CVS HEALTH Corp | 2013 | FY | 3

Segment Reporting
 
The Company currently has three reportable segments: Pharmacy Services, Retail Pharmacy and Corporate.
 
The Company evaluates its Pharmacy Services and Retail Pharmacy segment performance based on net revenue, gross profit and operating profit before the effect of certain intersegment activities and charges. The Company evaluates the performance of its Corporate Segment based on operating expenses before the effect of discontinued operations and certain intersegment activities and charges. See Note 1 for a description of the Pharmacy Services, Retail Pharmacy and Corporate segments and related significant accounting policies.

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:
 
In millions
Pharmacy Services
Segment(1)(2)
 
Retail Pharmacy
Segment(2)
 
Corporate
Segment
 
Intersegment
Eliminations(2)
 
Consolidated
Totals
2013:
 

 
 

 
 

 
 

 
 

Net revenues
$
76,208

 
$
65,618

 
$
—

 
$
(15,065
)
 
$
126,761

Gross profit
4,237

 
20,112

 
—

 
(566
)
 
23,783

Operating profit
3,086

 
6,268

 
(751
)
 
(566
)
 
8,037

Depreciation and amortization
560

 
1,217

 
93

 
—

 
1,870

Total assets
38,343

 
30,191

 
4,420

 
(1,428
)
 
71,526

Goodwill
19,658

 
6,884

 
—

 
—

 
26,542

Additions to property and equipment
313

 
1,610

 
61

 
—

 
1,984

2012:
 

 
 

 
 

 
 

 
 

Net revenues
$
73,444

 
$
63,641

 
$
—

 
$
(13,965
)
 
$
123,120

Gross profit
3,808

 
19,091

 
—

 
(411
)
 
22,488

Operating profit
2,679

 
5,636

 
(694
)
 
(411
)
 
7,210

Depreciation and amortization
517

 
1,153

 
83

 
—

 
1,753

Total assets
36,057

 
29,492

 
1,408

 
(736
)
 
66,221

Goodwill
19,646

 
6,749

 
—

 
—

 
26,395

Additions to property and equipment
422

 
1,555

 
53

 
—

 
2,030

2011:
 

 
 

 
 

 
 

 
 

Net revenues
$
58,874

 
$
59,579

 
$
—

 
$
(11,373
)
 
$
107,080

Gross profit
3,279

 
17,469

 
—

 
(186
)
 
20,562

Operating profit
2,220

 
4,913

 
(616
)
 
(186
)
 
6,331

Depreciation and amortization
433

 
1,060

 
75

 
—

 
1,568

Total assets
35,704

 
28,632

 
1,121

 
(605
)
 
64,852

Goodwill
19,657

 
6,801

 
—

 
—

 
26,458

Additions to property and equipment
461

 
1,353

 
58

 
—

 
1,872

 
(1)
Net revenues of the Pharmacy Services Segment include approximately $7.9 billion, $8.4 billion and $7.9 billion of Retail co-payments for the years ended December 31, 2013, 2012 and 2011, respectively.
(2)
Intersegment eliminations relate to two types of transactions: (i) Intersegment revenues that occur when Pharmacy Services Segment clients use Retail Pharmacy Segment stores to purchase covered products. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue on a standalone basis and (ii) Intersegment revenues, gross profit and operating profit that occur when Pharmacy Services Segment clients, through the Company’s intersegment activities (such as the Maintenance Choice program), elect to pick up their maintenance prescriptions at Retail Pharmacy Segment stores instead of receiving them through the mail. When this occurs, both the Pharmacy Services and Retail Pharmacy segments record the revenue, gross profit and operating profit on a standalone basis. Beginning in the fourth quarter of 2011, the Maintenance Choice eliminations reflect all discounts available for the purchase of mail order prescription drugs. The following amounts are eliminated in consolidation in connection with the item (ii) intersegment activity: net revenues of $4.3 billion, $3.4 billion and $2.6 billion for the years ended December 31, 2013, 2012 and 2011, respectively; gross profit and operating profit of $566 million, $411 million and $186 million for the years ended December 31, 2013, 2012 and 2011, respectively.

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