15
    ... customers value the lower prices of these high-quality alternatives to national brands, and we benefit from the higher margins they provide. Our latest offerings include CVS Health® branded health products, Gold Emblem Abound™ healthy food, and our Beauty 360™ line, to name just a few. 2015...

  • Page 16
    ...members, the Target deal puts more of our pharmacies within easy driving distance. That has allowed many more plan members to reap the benefits of our Maintenance Choice program. Other CVS Health integrated offerings- Pharmacy Advisor and Specialty Connect among them-are on the way as well. 14 CVS...

  • Page 17
    .... CVS Health has long served seniors through our retail pharmacy network, our SilverScript Medicare Part D prescription drug plan, and with our unmatched specialty solutions, to name just a few examples. With the 2015 acquisition of Omnicare, we now provide seniors with pharmacy services even...

  • Page 18
    ...CVS Pharmacy instead of waiting for home delivery. This integrated offering has led to significant gains in adherence. And only CVS Specialty has the tools to manage payor costs for all specialty medications, including those that are infused or paid under the medical benefit. Specialty Drug Revenue...

  • Page 19
    ... for online queuing. Users of the CVS Specialty app can seamlessly select their delivery option each time they order, choosing mail or in-store pickup through our Specialty Connect product. What's next? Our apps will soon include facial recognition, making account login a breeze. 2015 Annual Report...

  • Page 20
    ... start with heart, communities can count on you CVS Health has made community health and wellness central to our charge for a better world. From the 2015 deployment of telehealth to the launch of new digital pharmacy tools that drive adherence, CVS Health innovations are increasing access to care...

  • Page 21
    ... A commitment to integrating green building concepts in new store designs and retrofits will help us in our efforts to get there. We are also making meaningful changes to the ingredients in our store brands. In 2015, we phased out the use of microbeads in beauty and personal care products because of...

  • Page 22
    ...and career paths at CVS Health by the end of 2016. And thanks to our scale and reputation, we're a valued recruiting partner in our communities. For example, CVS Health will become the first company permitted to open shop on a military base for recruiting purposes when our hiring and training center...

  • Page 23
    ... Balance Sheets 56 Consolidated Statements of Cash Flows 57 Consolidated Statements of Shareholders' Equity 58 Notes to Consolidated Financial Statements 98 Five-Year Financial Summary 99 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 100 Stock Performance Graph 2015...

  • Page 24
    ... 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...

  • Page 25
    ... patient counseling with respect to adherence to drug therapies, closing gaps in care, and more cost-effective drug therapies. Our integrated pharmacy services model enables us to enhance access to care while helping to lower overall health care costs and improve health outcomes. 2015 Annual Report...

  • Page 26
    ... retail health care clinics operating under the MinuteClinic® name (of which 1,049 were located in CVS Pharmacy stores), and our online retail websites, CVS.com®, Navarro.comTM and Onofre.com.brTM. LTC operations are comprised of 143 spoke pharmacies that primarily handle new prescription orders...

  • Page 27
    ...impact from net new business grew for the Pharmacy Services Segment. The increase in our generic dispensing rates in both of our operating segments continued to have a negative effect on net revenue in 2015 as compared to 2014, as well as in 2014 as compared to 2013. • Both segments benefited from...

  • Page 28
    ... "Borrowings and Credit Agreements" to the consolidated financial statements for additional information. Income tax provision Our effective income tax rate was 39.3%, 39.5% and 38.9% in 2015, 2014 and 2013, respectively. The effective income tax rate was lower in 2015 compared to 2014 primarily due...

  • Page 29
    ... ways: when members of Pharmacy Services Segment clients ("members") fill prescriptions at retail stores to purchase covered products, when members enrolled in programs such as Maintenance Choice® elect to pick up maintenance prescriptions at a retail drugstore instead of receiving them through the...

  • Page 30
    ... (2) Pharmacy network net revenues, claims processed and generic dispensing rates do not include Maintenance Choice, which are included within the mail choice category. Pharmacy network is defined as claims filled at retail and specialty pharmacies, including our retail drugstores and long-term care...

  • Page 31
    ...of generic prescription drugs dispensed and changes in client pricing. • Our pharmacy network claims processed increased 9.0% to 926.2 million claims in the year ended December 31, 2015, compared to 849.6 million claims in the prior year. This increase was primarily due to net new business. During...

  • Page 32
    ... to selling, general and administrative activities and retail specialty pharmacy store and administrative payroll, employee benefits and occupancy costs, decreased to 1.2% of net revenues in 2015, compared to 1.4% in 2014 and 1.5% in 2013. As you review our Pharmacy Services Segment's performance in...

  • Page 33
    ... three times the amount of product days supplied compared to a normal prescription. (3) Same store sales and prescriptions exclude revenues from MinuteClinic, and revenue and prescriptions from stores in Brazil, LTC operations and from commercialization services. (4) Front store same store sales...

  • Page 34
    ... new stores, which accounted for approximately 140 basis points of our total net revenue percentage increase during the year. Additionally, in 2015, 2014 and 2013 we continued to see a positive impact on our net revenues due to the growth of our Maintenance Choice program. As you review our Retail...

  • Page 35
    ... of drug payments by Medicaid and Medicare could impact our pricing to customers and other payors and/or could impact our ability to negotiate discounts or rebates with manufacturers, wholesalers, PBMs or retail and mail pharmacies. See "Efforts to reduce reimbursement levels and alter health care...

  • Page 36
    ..., benefits costs, facilities management and information technology costs. Liquidity and Capital Resources We maintain a level of liquidity sufficient to allow us to cover our cash needs in the short-term. Over the long-term, we manage our cash and capital structure to maximize shareholder return...

  • Page 37
    ... new or closed store totals. (2) Includes retail drugstores, onsite pharmacy stores, specialty pharmacy stores and pharmacies within Target stores. (1) 2014 (2) 7,702 187 (23) 7,866 60 2013 (2) 7,508 213 (19) 7,702 78 7,866 1,833 (34) 9,665 58 Net cash provided by financing activities increased...

  • Page 38
    ...the 2013 Repurchase Programs, effective January 2, 2015, the Company entered into a $2.0 billion fixed dollar ASR agreement with J.P. Morgan Chase Bank ("JP Morgan"). Upon payment of the $2.0 billion purchase price on January 5, 2015, the Company received a number of shares of its common stock equal...

  • Page 39
    ... the acquisition of the pharmacies and clinics of Target. The remaining proceeds were used for general corporate purposes. Upon the closing of the Omnicare acquisition in August 2015, the Company assumed the long-term debt of Omnicare that had a fair value of approximately $3.1 billion, $2.0 billion...

  • Page 40
    ...cannot guarantee the future actions of Moody's and/or Standard & Poor's. Our debt ratings have a direct impact on our future borrowing costs, access to capital markets and new store operating lease costs. Quarterly Dividend Increase In December 2015, our Board of Directors authorized a 21% increase...

  • Page 41
    ... economic lives of the buildings are reflected herein assuming equivalent stores continue to operate through the term of the arrangements. (2) Interest payments on long-term debt are calculated on outstanding balances and interest rates in effect on December 31, 2015. 2015 Annual Report 39

  • Page 42
    ... and selection of our critical accounting policies with the Audit Committee of our Board of Directors and the Audit Committee has reviewed our disclosures relating to them. Revenue Recognition Pharmacy Services Segment Our Pharmacy Services Segment sells prescription drugs directly through our mail...

  • Page 43
    ...using the gross method consistent with our revenue recognition policies for Mail Co-Payments and Retail Co-Payments. We have recorded estimates of various assets and liabilities arising from our participation in the Medicare Part D program based on information in our claims management and enrollment...

  • Page 44
    ... of pharmaceutical and medical products are reimbursed by the federal Medicare Part D program and, to a lesser extent, state Medicaid programs. Payments for services rendered to patients covered by these programs are generally less than billed charges. We monitor our revenues and receivables from...

  • Page 45
    ...contracts if it exceeds contractually defined annual purchase volumes. In addition, the Pharmacy Services Segment receives fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of "Cost of revenues". Retail...

  • Page 46
    ... changed its methods of accounting for "front store" inventories in the Retail/LTC Segment. Prior to 2015, the Company valued front store inventories at the lower of cost or market on a first-in, first-out ("FIFO") basis in retail stores using the retail inventory method and in distribution centers...

  • Page 47
    ... estimates can be affected by a number of factors including, but not limited to, general economic conditions, availability of market information as well as the profitability of the Company. Goodwill is tested for impairment on a reporting unit basis using a two-step process. The first step of the...

  • Page 48
    ... limited to, historical settlement experience, the owner of the property, the location and condition of the property, the terms of the underlying lease, the specific marketplace demand and general economic conditions. Our total closed store lease liability covered by this critical accounting policy...

  • Page 49
    ...-annually to determine if our self-insurance liability is adequate for our health and medical liability. Our total self-insurance liability covered by this critical accounting policy was $660 million as of December 31, 2015. Although we believe we have sufficient current and historical information...

  • Page 50
    ... health of our PBM and LTC clients or other payors doing business with the Company and our ability to secure necessary financing, suitable store locations and sale-leaseback transactions on acceptable terms. • Efforts to reduce reimbursement levels and alter health care financing practices...

  • Page 51
    ... a broad and complex regulatory framework, including compliance with new and existing federal, state and local laws and regulations relating to health care, accounting standards, corporate securities, tax, environmental and other laws and regulations affecting our business. 2015 Annual Report 49

  • Page 52
    ... as they relate to our business, the pharmacy services, retail pharmacy, LTC pharmacy or retail clinic industries or to the health care industry generally. • The risk that any condition related to the closing of any proposed acquisition may not be satisfied on a timely basis or at all, including...

  • Page 53
    ...testing of the operating effectiveness of controls. Our system of internal control over financial reporting is enhanced by periodic reviews by our internal auditors, written policies and procedures and a written Code of Conduct adopted by our Company's Board of Directors, applicable to all employees...

  • Page 54
    ... respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of CVS Health Corporation as of...

  • Page 55
    ...CVS Health Weighted average shares outstanding Dividends declared per share See accompanying notes to consolidated financial statements. $ 153,290 126,762 26,528 17,074 9,454 838 - 8,616 3,386 5,230 9 5,239 (2) $ $ $ $ 5,237 4.65 0.01 4.66 1,118 $ $ $ $ 4.62 0.01 4.63 1,126 1.40 2015 Annual Report...

  • Page 56
    ...IN MILLIONS 2015 2014 $ 4,644 (35) 4 (37) (68) 4,576 - $ 4,576 $ $ 2013 4,592 (30) 3 59 32 4,624 - 4,624 Net income Other comprehensive income (loss): Foreign currency translation adjustments, net of tax Net cash flow hedges, net of tax Pension and other postretirement benefits, net of tax Total...

  • Page 57
    ... Balance Sheets DECEMBER 31, IN MILLIONS, EXCEPT PER SHARE AMOUNTS 2015 2014 Assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Deferred income taxes Other current assets Total current assets Property and equipment, net Goodwill Intangible assets, net...

  • Page 58
    ...term debt Payment of contingent consideration Dividends paid Proceeds from exercise of stock options Excess tax benefits from stock-based compensation Repurchase of common stock Other Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net...

  • Page 59
    ... option activity and stock awards Excess tax benefit on stock options and stock awards Portion of accelerated share repurchase not settled End of year Retained earnings: Beginning of year Changes in inventory accounting principles (Note 2) Net income attributable to CVS Health Common stock dividends...

  • Page 60
    ... 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 companies, unions, government employee groups, health...

  • Page 61
    ... a Target store) located in 49 states, the District of Columbia, Puerto Rico and Brazil operating primarily under the CVS Pharmacy, CVS, Longs Drugs, Navarro Discount Pharmacy and Drogaria Onofre names, the online retail websites, CVS.com, Navarro.com and Onofre.com.br, and 1,135 retail health care...

  • Page 62
    ...pharmacy benefit managers, insurance companies, governmental agencies and long-term care facilities), clients, members and private pay customers, as well as vendors and manufacturers. Charges to bad debt are based on both historical write-offs and specifically identified receivables. 60 CVS Health

  • Page 63
    ... cost method. See Note 2, "Changes in Accounting Principle." Physical inventory counts are taken on a regular basis in each retail store and long-term care pharmacy and a continuous cycle count process is the primary procedure used to validate the inventory balances on hand in each distribution...

  • Page 64
    ..., net of any volume-related or other discounts paid back to the client (see "Drug Discounts" below), (ii) the price paid to the PSS by client plan members for mail order prescriptions ("Mail Co-Payments") and the price paid to retail network pharmacies by client plan members for retail prescriptions...

  • Page 65
    ... clients is included in "Claims and discounts payable" in the accompanying consolidated balance sheets. Medicare Part D The PSS, through its SilverScript subsidiary, participates in the federal government's Medicare Part D program as a Prescription Drug Plan ("PDP"). Net revenues include insurance...

  • Page 66
    ... cost of prescription drugs sold component of cost of revenues includes: (i) the cost of the prescription drugs purchased from manufacturers or distributors and shipped to members in clients' benefit plans from the PSS' mail service dispensing pharmacies, net of any volume-related or other discounts...

  • Page 67
    ... to health and medical liabilities. The Company's self-insurance accruals, which include reported claims and claims incurred but not reported, are calculated using standard insurance industry actuarial assumptions and the Company's historical claims experience. Facility opening and closing costs New...

  • Page 68
    ... of income. Stock-based compensation Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable requisite service period of the stock award (generally 3 to 5 years) using the straight-line method. 66 CVS Health

  • Page 69
    ... The Company has an equity method investment in SureScripts, LLC ("SureScripts"), which operates a clinical health information network. The Pharmacy Services and Retail/LTC segments utilize this clinical health information network in providing services to its client plan members and retail customers...

  • Page 70
    ...revenue recognition guidance, including industry-specific guidance. This new guidance is expected to be effective for annual reporting periods (including interim reporting periods within those periods) beginning January 1, 2018; early adoption in 2017 is permitted. Companies have the option of using...

  • Page 71
    ... changed its methods of accounting for "front store" inventories in the Retail/LTC Segment. Prior to 2015, the Company valued front store inventories at the lower of cost or market on a first-in, first-out ("FIFO") basis in retail stores using the retail inventory method and in distribution centers...

  • Page 72
    ... in dispensing prescription drugs to assisted-living and long-term care facilities, and to broaden its presence in the specialty pharmacy business as the Company seeks to serve a greater percentage of the growing senior patient population in the United States. The fair value of the consideration...

  • Page 73
    ... by CVS Health. Target Pharmacy Acquisition On December 16, 2015, the Company acquired the pharmacy and clinic businesses of Target for approximately $1.9 billion, plus contingent consideration of up to $50 million based on future prescription growth over a three year period. The purchase price is...

  • Page 74
    ... as final settlement of the inventory valuation. This amount will be recorded as a reduction of the purchase price in the first quarter of 2016. In connection with the closing of the transaction, the Company and Target entered into pharmacy and clinic operating and master lease agreements. See Note...

  • Page 75
    ...third quarter of 2015, the Company performed its annual impairment test of the indefinitely-lived trademark and concluded there was no impairment as of the testing date. The carrying amount of its indefinitely-lived trademark was $6.4 billion as of December 31, 2015 and 2014. 2015 Annual Report 73

  • Page 76
    ... under the 2014 Repurchase Program, effective December 11, 2015, the Company entered into a $725 million fixed dollar ASR with Barclays Bank PLC ("Barclays"). Upon payment of the $725 million purchase price on December 14, 2015, the Company received a number of shares of its common stock equal to...

  • Page 77
    ...the 2013 Repurchase Programs, effective January 2, 2015, the Company entered into a $2.0 billion fixed dollar ASR agreement with J.P. Morgan Chase Bank ("JP Morgan"). Upon payment of the $2.0 billion purchase price on January 5, 2015, the Company received a number of shares of its common stock equal...

  • Page 78
    ... as of December 31, 2015. In connection with its commercial paper program, the Company maintains a $1.0 billion, five-year unsecured back-up credit facility, which expires on May 23, 2018, a $1.25 billion, five-year unsecured back-up credit facility, which expires on July 24, 2019, 76 CVS Health

  • Page 79
    ... the acquisition of the pharmacies and clinics of Target. The remaining proceeds were used for general corporate purposes. Upon the closing of the Omnicare acquisition in August 2015, the Company assumed the long-term debt of Omnicare that had a fair value of approximately $3.1 billion, $2.0 billion...

  • Page 80
    ...price plus accrued and unpaid interest to the redemption date. The net proceeds of the 2013 Notes were used to repay commercial paper outstanding at the time of issuance and to fund the acquisition of Coram in January 2014. The remainder was used for general corporate purposes. The credit facilities...

  • Page 81
    ... most of its retail and mail order locations, ten of its distribution centers and certain corporate offices under noncancelable operating leases, typically with initial terms of 15 to 25 years and with options that permit renewals for additional periods. The Company also leases certain equipment...

  • Page 82
    ... believe these limitations on dividends and distributions materially impact its financial position. The Company has recorded estimates of various assets and liabilities arising from its participation in the Medicare Part D program based on information in its claims management and enrollment systems...

  • Page 83
    ...: IN MILLIONS 2015 2014 2013 Components of net periodic benefit cost: Interest cost Expected return on plan assets Amortization of net loss Settlement loss Service cost Net periodic pension cost $ 31 (33) 21 - - $ 32 (31) 16 3 1 $ 30 (34) 22 - 1 $ 19 $ 21 $ 19 2015 Annual Report 81

  • Page 84
    ...purchase rates. The expected long-term rate of return on plan assets is determined by using the plan's target allocation and historical returns for each asset class on a plan by plan basis. Certain of the Company's pension plans use assumptions on expected compensation increases of plan participants...

  • Page 85
    ...benefit costs for 2013 include a settlement loss of $8 million. Pursuant to various collective bargaining agreements, the Company also contributes to multiemployer health and welfare plans that cover certain union-represented employees. The plans provide postretirement health care and life insurance...

  • Page 86
    ...Incentive Compensation Plan ("ICP") provide for grants of annual incentive and long-term performance awards to executive officers and other officers and employees of the Company or any subsidiary of the Company. Payment of such annual incentive and long-term performance awards will be in cash, stock...

  • Page 87
    ... and $329 million, respectively. The fair value of each stock option is estimated using the Black-Scholes option pricing model based on the following assumptions at the time of grant: 2015 Dividend yield (1) Expected volatility (2) Risk-free interest rate (3) Expected life (in years) (4) Weighted...

  • Page 88
    ...to the Company's effective income tax rate for continuing operations for the years ended December 31: 2015 Statutory income tax rate State income taxes, net of federal tax benefit Other Effective income tax rate 2014 35.0% 4.3 0.2 39.5% 2013 35.0% 4.0 (0.1) 38.9% 35.0% 4.0 0.3 39.3% 86 CVS Health

  • Page 89
    ...Beginning balance Additions based on tax positions related to the current year Additions based on tax positions related to prior years Reductions for tax positions of prior years Expiration of statutes of limitation Settlements Ending balance $ 188 57 122 (11) (13) (5) $ 338 2015 Annual Report...

  • Page 90
    ... to U.S. federal income tax as well as income tax of numerous state and local jurisdictions. The Company is a participant in the Compliance Assurance Process ("CAP"), which is a voluntary program offered by the Internal Revenue Service ("IRS") under which participating taxpayers work collaboratively...

  • Page 91
    ...matters. • Caremark (the term "Caremark" being used herein to generally refer to any one or more PBM subsidiaries of the Company, as applicable) was named in a putative class action lawsuit filed in October 2003 in Alabama state court by John Lauriello, purportedly on behalf of participants in the...

  • Page 92
    ... the U.S. Department of Health and Human Services, requesting information relating to the processing of Medicaid and certain other government agency claims on behalf of its clients (which allegedly resulted in underpayments from our pharmacy benefit management clients to the applicable government...

  • Page 93
    ... favor of Caremark and against Spay. In October 2015, Spay filed a notice of appeal in the United States Court of Appeals for the Third Circuit. • In November 2012, the Company received a subpoena from the OIG requesting information concerning automatic refill programs used by pharmacies to refill...

  • Page 94
    ... claims acts of several states, by overcharging state and federal governments in connection with prescription drugs available through the Company's Health Savings Pass program, a membership-based program that allows enrolled customers special pricing for typical 90-day supplies of various generic...

  • Page 95
    ... requesting documents and information in connection with a False Claims Act investigation concerning allegations that the Company submitted, or caused to be submitted, to the Medicare Part D program prescription drug event data that misrepresented true prices paid by the Company's PBM to pharmacies...

  • Page 96
    ... ways: when members of Pharmacy Services Segment clients ("members") fill prescriptions at retail stores to purchase covered products, when members enrolled in programs such as Maintenance Choice® elect to pick up maintenance prescriptions at a retail drugstore instead of receiving them through the...

  • Page 97
    ...: IN MILLIONS, EXCEPT PER SHARE AMOUNTS 2015 2014 2013 Numerator for earnings per share calculation: Income from continuing operations attributable to common stockholders (1) Denominator for earnings per share calculation: Weighted average shares, basic Effect of dilutive securities Weighted...

  • Page 98
    ... Health Net income attributable to CVS Health Diluted earnings per share: Income from continuing operations attributable to CVS Health Income (loss) from discontinued operations attributable to CVS Health Net income attributable to CVS Health Dividends per share Stock price: (New York Stock Exchange...

  • Page 99
    ... to CVS Health Net income attributable to CVS Health Diluted earnings per share: Income from continuing operations attributable to CVS Health Loss from discontinued operations attributable to CVS Health Net income attributable to CVS Health Dividends per share Stock price: (New York Stock Exchange...

  • Page 100
    ...Accounting Standards Board in April 2015. The effect of the adoption on the Company's consolidated balance sheet is a reduction in noncurrent assets and long-term debt of $65 million, $74 million, $54 million and $58 million as of December 31, 2014, 2013, 2012 and 2011, respectively. 98 CVS Health

  • Page 101
    ..., the Company has elected changes in its methods of accounting for front store inventories in the Retail/LTC Segment effective January 1, 2015. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CVS Health Corporation's internal...

  • Page 102
    ... CVS Health. (2) Includes seven companies: (COST, CVS, KR, SYY, WBA, WFM, WMT). (3) Includes 56 companies. The year-end values of each investment shown in the preceding graph are based on share price appreciation plus dividends, with the dividends reinvested as of the last business day of the month...

  • Page 103
    ...Pharmacy Stephen J. Gold Executive Vice President and Chief Information Officer J. David Joyner Executive Vice President, Sales and Account Services - CVS Caremark Per G.H. Lofberg Executive Vice President Thomas M. Moriarty Executive Vice President, Chief Health Strategy Officer and General Counsel...

  • Page 104
    WE ARE A pharmacy innovation company OUR STRATEGY Reinventing pharmacy OUR PURPOSE Helping people on their path to better health OUR VALUES Innovation Collaboration Caring Integrity Accountability The CVS Health 2015 Annual Report achieved the following results by printing on paper containing ...