Business Segment Information

12 Months Ended

Dec. 31, 2013

Business Segment Information

Business Segment Information

10. Business Segment Information

        The accounting policies of the Company's segments are the same as those described in Note 1—"General." The Company evaluates performance of its segments based on profit or loss from operations before stock compensation expense, depreciation and amortization, interest expense, interest and other income, gain on sale of assets, special charges or benefits, and income taxes ("Segment Profit"). Management uses Segment Profit information for internal reporting and control purposes and considers it important in making decisions regarding the allocation of capital and other resources, risk assessment and employee compensation, among other matters. Public Sector subcontracts with Pharmacy Management to provide pharmacy benefits management services for certain of Public Sector's customers. As such, revenue and cost of care related to this intersegment arrangement are eliminated. The Company's segments are defined previously.

        The following tables summarize, for the periods indicated, operating results by business segment (in thousands):

	Commercial			Public Sector			Specialty Solutions			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2011
Managed care and other revenue	$	561,780		$	1,459,659		$	344,335		$	268,987		$	(82,770	)	$	2,551,991
Dispensing revenue		—			—			—			247,409			—			247,409
Cost of care		(314,178	)		(1,271,532	)		(205,240	)		(76,544	)		82,770			(1,784,724	)
Cost of goods sold		—			—			—			(232,038	)		—			(232,038	)
Direct service costs and other		(152,760	)		(67,227	)		(61,681	)		(127,598	)		(120,368	)		(529,634	)
Stock compensation expense(1)		839			872			1,563			817			13,327			17,418
Segment profit (loss)	$	95,681		$	121,772		$	78,977		$	81,033		$	(107,041	)	$	270,422
Identifiable assets by business segment(2)
Restricted cash	$	18,319		$	164,479		$	—		$	—		$	2,996		$	185,794
Net accounts receivable		26,822			28,331			1,398			52,024			13,031			121,606
Investments		5,320			131,261			—			—			64,322			200,903
Pharmaceutical inventory		—			—			39,567			—			—			39,567
Goodwill		120,485			—			104,549			201,905			—			426,939
Other intangible assets, net		3,228			—			9,632			31,729			—			44,589

	Commercial			Public Sector			Specialty Solutions			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2012
Managed care and other revenue	$	728,512		$	1,620,875		$	349,133		$	227,669		$	(69,090	)	$	2,857,099
Dispensing revenue		—			—			—			350,298			—			350,298
Cost of care		(437,518	)		(1,413,320	)		(228,383	)		(61,759	)		69,090			(2,071,890	)
Cost of goods sold		—			—			—			(328,414	)		—			(328,414	)
Direct service costs and other		(172,035	)		(89,129	)		(55,418	)		(111,593	)		(129,337	)		(557,512	)
Stock compensation expense(1)		532			1,111			1,567			1,007			13,566			17,783
Segment profit (loss)	$	119,491		$	119,537		$	66,899		$	77,208		$	(115,771	)	$	267,364
Identifiable assets by business segment(2)
Restricted cash	$	18,254		$	147,766		$	—		$	—		$	60,534		$	226,554
Net accounts receivable		39,678			27,415			7,580			65,755			(2,175	)		138,253
Investments		21,273			101,093			—			—			111,324			233,690
Pharmaceutical inventory		—			—			45,727			—			—			45,727
Goodwill		120,485			—			104,549			201,905			—			426,939
Other intangible assets, net		2,152			—			7,877			24,906			—			34,935

	Commercial			Public Sector			Specialty Solutions			Pharmacy Management			Corporate and Elimination			Consolidated
Year Ended December 31, 2013
Managed care and other revenue	$	766,841		$	1,757,933		$	375,818		$	228,705		$	(66,248	)	$	3,063,049
PBM and dispensing revenue		—			—			—			483,268			—			483,268
Cost of care		(469,478	)		(1,523,023	)		(247,496	)		(59,227	)		66,248			(2,232,976	)
Cost of goods sold		—			—			—			(455,601	)		—			(455,601	)
Direct service costs and other		(172,491	)		(122,819	)		(57,334	)		(128,427	)		(138,475	)		(619,546	)
Stock compensation expense(1)		503			1,038			1,630			1,172			16,909			21,252
Segment profit (loss)	$	125,375		$	113,129		$	72,618		$	69,890		$	(121,566	)	$	259,446
Identifiable assets by business segment(2)
Restricted cash	$	25,107		$	196,651		$	—		$	—		$	14,938		$	236,696
Net accounts receivable		50,407			62,977			7,368			115,527			1,906			238,185
Investments		16,491			92,966			—			—			98,856			208,313
Pharmaceutical inventory		—			—			49,609			—			—			49,609
Goodwill		120,485			20,882			104,549			242,290			—			488,206
Other intangible assets, net		1,076			4,590			6,123			57,905			—			69,694

(1)

Stock compensation expense is included in direct service costs and other operating expenses, however this amount is excluded from the computation of segment profit since it is managed on a consolidated basis.

(2)

Identifiable assets by business segment are those assets that are used in the operations of each segment. The remainder of the Company's assets cannot be specifically identified by segment.

        The following table reconciles Segment Profit to consolidated income before income taxes for the years ended December 31, 2011, 2012 and 2013 (in thousands):

	2011			2012			2013
Segment Profit	$	270,422		$	267,364		$	259,446
Stock compensation expense		(17,418	)		(17,783	)		(21,252	)
Depreciation and amortization		(58,623	)		(60,488	)		(71,994	)
Interest expense		(2,502	)		(2,247	)		(3,000	)
Interest and other income		2,781			2,019			1,985
Income before income taxes	$	194,660		$	188,865		$	165,185