Delaware | 05-0494040 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One CVS Drive, Woonsocket, Rhode Island | 02895 | |
(Address of principal executive offices) | (Zip Code) |
Common Stock, par value $0.01 per share | New York Stock Exchange | |
Title of each class | Name of each exchange on which registered |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Page | |||
Part I | |||
Part II | |||
Part III | |||
Part IV | |||
Percentage of Net Revenues(1) | ||||||||
2015 | 2014 | 2013 | ||||||
Prescription drugs(2) | 72.9 | % | 70.7 | % | 69.5 | % | ||
Over-the-counter and personal care | 10.9 | 11.0 | 11.0 | |||||
Beauty/cosmetics | 4.5 | 4.7 | 4.9 | |||||
General merchandise and other | 11.7 | 13.6 | 14.6 | |||||
100.0 | % | 100.0 | % | 100.0 | % |
(1) | Percentages are estimates based on store point-of-sale data for the stores and revenue system data for sales outside the stores. |
(2) | In 2015, prescription drugs include LTC sales and sales in pharmacies within Target stores. |
• | federal and state laws and regulations concerning the submission of claims for reimbursement by Medicare, Medicaid and other government programs, whether at retail, mail, specialty or LTC; |
• | federal and state laws and regulations governing the purchase, distribution, tracking, management, compounding, dispensing and reimbursement of prescription drugs and related services, whether at retail, mail, specialty or LTC, and applicable registration or licensing requirements; |
• | heighted enforcement of controlled substances regulations; |
• | the effect of the expiration of patents covering brand name drugs and the introduction of generic products; |
• | the frequency and rate of approvals by the FDA of new brand name and generic drugs, or of over-the-counter status for brand name drugs; |
• | rules and regulations issued pursuant to HIPAA and the HITECH Act; and other federal and state laws affecting the collection, use, disclosure and transmission of health or other personal information, such as federal laws on information privacy precipitated by concerns about information collection through the Internet, state security breach laws and state laws limiting the use and disclosure of prescriber information; |
• | consumer protection laws affecting our health care services, our loyalty programs, the products we sell, the informational calls we make and/or the marketing of our goods and services; |
• | federal, state and local environmental, health and safety laws and regulations applicable to our business, including the management of hazardous substances, storage and transportation of hazardous materials, and various recordkeeping disclosure and procedure requirements promulgated by the Occupational Safety and Health Administration that may apply to our operations; |
• | health care reform, managed care reform and plan design legislation; |
• | FDA regulation affecting the retail, LTC or PBM industry; |
• | government regulation of the development, administration, review and updating of formularies and drug lists including requirements and/or limitations around formulary tiering and patient cost sharing; |
• | federal and state laws and regulations establishing or changing prompt payment requirements for payments to retail pharmacies; |
• | impact of network access legislation or regulations, including “any willing provider” laws, on our ability to manage pharmacy networks; |
• | administration of Medicare Part D, including legislative changes and/or CMS rulemaking and interpretation; |
• | Medicare and Medicaid regulations applicable to our LTC pharmacies and those of our client’s facilities; |
• | insurance licensing and other insurance regulatory requirements applicable to offering Medicare Part D programs and services or other health care services; |
• | government regulation allowing the importation of prescription drugs from Canada and elsewhere into the United States; and |
• | direct regulation of pharmacies or PBMs by regulatory and quasi-regulatory bodies. |
• | Integrating personnel, operations and systems, while maintaining focus on producing and delivering consistent, high quality products and services; |
• | Coordinating geographically dispersed organizations; |
• | Disruption of management’s attention from our ongoing business operations; |
• | Retaining existing customers and attracting new customers; and |
• | Managing inefficiencies associated with integrating our operations. |
Retail Stores | Pharmacies within Target | LTC Hub & Spoke Pharmacies | Onsite Pharmacy Stores | Specialty Pharmacy Stores | Specialty Mail Order Pharmacies | Mail Order Dispensing Pharmacies | Infusion & Enteral Services Locations | Total | |||||||||||||||||||
United States: | |||||||||||||||||||||||||||
Alabama | 158 | 22 | 2 | — | 1 | — | — | 1 | 184 | ||||||||||||||||||
Alaska | — | 3 | — | — | — | — | — | — | 3 | ||||||||||||||||||
Arizona | 147 | 45 | 3 | — | 1 | — | — | 2 | 198 | ||||||||||||||||||
Arkansas | 10 | 8 | 2 | — | — | — | — | 1 | 21 | ||||||||||||||||||
California | 867 | 251 | 10 | — | 3 | 1 | — | 10 | 1,142 | ||||||||||||||||||
Colorado | — | 39 | 3 | — | 1 | — | — | 2 | 45 | ||||||||||||||||||
Connecticut | 153 | 20 | 1 | 1 | — | — | — | 1 | 176 | ||||||||||||||||||
Delaware | 17 | 3 | — | — | — | — | — | 20 | |||||||||||||||||||
District of Columbia | 60 | 1 | — | — | 1 | — | — | — | 62 | ||||||||||||||||||
Florida | 756 | 121 | 6 | — | 3 | 1 | 1 | 8 | 896 | ||||||||||||||||||
Georgia | 313 | 43 | 2 | 3 | 1 | — | — | 1 | 363 | ||||||||||||||||||
Hawaii | 63 | 6 | — | — | 1 | — | 1 | — | 71 | ||||||||||||||||||
Idaho | — | 2 | 1 | — | — | — | — | 1 | 4 | ||||||||||||||||||
Illinois | 277 | 86 | 6 | 1 | — | 1 | 1 | 3 | 375 | ||||||||||||||||||
Indiana | 301 | 30 | 4 | — | — | — | — | 3 | 338 | ||||||||||||||||||
Iowa | 20 | 18 | 2 | — | — | — | — | 1 | 41 | ||||||||||||||||||
Kansas | 40 | 14 | 2 | — | — | 1 | — | 2 | 59 | ||||||||||||||||||
Kentucky | 66 | 9 | 5 | — | — | — | — | — | 80 | ||||||||||||||||||
Louisiana | 116 | 15 | 3 | — | — | — | — | 1 | 135 | ||||||||||||||||||
Maine | 22 | 5 | 1 | — | — | — | — | 1 | 29 | ||||||||||||||||||
Maryland | 177 | 39 | 2 | 5 | — | — | — | 1 | 224 | ||||||||||||||||||
Massachusetts | 356 | 39 | 2 | 2 | 2 | 1 | — | 2 | 404 | ||||||||||||||||||
Michigan | 249 | 51 | 4 | 1 | — | 1 | — | 2 | 308 | ||||||||||||||||||
Minnesota | 61 | 74 | 1 | 1 | — | — | — | 3 | 140 | ||||||||||||||||||
Mississippi | 52 | 5 | 1 | 1 | — | — | — | 1 | 60 | ||||||||||||||||||
Missouri | 92 | 34 | 6 | 1 | — | — | — | 1 | 134 | ||||||||||||||||||
Montana | 14 | 2 | 1 | — | — | — | — | — | 17 | ||||||||||||||||||
Nebraska | 19 | 11 | 1 | — | — | — | — | 1 | 32 | ||||||||||||||||||
Nevada | 86 | 15 | 1 | — | — | — | — | 2 | 104 | ||||||||||||||||||
New Hampshire | 40 | 9 | 1 | — | — | — | — | — | 50 | ||||||||||||||||||
New Jersey | 286 | 44 | 3 | 4 | — | 1 | — | 1 | 339 | ||||||||||||||||||
New Mexico | 18 | 6 | — | — | — | — | — | 1 | 25 | ||||||||||||||||||
New York | 486 | 70 | 7 | — | 1 | — | — | 7 | 571 | ||||||||||||||||||
North Carolina | 313 | 49 | 4 | — | 1 | 1 | — | 3 | 371 | ||||||||||||||||||
North Dakota | 6 | — | — | — | — | — | — | — | 6 | ||||||||||||||||||
Ohio | 319 | 59 | 7 | 2 | — | — | — | 4 | 391 | ||||||||||||||||||
Oklahoma | 62 | 16 | 2 | — | — | — | — | 1 | 81 | ||||||||||||||||||
Oregon | — | 18 | 2 | — | 1 | — | — | 1 | 22 | ||||||||||||||||||
Pennsylvania | 408 | 64 | 6 | 3 | 1 | 1 | 1 | 2 | 486 | ||||||||||||||||||
Puerto Rico | 23 | — | — | — | — | 1 | — | — | 24 | ||||||||||||||||||
Rhode Island | 63 | 4 | 1 | — | 1 | — | — | 1 | 70 | ||||||||||||||||||
South Carolina | 191 | 19 | 3 | — | 1 | — | — | 2 | 216 | ||||||||||||||||||
South Dakota | — | 3 | 1 | — | — | — | — | — | 4 | ||||||||||||||||||
Tennessee | 136 | 27 | 3 | 1 | — | 1 | — | 3 | 171 | ||||||||||||||||||
Texas | 659 | 133 | 11 | 2 | 2 | — | 1 | 5 | 813 | ||||||||||||||||||
Utah | 11 | 13 | 2 | — | — | — | — | 1 | 27 | ||||||||||||||||||
Vermont | 8 | — | — | — | — | — | — | — | 8 | ||||||||||||||||||
Virginia | 281 | 58 | 7 | 3 | 1 | — | — | 2 | 352 | ||||||||||||||||||
Washington | 4 | 30 | 4 | — | 1 | — | — | 3 | 42 | ||||||||||||||||||
West Virginia | 52 | 6 | 2 | — | — | — | — | — | 60 | ||||||||||||||||||
Wisconsin | 51 | 33 | 5 | 1 | — | — | — | 1 | 91 | ||||||||||||||||||
Total United States | 7,909 | 1,672 | 143 | 32 | 24 | 11 | 5 | 89 | 9,885 | ||||||||||||||||||
Brazil | 44 | — | — | — | — | — | — | — | 44 | ||||||||||||||||||
Total | 7,953 | 1,672 | 143 | 32 | 24 | 11 | 5 | 89 | 9,929 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||||||||
2015 | High | $ | 104.56 | $ | 106.47 | $ | 113.45 | $ | 105.29 | $ | 113.45 | |||||||||||
Low | $ | 94.16 | $ | 98.74 | $ | 95.12 | $ | 91.56 | $ | 91.56 | ||||||||||||
Cash dividends per common share | $ | 0.350 | $ | 0.350 | $ | 0.350 | $ | 0.350 | $ | 1.40 | ||||||||||||
2014 | High | $ | 76.36 | $ | 79.43 | $ | 82.57 | $ | 98.62 | $ | 98.62 | |||||||||||
Low | $ | 64.95 | $ | 72.37 | $ | 74.69 | $ | 77.40 | $ | 64.95 | ||||||||||||
Cash dividends per common share | $ | 0.275 | $ | 0.275 | $ | 0.275 | $ | 0.275 | $ | 1.10 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 7.7 | ||
December 17, 2013 (“2013 Repurchase Program”) | $ | 6.0 | $ | — | ||
September 19, 2012 (“2012 Repurchase Program”) | $ | 6.0 | $ | — |
Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
October 1, 2015 through October 31, 2015 | 4,010,003 | $ | 100.84 | 4,010,003 | $ | 8,416,444,607 | ||||||||
November 1, 2015 through November 30, 2015 | — | $ | — | — | $ | 8,416,444,607 | ||||||||
December 1, 2015 through December 31, 2015 | 6,218,039 | $ | 93.28 | 6,218,039 | $ | 7,690,617,031 | ||||||||
10,228,042 | 10,228,042 |
In millions, except per share amounts | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||
Statement of operations data: | |||||||||||||||||||
Net revenues | $ | 153,290 | $ | 139,367 | $ | 126,761 | $ | 123,120 | $ | 107,080 | |||||||||
Gross profit | 26,528 | 25,367 | 23,783 | 22,488 | 20,562 | ||||||||||||||
Operating expenses | 17,074 | 16,568 | 15,746 | 15,278 | 14,231 | ||||||||||||||
Operating profit | 9,454 | 8,799 | 8,037 | 7,210 | 6,331 | ||||||||||||||
Interest expense, net | 838 | 600 | 509 | 557 | 584 | ||||||||||||||
Loss on early extinguishment of debt | — | 521 | — | 348 | — | ||||||||||||||
Income tax provision | 3,386 | 3,033 | 2,928 | 2,436 | 2,258 | ||||||||||||||
Income from continuing operations | 5,230 | 4,645 | 4,600 | 3,869 | 3,489 | ||||||||||||||
Income (loss) from discontinued operations, net | |||||||||||||||||||
of tax | 9 | (1 | ) | (8 | ) | (7 | ) | (31 | ) | ||||||||||
Net income | 5,239 | 4,644 | 4,592 | 3,862 | 3,458 | ||||||||||||||
Net (income) loss attributable to noncontrolling | |||||||||||||||||||
interest | (2 | ) | — | — | 2 | 4 | |||||||||||||
Net income attributable to CVS Health | $ | 5,237 | $ | 4,644 | $ | 4,592 | $ | 3,864 | $ | 3,462 | |||||||||
Per common share data: | |||||||||||||||||||
Basic earnings per common share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.65 | $ | 3.98 | $ | 3.78 | $ | 3.05 | $ | 2.61 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||||
Net income attributable to CVS Health | $ | 4.66 | $ | 3.98 | $ | 3.77 | $ | 3.04 | $ | 2.59 | |||||||||
Diluted earnings per common share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.62 | $ | 3.96 | $ | 3.75 | $ | 3.02 | $ | 2.59 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||||
Net income attributable to CVS Health | $ | 4.63 | $ | 3.96 | $ | 3.74 | $ | 3.02 | $ | 2.57 | |||||||||
Cash dividends per common share | $ | 1.40 | $ | 1.10 | $ | 0.90 | $ | 0.65 | $ | 0.50 | |||||||||
Balance sheet and other data: | |||||||||||||||||||
Total assets(1) | $ | 93,657 | $ | 74,187 | $ | 71,452 | $ | 66,167 | $ | 64,794 | |||||||||
Long-term debt(1) | $ | 26,267 | $ | 11,630 | $ | 12,767 | $ | 9,079 | $ | 9,150 | |||||||||
Total shareholders’ equity | $ | 37,203 | $ | 37,963 | $ | 37,938 | $ | 37,653 | $ | 38,014 | |||||||||
Number of stores (at end of year) | 9,681 | 7,866 | 7,702 | 7,508 | 7,388 |
(1) | As of June 30, 2015, the Company early adopted Accounting Standard Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30) issued by the Financial 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. |
Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) (1) | |||||||
Equity compensation plans approved by stockholders | 24,341 | $ | 57.60 | 23,752 | |||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||
Total | 24,341 | $ | 57.60 | 23,752 |
(1) | Shares in thousands. |
Consolidated Statements of Income for the Years Ended December 31, 2015, 2014 and 2013 | 29 | ||
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013 | 30 | ||
Consolidated Balance Sheets as of December 31, 2015 and 2014 | 31 | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013 | 32 | ||
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2015, 2014 and 2013 | 33 | ||
Notes to Consolidated Financial Statements | 34 | ||
Report of Independent Registered Public Accounting Firm | 70 |
Exhibit | Description | |
2.1* | Agreement and Plan of Merger dated as of November 1, 2006 among, the Registrant, Caremark Rx, Inc. and Twain MergerSub Corp. (incorporated by reference to Exhibit 2.1 to the Registrant’s Registration Statement No. 333-139470 on Form S-4 filed December 19, 2006). | |
2.2* | Amendment No. 1 dated as of January 16, 2007 to the Agreement and Plan of Merger dated as of November 1, 2006 among the Registrant, Caremark Rx, Inc. and Twain Merger Sub Corp. (incorporated by reference to Exhibit 2.2 to the Registrant’s Registration Statement No. 333-139470 on Form S-4/A filed January 16, 2007). | |
2.3* | Waiver Agreement dated as of January 16, 2007 between the Registrant and Caremark Rx, Inc. with respect to the Agreement and Plan Merger dated as of November 1, 2006 by and between Registrant and Caremark Rx, Inc (incorporated by reference to Exhibit 2.3 to the Registrant’s Registration Statement No. 333-139470 on Form S-4/A filed January 16, 2007). | |
2.4* | Amendment to Waiver Agreement, dated as of February 12, 2007, between Registrant and Caremark Rx, Inc. (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated February 13, 2007; Commission File No. 001-01011). | |
2.5* | Amendment to Waiver Agreement, dated as of March 8, 2007, between Registrant and Caremark Rx, Inc. (incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated March 8, 2007; Commission File No. 001-01011). | |
2.6* | Agreement and Plan of Merger dated as of August 12, 2008, among the Registrant, Longs Drug Stores Corporation and Blue MergerSub Corp. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated August 13, 2008; Commission File No. 001-01011). | |
2.7* | Agreement and Plan of Merger, dated as of May 20, 2015, among CVS Pharmacy, Inc., Tree Merger Sub, Inc. and Omnicare, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K dated May 21, 2015; Commission File No. 001-01011). |
3.1* | Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996; Commission File No. 001-01011). | |
3.1A* | Certificate of Amendment to the Amended and Restated Certificate of Incorporation, effective May 13, 1998 (incorporated by reference to Exhibit 4.1A to Registrant’s Registration Statement No. 333-52055 on Form S-3/A dated May 18, 1998). | |
3.1B* | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated March 22, 2007; Commission File No. 001-01011). | |
3.1C* | Certificate of Merger dated May 9, 2007 (incorporated by reference to Exhibit 3.1C to Registrant’s Quarterly Report on Form 10-Q dated November 1, 2007; Commission File No. 001-01011). | |
3.1D* | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated May 13, 2010; Commission File No. 001-01011). | |
3.1E* | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report On Form 8-K dated May 10, 2012; Commission File No. 001-01011). | |
3.1F* | Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated September 3, 2014 (Commission File No. 001-01011)). | |
3.2* | By-laws of the Registrant, as amended and restated (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated January 26, 2016; Commission File No. 001-01011). | |
4 | Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), no instrument which defines the rights of holders of long-term debt of the Registrant and its subsidiaries is filed with this report. The Registrant hereby agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | |
4.1* | Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement of the Registrant on Form 8-B dated November 4, 1996; Commission File No. 001-01011). | |
10.1* | Stock Purchase Agreement dated as of October 14, 1995 between The TJX Companies, Inc. and Melville Corporation, as amended November 17, 1995 (incorporated by reference to Exhibits 2.1 and 2.2 to Melville’s Current Report on Form 8-K dated December 4, 1995; Commission File No. 001-01011). | |
10.2* | Stock Purchase Agreement dated as of March 25, 1996 between Melville Corporation and Consolidated Stores Corporation, as amended May 3, 1996 (incorporated by reference to Exhibits 2.1 and 2.2 to Melville’s Current Report on Form 8-K dated May 5, 1996; Commission File No. 001-01011). | |
10.3* | Distribution Agreement dated as of September 24, 1996 among Melville Corporation, Footstar, Inc. and Footstar Center, Inc. (incorporated by reference to Exhibit 99.1 to Melville’s Current Report on Form 8-K dated October 28, 1996; Commission File No. 001-01011). | |
10.4* | Tax Disaffiliation Agreement dated as of September 24, 1996 among Melville Corporation, Footstar, Inc. and certain subsidiaries named therein (incorporated by reference to Exhibit 99.2 to Melville’s Current Report on Form 8-K dated October 28, 1996; Commission File No. 001-01011). | |
10.5* | Stockholder Agreement dated as of December 2, 1996 between the Registrant, Nashua Hollis CVS, Inc. and Linens ‘n Things, Inc. (incorporated by reference to Exhibit 10(i)(6) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997; Commission File No. 001-01011). | |
10.6* | Tax Disaffiliation Agreement dated as of December 2, 1996 between the Registrant and Linens ‘n Things, Inc. and certain of their respective affiliates (incorporated by reference to Exhibit 10(i)(7) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997; Commission File No. 001-01011). | |
10.7* | Four Year Credit Agreement dated as of May 12, 2011 by and among the Registrant, the lenders party thereto, Barclays Capital and JP Morgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and the Bank of New York Mellon, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011; Commission File No. 001-01011). | |
10.8* | Amendment No. 1, dated as of November 22, 2011, to the Credit Agreement dated as of May 12, 2011 by and among the Registrant, the Lenders party thereto, the Co-Syndication Agents and Co-Documentation Agents named therein, and The Bank of New York Mellon, as Administrative Agent (incorporated by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011; Commission File No. 001-01011). |
10.9* | Credit Agreement dated as of May 23, 2013, by and among the Registrant, the lenders party thereto, Barclays Bank PLC and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and The Bank of New York Mellon, as Administrative Agent. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 (Commission File No. 001-01011). | |
10.10* | Amendment No. 2, dated as of May 23, 2013, to the Credit Agreement dated as of May 12, 2011, by and among the Registrant, the lenders party thereto, Barclays Capital and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and The Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and The Bank of New York Mellon, as Administrative Agent, as previously amended by Amendment No. 1, dated as of November 22, 2011 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 (Commission File No. 001-01011). | |
10.11* | Second Amended and Restated Credit Agreement, dated as of July 24, 2014, by and among the Registrant, the lenders party thereto, Barclays Bank PLC and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and The Bank of New York Mellon, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (Commission File No. 001-01011). | |
10.12* | Five Year Credit Agreement dated as of July 1, 2015, by and among the Registrant, the lenders party thereto, Barclays Bank PLC and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, Bank of America, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents, and The Bank of New York Mellon, as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015 (Commission File No. 001-01011). | |
10.13* | Supplemental Retirement Plan for Select Senior Management of CVS Health Corporation I as amended and restated in December 2008 (incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009; Commission File No. 001-01011). | |
10.14* | CVS Health Corporation 1996 Directors Stock Plan, as amended and restated November 5, 2002 (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 28, 2002; Commission File No. 001-01011). | |
10.15* | 1997 Incentive Compensation Plan as amended through December 2008 (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009; Commission File No. 001-01011). | |
10.16* | Caremark Rx, Inc. 2004 Incentive Stock Plan (incorporated by reference to Exhibit 99.2 of the Registrant’s Registration Statement No. 333-141481 on Form S-8 filed March 22, 2007; Commission File No. 011-01011). | |
10.17 | CVS Health Deferred Stock Compensation Plan, as amended. | |
10.18 | CVS Health Deferred Compensation Plan, as amended. | |
10.19* | 2010 Incentive Compensation Plan, as amended through January 15, 2013 (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement on Form 14A filed March 27, 2015; Commission File No. 001-01011). | |
10.20 | 2007 Employee Stock Purchase Plan, as amended. | |
10.21 | The Registrant’s 2015 Management Incentive Plan. |
10.22 | The Registrant’s 2015 Executive Incentive Plan. | |
10.23* | The Registrant’s Long-Term Incentive Plan (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013; Commission File No. 001-01011). | |
10.24* | The Registrant’s Partnership Equity Program amended as of December 2014 (incorporated by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.25 | The Registrant’s Severance Plan for Non-Store Employees amended as of January 2015. | |
10.26* | The Registrant’s Performance-Based Restricted Stock Unit Plan amended as of December 2014 (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.27* | Form of Enterprise Non-Competition, Non-Disclosure and Developments Agreement between the Registrant and certain of the Registrant’s executive officers (incorporated by reference to Exhibit 10.25 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013; Commission File No. 001-01011). | |
10.28 | Universal 409A Definition Document, as amended. | |
10.29* | Form of Non-Qualified Stock Option Agreement between the Registrant and selected employees of the Registrant (incorporated by reference to Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.30* | Form of Restricted Stock Unit Agreement - Annual Grant - between the Registrant and selected employees of the Registrant (incorporated by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.31* | Form of Performance-Based Restricted Stock Unit Agreement between the Registrant and selected employees of the Registrant (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.32* | Form of Partnership Equity Program Participant Purchased RSUs, Company Matching RSUs and Company Matching Options Agreement (Pre-Tax) (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.33* | Form of Partnership Equity Program Participant Purchased RSUs, Company Matching RSUs and Company Matching Options Agreement (Post-Tax) (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.34* | Amended and Restated Employment Agreement dated as of December 22, 2008 between the Registrant and the Registrant’s President and Chief Executive Officer (incorporated by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008; Commission File No. 001-01011). | |
10.35* | Amendment dated December 21, 2012 to the Amended and Restated Employment Agreement dated as of December 22, 2008 between the Registrant and the Registrant’s President and Chief Executive Officer (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012; Commission File No. 001-01011). | |
10.36* | Form of Non-Qualified Stock Option Agreement between the Registrant and the Registrant’s President and Chief Executive Officer (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.37* | Form of Restricted Stock Unit Agreement between the Registrant and the Registrant’s President and Chief Executive Officer (incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.38* | Amendment dated January 22, 2015 to Nonqualified Stock Option Agreements between the Registrant and the Registrant’s President and Chief Executive Officer (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated January 20, 2015; Commission File No. 001-01011). |
10.39* | Change in Control Agreement dated December 22, 2008 between the Registrant and the Registrant’s Executive Vice President and Chief Financial Officer (incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010; Commission File No. 001-01011). | |
10.40* | Amendment dated as of December 31, 2012 to the Change in Control Agreement dated December 22, 2008 between the Registrant and the Registrant’s Executive Vice President and Chief Financial Officer (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012; Commission File No. 001-01011). |
10.41* | Change in Control Agreement dated December 22, 2008 between the Registrant and the Registrant’s Executive Vice President and President of CVS Caremark (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012; Commission File No. 001-01011). | |
10.42* | Amendment dated as of December 31, 2012 to the Change in Control Agreement dated December 22, 2008 between the Registrant and the Registrant’s Executive Vice President and President of CVS Caremark (incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012; Commission File No. 001-01011). | |
10.43* | Change in Control Agreement dated December 22, 2008 between the Registrant and the Registrant’s Executive Vice President and President of CVS Pharmacy (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). |
10.44* | Amendment dated as of December 31, 2012 to the Change in Control Agreement between the Registrant and the Registrant’s Executive Vice President and President of CVS Pharmacy (incorporated by reference to Exhibit 10.44 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014; Commission File No. 001-01011). | |
10.45* | Change in Control Agreement dated October 1, 2012 between the Registrant and the Registrant’s Executive Vice President, Chief Health Strategy Officer and General Counsel (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015; Commission File No. 001-01011). | |
10.46* | Restrictive Covenant Agreement dated June 1, 2014 between the Registrant and the Registrant’s Executive Vice President, Chief Health Strategy Officer and General Counsel (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2015; Commission File No. 001-01011). | |
13 | Portions of the 2015 Annual Report to Stockholders of CVS Health Corporation, which are specifically designated in this Form 10-K as being incorporated by reference. | |
21 | Subsidiaries of the Registrant. | |
23 | Consent of Ernst & Young LLP. | |
31.1 | Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | The following materials from the CVS Health Corporation Annual Report on Form 10-K for the year ended December 31, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows and (iv) related notes. | |
CVS HEALTH CORPORATION | ||
Date: February 9, 2016 | By: | /s/ DAVID M. DENTON |
David M. Denton | ||
Executive Vice President and Chief Financial Officer |
Signature | Title(s) | Date | ||
/s/ RICHARD M. BRACKEN | Director | February 9, 2016 | ||
Richard M. Bracken | ||||
/s/ C. DAVID BROWN II | Director | February 9, 2016 | ||
C. David Brown II | ||||
/s/ EVA C. BORATTO | Senior Vice President - Controller and Chief Accounting Officer (Principal Accounting Officer) | February 9, 2016 | ||
Eva C. Boratto | ||||
/s/ ALECIA A. DECOUDREAUX | Director | February 9, 2016 | ||
Alecia A. DeCoudreaux | ||||
/s/ DAVID M. DENTON | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 9, 2016 | ||
David M. Denton | ||||
/s/ NANCY-ANN M. DEPARLE | Director | February 9, 2016 | ||
Nancy-Ann M. DeParle | ||||
/s/ DAVID W. DORMAN | Chairman of the Board and Director | February 9, 2016 | ||
David W. Dorman | ||||
/s/ ANNE M. FINUCANE | Director | February 9, 2016 | ||
Anne M. Finucane | ||||
/s/ LARRY J. MERLO | President and Chief Executive Officer (Principal Executive Officer) and Director | February 9, 2016 | ||
Larry J. Merlo | ||||
/s/ JEAN-PIERRE MILLON | Director | February 9, 2016 | ||
Jean-Pierre Millon | ||||
/s/ RICHARD J. SWIFT | Director | February 9, 2016 | ||
Richard J. Swift | ||||
/s/ WILLIAM C. WELDON | Director | February 9, 2016 | ||
William C. Weldon | ||||
/s/ TONY L. WHITE | Director | February 9, 2016 | ||
Tony L. White |
1.1 | Name of Plan. |
1.2 | Purpose of Plan. |
1.3 | “Top Hat” Pension Benefit Plan. |
1.4 | Funding. |
1.5 | Effective Date. |
1.6 | Administration. |
1.7 | Number and Gender. |
1.8 | Headings. |
2.1 | Account. |
2.2 | Affiliate. |
2.3 | Beneficiary. |
2.4 | Board. |
2.5 | Change in Control. |
2.6 | Code. |
2.7 | Committee. |
2.8 | Deferral Account. |
2.9 | Deferred Stock. |
2.10 | Deferred Stock Compensation Election. |
2.11 | Disability. |
2.12 | Distribution Date. |
2.13 | Effective Date. |
2.14 | Eligible Executive. |
2.15 | Employee. |
2.16 | ERISA. |
2.17 | Exchange Act. |
2.18 | Executive. |
2.19 | Grandfathered Deferral Account. |
2.20 | Participant. |
2.21 | Plan Administrator. |
2.22 | Plan Year. |
2.23 | Retirement. |
2.24 | Specified Employee. |
2.25 | Specific Future Year. |
2.26 | Stock. |
2.27 | Termination of Employment. |
2.28 | Trust. |
2.29 | Trustee. |
2.30 | Trust Agreement. |
2.31 | Universal 409A Definition Document. |
2.32 | Year of Service. |
3.1 | Eligibility. |
(a) | An Employee who is an Executive on October 1st of a calendar year (or such other date in the calendar year as designated by the Committee) shall be eligible to participate in the Plan. The Committee may, in its sole discretion, designate other key employees of the Company or an Affiliate who are members of a select group of management or highly compensated employees as eligible to participate in the Plan. |
(b) | Notwithstanding any Plan provision to the contrary, Employees must also be subject to the income tax laws of the United States in order to be eligible for participation in the Plan. |
(c) | Subject to the provisions of Sections 3.3 and Section 4.1, an Eligible Executive shall remain eligible to continue participation in the Plan for each Plan Year following his or her initial year of participation in the Plan. |
3.2 | Commencement of Participation. |
3.3 | Termination of Participation. |
(a) | Participation shall cease when the benefits that have been credited to a Participant’s Deferral Account have been distributed to him or her. |
(b) | Subject to the provisions of Section 4.3, a Participant shall only be eligible to make Deferred Stock Compensation Elections under the Plan for as long as he or she remains an Eligible Executive. |
(c) | If a former Participant who has incurred a Termination of Employment with the Company and all Affiliates and whose participation in the Plan ceased under Section 3.3(a) is reemployed as an Executive, the former Participant may again become eligible to participate in accordance with the provisions of Section 3.1. |
4.1 | Deferrals. |
4.2 | Filing Requirements of Deferred Stock Compensation Elections. |
4.3 | Modification or Revocation of Election by Participant. |
(a) | Once a properly completed Deferred Stock Compensation Election form is received by the Company, the elections of the Participant shall be irrevocable: provided however, that subject to the requirements of Section 409A of the Code, the Committee and/or Plan Administrator may, in its discretion, permit a Participant to elect a further deferral of amounts credited to a Deferral Account by filing a later election form in accordance with Section 6.7, below. |
(b) | If a Participant ceases to be an Executive after the date a Deferred Stock Compensation Election becomes effective but continues to be employed by the Company or an Affiliate, he or she shall continue to be a Participant and his or her Deferred Stock Compensation Election currently in effect shall remain in force, but such Participant shall not be eligible to make any further Deferred Stock Compensation Elections until such time as he or she shall once again become an Eligible Executive. |
5.1 | Establishment; Crediting of Amounts Deferred. |
5.2 | Deferred Stock As Sole Investment Vehicle. |
5.3 | Dividend Equivalents. |
(a) | Cash and Non-Stock Dividends. If the Company declares and pays a dividend on Stock in the form of cash or property other than shares of Stock, then a number of additional shares of Deferred Stock shall be credited to a Participant’s Deferral Account as of the payment date for such dividend equal to (A) the number of shares of Deferred Stock credited to the Deferral Account as of the record date for such dividend, multiplied by (B) the amount of cash plus the fair market value of any property other than shares actually paid as a dividend on each share at such payment date, divided by (C) the fair market value of a share of Stock at such payment date. |
(b) | Stock Dividends and Splits. If the Company declares and pays a dividend on Stock in the form of additional shares of Stock, or there occurs a forward split of Stock, then a number of additional shares of Deferred Stock shall be credited to the Participant’s Deferral Account as of the payment date for such dividend or forward Stock split equal to (A) the number of shares of Deferred Stock credited to the Deferral Account as of the record date for such dividend or split, multiplied by (B) the number of additional shares actually paid as a dividend or issued in such split in respect of each share of Stock. |
5.4 | Trusts. |
6.1 | Distribution Elections – Timing of Payment. |
(a) | Subject to the limitations set forth in this Article VI, each time a Participant makes a Deferred Stock Compensation Election, the Participant shall designate on that applicable Deferred Compensation Election, that the distribution of such deferrals shall be made or commence as the case may be pursuant to Section 6.6 as of (i) the Participant’s Retirement; or (ii) a Specific Future Year not later than the Plan Year in which the Participant attains age seventy-one (71) |
i. | Retirement. The distribution of the portion of a Participant’s Deferral Account (or subaccount(s)) that is deferred to Retirement under this Section shall commence on the first business day in the January next following his or her Retirement, pursuant to the provisions of Section 6.6, provided, however, that with respect to a Participant who is a Specified Employee as of the date of his or her Retirement, payment of any portion of his or her Deferral Account (or any subaccount(s) thereof) that is subject to Section 409A of the Code will be delayed until the first business day of the seventh (7th) month following the date such Retirement occurs. |
ii. | Specific Future Year. In the event a Participant elects to have the distribution of such deferrals made or commence as of a Specific Future Year, subject to rules established by the Plan Administrator, the deferral period must be at least five (5) Plan Years. The distribution of the portion of a Participant’s Deferral Account (or subaccount(s)) that is deferred to a Specific Future Year shall commence on the first business day of January in that specific year pursuant to the provisions of Section 6.6. |
6.2 | Disability Distributions. |
6.3 | Distributions in the Event of Death. |
6.4 | Distributions Upon Termination of Employment Other Than Retirement, Death or Disability. |
6.5 | Change in Control. |
6.6 | Form of Payment. |
(a) | Installments. Substantially equal annual installments, as elected by the Participant, from two (2) to ten (10) years. The initial installment of an annual payment stream will begin as of the first business day of the January (a) next following the Participant’s date of Retirement |
(b) | Lump sum. A Participant may elect distribution in the form of a single lump sum payment. Except for Specified Employees, distribution shall be made as of the first business day of the January (a) next following the Participant’s date of Retirement or (b) of the Specific Future Year, as the case may be, in accordance with the provisions of set forth in Section 6.1. |
(c) | Distributions to a Participant made pursuant to Section 6.1 will occur pursuant to the Participant’s payment elections at the time he or she submits the applicable Deferred Stock Compensation Election. A Participant may choose different forms of payment with respect to each Deferred Stock Compensation Election. In the absence of an election of the form of payment by a Participant on a Deferred Stock Compensation Election, the portion of the Participant’s Account deferred pursuant to that Deferred Stock Compensation Election, adjusted pursuant to the provisions of Article V, shall be paid in a single lump sum. |
(d) | A Participant shall not change his or her form of payment election, except as otherwise provided in Section 6.7 below. |
6.7 | Change of Distribution Election. |
(a) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to change his or her Specific Future Year election under Section 6.1(a)(ii) with respect to a portion of his or her Deferral Account to a later Specific Future Year by duly completing, executing and filing with the Plan Administrator a new Specific Future Year election applicable to such Deferrals, subject to the following limitations: |
i. | such election must be made at least twelve (12) months prior to the Specific Future Year then in effect with respect to that portion of his or her Deferral or Account (or subaccount(s) thereof), and such election will not become effective until at least twelve (12) months after the date on which the election is made; and |
ii. | the new Specific Future Year shall be a calendar year that is not less than five (5) years from the Specific Future Year then in effect. |
(b) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to delay the payment of a portion of his or her Deferral Account (or any subaccount(s) thereof) scheduled to be paid at his or her Retirement to his or her Retirement plus five |
(c) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to change the form of payment election under Section 6.6 applicable to his or her distribution under Section 6.1(a)(i) or (ii) by duly completing, executing and filing with the Plan Administrator a new form of payment election applicable to such deferrals, subject to the following limitations: |
i. | such election must be made at least twelve (12) months prior to the Specific Future Year then in effect with respect to that portion of his or her Deferral Account (or subaccount(s) thereof), and such election will not become effective until at least twelve (12) months after the date on which the election is made; and |
ii. | the distribution of that portion of his or her Deferral Account (or subaccount(s) thereof) shall be deferred for five (5) years from the date such amount would otherwise have been paid absent this election. |
(d) | It is the Company's intent that the provisions of Sections 6.7(a), (b) and (c) comply with the subsequent election provisions in Section 409A(a)(4)(C) of the Code, related regulations and other applicable guidance, and this Section 6.7 shall be interpreted accordingly. The Plan Administrator may impose additional restrictions or conditions on a Participant's ability to make an election pursuant to this Section 6.7. For avoidance of doubt, a Participant may not elect to alter the distribution of any portion of his or her Deferral Account (or any subaccount(s) thereof) from Retirement to a Specific Future Year or, except as provided in paragraph (a) above, from a Specific Future Year to Retirement. |
6.8 | Designation of Beneficiary. |
6.9 | Unclaimed Account. |
6.10 | Forfeited Stock. |
6.11 | Hardship Withdrawals. |
6.12 | Distribution of Grandfathered Deferral Account. |
6.13 | Form of Settlement. |
6.14 | Adjustments. |
7.1 | Plan Administrator. |
7.2 | General Powers of Administration. |
7.3 | Costs of Administration. |
7.4 | Indemnification. |
7.5 | 409A Compliance. |
7.6 | Sources of Stock: Limitation on Amount of Stock-Denominated Deferrals. |
8.1 | Claims. |
8.2 | Claim Decision. |
(a) | The reason or reasons for such denial; |
(b) | The pertinent provisions of the Plan; |
(c) | Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and |
(d) | The time limits for requesting a review under this Section. |
8.3 | Request for Review/Appeal. |
8.4 | Review of Decision. |
8.5 | Time Limit for Bringing Legal Action. |
9.1 | Not Contract of Employment. |
9.2 | Non-Assignability of Benefits. |
9.3 | Receipt and Release. |
9.4 | Withholding and Deduction and Taxes. |
9.5 | Amendment and Termination. |
9.6 | Compliance with Securities and Other Laws. |
9.7 | Provisions Relating to Section 16 of the Exchange Act. |
9.8 | No Trust Created. |
9.9 | Unsecured General Creditor Status of Employee. |
9.10 | Limitation. |
9.11 | Payment to Minors and Incompetents. |
9.12 | Acceleration of or Delay in Payments. |
9.13 | Severability. |
9.14 | Governing Laws. |
9.15 | Binding Effect. |
1.1 | Name of Plan. |
1.2 | Purpose of Plan. |
1.3 | “Top Hat” Pension Benefit Plan. |
1.4 | Funding. |
1.5 | Effective Date. |
1.6 | Administration. |
1.7 | Number and Gender. |
1.8 | Headings. |
2.1 | Account. |
2.2 | Affiliate. |
2.3 | Annual Cash Incentive. |
2.4 | Annual Cash Incentive Deferral. |
2.5 | Base Salary. |
2.6 | Base Salary Deferral. |
2.7 | Beneficiary. |
2.8 | Board. |
2.9 | Change in Control. |
2.10 | Code. |
2.11 | Commissions. |
2.12 | Commissions Deferral. |
2.13 | Committee. |
2.14 | Company Account. |
2.15 | Company Contribution. |
2.16 | CVS Caremark Retention Payment. |
2.18 | Deferral Account. |
2.19 | Deferred Compensation Election. |
2.20 | Disability. |
2.21 | Distribution Date. |
2.22 | Effective Date. |
2.23 | Elective Deferrals. |
2.24 | Eligible Executive. |
2.25 | Employee. |
2.26 | ERISA. |
2.27 | Executive. |
2.28 | Future Fund. |
2.29 | Grandfathered Company Account. |
2.30 | Grandfathered Deferral Account. |
2.31 | Lost Matching Contributions. |
2.32 | Participant. |
2.33 | Plan Administrator. |
2.34 | Plan Year. |
2.35 | Qualified Future Fund Matching Contribution. |
2.36 | Retirement. |
2.37 | Specified Employee. |
2.38 | Specific Future Year. |
2.39 | Termination of Employment. |
2.40 | Universal 409A Definition Document. |
2.41 | Valuation Date. |
2.42 | Year of Service. |
3.1 | Eligibility. |
(a) | An Employee who is an Executive on October 1st of a calendar year (or such other date in the calendar year as designated by the Committee) shall be eligible to participate in the Plan. The Committee may, in its sole discretion, designate other key employees of the Company or an Affiliate who are members of a select group of management or highly compensated employees as eligible to participate in the Plan. |
(b) | Notwithstanding any Plan provision to the contrary, Employees must also be subject to the income tax laws of the United States in order to be eligible for participation in the Plan. |
(c) | Subject to the provisions of Sections 3.3 and Section 4.1, an Eligible Executive shall remain eligible to continue participation in the Plan for each Plan Year following his or her initial year of participation in the Plan. |
3.2 | Commencement of Participation. |
3.3 | Termination of Participation. |
(a) | Participation shall cease when the benefits that have been credited to a Participant’s Deferral Account have been distributed to him or her. |
(b) | Subject to the provisions of Section 4.3(c), a Participant shall only be eligible to make Deferrals under the Plan for as long as he or she remains an Eligible Executive. |
(c) | If a former Participant who has incurred a Termination of Employment with the Company and all Affiliates and whose participation in the Plan ceased under Section 3.3(a) is reemployed as an Executive, the former Participant may again become eligible to participate in accordance with the provisions of Section 3.1(a). |
4.1 | Deferrals. |
(a) | Subject to the following provisions of this Article IV, an Eligible Executive may defer for any Plan Year, (i) up to fifty percent (50%) of Base Salary otherwise earned and payable in that Plan Year, and/or (ii) up to one hundred percent (100%) of Annual Cash Incentive otherwise earned in that Plan Year and payable in that Plan Year or in the first calendar quarter of the following Plan Year, and/or (iii) up to one hundred percent (100%) of Commissions otherwise earned in that Plan Year and payable in that Plan Year or in the first calendar quarter of the following Plan Year. The Plan Administrator may, as it deems appropriate, establish maximum or minimum limits on the amounts which may be deferred for a Plan Year and/or the times of such Deferred Compensation Elections. An Eligible Executive shall be given advance notice of any such limits. |
(b) | Deferrals under the Plan shall be calculated with respect to the gross cash compensation payable to the Participant prior to any deductions (e.g., 401(k) deferrals) or withholdings. However, the Deferrals shall be reduced by the Plan Administrator as necessary if it is later determined, after Deferrals are made under the Plan and after additional deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other deductions required by law, that all such total deferrals will exceed one hundred percent (100%) of the cash compensation of the Participant available under Section 4.1(a). Changes to payroll withholdings that affect the amount of compensation being deferred to the Plan shall be allowed only to the extent permissible under Section 409A of the Code. |
4.2 | Filing Requirements of Deferred Compensation Elections. |
4.3 | Modification or Revocation of Election by Participant. |
(a) | A Participant’s Deferred Compensation Election for a Plan Year shall become irrevocable as of the close of business on the date established by the Plan Administrator, but not later than the last day of the calendar year preceding the Plan Year in which such Base Salary, Annual Cash Incentive or Commissions applicable to that election is earned, and shall become effective as of the first day of the Plan Year in which such Base Salary and/or Annual Cash Incentive or Commissions is earned. |
(b) | If a Participant’s Deferred Compensation Election applicable to his or her Base Salary and/or Annual Cash Incentive or Commissions is cancelled for a Plan Year, he or she will not be permitted to elect to make Deferrals again until the next Plan Year. |
(c) | If a Participant ceases to be an Executive after the date a Deferred Compensation Election becomes effective but continues to be employed by the Company or an Affiliate, he or she shall continue to be a Participant and his or her Deferred Compensation Election currently in effect shall remain in force, but such Participant shall not be eligible to make any further Deferred Compensation Elections until such time as he or she shall once again become an Eligible Executive. |
(d) | Notwithstanding anything in the Plan to the contrary, if an Eligible Executive: |
i. | receives a withdrawal of deferred cash contributions on account of hardship from any plan which is maintained by the Company or an Affiliate and which meets the requirements of Section 401(k) of the Code (or any successor thereto); and |
ii. | is precluded from making contributions to such 401(k) plan for at least six (6) months after receipt of the hardship withdrawal, |
(a) | Company Contributions - Restoration of Lost Matching Contribution. The amount of Lost Matching Contributions credited under the Plan on a Participant’s behalf each calendar year shall be equal to (i) minus (ii) where: |
i. | is the total Qualified Future Fund Matching Contribution that would have been allocated on the Participant’s behalf under Future Fund, without giving effect to any reductions or limitations required by Sections 401(a)(17), 401(k), 402(g) and/or 415 of the Code, for the Plan Year based on the aggregate of the Participant’s Elective Deferrals to Future Fund, his or her deferrals to any other qualified defined contribution plan maintained by the Company or an Affiliate, and his or her Deferral under Section 4.1 for the Plan Year, disregarding, in all cases, any deferrals made with respect to Base Salary, Annual Cash Incentives and Commissions otherwise payable prior to the first payroll period commencing in the month following date the Participant’s completion of one (1) Year of Service; and |
ii. | If the Participant is eligible to contribute to Future Fund (whether pre-tax or after-tax) during the Plan Year, the actual matching contributions made on the Participant’s behalf to Future Fund or any other qualified defined contribution plan maintained by the Company or any Affiliate for that Plan Year. |
(b) | LTIP Deferrals. |
(c) | Cash Retention Award Deferrals. |
4.5 | Deferral and Contribution Timing. |
5.1 | Establishment of Bookkeeping Accounts. |
5.2 | Subaccounts. |
5.3 | Hypothetical Nature of Accounts. |
5.4 | Vesting. |
5.5 | Deferral Crediting Options. |
6.1 | Distribution Elections – Timing of Payment. |
(a) | Subject to the limitations set forth in this Article VI, each time a Participant makes a Deferred Compensation Election with respect to a Plan Year beginning on or after January 1, 2016, the Participant shall designate on that applicable Deferred Compensation Election, separately for Participant deferrals and Company Contributions, as adjusted pursuant to Article V, that the distribution of such deferrals shall be made or commence, as the case may be, pursuant to Section 6.6, as of (i) the Participant’s Retirement; or (ii) a Specific Future Year not later than the Plan Year in which the Participant attains age seventy-one (71) |
i. | Retirement. The distribution of the portion of a Participant’s Deferral or Company Account (or subaccount(s)) that is deferred to Retirement under this Section shall commence on the first business day in the January next following his or her Retirement, pursuant to the provisions of Section 6.6, provided, however, that with respect to a Participant who is a Specified Employee as of the date of his or her Retirement, payment of any portion of his or her Deferral or Company Account (or any subaccount(s) thereof) that is subject to Section 409A of the Code will be delayed until the first business day of the seventh (7th) month following the date such Retirement occurs. |
ii. | Specific Future Year. In the event a Participant elects to have the distribution of such deferrals made or commence as of a Specific Future Year, subject to rules established by the Plan Administrator, the deferral period must be at least five (5) Plan Years. The distribution of the portion of a Participant’s Deferral or Company Account (or subaccount(s)) that is deferred to a Specific Future Year shall commence on the first business day of January in that specific year pursuant to the provisions of Section 6.6. |
(b) | Company Contributions shall be distributed pursuant to the Participant’s distribution election. In the event a Participant has not made a distribution election for the Company Contributions for that Plan Year, such distribution shall mirror his or her distribution election made with respect to his or her Base Salary Deferral or Annual Cash Incentive or Commissions Deferral for that Plan Year, if any, in such order; otherwise, such distribution shall be made at the Participant’s Retirement. |
6.2 | Disability Distributions. |
6.3 | Distributions in the Event of Death. |
6.4 | Distributions Upon Termination of Employment Other Than Retirement, Death or Disability. |
6.5 | Change in Control. |
6.6 | Form of Payment. |
(a) | Installments. Subject to the limitations set forth in Article VI, distributions will be made in annual (or quarterly, if the election was made prior to October 1, 2008) installments, as elected by the Participant, for up to, and including, ten (10) years (fifteen (15) years for an election made prior to October 1, 2008). The initial installment of an annual or quarterly payment stream will begin as of the first business day of the January (a) next following the Participant’s date of Retirement or (b) of the Specific Future Year, as the case may be, in accordance with the provisions of set forth in Section 6.1. Subsequent annual or quarterly payments will be as of the first business day of each subsequent calendar year or quarter of the installment period. |
(b) | Lump sum. A Participant may elect distribution in the form of a single lump sum payment. Except for Specified Employees, distribution shall be made as of the first business day of the January (a) next following the Participant’s date of Retirement or (b) of the Specific Future Year, as the case may be, in accordance with the provisions of set forth in Section 6.1. |
(c) | Distributions to a Participant made pursuant to Section 6.1 will occur pursuant to the Participant’s payment elections at the time he or she submits the applicable Deferred Compensation Election. A Participant may choose different forms of payment with respect to each Deferred Compensation Election. Company Contributions, adjusted pursuant to Article V, shall be distributed pursuant to the Participant’s form of payment election made with respect to his or her Company Contributions for that year. If the Participant has not made an election with respect to his or her Company Contributions, the portion of his or her Company Account attributable to such Company contributions will be distributed in accordance with his or her form of payment election with respect to his or her Base Salary Deferral, Annual Cash Incentive or Commissions Deferrals for that year, if any, in that order; otherwise payment will be made in a lump sum payment. In the absence of an election of the form of payment by a Participant on a Deferred Compensation Election, the portion of the Participant’s Account deferred pursuant to that Deferred Compensation Election, adjusted pursuant to the provisions of Article V, shall be paid in a single lump sum. |
(d) | A Participant shall not change his or her form of payment election, except as otherwise provided in Section 6.7 below. |
6.7 | Change of Distribution Election. |
(a) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to change his or her Specific Future Year election under Section 6.1(a)(ii) with respect to a portion of his or her Deferral Account (or an Interim Distribution date election applicable to a portion of his or her Deferral Account or Company Account made pursuant to the provisions of the Plan as in effect prior to December 31, 2008) to a later Specific Future Year (or, if applicable, a later Interim Distribution date) by duly completing, executing and filing with the Plan Administrator a new Specific Future Year election (or Interim Distribution date election) applicable to such Deferrals, subject to the following limitations: |
i. | such election must be made at least twelve (12) months prior to the Specific Future Year (or Interim Distribution date) then in effect with respect to that portion of his or her Deferral or Company Account (or subaccount(s) thereof), and such election will not become effective until at least twelve (12) months after the date on which the election is made; and |
ii. | the new Specific Future Year (or Interim Distribution date) shall be a calendar year that is not less than five (5) years from the Specific Future Year (or Interim Distribution date) then in effect. |
(b) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to delay the payment of a portion of his or her Deferral or Company Account (or any subaccount(s) thereof) scheduled to be paid at his or her Retirement to his or her Retirement plus five (5) calendar years by duly completing, executing and filing with the Plan Administrator a new Retirement election applicable to such deferrals; provided, however such election must be made at least twelve (12) months prior to Retirement and shall not become effective until at least twelve (12) months after the date on which the election is made. |
(c) | In accordance with such procedures as the Plan Administrator may prescribe, a Participant may elect to change the form of payment election under Section 6.6 applicable to his or her distribution under Section 6.1(a)(i) or (ii) by duly completing, executing and filing with the Plan Administrator a new form of payment election applicable to such deferrals, subject to the following limitations: |
i. | such election must be made at least twelve (12) months prior to the Specific Future Year then in effect with respect to that portion of his or her Deferral or Company Account (or subaccount(s) thereof), and such election will not become effective until at least twelve (12) months after the date on which the election is made; and |
ii. | the distribution of that portion of his or her Deferral or Company Account (or subaccount(s) thereof) shall be deferred for five (5) years from the date such amount would otherwise have been paid absent this election. |
(d) | It is the Company's intent that the provisions of Sections 6.7(a), (b) and (c) comply with the subsequent election provisions in Section 409A(a)(4)(C) of the Code, related regulations |
6.8 | Account Valuation upon a Distribution. |
6.9 | Designation of Beneficiary. |
6.10 | Unclaimed Account. |
6.11 | Hardship Withdrawals. |
6.12 | Distribution of Grandfathered Deferral Account and the Grandfathered Company Account. |
7.1 | Plan Administrator. |
7.2 | General Powers of Administration. |
7.3 | Costs of Administration. |
7.4 | Indemnification. |
7.5 | 409A Compliance. |
8.1 | Claims. |
8.2 | Claim Decision. |
(a) | The reason or reasons for such denial; |
(b) | The pertinent provisions of the Plan; |
(c) | Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and |
(d) | The time limits for requesting a review under this Section. |
8.3 | Request for Review/Appeal. |
8.4 | Review of Decision. |
8.5 | Time Limit for Bringing Legal Action. |
9.1 | Not Contract of Employment. |
9.2 | Non-Assignability of Benefits. |
9.3 | Withholding and Deduction and Taxes. |
9.4 | Amendment and Termination. |
9.5 | Compliance with Securities and Other Laws. |
9.6 | No Trust Created. |
9.7 | Unsecured General Creditor Status of Employee. |
9.8 | Limitation. |
9.9 | Payment to Minors and Incompetents. |
9.10 | Acceleration of or Delay in Payments. |
9.11 | Severability. |
9.12 | Governing Laws. |
9.13 | Binding Effect. |
6.2. | Form of Payment |
6.3. | Disability Distributions |
6.6. | Change of Distribution Election |
• | Client Relationship and Loyalty Survey (weight = 50%) |
• | Mail Service Pharmacy and Customer Care Survey (weight = 25%) |
• | Specialty Pharmacy Satisfaction Survey (weight = 25%) |
Measurement | Percent Weight | Measurement Tool | Achievement Measured Against | Modifier |
Operating Profit | 80% | Earnings Before Interest and Taxes (“EBIT”) | 2015 EBIT Goal | CEO & Committee Discretion (1) Financial Adjustments |
PBM Client Satisfaction | 10% | Client Relationship and Loyalty, Customer Care, Mail Service and Specialty Surveys | 2015 PBM Client Satisfaction Target | Operating Profit Funding |
Retail Customer Service | 10% | myCustomer Service Scorecard | 2015 myCustomer Experience Target | Operating Profit Funding |
1. | If an Eligible Participant is hired or returns to work from an authorized leave of absence on or before the 15th of the month, the full month will be included in the incentive calculations. |
2. | If an Eligible Participant is hired or returns to work from an authorized leave of absence after the 15th of the month, then the full month will be excluded from the incentive calculations. |
3. | If an Eligible Participant’s employment is terminated on or before the 15th of the month and the employee is eligible for a prorated award under the Plan, then the full month will be excluded from incentive calculations. |
4. | If an Eligible Participant’s employment is terminated after the 15th of the month and the employee is eligible for a prorated award under the Plan, then the full month will be included in the incentive calculations. |
a. | An employee is hired as an Eligible Participant on September 14th. Because the Eligible Participant is actively employed prior to the 15th of September, the full month of September will be included in his/her prorated incentive award and the Eligible Participant will receive a prorated incentive award covering a total of four months. The award will be calculated using the Eligible Participant’s individual award opportunity target and base salary as of December 31st. |
b. | An Eligible Participant begins a personal leave of absence on June 3rd and returns to active status on July 22nd. Assuming the Eligible Participant was incentive eligible for the entire year, the months of June and July will be excluded from the Eligible Participant’s incentive award and the Eligible Participant will receive a prorated incentive award covering a total of 10 months. The award will be calculated using the Eligible Participant’s individual award opportunity target and base salary as of December 31st. |
VI. | Payment of Awards |
1. | If a Participant’s employment is terminated on or before the 15th of the month and the employee is eligible for a prorated award under the Plan, then the full month will be excluded from incentive calculations. |
2. | If a Participant’s employment is terminated after the 15th of the month and the employee is eligible for a prorated award under the Plan, then the full month will be included in the incentive calculations. |
C. | Compliance with Applicable Law |
G. | Interpretation |
(f) | individuals employed in Puerto Rico; and |
(g) | individuals employed outside the United States of America. |
(iv) | For Eligible Exempt Employees in grades 112, 206, 305, 412, the Eligible Employee’s Weekly Rate multiplied by twenty-six (26); |
(v) | For Eligible Exempt Employees in grades 36A-Z, the Eligible Employee’s Weekly Rate multiplied by fifty-two (52); and |
(vi) | For Eligible Exempt Employees in grades 38A-Z and 39 A-Z, the Eligible Employee’s Weekly Rate multiplied by fifty-two (52). |
3.2 | Claim Procedures. |
(a) | The compensation of the Employee shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c)-2(d)(3) (wages within the meaning of Section 3401(a) of the Code for purposes of income tax withholding at the source, plus amounts excludible from gross income under Sections 125(a) and 402(e)(3) of the Code). |
(b) | Notwithstanding anything herein to the contrary, (i) if a different definition of compensation has been designated by the Company with respect to another nonqualified deferred compensation plan in which a key employee participates, the definition of compensation shall be the definition provided in Treas. Reg. Section 1.409A-1(i)(2), and (ii) the Company may, through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company, elect to use a different definition of compensation. |
(c) | In the event of corporate transactions described in Treas. Reg. Section 1.409A-1(i)(6), the identification of Specified Employees shall be determined in accordance with the default rules described therein, unless the Company elects to utilize the available alternative methodology through designations made within the timeframes specified therein. |
(d) | Specified Employee Identification Date means December 31, unless the Company has elected a different date through compensation plans maintained by the Employer. |
(e) | Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification |
(a) | “Separation from Service” as such term is defined in the Income Tax Regulations under Section 409A of the Code as modified by the rules described below: |
(i) | except in the case where the employee is on a bona fide leave of absence pursuant to the Company’s policies as provided below, the employee is deemed to have incurred a Separation from Service on a date if the Company and the employee reasonably anticipate that the level of services to be performed by the employee after such date would be permanently reduced to 20% or less of the average services rendered by the employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which the employee was on a bona fide leave of absence; |
(ii) | if the employee is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to the Company’s policies, the employee shall incur a Separation from Service on the first date that the rules of (a)(i), above, are satisfied following the later of (i) the 6 month (12 month for a disability leave of absence) anniversary of the commencement of the leave or (ii) the expiration of the employee’s right, if any, to reemployment under statute, contract or to Company policy. For this purpose, a “disability leave of absence” is an absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such |
(iii) | for purposes of determining whether another organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative; |
(iv) | the Company specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to an employee providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Section 409A of the Code; or |
(b) | for any plan or arrangement that is not subject to the rules of Section 409A of the Code, the complete cessation of providing service to the Company or any Affiliate as an employee. |
Year Ended December 31, | |||||||||||
In millions, except per share amounts | 2015 | 2014 | 2013 | ||||||||
Net revenues | $ | 153,290 | $ | 139,367 | $ | 126,761 | |||||
Cost of revenues | 126,762 | 114,000 | 102,978 | ||||||||
Gross profit | 26,528 | 25,367 | 23,783 | ||||||||
Operating expenses | 17,074 | 16,568 | 15,746 | ||||||||
Operating profit | 9,454 | 8,799 | 8,037 | ||||||||
Interest expense, net | 838 | 600 | 509 | ||||||||
Loss on early extinguishment of debt | — | 521 | — | ||||||||
Income before income tax provision | 8,616 | 7,678 | 7,528 | ||||||||
Income tax provision | 3,386 | 3,033 | 2,928 | ||||||||
Income from continuing operations | 5,230 | 4,645 | 4,600 | ||||||||
Income (loss) from discontinued operations, net of tax | 9 | (1 | ) | (8 | ) | ||||||
Net income | 5,239 | 4,644 | 4,592 | ||||||||
Net income attributable to noncontrolling interest | (2 | ) | — | — | |||||||
Net income attributable to CVS Health | $ | 5,237 | $ | 4,644 | $ | 4,592 | |||||
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.62 | $ | 3.96 | $ | 3.75 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | ||||
Net income attributable to CVS Health | $ | 4.63 | $ | 3.96 | $ | 3.74 |
• | During 2015, net revenues in our Pharmacy Services Segment increased 13.5% and net revenues in our Retail/LTC Segment increased 6.2% compared to the prior year. |
• | During 2014, net revenues in our Pharmacy Services Segment increased by 16.1% and net revenues in our Retail/LTC Segment increased 3.3% compared to the prior year. |
• | In 2015 and 2014, the 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 the Omnicare acquisition that occurred in August 2015. |
• | During 2015, gross profit in our Pharmacy Services Segment and Retail/LTC Segment increased by 9.6% and 3.4%, respectively, compared to the prior year. For the year ended December 31, 2015, gross profit as a percent of net revenues in our Pharmacy Services Segment and Retail/LTC Segment was 5.2% and 30.5%, respectively. |
• | During 2014, gross profit in our Pharmacy Services Segment and Retail/LTC Segment increased by 12.6% and 5.8%, respectively, compared to the prior year. For the year ended December 31, 2014, gross profit as a percent of net revenues in our Pharmacy Services Segment and Retail/LTC Segment was 5.4% and 31.4%, respectively. |
• | The increased weighting toward the Pharmacy Services Segment, which has a lower gross profit than the Retail/LTC Segment, resulted in a decline in consolidated gross profit as a percent of net revenues in 2015 as compared to 2014. In addition, gross profit for 2015, 2014 and 2013 has been negatively impacted by price compression in the Pharmacy Services Segment and reimbursement pressure in the Retail/LTC Segment. |
• | Our gross profit continued to benefit from the increased utilization of generic drugs (which normally yield a higher gross profit rate than equivalent brand name drugs) in both the Pharmacy Services and Retail/LTC segments for 2013 through 2015, partially offsetting the negative impacts described above. |
In millions | 2015 | 2014 | 2013 | ||||||||
Interest expense | $ | 859 | $ | 615 | $ | 517 | |||||
Interest income | (21 | ) | (15 | ) | (8 | ) | |||||
Interest expense, net | $ | 838 | $ | 600 | $ | 509 |
In millions | Pharmacy Services Segment(1)(2) | Retail/LTC Segment(2) | Corporate Segment | Intersegment Eliminations(2) | Consolidated Totals | ||||||||||||||
2015: | |||||||||||||||||||
Net revenues | $ | 100,363 | $ | 72,007 | $ | — | $ | (19,080 | ) | $ | 153,290 | ||||||||
Gross profit | 5,227 | 21,992 | — | (691 | ) | 26,528 | |||||||||||||
Operating profit (loss)(3) | 3,989 | 7,130 | (1,037 | ) | (628 | ) | 9,454 | ||||||||||||
2014: | |||||||||||||||||||
Net revenues | $ | 88,440 | $ | 67,798 | $ | — | $ | (16,871 | ) | $ | 139,367 | ||||||||
Gross profit | 4,771 | 21,277 | — | (681 | ) | 25,367 | |||||||||||||
Operating profit (loss) | 3,514 | 6,762 | (796 | ) | (681 | ) | 8,799 | ||||||||||||
2013: | |||||||||||||||||||
Net revenues | $ | 76,208 | $ | 65,618 | $ | — | $ | (15,065 | ) | $ | 126,761 | ||||||||
Gross profit | 4,237 | 20,112 | — | (566 | ) | 23,783 | |||||||||||||
Operating profit (loss)(4) | 3,086 | 6,268 | (751 | ) | (566 | ) | 8,037 |
(1) | Net revenues of the Pharmacy Services Segment include approximately $8.9 billion, $8.1 billion and $7.9 billion of Retail Co-Payments for 2015, 2014 and 2013, respectively. See Note 1 to the consolidated financial statements for additional information about Retail Co-Payments. |
(2) | Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services Segment and the Retail/LTC Segment. These occur in the following 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 mail, or when members have prescriptions filled at long-term care facilities. When these occur, both the Pharmacy Services and Retail/LTC segments record the revenues, gross profit and operating profit on a standalone basis. |
(3) | For the year ended December 31, 2015, the Corporate Segment operating loss includes $156 million of acquisition-related transaction and integration costs and a $90 million charge related to a legacy lawsuit challenging the 1999 legal settlement by MedPartners of various securities class actions and a related derivative claim. |
(4) | Consolidated operating profit for the year ended December 31, 2013 includes a $72 million gain on a legal settlement, of which, $11 million is included in the Pharmacy Services Segment and $61 million is included in the Retail/LTC Segment. |
Year Ended December 31, | |||||||||||
In millions | 2015 | 2014 | 2013 | ||||||||
Net revenues | $ | 100,363 | $ | 88,440 | $ | 76,208 | |||||
Gross profit | $ | 5,227 | $ | 4,771 | $ | 4,237 | |||||
Gross profit % of net revenues | 5.2 | % | 5.4 | % | 5.6 | % | |||||
Operating expenses | $ | 1,238 | $ | 1,257 | $ | 1,151 | |||||
Operating expenses % of net revenues | 1.2 | % | 1.4 | % | 1.5 | % | |||||
Operating profit | $ | 3,989 | $ | 3,514 | $ | 3,086 | |||||
Operating profit % of net revenues | 4.0 | % | 4.0 | % | 4.1 | % | |||||
Net revenues: | |||||||||||
Mail choice(1) | $ | 37,828 | $ | 31,081 | $ | 24,791 | |||||
Pharmacy network(2) | $ | 62,240 | $ | 57,122 | $ | 51,211 | |||||
Other | $ | 295 | $ | 237 | $ | 206 | |||||
Pharmacy claims processed: | |||||||||||
Total | 1,011.9 | 932.0 | 902.1 | ||||||||
Mail choice(1) | 85.7 | 82.4 | 83.3 | ||||||||
Pharmacy network(2) | 926.2 | 849.6 | 818.8 | ||||||||
Generic dispensing rate: | |||||||||||
Total | 83.7 | % | 82.2 | % | 80.5 | % | |||||
Mail choice(1) | 76.4 | % | 74.6 | % | 72.6 | % | |||||
Pharmacy network(2) | 84.4 | % | 83.0 | % | 81.3 | % | |||||
Mail choice penetration rate | 20.6 | % | 21.4 | % | 22.6 | % |
(1) | Mail choice is defined as claims filled at a Pharmacy Services mail facility, which includes specialty mail claims inclusive of Specialty Connect claims filled at retail, as well as prescriptions filled at retail under the Maintenance Choice program. |
(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 pharmacies, but excluding Maintenance Choice activity. |
• | Our mail choice claims processed increased 4.0% to 85.7 million claims in the year ended December 31, 2015, compared to 82.4 million claims in the prior year. The increase in mail choice claims was driven by net new business, specialty and continuing adoption of our Maintenance Choice offerings. During 2014, our mail choice claims processed decreased 1.1% to 82.4 million claims. The decrease in mail choice claims was driven by a decline in traditional mail volumes, which was mostly offset by growth in our Maintenance Choice program and specialty pharmacy. |
• | During 2015 and 2014, our average revenue per mail choice claim increased by 17.0% and 26.8%, compared to 2014 and 2013, respectively. The increase in 2015 was primarily due to growth in specialty pharmacy. The increase in 2014 was |
• | 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 2014, our pharmacy network claims processed increased 3.8% to 849.6 million compared to 818.8 million pharmacy network claims processed in 2013. This increase was primarily due to net new business and growth in Managed Medicaid, partially offset by a decrease in Medicare Part D claims. Medicare Part D claims were negatively affected by the CMS sanctions that were in place during 2013. |
• | Our average revenue per pharmacy network claim processed remained flat for the year ended December 31, 2015 as compared to the prior year. During 2014, our average revenue per pharmacy network claim processed increased by 7.5%, compared to 2013. This increase was primarily due to drug inflation and changes in the drug mix, partially offset by increases in the generic dispensing rate. |
• | Our mail choice generic dispensing rate was 76.4%, 74.6% and 72.6% in the years ended December 31, 2015, 2014 and 2013, respectively. Our pharmacy network generic dispensing rate increased to 84.4% in the year ended December 31, 2015, compared to 83.0% in the prior year. During 2014, our pharmacy network generic dispensing rate increased to 83.0% compared to our pharmacy network generic dispensing rate of 81.3% in 2013. These continued increases in mail choice and pharmacy network generic dispensing rates were primarily due to the impact of new generic drug introductions, and our continuous efforts to encourage plan members to use generic drugs when they are available. We believe our generic dispensing rates will continue to increase in future periods, albeit at a slower pace. This increase will be affected by, among other things, the number of new generic drug introductions and our success at encouraging plan members to utilize generic drugs when they are available and clinically appropriate. |
• | We completed the rollout of Specialty ConnectTM in May 2014, which integrates the Company’s specialty pharmacy mail and retail capabilities, providing members with the choice to bring their specialty prescriptions to any CVS Pharmacy® location. Whether submitted through our mail order pharmacy or at CVS Pharmacy, all prescriptions are filled through the Company’s specialty mail order pharmacies, so all revenue from this specialty prescription services program is recorded within the Pharmacy Services Segment. |
• | The Pharmacy Services Segment recognizes revenues from its pharmacy network transactions based on individual contract terms. Our Pharmacy Services Segment contracts are predominantly accounted for using the gross method. See the “Revenue Recognition” description under “Critical Accounting Policies” later in this section for further information on our revenue recognition policy. |
• | Our gross profit dollars and gross profit as a percentage of net revenues continued to be impacted by our efforts to (i) retain existing clients, (ii) obtain new business and (iii) maintain or improve the rebates and/or discounts we received from manufacturers, wholesalers and retail pharmacies. In particular, competitive pressures in the PBM industry have caused us and other PBMs to continue to share a larger portion of rebates and/or discounts received from pharmaceutical manufacturers with clients. In addition, market dynamics and regulatory changes have impacted our ability to offer plan sponsors pricing that includes retail network “differential” or “spread”. We expect these trends to continue. The “differential” or “spread” is any difference between the drug price charged to plan sponsors, including Medicare Part D plan sponsors, by a PBM and the price paid for the drug by the PBM to the dispensing provider. The increased use by patients of generic drugs has positively impacted our gross profit margins but has resulted in third party payors augmenting their efforts to reduce reimbursement payments for prescriptions. This trend, which we expect to continue, reduces the benefit we realize from brand to generic product conversions. |
• | We review our network contracts on an individual basis to determine if the related revenues should be accounted for using the gross method or net method under the applicable accounting rules. Our Pharmacy Services Segment network contracts are predominantly accounted for using the gross method, which results in higher revenues, higher cost of revenues and lower gross profit rates. |
• | Our gross profit as a percentage of revenues benefited from the increase in our total generic dispensing rate, which increased to 83.7% and 82.2% in 2015 and 2014, respectively, compared to our generic dispensing rate of 80.5% in 2013. These increases were primarily due to new generic drug introductions and our continued efforts to encourage plan members to use clinically appropriate generic drugs when they are available. We expect these trends to continue, albeit at a slower pace. |
• | Operating expenses decreased $19 million or 1.5%, to $1.2 billion, in the year ended December 31, 2015, compared to the prior year. The decrease in operating expense dollars is primarily due to lower integration costs from the Coram acquisition which occurred in January 2014, partially offset by the addition of the specialty pharmacy operations of Omnicare from the acquisition in August 2015. Operating expenses as a percentage of net revenues improved slightly from 1.4% in 2014 to 1.2% in 2015. |
• | During 2014, the increase in operating expenses of $106 million or 9.2%, to $1.3 billion compared to 2013, is primarily related to increased costs associated with infusion services due to the 2014 acquisition of Coram, as well as an $11 million gain from a legal settlement during the year ended December 31, 2013. The slight decrease in operating expenses as a percentage of net revenues was primarily due to expense leverage from net revenue growth. |
Year Ended December 31, | |||||||||||
In millions | 2015 | 2014 | 2013 | ||||||||
Net revenues | $ | 72,007 | $ | 67,798 | $ | 65,618 | |||||
Gross profit | $ | 21,992 | $ | 21,277 | $ | 20,112 | |||||
Gross profit % of net revenues | 30.5 | % | 31.4 | % | 30.6 | % | |||||
Operating expenses(1) | $ | 14,862 | $ | 14,515 | $ | 13,844 | |||||
Operating expenses % of net revenues | 20.6 | % | 21.4 | % | 21.1 | % | |||||
Operating profit | $ | 7,130 | $ | 6,762 | $ | 6,268 | |||||
Operating profit % of net revenues | 9.9 | % | 10.0 | % | 9.6 | % | |||||
Prescriptions filled (90 Day = 3 prescriptions) (2) | 1,031.6 | 935.9 | 890.1 | ||||||||
Net revenue increase (decrease): | |||||||||||
Total | 6.2 | % | 3.3 | % | 3.1 | % | |||||
Pharmacy | 9.5 | % | 5.1 | % | 4.1 | % | |||||
Front Store | (2.5 | )% | (2.5 | )% | 1.0 | % | |||||
Total prescription volume (90 Day = 3 prescriptions) (2) | 10.2 | % | 5.2 | % | 5.2 | % | |||||
Same store sales increase (decrease)(3): | |||||||||||
Total | 1.7 | % | 2.1 | % | 1.7 | % | |||||
Pharmacy | 4.5 | % | 4.8 | % | 2.6 | % | |||||
Front Store(4) | (5.0 | )% | (4.0 | )% | (0.5 | )% | |||||
Prescription volume (90 Day = 3 prescriptions) (2) | 4.8 | % | 4.1 | % | 4.4 | % | |||||
Generic dispensing rates | 84.5 | % | 83.1 | % | 81.4 | % | |||||
Pharmacy % of net revenues | 72.9 | % | 70.7 | % | 69.5 | % |
(1) | Operating expenses for the three months and year ended December 31, 2015 include $52 million and $64 million, respectively, of acquisition-related integration costs related to the acquisition of Omnicare and the pharmacies and clinics of Target. |
(2) | Includes the adjustment to convert 90-day, non-specialty prescriptions to the equivalent of three 30-day prescriptions. This adjustment reflects the fact that these prescriptions include approximately 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 would have been approximately 520 basis points higher for the year ended December 31, 2015 if tobacco and the estimated associated basket sales were excluded from the year ended December 31, 2014. |
• | Front store same store sales declined 5.0% in the year ended December 31, 2015, as compared to the prior year. The decrease is primarily due to the Company’s decision to stop selling tobacco products and softer customer traffic. The decrease was partially offset by an increase in basket size. On a comparable basis, front store same store sales would have been approximately 520 basis points higher for the year ended December 31, 2015 if tobacco and the estimated associated basket sales were excluded from the year ended December 31, 2014. |
• | Pharmacy same store sales rose 4.5% in the year ended December 31, 2015, as compared to the prior year. Pharmacy same store sales were positively impacted by same store script growth of 4.8%, partially offset by the impact of the increase in generic dispensing and reimbursement pressure. |
• | Pharmacy revenues continue to be negatively impacted by the conversion of brand name drugs to equivalent generic drugs, which typically have a lower selling price. Pharmacy same store sales were negatively impacted by approximately 390 and 160 basis points for the years ended December 31, 2015 and 2014, respectively, due to recent generic introductions. The increase in the impact from 2014 to 2015 was primarily due to a larger impact from new generic drug introductions. In addition, our pharmacy revenue growth has also been affected by continued reimbursement pressure, the lack of significant new brand name drug introductions, as well as an increase in the number of over-the-counter remedies that were historically only available by prescription. |
• | As of December 31, 2015, we operated 9,655 retail stores, including the 1,672 locations in Target stores, compared to 7,822 retail stores as of December 31, 2014 and 7,660 retail stores as of December 31, 2013. Total net revenues from new and acquired stores contributed approximately 1.6%, 1.1% and 1.0% to our total net revenue percentage increase in 2015, 2014, and 2013, respectively. |
• | Pharmacy revenue growth continued to benefit from increased utilization by Medicare Part D beneficiaries, our ability to attract and retain managed care customers and favorable industry trends. These trends include an aging American population; many “baby boomers” are now in their fifties and sixties and are consuming a greater number of prescription drugs, as well as expanded coverage from the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively, “ACA”). In addition, the increased use of pharmaceuticals as the first line of defense for individual health care also contributed to the growing demand for pharmacy services. We believe these favorable industry trends will continue. |
• | Front store revenues as a percentage of total net revenues for the years ended December 31, 2015, 2014 and 2013 were 26.5%, 28.8% and 30.5%, respectively. The decline in front store revenues as a percentage of total net revenues in 2015 and 2014 was largely due to the removal of tobacco products and the associated basket sales. On average, our gross profit on front store revenues is generally higher than our gross profit on pharmacy revenues. Pharmacy revenues as a percentage of total net revenues increased approximately 220, 120 and 60 basis points in the years ended December 31, 2015, 2014 and 2013, respectively. This was due to pharmacy revenues growing faster than front store revenues, as well as the acquisition of Omnicare. The mix effect from a higher proportion of pharmacy sales had a negative effect on our overall gross profit for the years ended December 31, 2015, 2014 and 2013, respectively. This negative effect was partially offset by increased generic drug dispensing rates, the removal of tobacco products from our stores, favorable purchasing economics and increased store brand penetration. |
• | During the year ended December 31, 2014, our front store gross profit as a percentage of net revenues increased compared to the prior year. The increase is primarily related to a change in the mix of products sold, including the removal of tobacco products from our stores, and higher store brand sales. |
• | Gross profit dollars and margin for the year ended December 31, 2014 were positively impacted by $53 million related to the favorable resolution of previously proposed retroactive reimbursement rate changes in the State of California’s Medicaid program. |
• | Our pharmacy gross profit rates have been adversely affected by the efforts of managed care organizations, PBMs and governmental and other third party payors to reduce their prescription drug costs, as well as changes in the mix of our business within pharmacy. In the event this trend accelerates, we may not be able to sustain our current rate of revenue growth and gross profit dollars could be adversely impacted. The increased use of generic drugs has positively impacted our gross profit but has resulted in third party payors augmenting their efforts to reduce reimbursement payments to retail pharmacies for prescriptions. This trend, which we expect to continue, reduces the benefit we realize from brand to generic product conversions. |
• | ACA made several significant changes to Medicaid rebates and to reimbursement. One of these changes was the revision of the definition of Average Manufacturer Price (“AMP”) and the reimbursement formula for multi-source drugs. Changes in reporting of AMP or other adjustments that may be made regarding the reimbursement 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 financing practices” in Part I, Item 1A, Risk Factors within our 2015 Form 10-K, for additional information. |
Year Ended December 31, | ||||||||||||
In millions | 2015 | 2014 | 2013 | |||||||||
Net cash provided by operating activities | $ | 8,412 | $ | 8,137 | $ | 5,783 | ||||||
Net cash used in investing activities | (13,420 | ) | (4,045 | ) | (1,835 | ) | ||||||
Net cash provided by (used in) financing activities | 5,006 | (5,694 | ) | (1,237 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (20 | ) | (6 | ) | 3 | |||||||
Net increase (decrease) in cash and cash equivalents | $ | (22 | ) | $ | (1,608 | ) | $ | 2,714 |
2015(2) | 2014(2) | 2013(2) | ||||||
Total stores (beginning of year) | 7,866 | 7,702 | 7,508 | |||||
New and acquired stores(1) | 1,833 | 187 | 213 | |||||
Closed stores(1) | (34 | ) | (23 | ) | (19 | ) | ||
Total stores (end of year) | 9,665 | 7,866 | 7,702 | |||||
Relocated stores | 58 | 60 | 78 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 7.7 | ||
December 17, 2013 (“2013 Repurchase Program”) | $ | 6.0 | $ | — | ||
September 19, 2012 (“2012 Repurchase Program”) | $ | 6.0 | $ | — |
Interest Rate and Maturity | Aggregate Principal Amount (In Millions) | Percentage of Total Outstanding Principal Amount Exchanged | |||||
4.75% senior notes due 2022 | $ | 388 | 96.8 | % | |||
5% senior notes due 2024 | 296 | 98.8 | % | ||||
Total senior notes issued under exchange transaction | $ | 684 |
Payments Due by Period | |||||||||||||||||||
In millions | Total | 2016 | 2017 to 2018 | 2019 to 2020 | Thereafter | ||||||||||||||
Operating leases | $ | 27,681 | $ | 2,405 | $ | 4,518 | $ | 3,921 | $ | 16,837 | |||||||||
Lease obligations from discontinued operations | 35 | 14 | 13 | 5 | 3 | ||||||||||||||
Capital lease obligations | 1,324 | 52 | 164 | 138 | 970 | ||||||||||||||
Contractual lease obligations with Target(1) | 1,697 | — | — | — | 1,697 | ||||||||||||||
Long-term debt | 26,819 | 1,179 | 4,588 | 4,444 | 16,608 | ||||||||||||||
Interest payments on long-term debt(2) | 14,201 | 1,079 | 1,982 | 1,698 | 9,442 | ||||||||||||||
Other long-term liabilities reflected in our consolidated balance sheet | 829 | 42 | 432 | 102 | 253 | ||||||||||||||
$ | 72,586 | $ | 4,771 | $ | 11,697 | $ | 10,308 | $ | 45,810 |
(1) | The Company leases pharmacy and clinic space from Target. See Note 7, “Leases” to the consolidated financial statements for additional information regarding the lease arrangements with Target. Amounts related to the operating and capital leases with Target are reflected within the operating leases and capital lease obligations above. Amounts due in excess of the remaining estimated 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 |
• | Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription is delivered. At the time of delivery, the Pharmacy Services Segment has performed substantially all of its obligations under its client contracts and does not experience a significant level of returns or reshipments. |
• | Revenues generated from prescription drugs sold by third party pharmacies in the Pharmacy Services Segment’s retail pharmacy network and associated administrative fees are recognized at the Pharmacy Services Segment’s point-of-sale, which is when the claim is adjudicated by the Pharmacy Services Segment’s online claims processing system. |
• | Risks relating to the health of the economy in general and in the markets we serve, which could impact consumer purchasing power, preferences and/or spending patterns, drug utilization trends, the financial 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, including pressure to reduce reimbursement levels for generic drugs. |
• | The possibility of PBM and LTC client loss and/or the failure to win new PBM and LTC business, including as a result of failure to win renewal of expiring contracts, contract termination rights that may permit clients to terminate a contract prior to expiration and early or periodic renegotiation of pricing by clients prior to expiration of a contract. |
• | The possibility of loss of Medicare Part D business and/or failure to obtain new Medicare Part D business, whether as a result of the annual Medicare Part D competitive bidding process or otherwise. |
• | Risks related to the frequency and rate of the introduction of generic drugs and brand name prescription products. |
• | Risks of declining gross margins in the PBM and LTC pharmacy industries attributable to increased competitive pressures, increased client demand for lower prices, enhanced service offerings and/or higher service levels and market dynamics and, with respect to the PBM industry, regulatory changes that impact our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread.” |
• | Regulatory changes, business changes and compliance requirements and restrictions that may be imposed by Centers for Medicare and Medicaid Services (“CMS”), Office of Inspector General or other government agencies relating to the Company’s participation in Medicare, Medicaid and other federal and state government-funded programs, including sanctions and remedial actions that may be imposed by CMS on its Medicare Part D business. |
• | Risks and uncertainties related to the timing and scope of reimbursement from Medicare, Medicaid and other government-funded programs, including the possible impact of sequestration, the impact of other federal budget, debt and deficit negotiations and legislation that could delay or reduce reimbursement from such programs and the impact of any closure, suspension or other changes affecting federal or state government funding or operations. |
• | Possible changes in industry pricing benchmarks used to establish pricing in many of our PBM and LTC client contracts, pharmaceutical purchasing arrangements, retail network contracts, specialty payor agreements and other third party payor contracts. |
• | A highly competitive business environment, including the uncertain impact of increased consolidation in the PBM industry, uncertainty concerning the ability of our retail pharmacy business to secure and maintain contractual relationships with PBMs and other payors on acceptable terms, uncertainty concerning the ability of our PBM business to secure and maintain competitive access, pricing and other contract terms from retail network pharmacies in an environment where some PBM clients are willing to consider adopting narrow or more restricted retail pharmacy networks. |
• | The Company’s ability to timely identify or effectively respond to changing consumer preferences and spending patterns, an inability to expand the products being purchased by our customers, or the failure or inability to obtain or offer particular categories of products. |
• | Risks relating to our ability to secure timely and sufficient access to the products we sell from our domestic and/or international suppliers. |
• | Reform of the U.S. health care system, including ongoing implementation of ACA, continuing legislative efforts, regulatory changes and judicial interpretations impacting our health care system and the possibility of shifting political and legislative priorities related to reform of the health care system in the future. |
• | Risks relating to any failure to properly maintain our information technology systems, our information security systems and our infrastructure to support our business and to protect the privacy and security of sensitive customer and business information. |
• | Risks related to compliance with 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. |
• | Risks related to litigation, government investigations and other legal proceedings 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 the inability to obtain required regulatory approvals of any proposed acquisition, or on the terms desired or anticipated; the risk that such approvals may result in the imposition of conditions that could adversely affect the resulting combined company or the expected benefits of any proposed transaction; and the risk that the proposed transactions fail to close for any other reason. |
• | The possibility that the anticipated synergies and other benefits from any acquisition by us will not be realized, or will not be realized within the expected time periods. |
• | The risks and uncertainties related to our ability to integrate the operations, products, services and employees of any entities acquired by us and the effect of the potential disruption of management’s attention from ongoing business operations due to any pending acquisitions. |
• | The accessibility or availability of adequate financing on a timely basis and on reasonable terms in connection with any proposed acquisition. |
• | Risks related to the outcome of any legal proceedings related to, or involving any entity that is a part of, any proposed acquisition contemplated by us. |
• | Other risks and uncertainties detailed from time to time in our filings with the SEC. |
/s/ Ernst & Young LLP | |
Boston, Massachusetts | |
February 9, 2016 |
Year Ended December 31, | |||||||||||
In millions, except per share amounts | 2015 | 2014 | 2013 | ||||||||
Net revenues | $ | 153,290 | $ | 139,367 | $ | 126,761 | |||||
Cost of revenues | 126,762 | 114,000 | 102,978 | ||||||||
Gross profit | 26,528 | 25,367 | 23,783 | ||||||||
Operating expenses | 17,074 | 16,568 | 15,746 | ||||||||
Operating profit | 9,454 | 8,799 | 8,037 | ||||||||
Interest expense, net | 838 | 600 | 509 | ||||||||
Loss on early extinguishment of debt | — | 521 | — | ||||||||
Income before income tax provision | 8,616 | 7,678 | 7,528 | ||||||||
Income tax provision | 3,386 | 3,033 | 2,928 | ||||||||
Income from continuing operations | 5,230 | 4,645 | 4,600 | ||||||||
Income (loss) from discontinued operations, net of tax | 9 | (1 | ) | (8 | ) | ||||||
Net income | 5,239 | 4,644 | 4,592 | ||||||||
Net income attributable to noncontrolling interest | (2 | ) | — | — | |||||||
Net income attributable to CVS Health | $ | 5,237 | $ | 4,644 | $ | 4,592 | |||||
Basic earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.65 | $ | 3.98 | $ | 3.78 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | ||||
Net income attributable to CVS Health | $ | 4.66 | $ | 3.98 | $ | 3.77 | |||||
Weighted average shares outstanding | 1,118 | 1,161 | 1,217 | ||||||||
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.62 | $ | 3.96 | $ | 3.75 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | ||||
Net income attributable to CVS Health | $ | 4.63 | $ | 3.96 | $ | 3.74 | |||||
Weighted average shares outstanding | 1,126 | 1,169 | 1,226 | ||||||||
Dividends declared per share | $ | 1.40 | $ | 1.10 | $ | 0.90 |
Year Ended December 31, | |||||||||||
In millions | 2015 | 2014 | 2013 | ||||||||
Net income | $ | 5,239 | $ | 4,644 | $ | 4,592 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments, net of tax | (100 | ) | (35 | ) | (30 | ) | |||||
Net cash flow hedges, net of tax | 2 | 4 | 3 | ||||||||
Pension and other postretirement benefits, net of tax | (43 | ) | (37 | ) | 59 | ||||||
Total other comprehensive income (loss) | (141 | ) | (68 | ) | 32 | ||||||
Comprehensive income | 5,098 | 4,576 | 4,624 | ||||||||
Comprehensive income attributable to noncontrolling interest | (2 | ) | — | — | |||||||
Comprehensive income attributable to CVS Health | $ | 5,096 | $ | 4,576 | $ | 4,624 |
December 31, | |||||||
In millions, except per share amounts | 2015 | 2014 | |||||
Assets: | |||||||
Cash and cash equivalents | $ | 2,459 | $ | 2,481 | |||
Short-term investments | 88 | 34 | |||||
Accounts receivable, net | 11,888 | 9,687 | |||||
Inventories | 14,001 | 11,930 | |||||
Deferred income taxes | 1,220 | 985 | |||||
Other current assets | 722 | 866 | |||||
Total current assets | 30,378 | 25,983 | |||||
Property and equipment, net | 9,855 | 8,843 | |||||
Goodwill | 38,106 | 28,142 | |||||
Intangible assets, net | 13,878 | 9,774 | |||||
Other assets | 1,440 | 1,445 | |||||
Total assets | $ | 93,657 | $ | 74,187 | |||
Liabilities: | |||||||
Accounts payable | $ | 7,490 | $ | 6,547 | |||
Claims and discounts payable | 7,653 | 5,404 | |||||
Accrued expenses | 6,829 | 5,816 | |||||
Short-term debt | — | 685 | |||||
Current portion of long-term debt | 1,197 | 575 | |||||
Total current liabilities | 23,169 | 19,027 | |||||
Long-term debt | 26,267 | 11,630 | |||||
Deferred income taxes | 5,437 | 4,036 | |||||
Other long-term liabilities | 1,542 | 1,531 | |||||
Commitments and contingencies (Note 12) | — | — | |||||
Redeemable noncontrolling interest | 39 | — | |||||
Shareholders’ equity: | |||||||
CVS Health shareholders’ equity: | |||||||
Preferred stock, par value $0.01: 0.1 shares authorized; none issued or outstanding | — | — | |||||
Common stock, par value $0.01: 3,200 shares authorized; 1,699 shares issued and 1,101 | |||||||
shares outstanding at December 31, 2015 and 1,691 shares issued and 1,140 shares | |||||||
outstanding at December 31, 2014 | 17 | 17 | |||||
Treasury stock, at cost: 597 shares at December 31, 2015 and 550 shares at December 31, | |||||||
2014 | (28,886 | ) | (24,078 | ) | |||
Shares held in trust: 1 share at December 31, 2015 and 2014 | (31 | ) | (31 | ) | |||
Capital surplus | 30,948 | 30,418 | |||||
Retained earnings | 35,506 | 31,849 | |||||
Accumulated other comprehensive income (loss) | (358 | ) | (217 | ) | |||
Total CVS Health shareholders’ equity | 37,196 | 37,958 | |||||
Noncontrolling interest | 7 | 5 | |||||
Total shareholders’ equity | 37,203 | 37,963 | |||||
Total liabilities and shareholders’ equity | $ | 93,657 | $ | 74,187 |
Year Ended December 31, | |||||||||||
In millions | 2015 | 2014 | 2013 | ||||||||
Cash flows from operating activities: | |||||||||||
Cash receipts from customers | $ | 148,954 | $ | 132,406 | $ | 114,993 | |||||
Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (122,498 | ) | (105,362 | ) | (91,178 | ) | |||||
Cash paid to other suppliers and employees | (14,162 | ) | (15,344 | ) | (14,295 | ) | |||||
Interest received | 21 | 15 | 8 | ||||||||
Interest paid | (629 | ) | (647 | ) | (534 | ) | |||||
Income taxes paid | (3,274 | ) | (2,931 | ) | (3,211 | ) | |||||
Net cash provided by operating activities | 8,412 | 8,137 | 5,783 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (2,367 | ) | (2,136 | ) | (1,984 | ) | |||||
Proceeds from sale-leaseback transactions | 411 | 515 | 600 | ||||||||
Proceeds from sale of property and equipment and other assets | 35 | 11 | 54 | ||||||||
Acquisitions (net of cash acquired) and other investments | (11,475 | ) | (2,439 | ) | (415 | ) | |||||
Purchase of available-for-sale investments | (267 | ) | (157 | ) | (226 | ) | |||||
Maturity of available-for-sale investments | 243 | 161 | 136 | ||||||||
Net cash used in investing activities | (13,420 | ) | (4,045 | ) | (1,835 | ) | |||||
Cash flows from financing activities: | |||||||||||
Increase (decrease) in short-term debt | (685 | ) | 685 | (690 | ) | ||||||
Proceeds from issuance of long-term debt | 14,805 | 1,483 | 3,964 | ||||||||
Repayments of long-term debt | (2,902 | ) | (3,100 | ) | — | ||||||
Payment of contingent consideration | (58 | ) | — | — | |||||||
Dividends paid | (1,576 | ) | (1,288 | ) | (1,097 | ) | |||||
Proceeds from exercise of stock options | 299 | 421 | 500 | ||||||||
Excess tax benefits from stock-based compensation | 127 | 106 | 62 | ||||||||
Repurchase of common stock | (5,001 | ) | (4,001 | ) | (3,976 | ) | |||||
Other | (3 | ) | — | — | |||||||
Net cash provided by (used in) financing activities | 5,006 | (5,694 | ) | (1,237 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (20 | ) | (6 | ) | 3 | ||||||
Net increase (decrease) in cash and cash equivalents | (22 | ) | (1,608 | ) | 2,714 | ||||||
Cash and cash equivalents at the beginning of the year | 2,481 | 4,089 | 1,375 | ||||||||
Cash and cash equivalents at the end of the year | $ | 2,459 | $ | 2,481 | $ | 4,089 | |||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 5,239 | $ | 4,644 | $ | 4,592 | |||||
Adjustments required to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 2,092 | 1,931 | 1,870 | ||||||||
Stock-based compensation | 230 | 165 | 141 | ||||||||
Loss on early extinguishment of debt | — | 521 | — | ||||||||
Deferred income taxes and other noncash items | (266 | ) | (58 | ) | (86 | ) | |||||
Change in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
Accounts receivable, net | (1,594 | ) | (737 | ) | (2,210 | ) | |||||
Inventories | (1,141 | ) | (770 | ) | 12 | ||||||
Other current assets | 355 | (383 | ) | 105 | |||||||
Other assets | 2 | 9 | (135 | ) | |||||||
Accounts payable and claims and discounts payable | 2,834 | 1,742 | 1,024 | ||||||||
Accrued expenses | 765 | 1,060 | 471 | ||||||||
Other long-term liabilities | (104 | ) | 13 | (1 | ) | ||||||
Net cash provided by operating activities | $ | 8,412 | $ | 8,137 | $ | 5,783 |
Shares | Dollars | |||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||
Common stock: | ||||||||||||||||||||
Beginning of year | 1,691 | 1,680 | 1,667 | $ | 17 | $ | 17 | $ | 17 | |||||||||||
Stock options exercised and issuance of stock awards | 8 | 11 | 13 | — | — | — | ||||||||||||||
End of year | 1,699 | 1,691 | 1,680 | $ | 17 | $ | 17 | $ | 17 | |||||||||||
Treasury stock: | ||||||||||||||||||||
Beginning of year | (550 | ) | (500 | ) | (435 | ) | $ | (24,078 | ) | $ | (20,169 | ) | $ | (16,270 | ) | |||||
Purchase of treasury shares | (48 | ) | (51 | ) | (66 | ) | (4,856 | ) | (4,001 | ) | (3,976 | ) | ||||||||
Employee stock purchase plan issuances | 1 | 1 | 1 | 48 | 92 | 77 | ||||||||||||||
End of year | (597 | ) | (550 | ) | (500 | ) | $ | (28,886 | ) | $ | (24,078 | ) | $ | (20,169 | ) | |||||
Shares held in trust: | ||||||||||||||||||||
Balance at beginning and end of year | (1 | ) | (1 | ) | (1 | ) | $ | (31 | ) | $ | (31 | ) | $ | (31 | ) | |||||
Capital surplus: | ||||||||||||||||||||
Beginning of year | $ | 30,418 | $ | 29,777 | $ | 29,120 | ||||||||||||||
Stock option activity and stock awards | 533 | 535 | 588 | |||||||||||||||||
Excess tax benefit on stock options and stock awards | 142 | 106 | 69 | |||||||||||||||||
Portion of accelerated share repurchase not settled | (145 | ) | — | — | ||||||||||||||||
End of year | $ | 30,948 | $ | 30,418 | $ | 29,777 | ||||||||||||||
Retained earnings: | ||||||||||||||||||||
Beginning of year | $ | 31,849 | $ | 28,493 | $ | 24,998 | ||||||||||||||
Changes in inventory accounting principles (Note 2) | (4 | ) | — | — | ||||||||||||||||
Net income attributable to CVS Health | 5,237 | 4,644 | 4,592 | |||||||||||||||||
Common stock dividends | (1,576 | ) | (1,288 | ) | (1,097 | ) | ||||||||||||||
End of year | $ | 35,506 | $ | 31,849 | $ | 28,493 | ||||||||||||||
Accumulated other comprehensive loss: | ||||||||||||||||||||
Beginning of year | $ | (217 | ) | $ | (149 | ) | $ | (181 | ) | |||||||||||
Foreign currency translation adjustments, net of tax | (100 | ) | (35 | ) | (30 | ) | ||||||||||||||
Net cash flow hedges, net of tax | 2 | 4 | 3 | |||||||||||||||||
Pension and other postretirement benefits, net of tax | (43 | ) | (37 | ) | 59 | |||||||||||||||
End of year | $ | (358 | ) | $ | (217 | ) | $ | (149 | ) | |||||||||||
Total CVS Health shareholders’ equity | $ | 37,196 | $ | 37,958 | $ | 37,938 | ||||||||||||||
Noncontrolling interest: | ||||||||||||||||||||
Beginning of year | $ | 5 | $ | — | $ | — | ||||||||||||||
Business combinations | 1 | 5 | — | |||||||||||||||||
Capital contributions | 2 | — | — | |||||||||||||||||
Net income attributable to noncontrolling interest(1) | 1 | — | — | |||||||||||||||||
Distributions | (2 | ) | — | — | ||||||||||||||||
End of year | $ | 7 | $ | 5 | $ | — | ||||||||||||||
Total shareholders’ equity | $ | 37,203 | $ | 37,963 | $ | 37,938 |
• | Level 1 - Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. |
• | Level 2 - Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. |
• | Level 3 - Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk. |
In millions | 2015 | 2014 | 2013 | ||||||||
Beginning balance | $ | 256 | $ | 256 | $ | 243 | |||||
Additions charged to bad debt expense | 216 | 185 | 195 | ||||||||
Write-offs charged to allowance | (311 | ) | (185 | ) | (182 | ) | |||||
Ending balance | $ | 161 | $ | 256 | $ | 256 |
In millions | 2015 | 2014 | |||||
Land | $ | 1,635 | $ | 1,506 | |||
Building and improvements | 3,168 | 2,828 | |||||
Fixtures and equipment | 10,001 | 8,958 | |||||
Leasehold improvements | 4,015 | 3,626 | |||||
Software | 2,217 | 1,868 | |||||
21,036 | 18,786 | ||||||
Accumulated depreciation and amortization | (11,181 | ) | (9,943 | ) | |||
Property and equipment, net | $ | 9,855 | $ | 8,843 |
In millions | |||
Acquisition of noncontrolling interest | $ | 39 | |
Net income attributable to noncontrolling interest | 1 | ||
Distributions | (1 | ) | |
Balance, December 31, 2015 | $ | 39 |
• | Revenues generated from prescription drugs sold by mail service dispensing pharmacies are recognized when the prescription is delivered. At the time of delivery, the PSS has performed substantially all of its obligations under its client contracts and does not experience a significant level of returns or reshipments. |
• | Revenues generated from prescription drugs sold by third party pharmacies in the PSS’ retail pharmacy network and associated administrative fees are recognized at the PSS’ point-of-sale, which is when the claim is adjudicated by the PSS online claims processing system. |
Year Ended December 31, 2015(1) | |||||||||||||||
In millions | Foreign Currency | Losses on Cash Flow Hedges | Pension and Other Postretirement Benefits | Total | |||||||||||
Balance, December 31, 2014 | $ | (65 | ) | $ | (9 | ) | $ | (143 | ) | $ | (217 | ) | |||
Other comprehensive income (loss) before reclassifications | (100 | ) | — | (56 | ) | (156 | ) | ||||||||
Amounts reclassified from accumulated other comprehensive income (2) | — | 2 | 13 | 15 | |||||||||||
Net other comprehensive income (loss) | (100 | ) | 2 | (43 | ) | (141 | ) | ||||||||
Balance, December 31, 2015 | $ | (165 | ) | $ | (7 | ) | $ | (186 | ) | $ | (358 | ) | |||
Year Ended December 31, 2014(1) | |||||||||||||||
Foreign Currency | Losses on Cash Flow Hedges | Pension and Other Postretirement Benefits | Total | ||||||||||||
Balance, December 31, 2013 | $ | (30 | ) | $ | (13 | ) | $ | (106 | ) | $ | (149 | ) | |||
Other comprehensive income (loss) before reclassifications | (35 | ) | — | — | (35 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (2) | — | 4 | (37 | ) | (33 | ) | |||||||||
Net other comprehensive income (loss) | (35 | ) | 4 | (37 | ) | (68 | ) | ||||||||
Balance, December 31, 2014 | $ | (65 | ) | $ | (9 | ) | $ | (143 | ) | $ | (217 | ) |
(1) | All amounts are net of tax. |
(2) | The amounts reclassified from accumulated other comprehensive income for cash flow hedges are recorded within interest expense, net on the consolidated statement of income. The amounts reclassified from accumulated other comprehensive income for pension and other postretirement benefits are included in operating expenses on the consolidated statement of income. |
In millions | 2015 | 2014 | 2013 | |||||||||
Income from discontinued operations | $ | 15 | $ | (1 | ) | $ | (12 | ) | ||||
Income tax expense | (6 | ) | — | 4 | ||||||||
Income from discontinued operations, net of tax | $ | 9 | $ | (1 | ) | $ | (8 | ) |
In millions | As Previously Reported | Adjustments | As Revised | |||||||||
Other assets | $ | 1,510 | $ | (65 | ) | $ | 1,445 | |||||
Total assets | 74,252 | (65 | ) | 74,187 | ||||||||
Long-term debt | 11,695 | (65 | ) | 11,630 | ||||||||
Total liabilities and shareholders’ equity | 74,252 | (65 | ) | 74,187 |
(in millions) | |||
Cash paid to Omnicare shareholders | $ | 9,636 | |
Fair value of replacement equity awards issued to Omnicare employees | |||
for precombination services | 9 | ||
Total consideration | $ | 9,645 |
(in millions) | |||
Current assets (including cash of $298) | $ | 1,657 | |
Property and equipment | 313 | ||
Goodwill | 9,090 | ||
Intangible assets | 3,962 | ||
Other noncurrent assets | 64 | ||
Current liabilities | (705 | ) | |
Long-term debt | (3,110 | ) | |
Deferred income tax liabilities | (1,518 | ) | |
Other noncurrent liabilities | (69 | ) | |
Redeemable noncontrolling interest | $ | (39 | ) |
Total consideration | $ | 9,645 |
Year Ended December 31, | ||||||||
(in millions, except per share data) | 2015 | 2014 | ||||||
Total revenues | $ | 156,798 | $ | 144,836 | ||||
Income from continuing operations | 5,277 | 4,522 | ||||||
Basic earnings per share from continuing operations | $ | 4.70 | $ | 3.88 | ||||
Diluted earnings per share from continuing operations | $ | 4.66 | $ | 3.85 |
In millions | |||
Accounts receivable | $ | 2 | |
Inventories | 472 | ||
Property and equipment | 9 | ||
Intangible assets | 490 | ||
Goodwill | 916 | ||
Total cash consideration | $ | 1,889 |
In millions | Pharmacy Services | Retail/LTC | Total | ||||||||
Balance, December 31, 2013 | $ | 19,658 | $ | 6,884 | $ | 26,542 | |||||
Acquisitions | 1,578 | 38 | 1,616 | ||||||||
Foreign currency translation adjustments | — | (14 | ) | (14 | ) | ||||||
Other (1) | (2 | ) | — | (2 | ) | ||||||
Balance, December 31, 2014 | 21,234 | 6,908 | 28,142 | ||||||||
Acquisitions | 452 | 9,554 | 10,006 | ||||||||
Foreign currency translation adjustments | — | (40 | ) | (40 | ) | ||||||
Other (1) | (1 | ) | (1 | ) | (2 | ) | |||||
Balance, December 31, 2015 | $ | 21,685 | $ | 16,421 | $ | 38,106 |
In millions | |||
2016 | $ | 760 | |
2017 | 735 | ||
2018 | 705 | ||
2019 | 662 | ||
2020 | 490 |
2015 | 2014 | ||||||||||||||||||||||
In millions | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
Trademark (indefinitely-lived) | $ | 6,398 | $ | — | $ | 6,398 | $ | 6,398 | $ | — | $ | 6,398 | |||||||||||
Customer contracts and relationships and covenants not to compete | 10,594 | (4,092 | ) | 6,502 | 6,521 | (3,549 | ) | 2,972 | |||||||||||||||
Favorable leases and other | 1,595 | (617 | ) | 978 | 880 | (476 | ) | 404 | |||||||||||||||
$ | 18,587 | $ | (4,709 | ) | $ | 13,878 | $ | 13,799 | $ | (4,025 | ) | $ | 9,774 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 7.7 | ||
December 17, 2013 (“2013 Repurchase Program”) | $ | 6.0 | $ | — | ||
September 19, 2012 (“2012 Repurchase Program”) | $ | 6.0 | $ | — |
In millions | 2015 | 2014 | |||||
Commercial paper | $ | — | $ | 685 | |||
3.25% senior notes due 2015 | — | 550 | |||||
1.2% senior notes due 2016 | 750 | 750 | |||||
6.125% senior notes due 2016 | 421 | 421 | |||||
5.75% senior notes due 2017 | 1,080 | 1,080 | |||||
1.9% senior notes due 2018 | 2,250 | — | |||||
2.25% senior notes due 2018 | 1,250 | 1,250 | |||||
2.25% senior notes due 2019 | 850 | 850 | |||||
6.6% senior notes due 2019 | 394 | 394 | |||||
2.8% senior notes due 2020 | 2,750 | — | |||||
4.75% senior notes due 2020 | 450 | 450 | |||||
4.125% senior notes due 2021 | 550 | 550 | |||||
2.75% senior notes due 2022 | 1,250 | 1,250 | |||||
3.5% senior notes due 2022 | 1,500 | — | |||||
4.75% senior notes due 2022 | 400 | — | |||||
4% senior notes due 2023 | 1,250 | 1,250 | |||||
3.375% senior notes due 2024 | 650 | 650 | |||||
5% senior notes due 2024 | 300 | — | |||||
3.875% senior notes due 2025 | 3,000 | — | |||||
6.25% senior notes due 2027 | 453 | 453 | |||||
3.25% senior exchange debentures due 2035 | 5 | — | |||||
4.875% senior notes due 2035 | 2,000 | — | |||||
6.125% senior notes due 2039 | 734 | 734 | |||||
5.75% senior notes due 2041 | 493 | 493 | |||||
5.3% senior notes due 2043 | 750 | 750 | |||||
5.125% senior notes due 2045 | 3,500 | — | |||||
Capital lease obligations | 644 | 391 | |||||
Other | 20 | 41 | |||||
Total debt principal | 27,694 | 12,992 | |||||
Debt premiums | 39 | — | |||||
Debt discounts and deferred financing costs | (269 | ) | (102 | ) | |||
27,464 | 12,890 | ||||||
Less: | |||||||
Short-term debt (commercial paper) | — | (685 | ) | ||||
Current portion of long-term debt | (1,197 | ) | (575 | ) | |||
Long-term debt | $ | 26,267 | $ | 11,630 |
Interest Rate and Maturity | Aggregate Principal Amount (In Millions) | Percentage of Total Outstanding Principal Amount Exchanged | |||||
4.75% senior notes due 2022 | $ | 388 | 96.8 | % | |||
5% senior notes due 2024 | 296 | 98.8 | % | ||||
Total senior notes issued under exchange transaction | $ | 684 |
Year Ending December 31: | ||||
In millions | ||||
2016 | $ | 1,197 | ||
2017 | 1,113 | |||
2018 | 3,521 | |||
2019 | 1,266 | |||
2020 | 3,224 | |||
Thereafter | 17,373 | |||
Total | $ | 27,694 |
In millions | 2015 | 2014 | 2013 | ||||||||
Minimum rentals | $ | 2,317 | $ | 2,320 | $ | 2,210 | |||||
Contingent rentals | 34 | 36 | 41 | ||||||||
2,351 | 2,356 | 2,251 | |||||||||
Less: sublease income | (22 | ) | (21 | ) | (21 | ) | |||||
$ | 2,329 | $ | 2,335 | $ | 2,230 |
In millions | Capital Leases | Operating Leases(1) | |||||
2016 | $ | 52 | $ | 2,405 | |||
2017 | 94 | 2,321 | |||||
2018 | 70 | 2,197 | |||||
2019 | 69 | 2,044 | |||||
2020 | 69 | 1,877 | |||||
Thereafter | 970 | 16,837 | |||||
Total future lease payments(2) | 1,324 | $ | 27,681 | ||||
Less: imputed interest | (679 | ) | |||||
Present value of capital lease obligations | $ | 645 |
(1) | Future operating lease payments have not been reduced by minimum sublease rentals of $180 million due in the future under noncancelable subleases. |
(2) | The Company leases pharmacy and clinic space from Target. Amounts related to such capital and operating leases are reflected above. Amounts due in excess of the remaining estimated economic life of the buildings of approximately $1.7 billion are not reflected herein since the estimated economic life of the buildings is shorter than the contractual term of the lease arrangement. |
In millions | 2015 | 2014 | ||||||
Change in benefit obligation: | ||||||||
Benefit obligation at beginning of year | $ | 796 | $ | 694 | ||||
Acquisition | 8 | — | ||||||
Service cost | — | 1 | ||||||
Interest cost | 31 | 32 | ||||||
Actuarial loss | 45 | 119 | ||||||
Benefit payments | (36 | ) | (41 | ) | ||||
Settlements | — | (9 | ) | |||||
Benefit obligation at end of year | $ | 844 | $ | 796 |
In millions | 2015 | 2014 | ||||||
Change in plan assets: | ||||||||
Fair value of plan assets at the beginning of the year | $ | 635 | $ | 568 | ||||
Acquisitions | 5 | — | ||||||
Actual return on plan assets | (13 | ) | 75 | |||||
Employer contributions | 22 | 42 | ||||||
Benefit payments | (36 | ) | (41 | ) | ||||
Settlements | — | (9 | ) | |||||
Fair value of plan assets at the end of the year | 613 | 635 | ||||||
Funded status | $ | (231 | ) | $ | (161 | ) |
In millions | 2015 | 2014 | 2013 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Interest cost | $ | 31 | $ | 32 | $ | 30 | ||||||
Expected return on plan assets | (33 | ) | (31 | ) | (34 | ) | ||||||
Amortization of net loss | 21 | 16 | 22 | |||||||||
Settlement loss | — | 3 | — | |||||||||
Service cost | — | 1 | 1 | |||||||||
Net periodic pension cost | $ | 19 | $ | 21 | $ | 19 |
In millions | Fair value of plan assets at December 31, 2015 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and money market funds | $ | 10 | $ | — | $ | — | $ | 10 | |||||||
Fixed income funds | 4 | 484 | — | 488 | |||||||||||
Equity mutual funds | 115 | — | — | 115 | |||||||||||
Total assets at fair value | $ | 129 | $ | 484 | $ | — | $ | 613 | |||||||
Fair value of plan assets at December 31, 2014 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and money market funds | $ | 7 | $ | — | $ | — | $ | 7 | |||||||
Fixed income funds | — | 514 | — | 514 | |||||||||||
Equity mutual funds | 84 | 30 | — | 114 | |||||||||||
Total assets at fair value | $ | 91 | $ | 544 | $ | — | $ | 635 |
In millions | |||
2016 | $ | 37 | |
2017(1) | 39 | ||
2018 | 51 | ||
2019 | 50 | ||
2020 | 49 | ||
Thereafter | 250 |
2015 | 2014 | 2013 | |||||||||
Dividend yield(1) | 0.71 | % | 0.75 | % | 0.86 | % | |||||
Expected volatility(2) | 13.92 | % | 14.87 | % | 16.94 | % | |||||
Risk-free interest rate(3) | 0.11 | % | 0.08 | % | 0.10 | % | |||||
Expected life (in years)(4) | 0.5 | 0.5 | 0.5 | ||||||||
Weighted-average grant date fair value | $ | 18.72 | $ | 13.74 | $ | 10.08 |
(1) | The dividend yield is calculated based on semi-annual dividends paid and the fair market value of the Company’s stock at the grant date. |
(2) | The expected volatility is based on the historical volatility of the Company’s daily stock market prices over the previous six month period. |
(3) | The risk-free interest rate is based on the Treasury constant maturity interest rate whose term is consistent with the expected term of ESPP options (i.e., 6 months). |
(4) | The expected life is based on the semi-annual purchase period. |
Units in thousands | Units | Weighted Average Grant Date Fair Value | ||||
Nonvested at beginning of year | 4,677 | $ | 51.90 | |||
Granted | 2,695 | $ | 100.81 | |||
Vested | (1,646 | ) | $ | 103.82 | ||
Forfeited | (308 | ) | $ | 73.61 | ||
Nonvested at end of year | 5,418 | $ | 59.22 |
2015 | 2014 | 2013 | |||||||||
Dividend yield(1) | 1.37 | % | 1.47 | % | 1.65 | % | |||||
Expected volatility(2) | 18.07 | % | 19.92 | % | 30.96 | % | |||||
Risk-free interest rate(3) | 1.24 | % | 1.35 | % | 0.73 | % | |||||
Expected life (in years)(4) | 4.2 | 4.0 | 4.7 | ||||||||
Weighted-average grant date fair value | $ | 14.01 | $ | 11.04 | $ | 12.50 |
(1) | The dividend yield is based on annual dividends paid and the fair market value of the Company’s stock at the grant date. |
(2) | The expected volatility is estimated using the Company’s historical volatility over a period equal to the expected life of each option grant after adjustments for infrequent events such as stock splits. |
(3) | The risk-free interest rate is selected based on yields from U.S. Treasury zero-coupon issues with a remaining term equal to the expected term of the options being valued. |
(4) | The expected life represents the number of years the options are expected to be outstanding from grant date based on historical option holder exercise experience. |
Shares in thousands | Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||
Outstanding at December 31, 2014 | 28,166 | $ | 47.87 | |||||||||
Granted | 3,772 | $ | 102.25 | |||||||||
Exercised | (6,425 | ) | $ | 40.68 | ||||||||
Forfeited | (902 | ) | $ | 66.81 | ||||||||
Expired | (270 | ) | $ | 38.03 | ||||||||
Outstanding at December 31, 2015 | 24,341 | $ | 57.60 | 3.88 | $ | 993,965,110 | ||||||
Exercisable at December 31, 2015 | 11,847 | $ | 42.17 | 2.66 | $ | 658,732,653 | ||||||
Vested at December 31, 2015 and expected to vest in the future | 23,765 | $ | 56.96 | 3.84 | $ | 984,746,487 |
In millions | 2015 | 2014 | 2013 | ||||||||
Current: | |||||||||||
Federal | $ | 3,065 | $ | 2,581 | $ | 2,623 | |||||
State | 555 | 495 | 437 | ||||||||
3,620 | 3,076 | 3,060 | |||||||||
Deferred: | |||||||||||
Federal | (180 | ) | (43 | ) | (115 | ) | |||||
State | (54 | ) | — | (17 | ) | ||||||
(234 | ) | (43 | ) | (132 | ) | ||||||
Total | $ | 3,386 | $ | 3,033 | $ | 2,928 |
2015 | 2014 | 2013 | ||||||
Statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal tax benefit | 4.0 | 4.3 | 4.0 | |||||
Other | 0.3 | 0.2 | (0.1 | ) | ||||
Effective income tax rate | 39.3 | % | 39.5 | % | 38.9 | % |
In millions | 2015 | 2014 | |||||
Deferred tax assets: | |||||||
Lease and rents | $ | 378 | $ | 396 | |||
Inventory | 99 | — | |||||
Employee benefits | 359 | 311 | |||||
Allowance for doubtful accounts | 279 | 164 | |||||
Retirement benefits | 105 | 80 | |||||
Net operating loss and capital loss carryforwards | 115 | 74 | |||||
Deferred income | 83 | 261 | |||||
Other | 498 | 297 | |||||
Valuation allowance | (115 | ) | (5 | ) | |||
Total deferred tax assets | 1,801 | 1,578 | |||||
Deferred tax liabilities: | |||||||
Inventories | — | (18 | ) | ||||
Depreciation and amortization | (6,018 | ) | (4,572 | ) | |||
Total deferred tax liabilities | (6,018 | ) | (4,590 | ) | |||
Net deferred tax liabilities | $ | (4,217 | ) | $ | (3,012 | ) |
In millions | 2015 | 2014 | |||||
Deferred tax assets—current | $ | 1,220 | $ | 985 | |||
Deferred tax assets—noncurrent (included in other assets) | — | 39 | |||||
Deferred tax liabilities—noncurrent | (5,437 | ) | (4,036 | ) | |||
Net deferred tax liabilities | $ | (4,217 | ) | $ | (3,012 | ) |
In millions | 2015 | 2014 | 2013 | ||||||||
Beginning balance | $ | 188 | $ | 117 | $ | 80 | |||||
Additions based on tax positions related to the current year | 57 | 32 | 19 | ||||||||
Additions based on tax positions related to prior years | 122 | 70 | 37 | ||||||||
Reductions for tax positions of prior years | (11 | ) | (15 | ) | (1 | ) | |||||
Expiration of statutes of limitation | (13 | ) | (15 | ) | (17 | ) | |||||
Settlements | (5 | ) | (1 | ) | (1 | ) | |||||
Ending balance | $ | 338 | $ | 188 | $ | 117 |
• | 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 1999 settlement of various securities class action and derivative lawsuits against Caremark and others. Other defendants include insurance companies that provided coverage to Caremark with respect to the settled lawsuits. The Lauriello lawsuit seeks approximately $3.2 billion in compensatory damages plus other non-specified damages based on allegations that the amount of insurance coverage available for the settled lawsuits was misrepresented and suppressed. A similar lawsuit was filed in November 2003 by Frank McArthur, also in Alabama state court, naming as defendants, among others, Caremark and several insurance companies involved in the 1999 settlement. This lawsuit was stayed as a later-filed class action, but McArthur was subsequently allowed to intervene in the Lauriello action. Following the close of class discovery, the trial court entered an Order on August 15, 2012 that granted the plaintiffs’ motion to certify a class pursuant to Alabama Rule of Civil Procedures 23(b)(3) but denied their request that the class also be certified pursuant to Rule 23(b)(1). In addition, the August 15, 2012 Order appointed class representatives and class counsel. On September 12, 2014, the Alabama Supreme Court affirmed the trial court’s August 15, 2012 Order. In November 2015, the trial court ruled on the parties’ motions for summary judgment. The Court granted in part and denied in part plaintiffs' motion for summary judgment and the Court denied Caremark's motion for summary judgment. The parties engaged in mediation in January 2016. The case is proceeding and trial is currently scheduled to begin on February 19, 2016. |
• | Beginning in August 2003, various lawsuits were filed by pharmacies alleging that Caremark and other PBMs were violating certain antitrust laws. In August 2003, Bellevue Drug Co., Robert Schreiber, Inc. d/b/a Burns Pharmacy and Rehn-Huerbinger Drug Co. d/b/a Parkway Drugs #4, together with Pharmacy Freedom Fund and the National Community Pharmacists Association filed a putative class action against Caremark in the United States District Court for the Eastern District of Pennsylvania, seeking treble damages and injunctive relief. This case was initially sent to arbitration based on the contract terms between the pharmacies and Caremark, but later returned to federal court, where it currently remains. In addition, in October 2003, two independent pharmacies, North Jackson Pharmacy, Inc. and C&C, Inc. d/b/a Big C Discount Drugs, Inc., filed three separate putative class action complaints in the United States District Court for the Northern District of Alabama, all seeking treble damages and injunctive relief. One complaint named three Caremark entities as defendants, and the other two complaints named PBM competitors. The North Jackson Pharmacy case against two of the Caremark entities was transferred to the United States District Court for the Northern District of Illinois; the case against the third Caremark entity was sent to arbitration based on contract terms between the pharmacies and that entity. The arbitration was stayed at the parties’ request and later closed by the American Arbitration Association. |
• | In February 2006, two substantially similar putative class action lawsuits were filed in the U.S. District Court for the Eastern District of Kentucky, and were consolidated and entitled Indiana State Dist. Council of Laborers & HOD Carriers Pension & Welfare Fund v. Omnicare, Inc., et al., No. 2:06cv26. The consolidated complaint was filed against Omnicare, three of its officers and two of its directors and purported to be brought on behalf of all open-market purchasers of Omnicare common stock from August 3, 2005 through July 27, 2006, as well as all purchasers who bought shares of Omnicare common stock in Omnicare’s public offering in December 2005. The complaint alleged violations of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933 and sought, among other things, compensatory damages and injunctive relief. After dismissals and appeals to the United States Court of Appeals for the Sixth Circuit, the United States Supreme Court remanded the case to the district court. In October 2015, the court granted plaintiffs’ motion to file a third amended complaint. In December 2015, Omnicare filed a motion to dismiss plaintiffs' third amended complaint. |
• | In December 2007, the Company received a document subpoena from the Office of Inspector General (“OIG”) within 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 |
• | In November 2009, a securities class action lawsuit was filed in the United States District Court for the District of Rhode Island by Richard Medoff, purportedly on behalf of purchasers of CVS Health Corporation stock between May 5, 2009 and November 4, 2009. An amended complaint extended that time period back to October 30, 2008. The lawsuit names the Company and certain officers as defendants and includes allegations of securities fraud relating to public disclosures made by the Company concerning the PBM business and allegations of insider trading. In addition, a shareholder derivative lawsuit was filed by Mark Wuotila in December 2009 in the same court against the directors and certain officers of the Company. This lawsuit, which has remained stayed pending developments in the related securities class action, includes allegations of, among other things, securities fraud, insider trading and breach of fiduciary duties and further alleges that the Company was damaged by the purchase of stock at allegedly inflated prices under its share repurchase program. In January 2011, both lawsuits were transferred to the United States District Court for the District of New Hampshire. In August 2015, the Parties reached an agreement in principle to settle the Medoff action for $48 million. In September 2015, the Parties filed a joint stipulation seeking preliminary approval for this settlement. Preliminary approval was granted in November 2015 and the final approval hearing occurred in January 2016. The Company denies any wrongdoing, and agreed to a settlement to avoid the burden, uncertainty and distraction of litigation. The settlement will be funded by insurance proceeds. The Wuotila derivative matter remains pending. |
• | As part of a previously disclosed civil settlement agreement entered into by Omnicare with the U.S. Attorney’s Office, for the District of Massachusetts in November 2009, Omnicare also entered into an amended and restated corporate integrity agreement (“CIA”) with the OIG with a term of five years from November 2, 2009 with certain provisions continuing for a period after the term. In October 2015, Omnicare received a closure letter from the OIG. The Company is continuing discussions with the OIG around the CIA and its compliance program. |
• | In March 2010, the Company learned that various State Attorneys General offices and certain other government agencies were conducting a multi-state investigation of certain of the Company’s business practices similar to those being investigated at that time by the U.S. Federal Trade Commission (“FTC”). Twenty-eight states, the District of Columbia and the County of Los Angeles are known to be participating in this investigation. The prior FTC investigation, which commenced in August 2009, was officially concluded in May 2012 when the consent order entered into between the FTC and the Company became final. The Company has cooperated with the multi-state investigation. |
• | In March 2010, the Company received a subpoena from the OIG requesting information about programs under which the Company has offered customers remuneration conditioned upon the transfer of prescriptions for drugs or medications to the Company’s pharmacies in the form of gift cards, cash, non-prescription merchandise or discounts or coupons for non-prescription merchandise. The subpoena relates to an investigation of possible false or otherwise improper claims for payment under the Medicare and Medicaid programs. The Company has provided documents and other information in response to this request for information. |
• | On October 29, 2010, a qui tam complaint entitled United States et al., ex rel. Banigan and Templin v. Organon USA, Inc., Omnicare, Inc. and PharMerica Corporation, Civil No. 07-12153-RWZ, that had been filed under seal with the U.S. District Court in Boston, Massachusetts, was ordered unsealed by the court. The complaint was brought by James Banigan and Richard Templin, former employees of Organon, as private party qui tam relators on behalf of the federal government and several state and local governments. The action alleges civil violations of the False Claims Act based on allegations that Organon and its affiliates paid Omnicare and several other long-term care pharmacies rebates, post-purchase discounts and other forms of remuneration in return for purchasing pharmaceuticals from Organon and taking steps to increase the purchase of Organon’s drugs in violation of the Anti-Kickback Statute. The U.S. Department of Justice declined to intervene in this action. The court denied Omnicare’s motion to dismiss in June 2012. Discovery is closed in this matter. The Company believes that the allegations are without merit. |
• | In January 2012, the United States District Court for the Eastern District of Pennsylvania unsealed a first amended qui tam complaint filed in August 2011 by an individual relator, Anthony Spay, who is described in the complaint as having once been employed by a firm providing pharmacy prescription benefit audit and recovery services. The complaint seeks monetary damages and alleges that Caremark’s processing of Medicare claims on behalf of one of its clients violated the federal False Claims Act. The United States declined to intervene in the lawsuit. In September |
• | In November 2012, the Company received a subpoena from the OIG requesting information concerning automatic refill programs used by pharmacies to refill prescriptions for customers. The Company has been cooperating and providing documents and other information in response to this request for information. |
• | In 2013, Omnicare received subpoenas seeking information regarding Omnicare’s nationwide billing practices with regard to National Drug Code overrides and Omnicare’s May 2008 acquisition of Pure Service Pharmacy. In 2014, Omnicare received subpoenas seeking information regarding Omnicare’s Auto Label Verification system and Omnicare’s per diem arrangements. Omnicare has produced documents and provided information in response to these subpoenas and continues to cooperate in the investigations. |
• | On March 22, 2013, a qui tam complaint entitled United States et al. ex rel. Susan Ruscher v. Omnicare, Inc. et al., Civil No. 08-cv-3396, which had been filed under seal in the U.S. District Court for the Southern District of Texas, was unsealed by the court. The complaint was brought by Susan Ruscher as a private party qui tam relator on behalf of the federal government and several state governments alleging violations of the federal False Claims Act and analogous state laws based upon allegations that Omnicare’s practices relating to customer collections violated the Anti-Kickback Statute. In September 2015, the court granted summary judgment dismissing all claims against Omnicare and denied relator’s motion for summary judgment related to Omnicare’s counterclaims and thereafter, in October 2015, the court entered a final judgment for Omnicare and stayed trial on the counterclaims pending an appeal from the relator. In October 2015, plaintiffs filed a notice of appeal in the United States Court of Appeals for the Fifth Circuit. |
• | In March 2014, the Company received a subpoena from the United States Attorney’s Office for the District of Rhode Island, requesting documents and information concerning bona fide service fees and rebates received from pharmaceutical manufacturers in connection with certain drugs utilized under Part D of the Medicare Program, as well as the reporting of those fees and rebates to Part D plan sponsors. The Company has been cooperating with the government and providing documents and information in response to the subpoena. |
• | The U.S. Department of Justice, through the U.S. Attorney’s Office for the Western District of Virginia, investigated whether Omnicare’s activities in connection with the agreements it had with the manufacturer of the pharmaceutical Depakote violated the False Claims Act or the Anti-Kickback Statute. Omnicare cooperated with this investigation and believes that it has complied with applicable laws and regulations with respect to this matter. In connection with this matter, on December 22, 2014, the U.S. Department of Justice filed a civil complaint-in-intervention in two qui tam complaints, entitled United States, et al., ex rel. Spetter v. Abbott Laboratories, Inc., Omnicare, Inc., and PharMerica Corp., No. 1:07-cv-00006 and United States, et al., ex rel. McCoyd v. Abbott Laboratories, Omnicare, Inc., PharMerica Corp., and Miles White, No. 1:07-cv-00081, alleging civil violations of the False Claims Act in connection with the manufacturer agreements described above. In July 2015, the parties filed a Joint Motion to Stay the Litigation stating that the parties have reached a proposed resolution of the monetary terms of a potential settlement agreement. These financial terms are contingent on approval by authorized officials at the Department of Justice, negotiation of terms of a settlement agreement, approval and releases from the OIG, the National Association of Medicaid Fraud Control Units, and the Department of Justice, and coordination with discussions with the United States regarding other ongoing matters. While the Company believes that a final settlement will be reached, there can be no assurance that any final settlement agreement will be reached or as to the final terms of such settlement. |
• | In May 2015, the Company entered into a settlement agreement with the U.S. Attorney’s Office for the Middle District of Florida, resolving alleged violations of the Controlled Substances Act (“CSA”). The Company paid a fine of $22 million in connection with the settlement. The Company is also undergoing several audits by the Drug Enforcement Agency (“DEA”) Administrator and is in discussions with the DEA and the U.S. Attorney’s Office in several locations concerning allegations that the Company has violated certain requirements of the CSA. Whether agreements can be reached and on what terms is uncertain. |
• | In May 2015, the Company received a subpoena from the OIG requesting information and documents concerning the Company’s automatic refill programs, adherence outreach programs, and pharmacy customer incentives, particularly in connection with claims for reimbursement made to the Minnesota Medicaid program. The Company has been cooperating with the investigation and providing information in response to the subpoena. |
• | In July 2015, the U.S. District Court in the District of Massachusetts dismissed all claims alleged in a qui tam lawsuit that had been brought against the Company by a pharmacy auditor and a former CVS pharmacist. The lawsuit, which was initially filed under seal in 2011, alleged that the Company violated the federal False Claims Act, as well as the false 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 prescription drugs. The federal government had declined to intervene in the case. The plaintiffs are appealing the dismissal to the U.S. Court of Appeals for First Circuit. |
• | On July 27, 2015, a consolidated class action complaint was filed by plaintiffs naming Omnicare, the members of the Omnicare Board of Directors, CVS Health, CVS Pharmacy, Inc. and its merger subsidiary as defendants. The complaint alleged that the members of the Omnicare Board of Directors breached their fiduciary duties to Omnicare’s stockholders during merger negotiations by entering into the merger agreement and approving the merger, and the CVS parties aided and abetted such breaches of fiduciary duties. In September 2015, the court granted plaintiffs’ voluntary notice of dismissal of all allegations against the defendants. |
• | The Attorney General of the State of Texas issued civil investigative demands and other requests in February 2012, May 2014, and May 2015, and has continued its investigation concerning the Health Savings Pass program and other pricing practices with respect to claims for reimbursement from the Texas Medicaid program. |
• | In July and September 2015, two related putative class actions, Corcoran et al. v. CVS Health Corp., and Podgorny et al. v. CVS Health Corp., were filed against the Company in the United States District Court in the Northern District of California and the Northern District of Illinois, respectively. The two cases have been consolidated in United States District Court in the Northern District of California. The consolidated second amended complaint alleges that plaintiffs overpaid for prescriptions for generic drugs filled at CVS pharmacies. The plaintiffs seek damages and injunctive relief under the consumer protection statutes and common laws of certain states. The Company has moved to dismiss the second amended complaint. |
• | In September 2015, Omnicare was served with an administrative subpoena by the DEA. The subpoena seeks documents related to controlled substance policies, procedures, and practices at eight pharmacy locations from May 2012 to present. The Company has been cooperating and providing documents in response to this administrative subpoena. |
• | In October 2015, Omnicare received a Civil Investigative Demand from the United States Attorney’s Office for the Southern District of New York requesting information and documents concerning Omnicare’s cycle fill process for assisted living facilities. The Company has been cooperating with the government and providing documents and information in response to the Civil Investigative Demand. |
• | In October 2015, the Company received from the U.S. Department of Justice a Civil Investigative Demand 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 for drugs dispensed to Part D beneficiaries with prescription benefits administered by the Company’s PBM. The Company has been cooperating with the government and providing documents and information in response to the Civil Investigative Demand. |
• | In November 2015, the United States District Court for the Eastern District of Pennsylvania unsealed a second amended qui tam complaint filed in September 2015, in an action captioned The United States of America et al. ex rel. Sally Schimelpfeinig and John Segura v. Dr. Reddy’s Laboratories Limited et al. The U.S. Department of Justice declined to intervene in this action. The relators allege that the Company, Walgreens, Wal-Mart, and Dr. Reddy’s Laboratories violated the federal and various state False Claims Acts by dispensing prescriptions in unit dose packaging supplied by Dr. Reddy’s that was not compliant with the Consumer Product Safety Improvement Act and the Poison Preventive Packaging Act and thereby allegedly rendering the drugs misbranded under the Food, Drug & Cosmetic Act. |
In millions | Pharmacy Services Segment(1)(2) | Retail/LTC Segment(2) | Corporate Segment | Intersegment Eliminations(2) | Consolidated Totals | ||||||||||||||
2015: | |||||||||||||||||||
Net revenues | $ | 100,363 | $ | 72,007 | $ | — | $ | (19,080 | ) | $ | 153,290 | ||||||||
Gross profit | 5,227 | 21,992 | — | (691 | ) | 26,528 | |||||||||||||
Operating profit(3) | 3,989 | 7,130 | (1,037 | ) | (628 | ) | 9,454 | ||||||||||||
Depreciation and amortization | 654 | 1,336 | 102 | — | 2,092 | ||||||||||||||
Additions to property and equipment | 359 | 1,883 | 125 | — | 2,367 | ||||||||||||||
2014: | |||||||||||||||||||
Net revenues | $ | 88,440 | $ | 67,798 | $ | — | $ | (16,871 | ) | $ | 139,367 | ||||||||
Gross profit | 4,771 | 21,277 | — | (681 | ) | 25,367 | |||||||||||||
Operating profit | 3,514 | 6,762 | (796 | ) | (681 | ) | 8,799 | ||||||||||||
Depreciation and amortization | 630 | 1,205 | 96 | — | 1,931 | ||||||||||||||
Additions to property and equipment | 308 | 1,745 | 83 | — | 2,136 | ||||||||||||||
2013: | |||||||||||||||||||
Net revenues | $ | 76,208 | $ | 65,618 | $ | — | $ | (15,065 | ) | $ | 126,761 | ||||||||
Gross profit | 4,237 | 20,112 | — | (566 | ) | 23,783 | |||||||||||||
Operating profit(4) | 3,086 | 6,268 | (751 | ) | (566 | ) | 8,037 | ||||||||||||
Depreciation and amortization | 560 | 1,217 | 93 | — | 1,870 | ||||||||||||||
Additions to property and equipment | 313 | 1,610 | 61 | — | 1,984 |
(1) | Net revenues of the Pharmacy Services Segment include approximately $8.9 billion, $8.1 billion and $7.9 billion of Retail Co-Payments for 2015, 2014 and 2013, respectively. See Note 1 to the consolidated financial statements for additional information about Retail Co-Payments. |
(2) | Intersegment eliminations relate to intersegment revenue generating activities that occur between the Pharmacy Services Segment and the Retail/LTC Segment. These occur in the following 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 mail, or when members have prescriptions filled at long-term care facilities. When these occur, both the Pharmacy Services and Retail/LTC segments record the revenues, gross profit and operating profit on a standalone basis. |
(3) | For the year ended December 31, 2015, the Corporate Segment operating loss includes $156 million of acquisition-related transaction and integration costs and a $90 million charge related to a legacy lawsuit challenging the 1999 legal settlement by MedPartners of various securities class actions and a related derivative claim. |
(4) | Consolidated operating profit for the year ended December 31, 2013 includes a $72 million gain on a legal settlement, of which, $11 million is included in the Pharmacy Services Segment and $61 million is included in the Retail/LTC Segment. |
In millions, except per share amounts | 2015 | 2014 | 2013 | ||||||||
Numerator for earnings per share calculation: | |||||||||||
Income from continuing operations attributable to common stockholders(1) | $ | 5,202 | $ | 4,626 | $ | 4,600 | |||||
Denominator for earnings per share calculation: | |||||||||||
Weighted average shares, basic | 1,118 | 1,161 | 1,217 | ||||||||
Effect of dilutive securities | 8 | 8 | 9 | ||||||||
Weighted average shares, diluted | 1,126 | 1,169 | 1,226 | ||||||||
Earnings per share from continuing operations: | |||||||||||
Basic | $ | 4.65 | $ | 3.98 | $ | 3.78 | |||||
Diluted | $ | 4.62 | $ | 3.96 | $ | 3.75 |
(1) | Comprised of income from continuing operations less amounts allocable to participating securities of $27 million and $19 million for the years ended December 31, 2015 and 2014, respectively. |
In millions, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||||
2015: | |||||||||||||||||||
Net revenues | $ | 36,332 | $ | 37,169 | $ | 38,644 | $ | 41,145 | $ | 153,290 | |||||||||
Gross profit | 6,164 | 6,402 | 6,661 | 7,301 | 26,528 | ||||||||||||||
Operating profit | 2,132 | 2,262 | 2,331 | 2,729 | 9,454 | ||||||||||||||
Income from continuing operations | 1,221 | 1,272 | 1,237 | 1,500 | 5,230 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | 10 | (1 | ) | 9 | |||||||||||||
Net income attributable to CVS Health | 1,221 | 1,272 | 1,246 | 1,498 | 5,237 | ||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 1.08 | $ | 1.13 | $ | 1.10 | $ | 1.35 | $ | 4.65 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | 0.01 | $ | — | $ | 0.01 | |||||||||
Net income attributable to CVS Health | $ | 1.08 | $ | 1.13 | $ | 1.11 | $ | 1.35 | $ | 4.66 | |||||||||
Diluted earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 1.07 | $ | 1.12 | $ | 1.10 | $ | 1.34 | $ | 4.62 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | 0.01 | $ | — | $ | 0.01 | |||||||||
Net income attributable to CVS Health | $ | 1.07 | $ | 1.12 | $ | 1.11 | $ | 1.34 | $ | 4.63 | |||||||||
Dividends per share | $ | 0.350 | $ | 0.350 | $ | 0.350 | $ | 0.350 | $ | 1.40 | |||||||||
Stock price: (New York Stock Exchange) | |||||||||||||||||||
High | $ | 104.56 | $ | 106.47 | $ | 113.45 | $ | 105.29 | $ | 113.45 | |||||||||
Low | $ | 94.16 | $ | 98.74 | $ | 95.12 | $ | 91.56 | $ | 91.56 |
In millions, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||||
2014: | |||||||||||||||||||
Net revenues | $ | 32,689 | $ | 34,602 | $ | 35,021 | $ | 37,055 | $ | 139,367 | |||||||||
Gross profit | 5,942 | 6,324 | 6,468 | 6,633 | 25,367 | ||||||||||||||
Operating profit | 2,024 | 2,208 | 2,246 | 2,321 | 8,799 | ||||||||||||||
Income from continuing operations | 1,129 | 1,246 | 948 | 1,322 | 4,645 | ||||||||||||||
Loss from discontinued operations, net of tax | — | — | — | (1 | ) | (1 | ) | ||||||||||||
Net income attributable to CVS Health | 1,129 | 1,246 | 948 | 1,321 | 4,644 | ||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 0.96 | $ | 1.07 | $ | 0.82 | $ | 1.15 | $ | 3.98 | |||||||||
Loss from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Net income attributable to CVS Health | $ | 0.96 | $ | 1.07 | $ | 0.82 | $ | 1.15 | $ | 3.98 | |||||||||
Diluted earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 0.95 | $ | 1.06 | $ | 0.81 | $ | 1.14 | $ | 3.96 | |||||||||
Loss from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Net income attributable to CVS Health | $ | 0.95 | $ | 1.06 | $ | 0.81 | $ | 1.14 | $ | 3.96 | |||||||||
Dividends per share | $ | 0.275 | $ | 0.275 | $ | 0.275 | $ | 0.275 | $ | 1.10 | |||||||||
Stock price: (New York Stock Exchange) | |||||||||||||||||||
High | $ | 76.36 | $ | 79.43 | $ | 82.57 | $ | 98.62 | $ | 98.62 | |||||||||
Low | $ | 64.95 | $ | 72.37 | $ | 74.69 | $ | 77.40 | $ | 64.95 |
In millions, except per share amounts | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||
Statement of operations data: | |||||||||||||||||||
Net revenues | $ | 153,290 | $ | 139,367 | $ | 126,761 | $ | 123,120 | $ | 107,080 | |||||||||
Gross profit | 26,528 | 25,367 | 23,783 | 22,488 | 20,562 | ||||||||||||||
Operating expenses | 17,074 | 16,568 | 15,746 | 15,278 | 14,231 | ||||||||||||||
Operating profit | 9,454 | 8,799 | 8,037 | 7,210 | 6,331 | ||||||||||||||
Interest expense, net | 838 | 600 | 509 | 557 | 584 | ||||||||||||||
Loss on early extinguishment of debt | — | 521 | — | 348 | — | ||||||||||||||
Income tax provision(1) | 3,386 | 3,033 | 2,928 | 2,436 | 2,258 | ||||||||||||||
Income from continuing operations | 5,230 | 4,645 | 4,600 | 3,869 | 3,489 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | 9 | (1 | ) | (8 | ) | (7 | ) | (31 | ) | ||||||||||
Net income | 5,239 | 4,644 | 4,592 | 3,862 | 3,458 | ||||||||||||||
Net (income) loss attributable to noncontrolling interest | (2 | ) | — | — | 2 | 4 | |||||||||||||
Net income attributable to CVS Health | $ | 5,237 | $ | 4,644 | $ | 4,592 | $ | 3,864 | $ | 3,462 | |||||||||
Per share data: | |||||||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.65 | $ | 3.98 | $ | 3.78 | $ | 3.05 | $ | 2.61 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||||
Net income attributable to CVS Health | $ | 4.66 | $ | 3.98 | $ | 3.77 | $ | 3.04 | $ | 2.59 | |||||||||
Diluted earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.62 | $ | 3.96 | $ | 3.75 | $ | 3.02 | $ | 2.59 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||||
Net income attributable to CVS Health | $ | 4.63 | $ | 3.96 | $ | 3.74 | $ | 3.02 | $ | 2.57 | |||||||||
Cash dividends per share | $ | 1.40 | $ | 1.10 | $ | 0.90 | $ | 0.65 | $ | 0.50 | |||||||||
Balance sheet and other data: | |||||||||||||||||||
Total assets(1) | $ | 93,657 | $ | 74,187 | $ | 71,452 | $ | 66,167 | $ | 64,794 | |||||||||
Long-term debt(1) | $ | 26,267 | $ | 11,630 | $ | 12,767 | $ | 9,079 | $ | 9,150 | |||||||||
Total shareholders’ equity | $ | 37,203 | $ | 37,963 | $ | 37,938 | $ | 37,653 | $ | 38,014 | |||||||||
Number of stores (at end of year) | 9,681 | 7,866 | 7,702 | 7,508 | 7,388 |
(1) | As of June 30, 2015, the Company early adopted Accounting Standard Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30) issued by the Financial 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. |
/s/ Ernst & Young LLP | |
Boston, Massachusetts | |
February 9, 2016 |
(1) | Caremark Rx, L.L.C., the parent of the Registrant’s pharmacy services subsidiaries, is the immediate or indirect parent of many mail order, pharmacy benefit management, infusion, Medicare Part D, insurance, specialty mail and retail specialty pharmacy subsidiaries, all of which operate in the United States and its territories. |
(2) | CVS Pharmacy, Inc. is the immediate or indirect parent of approximately 48 entities that operate drugstores, all of which drugstores are in the United States and its territories except approximately 44 drugstores that are operated by Drogaria Onofre Ltda., a Brazil limited liability company that is an indirect subsidiary of CVS Pharmacy, Inc. |
(3) | Omnicare, Inc., the parent of the Registrant’s long-term care subsidiaries, is the immediate or indirect parent of many long-term care subsidiaries, all of which operate in the United States and its territories. |
(1) | Registration Statements (Form S-3ASR Nos. 333-187440 and 333-200217, and Form S-3 No. 333-205156) of CVS Health Corporation, and |
(2) | Registration Statements (Form S-8 Nos. 333-49407, 333-34927, 333-28043, 333-91253, 333-63664, 333-139470, 333-141481, 333-167746 and 333-208805) of CVS Health Corporation; |
1. | I have reviewed this annual report on Form 10-K of CVS Health Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 9, 2016 | By: | /S/ LARRY J. MERLO |
Larry J. Merlo President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of CVS Health Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 9, 2016 | By: | /S/ DAVID M. DENTON |
David M. Denton | ||
Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
February 9, 2016 | /S/ LARRY J. MERLO |
Larry J. Merlo | |
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
February 9, 2016 | /S/ DAVID M. DENTON |
David M. Denton | |
Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2015 |
Feb. 03, 2016 |
Jun. 30, 2015 |
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Document and Entity Information | |||
Entity Registrant Name | CVS HEALTH CORP | ||
Entity Central Index Key | 0000064803 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 116,868,242,939 | ||
Entity Common Stock, Shares Outstanding | 1,098,490,835 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Statement of Comprehensive Income [Abstract] | |||
Net income | $ 5,239 | $ 4,644 | $ 4,592 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments, net of tax | (100) | (35) | (30) |
Net cash flow hedges, net of tax | 2 | 4 | 3 |
Pension and other postretirement benefits, net of tax | (43) | (37) | 59 |
Net other comprehensive income (loss) | (141) | (68) | 32 |
Comprehensive income | 5,098 | 4,576 | 4,624 |
Comprehensive income attributable to noncontrolling interest | (2) | 0 | 0 |
Comprehensive income attributable to CVS Health | $ 5,096 | $ 4,576 | $ 4,624 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 100,000.0 | 100,000.0 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 3,200,000,000 | 3,200,000,000 |
Common Stock, shares issued | 1,699,000,000 | 1,691,000,000 |
Common Stock, shares outstanding | 1,101,000,000 | 1,140,000,000 |
2014 | 597,000,000 | 550,000,000 |
Shares held in trust: 1 share at December 31, 2015 and 2014 | 1,000,000 | 1,000,000 |
Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | 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 companies, 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 interaction screenings and brand to generic substitutions. The PSS’ specialty pharmacies support individuals that require complex and expensive drug therapies. The specialty 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 conditions, 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 pharmacy stores, 11 specialty mail order pharmacies and five mail order dispensing pharmacies, and 83 branches for infusion and enteral services, including 73 ambulatory infusion suites and six centers of excellence, located in 40 states, Puerto Rico and the District of Columbia. Retail/LTC Segment (the “RLS”) - The RLS sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, photo finishing, seasonal merchandise, greeting cards and convenience foods, through the Company’s CVS Pharmacy®, CVS®, Longs Drugs®, Navarro Discount Pharmacy® and Drogaria OnofreTM retail stores and online through CVS.com®, Navarro.comTM and Onofre.com.brTM. The RLS also provides health care services through its MinuteClinic® health care clinics. MinuteClinics are staffed by nurse practitioners and physician assistants who utilize nationally recognized protocols to diagnose and treat minor health conditions, perform health screenings, monitor chronic conditions and deliver vaccinations. With the acquisition of Omnicare, the RLS now includes LTC operations, which is comprised of providing the distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings, as well as commercialization services which are provided under the name RxCrossroads®. With the acquisition of the pharmacies and clinics of Target, the Company added 1,672 pharmacies and approximately 79 clinics. As of December 31, 2015, the retail pharmacy business included 9,655 retail stores (of which 7,897 were our stores that operated a pharmacy and 1,672 were our pharmacies located within 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 clinics operating under the MinuteClinic name (of which 1,049 were located in CVS Pharmacy stores). LTC operations is comprised of 143 spoke pharmacies that primarily handle new prescription orders and 32 hub pharmacies that use proprietary automation to support spoke pharmacies with refill prescriptions. LTC operates primarily under the Omnicare® and NeighborCare® names. Corporate Segment - The Corporate Segment provides management and administrative services to support the Company. The Corporate Segment consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, corporate information technology and finance departments. Principles of consolidation - The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Fair value hierarchy - The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:
Cash and cash equivalents - Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. The Company invests in short-term money market funds, commercial paper and time deposits, as well as other debt securities that are classified as cash equivalents within the accompanying consolidated balance sheets, as these funds are highly liquid and readily convertible to known amounts of cash. These investments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. Short-term investments - The Company’s short-term investments consist of certificates of deposit with initial maturities of greater than three months when purchased that mature in less than one year from the balance sheet date. These investments, which were classified as available-for-sale within Level 1 of the fair value hierarchy, were carried at fair value, which approximated their historical cost at December 31, 2015 and 2014. Fair value of financial instruments - As of December 31, 2015, the Company’s financial instruments include cash and cash equivalents, short-term and long-term investments, accounts receivable, accounts payable, contingent consideration liability and short-term debt. Due to the nature of these instruments, the Company’s carrying value approximates fair value. The carrying amount and estimated fair value of total long-term debt was $27.5 billion and $28.4 billion, respectively, as of December 31, 2015. The fair value of the Company’s long-term debt was estimated based on quoted rates currently offered in active markets for the Company’s debt, which is considered Level 1 of the fair value hierarchy. The Company had outstanding letters of credit, which guaranteed foreign trade purchases, with a fair value of $4 million as of December 31, 2015. There were no outstanding derivative financial instruments as of December 31, 2015 and 2014. Foreign currency translation and transactions - For local currency functional currency, assets and liabilities are translated at end-of-period rates while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss). For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for non-monetary balance sheet accounts, which are remeasured at historical exchange rates. Revenue and expense are remeasured at average exchange rates in effect during each period, except for those expenses related to the nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in income. Gains and losses arising from foreign currency transactions and the effects of remeasurements were not material for all periods presented. Accounts receivable - Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from third party providers (e.g., 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. The activity in the allowance for doubtful accounts receivable for the years ended December 31 is as follows:
Inventories - All inventories are stated at the lower of cost or market. Prescription drug inventories in the RLS and PSS, as well as front store inventories in the RLS stores are accounted for using the weighted average 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 center and mail facility to ensure that the amounts reflected in the accompanying consolidated financial statements are properly stated. During the interim period between physical inventory counts, the Company accrues for anticipated physical inventory losses on a location-by-location basis based on historical results and current trends. Property and equipment - Property, equipment and improvements to leased premises are depreciated using the straight-line method over the estimated useful lives of the assets, or when applicable, the term of the lease, whichever is shorter. Estimated useful lives generally range from 10 to 40 years for buildings, building improvements and leasehold improvements and 3 to 10 years for fixtures, equipment and internally developed software. Repair and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Application development stage costs for significant internally developed software projects are capitalized and depreciated. The following are the components of property and equipment at December 31:
The gross amount of property and equipment under capital leases was $528 million and $268 million as of December 31, 2015 and 2014, respectively. Accumulated amortization of property and equipment under capital lease was $97 million and $86 million as of December 31, 2015 and 2014, respectively. Amortization of property and equipment under capital lease is included within depreciation expense. Depreciation expense totaled $1.5 billion in 2015 and $1.4 billion in both 2014 and 2013. Goodwill and other indefinitely-lived assets - Goodwill and other indefinitely-lived assets are not amortized, but are subject to impairment reviews annually, or more frequently if necessary. See Note 4 for additional information on goodwill and other indefinitely-lived assets. Intangible assets - Purchased customer contracts and relationships are amortized on a straight-line basis over their estimated useful lives between 9 and 20 years. Purchased customer lists are amortized on a straight-line basis over their estimated useful lives of up to 10 years. Purchased leases are amortized on a straight-line basis over the remaining life of the lease. See Note 4 for additional information about intangible assets. Impairment of long-lived assets - The Company groups and evaluates fixed and finite-lived intangible assets for impairment at the lowest level at which individual cash flows can be identified, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted and without interest charges). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted and with interest charges). If required, an impairment loss is recorded for the portion of the asset group’s carrying value that exceeds the asset group’s estimated future cash flows (discounted and with interest charges). Redeemable noncontrolling interest - As a result of the acquisition of Omnicare in August 2015, the Company obtained a 73% ownership interest in limited liability company (“LLC”). Due to the change in control in Omnicare, the noncontrolling member of the LLC had the contractual right to put its membership interest to the Company at fair value. Consequently, the noncontrolling interest in the LLC is recorded as a redeemable noncontrolling interest at fair value. In January 2016, as provided for in the LLC operating agreement, the noncontrolling shareholder of the LLC exercised its option to sell its ownership interest in the LLC to the Company. On February 8, 2016, in accordance with the terms of the LLC operating agreement, the Company purchased the noncontrolling interest in the LLC at an amount determined pursuant to the operating agreement that approximated its carrying value at December 31, 2015. Below is a summary of the changes in redeemable noncontrolling interest for the year ended December 31, 2015:
Revenue Recognition Pharmacy Services Segment - The PSS sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through its retail pharmacy network. The PSS recognizes revenue from prescription drugs sold by its mail service dispensing pharmacies and under retail pharmacy network contracts where it is the principal using the gross method at the contract prices negotiated with its clients. Net revenues include: (i) the portion of the price the client pays directly to the PSS, 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 (“Retail Co-Payments”), and (iii) administrative fees for retail pharmacy network contracts where the PSS is not the principal as discussed below. Sales taxes are not included in revenue. Revenue is recognized when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. The following revenue recognition policies have been established for the PSS:
The PSS determines whether it is the principal or agent for its retail pharmacy network transactions on a contract by contract basis. In the majority of its contracts, the PSS has determined it is the principal due to it: (i) being the primary obligor in the arrangement, (ii) having latitude in establishing the price, changing the product or performing part of the service, (iii) having discretion in supplier selection, (iv) having involvement in the determination of product or service specifications, and (v) having credit risk. The PSS’ obligations under its client contracts for which revenues are reported using the gross method are separate and distinct from its obligations to the third party pharmacies included in its retail pharmacy network contracts. Pursuant to these contracts, the PSS is contractually required to pay the third party pharmacies in its retail pharmacy network for products sold, regardless of whether the PSS is paid by its clients. The PSS’ responsibilities under its client contracts typically include validating eligibility and coverage levels, communicating the prescription price and the co-payments due to the third party retail pharmacy, identifying possible adverse drug interactions for the pharmacist to address with the prescriber prior to dispensing, suggesting generic alternatives where clinically appropriate and approving the prescription for dispensing. Although the PSS does not have credit risk with respect to Retail Co-Payments or inventory risk related to retail network claims, management believes that all of the other applicable indicators of gross revenue reporting are present. For contracts under which the PSS acts as an agent, revenue is recognized using the net method. Drug Discounts - The PSS deducts from its revenues any rebates, inclusive of discounts and fees, earned by its clients. Rebates are paid to clients in accordance with the terms of client contracts, which are normally based on fixed rebates per prescription for specific products dispensed or a percentage of manufacturer discounts received for specific products dispensed. The liability for rebates due to 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 premiums earned by the PDP, which are determined based on the PDP’s annual bid and related contractual arrangements with the Centers for Medicare and Medicaid Services (“CMS”). The insurance premiums include a direct premium paid by CMS and a beneficiary premium, which is the responsibility of the PDP member, but which is subsidized by CMS in the case of low-income members. Premiums collected in advance are initially deferred in accrued expenses and are then recognized in net revenues over the period in which members are entitled to receive benefits. In addition to these premiums, net revenues include co-payments, coverage gap benefits, deductibles and co-insurance (collectively, the “Member Co-Payments”) related to PDP members’ actual prescription claims. In certain cases, CMS subsidizes a portion of these Member Co-Payments and pays the PSS an estimated prospective Member Co-Payment subsidy amount each month. The prospective Member Co-Payment subsidy amounts received from CMS are also included in net revenues. SilverScript assumes no risk for these amounts. If the prospective Member Co-Payment subsidies received differ from the amounts based on actual prescription claims, the difference is recorded in either accounts receivable or accrued expenses. The PSS accounts for CMS obligations and Member Co-Payments (including the amounts subsidized by CMS) using the gross method consistent with its revenue recognition policies for Mail Co-Payments and Retail Co-Payments (discussed previously in this document). Retail/LTC Segment Retail Pharmacy - The retail drugstores recognize revenue at the time the customer takes possession of the merchandise. Customer returns are not material. Revenue generated from the performance of services in the RLS’ health care clinics is recognized at the time the services are performed. Sales taxes are not included in revenue. Long-term Care - Revenue is recognized when products are delivered or services are rendered or provided to the customer, prices are fixed and determinable, and collection is reasonably assured. A significant portion of our revenues from sales 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. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third party insurance payors, and record an estimated contractual allowance for sales and receivable balances at the revenue recognition date, to properly account for anticipated differences between billed and reimbursed amounts. Accordingly, the total net sales and receivables reported in the Company's consolidated financial statements are recorded at the amount expected to be ultimately received from these payors. Since billing functions for a portion of the Company's revenue systems are largely computerized, enabling on-line adjudication at the time of sale to record net revenues, the Company's exposure in connection with estimating contractual allowance adjustments is limited primarily to unbilled and initially rejected Medicare, Medicaid and third party claims (typically approved for reimbursement once additional information is provided to the payor). For the remaining portion of the Company's revenue systems, the contractual allowance is estimated for all billed, unbilled and initially rejected Medicare, Medicaid and third party claims. The Company evaluates several criteria in developing the estimated contractual allowances on a monthly basis, including historical trends based on actual claims paid, current contract and reimbursement terms, and changes in customer base and payor/product mix. Contractual allowance estimates are adjusted to actual amounts as cash is received and claims are settled, and the aggregate impact of these resulting adjustments was not significant to our results of operations for any of the periods presented. Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of our normal billing procedures and subject to our normal accounts receivable collections procedures. Health Care Clinics - For services provided by our health care clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third party payor contractual obligations and patient direct bill historical collection rates. Loyalty Program - The Company’s customer loyalty program, ExtraCare®, is comprised of two components, ExtraSavingsTM and ExtraBucks® Rewards. ExtraSavings coupons redeemed by customers are recorded as a reduction of revenues when redeemed. ExtraBucks Rewards are accrued as a charge to cost of revenues when earned, net of estimated breakage. The Company determines breakage based on historical redemption patterns. See Note 13 for additional information about the revenues of the Company’s business segments. Cost of revenues Pharmacy Services Segment - The PSS’ cost of revenues includes: (i) the cost of prescription drugs sold during the reporting period directly through its mail service dispensing pharmacies and indirectly through its retail pharmacy network, (ii) shipping and handling costs, and (iii) the operating costs of its mail service dispensing pharmacies and client service operations and related information technology support costs including depreciation and amortization. The 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 (see “Vendor allowances and purchase discounts” below) and (ii) the cost of prescription drugs sold (including Retail Co-Payments) through the PSS’ retail pharmacy network under contracts where it is the principal, net of any volume-related or other discounts. Retail/LTC Segment - The RLS’ cost of revenues includes: the cost of merchandise sold during the reporting period and the related purchasing costs, warehousing and delivery costs (including depreciation and amortization) and actual and estimated inventory losses. See Note 13 for additional information about the cost of revenues of the Company’s business segments. Vendor allowances and purchase discounts The Company accounts for vendor allowances and purchase discounts as follows: Pharmacy Services Segment - The PSS receives purchase discounts on products purchased. The PSS’ contractual arrangements with vendors, including manufacturers, wholesalers and retail pharmacies, normally provide for the PSS to receive purchase discounts from established list prices in one, or a combination, of the following forms: (i) a direct discount at the time of purchase, (ii) a discount for the prompt payment of invoices, or (iii) when products are purchased indirectly from a manufacturer (e.g., through a wholesaler or retail pharmacy), a discount (or rebate) paid subsequent to dispensing. These rebates are recognized when prescriptions are dispensed and are generally calculated and billed to manufacturers within 30 days of the end of each completed quarter. Historically, the effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the PSS’ results of operations. The PSS accounts for the effect of any such differences as a change in accounting estimate in the period the reconciliation is completed. The PSS also receives additional discounts under its wholesaler contracts if it exceeds contractually defined annual purchase volumes. In addition, the PSS receives fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of “Cost of revenues”. Retail/LTC Segment - Vendor allowances received by the RLS reduce the carrying cost of inventory and are recognized in cost of revenues when the related inventory is sold, unless they are specifically identified as a reimbursement of incremental costs for promotional programs and/or other services provided. Amounts that are directly linked to advertising commitments are recognized as a reduction of advertising expense (included in operating expenses) when the related advertising commitment is satisfied. Any such allowances received in excess of the actual cost incurred also reduce the carrying cost of inventory. The total value of any upfront payments received from vendors that are linked to purchase commitments is initially deferred. The deferred amounts are then amortized to reduce cost of revenues over the life of the contract based upon purchase volume. The total value of any upfront payments received from vendors that are not linked to purchase commitments is also initially deferred. The deferred amounts are then amortized to reduce cost of revenues on a straight-line basis over the life of the related contract. The total amortization of these upfront payments was not material to the accompanying consolidated financial statements. Insurance - The Company is self-insured for certain losses related to general liability, workers’ compensation and auto liability. The Company obtains third party insurance coverage to limit exposure from these claims. The Company is also self-insured for certain losses related 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 facility opening costs, other than capital expenditures, are charged directly to expense when incurred. When the Company closes a facility, the present value of estimated unrecoverable costs, including the remaining lease obligation less estimated sublease income and the book value of abandoned property and equipment, are charged to expense. The long-term portion of the lease obligations associated with facility closings was $217 million and $207 million in 2015 and 2014, respectively. Advertising costs - Advertising costs are expensed when the related advertising takes place. Advertising costs, net of vendor funding (included in operating expenses), were $221 million, $212 million and $177 million in 2015, 2014 and 2013, respectively. Interest expense, net - Interest expense, net of capitalized interest, was $859 million, $615 million and $517 million, and interest income was $21 million, $15 million and $8 million in 2015, 2014 and 2013, respectively. Capitalized interest totaled $12 million, $19 million and $25 million in 2015, 2014 and 2013, respectively. Shares held in trust - The Company maintains grantor trusts, which held approximately 1 million shares of its common stock at December 31, 2015 and 2014, respectively. These shares are designated for use under various employee compensation plans. Since the Company holds these shares, they are excluded from the computation of basic and diluted shares outstanding. Accumulated other comprehensive income - Accumulated other comprehensive income (loss) consists of changes in the net actuarial gains and losses associated with pension and other postretirement benefit plans, losses on derivatives from cash flow hedges executed in previous years associated with the issuance of long-term debt, and foreign currency translation adjustments. The amount included in accumulated other comprehensive loss related to the Company’s pension and postretirement plans was $305 million pre-tax ($186 million after-tax) as of December 31, 2015 and $234 million pre-tax ($143 million after-tax) as of December 31, 2014. The net impact on cash flow hedges totaled $14 million pre-tax ($7 million after-tax) and $16 million pre-tax ($9 million after-tax) as of December 31, 2015 and 2014, respectively. Cumulative foreign currency translation adjustments at December 31, 2015 and 2014 were $165 million and $65 million, respectively. Changes in accumulated other comprehensive income (loss) by component are shown below:
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. Variable Interest Entity - In July 2014, the Company and Cardinal Health, Inc. (“Cardinal”) established Red Oak Sourcing, LLC (“Red Oak”), a generic pharmaceutical sourcing entity in which the Company and Cardinal each own 50%. The Red Oak arrangement has an initial term of ten years. Under this arrangement, the Company and Cardinal contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic pharmaceutical supply contracts for both companies through Red Oak; however, Red Oak does not own or hold inventory on behalf of either company. No physical assets (e.g., property and equipment) were contributed to Red Oak by either company and minimal funding was provided to capitalize Red Oak. The Company has determined that it is the primary beneficiary of this variable interest entity because it has the ability to direct the activities of Red Oak. Consequently, the Company consolidates Red Oak in its consolidated financial statements within the Retail/LTC Segment. Cardinal is required to pay the Company 39 quarterly payments beginning in October 2014. As milestones are met, the quarterly payments increase. The Company received approximately $122 million and $26 million from Cardinal during the years ended December 31, 2015 and 2014, respectively. The payments reduce the Company’s carrying value of inventory and are recognized in cost of revenues when the related inventory is sold. Revenues associated with Red Oak expenses reimbursed by Cardinal for the years ended December 31, 2015 and 2014, as well as amounts due to or due from Cardinal at December 31, 2015 and 2014 were immaterial. Related party transactions - 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. The Company expensed fees of approximately $50 million in the years ended December 2015 and 2014, and $48 million in the year ended December 31, 2013, for the use of this network. The Company’s investment in and equity in earnings of SureScripts for all periods presented is immaterial. In connection with the acquisition of Omnicare in August 2015, the Company obtained an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several long-term care pharmacies in four states. Heartland paid the Company approximately $25 million for pharmaceutical inventory purchases during the period from August 18, 2015 to December 31, 2015. Additionally, the Company performs certain collection functions for Heartland and then passes those customer cash collections to Heartland. The Company’s investment in and equity in earnings of Heartland as of and for the year ended December 31, 2015 is immaterial. In September 2014, the Company made a charitable contribution of $25 million to the CVS Foundation (formerly CVS Caremark Charitable Trust, Inc.) (the “Foundation”) to fund future giving. The Foundation is a non-profit entity that focuses on health, education and community involvement programs. The charitable contribution was recorded as an operating expense in the consolidated statement of income for the year ended December 31, 2014. Income taxes - The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in the tax rates on deferred tax asset and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that it believes these assets are more likely than not to be realized in making such a determination. The Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. To the extent that the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. The Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Interest and/or penalties related to uncertain tax positions are recognized in income tax expense. Discontinued Operations - In connection with certain business dispositions completed between 1991 and 1997, the Company retained guarantees on store lease obligations for a number of former subsidiaries, including Linens ‘n Things which filed for bankruptcy in 2008. The Company's income from discontinued operations in 2015 of $9 million, net of tax, was related to the release of certain store lease guarantees due to a settlement with a landlord. The Company’s loss from discontinued operations includes lease-related costs which the Company believes it will likely be required to satisfy pursuant to its Linens ‘n Things lease guarantees. Below is a summary of the results of discontinued operations for the years ended December 31:
Earnings per common share - Earnings per share is computed using the two-class method. Options to purchase 2.7 million, 2.1 million and 6.2 million shares of common stock were outstanding as of December 31, 2015, 2014 and 2013, respectively, but were not included in the calculation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. New Accounting Pronouncement - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current 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 either a full retrospective or a modified retrospective approach to adopt the guidance. This update could impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption, as well as the method of transition and required disclosures. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30). ASU No. 2015-03 requires the presentation of debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of such costs are required to be reported as interest expense, which is consistent with the Company’s current policy. This change conforms the presentation of debt issuance costs with that of debt discounts. The ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015; early adoption is permitted. The guidance is required to be applied retrospectively to all prior periods. The Company has early adopted this standard as of June 30, 2015. The effect of the adoption of ASU 2015-03 on the Company’s consolidated balance sheet is a reduction of noncurrent assets and long-term debt of $65 million as of December 31, 2014. The following is a reconciliation of the effect of this reclassification on the Company’s consolidated balance sheet as of December 31, 2014:
In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. ASU No. 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period after an acquisition within the reporting period they are determined. This is a change from the previous requirement that the adjustments be recorded retrospectively. The ASU also requires disclosure of the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the adjustment to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015; early adoption is permitted. The Company has early adopted the ASU as of September 30, 2015. The adoption did not have a material effect on the Company's consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740). ASU No. 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as non-current in the statement of financial position. This ASU may be applied either prospectively to all deferred tax assets and liabilities, or retrospectively to all periods presented for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The change will require additional disclosure based on the method of adoption. Had the Company adopted this ASU, current deferred income taxes, total current assets, total assets and total liabilities would have been approximately $1.2 billion and $1.0 billion lower as of December 31, 2015 and 2014, respectively. |
Change in Accounting Principle |
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Accounting Changes and Error Corrections [Abstract] | |
Changes in Accounting Principle | Changes in Accounting Principle Effective January 1, 2015, the Company 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 using the FIFO cost method. Effective January 1, 2015, all front store inventories in the Retail/LTC Segment have been valued at the lower of cost or market using the weighted average cost method. These changes affected approximately 36% of consolidated inventories. These changes were made primarily to provide the Company with better information to manage its retail front store operations and to bring all of the Company’s inventories to a common inventory valuation methodology. The Company believes the weighted average cost method is preferable to the retail inventory method and the FIFO cost method because it results in greater precision in the determination of cost of revenues and inventories at the stock keeping unit (“SKU”) level and results in a consistent inventory valuation method for all of the Company’s inventories as all of the Company’s remaining inventories, which consist of prescription drugs, were already being valued using the weighted average cost method. The Company recorded the cumulative effect of these changes in accounting principle as of January 1, 2015. The Company determined that retrospective application for periods prior to 2015 is impracticable, as the period-specific information necessary to value front store inventories in the Retail/LTC Segment under the weighted average cost method is unavailable. The Company implemented a new perpetual inventory system to manage front store inventory at the SKU level and valued front store inventory as of January 1, 2015 and calculated the cumulative impact. The effect of these changes in accounting principle as of January 1, 2015, was a decrease in inventories of $7 million, an increase in current deferred income tax assets of $3 million and a decrease in retained earnings of $4 million. Had the Company not made these changes in accounting principle, for the year ended December 31, 2015, income from continuing operations would have been lower by $27 million. Basic and diluted earnings per share from continuing operations attributable to CVS Health would have been approximately $0.02 per share lower for the year ended December 31, 2015. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions Omnicare Acquisition On August 18, 2015, the Company acquired 100% of the outstanding common shares and voting interests of 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. Additionally, holders of Omnicare restricted stock units and performance based restricted stock units received 738,765 CVS Health Corporation restricted stock awards with a fair value of approximately $80 million as replacement awards. Omnicare is a leading health care services company that specializes in the management of complex pharmaceutical care. Omnicare’s long-term care (“LTC”) business is the nation’s largest provider of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. In addition, Omnicare has a specialty pharmacy business operating primarily under the name of Advanced Care Scripts, and provides commercialization services under the name of RxCrossroads®. The Company is including LTC and the commercialization services in its former Retail Pharmacy Segment, which has been renamed the “Retail/LTC Segment,” and will include the specialty pharmacy business in its Pharmacy Services Segment. The Company acquired Omnicare to expand its operations 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 transferred on the date of acquisition consisted of the following:
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
The assessment of fair value is preliminary and is based on information that was available to management at the time the condensed consolidated financial statements were prepared. Accordingly, such amounts may change. The most significant open items included the accounting for deferred income taxes and contingencies as management is awaiting additional information to complete its assessment of these matters. The goodwill represents future economic benefits expected to arise from the Company’s expanded presence in the pharmaceutical care market, the assembled workforce acquired, expected purchasing and revenue synergies, as well as operating efficiencies and cost savings. Goodwill of $8.6 billion was allocated to the Retail/LTC Segment and the remaining goodwill of $0.5 billion was allocated to the Pharmacy Services Segment. Approximately $0.4 billion of the goodwill is deductible for income tax purposes. Intangible assets acquired include customer relationships and trade names of $3.9 billion and $74 million, respectively, with estimated weighted average useful lives of 19.1 and 2.9 years, respectively, and 18.8 years in total. The fair value of trade accounts receivable acquired is $600 million, with the gross contractual amount being $857 million. The Company expects $257 million of trade accounts receivable to be uncollectible. The fair value of other receivables acquired is $147 million, with the gross contractual amount being $161 million. The Company expects $14 million of other receivables to be uncollectible. During the year ended December 31, 2015, the Company incurred transaction costs of $70 million associated with the acquisition of Omnicare that were recorded within operating expenses. The Company’s consolidated results of operations for the year ended December 31, 2015, include $2.6 billion of net revenues and net income of $61 million associated with the operating results of Omnicare from August 18, 2015 to December 31, 2015. These Omnicare operating results include severance costs and accelerated stock-based compensation. The following unaudited pro forma information presents a summary of the Company’s combined results of operations for the year ended December 31, 2015 and 2014 as if the Omnicare acquisition and the related financing transactions had occurred on January 1, 2014. The following pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.
Pro forma income from continuing operations for the year ended December 31, 2015, excludes $135 million related to severance costs, accelerated stock-based compensation and transaction costs incurred in connection with the Omnicare acquisition. Pro forma income from continuing operations for the year ended December 31, 2014, includes a $521 million loss on the early extinguishment of debt recorded 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 also subject to adjustment based on the value of inventory at the closing date. The Company acquired Target’s 1,672 pharmacies which operate in 47 states and will operate them through a store-within-a-store format, branded as CVS Pharmacy. The Company also acquired 79 Target clinic locations which will be rebranded as MinuteClinic. The Company acquired the Target pharmacy and clinic businesses primarily to expand the geographic reach of its retail pharmacy business. The estimated fair values of the assets acquired at the date of acquisition were approximately as follows:
The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Accordingly, such amounts may change. As of December 31, 2015, the most significant open item was the inventory related purchase price adjustment. Intangible assets acquired include customer relationships with an estimated useful life of 13 years. The goodwill represents future economic benefits expected to arise from the Company’s expanded geographic presence in the retail pharmacy market, the assembled workforce acquired, expected purchasing and revenue synergies, as well as operating efficiencies and cost savings. The goodwill is deductible for income tax purposes. No liability for any potential contingent consideration has been recorded based on current projections for future prescription growth over the relevant period. In January 2016, the Company received approximately $21 million from Target 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 7 of the consolidated financial statements for disclosures of the Company’s leasing arrangements. During the year ended December 31, 2015, the Company incurred transaction costs of approximately $26 million associated with the acquisition that were recorded within operating expenses. The results of the Target pharmacies and clinics are included in the Company’s Retail/LTC Segment beginning on December 16, 2015. Pro forma financial information for this acquisition is not presented as such results are immaterial to the Company’s consolidated financial statements. Coram Acquisition On January 16, 2014, the Company acquired 100% of the voting interests of Coram LLC and its subsidiaries (collectively, “Coram”), the specialty infusion services and enteral nutrition business unit of Apria Healthcare Group Inc. (“Apria”), for cash consideration of approximately $2.1 billion, plus contingent consideration of approximately $0.1 billion. The purchase price was also subject to a working capital adjustment, which resulted in the Company receiving $9 million from Apria. Coram is one of the nation’s largest providers of comprehensive infusion services, caring for approximately 240,000 patients annually. Coram has approximately 4,600 employees, including approximately 600 nurses and 250 dietitians, operating primarily through 83 branch locations and six centers of excellence for patient intake. The contingent consideration is based on the Company’s future realization of Coram’s tax net operating loss carryforwards (“NOLs”) as of the date of the acquisition. The Company will pay the seller the first $60 million in tax savings realized from the future utilization of the Coram NOLs, plus 50% of any additional future tax savings from the remaining NOLs. The fair value of the contingent consideration liability associated with the future realization of the Coram NOLs was determined using Level 3 inputs based on the present value of contingent payments expected to be made based on the Company’s estimate of the amount and timing of Coram NOLs that will ultimately be realized. The change in fair value of the contingent consideration liability recognized in earnings for the year ended December 31, 2014 was immaterial and for the year ended December 31, 2015 was approximately $4 million. During the year ended December 31, 2015, the Company made contingent consideration payments to Apria of approximately $58 million. The Company recognized approximately $1.6 billion of goodwill in connection with the acquisition. The goodwill represents future economic benefits expected to arise from the Company’s expanded presence in the specialty pharmaceuticals market, the assembled workforce acquired, and the expected synergies from combining operations with Coram. The goodwill is nondeductible for income tax purposes. Coram’s results of operations are included in the Company’s PSS beginning on January 16, 2014. Pro forma information for this acquisition is not presented as Coram’s results are immaterial to the Company’s consolidated financial statements. During the year ended December 31, 2014, acquisition costs of $15 million were expensed as incurred within operating expenses. |
Goodwill and Other Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangibles | Goodwill and Other Intangibles Goodwill and other indefinitely-lived assets are not amortized, but are subject to annual impairment reviews, or more frequent reviews if events or circumstances indicate an impairment may exist. When evaluating goodwill for potential impairment, the Company first compares the fair value of its reporting units to their respective carrying amounts. The Company estimates the fair value of its reporting units using a combination of a future discounted cash flow valuation model and a comparable market transaction model. If the estimated fair value of the reporting unit is less than its carrying amount, an impairment loss calculation is prepared. The impairment loss calculation compares the implied fair value of a reporting unit’s goodwill with the carrying amount of its goodwill. If the carrying amount of the goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to the excess. During the third quarter of 2015, the Company performed its required annual goodwill impairment tests. The Company concluded there were no goodwill impairments as of the testing date. Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31, 2015 and 2014:
(1) “Other” represents immaterial purchase accounting adjustments for acquisitions. Indefinitely-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its carrying value. The Company estimates the fair value of its indefinitely-lived trademark using the relief from royalty method under the income approach. If the carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized and the asset is written down to its estimated fair value. During the 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. The Company amortizes intangible assets with finite lives over the estimated useful lives of the respective assets, which have a weighted average useful life of 15.5 years. The weighted average useful lives of the Company’s customer contracts and relationships and covenants not to compete are 15.5 years. The weighted average lives of the Company’s favorable leases and other intangible assets are 15.6 years. Amortization expense for intangible assets totaled $611 million, $518 million and $494 million in 2015, 2014 and 2013, respectively. The anticipated annual amortization expense for these intangible assets for the next five years is as follows:
The following table is a summary of the Company’s intangible assets as of December 31:
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Share Repurchase Programs |
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Payments for Repurchase of Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchase Programs | Share Repurchase Programs The following share repurchase programs were authorized by the Company’s Board of Directors:
The share Repurchase Programs, each of which was effective immediately, permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions. The 2014 Repurchase Program may be modified or terminated by the Board of Directors at any time. The 2013 and 2012 Repurchase Programs have been completed, as described below. Pursuant to the authorization 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 80% of the $725 million notional amount of the ASR or approximately 6.2 million shares. At the conclusion of the ASR program, the Company may receive additional shares equal to the remaining 20% of the $725 million notional amount. The initial 6.2 million shares of common stock delivered to the Company by Barclays were placed into treasury stock in December 2015. The ASR was accounted for as an initial treasury stock transaction for $580 million and a forward contract for $145 million. The forward contract was classified as an equity instrument and was recorded within capital surplus on the consolidated balance sheet. On January 28, 2016, the Company received 1.4 million shares of common stock, representing the remaining 20% of the $725 million notional amount of the ASR, thereby concluding the ASR. The remaining 1.4 million shares of common stock delivered to the Company by Barclays were placed into treasury stock in January 2016 and the forward contract was reclassified from capital surplus to treasury stock. Pursuant to the authorization under 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 to 80% of the $2.0 billion notional amount of the ASR agreement or approximately 16.8 million shares, which were placed into treasury stock in January 2015. On May 1, 2015, the Company received approximately 3.1 million shares of common stock, representing the remaining 20% of the $2.0 billion notional amount of the ASR, thereby concluding the ASR. The remaining 3.1 million shares of common stock delivered to the Company by JP Morgan were placed into treasury stock in May 2015. The ASR was accounted for as an initial treasury stock transaction for $1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was initially recorded within capital surplus on the consolidated balance sheet and was reclassified to treasury stock upon the settlement of the ASR in May 2015. Pursuant to the authorization under the 2012 Repurchase Program, effective October 1, 2013, the Company entered into a $1.7 billion fixed dollar ASR agreement with Barclays. Upon payment of the $1.7 billion purchase price on October 1, 2013, the Company received a number of shares of its common stock equal to 50% of the $1.7 billion notional amount of the ASR agreement or approximately 14.9 million shares at a price of $56.88 per share. The Company received approximately 11.7 million shares of common stock on December 30, 2013 at an average price of $63.83 per share, representing the remaining 50% of the $1.7 billion notional amount of the ASR agreement and thereby concluding the agreement. The total of 26.6 million shares of common stock delivered to the Company by Barclays over the term of the October 2013 ASR agreement were placed into treasury stock. The ASR was accounted for as an initial treasury stock transaction and a forward contract. The forward contract was classified as an equity instrument. Each of the ASR transactions described above, the initial repurchase of the shares and delivery of the remainder of the shares to conclude each ASR, resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. During the year ended December 31, 2015, the Company repurchased an aggregate of 48.0 million shares of common stock for approximately $5.0 billion under the 2013 and 2014 Repurchase Programs. As of December 31, 2015, there remained an aggregate of approximately $7.7 billion available for future repurchases under the 2014 Repurchase Program and the 2013 Repurchase Program was complete. During the year ended December 31, 2014, the Company repurchased an aggregate of 51.4 million shares of common stock for approximately $4.0 billion under the 2013 and 2012 Repurchase Programs. As of December 31, 2014, there remained an aggregate of approximately $12.7 billion available for future repurchases under the 2014 and 2013 Repurchase Programs. As of December 31, 2014, the 2012 Repurchase Program was complete. During the year ended December 31, 2013, the Company repurchased an aggregate of 66.2 million shares of common stock for approximately $4.0 billion under the 2012 Repurchase Program, which includes shares received from the October 2013 ASR agreement described above. As of December 31, 2013, there remained an aggregate of approximately $6.7 billion available for future repurchases under the 2013 and 2012 Repurchase Programs. |
Borrowing and Credit Agreements |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowing and Credit Agreements | Borrowings and Credit Agreements The following table is a summary of the Company’s borrowings as of December 31:
The Company did not have any commercial paper outstanding 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, and a $1.25 billion, five-year unsecured back-up credit facility, which expires on July 1, 2020. The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage. As of December 31, 2015, there were no borrowings outstanding under the back-up credit facilities. The weighted average interest rate for short-term debt outstanding as of December 31, 2014 was 0.36%. On May 20, 2015, in connection with the acquisition of Omnicare, the Company entered into a $13 billion unsecured bridge loan facility. The Company paid approximately $52 million in fees in connection with the facility. The fees were capitalized and amortized as interest expense over the period the bridge facility was outstanding. The bridge loan facility expired on July 20, 2015 upon the Company’s issuance of unsecured senior notes with an aggregate principal of $15 billion as discussed below. The bridge loan facility fees became fully amortized in July 2015. On July 20, 2015, the Company issued an aggregate of $2.25 billion of 1.9% unsecured senior notes due 2018 (“2018 Notes”), an aggregate of $2.75 billion of 2.8% unsecured senior notes due 2020 (“2020 Notes”), an aggregate of $1.5 billion of 3.5% unsecured senior notes due 2022 (“2022 Notes”), an aggregate of $3 billion of 3.875% unsecured senior notes due 2025 (“2025 Notes”), an aggregate of $2 billion of 4.875% unsecured senior notes due 2035 (“2035 Notes”), and an aggregate of $3.5 billion of 5.125% unsecured senior notes due 2045 (“2045 Notes” and, together with the 2018 Notes, 2020 Notes, 2022 Notes, 2025 Notes and 2035 Notes, the “Notes”) for total proceeds of approximately $14.8 billion, net of discounts and underwriting fees. The Notes pay interest semi-annually and contain redemption terms which allow or require the Company to redeem the Notes at a defined redemption price plus accrued and unpaid interest at the redemption date. The net proceeds of the Notes were used to fund the Omnicare acquisition and 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 of which was previously convertible into Omnicare shares that holders were able to redeem subsequent to the acquisition. During the period from August 18, 2015 to December 31, 2015, all but $5 million of the $2.0 billion of previously convertible debt was redeemed and repaid and approximately $0.4 billion in Omnicare term debt assumed was repaid for total repayments of Omnicare debt of approximately $2.4 billion in 2015. The remaining principal of the Omnicare debt assumed was comprised of senior unsecured notes with an aggregate principal amount of $700 million ($400 million of 4.75% senior notes due 2022 and $300 million of 5% senior notes due 2024). In September 2015, the Company commenced exchange offers for the 4.75% senior notes due 2022 and the 5% senior notes due 2024 to exchange all validly tendered and accepted notes issued by Omnicare for notes to be issued by the Company. This offer expired on October 20, 2015 and the aggregate principal amounts below of each of the Omnicare notes were validly tendered and exchanged for notes issued by the Company.
The Company recorded this exchange transaction as a modification of the original debt instruments. As such, no gain or loss on extinguishment was recognized in the Company's consolidated income statement as a result of this exchange transaction and issuance costs were expensed as incurred. On August 7, 2014, the Company issued $850 million of 2.25% unsecured senior notes due August 12, 2019 and $650 million of 3.375% unsecured senior notes due August 12, 2024 (collectively, the “2014 Notes”) for total proceeds of approximately $1.5 billion, net of discounts and underwriting fees. The 2014 Notes pay interest semi-annually and may be redeemed, in whole at any time, or in part from time to time, at the Company’s option at a defined redemption price plus accrued and unpaid interest to the redemption date. The net proceeds of the 2014 Notes were used for general corporate purposes and to repay certain corporate debt. On August 7, 2014, the Company announced tender offers for any and all of the 6.25% Senior Notes due 2027, and up to a maximum amount of the 6.125% Senior Notes due 2039, the 5.75% Senior Notes due 2041 and the 5.75% Senior Notes due 2017, for up to an aggregate principal amount of $1.5 billion. On August 21, 2014, the Company increased the aggregate principal amount of the tender offers to $2.0 billion and completed the repurchase for the maximum amount on September 4, 2014. The Company paid a premium of $490 million in excess of the debt principal in connection with the tender offers, wrote off $26 million of unamortized deferred financing costs and incurred $5 million in fees, for a total loss on the early extinguishment of debt of $521 million. The loss was recorded in income from continuing operations on the consolidated statement of income for the year ended December 31, 2014. During the year ended December 31, 2014, the Company repurchased the remaining $41 million of outstanding Enhanced Capital Advantage Preferred Securities (“ECAPS”) at par. The fees and write-off of deferred issuance costs associated with the early extinguishment of the ECAPS were immaterial. On December 2, 2013, the Company issued $750 million of 1.2% unsecured senior notes due December 5, 2016; $1.25 billion of 2.25% unsecured senior notes due December 5, 2018; $1.25 billion of 4.0% unsecured senior notes due December 5, 2023; and $750 million of 5.3% unsecured senior notes due December 5, 2043 (the “2013 Notes”) for total proceeds of approximately $4.0 billion, net of discounts and underwriting fees. The 2013 Notes pay interest semi-annually and may be redeemed, in whole at any time, or in part from time to time, at the Company’s option at a defined redemption 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, back-up credit facilities and unsecured senior notes contain customary restrictive financial and operating covenants. The covenants do not materially affect the Company’s financial or operating flexibility. The following is a summary of the Company's required principal debt repayments, excluding unamortized debt discounts, deferred financing costs and debt premiums, due during each of the next five years and thereafter, as of December 31, 2015:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases 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 and other assets under noncancelable operating leases, typically with initial terms of 3 to 10 years. In December 2015, in connection with the acquisition of the pharmacy and clinic businesses of Target, the Company entered into lease agreements with Target for the pharmacy and clinic space within Target stores. Given that the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings being leased, the Company concluded for accounting purposes that the lease term was the remaining economic life of the buildings. Consequently, most of the individual pharmacy leases are capital leases. Approximately $0.3 billion of capital lease obligations were recorded in connection with this transaction. Minimum rent on operating leases is expensed on a straight-line basis over the term of the lease. In addition to minimum rental payments, certain leases require additional payments based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance, which are expensed when incurred. The following table is a summary of the Company’s net rental expense for operating leases for the years ended December 31:
The following table is a summary of the future minimum lease payments under capital and operating leases as of December 31, 2015:
The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the above table. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Proceeds from sale-leaseback transactions totaled $411 million in 2015, $515 million in 2014 and $600 million in 2013. |
Medicare Part D |
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Receivables [Abstract] | |
Medicare Part D | Medicare Part D The Company offers Medicare Part D benefits through SilverScript, which has contracted with CMS to be a PDP and, pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, must be a risk-bearing entity regulated under state insurance laws or similar statutes. SilverScript is a licensed domestic insurance company under the applicable laws and regulations. Pursuant to these laws and regulations, SilverScript must file quarterly and annual reports with the National Association of Insurance Commissioners (“NAIC”) and certain state regulators, must maintain certain minimum amounts of capital and surplus under a formula established by the NAIC and must, in certain circumstances, request and receive the approval of certain state regulators before making dividend payments or other capital distributions to the Company. The Company does not 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. Significant estimates arising from its participation in this program include: (i) estimates of low-income cost subsidy, reinsurance amounts, and coverage gap discount amounts ultimately payable to or receivable from CMS based on a detailed claims reconciliation that will occur in the following year; (ii) an estimate of amounts receivable from or payable to CMS under a risk-sharing feature of the Medicare Part D program design, referred to as the risk corridor and (iii) estimates for claims that have been reported and are in the process of being paid or contested and for our estimate of claims that have been incurred but have not yet been reported. As of December 31, 2015 and 2014, amounts due from CMS included in accounts receivable were $1.6 billion and $1.8 billion, respectively. |
Pension Plans and Other Postretirement Benefits |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans and Other Postretirement Benefits | ension Plans and Other Postretirement Benefits Defined Contribution Plans The Company sponsors voluntary 401(k) savings plans that cover all employees who meet plan eligibility requirements. The Company makes matching contributions consistent with the provisions of the plans. At the participant’s option, account balances, including the Company’s matching contribution, can be transferred without restriction among various investment options, including the Company’s common stock fund under one of the defined contribution plans. The Company also maintains a nonqualified, unfunded Deferred Compensation Plan for certain key employees. This plan provides participants the opportunity to defer portions of their eligible compensation and receive matching contributions equivalent to what they could have received under the CVS Health 401(k) Plan absent certain restrictions and limitations under the Internal Revenue Code. The Company’s contributions under the above defined contribution plans were $251 million, $238 million and $235 million in 2015, 2014 and 2013, respectively. Defined Benefit Pension Plans As of December 31, 2015, the Company sponsored seven defined benefit pension plans. Two of the plans are tax-qualified plans that are funded based on actuarial calculations and applicable federal laws and regulations. The other five plans are unfunded nonqualified supplemental retirement plans. As of December 31, 2014 and 2013, the Company sponsored nine defined benefit pension plans. Four of the plans were tax-qualified plans and the other five plans were unfunded nonqualified supplemental retirement plans. Most of the plans were frozen in prior periods. On September 30, 2015, the Company’s Board of Directors approved a resolution to merge the four tax-qualified defined benefit plans that existed in 2014 and terminate the resulting merged plan. The merger was effective September 30, 2015 and the merged plan termination was effective December 31, 2015. It is expected to take approximately 18 to 24 months to complete the settlement of the terminated plan from the date of the approved resolution. The assumptions used to calculate the pension liability as of December 31, 2015 reflect the resolution to terminate the merged plan. This resulted in the pension liability and pre-tax accumulated other comprehensive income both increasing by $67 million during the three months ended December 31, 2015. The pension liability will be settled in either lump sum payments or purchased annuities. Currently, there is not enough information available to determine the ultimate cost of the termination; however, based on current market rates the one-time settlement charge at final liquidation is estimated to be in the range of approximately $175 million to $250 million. The following tables outline the change in benefit obligations and plan assets over the comparable periods:
The components of net periodic benefit costs for the years ended December 31, 2015, 2014 and 2013 are shown below:
Pension Plan Assumptions The Company uses a series of actuarial assumptions to determine the benefit obligations and the net benefit costs. The discount rate is determined by examining the current yields observed on the measurement date of fixed-interest, high quality investments expected to be available during the period to maturity of the related benefits on a plan by plan basis. The discount rate for the merged qualified plan that has been terminated is determined by examining the current assumed lump sum and annuity 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. These increases are determined by an actuarial analysis of the plan participants, their expected compensation increases, and the duration of their earnings period until retirement. Each of these assumptions are reviewed as plan characteristics change and on an annual basis with input from senior pension and financial executives and the Company’s external actuarial consultants. The discount rate for determining plan benefit obligations was 4.25% for all plans except the merged qualified plan in 2015 and 4% for all plans in 2014. The discount rate for the merged qualified plan was 3.25% in 2015. The expected long-term rate of return for the plans ranged from 5.75% to 6.75% in 2015 and ranged from 5.75% to 7.25% in 2014. The rate of compensation increases for certain of the plans with active participants ranged from 4% to 6% in 2015 and 2014. Return on Plan Assets Historically, the Company used an investment strategy which emphasized equities in order to produce higher expected returns, and in the long run, lower expected expense and cash contribution requirements. Beginning in 2013, the Company changed its investment strategy to be liability management driven. The qualified pension plan asset allocation targets in 2014 and 2013 were revised to hold more fixed income investments based on the change in the investment strategy. As of December 31, 2015, investment allocations for the two qualified defined benefit plans range from 80% to 100% in fixed income and 0% to 20% in equities. The following tables show the fair value allocation of plan assets by asset category as of December 31, 2015 and 2014.
As of December 31, 2015, the Company’s qualified defined benefit pension plan assets consisted of 19% equity, 80% fixed income and 2% money market securities of which 21% were classified as Level 1 and 79% as Level 2 in the fair value hierarchy. The Company’s qualified defined benefit pension plan assets as of December 31, 2014 consisted of 18% equity, 81% fixed income and 1% money market securities of which 14% were classified as Level 1 and 86% as Level 2 in the fair value hierarchy. The Company continued to have no investments in Level 3 alternative investments during the years ended December 31, 2015 and 2014. Cash Flows The Company contributed $22 million, $42 million and $33 million to the pension plans during 2015, 2014 and 2013, respectively. The Company plans to make approximately $37 million in contributions to the pension plans during 2016. These contributions include contributions made to certain nonqualified benefit plans for which there is no funding requirement. The Company estimates the following future benefit payments which are calculated using the same actuarial assumptions used to measure the benefit obligation as of December 31, 2015:
(1) Excludes any payments associated with the ultimate settlement of the terminated plan discussed above. Multiemployer Pension Plans The Company also contributes to a number of multiemployer pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer pension plans in the following aspects: (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers, and (iii) if the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. None of the multiemployer pension plans in which the Company participates are individually significant to the Company. Total Company contributions to multiemployer pension plans were $14 million in 2015 and 2014 and $13 million in 2013. Other Postretirement Benefits The Company provides postretirement health care and life insurance benefits to certain retirees who meet eligibility requirements. The Company’s funding policy is generally to pay covered expenses as they are incurred. For retiree medical plan accounting, the Company reviews external data and its own historical trends for health care costs to determine the health care cost trend rates. As of December 31, 2015 and 2014, the Company’s other postretirement benefits have an accumulated postretirement benefit obligation of $33 million and $31 million, respectively. Net periodic benefit costs related to these other postretirement benefits were $2 million in 2015, $1 million in 2014, and $11 million in 2013. The net periodic 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 benefits to certain employees who meet eligibility requirements. Total Company contributions to multiemployer health and welfare plans were $60 million, $58 million and $55 million in 2015, 2014 and 2013, respectively. |
Stock Incentive Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | Stock Incentive Plans Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period of the stock award (generally three to five years) using the straight-line method. Compensation expense related to stock options, which includes the Employee Stock Purchase Plan (the “ESPP”) totaled $90 million, $103 million and $100 million for 2015, 2014 and 2013, respectively. The recognized tax benefit was $26 million, $33 million and $32 million for 2015, 2014 and 2013, respectively. Compensation expense related to restricted stock awards totaled $140 million, $62 million and $41 million for 2015, 2014 and 2013, respectively. Stock-based compensation for the year ended December 31,2015 includes $38 million associated with accelerated vesting of restricted stock replacement awards issued to Omnicare executives who were terminated subsequent to the acquisition. The ESPP provides for the purchase of up to 15 million shares of common stock. In March 2013, the Board of Directors approved an amendment to the ESPP to provide an additional 15 million shares of common stock for issuance. Under the ESPP, eligible employees may purchase common stock at the end of each six month offering period at a purchase price equal to 85% of the lower of the fair market value on the first day or the last day of the offering period. During 2015, approximately 1 million shares of common stock were purchased under the provisions of the ESPP at an average price of $72.21 per share. As of December 31, 2015, approximately 14 million shares of common stock were available for issuance under the ESPP. The fair value of stock-based compensation associated with the ESPP is estimated on the date of grant (the first day of the six month offering period) using the Black-Scholes Option Pricing Model. The following table is a summary of the assumptions used to value the ESPP awards for each of the respective periods:
The terms of the Company’s 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, other awards or other property, at the discretion of the Management Planning and Development Committee of the Company’s Board of Directors. The ICP allows for a maximum of 74 million shares to be reserved and available for grants. The ICP is the only compensation plan under which the Company grants stock options, restricted stock and other stock-based awards to its employees, with the exception of the Company’s ESPP. In November 2012, the Company’s Board of Directors approved an amendment to the ICP to eliminate the share recycling provision of the ICP. As of December 31, 2015, there were approximately 24 million shares available for future grants under the ICP. The Company’s restricted awards are considered nonvested share awards and require no payment from the employee. Compensation cost is recorded based on the market price of the Company’s common stock on the grant date and is recognized on a straight-line basis over the requisite service period. The Company granted 2,695,000, 2,708,000 and 1,715,000 restricted stock units with a weighted average fair value of $100.81, $73.60 and $54.30 in 2015, 2014 and 2013, respectively. As of December 31, 2015, there was $268 million of total unrecognized compensation cost related to the restricted stock units that are expected to vest. These costs are expected to be recognized over a weighted-average period of 2.61 years. The total fair value of restricted shares vested during 2015, 2014 and 2013 was $164 million, $57 million and $41 million, respectively. The following table is a summary of the restricted stock unit and restricted share award activity for the year ended December 31, 2015.
All grants under the ICP are awarded at fair value on the date of grant. The fair value of stock options is estimated using the Black-Scholes Option Pricing Model and stock-based compensation is recognized on a straight-line basis over the requisite service period. Stock options granted generally become exercisable over a four-year period from the grant date. Stock options generally expire seven years after the grant date. Excess tax benefits of $127 million, $106 million and $62 million were included in financing activities in the accompanying consolidated statements of cash flow during 2015, 2014 and 2013, respectively. Cash received from stock options exercised, which includes the ESPP, totaled $299 million, $421 million and $500 million during 2015, 2014 and 2013, respectively. The total intrinsic value of stock options exercised was $394 million, $372 million and $282 million in 2015, 2014 and 2013, respectively. The total fair value of stock options vested during 2015, 2014 and 2013 was $334 million, $292 million 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:
As of December 31, 2015, unrecognized compensation expense related to unvested options totaled $91 million, which the Company expects to be recognized over a weighted-average period of 1.72 years. After considering anticipated forfeitures, the Company expects approximately 12 million of the unvested stock options to vest over the requisite service period. The following table is a summary of the Company’s stock option activity for the year ended December 31, 2015:
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The income tax provision for continuing operations consisted of the following for the years ended December 31:
The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31:
The following table is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31:
Net deferred tax assets (liabilities) are presented on the consolidated balance sheets as follows:
The Company assesses positive and negative evidence to determine whether it is more likely than not some portion of a deferred tax asset would not be realized. When it would not, a valuation allowance is established for such portion of a deferred tax asset. The Company's valuation allowance increased by $110 million in the current year, a majority of which relates to capital losses assumed in the Omnicare acquisition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
The Company and most of its subsidiaries are subject 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 with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the filing of their federal income tax. The IRS is currently examining the Company’s 2014 and 2015 consolidated U.S. federal income tax returns. The Company and its subsidiaries are also currently under income tax examinations by a number of state and local tax authorities. As of December 31, 2015, no examination has resulted in any proposed adjustments that would result in a material change to the Company’s results of operations, financial condition or liquidity. Substantially all material state and local income tax matters have been concluded for fiscal years through 2010. Although certain state exams will be concluded and certain state statutes will lapse in 2016, the change in the balance of our uncertain tax positions will be immaterial. In addition, it is reasonably possible that the Company’s unrecognized tax benefits could significantly change within the next twelve months due to the anticipated conclusion of various examinations with the IRS for various years. An estimate of the range of the possible change cannot be made at this time. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. The Company recognized interest of approximately $5 million during the year ended December 31, 2015, $6 million during the year ended December 31, 2014, and $4 million during the year ended December 31, 2013. The Company had approximately $16 million and $11 million accrued for interest and penalties as of December 31, 2015 and 2014, respectively. There are no material uncertain tax positions as of December 31, 2015 the ultimate deductibility of which is highly certain but for which there is uncertainty about the timing. If there were, any such items would impact deferred tax accounting only, not the annual effective income tax rate, and would accelerate the payment of cash to the taxing authority to a period earlier than expected. As of December 31, 2015, the total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is approximately $292 million, after considering the federal benefit of state income taxes. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Lease Guarantees Between 1991 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores, Linens ‘n Things, Marshalls, Kay-Bee Toys, Wilsons, This End Up and Footstar. In many cases, when a former subsidiary leased a store, the Company provided a guarantee of the store’s lease obligations. When the subsidiaries were disposed of, the Company’s guarantees remained in place, although each initial purchaser has agreed to indemnify the Company for any lease obligations the Company was required to satisfy. If any of the purchasers or any of the former subsidiaries were to become insolvent and failed to make the required payments under a store lease, the Company could be required to satisfy these obligations. As of December 31, 2015, the Company guaranteed approximately 72 such store leases (excluding the lease guarantees related to Linens ‘n Things, which are discussed in Note 1), with the maximum remaining lease term extending through 2026. Management believes the ultimate disposition of any of the remaining guarantees will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or future cash flows. Legal Matters The Company is a party to legal proceedings, investigations and claims in the ordinary course of its business, including the matters described below. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. None of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial position. The Company’s contingencies are subject to significant uncertainties, including, among other factors: (i) the procedural status of pending matters; (ii) whether class action status is sought and certified; (iii) whether asserted claims or allegations will survive dispositive motion practice; (iv) the extent of potential damages, fines or penalties, which are often unspecified or indeterminate; (v) the impact of discovery on the legal process; (vi) whether novel or unsettled legal theories are at issue; (vii) the settlement posture of the parties, and/or (viii) in the case of certain government agency investigations, whether a sealed qui tam lawsuit (“whistleblower” action) has been filed and whether the government agency makes a decision to intervene in the lawsuit following investigation. Except as otherwise noted, the Company cannot predict with certainty the timing or outcome of the legal matters described below, and is unable to reasonably estimate a possible loss or range of possible loss in excess of amounts already accrued for these matters.
In August 2006, the Judicial Panel on Multidistrict Litigation issued an order transferring all related PBM antitrust cases, including the North Jackson Pharmacy cases, to the United States District Court for the Eastern District of Pennsylvania for coordinated and consolidated proceedings with the cases originally filed in that court, including the Bellevue matter. The consolidated action is now known as In re Pharmacy Benefit Managers Antitrust Litigation. A motion for class certification filed by the North Jackson Pharmacy plaintiffs against the Caremark defendants in August 2015 is currently pending. In the Bellevue matter, the parties are in the early stages of discovery.
The Company is also a party to other legal proceedings, government investigations, inquiries and audits arising in the normal course of its business, none of which is expected to be material to the Company. The Company can give no assurance, however, that its business, financial condition and results of operations will not be materially adversely affected, or that the Company will not be required to materially change its business practices, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations as they may relate to the Company’s business, the pharmacy services, retail pharmacy, long-term care pharmacy or retail clinic industries or to the health care industry generally; (iii) pending or future federal or state governmental investigations of the Company’s business or the pharmacy services, retail pharmacy, long-term care pharmacy or retail clinic industry or of the health care industry generally; (iv) pending or future government enforcement actions against the Company; (v) adverse developments in any pending qui tam lawsuit against the Company, whether sealed or unsealed, or in any future qui tam lawsuit that may be filed against the Company; or (vi) adverse developments in pending or future legal proceedings against the Company or affecting the pharmacy services, retail pharmacy, long-term care pharmacy or retail clinic industry or the health care industry generally. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting The Company currently has three reportable segments: Pharmacy Services, Retail/LTC and Corporate. The Retail/LTC Segment includes the operating results of the Company's Retail Pharmacy and LTC operating segments as the operations and economics characteristics are similar. The Company's segments maintain separate financial information for which operating results are evaluated on a regular basis by the Company's chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company evaluates its Pharmacy Services and Retail/LTC segment performance based on net revenue, gross profit and operating profit before the effect of nonrecurring charges and certain intersegment activities. The Company evaluates the performance of its Corporate Segment based on operating expenses before the effect of discontinued operations, nonrecurring charges, and certain intersegment activities. See Note 1 for a description of the Pharmacy Services, Retail/LTC 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:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following is a reconciliation of basic and diluted earnings per share from continuing operations for the respective years:
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Quarterly Financial Information (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited)
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of consolidation - The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated. The Company continually evaluates its investments to determine if they represent variable interests in a VIE. If the Company determines that it has a variable interest in a VIE, the Company then evaluates if it is the primary beneficiary of the VIE. The evaluation is a qualitative assessment as to whether the Company has the ability to direct the activities of a VIE that most significantly impact the entity’s economic performance. The Company consolidates a VIE if it is considered to be the primary beneficiary. Assets and liabilities of VIEs for which the Company is the primary beneficiary were not significant to the Company’s consolidated financial statements. VIE creditors do not have recourse against the general credit of the Company. |
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Use of Estimates | Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates |
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Fair Value Hierarchy | Fair value hierarchy - The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:
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Cash and Cash Equivalents | Cash and cash equivalents - Cash and cash equivalents consist of cash and temporary investments with maturities of three months or less when purchased. The Company invests in short-term money market funds, commercial paper and time deposits, as well as other debt securities that are classified as cash equivalents within the accompanying consolidated balance sheets, as these funds are highly liquid and readily convertible to known amounts of cash. These investments are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. |
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Short-term and Long-term Investments | Short-term investments - The Company’s short-term investments consist of certificates of deposit with initial maturities of greater than three months when purchased that mature in less than one year from the balance sheet date. These investments, which were classified as available-for-sale within Level 1 of the fair value hierarchy, were carried at fair value, which approximated their historical cost at December 31, 2015 and 2014. |
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Fair Value of Financial Instruments | Fair value of financial instruments - As of December 31, 2015, the Company’s financial instruments include cash and cash equivalents, short-term and long-term investments, accounts receivable, accounts payable, contingent consideration liability and short-term debt. Due to the nature of these instruments, the Company’s carrying value approximates fair value. The carrying amount and estimated fair value of total long-term debt was $27.5 billion and $28.4 billion, respectively, as of December 31, 2015. The fair value of the Company’s long-term debt was estimated based on quoted rates currently offered in active markets for the Company’s debt, which is considered Level 1 of the fair value hierarchy. |
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Foreign Currency Translation and Transactions | Foreign currency translation and transactions - For local currency functional currency, assets and liabilities are translated at end-of-period rates while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss). For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for non-monetary balance sheet accounts, which are remeasured at historical exchange rates. Revenue and expense are remeasured at average exchange rates in effect during each period, except for those expenses related to the nonmonetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in income. Gains and losses arising from foreign currency transactions and the effects of remeasurements were not material for all periods presented. |
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Accounts Receivable | Accounts receivable - Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from third party providers (e.g., 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. |
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Inventories | Inventories - All inventories are stated at the lower of cost or market. Prescription drug inventories in the RLS and PSS, as well as front store inventories in the RLS stores are accounted for using the weighted average 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 center and mail facility to ensure that the amounts reflected in the accompanying consolidated financial statements are properly stated. During the interim period between physical inventory counts, the Company accrues for anticipated physical inventory losses on a location-by-location basis based on historical results and current trends. |
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Property and Equipment | Property and equipment - Property, equipment and improvements to leased premises are depreciated using the straight-line method over the estimated useful lives of the assets, or when applicable, the term of the lease, whichever is shorter. Estimated useful lives generally range from 10 to 40 years for buildings, building improvements and leasehold improvements and 3 to 10 years for fixtures, equipment and internally developed software. Repair and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Application development stage costs for significant internally developed software projects are capitalized and depreciated. |
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Goodwill and Other Indefinitely-lived Assets | Goodwill and other indefinitely-lived assets - Goodwill and other indefinitely-lived assets are not amortized, but are subject to impairment reviews annually, or more frequently if necessary. |
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Intangible Assets | Intangible assets - Purchased customer contracts and relationships are amortized on a straight-line basis over their estimated useful lives between 9 and 20 years. Purchased customer lists are amortized on a straight-line basis over their estimated useful lives of up to 10 years. Purchased leases are amortized on a straight-line basis over the remaining life of the lease. See Note 4 for additional information about intangible assets. |
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Impairment of Long-lived Assets | Impairment of long-lived assets - The Company groups and evaluates fixed and finite-lived intangible assets for impairment at the lowest level at which individual cash flows can be identified, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted and without interest charges). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted and with interest charges). If required, an impairment loss is recorded for the portion of the asset group’s carrying value that exceeds the asset group’s estimated future cash flows (discounted and with interest charges). |
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Redeemable Noncontrolling Interest | Redeemable noncontrolling interest - As a result of the acquisition of Omnicare in August 2015, the Company obtained a 73% ownership interest in limited liability company (“LLC”). |
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Revenue Recognition | Revenue Recognition Pharmacy Services Segment - The PSS sells prescription drugs directly through its mail service dispensing pharmacies and indirectly through its retail pharmacy network. The PSS recognizes revenue from prescription drugs sold by its mail service dispensing pharmacies and under retail pharmacy network contracts where it is the principal using the gross method at the contract prices negotiated with its clients. Net revenues include: (i) the portion of the price the client pays directly to the PSS, 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 (“Retail Co-Payments”), and (iii) administrative fees for retail pharmacy network contracts where the PSS is not the principal as discussed below. Sales taxes are not included in revenue. Revenue is recognized when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. The following revenue recognition policies have been established for the PSS:
The PSS determines whether it is the principal or agent for its retail pharmacy network transactions on a contract by contract basis. In the majority of its contracts, the PSS has determined it is the principal due to it: (i) being the primary obligor in the arrangement, (ii) having latitude in establishing the price, changing the product or performing part of the service, (iii) having discretion in supplier selection, (iv) having involvement in the determination of product or service specifications, and (v) having credit risk. The PSS’ obligations under its client contracts for which revenues are reported using the gross method are separate and distinct from its obligations to the third party pharmacies included in its retail pharmacy network contracts. Pursuant to these contracts, the PSS is contractually required to pay the third party pharmacies in its retail pharmacy network for products sold, regardless of whether the PSS is paid by its clients. The PSS’ responsibilities under its client contracts typically include validating eligibility and coverage levels, communicating the prescription price and the co-payments due to the third party retail pharmacy, identifying possible adverse drug interactions for the pharmacist to address with the prescriber prior to dispensing, suggesting generic alternatives where clinically appropriate and approving the prescription for dispensing. Although the PSS does not have credit risk with respect to Retail Co-Payments or inventory risk related to retail network claims, management believes that all of the other applicable indicators of gross revenue reporting are present. For contracts under which the PSS acts as an agent, revenue is recognized using the net method. Drug Discounts - The PSS deducts from its revenues any rebates, inclusive of discounts and fees, earned by its clients. Rebates are paid to clients in accordance with the terms of client contracts, which are normally based on fixed rebates per prescription for specific products dispensed or a percentage of manufacturer discounts received for specific products dispensed. The liability for rebates due to 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 premiums earned by the PDP, which are determined based on the PDP’s annual bid and related contractual arrangements with the Centers for Medicare and Medicaid Services (“CMS”). The insurance premiums include a direct premium paid by CMS and a beneficiary premium, which is the responsibility of the PDP member, but which is subsidized by CMS in the case of low-income members. Premiums collected in advance are initially deferred in accrued expenses and are then recognized in net revenues over the period in which members are entitled to receive benefits. In addition to these premiums, net revenues include co-payments, coverage gap benefits, deductibles and co-insurance (collectively, the “Member Co-Payments”) related to PDP members’ actual prescription claims. In certain cases, CMS subsidizes a portion of these Member Co-Payments and pays the PSS an estimated prospective Member Co-Payment subsidy amount each month. The prospective Member Co-Payment subsidy amounts received from CMS are also included in net revenues. SilverScript assumes no risk for these amounts. If the prospective Member Co-Payment subsidies received differ from the amounts based on actual prescription claims, the difference is recorded in either accounts receivable or accrued expenses. The PSS accounts for CMS obligations and Member Co-Payments (including the amounts subsidized by CMS) using the gross method consistent with its revenue recognition policies for Mail Co-Payments and Retail Co-Payments (discussed previously in this document). Retail/LTC Segment Retail Pharmacy - The retail drugstores recognize revenue at the time the customer takes possession of the merchandise. Customer returns are not material. Revenue generated from the performance of services in the RLS’ health care clinics is recognized at the time the services are performed. Sales taxes are not included in revenue. Long-term Care - Revenue is recognized when products are delivered or services are rendered or provided to the customer, prices are fixed and determinable, and collection is reasonably assured. A significant portion of our revenues from sales 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. The Company monitors its revenues and receivables from these reimbursement sources, as well as other third party insurance payors, and record an estimated contractual allowance for sales and receivable balances at the revenue recognition date, to properly account for anticipated differences between billed and reimbursed amounts. Accordingly, the total net sales and receivables reported in the Company's consolidated financial statements are recorded at the amount expected to be ultimately received from these payors. Since billing functions for a portion of the Company's revenue systems are largely computerized, enabling on-line adjudication at the time of sale to record net revenues, the Company's exposure in connection with estimating contractual allowance adjustments is limited primarily to unbilled and initially rejected Medicare, Medicaid and third party claims (typically approved for reimbursement once additional information is provided to the payor). For the remaining portion of the Company's revenue systems, the contractual allowance is estimated for all billed, unbilled and initially rejected Medicare, Medicaid and third party claims. The Company evaluates several criteria in developing the estimated contractual allowances on a monthly basis, including historical trends based on actual claims paid, current contract and reimbursement terms, and changes in customer base and payor/product mix. Contractual allowance estimates are adjusted to actual amounts as cash is received and claims are settled, and the aggregate impact of these resulting adjustments was not significant to our results of operations for any of the periods presented. Patient co-payments associated with Medicare Part D, certain state Medicaid programs, Medicare Part B and certain third party payors are typically not collected at the time products are delivered or services are rendered, but are billed to the individuals as part of our normal billing procedures and subject to our normal accounts receivable collections procedures. Health Care Clinics - For services provided by our health care clinics, revenue recognition occurs for completed services provided to patients, with adjustments taken for third party payor contractual obligations and patient direct bill historical collection rates. Loyalty Program - The Company’s customer loyalty program, ExtraCare®, is comprised of two components, ExtraSavingsTM and ExtraBucks® Rewards. ExtraSavings coupons redeemed by customers are recorded as a reduction of revenues when redeemed. ExtraBucks Rewards are accrued as a charge to cost of revenues when earned, net of estimated breakage. The Company determines breakage based on historical redemption patterns. |
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Cost of Revenues | Cost of revenues Pharmacy Services Segment - The PSS’ cost of revenues includes: (i) the cost of prescription drugs sold during the reporting period directly through its mail service dispensing pharmacies and indirectly through its retail pharmacy network, (ii) shipping and handling costs, and (iii) the operating costs of its mail service dispensing pharmacies and client service operations and related information technology support costs including depreciation and amortization. The 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 (see “Vendor allowances and purchase discounts” below) and (ii) the cost of prescription drugs sold (including Retail Co-Payments) through the PSS’ retail pharmacy network under contracts where it is the principal, net of any volume-related or other discounts. Retail/LTC Segment - The RLS’ cost of revenues includes: the cost of merchandise sold during the reporting period and the related purchasing costs, warehousing and delivery costs (including depreciation and amortization) and actual and estimated inventory losses. |
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Vendor Allowances and Purchase Discounts | Vendor allowances and purchase discounts The Company accounts for vendor allowances and purchase discounts as follows: Pharmacy Services Segment - The PSS receives purchase discounts on products purchased. The PSS’ contractual arrangements with vendors, including manufacturers, wholesalers and retail pharmacies, normally provide for the PSS to receive purchase discounts from established list prices in one, or a combination, of the following forms: (i) a direct discount at the time of purchase, (ii) a discount for the prompt payment of invoices, or (iii) when products are purchased indirectly from a manufacturer (e.g., through a wholesaler or retail pharmacy), a discount (or rebate) paid subsequent to dispensing. These rebates are recognized when prescriptions are dispensed and are generally calculated and billed to manufacturers within 30 days of the end of each completed quarter. Historically, the effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the PSS’ results of operations. The PSS accounts for the effect of any such differences as a change in accounting estimate in the period the reconciliation is completed. The PSS also receives additional discounts under its wholesaler contracts if it exceeds contractually defined annual purchase volumes. In addition, the PSS receives fees from pharmaceutical manufacturers for administrative services. Purchase discounts and administrative service fees are recorded as a reduction of “Cost of revenues”. Retail/LTC Segment - Vendor allowances received by the RLS reduce the carrying cost of inventory and are recognized in cost of revenues when the related inventory is sold, unless they are specifically identified as a reimbursement of incremental costs for promotional programs and/or other services provided. Amounts that are directly linked to advertising commitments are recognized as a reduction of advertising expense (included in operating expenses) when the related advertising commitment is satisfied. Any such allowances received in excess of the actual cost incurred also reduce the carrying cost of inventory. The total value of any upfront payments received from vendors that are linked to purchase commitments is initially deferred. The deferred amounts are then amortized to reduce cost of revenues over the life of the contract based upon purchase volume. The total value of any upfront payments received from vendors that are not linked to purchase commitments is also initially deferred. The deferred amounts are then amortized to reduce cost of revenues on a straight-line basis over the life of the related contract. The total amortization of these upfront payments was not material to the accompanying consolidated financial statements. |
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Insurance | Insurance - The Company is self-insured for certain losses related to general liability, workers’ compensation and auto liability. The Company obtains third party insurance coverage to limit exposure from these claims. The Company is also self-insured for certain losses related 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. |
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Facility Opening and Closing Costs | Facility opening and closing costs - New facility opening costs, other than capital expenditures, are charged directly to expense when incurred. When the Company closes a facility, the present value of estimated unrecoverable costs, including the remaining lease obligation less estimated sublease income and the book value of abandoned property and equipment, are charged to expense. |
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Advertising Costs | Advertising costs - Advertising costs are expensed when the related advertising takes place. |
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Shares Held in Trust | Shares held in trust - The Company maintains grantor trusts, which held approximately 1 million shares of its common stock at December 31, 2015 and 2014, respectively. These shares are designated for use under various employee compensation plans. Since the Company holds these shares, they are excluded from the computation of basic and diluted shares outstanding. |
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Accumulated Other Comprehensive Loss | Accumulated other comprehensive income - Accumulated other comprehensive income (loss) consists of changes in the net actuarial gains and losses associated with pension and other postretirement benefit plans, losses on derivatives from cash flow hedges executed in previous years associated with the issuance of long-term debt, and foreign currency translation adjustments. |
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Stock-based Compensation | 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. |
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Variable Interest Entity | Variable Interest Entity - In July 2014, the Company and Cardinal Health, Inc. (“Cardinal”) established Red Oak Sourcing, LLC (“Red Oak”), a generic pharmaceutical sourcing entity in which the Company and Cardinal each own 50%. The Red Oak arrangement has an initial term of ten years. Under this arrangement, the Company and Cardinal contributed their sourcing and supply chain expertise to Red Oak and agreed to source and negotiate generic pharmaceutical supply contracts for both companies through Red Oak; however, Red Oak does not own or hold inventory on behalf of either company. No physical assets (e.g., property and equipment) were contributed to Red Oak by either company and minimal funding was provided to capitalize Red Oak. The Company has determined that it is the primary beneficiary of this variable interest entity because it has the ability to direct the activities of Red Oak. Consequently, the Company consolidates Red Oak in its consolidated financial statements within the Retail/LTC Segment. Cardinal is required to pay the Company 39 quarterly payments beginning in October 2014. As milestones are met, the quarterly payments increase. The Company received approximately $122 million and $26 million from Cardinal during the years ended December 31, 2015 and 2014, respectively. The payments reduce the Company’s carrying value of inventory and are recognized in cost of revenues when the related inventory is sold. |
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Related Party Transactions | Related party transactions - 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. The Company expensed fees of approximately $50 million in the years ended December 2015 and 2014, and $48 million in the year ended December 31, 2013, for the use of this network. The Company’s investment in and equity in earnings of SureScripts for all periods presented is immaterial. In connection with the acquisition of Omnicare in August 2015, the Company obtained an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several long-term care pharmacies in four states. Heartland paid the Company approximately $25 million for pharmaceutical inventory purchases during the period from August 18, 2015 to December 31, 2015. Additionally, the Company performs certain collection functions for Heartland and then passes those customer cash collections to Heartland. The Company’s investment in and equity in earnings of Heartland as of and for the year ended December 31, 2015 is immaterial. In September 2014, the Company made a charitable contribution of $25 million to the CVS Foundation (formerly CVS Caremark Charitable Trust, Inc.) (the “Foundation”) to fund future giving. The Foundation is a non-profit entity that focuses on health, education and community involvement programs. The charitable contribution was recorded as an operating expense in the consolidated statement of income for the year ended December 31, 2014. |
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Income Taxes | Income taxes - The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in the tax rates on deferred tax asset and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that it believes these assets are more likely than not to be realized in making such a determination. The Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. To the extent that the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. The Company records uncertain tax positions on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Interest and/or penalties related to uncertain tax positions are recognized in income tax expense. |
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Discontinued Operations | Discontinued Operations - In connection with certain business dispositions completed between 1991 and 1997, the Company retained guarantees on store lease obligations for a number of former subsidiaries, including Linens ‘n Things which filed for bankruptcy in 2008. The Company's income from discontinued operations in 2015 of $9 million, net of tax, was related to the release of certain store lease guarantees due to a settlement with a landlord. The Company’s loss from discontinued operations includes lease-related costs which the Company believes it will likely be required to satisfy pursuant to its Linens ‘n Things lease guarantees. |
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Earnings Per Common Share | Earnings per common share - Earnings per share is computed using the two-class method. Options to purchase 2.7 million, 2.1 million and 6.2 million shares of common stock were outstanding as of December 31, 2015, 2014 and 2013, respectively, but were not included in the calculation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. |
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New Accounting Pronouncement | New Accounting Pronouncement - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current 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 either a full retrospective or a modified retrospective approach to adopt the guidance. This update could impact the timing and amounts of revenue recognized. The Company is currently evaluating the effect that implementation of this update will have on its consolidated financial position and results of operations upon adoption, as well as the method of transition and required disclosures. In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835-30). ASU No. 2015-03 requires the presentation of debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of such costs are required to be reported as interest expense, which is consistent with the Company’s current policy. This change conforms the presentation of debt issuance costs with that of debt discounts. The ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015; early adoption is permitted. The guidance is required to be applied retrospectively to all prior periods. The Company has early adopted this standard as of June 30, 2015. The effect of the adoption of ASU 2015-03 on the Company’s consolidated balance sheet is a reduction of noncurrent assets and long-term debt of $65 million as of December 31, 2014. The following is a reconciliation of the effect of this reclassification on the Company’s consolidated balance sheet as of December 31, 2014:
In September 2015, the FASB issued ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments. ASU No. 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period after an acquisition within the reporting period they are determined. This is a change from the previous requirement that the adjustments be recorded retrospectively. The ASU also requires disclosure of the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the adjustment to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015; early adoption is permitted. The Company has early adopted the ASU as of September 30, 2015. The adoption did not have a material effect on the Company's consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740). ASU No. 2015-17 simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as non-current in the statement of financial position. This ASU may be applied either prospectively to all deferred tax assets and liabilities, or retrospectively to all periods presented for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The change will require additional disclosure based on the method of adoption. |
Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in allowance for doubtful trade accounts receivable | The activity in the allowance for doubtful accounts receivable for the years ended December 31 is as follows:
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Components of property and equipment | The following are the components of property and equipment at December 31:
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Reconciliation of the changes in the redeemable noncontrolling interest | Below is a summary of the changes in redeemable noncontrolling interest for the year ended December 31, 2015:
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Schedule of Accumulated Other Comprehensive Income (Loss) by Component | Changes in accumulated other comprehensive income (loss) by component are shown below:
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Discontinued Operations Results | Below is a summary of the results of discontinued operations for the years ended December 31:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following is a reconciliation of the effect of this reclassification on the Company’s consolidated balance sheet as of December 31, 2014:
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Acquisitions (Table) |
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Omnicare, Inc. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The fair value of the consideration transferred on the date of acquisition consisted of the following:
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
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Business Acquisition, Pro Forma Information |
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Target Pharmacy Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The estimated fair values of the assets acquired at the date of acquisition were approximately as follows:
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Goodwill and Other Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill by Segment | Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31, 2015 and 2014:
(1) “Other” represents immaterial purchase accounting adjustments for acquisitions. |
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Anticipated Annual Amortization for Intangible Assets | The anticipated annual amortization expense for these intangible assets for the next five years is as follows:
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Summary of the Company's intangible assets | The following table is a summary of the Company’s intangible assets as of December 31:
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Share Repurchase Programs Share Repurchase Programs (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share Repurchase Programs | The following share repurchase programs were authorized by the Company’s Board of Directors:
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Borrowing and Credit Agreements (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Company's borrowings |
The following table is a summary of the Company’s borrowings as of December 31:
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Schedule of Maturities of Long-term Debt | The following is a summary of the Company's required principal debt repayments, excluding unamortized debt discounts, deferred financing costs and debt premiums, due during each of the next five years and thereafter, as of December 31, 2015:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of net rental expense for operating leases | The following table is a summary of the Company’s net rental expense for operating leases for the years ended December 31:
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Summary of future minimum lease payments under capital and operating leases | The following table is a summary of the future minimum lease payments under capital and operating leases as of December 31, 2015:
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Pension Plans and Other Postretirement Benefits Pension Plans and Other Postretirement Benefits (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Projected Benefit Obligation | The following tables outline the change in benefit obligations and plan assets over the comparable periods:
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Schedule of Changes in Fair Value of Plan Assets |
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Schedule of Net Benefit Costs | The components of net periodic benefit costs for the years ended December 31, 2015, 2014 and 2013 are shown below:
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Schedule of Allocation of Plan Assets | The following tables show the fair value allocation of plan assets by asset category as of December 31, 2015 and 2014.
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Schedule of Expected Benefit Payments | The Company estimates the following future benefit payments which are calculated using the same actuarial assumptions used to measure the benefit obligation as of December 31, 2015:
(1) Excludes any payments associated with the ultimate settlement of the terminated plan discussed above. |
Stock Incentive Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the assumptions used to value the ESPP awards | The following table is a summary of the assumptions used to value the ESPP awards for each of the respective periods:
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Summary of the restricted stock unit and restricted share award activity | The following table is a summary of the restricted stock unit and restricted share award activity for the year ended December 31, 2015.
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Black-Scholes option pricing model, assumptions | 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:
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Summary of the Company's stock option activity | The following table is a summary of the Company’s stock option activity for the year ended December 31, 2015:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax provision for continuing operations | The income tax provision for continuing operations consisted of the following for the years ended December 31:
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Reconciliation of the statutory income tax rate to the Company's effective income tax rate for continuing operations | The following table is a reconciliation of the statutory income tax rate to the Company’s effective income tax rate for continuing operations for the years ended December 31:
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Summary of the significant components of the Company's deferred tax assets and liabilities | The following table is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31:
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Schedule of net deferred tax assets (liabilities) | Net deferred tax assets (liabilities) are presented on the consolidated balance sheets as follows:
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Reconciliation of the beginning and ending amount of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Company's business segments to the consolidated financial statements | The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:
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Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of basic and diluted earnings per common share | The following is a reconciliation of basic and diluted earnings per share from continuing operations for the respective years:
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Quarterly Financial Information (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) |
|
Significant Accounting Policies - Description of Business (Details) |
12 Months Ended | |
---|---|---|
Dec. 16, 2015
clinic
state
pharmacy
|
Dec. 31, 2015
clinic
Suite
state
Center
condition
Branch
segment
drugstore
pharmacy
|
|
Segment reporting information | ||
Number of reportable segments | segment | 3 | |
Pharmacy Services Segment | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 68,000 | |
Number of chain pharmacies | 41,000 | |
Number of independent pharmacies | 27,000 | |
Number of conditions for integrated disease management | condition | 17 | |
Centers of excellence for infusion and enteral services | Center | 6 | |
Number of states pharmacies operated | state | 40 | |
Pharmacy Services Segment | Specialty stores | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 24 | |
Pharmacy Services Segment | Specialty mail order | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 11 | |
Pharmacy Services Segment | Mail service | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 5 | |
Pharmacy Services Segment | Infusion and Enteral Branches | ||
Segment reporting information | ||
Number of infusion and enteral branches | Branch | 83 | |
Pharmacy Services Segment | Ambulatory Infusion Suites | ||
Segment reporting information | ||
Number of infusion and enteral branches | Suite | 73 | |
Retail/LTC Segment | ||
Segment reporting information | ||
Number of states pharmacies operated | state | 49 | |
Number of drugstores | 9,655 | |
Number of LTC spoke pharmacies | drugstore | 143 | |
Number of LTC hub pharmacies | drugstore | 32 | |
Retail/LTC Segment | MinuteClinic within CVS Pharmacy Stores | ||
Segment reporting information | ||
Number of drugstores | clinic | 1,049 | |
Retail/LTC Segment | MinuteClinic | ||
Segment reporting information | ||
Number of drugstores | clinic | 1,135 | |
Retail/LTC Segment | CVS/pharmacy | ||
Segment reporting information | ||
Number of drugstores | 7,897 | |
Target Pharmacy Acquisition | Retail/LTC Segment | ||
Segment reporting information | ||
Number of states pharmacies operated | state | 47 | |
Number of pharmacies acquired | 1,672 | |
Number of clinics acquired | clinic | 79 |
Significant Accounting Policies - Fair Value of Financial Instruments (Details) $ in Millions |
Dec. 31, 2015
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
Carrying amount of long-term debt | $ 27,500 |
Estimated fair value of long-term debt | 28,400 |
Fair value of outstanding letters of credit | $ 4 |
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning balance | $ 256 | $ 256 | $ 243 |
Additions charged to bad debt expense | 216 | 185 | 195 |
Write-offs charged to allowance | (311) | (185) | (182) |
Ending balance | $ 161 | $ 256 | $ 256 |
Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 21,036 | $ 18,786 | |
Accumulated depreciation and amortization | (11,181) | (9,943) | |
Property and equipment, net | 9,855 | 8,843 | |
Property and equipment under capital leases | 528 | 268 | |
Capital leases, accumulated depreciation | 97 | 86 | |
Depreciation expense | 1,500 | 1,400 | $ 1,400 |
Leasehold Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,015 | 3,626 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,635 | 1,506 | |
Building and Building Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,168 | 2,828 | |
Fixtures and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 10,001 | 8,958 | |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,217 | $ 1,868 | |
Minimum | Building | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years | ||
Minimum | Building Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years | ||
Minimum | Leasehold Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years | ||
Minimum | Furniture and Fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 3 years | ||
Minimum | Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 3 years | ||
Minimum | Software and Software Development Costs | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 3 years | ||
Maximum | Building | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 40 years | ||
Maximum | Building Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 40 years | ||
Maximum | Leasehold Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 40 years | ||
Maximum | Furniture and Fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years | ||
Maximum | Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years | ||
Maximum | Software and Software Development Costs | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful life (in years) | 10 years |
Significant Accounting Policies - Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Purchased Customer Contracts and Relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived intangible asset, useful life (in years) | 9 years |
Purchased Customer Contracts and Relationships | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived intangible asset, useful life (in years) | 20 years |
Customer Lists | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived intangible asset, useful life (in years) | 10 years |
Significant Accounting Policies - Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015 |
Aug. 31, 2015 |
Aug. 18, 2015 |
Dec. 31, 2014 |
|
Redeemable Noncontrolling Interest [Line Items] | ||||
Percentage of voting interests acquired | 100.00% | |||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | ||||
Net income attributable to noncontrolling interest | $ 1 | |||
Balance, December 31, 2015 | 7 | $ 5 | ||
NCRX | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Percentage of voting interests acquired | 73.00% | |||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | ||||
Acquisition of noncontrolling interest | 39 | |||
Net income attributable to noncontrolling interest | 1 | |||
Reclassification to capital surplus in connection with purchase of noncontrolling interest | (1) | |||
Balance, December 31, 2015 | $ 39 |
Significant Accounting Policies - Facility Opening, Advertising Costs, Interest Expense, and Shares Held in Trust (Details) - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accounting Policies [Abstract] | |||
Billing of rebates to manufacturers, period (in days) | 30 days | ||
Long-term portion of lease obligations associated with facility closings | $ 217 | $ 207 | |
Advertising costs, net of vendor funding | 221 | 212 | $ 177 |
Interest expense, net of capitalized interest | 859 | 615 | 517 |
Interest income | 21 | 15 | 8 |
Capitalized interest | $ 12 | $ 19 | $ 25 |
Shares held in employee trust (in shares) | 1 | 1 |
Significant Accounting Policies - Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
||||||
Accounting Policies [Abstract] | |||||||
AOCI related to pension and postretirement plans, pre-tax | $ 305 | $ 234 | |||||
AOCI related to pension and postretirement plans, after-tax | 186 | 143 | |||||
Net impact on cash flow hedges, pre-tax | 14 | 16 | |||||
Net impact on cash flow hedges, after-tax | 7 | 9 | |||||
Foreign currency translation adjustment, net of tax | 165 | 65 | |||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Stockholders' equity attributable to parent, beginning balance | 37,958 | ||||||
Stockholders' equity attributable to parent, ending balance | 37,196 | 37,958 | |||||
Foreign Currency | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Stockholders' equity attributable to parent, beginning balance | [1] | (65) | (30) | ||||
Other comprehensive income (loss) before reclassifications | [1] | (100) | (35) | ||||
Amounts reclassified from accumulated other comprehensive income | [1],[2] | 0 | 0 | ||||
Net other comprehensive income (loss) | [1] | (100) | (35) | ||||
Stockholders' equity attributable to parent, ending balance | [1] | (165) | (65) | ||||
Losses on Cash Flow Hedges | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Stockholders' equity attributable to parent, beginning balance | [1] | (9) | (13) | ||||
Other comprehensive income (loss) before reclassifications | [1] | 0 | 0 | ||||
Amounts reclassified from accumulated other comprehensive income | [1],[2] | 2 | 4 | ||||
Net other comprehensive income (loss) | [1] | 2 | 4 | ||||
Stockholders' equity attributable to parent, ending balance | [1] | (7) | (9) | ||||
Pension and Other Postretirement Benefits | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Stockholders' equity attributable to parent, beginning balance | [1] | (143) | (106) | ||||
Other comprehensive income (loss) before reclassifications | [1] | (56) | 0 | ||||
Amounts reclassified from accumulated other comprehensive income | [1],[2] | 13 | (37) | ||||
Net other comprehensive income (loss) | [1] | (43) | (37) | ||||
Stockholders' equity attributable to parent, ending balance | [1] | (186) | (143) | ||||
AOCI Attributable to Parent | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Stockholders' equity attributable to parent, beginning balance | [1] | (217) | (149) | ||||
Other comprehensive income (loss) before reclassifications | [1] | (156) | (35) | ||||
Amounts reclassified from accumulated other comprehensive income | [1],[2] | 15 | (33) | ||||
Net other comprehensive income (loss) | [1] | (141) | (68) | ||||
Stockholders' equity attributable to parent, ending balance | [1] | $ (358) | $ (217) | ||||
|
Significant Accounting Policies - Stock-based Compensation and Variable Interest Entity (Details) $ in Millions |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Jul. 31, 2014 |
Dec. 31, 2015
USD ($)
payment
|
Dec. 31, 2014
USD ($)
|
|
Variable Interest Entity, Primary Beneficiary | Terms of Generic Sourcing Venture | |||
Variable Interest Entity [Line Items] | |||
Ownership percentage by noncontrolling owners | 50.00% | ||
Ownership percentage by parent | 50.00% | ||
Initial contractual term | 10 years | ||
Number of quarterly payments due (in quarterly payments) | payment | 39 | ||
Increase in contractual obligation payment received | $ | $ 122 | $ 26 | |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period of the stock award (in years) | 3 years | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Requisite service period of the stock award (in years) | 5 years |
Significant Accounting Policies - Related Party Transactions (Details) $ in Millions |
1 Months Ended | 4 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2014
USD ($)
|
Dec. 31, 2015
USD ($)
state
|
Dec. 31, 2015
USD ($)
state
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Related Party Transaction [Line Items] | |||||
Expenses from transactions with related party | $ 50 | $ 50 | $ 48 | ||
Charitable contribution to the CVS foundation | $ 25 | ||||
Equity Method Investee | |||||
Related Party Transaction [Line Items] | |||||
Other revenues from transactions with related party | $ 25 | ||||
Heartland Healthcare Services | |||||
Related Party Transaction [Line Items] | |||||
Number of states in which entity operates | state | 4 | 4 |
Significant Accounting Policies - Discontinued Operations (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accounting Policies [Abstract] | |||||||||||
Income from discontinued operations | $ 15 | $ (1) | $ (12) | ||||||||
Income tax expense | (6) | 0 | 4 | ||||||||
Income (loss) from discontinued operations, net of tax | $ (1) | $ 10 | $ 0 | $ 0 | $ (1) | $ 0 | $ 0 | $ 0 | $ 9 | $ (1) | $ (8) |
Antidilutive securities excluded from computation of earnings per share | 2.7 | 2.1 | 6.2 |
Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other assets | $ 1,440 | $ 1,445 |
Total assets | 93,657 | 74,187 |
Total liabilities and shareholders’ equity | 93,657 | 74,187 |
Adjustments for New Accounting Principle, Early Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other assets | 1,445 | |
Total assets | 74,187 | |
Long-term debt | 11,630 | |
Total liabilities and shareholders’ equity | 74,187 | |
Adjustments for New Accounting Principle, Early Adoption | Scenario, Previously Reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other assets | 1,510 | |
Total assets | 74,252 | |
Long-term debt | 11,695 | |
Total liabilities and shareholders’ equity | 74,252 | |
Adjustments for New Accounting Principle, Early Adoption | Scenario, Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other assets | (65) | |
Total assets | (65) | |
Long-term debt | (65) | |
Total liabilities and shareholders’ equity | (65) | |
Deferred Tax Assets, Current | Pro Forma | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption, quantification | 1,200 | 1,000 |
Assets, Current | Pro Forma | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption, quantification | 1,200 | 1,000 |
Assets | Pro Forma | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption, quantification | 1,200 | 1,000 |
Liability | Pro Forma | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Effect of adoption, quantification | $ (1,200) | $ (1,000) |
Change in Accounting Principle (Details) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2015
USD ($)
$ / shares
|
Dec. 31, 2015
USD ($)
|
Jan. 01, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Percentage of consolidated inventories impacted by change in accounting principle | 0.36 | |||
Inventories | $ (14,001) | $ (11,930) | ||
Retained earnings | $ (35,506) | $ (31,849) | ||
Inventory Valuation Methodology Adjustment | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Inventories | $ 7 | |||
Deferred tax assets, net, current | 3 | |||
Retained earnings | $ 4 | |||
Effect of change on net income | $ 27 | |||
Inventory Valuation Methodology Adjustment | Continuing Operations | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Effect of change on diluted earnings per share (in dollars per share) | $ / shares | $ (0.02) | |||
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Basic Earnings Per Share | $ / shares | $ 0.02 |
Acquisitions - Omnicare Acquisition (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 18, 2015 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Business Acquisition [Line Items] | |||||||||||||||
Percentage of voting interests acquired | 100.00% | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Goodwill | $ 38,106 | $ 28,142 | $ 38,106 | $ 38,106 | $ 28,142 | $ 26,542 | |||||||||
Goodwill | 10,006 | 1,616 | |||||||||||||
Net revenues | 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | 37,055 | $ 35,021 | $ 34,602 | $ 32,689 | 153,290 | 139,367 | 126,761 | ||||
Net income | 5,239 | 4,644 | 4,592 | ||||||||||||
Business Acquisition, Pro Forma Information: | |||||||||||||||
Loss on early extinguishment of debt | 0 | 521 | 0 | ||||||||||||
Retail/LTC Segment | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Goodwill | 16,421 | 6,908 | 16,421 | 16,421 | 6,908 | 6,884 | |||||||||
Goodwill | 9,554 | 38 | |||||||||||||
Pharmacy Services Segment | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Goodwill | 21,685 | $ 21,234 | 21,685 | 21,685 | 21,234 | $ 19,658 | |||||||||
Goodwill | 452 | $ 1,578 | |||||||||||||
Omnicare, Inc. | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Business acquisition, share price (in dollars per share) | $ 98.00 | ||||||||||||||
Consideration transferred | $ 9,645 | ||||||||||||||
Consideration transferred, liabilities incurred | 3,100 | ||||||||||||||
Restricted stock awards issued, value | 80 | ||||||||||||||
Cash paid to Omnicare shareholders | 9,636 | ||||||||||||||
Fair value of replacement equity awards issued to Omnicare employees for precombination services | 9 | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Current assets (including cash of $298) | 1,657 | ||||||||||||||
Cash | 298 | ||||||||||||||
Property and equipment | 313 | ||||||||||||||
Goodwill | 9,090 | ||||||||||||||
Intangible assets | 3,962 | ||||||||||||||
Other noncurrent assets | 64 | ||||||||||||||
Current liabilities | (705) | ||||||||||||||
Long-term debt | (3,110) | ||||||||||||||
Deferred income tax liabilities | (1,518) | ||||||||||||||
Other noncurrent liabilities | (69) | ||||||||||||||
Redeemable noncontrolling interest | (39) | ||||||||||||||
Goodwill, expected tax deductible | $ 400 | ||||||||||||||
Weighted average useful life (in years) | 18 years 9 months | ||||||||||||||
Acquisition related costs | 70 | ||||||||||||||
Net revenues | 2,600 | ||||||||||||||
Net income | 61 | ||||||||||||||
Business Acquisition, Pro Forma Information: | |||||||||||||||
Total revenues | $ 156,798 | $ 144,836 | |||||||||||||
Income from continuing operations | $ 5,277 | $ 4,522 | |||||||||||||
Basic earnings per share from continuing operations (in dollars per share) | $ 4.70 | $ 3.88 | |||||||||||||
Diluted earnings per share from continuing operations (in dollars per share) | $ 4.66 | $ 3.85 | |||||||||||||
Restructuring costs | 135 | ||||||||||||||
Omnicare, Inc. | Restricted Stock | |||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||
Restricted stock awards issued (in shares) | 738,765 | ||||||||||||||
Omnicare, Inc. | Retail/LTC Segment | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Goodwill | $ 8,600 | ||||||||||||||
Omnicare, Inc. | Pharmacy Services Segment | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Goodwill | 500 | ||||||||||||||
Omnicare, Inc. | Customer Relationships | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Intangible assets | $ 3,900 | ||||||||||||||
Weighted average useful life (in years) | 19 years 1 month | ||||||||||||||
Omnicare, Inc. | Trade Names | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Intangible assets | $ 74 | ||||||||||||||
Weighted average useful life (in years) | 2 years 11 months | ||||||||||||||
Omnicare, Inc. | Trade Accounts Receivable | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Acquired receivables, fair value | 600 | 600 | 600 | ||||||||||||
Acquired receivables, gross contractual amount | 857 | 857 | 857 | ||||||||||||
Acquired receivables, estimated uncollectible | 257 | 257 | 257 | ||||||||||||
Omnicare, Inc. | Other Acquired Receivables | |||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | |||||||||||||||
Acquired receivables, fair value | 147 | 147 | 147 | ||||||||||||
Acquired receivables, gross contractual amount | 161 | 161 | 161 | ||||||||||||
Acquired receivables, estimated uncollectible | $ 14 | $ 14 | $ 14 |
Acquisitions - Target Pharmacy Acquisition (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 16, 2015
USD ($)
clinic
state
pharmacy
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
state
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Assets Acquired: | |||||
Goodwill | $ 38,106 | $ 28,142 | $ 26,542 | ||
Retail/LTC Segment | |||||
Business Acquisition [Line Items] | |||||
Number of states pharmacies operated | state | 49 | ||||
Assets Acquired: | |||||
Goodwill | $ 16,421 | $ 6,908 | $ 6,884 | ||
Target Pharmacy Acquisition | |||||
Business Acquisition [Line Items] | |||||
Consideration transferred | $ 1,900 | ||||
Contingent consideration, liability | $ 50 | ||||
Contingent consideration, liability term | 3 years | ||||
Assets Acquired: | |||||
Accounts receivable | $ 2 | ||||
Inventories | 472 | ||||
Property and equipment | 9 | ||||
Intangible assets | 490 | ||||
Goodwill | 916 | ||||
Total cash consideration | $ 1,889 | ||||
Acquisition related costs | $ 26 | ||||
Target Pharmacy Acquisition | Scenario, Forecast | |||||
Assets Acquired: | |||||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Inventory | $ 21 | ||||
Target Pharmacy Acquisition | Customer Relationships | |||||
Assets Acquired: | |||||
Finite-Lived intangible asset, useful life (in years) | 13 years | ||||
Target Pharmacy Acquisition | Retail/LTC Segment | |||||
Business Acquisition [Line Items] | |||||
Number of pharmacies acquired | pharmacy | 1,672 | ||||
Number of states pharmacies operated | state | 47 | ||||
Number of clinics acquired | clinic | 79 |
Acquisitions - Coram Acquisition (Details) Patient in Thousands, $ in Millions |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Jan. 16, 2014
USD ($)
|
Dec. 31, 2015
USD ($)
nurse
Dietitian
employee
Patient
Center
Branch
|
Dec. 31, 2015
USD ($)
nurse
Dietitian
employee
Patient
Center
Branch
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
Aug. 18, 2015 |
|
Business Acquisition [Line Items] | ||||||
Percentage of voting interests acquired | 100.00% | |||||
Payment made to seller | $ 58 | $ 0 | $ 0 | |||
Goodwill | $ 38,106 | $ 38,106 | 28,142 | $ 26,542 | ||
Coram LLC | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of voting interests acquired | 100.00% | |||||
Consideration transferred | $ 2,100 | |||||
Contingent consideration, liability | 100 | |||||
Working capital adjustment | 9 | |||||
Decrease in inventories | Patient | 240 | 240 | ||||
Net operating loss carryforwards to be paid to seller | $ 60 | |||||
Additional payments to seller for remaining net operating losses used | 50.00% | |||||
Change in amount of contingent consideration, liability | $ 4 | |||||
Payment made to seller | $ 58 | |||||
Goodwill | $ 1,600 | |||||
Acquisition related costs | $ 15 | |||||
Coram LLC | Branch location | ||||||
Business Acquisition [Line Items] | ||||||
Increase in net income | Branch | 83 | 83 | ||||
Coram LLC | Centers of Excellence | ||||||
Business Acquisition [Line Items] | ||||||
Increase in net income | Center | 6 | 6 | ||||
Coram LLC | Employee | ||||||
Business Acquisition [Line Items] | ||||||
Increase in current deferred income tax assets | employee | 4,600 | 4,600 | ||||
Coram LLC | Nurses | ||||||
Business Acquisition [Line Items] | ||||||
Increase in current deferred income tax assets | nurse | 600 | 600 | ||||
Coram LLC | Dietitians | ||||||
Business Acquisition [Line Items] | ||||||
Increase in current deferred income tax assets | Dietitian | 250 | 250 |
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
||||
Goodwill [Line Items] | ||||||
Goodwill, impairment loss | $ 0 | |||||
Goodwill [Roll Forward] | ||||||
Goodwill, beginning balance | $ 28,142,000,000 | $ 26,542,000,000 | ||||
Acquisitions | 10,006,000,000 | 1,616,000,000 | ||||
Foreign currency translation adjustments | (40,000,000) | (14,000,000) | ||||
Other | [1] | (2,000,000) | (2,000,000) | |||
Goodwill, ending balance | 38,106,000,000 | 28,142,000,000 | ||||
Pharmacy Services Segment | ||||||
Goodwill [Roll Forward] | ||||||
Goodwill, beginning balance | 21,234,000,000 | 19,658,000,000 | ||||
Acquisitions | 452,000,000 | 1,578,000,000 | ||||
Foreign currency translation adjustments | 0 | 0 | ||||
Other | [1] | (1,000,000) | (2,000,000) | |||
Goodwill, ending balance | 21,685,000,000 | 21,234,000,000 | ||||
Retail/LTC Segment | ||||||
Goodwill [Roll Forward] | ||||||
Goodwill, beginning balance | 6,908,000,000 | 6,884,000,000 | ||||
Acquisitions | 9,554,000,000 | 38,000,000 | ||||
Foreign currency translation adjustments | (40,000,000) | (14,000,000) | ||||
Other | [1] | (1,000,000) | 0 | |||
Goodwill, ending balance | $ 16,421,000,000 | $ 6,908,000,000 | ||||
|
Goodwill and Other Intangibles - Intangible Assets (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Intangible assets | ||||
Amortization expense related to finite-lived intangible assets | $ 611,000,000 | $ 518,000,000 | $ 494,000,000 | |
Anticipated annual amortization expenses | ||||
2016 | 760,000,000 | |||
2017 | 735,000,000 | |||
2018 | 705,000,000 | |||
2019 | 662,000,000 | |||
2020 | 490,000,000 | |||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross carrying amount | 18,587,000,000 | 13,799,000,000 | ||
Finite-lived intangible asset, accumulated amortization | (4,709,000,000) | (4,025,000,000) | ||
Intangible assets, net carrying amount | $ 13,878,000,000 | 9,774,000,000 | ||
Weighted Average | ||||
Intangible assets | ||||
Finite-Lived intangible asset, useful life (in years) | 15 years 6 months | |||
Customer contracts and relationships and covenants not to compete | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross carrying amount | $ 10,594,000,000 | 6,521,000,000 | ||
Finite-lived intangible asset, accumulated amortization | (4,092,000,000) | (3,549,000,000) | ||
Intangible assets, net carrying amount | $ 6,502,000,000 | 2,972,000,000 | ||
Customer contracts and relationships and covenants not to compete | Weighted Average | ||||
Intangible assets | ||||
Finite-Lived intangible asset, useful life (in years) | 15 years 6 months | |||
Favorable leases and other | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross carrying amount | $ 1,595,000,000 | 880,000,000 | ||
Finite-lived intangible asset, accumulated amortization | (617,000,000) | (476,000,000) | ||
Intangible assets, net carrying amount | $ 978,000,000 | 404,000,000 | ||
Favorable leases and other | Weighted Average | ||||
Intangible assets | ||||
Finite-Lived intangible asset, useful life (in years) | 15 years 7 months 6 days | |||
Trademarks (indefinitely-lived) | ||||
Intangible assets | ||||
Impairment of intangible assets, indefinite-lived | $ 0 | |||
Indefinite-lived intangible assets | $ 6,400,000,000 | 6,400,000,000 | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross carrying amount | 6,398,000,000 | 6,398,000,000 | ||
Intangible assets, net carrying amount | $ 6,398,000,000 | $ 6,398,000,000 |
Share Repurchase Programs (Details) - USD ($) $ / shares in Units, shares in Millions |
12 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 30, 2013 |
Oct. 01, 2013 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Jan. 28, 2016 |
Dec. 11, 2015 |
May. 01, 2015 |
Jan. 05, 2015 |
Jan. 02, 2015 |
Dec. 15, 2014 |
Dec. 17, 2013 |
Sep. 19, 2012 |
|
December 11, 2015 | |||||||||||||
Share repurchases | |||||||||||||
Amount under ASR agreement | $ 725,000,000.0 | ||||||||||||
ASR, shares received as a percent of notional amount | 80.00% | ||||||||||||
Shares repurchased under ASR agreement | 6.2 | ||||||||||||
ASR, shares to be received at end of program as a percent of notional amount | 20.00% | ||||||||||||
ASR, settlement payment | $ 580,000,000 | ||||||||||||
Transfer of shares to treasury stock value | 145,000,000 | ||||||||||||
December 11, 2015 | Subsequent Event | |||||||||||||
Share repurchases | |||||||||||||
Shares repurchased under ASR agreement | 1.4 | ||||||||||||
January 02, 2015 | |||||||||||||
Share repurchases | |||||||||||||
Amount under ASR agreement | $ 2,000,000,000.0 | ||||||||||||
ASR, shares received as a percent of notional amount | 80.00% | ||||||||||||
Shares repurchased under ASR agreement | 3.1 | 16.8 | |||||||||||
ASR, shares to be received at end of program as a percent of notional amount | 20.00% | ||||||||||||
ASR, settlement payment | 1,600,000,000 | ||||||||||||
Transfer of shares to treasury stock value | 400,000,000 | ||||||||||||
October 01, 2013 | |||||||||||||
Share repurchases | |||||||||||||
Amount under ASR agreement | $ 1,700,000,000.0 | ||||||||||||
Shares repurchased under ASR agreement | 11.7 | 14.9 | 26.6 | ||||||||||
Notional purchase price (as a percent) | 50.00% | ||||||||||||
Common stock price of shares repurchased under ASR agreement with Barclays (in dollars per share) | $ 63.83 | $ 56.88 | |||||||||||
2014 Repurchase Program | |||||||||||||
Share repurchases | |||||||||||||
Share repurchase program, authorized amount | $ 10,000,000,000 | ||||||||||||
Amount available for repurchases | 7,700,000,000 | ||||||||||||
2013 Repurchase Program | |||||||||||||
Share repurchases | |||||||||||||
Share repurchase program, authorized amount | $ 6,000,000,000.0 | ||||||||||||
Amount available for repurchases | 0 | ||||||||||||
2012 Repurchase Program | |||||||||||||
Share repurchases | |||||||||||||
Share repurchase program, authorized amount | $ 6,000,000,000.0 | ||||||||||||
Amount available for repurchases | $ 0 | ||||||||||||
Repurchase of common stock (in shares) | 66.2 | ||||||||||||
Repurchase of common stock | $ 4,000,000,000 | ||||||||||||
2014 and 2013 Repurchase Programs | |||||||||||||
Share repurchases | |||||||||||||
Amount available for repurchases | $ 12,700,000,000 | ||||||||||||
Repurchase of common stock (in shares) | 48.0 | ||||||||||||
Repurchase of common stock | $ 5,000,000,000 | ||||||||||||
2013 and 2012 Repurchase Programs | |||||||||||||
Share repurchases | |||||||||||||
Amount available for repurchases | $ 6,700,000,000 | ||||||||||||
Repurchase of common stock (in shares) | 51.4 | ||||||||||||
Repurchase of common stock | $ 4,000,000,000 |
Borrowing and Credit Agreements - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
Aug. 07, 2014 |
Dec. 02, 2013 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Total debt principal | $ 27,694 | $ 12,992 | ||
Debt premiums | 39 | 0 | ||
Debt discounts and deferred financing costs | (269) | (102) | ||
Long-term debt, net of premiums, discounts and deferred costs | 27,464 | 12,890 | ||
Short-term debt (commercial paper) | 0 | (685) | ||
Current portion of long-term debt | (1,197) | (575) | ||
Long-term debt | 26,267 | 11,630 | ||
Commercial paper | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | 0 | 685 | ||
3.25% senior notes due 2015 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 0 | $ 550 | ||
Interest rate, stated percentage | 3.25% | 3.25% | ||
1.2% senior notes due 2016 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 750 | $ 750 | ||
Interest rate, stated percentage | 1.20% | 1.20% | ||
6.125% senior notes due 2016 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 421 | $ 421 | ||
Interest rate, stated percentage | 6.125% | 6.125% | ||
5.75% senior notes due 2017 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 1,080 | $ 1,080 | ||
Interest rate, stated percentage | 5.75% | 5.75% | 5.75% | |
1.9% senior notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 2,250 | $ 0 | ||
Interest rate, stated percentage | 1.90% | 1.90% | ||
2.25% senior notes due 2018 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 1,250 | $ 1,250 | ||
Interest rate, stated percentage | 2.25% | 2.25% | 2.25% | |
2.25% senior notes due 2019 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 850 | $ 850 | ||
Interest rate, stated percentage | 2.25% | 2.25% | 2.25% | |
6.6% senior notes due 2019 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 394 | $ 394 | ||
Interest rate, stated percentage | 6.60% | 6.60% | ||
2.8% senior notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 2,750 | $ 0 | ||
Interest rate, stated percentage | 2.80% | 2.80% | ||
4.75% senior notes due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 450 | $ 450 | ||
Interest rate, stated percentage | 4.75% | 4.75% | ||
4.125% senior notes due 2021 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 550 | $ 550 | ||
Interest rate, stated percentage | 4.125% | 4.125% | ||
2.75% senior notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 1,250 | $ 1,250 | ||
Interest rate, stated percentage | 2.75% | 2.75% | ||
3.5% senior notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 1,500 | $ 0 | ||
Interest rate, stated percentage | 3.50% | 3.50% | ||
4.75% senior notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 400 | $ 0 | ||
Interest rate, stated percentage | 4.75% | 4.75% | ||
4% senior notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 1,250 | $ 1,250 | ||
Interest rate, stated percentage | 4.00% | 4.00% | 4.00% | |
3.375% senior notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 650 | $ 650 | ||
Interest rate, stated percentage | 3.375% | 3.375% | 3.375% | |
5% senior notes due 2024 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 300 | $ 0 | ||
Interest rate, stated percentage | 5.00% | 5.00% | ||
3.875% senior notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 3,000 | $ 0 | ||
Interest rate, stated percentage | 3.875% | 3.875% | ||
6.25% senior notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 453 | $ 453 | ||
Interest rate, stated percentage | 6.25% | 6.25% | 6.25% | |
3.25% senior exchange debentures due 2035 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 5 | $ 0 | ||
Interest rate, stated percentage | 3.25% | 3.25% | ||
4.875% senior notes due 2035 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 2,000 | $ 0 | ||
Interest rate, stated percentage | 4.875% | 4.875% | ||
6.125% senior notes due 2039 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 734 | $ 734 | ||
Interest rate, stated percentage | 6.125% | 6.125% | 6.125% | |
5.75% senior notes due 2041 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 493 | $ 493 | ||
Interest rate, stated percentage | 5.75% | 5.75% | 5.75% | |
5.3% senior notes due 2043 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 750 | $ 750 | ||
Interest rate, stated percentage | 5.30% | 5.30% | 5.30% | |
5.125% senior notes due 2045 | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 3,500 | $ 0 | ||
Interest rate, stated percentage | 5.125% | 5.125% | ||
Capital lease obligations | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 644 | $ 391 | ||
Other | ||||
Debt Instrument [Line Items] | ||||
Total debt principal | $ 20 | $ 41 |
Borrowing and Credit Agreements - Additional Information (Details) - USD ($) |
1 Months Ended | 4 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Jul. 20, 2015 |
May. 20, 2015 |
Sep. 04, 2014 |
Aug. 07, 2014 |
Dec. 02, 2013 |
Aug. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Instrument [Line Items] | ||||||||||
Weighted average interest rate | 0.36% | |||||||||
Proceeds from issuance of senior long-term debt | $ 1,500,000,000 | $ 4,000,000,000 | ||||||||
Carrying amount of long-term debt | $ 27,500,000,000 | $ 27,500,000,000 | ||||||||
Loss on early extinguishment of debt | 0 | $ 521,000,000 | $ 0 | |||||||
Total debt principal | 27,694,000,000 | 27,694,000,000 | $ 12,992,000,000 | |||||||
Omnicare, Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes assumed | $ 3,100,000,000 | |||||||||
Convertible debt | 5,000,000 | 5,000,000 | ||||||||
Repayments of debt | 2,400,000,000 | |||||||||
Carrying amount of long-term debt | 700,000,000 | |||||||||
Senior notes 1.900% due in 2018, 2.800% due in 2020, 3.500% due in 2022, 4.875% due in 2035, and 5.125% due in 2045 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 15,000,000,000 | |||||||||
Bridge Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Bridge loan | $ 13,000,000,000 | |||||||||
Loan processing fee | $ 52,000,000 | |||||||||
Unsecured Backup Credit Facility Expiring May 2016 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | 1,000,000,000.00 | $ 1,000,000,000.00 | ||||||||
Line of credit facility term (in years) | 5 years | |||||||||
Unsecured Backup Credit Facility Expiring February 2017 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | 1,250,000,000.00 | $ 1,250,000,000.00 | ||||||||
Line of credit facility term (in years) | 5 years | |||||||||
Unsecured Backup Credit Facility Expiring May 2018 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | 1,250,000,000.00 | $ 1,250,000,000.00 | ||||||||
Line of credit facility term (in years) | 5 years | |||||||||
Unsecured Backup Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee percentage | 0.03% | |||||||||
Long-term line of credit | 0 | $ 0 | ||||||||
Unsecured Debt | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from issuance of senior long-term debt | 14,800,000,000 | |||||||||
Unsecured Debt | 1.9% senior notes due 2018 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 2,250,000,000.00 | |||||||||
Interest rate, stated percentage | 1.90% | |||||||||
Unsecured Debt | 2.8% senior notes due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 2,750,000,000.00 | |||||||||
Interest rate, stated percentage | 2.80% | |||||||||
Unsecured Debt | 3.5% senior notes due 2022 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 1,500,000,000.0 | |||||||||
Interest rate, stated percentage | 3.50% | |||||||||
Unsecured Debt | 3.875% senior notes due 2025 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 3,000,000,000 | |||||||||
Interest rate, stated percentage | 3.875% | |||||||||
Unsecured Debt | 4.875% senior notes due 2035 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 2,000,000,000 | |||||||||
Interest rate, stated percentage | 4.875% | |||||||||
Unsecured Debt | 5.125% senior notes due 2045 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 3,500,000,000.0 | |||||||||
Interest rate, stated percentage | 5.125% | |||||||||
Convertible Debt | Omnicare, Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes assumed | 2,000,000,000 | |||||||||
Loans Payable | Omnicare, Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Repayments of debt | $ 400,000,000 | |||||||||
Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 684,000,000 | |||||||||
Senior Notes | 4.750% senior notes due in 2022 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 388,000,000 | |||||||||
Senior Notes | 4.750% senior notes due in 2022 | Omnicare, Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Carrying amount of long-term debt | 400,000,000 | |||||||||
Senior Notes | 5% senior notes due 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 296,000,000 | |||||||||
Senior Notes | 5% senior notes due 2024 | Omnicare, Inc. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Carrying amount of long-term debt | $ 300,000,000 | |||||||||
2.25% senior notes due 2019 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 850,000,000 | |||||||||
Interest rate, stated percentage | 2.25% | 2.25% | 2.25% | 2.25% | ||||||
Total debt principal | $ 850,000,000 | $ 850,000,000 | $ 850,000,000 | |||||||
3.375% senior notes due 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 650,000,000 | |||||||||
Interest rate, stated percentage | 3.375% | 3.375% | 3.375% | 3.375% | ||||||
Total debt principal | $ 650,000,000 | $ 650,000,000 | $ 650,000,000 | |||||||
6.25% senior notes due 2027 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 6.25% | 6.25% | 6.25% | 6.25% | ||||||
Total debt principal | $ 453,000,000 | $ 453,000,000 | $ 453,000,000 | |||||||
6.125% senior notes due 2039 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 6.125% | 6.125% | 6.125% | 6.125% | ||||||
Total debt principal | $ 734,000,000 | $ 734,000,000 | $ 734,000,000 | |||||||
5.75% senior notes due 2041 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 5.75% | 5.75% | 5.75% | 5.75% | ||||||
Total debt principal | $ 493,000,000 | $ 493,000,000 | $ 493,000,000 | |||||||
5.75% senior notes due 2017 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 5.75% | 5.75% | 5.75% | 5.75% | ||||||
Total debt principal | $ 1,080,000,000 | $ 1,080,000,000 | $ 1,080,000,000 | |||||||
Senior notes 6.25% Due in 2027, 6.125% Due in 2039, 5.75% Due in 2041, 5.75% Due in 2017 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Extinguishment of debt amount tender offer | $ 2,000,000,000.0 | $ 1,500,000,000.0 | ||||||||
Redemption premium | 490,000,000 | |||||||||
Write-off of unamortized deferred financing charges | 26,000,000 | |||||||||
Extinguishment of debt tender fees | 5,000,000 | |||||||||
Loss on early extinguishment of debt | $ 521,000,000 | |||||||||
Enhanced Capital Advantage Preferred Securities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Total debt principal | $ 41,000,000 | |||||||||
Unsecured Senior Notes 1.25% Due in 2016 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 750,000,000 | |||||||||
Interest rate, stated percentage | 1.20% | |||||||||
2.25% senior notes due 2018 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 1,250,000,000.00 | |||||||||
Interest rate, stated percentage | 2.25% | 2.25% | 2.25% | 2.25% | ||||||
Total debt principal | $ 1,250,000,000 | $ 1,250,000,000 | $ 1,250,000,000 | |||||||
4% senior notes due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 1,250,000,000.00 | |||||||||
Interest rate, stated percentage | 4.00% | 4.00% | 4.00% | 4.00% | ||||||
Total debt principal | $ 1,250,000,000 | $ 1,250,000,000 | $ 1,250,000,000 | |||||||
5.3% senior notes due 2043 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 750,000,000 | |||||||||
Interest rate, stated percentage | 5.30% | 5.30% | 5.30% | 5.30% | ||||||
Total debt principal | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 | |||||||
4.75% senior notes due 2022 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 4.75% | 4.75% | 4.75% | |||||||
Total debt principal | $ 400,000,000 | $ 400,000,000 | $ 0 | |||||||
5% senior notes due 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate, stated percentage | 5.00% | 5.00% | 5.00% | |||||||
Total debt principal | $ 300,000,000 | $ 300,000,000 | $ 0 |
Borrowing and Credit Agreements - Interest Rate and Maturity (Details) - Senior Notes $ in Millions |
1 Months Ended |
---|---|
Aug. 31, 2015
USD ($)
| |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 684 |
4.750% senior notes due in 2022 | |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 388 |
Percentage of principal amount redeemed | 96.80% |
5% senior notes due 2024 | |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 296 |
Percentage of principal amount redeemed | 98.80% |
Borrowing and Credit Agreements - Debt Maturities (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Disclosure [Abstract] | ||
2016 | $ 1,197 | |
2017 | 1,113 | |
2018 | 3,521 | |
2019 | 1,266 | |
2020 | 3,224 | |
Thereafter | 17,373 | |
Total debt | $ 27,694 | $ 12,992 |
Leases - Additional Information (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
Center
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Operating Leased Assets [Line Items] | |||
Capital lease obligations | $ 300 | ||
Proceeds from sale-leaseback transactions | $ 411 | $ 515 | $ 600 |
Retail and mail order locations, distribution centers and corporate offices | |||
Operating Leased Assets [Line Items] | |||
Number of distribution centers leased | Center | 10 | ||
Retail and mail order locations, distribution centers and corporate offices | Minimum | |||
Operating Leased Assets [Line Items] | |||
Non-cancelable operating leases, initial term (in years) | 15 years | ||
Retail and mail order locations, distribution centers and corporate offices | Maximum | |||
Operating Leased Assets [Line Items] | |||
Non-cancelable operating leases, initial term (in years) | 25 years | ||
Equipment and other assets | Minimum | |||
Operating Leased Assets [Line Items] | |||
Non-cancelable operating leases, initial term (in years) | 3 years | ||
Equipment and other assets | Maximum | |||
Operating Leased Assets [Line Items] | |||
Non-cancelable operating leases, initial term (in years) | 10 years |
Leases - Schedule of Rent Expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Leases [Abstract] | |||
Minimum rentals | $ 2,317 | $ 2,320 | $ 2,210 |
Contingent rentals | 34 | 36 | 41 |
Gross lease rental expense | 2,351 | 2,356 | 2,251 |
Less: sublease income | (22) | (21) | (21) |
Net lease rental expense | $ 2,329 | $ 2,335 | $ 2,230 |
Leases - Schedule of Future Minimum Lease Payments (Details) $ in Millions |
Dec. 31, 2015
USD ($)
|
|||||
---|---|---|---|---|---|---|
Capital Leases | ||||||
2016 | $ 52 | |||||
2017 | 94 | |||||
2018 | 70 | |||||
2019 | 69 | |||||
2020 | 69 | |||||
Thereafter | 970 | |||||
Total future lease payments | 1,324 | [1] | ||||
Less: imputed interest | (679) | |||||
Present value of capital lease obligations | 645 | |||||
Operating Leases | ||||||
2016 | 2,405 | [2] | ||||
2017 | 2,321 | [2] | ||||
2018 | 2,197 | [2] | ||||
2019 | 2,044 | [2] | ||||
2020 | 1,877 | [2] | ||||
Thereafter | 16,837 | [2] | ||||
Total future lease payments | 27,681 | [1],[2] | ||||
Minimum sublease rentals due in future under non-cancelable subleases | 180 | |||||
Obligation in excess of future minimum payments | $ 1,700 | |||||
|
Medicare Part D Medicare Part D (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 11,888 | $ 9,687 |
Centers for Medicare and Medicaid Services | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 1,600 | $ 1,800 |
Pension Plans and Other Postretirement Benefits - Additional Information (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
Plan
|
Dec. 31, 2014
USD ($)
Plan
|
Dec. 31, 2013
USD ($)
Plan
|
|
Compensation and Retirement Disclosure [Abstract] | ||||
Employer's contributions under defined contribution plans | $ 251 | $ 238 | $ 235 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of defined benefit plans | Plan | 7 | 9 | 9 | |
Multiemployer Plans, Pension | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Period contributions | $ 14 | $ 14 | $ 13 | |
Change in Assumptions for Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Increase (decrease) in pension plan obligations | $ 67 | |||
Minimum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Period to complete settlement of pension plan | 18 months | |||
Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Period to complete settlement of pension plan | 24 months | |||
Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Increase in OCI | 67 | |||
Settlement loss | $ 0 | $ 3 | 0 | |
Discount rate | 4.25% | 4.00% | ||
Rate of compensation increase | 4.00% | 6.00% | ||
Employer contributions | $ 22 | $ 42 | 33 | |
Estimated future employer contributions in next fiscal year | 37 | |||
Benefit obligation | $ 844 | 844 | 796 | 694 |
Net periodic pension cost | $ 19 | $ 21 | $ 19 | |
Pension Plans | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 21.00% | 21.00% | 14.00% | |
Pension Plans | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 79.00% | 79.00% | 86.00% | |
Pension Plans | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 80.00% | 80.00% | 81.00% | |
Pension Plans | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 19.00% | 19.00% | 18.00% | |
Pension Plans | Money Market Funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 2.00% | 2.00% | 1.00% | |
Pension Plans | Minimum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 175 | |||
Expected long-term rate of return on plan assets | 5.75% | 5.75% | ||
Pension Plans | Minimum | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 80.00% | 80.00% | ||
Pension Plans | Minimum | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 0.00% | 0.00% | ||
Pension Plans | Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 250 | |||
Expected long-term rate of return on plan assets | 6.75% | 7.25% | ||
Pension Plans | Maximum | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 100.00% | 100.00% | ||
Pension Plans | Maximum | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 20.00% | 20.00% | ||
Tax Qualified Pension Plans, Defined Benefit | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of defined benefit plans | Plan | 2 | 4 | 4 | |
Discount rate | 3.25% | |||
Unfunded Nonqualified Supplemental Retirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of defined benefit plans | Plan | 5 | 5 | 5 | |
Other Postretirement Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 8 | |||
Period contributions | $ 60 | 58 | $ 55 | |
Benefit obligation | $ 33 | 33 | 31 | |
Net periodic pension cost | $ 2 | $ 1 | $ 11 |
Pension Plans and Other Postretirement Benefits - Change in Benefit Obligation (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit obligation at beginning of year | $ 796 | $ 694 | |
Acquisition | 8 | 0 | |
Service cost | 0 | 1 | $ 1 |
Interest cost | 31 | 32 | 30 |
Actuarial loss | 45 | 119 | |
Benefit payments | (36) | (41) | |
Settlements | 0 | (9) | |
Benefit obligation at end of year | $ 844 | $ 796 | $ 694 |
Pension Plans and Other Postretirement Benefits - Change in Plan Assets (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets | |||
Fair value of plan assets at the beginning of the year | $ 635 | $ 568 | |
Acquisitions | 5 | 0 | |
Actual return on plan assets | (13) | 75 | |
Employer contributions | 22 | 42 | $ 33 |
Benefit payments | (36) | (41) | |
Settlements | 0 | (9) | |
Fair value of plan assets at the end of the year | 613 | 635 | $ 568 |
Funded status | $ (231) | $ (161) |
Pension Plans and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Interest cost | $ 31 | $ 32 | $ 30 |
Expected return on plan assets | (33) | (31) | (34) |
Amortization of net loss | 21 | 16 | 22 |
Settlement loss | 0 | 3 | 0 |
Service cost | 0 | 1 | 1 |
Net periodic pension cost | $ 19 | $ 21 | $ 19 |
Pension Plans and Other Postretirement Benefits - Fair Value Allocation of Plan Assets (Details) - Pension Plans - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 613 | $ 635 | $ 568 |
Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 129 | 91 | |
Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 484 | 544 | |
Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and money market funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 10 | 7 | |
Cash and money market funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 10 | 7 | |
Cash and money market funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Cash and money market funds | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Fixed income funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 488 | 514 | |
Fixed income funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 4 | 0 | |
Fixed income funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 484 | 514 | |
Fixed income funds | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
Equity mutual funds | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 115 | 114 | |
Equity mutual funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 115 | 84 | |
Equity mutual funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 30 | |
Equity mutual funds | Level 3 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 0 | $ 0 |
Pension Plans and Other Postretirement Benefits - Expected Future Benefit Payments (Details) - Pension Plans $ in Millions |
Dec. 31, 2015
USD ($)
|
|||
---|---|---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||||
2016 | $ 37 | |||
2017 | 39 | [1] | ||
2018 | 51 | |||
2019 | 50 | |||
2020 | 49 | |||
Thereafter | $ 250 | |||
|
Stock Incentive Plans - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
Mar. 31, 2013 |
|
Compensation | ||||
Excess tax benefits from stock-based compensation | $ 127 | $ 106 | $ 62 | |
Proceeds from exercise of stock options | 299 | 421 | 500 | |
Total intrinsic value of options exercised | 394 | 372 | 282 | |
Restricted Stock | ||||
Compensation | ||||
Compensation expense related to share-based compensation | 140 | 62 | 41 | |
Total fair value of restricted shares vested | 164 | $ 57 | $ 41 | |
Restricted Stock | Executive Officer | ||||
Compensation | ||||
Compensation expense related to share-based compensation | $ 38 | |||
Restricted Stock Units (RSUs) | ||||
Compensation | ||||
Granted (in shares) | 2,695,000 | 2,708,000 | 1,715,000 | |
Granted (in dollars per share) | $ 100.81 | $ 73.60 | $ 54.30 | |
Unrecognized compensation expense related to unvested options | $ 268 | |||
Unrecognized compensation expense related to unvested options, period of recognition (in years) | 2 years 7 months 10 days | |||
Options Granted, Beginning from 2011 | ||||
Compensation | ||||
Exercisable period (in years) | 4 years | |||
Expiration period for options granted (in years) | 7 years | |||
Employee Stock Option | ||||
Compensation | ||||
Fair value of options vested | $ 334 | $ 292 | $ 329 | |
Employee Stock | ||||
Compensation | ||||
Compensation expense related to share-based compensation | 90 | 103 | 100 | |
Recognized tax benefit on compensation expense | $ 26 | $ 33 | $ 32 | |
Employee Stock Purchase Plan 2007 | ||||
Compensation | ||||
Maximum number of shares that can be purchased under ESPP (in shares) | 15,000,000 | 15,000,000 | ||
Employee purchase price, percentage of fair market value of ordinary shares | 85.00% | |||
Shares of common stock purchased for ESPP (in shares) | 1,000,000 | |||
Average price of shares of common stock purchased for ESPP (in dollars per share) | $ 72.21 | |||
Shares of common stock available for issue under ESPP (in shares) | 14,000,000 | |||
Equity Incentive Plan 2010 | ||||
Compensation | ||||
Maximum number of shares that can be purchased under ESPP (in shares) | 74,000,000 | |||
Shares available for future grants under the ICP (in shares) | 24,000,000 | |||
Employee Stock Option | ||||
Compensation | ||||
Unrecognized compensation expense related to unvested options | $ 91 | |||
Unrecognized compensation expense related to unvested options, period of recognition (in years) | 1 year 8 months 19 days | |||
Unvested options to vest over the requisite service period (in shares) | $ 12 | |||
Minimum | ||||
Compensation | ||||
Requisite service period of the stock award (in years) | 3 years | |||
Maximum | ||||
Compensation | ||||
Requisite service period of the stock award (in years) | 5 years |
Stock Incentive Plans - Schedule of Valuation Assumptions of ESPP (Details) - $ / shares |
12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
||||||||||
Employee Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Dividend yield | [1] | 0.71% | 0.75% | 0.86% | ||||||||
Expected volatility | [2] | 13.92% | 14.87% | 16.94% | ||||||||
Risk-free interest rate | [3] | 0.11% | 0.08% | 0.10% | ||||||||
Expected life (in years) | [4] | 6 months | 6 months | 6 months | ||||||||
Weighted-average grant date fair value (in dollars per share) | $ 18.72 | $ 13.74 | $ 10.08 | |||||||||
Employee Stock Purchase Plan 2007 | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Offering period for stock purchase plan (in months) | 6 months | |||||||||||
|
Stock Incentive Plans - Schedule of Restricted Stock and RSU Activity (Details) - Restricted Unit and Restricted Share Award shares in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2015
$ / shares
shares
| |
Units | |
Nonvested at beginning of year (in shares) | shares | 4,677 |
Granted (in shares) | shares | 2,695 |
Vested (in shares) | shares | (1,646) |
Forfeited (in shares) | shares | (308) |
Nonvested at end of year (in shares) | shares | 5,418 |
Weighted Average Grant Date Fair Value | |
Nonvested at beginning of year (in dollars per share) | $ / shares | $ 51.90 |
Granted (in dollars per share) | $ / shares | 100.81 |
Vested (in dollars per share) | $ / shares | 103.82 |
Forfeited (in dollars per share) | $ / shares | 73.61 |
Nonvested at end of year (in dollars per share) | $ / shares | $ 59.22 |
Stock Incentive Plans - Fair Value of Options Using Black-Scholes (Details) - Employee Stock Option - $ / shares |
12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Dividend yield | [1] | 1.37% | 1.47% | 1.65% | ||||||||
Expected volatility | [2] | 18.07% | 19.92% | 30.96% | ||||||||
Risk-free interest rate | [3] | 1.24% | 1.35% | 0.73% | ||||||||
Expected life (in years) | [4] | 4 years 2 months 12 days | 4 years | 4 years 8 months | ||||||||
Weighted-average grant date fair value (in dollars per share) | $ 14.01 | $ 11.04 | $ 12.50 | |||||||||
|
Stock Incentive Plans - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at the beginning of the period (in shares) | 28,166 | |
Granted (in shares) | 3,772 | |
Exercised (in shares) | (6,425) | |
Forfeited (in shares) | (902) | |
Expired (in shares) | (270) | |
Outstanding at the end of the period (in shares) | 24,341 | 28,166 |
Options exercisable (in shares) | 11,847 | |
Options vested and expected to vest end of the period (in shares) | 23,765 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding at the beginning of the period (in dollars per share) | $ 47.87 | |
Granted (in dollars per share) | 102.25 | |
Exercised (in dollars per share) | 40.68 | |
Forfeited (in dollars per share) | 66.81 | |
Expired (in dollars per share) | 38.03 | |
Outstanding at the end of the period (in dollars per share) | 57.60 | $ 47.87 |
Exercisable at end of period (in dollars per share) | 42.17 | |
Vested and expected to vest (in dollars per share) | $ 56.96 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted average remaining contractual term, options outstanding (in years) | 3 years 10 months 17 days | |
Weighted average remaining contractual term, options exercisable (in years) | 2 years 7 months 28 days | |
Weighted average remaining contractual term, options vested and expected to vest (in years) | 3 years 10 months 2 days | |
Aggregate intrinsic value, options outstanding | $ 993,965,110 | |
Aggregate intrinsic value, options exercisable | 658,732,653 | |
Aggregate intrinsic value, options vested and expected to vest | $ 984,746,487 |
Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Current: | |||
Federal | $ 3,065 | $ 2,581 | $ 2,623 |
State | 555 | 495 | 437 |
Total current income tax provision | 3,620 | 3,076 | 3,060 |
Deferred: | |||
Federal | (180) | (43) | (115) |
State | (54) | 0 | (17) |
Total deferred income tax provision | (234) | (43) | (132) |
Total | $ 3,386 | $ 3,033 | $ 2,928 |
Reconciliation of the statutory income tax rate to the Company's effective income tax rate | |||
Statutory income tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 4.00% | 4.30% | 4.00% |
Other | 0.30% | 0.20% | (0.10%) |
Effective income tax rate | 39.30% | 39.50% | 38.90% |
Deferred tax assets: | |||
Lease and rents | $ 378 | $ 396 | |
Inventory | 99 | 0 | |
Employee benefits | 359 | 311 | |
Allowance for doubtful accounts | 279 | 164 | |
Retirement benefits | 105 | 80 | |
Net operating loss and capital loss carryforwards | 115 | 74 | |
Deferred income | 83 | 261 | |
Other | 498 | 297 | |
Valuation allowance | (115) | (5) | |
Total deferred tax assets | 1,801 | 1,578 | |
Deferred tax liabilities: | |||
Inventories | 0 | (18) | |
Depreciation and amortization | (6,018) | (4,572) | |
Total deferred tax liabilities | (6,018) | (4,590) | |
Net deferred tax liabilities | (4,217) | (3,012) | |
Net deferred tax assets (liabilities) presented on the consolidated balance sheets | |||
Deferred tax assets—current | 1,220 | 985 | |
Deferred tax assets—noncurrent (included in other assets) | 0 | 39 | |
Deferred tax liabilities—noncurrent | (5,437) | (4,036) | |
Increase (decrease) in valuation allowance | 110 | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Beginning balance | 188 | 117 | $ 80 |
Additions based on tax positions related to the current year | 57 | 32 | 19 |
Additions based on tax positions related to prior years | 122 | 70 | 37 |
Reductions for tax positions of prior years | (11) | (15) | (1) |
Expiration of statutes of limitation | (13) | (15) | (17) |
Settlements | (5) | (1) | (1) |
Ending balance | 338 | 188 | 117 |
Interest recognized related to unrecognized tax benefits | 5 | 6 | $ 4 |
Accrued interest and penalties related to unrecognized tax benefits | 16 | $ 11 | |
Unrecognized tax benefits that would impact effective tax rate | $ 292 |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 22, 2014
qui_tam_complaint
|
Nov. 02, 2009 |
Sep. 30, 2015
pharmacy
|
Aug. 31, 2015
USD ($)
|
Jul. 31, 2015 |
May. 31, 2015
USD ($)
|
Feb. 28, 2006
director
class_action_complaint
officer
|
Oct. 31, 2003
USD ($)
pharmacy
class_action_complaint
competitor
defendant
|
Sep. 30, 2015
class_action_complaint
|
Dec. 31, 2015
state
lease
|
|
Loss contingencies | ||||||||||
Number of store leases guaranteed | lease | 72 | |||||||||
Number of pharmacies filing putative action | pharmacy | 2 | |||||||||
New claims filed, number | class_action_complaint | 3 | 2 | ||||||||
Number of Caremark entities named as defendants | defendant | 2 | |||||||||
Number of competitors against whom putative actions are filed | competitor | 2 | |||||||||
Number of states participating in multi-state investigation | state | 28 | |||||||||
Prescription drug plan, supply duration | 90 days | |||||||||
Omnicare, Inc. | ||||||||||
Loss contingencies | ||||||||||
New claims filed, number | 2 | 2 | ||||||||
Number of officers named in lawsuit | officer | 3 | |||||||||
Number of directors named in lawsuit | director | 2 | |||||||||
Corporate integrity agreement term | 5 years | |||||||||
Number of pharmacies indicated in subpoena | pharmacy | 8 | |||||||||
North Jackson Pharmacy, Inc. and C&C, Inc. d/b/a Big C Discount Drugs, Inc. vs Caremark Case | ||||||||||
Loss contingencies | ||||||||||
New claims filed, number | class_action_complaint | 1 | |||||||||
Number of Caremark entities named as defendants | defendant | 3 | |||||||||
Principle Medoff Securities Class Action Lawsuit | ||||||||||
Loss contingencies | ||||||||||
Litigation settlement, amount | $ 48 | |||||||||
U.S. Attorney’s Office for the Middle District of Florida | ||||||||||
Loss contingencies | ||||||||||
Payments for legal settlements | $ 22 | |||||||||
Lauriello Lawsuit | ||||||||||
Loss contingencies | ||||||||||
Lauriello lawsuit, amount sought in compensatory damages | $ 3,200 |
Segment Reporting (Details) $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Sep. 30, 2014
USD ($)
|
Jun. 30, 2014
USD ($)
|
Mar. 31, 2014
USD ($)
|
Dec. 31, 2015
USD ($)
segment
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
||||||||||||
Segment reporting information | ||||||||||||||||||||||
Number of segments | segment | 3 | |||||||||||||||||||||
Net revenues | $ 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | $ 37,055 | $ 35,021 | $ 34,602 | $ 32,689 | $ 153,290 | $ 139,367 | $ 126,761 | |||||||||||
Gross profit | 7,301 | 6,661 | 6,402 | 6,164 | 6,633 | 6,468 | 6,324 | 5,942 | 26,528 | 25,367 | 23,783 | |||||||||||
Operating profit | $ 2,729 | $ 2,331 | $ 2,262 | $ 2,132 | $ 2,321 | $ 2,246 | $ 2,208 | $ 2,024 | 9,454 | 8,799 | 8,037 | |||||||||||
Depreciation and amortization | 2,092 | 1,931 | 1,870 | |||||||||||||||||||
Additions to property and equipment | 2,367 | 2,136 | 1,984 | |||||||||||||||||||
Gain related to litigation settlement | 72 | |||||||||||||||||||||
Operating Segments | Pharmacy Services Segment | ||||||||||||||||||||||
Segment reporting information | ||||||||||||||||||||||
Net revenues | [1],[2] | 100,363 | 88,440 | 76,208 | ||||||||||||||||||
Gross profit | [1],[2] | 5,227 | 4,771 | 4,237 | ||||||||||||||||||
Operating profit | [1],[2] | 3,989 | [3] | 3,514 | 3,086 | [4] | ||||||||||||||||
Depreciation and amortization | [1],[2] | 654 | 630 | 560 | ||||||||||||||||||
Additions to property and equipment | [1],[2] | 359 | 308 | 313 | ||||||||||||||||||
Net revenues, retail co-payments | 8,900 | 8,100 | 7,900 | |||||||||||||||||||
Gain related to litigation settlement | 11 | |||||||||||||||||||||
Operating Segments | Retail/LTC Segment | ||||||||||||||||||||||
Segment reporting information | ||||||||||||||||||||||
Net revenues | [1] | 72,007 | 67,798 | 65,618 | ||||||||||||||||||
Gross profit | [1] | 21,992 | 21,277 | 20,112 | ||||||||||||||||||
Operating profit | [1] | 7,130 | [3] | 6,762 | 6,268 | [4] | ||||||||||||||||
Depreciation and amortization | [1] | 1,336 | 1,205 | 1,217 | ||||||||||||||||||
Additions to property and equipment | [1] | 1,883 | 1,745 | 1,610 | ||||||||||||||||||
Gain related to litigation settlement | 61 | |||||||||||||||||||||
Operating Segments | Corporate Segment | ||||||||||||||||||||||
Segment reporting information | ||||||||||||||||||||||
Net revenues | 0 | 0 | 0 | |||||||||||||||||||
Gross profit | 0 | 0 | 0 | |||||||||||||||||||
Operating profit | (1,037) | (796) | (751) | |||||||||||||||||||
Depreciation and amortization | 102 | 96 | 93 | |||||||||||||||||||
Additions to property and equipment | 125 | 83 | 61 | |||||||||||||||||||
Acquisition related costs | 156 | |||||||||||||||||||||
Payments for legal settlements | 90 | |||||||||||||||||||||
Intersegment Eliminations | ||||||||||||||||||||||
Segment reporting information | ||||||||||||||||||||||
Net revenues | [1] | (19,080) | (16,871) | (15,065) | ||||||||||||||||||
Gross profit | [1] | (691) | (681) | (566) | ||||||||||||||||||
Operating profit | [1] | (628) | [3] | (681) | (566) | [4] | ||||||||||||||||
Depreciation and amortization | [1] | 0 | 0 | 0 | ||||||||||||||||||
Additions to property and equipment | [1] | $ 0 | $ 0 | $ 0 | ||||||||||||||||||
|
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|||
Numerator for earnings per common share calculation: | |||||||||||||
Income from continuing operations attributable to common stockholders | [1] | $ 5,202 | $ 4,626 | $ 4,600 | |||||||||
Denominator for earnings per share calculation: | |||||||||||||
Weighted average shares, basic (in shares) | 1,118 | 1,161 | 1,217 | ||||||||||
Effect of dilutive securities (in shares) | 8 | 8 | 9 | ||||||||||
Weighted average shares, diluted (in shares) | 1,126 | 1,169 | 1,226 | ||||||||||
Earnings per share from continuing operations: | |||||||||||||
Earnings per share, basic (in dollars per share) | $ 1.35 | $ 1.10 | $ 1.13 | $ 1.08 | $ 1.15 | $ 0.82 | $ 1.07 | $ 0.96 | $ 4.65 | $ 3.98 | $ 3.78 | ||
Earnings per share, diluted (in dollars per share) | $ 1.34 | $ 1.10 | $ 1.12 | $ 1.07 | $ 1.14 | $ 0.81 | $ 1.06 | $ 0.95 | $ 4.62 | $ 3.96 | $ 3.75 | ||
Distributed and undistributed earnings (loss), diluted | $ 27 | $ 19 | |||||||||||
|
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly financial information | |||||||||||
Net revenues | $ 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | $ 37,055 | $ 35,021 | $ 34,602 | $ 32,689 | $ 153,290 | $ 139,367 | $ 126,761 |
Gross profit | 7,301 | 6,661 | 6,402 | 6,164 | 6,633 | 6,468 | 6,324 | 5,942 | 26,528 | 25,367 | 23,783 |
Operating profit | 2,729 | 2,331 | 2,262 | 2,132 | 2,321 | 2,246 | 2,208 | 2,024 | 9,454 | 8,799 | 8,037 |
Income from continuing operations | 1,500 | 1,237 | 1,272 | 1,221 | 1,322 | 948 | 1,246 | 1,129 | 5,230 | 4,645 | 4,600 |
Income (loss) from discontinued operations, net of tax | (1) | 10 | 0 | 0 | (1) | 0 | 0 | 0 | 9 | (1) | (8) |
Net income attributable to CVS Health | $ 1,498 | $ 1,246 | $ 1,272 | $ 1,221 | $ 1,321 | $ 948 | $ 1,246 | $ 1,129 | $ 5,237 | $ 4,644 | $ 4,592 |
Basic earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Caremark (in dollars per share) | $ 1.35 | $ 1.10 | $ 1.13 | $ 1.08 | $ 1.15 | $ 0.82 | $ 1.07 | $ 0.96 | $ 4.65 | $ 3.98 | $ 3.78 |
Income (loss) from discontinued operations attributable to CVS Caremark (in dollars per share) | 0.00 | 0.01 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | (0.01) |
Net income attributable to CVS Caremark (in dollars per share) | 1.35 | 1.11 | 1.13 | 1.08 | 1.15 | 0.82 | 1.07 | 0.96 | 4.66 | 3.98 | 3.77 |
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Caremark (in dollars per share) | 1.34 | 1.10 | 1.12 | 1.07 | 1.14 | 0.81 | 1.06 | 0.95 | 4.62 | 3.96 | 3.75 |
Income (loss) from discontinued operations attributable to CVS Caremark (in dollars per share) | 0.00 | 0.01 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | (0.01) |
Net income attributable to CVS Caremark (in dollars per share) | 1.34 | 1.11 | 1.12 | 1.07 | 1.14 | 0.81 | 1.06 | 0.95 | 4.63 | 3.96 | 3.74 |
Dividends per share (in dollars per share) | 0.35 | 0.35 | 0.35 | 0.35 | 0.275 | 0.275 | 0.275 | 0.275 | 1.40 | 1.10 | $ 0.9 |
High | |||||||||||
Diluted earnings per share: | |||||||||||
NYSE Stock Price (in dollars per share) | 105.29 | 113.45 | 106.47 | 104.56 | 98.62 | 82.57 | 79.43 | 76.36 | 113.45 | 98.62 | |
Low | |||||||||||
Diluted earnings per share: | |||||||||||
NYSE Stock Price (in dollars per share) | $ 91.56 | $ 95.12 | $ 98.74 | $ 94.16 | $ 77.40 | $ 74.69 | $ 72.37 | $ 64.95 | $ 91.56 | $ 64.95 |
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