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) | ||||||||
2016 | 2015 | 2014 | ||||||
Prescription drugs(2) | 75.0 | % | 72.9 | % | 70.7 | % | ||
Over-the-counter and personal care | 10.0 | 10.9 | 11.0 | |||||
Beauty/cosmetics | 4.2 | 4.5 | 4.7 | |||||
General merchandise and other | 10.8 | 11.7 | 13.6 | |||||
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 2016 and 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; |
• | health care fraud and abuse laws regulations; |
• | consumer protection laws affecting our health care services, our loyalty programs, our drug discount card 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; |
• | laws against the corporate practice of medicine; |
• | FDA regulation affecting the retail, LTC, specialty 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; |
• | state laws and regulations related to increased oversight of PBM activities by state departments of insurance pharmacy reimbursement for generics and pharmacy audits; |
• | drug pricing legislation, including “most favored nation” pricing; |
• | 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; |
• | ERISA and related regulations; |
• | administration of Medicare Part D, including legislative changes and/or CMS rulemaking and interpretation; |
• | Medicare and Medicaid regulations applicable to our business, in particular our LTC pharmacies and those of our client’s facilities; |
• | ongoing compliance with consent decrees, corporate integrity agreements, corrective action plans and other agreements with government agencies; |
• | insurance licensing and other insurance regulatory requirements applicable to offering Medicare Part D programs and services or other health care services; 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 | 159 | 22 | 2 | 1 | 1 | — | — | 1 | 186 | ||||||||||||||||||
Alaska | — | 3 | — | — | — | — | — | — | 3 | ||||||||||||||||||
Arizona | 152 | 45 | 2 | — | 1 | 1 | — | 3 | 204 | ||||||||||||||||||
Arkansas | 15 | 8 | 2 | — | — | — | — | 1 | 26 | ||||||||||||||||||
California | 878 | 250 | 9 | — | 3 | 1 | — | 8 | 1,149 | ||||||||||||||||||
Colorado | — | 39 | 3 | — | 1 | — | — | 1 | 44 | ||||||||||||||||||
Connecticut | 153 | 20 | 1 | 1 | — | — | — | 1 | 176 | ||||||||||||||||||
Delaware | 17 | 3 | — | — | — | — | — | 20 | |||||||||||||||||||
District of Columbia | 59 | 1 | — | — | 1 | — | — | — | 61 | ||||||||||||||||||
Florida | 756 | 121 | 6 | 1 | 2 | 2 | — | 7 | 895 | ||||||||||||||||||
Georgia | 312 | 42 | 2 | 3 | 1 | — | — | 1 | 361 | ||||||||||||||||||
Hawaii | 63 | 6 | — | — | 1 | — | 1 | — | 71 | ||||||||||||||||||
Idaho | — | 2 | 1 | — | — | — | — | 1 | 4 | ||||||||||||||||||
Illinois | 282 | 88 | 7 | 1 | — | 1 | 1 | 2 | 382 | ||||||||||||||||||
Indiana | 303 | 30 | 4 | — | — | — | — | 3 | 340 | ||||||||||||||||||
Iowa | 20 | 18 | 2 | — | — | — | — | 1 | 41 | ||||||||||||||||||
Kansas | 40 | 14 | 2 | — | — | 1 | — | 2 | 59 | ||||||||||||||||||
Kentucky | 68 | 9 | 9 | — | — | — | — | — | 86 | ||||||||||||||||||
Louisiana | 119 | 15 | 3 | — | — | — | — | 1 | 138 | ||||||||||||||||||
Maine | 22 | 5 | 1 | — | — | — | — | 1 | 29 | ||||||||||||||||||
Maryland | 182 | 39 | 2 | 5 | — | — | — | 1 | 229 | ||||||||||||||||||
Massachusetts | 357 | 39 | 2 | 2 | 2 | 1 | — | 1 | 404 | ||||||||||||||||||
Michigan | 250 | 51 | 4 | 1 | — | 1 | — | 2 | 309 | ||||||||||||||||||
Minnesota | 61 | 74 | 6 | 1 | — | — | — | 2 | 144 | ||||||||||||||||||
Mississippi | 52 | 5 | 1 | 1 | — | — | — | 1 | 60 | ||||||||||||||||||
Missouri | 95 | 33 | 6 | 1 | — | — | — | 1 | 136 | ||||||||||||||||||
Montana | 14 | 2 | 1 | — | — | — | — | — | 17 | ||||||||||||||||||
Nebraska | 19 | 11 | 1 | — | — | — | — | 1 | 32 | ||||||||||||||||||
Nevada | 87 | 15 | 2 | — | — | — | — | 2 | 106 | ||||||||||||||||||
New Hampshire | 40 | 9 | 1 | — | — | — | — | — | 50 | ||||||||||||||||||
New Jersey | 293 | 45 | 3 | 4 | — | 1 | — | 1 | 347 | ||||||||||||||||||
New Mexico | 19 | 6 | 1 | — | — | — | — | 1 | 27 | ||||||||||||||||||
New York | 487 | 73 | 7 | — | 1 | — | — | 7 | 575 | ||||||||||||||||||
North Carolina | 314 | 49 | 4 | 2 | 1 | 1 | — | 3 | 374 | ||||||||||||||||||
North Dakota | 6 | — | — | — | — | — | — | — | 6 | ||||||||||||||||||
Ohio | 320 | 59 | 7 | 1 | — | — | — | 4 | 391 | ||||||||||||||||||
Oklahoma | 62 | 15 | 2 | — | — | — | — | 1 | 80 | ||||||||||||||||||
Oregon | — | 18 | 2 | — | 1 | — | — | 1 | 22 | ||||||||||||||||||
Pennsylvania | 410 | 64 | 6 | 3 | 1 | 1 | 1 | 2 | 488 | ||||||||||||||||||
Puerto Rico | 24 | — | — | — | — | 1 | — | — | 25 | ||||||||||||||||||
Rhode Island | 63 | 4 | 1 | — | 1 | — | — | 1 | 70 | ||||||||||||||||||
South Carolina | 191 | 19 | 3 | 1 | 1 | — | — | 2 | 217 | ||||||||||||||||||
South Dakota | — | 3 | 1 | — | — | — | — | — | 4 | ||||||||||||||||||
Tennessee | 135 | 27 | 3 | 1 | — | 1 | — | 3 | 170 | ||||||||||||||||||
Texas | 684 | 133 | 10 | 3 | 2 | — | 1 | 5 | 838 | ||||||||||||||||||
Utah | 12 | 13 | 2 | — | — | — | — | 1 | 28 | ||||||||||||||||||
Vermont | 10 | — | — | — | — | — | — | — | 10 | ||||||||||||||||||
Virginia | 283 | 58 | 7 | 4 | 1 | — | — | 2 | 355 | ||||||||||||||||||
Washington | 8 | 30 | 4 | — | 1 | — | — | 2 | 45 | ||||||||||||||||||
West Virginia | 51 | 6 | 2 | — | — | — | — | — | 59 | ||||||||||||||||||
Wisconsin | 51 | 33 | 5 | 1 | — | — | — | 1 | 91 | ||||||||||||||||||
Wyoming | — | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||
Total United States | 7,998 | 1,674 | 152 | 38 | 23 | 13 | 4 | 84 | 9,986 | ||||||||||||||||||
Brazil | 37 | — | — | — | — | — | — | — | 37 | ||||||||||||||||||
Total | 8,035 | 1,674 | 152 | 38 | 23 | 13 | 4 | 84 | 10,023 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||||||||
2016 | High | $ | 104.05 | $ | 106.10 | $ | 98.06 | $ | 88.80 | $ | 106.10 | |||||||||||
Low | $ | 89.65 | $ | 93.21 | $ | 88.99 | $ | 73.53 | $ | 73.53 | ||||||||||||
Cash dividends per common share | $ | 0.425 | $ | 0.425 | $ | 0.425 | $ | 0.425 | $ | 1.70 | ||||||||||||
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 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
November 2, 2016 (“2016 Repurchase Program”) | $ | 15.0 | $ | 15.0 | ||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 3.2 | ||
December 17, 2013 (“2013 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, 2016 through October 31, 2016 | — | $ | — | — | $ | 3,691,002,299 | ||||||||
November 1, 2016 through November 30, 2016 | 5,425,000 | $ | 75.11 | 5,425,000 | $ | 18,283,540,767 | ||||||||
December 1, 2016 through December 31, 2016 | 700,000 | $ | 75.91 | 700,000 | $ | 18,230,407,177 | ||||||||
6,125,000 | 6,125,000 |
In millions, except per share amounts | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||
Statement of operations data: | |||||||||||||||||||
Net revenues | $ | 177,526 | $ | 153,290 | $ | 139,367 | $ | 126,761 | $ | 123,120 | |||||||||
Gross profit | 28,857 | 26,528 | 25,367 | 23,783 | 22,488 | ||||||||||||||
Operating expenses | 18,519 | 17,074 | 16,568 | 15,746 | 15,278 | ||||||||||||||
Operating profit | 10,338 | 9,454 | 8,799 | 8,037 | 7,210 | ||||||||||||||
Interest expense, net | 1,058 | 838 | 600 | 509 | 557 | ||||||||||||||
Loss on early extinguishment of debt | 643 | — | 521 | — | 348 | ||||||||||||||
Income tax provision | 3,317 | 3,386 | 3,033 | 2,928 | 2,436 | ||||||||||||||
Income from continuing operations | 5,320 | 5,230 | 4,645 | 4,600 | 3,869 | ||||||||||||||
Income (loss) from discontinued | |||||||||||||||||||
operations, net of tax | (1 | ) | 9 | (1 | ) | (8 | ) | (7 | ) | ||||||||||
Net income | 5,319 | 5,239 | 4,644 | 4,592 | 3,862 | ||||||||||||||
Net (income) loss attributable to | |||||||||||||||||||
noncontrolling interest | (2 | ) | (2 | ) | — | — | 2 | ||||||||||||
Net income attributable to CVS Health | $ | 5,317 | $ | 5,237 | $ | 4,644 | $ | 4,592 | $ | 3,864 | |||||||||
Per common share data: | |||||||||||||||||||
Basic earnings per common share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.93 | $ | 4.65 | $ | 3.98 | $ | 3.78 | $ | 3.05 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |||||||
Net income attributable to CVS Health | $ | 4.93 | $ | 4.66 | $ | 3.98 | $ | 3.77 | $ | 3.04 | |||||||||
Diluted earnings per common share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.91 | $ | 4.62 | $ | 3.96 | $ | 3.75 | $ | 3.02 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |||||||
Net income attributable to CVS Health | $ | 4.90 | $ | 4.63 | $ | 3.96 | $ | 3.74 | $ | 3.02 | |||||||||
Cash dividends per common share | $ | 1.70 | $ | 1.40 | $ | 1.10 | $ | 0.90 | $ | 0.65 | |||||||||
Balance sheet and other data: | |||||||||||||||||||
Total assets(1) | $ | 94,462 | $ | 92,437 | $ | 73,202 | $ | 70,550 | $ | 65,474 | |||||||||
Long-term debt | $ | 25,615 | $ | 26,267 | $ | 11,630 | $ | 12,767 | $ | 9,079 | |||||||||
Total shareholders’ equity | $ | 36,834 | $ | 37,203 | $ | 37,963 | $ | 37,938 | $ | 37,653 | |||||||||
Number of stores (at end of year) | 9,750 | 9,681 | 7,866 | 7,702 | 7,508 |
(1) | As of January 1, 2016, the Company early adopted Accounting Standard Update No. 2015-17, Income Taxes (Topic 740) issued by the Financial Accounting Standards Board in November 2015. The effect of the retrospective adoption on the Company’s historical consolidated balance sheets is a reduction in current assets and deferred income taxes of $1.2 billion, $985 million, $902 million and $693 million as of December 31, 2015, 2014, 2013 and 2012, 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 | 23,275 | $ | 68.60 | 17,645 | |||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||
Total | 23,275 | $ | 68.60 | 17,645 |
(1) | Shares in thousands. |
Consolidated Statements of Income for the Years Ended December 31, 2016, 2015 and 2014 | 70 | ||
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015 and 2014 | 71 | ||
Consolidated Balance Sheets as of December 31, 2016 and 2015 | 72 | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016, 2015 and 2014 | 73 | ||
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2016, 2015 and 2014 | 74 | ||
Notes to Consolidated Financial Statements | 75 | ||
Report of Independent Registered Public Accounting Firm | 111 |
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 May 13, 2013; Commission File No. 001-01011). | |
3.1G* | 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 | Credit Agreement dated as of January 3, 2017, by and among the Registrant, the lenders party thereto, and Barclays Bank PLC, as Administrative Agent. | |
10.14* | The Registrant’s Supplemental Retirement Plan for Select Senior Management 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). | |
10.15* | The Registrant’s 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). | |
10.16* | The Registrant’s 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). | |
10.17* | 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). | |
10.18* | The Registrant’s Deferred Stock Compensation Plan, as amended (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015; Commission File No. 001-01011). | |
10.19 | The Registrant’s Deferred Compensation Plan, as amended. | |
10.20* | The Registrant’s 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). | |
10.21* | The Registrant’s 2007 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015; Commission File No. 001-01011). | |
10.22 | The Registrant’s 2016 Management Incentive Plan. | |
10.23 | The Registrant’s 2016 Executive Incentive Plan. | |
10.24* | 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). | |
10.25 | The Registrant’s Partnership Equity Program, as amended. | |
10.26* | The Registrant’s Severance Plan for Non-Store Employees amended as of January 2015 (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015; Commission File No. 001-01011). | |
10.27 | The Registrant’s Performance-Based Restricted Stock Unit Plan, as amended. | |
10.28* | 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). | |
10.29* | Universal 409A Definition Document, as amended (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015; Commission File No. 001-01011). | |
10.30* | 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). | |
10.31* | 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). | |
10.32* | 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). | |
10.33* | 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). | |
10.34* | 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). | |
10.35* | 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). | |
10.36* | 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). | |
10.37 | Form of Non-Qualified Stock Option Agreement between the Registrant and the Registrant’s President and Chief Executive Officer. | |
10.38 | Form of Restricted Stock Unit Agreement between the Registrant and the Registrant’s President and Chief Executive Officer. | |
10.39* | 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). |
10.40* | 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). | |
10.41* | 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). | |
10.42* | 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). | |
10.43* | 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). | |
10.44 | Restricted Stock Unit Agreement dated April 1, 2016 between the Registrant and the Registrant’s Executive Vice President and President of CVS Caremark. | |
10.45 | Restrictive Covenant Agreement dated May 20, 2016 between the Registrant and the Registrant’s Executive Vice President and President of CVS Caremark. | |
10.46* | 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). | |
10.47* | 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). | |
10.48* | Change in Control Agreement dated October 1, 2012 between the Registrant and the Registrant’s Executive Vice President, Chief 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). | |
10.49* | Restrictive Covenant Agreement dated June 1, 2014 between the Registrant and the Registrant’s Executive Vice President, Chief 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 2016 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, 2016 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, 2017 | 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, 2017 | ||
Richard M. Bracken | ||||
/s/ C. DAVID BROWN II | Director | February 9, 2017 | ||
C. David Brown II | ||||
/s/ EVA C. BORATTO | Senior Vice President - Controller and Chief Accounting Officer (Principal Accounting Officer) | February 9, 2017 | ||
Eva C. Boratto | ||||
/s/ ALECIA A. DECOUDREAUX | Director | February 9, 2017 | ||
Alecia A. DeCoudreaux | ||||
/s/ DAVID M. DENTON | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 9, 2017 | ||
David M. Denton | ||||
/s/ NANCY-ANN M. DEPARLE | Director | February 9, 2017 | ||
Nancy-Ann M. DeParle | ||||
/s/ DAVID W. DORMAN | Chairman of the Board and Director | February 9, 2017 | ||
David W. Dorman | ||||
Director | ||||
Anne M. Finucane | ||||
/s/ LARRY J. MERLO | President and Chief Executive Officer (Principal Executive Officer) and Director | February 9, 2017 | ||
Larry J. Merlo | ||||
/s/ JEAN-PIERRE MILLON | Director | February 9, 2017 | ||
Jean-Pierre Millon | ||||
/s/ RICHARD J. SWIFT | Director | February 9, 2017 | ||
Richard J. Swift | ||||
/s/ WILLIAM C. WELDON | Director | February 9, 2017 | ||
William C. Weldon | ||||
/s/ TONY L. WHITE | Director | February 9, 2017 | ||
Tony L. White |
Exhibit | A | List of Commitments |
Exhibit | B | Form of Note |
Exhibit | C | Form of Borrowing Request |
Exhibit | D | Form of Opinion of Counsel to the Borrower |
Exhibit | E | Form of Assignment and Assumption |
1. | DEFINITIONS AND PRINCIPLES OF CONSTRUCTION |
1.1 | Definitions |
Pricing Level | ABR Advances | Eurodollar Advances | Facility Fee |
Pricing Level I | 0.000% | 0.795% | 0.080% |
Pricing Level II | 0.000% | 0.900% | 0.100% |
Pricing Level III | 0.000% | 1.000% | 0.125% |
Pricing Level IV | 0.100% | 1.100% | 0.150% |
Pricing Level V | 0.300% | 1.300% | 0.200% |
Pricing Level VI | 0.500% | 1.500% | 0.250% |
(a) | the applicable LIBO Screen Rate for the longest period (for which that LIBO Screen Rate is available) which is less than the Interest Period of that Loan; and |
(b) | the applicable LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available) which exceeds the Interest Period of that Loan, |
1.2 | Principles of Construction |
2. | AMOUNT AND TERMS OF LOANS |
2.1 | Revolving Credit Loans |
2.2 | [Reserved] |
2.3 | Notice of Borrowing Revolving Credit Loans |
2.4 | [Reserved] |
2.5 | Use of Proceeds |
2.6 | Termination or Reduction of Commitments |
Commitment Reduction Date | Amount of Reduction of Aggregate Commitment Amount |
March 31, 2017 | $750,000,000 |
June 30, 2017 | $750,000,000 |
September 30, 2017 | $500,000,000 |
2.7 | Prepayments of Loans |
2.8 | [Reserved] |
2.9 | [Reserved] |
2.10 | [Reserved] |
2.11 | Notes |
2.12 | [Reserved] |
3. | PROCEEDS, PAYMENTS, CONVERSIONS, INTEREST, YIELD PROTECTION AND FEES |
3.1 | Disbursement of the Proceeds of the Loans |
3.2 | Payments |
3.3 | Conversions; Other Matters |
3.4 | Interest Rates and Payment Dates |
LOANS | RATE |
Revolving Credit Loans constituting ABR Advances | Alternate Base Rate applicable thereto plus the Applicable Margin. |
Revolving Credit Loans constituting Eurodollar Advances | Eurodollar Rate applicable thereto plus the Applicable Margin. |
3.5 | Indemnification for Loss |
3.6 | Reimbursement for Costs, Etc. |
3.7 | Illegality of Funding |
3.8 | [Reserved] |
3.9 | Certificates of Payment and Reimbursement |
3.10 | Taxes; Net Payments |
3.11 | Facility Fees |
3.12 | [Reserved] |
3.13 | Replacement of Lender |
4. | REPRESENTATIONS AND WARRANTIES |
4.1 | Existence and Power |
4.2 | Authority |
4.3 | Binding Agreement |
4.4 | Litigation |
4.5 | No Conflicting Agreements |
4.6 | Taxes |
4.7 | Compliance with Applicable Laws; Filings |
4.8 | Governmental Regulations |
4.9 | Federal Reserve Regulations; Use of Proceeds |
4.10 | No Misrepresentation |
4.11 | Plans |
4.12 | Environmental Matters |
4.13 | Financial Statements |
4.14 | Anti-Corruption Laws and Sanctions |
5. | CONDITIONS TO EFFECTIVENESS |
5.1 | Agreement |
5.2 | Notes |
5.3 | Corporate Action |
5.4 | Opinion of Counsel to the Borrower |
5.5 | [Reserved] |
5.6 | No Default and Representations and Warranties |
5.7 | Fees |
6. | CONDITIONS OF LENDING ‑ ALL LOANS |
6.1 | Compliance |
6.2 | Requests |
7. | AFFIRMATIVE COVENANTS |
7.1 | Legal Existence |
7.2 | Taxes |
7.3 | Insurance |
7.4 | Performance of Obligations |
7.5 | Condition of Property |
7.6 | Observance of Legal Requirements |
7.7 | Financial Statements and Other Information |
7.8 | Records |
7.9 | Authorizations |
8. | NEGATIVE COVENANTS |
8.1 | Subsidiary Indebtedness |
8.2 | Liens |
8.3 | Dispositions |
8.4 | Merger or Consolidation, Etc. |
8.5 | Acquisitions |
8.6 | Restricted Payments |
8.7 | Limitation on Upstream Dividends by Subsidiaries |
8.8 | Limitation on Negative Pledges |
8.9 | Ratio of Consolidated Indebtedness to Total Capitalization |
9. | DEFAULT |
9.1 | Events of Default |
9.2 | Remedies |
10. | AGENT |
11. | OTHER PROVISIONS |
11.1 | Amendments, Waivers, Etc. |
11.2 | Notices |
11.3 | No Waiver; Cumulative Remedies |
11.4 | Survival of Representations and Warranties |
11.5 | Payment of Expenses; Indemnified Liabilities |
11.6 | Lending Offices |
11.7 | Successors and Assigns |
11.8 | Counterparts; Electronic Execution of Assignments |
11.9 | Set‑off and Sharing of Payments |
11.10 | Indemnity |
11.11 | Governing Law |
11.12 | Severability |
11.13 | Integration |
11.14 | Treatment of Certain Information |
11.15 | Acknowledgments |
11.16 | Consent to Jurisdiction |
11.17 | Service of Process |
11.18 | No Limitation on Service or Suit |
11.19 | WAIVER OF TRIAL BY JURY |
11.20 | Patriot Act Notice |
11.21 | No Fiduciary Duty |
11.22 | Acknowledgement and Consent to Bail-In of EEA Financial Institutions |
Lender | Commitment Amount | ||
Barclays Bank PLC | $2,500,000,000 | ||
TOTAL | $2,500,000,000 |
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. |
2.17 | Deferrals. |
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. |
2.27 | 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. Notwithstanding anything in the Plan to the contrary, a previously submitted Participant’s Deferred Compensation Election (with respect to Base Salary, Annual Cash Incentive and/or Commissions) shall be disregarded following the Participant’s Termination of Employment. |
(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, |
4.4 | Company Contributions and Other Deferrals. |
(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 |
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. |
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. |
5.6 | Hypothetical Gains or Losses. |
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 |
(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 |
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 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 or Company Accounts (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 | 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. |
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”) | 2016 EBIT Goal | CEO & Committee Discretion (1) Financial Adjustments |
PBM Client Satisfaction | 10% | Client Relationship and Loyalty, Customer Care, Mail Service and Specialty Surveys | 2016 PBM Client Satisfaction Target | Operating Profit Funding |
Retail Customer Service | 10% | myCustomer Service Scorecard | 2016 myCustomer Experience Target | Operating Profit Funding |
VII. | Eligible Participant Status |
VIII. | Miscellaneous |
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. |
A. | No Promise of Continued Employment |
C. | Compliance with Applicable Law |
G. | Interpretation |
Page | ||||
I. | Purpose and Status of the PEP | 1 | ||
II. | Eligibility | 1 | ||
III. | Definitions | 1 | ||
IV. | Administration | 2 | ||
V. | Award | 2 | ||
VI. | Participation | 2 | ||
VII. | Form of Participation | 2 | ||
VIII. | Company Matching Investments | 3 | ||
IX. | Restrictions on Disposition of Participant Purchased Shares | 3 | ||
X. | Dividends | 4 | ||
XI. | Vesting and Settlement of RSUs | 4 | ||
XII. | Options to Purchase Common Stock | 4 | ||
XIII. | Termination of Employment | 5 | ||
XIV. | General Provisions | 7 | ||
XV. | Recoupment Policy | 9 | ||
(a) | The number of shares of Stock purchased by the Participant shall have a total Fair Market Value as of the purchase date at least equal to the investment amount set forth in the applicable Election Form (or, if applicable, at least equal to the difference between the Fair Market Value of the shares of Stock designated by the Participant under Section VII(B)(i) and the investment amount). |
(b) | The Participant is responsible for the payment of any brokerage fees associated with the purchase of Stock for this purpose. |
(A) | Involuntary Termination of Participant’s Employment without Cause. |
(B) | Retirement of Participant. “Qualified Retirement” shall mean termination of employment on or after attainment of age fifty-five (55) with at least ten (10) years of continuous service, or attainment of age sixty (60) with at least five (5) years of continuous service, provided that: (i) if the Participant elects to terminate his or her employment voluntarily, the Participant has provided the Company with at least twelve (12) months advance notice of his or her retirement date or such other term of advance notice as is determined by the Chief Human Resources Officer of the Company; or (ii) if the Company elects to terminate the Participant’s employment, then such termination is without cause. As of the Participant’s retirement date, any Participant Purchased Shares shall not be subject to any transfer or sale restrictions, and any Participant Purchased RSUs shall vest as of the Participant’s retirement date and shall settle in accordance with the regular schedule set forth in the applicable Award agreement. The Participant may exercise his or her vested Company Matching Option during the two-year period following the retirement date; any portion of the Company Matching Option which is not vested as of the retirement date shall be forfeited by the Participant as of the retirement date. Any Company Matching RSU or Company Matching Option that is not vested as of the retirement date shall be forfeited by the Participant. In the event the Participant’s termination of employment qualifies as a Qualified Retirement and the Participant also enters into a severance agreement with the Company, the terms of Section XIII(A) shall apply with respect to the settlement of Participant Purchased RSUs and the vesting and settlement of Company Matching RSUs and Company Matching Options. |
(C) | Disability of Participant. In the event a Participant ceases to be employed by the Company, or any subsidiary of the Company, by reason of total and permanent disability (as defined in the Company’s Long-Term Disability Plan, or, if not defined in such plan, as defined by the Social Security Administration), any Participant Purchased Shares shall not be subject to any transfer or sale restrictions. In addition, any Participant Purchased RSUs and any Company Matching RSUs shall vest as of Participant’s disability date and shall settle in accordance with the regular schedule set forth in the applicable Award agreement and any Company Matching Option shall vest and be exercisable during the twelve (12) month period following Participant’s employment termination date, in each case on a pro rata basis in accordance with the Award in effect for the Participant. Notwithstanding the foregoing, a Participant shall be deemed to have ceased employment due to a qualifying disability under this Section XIII (C) only if at the time of such cessation of employment the Participant is disabled within the meaning of Section 409A of the Code pursuant to the regulations thereunder. |
(D) | Death of Participant. In the event of a Participant’s death while employed by the Company or one of its subsidiaries, any Participant Purchased Shares shall not be subject to any transfer or sale restrictions. In addition, all Participant Purchased RSUs and all Company Matching RSUs shall vest and settle on Participant’s date of death and Company Matching Options shall become immediately vested in full. The Company Matching Option may be exercised during the twelve (12) month period |
(E) | Change In Control. In the event of a Termination Without Cause or a Constructive Termination Without Cause, in each case within the two-year period following a Change in Control, any Participant Purchased Shares shall not be subject to any transfer or sale restrictions. In addition, all of the Participant’s outstanding Participant Purchased RSUs and all Company Matching RSUs shall vest and settle as of the Participant’s termination date and Company Matching Options that are not then vested will become immediately vested and exercisable for the remainder of the term of the Company Matching Option but not beyond its original Expiration date provided in Section XII(D). All other terms and conditions governing such Company Matching RSUs, Participant Purchased RSUs and Company Matching Options will be subject to the provisions of the Company’s 2010 ICP. |
(F) | Coordination of Provisions. Notwithstanding anything to the contrary above, to the extent that the circumstances of the termination of a Participant’s employment are within the description of more than one of the subparagraphs above in this Section XIII, each portion of a Participant’s Company Matching RSU or Company Matching Option under any Award shall be entitled to the more favorable treatment explicitly applicable to such portion of the Participant’s Company Matching RSU or Company Matching Option under the provisions of this Section XIII. For example, if a Participant qualifies as Qualified Retiree at the time of the Participant’s termination of employment but the Participant receives severance in connection with the Participant’s termination as described in Section XIII (A), the Participant’s unvested Matching Company Option shall continue to vest during the applicable severance period and any portion of the Company Matching Option that vests during the severance period shall be exercisable on or before the ninetieth (90th) day following the last day of the severance period, while any portion of the Participant’s Matching Company Option that is vested as of the Participant’s termination may be exercised during the two-year period following the Retirement Date. Similarly, by way of example, if a Participant experiences a termination of employment due to disability following a Change in Control, the treatment described in Section XIII (E) shall apply to the Participant’s Awards to the extent that such treatment is more favorable to the Participant than the treatment applicable under Section XIII (C). |
(G) | In any case, the settlement of Participant Purchased RSUs and Company Matching RSUs shall be subject to the settlement timing provisions of Section XIV(C)(ix) of the PEP. |
(i) | Adjustments. Participant Purchased Shares or Participant Purchased RSUs, Company Matching RSUs, and Company Matching Options, and the terms and conditions relating thereto, shall be subject to adjustment in accordance with applicable sections of the 2010 ICP. |
(ii) | Nontransferability. Participant Purchased Shares or Participant Purchased RSUs, Company Matching RSUs, Company Matching Options, and all rights relating thereto, shall not be transferable or assignable by a Participant, other than by will or the laws of descent and distribution (or pursuant to a beneficiary designation if and to the extent authorized by the Committee), and shall not be pledged, hypothecated, or otherwise encumbered in any |
(iii) | Certain Other Terms. Additional terms applicable to Awards under the PEP are set forth in the 2010 ICP. |
(iv) | No Partnership Rights or Rights to Participate. A Participant’s participation in the PEP, investment in Participant Purchased Shares or Participant Purchased RSUs, and grant of an Award under the PEP confers no rights as a partner of a partnership. No Participant has or will have any claim to participate in the PEP, except as selected by the Committee, and the Company will have no obligation to continue the PEP. |
(v) | Changes to the PEP. The Committee may amend, alter, suspend, discontinue or terminate the PEP without the consent of any Participant; provided, however, that, without the consent of an affected Participant, no such action shall materially and adversely affect the rights of such Participant with respect to an outstanding Award. |
(vi) | Limitation on Repurchase Obligation. All repurchases of Stock permitted to occur in the ordinary course pursuant to the terms established under the PEP are intended to qualify for the exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3(e) promulgated under the Exchange Act and, accordingly, such repurchases are authorized to occur with respect to all Awards under the PEP unless and until the repurchase rights and obligations relating to an Award are explicitly revoked by the Committee. |
(vii) | Agreements and Other Documents. The Committee shall specify agreements or other documents to evidence rights and obligations under the PEP. A form of agreement that may be used to evidence rights and obligations relating to Participant Purchased Shares and/or Participant Purchased RSUs, Company Matching RSUs and Company Matching Options shall be provided to each Participant. |
(viii) | Governing Law. The validity, construction, and effect of the PEP, any rules and regulations and any award agreements or related documents hereunder shall be determined in accordance with the Delaware General Corporation Law, without giving effect to principles of conflicts of laws and applicable federal law. |
(ix) | Section 409A Compliance. The Participant Purchased RSUs and Company Matching RSUs under the PEP are intended to qualify as nonqualified deferred compensation awards which comply with the provisions of Section 409A and the regulations thereunder. The vesting dates shall be the dates fixed under the terms of the PEP as of the Grant Date, subject to acceleration only upon the following permissible events under Section 409A of the Code as specified under the PEP or as otherwise provided by the Committee in its sole discretion: the Participant’s death, the Participant’s qualifying disability (under Section XIII (C)) or a Change in Control (within the meaning of the 2010 ICP, which includes a definition of change in control that complies with Section 409A of the Code). Any portion of a Participant Purchased RSU and Company Matching RSU that has become vested in accordance with the terms of the PEP shall be settled as provided under the PEP on a date selected by the Company occurring prior to the 15th day of the third calendar month following the applicable vesting date. In the event that a Participant experiences a termination of employment and is granted severance and is therefore permitted to continue to vest in one or more installments of a Participant Purchased RSU or Company Matching RSU Award pursuant to Section XIII (A), such installments shall continue to be subject to settlement only after the vesting date originally applicable to such installments and during the settlement period set forth above in this Section XIV (C). In the event that the Committee exercises its sole discretion to waive the forfeiture provisions applicable to any Participant Purchased RSUs or Company Matching RSUs, those RSUs shall be settled at the same time that they would otherwise have been settled if they had vested in due course under the terms of the PEP and the applicable Award. Notwithstanding the foregoing or any other provision of the PEP or any Award to the contrary, to the extent necessary to comply with the requirements of Section 409A of the Code, any settlement amounts to which a Participant may become entitled under the PEP, which are subject to Section 409A of the Code (and not otherwise exempt from its application), that are payable within six months following the date of termination will be withheld until the first business day of the seventh (7th) month following the date of termination. To the extent any provisions of the PEP or any RSU does not comply with Section 409A of the Code, the Company and any affected Participant will make such changes |
I. | Objectives and Summary |
II. | Administration |
III | PBRS Plan Year |
IV. | Eligibility |
a) | In General. Except as provided in paragraphs (ii)-(iv) below, if for any reason the employment of an Eligible Employee with the Company and any subsidiary of the Company terminates during a PBRS Plan Year, the Eligible Employee will not receive a PBRS Award for that PBRS Plan Year. |
b) | Retirement. If an Eligible Employee is at least age 55 and has a minimum of 10 years of service with CVS Health or a predecessor company/subsidiary or is at least age 60 and has a minimum of 5 years of service with CVS Health or a predecessor company/subsidiary and the Eligible Employee retires prior to the last day of the PBRS Plan Year, he or she may receive a PBRS Award. Such PBRS Award may be payable in cash at the same time PBRS Awards are made to other Eligible Employees and may be pro-rated for the number of full months (a partial month will be counted as a full month) during which the Eligible Employee was an active employee based on a full calendar year, provided he or she meets all other eligibility criteria for a PBRS Award. |
c) | Death or Disability. If an Eligible Employee dies or commences a long-term disability (as defined in the Company's LTD plan or by the Social Security Administrator), the Eligible Employee may receive a PBRS Award for the year in which the death or commencement of long-term disability occurs at the same time PBRS Awards are made to other Participants. Such PBRS Award will be pro-rated for the number of full months (a partial month will be counted as a full month) during which the Eligible Employee was an active employee based on a full calendar year and will (unless otherwise determined by the CEO or the Committee) be paid in cash based on the Eligible Employee’s base salary in effect at the time of death or commencement of long-term disability. PBRS Awards with respect to deceased Eligible Employees shall be paid to the Eligible Employee’s Beneficiary. |
d) | Other Terminations. In the sole discretion of the CEO or the Committee (as the case may be), an Eligible Employee who terminates employment with the Company and its subsidiaries prior to the last day of the PBRS Plan Year or prior to the Plan payout date for any reason other than retirement, death or long-term disability, as |
V. | Plan Performance Measures |
• | 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”) | 20XX EBIT Goal | CEO & Committee Discretion (1) Financial Adjustments |
PBM Client Satisfaction | 10% | Client Relationship and Loyalty, Customer Care, Mail Service and Specialty Surveys | 20XX PBM Client Satisfaction Target | Operating Profit Funding |
Retail Customer Service | 10% | myCustomer Service Scorecard | 20XX myCustomer Experience Target | Operating Profit Funding |
VI. | Plan Payout |
A. | Target PBRS Award |
Participant: | Larry Merlo |
Employee ID: | XXXXXX |
Shares: | XXXXXX |
Option Price: | $XXX.XX |
(i) | 25% of the Option shall vest on the 1st anniversary of the Grant Date; |
(ii) | 25% of the Option shall vest on the 2nd anniversary of the Grant Date; |
(iii) | 25% of the Option shall vest on the 3rd anniversary of the Grant Date; |
(iv) | 25% of the Option shall vest on the 4th anniversary of the Grant Date. |
1. | Pursuant and subject to the provisions of the 2010 Incentive Compensation Plan, as amended (the “ICP”) of CVS Health Corporation (the “Company”), on the date set forth above (the “Grant Date”), the Company has awarded and hereby evidences the Restricted Stock Unit (“RSU”) Award to the person named below (the “Participant”), subject to the terms and conditions set forth and incorporated in this Restricted Stock Unit agreement (the “Agreement”). The ICP is hereby made a part hereof and Participant agrees to be bound by all the provisions of the ICP. Capitalized terms not otherwise defined herein shall have the meaning assigned to such term(s) in the ICP. Except as expressly provided below in Sections 4 and 7, upon termination of employment the treatment of RSUs granted pursuant to this Agreement shall be governed under and subject to the terms of the Amended and Restated Employment Agreement between the Company and the Participant dated December 22, 2008, as amended December 21, 2012 (the “Employment Agreement”). On the Grant Date specified above, the Fair Market Value (the “FMV”), which is the Closing Price of the Company’s common stock on the Grant Date, of each RSU equals $XXX.XX. |
Participant: | Larry J. Merlo |
Employee ID: | XXXXXX |
RSUs (#): | XXXXX |
2. | Each RSU represents a right to a future payment of one share (“Share”) of Common Stock ($0.01 par value) of the Company, subject to required tax withholding. |
3. | (a) To the extent dividends are paid on Shares while the RSUs remain outstanding and prior to the Settlement Date (as defined below), subject to Section 5(b), Participant shall be entitled to receive a cash payment in an amount equivalent to the cash dividends with respect to the number of Shares covered by the RSUs; provided, however, that no dividends shall be payable with respect to any RSUs forfeited on or prior to the dividend record date. |
4. | Subject to the terms and conditions of the ICP and this Agreement and subject to Participant’s continued employment, Participant shall be entitled to receive (and the Company shall deliver to Participant) the Shares on the Vesting Date(s) set forth herein, or as soon as administratively practicable, but within 30 days thereafter, (or in the Employment Agreement, as the case may be), unless delivery of the Shares has been deferred in accordance with Section 5 below (the date of such delivery of the Shares being hereafter referred to as the “Settlement Date”). Each “Vesting Date” , except as otherwise provided in Section 7, shall be in accordance with the schedule set forth below: |
(a) | 50% of the RSUs shall vest on the third anniversary of the Grant Date (“Tranche A”); |
(b) | 50% of the RSUs shall vest on the fifth anniversary of the Grant Date (“Tranche B”); |
(i) | Participant provides at least 12 months’ advance notice to the Committee of his intent to take Approved Early Retirement or Normal Retirement, |
(ii) | Participant fully cooperates with the Company in transitioning his duties during the period between the disclosure to the Committee of his intent to take Approved Early Retirement or Normal Retirement and his retirement date, |
(iii) | Participant continues to be employed by the Company through the Approved Early Retirement or Normal Retirement date, and |
(iv) | the Committee approves such vesting terms (such approval not to be unreasonably withheld), and, in the case of an Approved Early Retirement, approves such retirement. |
5. | (a) In accordance with rules promulgated by the Management Planning and Development Committee of the Board of Directors (the “Committee”), Participant, to the extent eligible under the CVS Health Deferred Stock Compensation Plan, may elect to defer delivery of Shares in settlement of RSUs covered by this Agreement. Any such deferred delivery date elected by Participant shall become the Settlement Date for purposes of this RSU Agreement. |
6. | On the Settlement Date the number of Shares to be delivered by the Company to Participant shall be reduced by the smallest number of Shares having a FMV at least equal to the dollar amount of Federal, state and local tax withholding required to be withheld by the Company with respect to such RSUs on such date. |
7. | (a) Except as provided in Paragraphs 7(b) – (e) below, if, for any reason other than Approved Early Retirement or Normal Retirement, Participant’s employment with the Company and any subsidiary of the Company terminates, all RSUs not then vested in accordance with Section 4 above shall be treated in accordance with the Employment Agreement. In the event of a conflict between the Employment Agreement and the provisions in Sections 7(b) – (e) of this Agreement, this Agreement shall control. |
(c) | (i) In the event Participant’s employment with the Company and any subsidiary of the Company terminates prior to the third anniversary of the Grant Date, by reason of total and permanent disability (as defined in the Company’s Long-Term Disability Plan, or, if not defined in such Plan, as defined by the Social Security Administration), the RSUs shall vest on a pro rata basis as follows: the total number of RSUs vested as of the termination date, which is the last date that the Participant is employed by the Company and any subsidiary of the Company, shall be equal to the number of RSUs granted on the Grant Date multiplied by the following fraction: (A) the numerator shall be the whole number of months elapsed Participant’s termination date and (B) the denominator shall be thirty-six (36). For purposes of |
8. | An RSU does not represent an equity interest in the Company and carries no voting rights. Participant shall have no rights of a shareholder with respect to the RSUs until the Shares have been delivered to Participant. |
9. | Neither the execution and delivery hereof nor the granting of the award evidenced hereby shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company or its subsidiaries to employ Participant for any specific period. |
1. | Pursuant and subject to the provisions of the 2010 Incentive Compensation Plan, as amended (the “ICP”) of CVS Health Corporation (the “Company”), on the date set forth above (the “Grant Date”), the Company has awarded and hereby evidences the Restricted Stock Unit (“RSU”) Award to the person named below (the “Participant”), subject to the terms and conditions set forth and incorporated in this Restricted Stock Unit agreement (the “Agreement”). The ICP is hereby made a part hereof and Participant agrees to be bound by all the provisions of the ICP. Capitalized terms not otherwise defined herein shall have the meaning assigned to such term(s) in the ICP. On the Grant Date specified above, the Fair Market Value (the “FMV”), which is the Closing Price of the Company’s common stock on the Grant Date, of each RSU equals $104.82. |
Participant: | Jonathan C. Roberts |
Employee ID: | XXXXX |
RSUs (#): | 21,465 |
2. | Each RSU represents a right to a future payment of one share (“Share”) of Common Stock ($0.01 par value) of the Company, subject to required tax withholding. |
3. | (a) To the extent dividends are paid on Shares while the RSUs remain outstanding and prior to the Settlement Date (as defined below), subject to Section 5(b), Participant shall be entitled to receive a cash payment in an amount equivalent to the cash dividends with respect to the number of Shares covered by the RSUs; provided, however, that no dividends shall be payable with respect to any RSUs forfeited on or prior to the dividend record date. |
4. | Subject to the terms and conditions of the ICP and this Agreement and subject to Participant’s continued employment, Participant shall be entitled to receive (and the Company shall deliver to Participant) the Shares on the Vesting Date(s) set forth herein, or as soon as administratively practicable, but within 30 days thereafter, unless delivery of the Shares has been deferred in accordance with Section 5 below (the date of such delivery of the Shares being hereafter referred to as the “Settlement Date”). Each “Vesting Date,” except as otherwise provided in Section 7, shall be in accordance with the schedule set forth below: |
5. | (a) In accordance with rules promulgated by the Management Planning and Development Committee of the Board of Directors (the “Committee”), Participant, to the extent eligible under the CVS Health Deferred Stock Compensation Plan, may elect to defer delivery of Shares in settlement of RSUs covered by this Agreement. Any such deferred delivery date elected by Participant shall become the Settlement Date for purposes of this RSU Agreement. |
6. | On the Settlement Date the number of Shares to be delivered by the Company to Participant shall be reduced by the smallest number of Shares having a FMV at least equal to the dollar amount of Federal, state and local tax withholding required to be withheld by the Company with respect to such RSUs on such date. |
7. | (a) Except as provided in Paragraphs 7 (b) – (f) below, if, for any reason, Participant’s employment with the Company and any subsidiary of the Company terminates, all RSUs not then vested in accordance with Section 4 above shall be immediately forfeited. |
8. | An RSU does not represent an equity interest in the Company and carries no voting rights. Participant shall have no rights of a shareholder with respect to the RSUs until the Shares have been delivered to Participant. |
9. | Neither the execution and delivery hereof nor the granting of the award evidenced hereby shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Company or its subsidiaries to employ Participant for any specific period. |
10. | Any notice required to be given hereunder to the Company shall be addressed in writing to: CVS Health Corporation, Senior Vice President, Compensation & Benefits, One CVS Drive, Woonsocket, RI 02895. Any notice required to be given hereunder to Participant shall be addressed to such Participant at the address shown on the records of the Company, subject to the right of either party hereafter to designate, in writing, to the other, some other address. |
11. | All decisions and interpretations made by the Board of Directors or the Committee with regard to any question arising hereunder or under the ICP shall be binding and conclusive on all persons. In the event of any inconsistency between the terms hereof and the provisions of the ICP, the ICP shall govern. |
12. | The award of RSUs pursuant to this Agreement is expressly subject to and contingent upon the requirement that the Participant shall have fully executed and delivered to the Company the Restrictive Covenant Agreement attached as Exhibit A. |
By: | /s/ Lisa G. Bisaccia |
1. | For an employee residing in Illinois, Kansas, or North Carolina, you are hereby advised: |
2. | For an employee residing in Utah, you are hereby advised: |
3. | For an employee residing in Minnesota, you are hereby advised: |
Year Ended December 31, | |||||||||||
In millions, except per share amounts | 2016 | 2015 | 2014 | ||||||||
Net revenues | $ | 177,526 | $ | 153,290 | $ | 139,367 | |||||
Cost of revenues | 148,669 | 126,762 | 114,000 | ||||||||
Gross profit | 28,857 | 26,528 | 25,367 | ||||||||
Operating expenses | 18,519 | 17,074 | 16,568 | ||||||||
Operating profit | 10,338 | 9,454 | 8,799 | ||||||||
Interest expense, net | 1,058 | 838 | 600 | ||||||||
Loss on early extinguishment of debt | 643 | — | 521 | ||||||||
Income before income tax provision | 8,637 | 8,616 | 7,678 | ||||||||
Income tax provision | 3,317 | 3,386 | 3,033 | ||||||||
Income from continuing operations | 5,320 | 5,230 | 4,645 | ||||||||
Income (loss) from discontinued operations, net of tax | (1 | ) | 9 | (1 | ) | ||||||
Net income | 5,319 | 5,239 | 4,644 | ||||||||
Net income attributable to noncontrolling interest | (2 | ) | (2 | ) | — | ||||||
Net income attributable to CVS Health | $ | 5,317 | $ | 5,237 | $ | 4,644 | |||||
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.91 | $ | 4.62 | $ | 3.96 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | |||||
Net income attributable to CVS Health | $ | 4.90 | $ | 4.63 | $ | 3.96 |
• | During 2016, net revenues in our Pharmacy Services Segment increased 19.5% and net revenues in our Retail/LTC Segment increased 12.6% compared to the prior year. The Retail/LTC Segment benefited from the 2015 acquisitions of Omnicare and the pharmacies and clinics of Target. |
• | During 2015, net revenues in our Pharmacy Services Segment increased by 13.5% and net revenues in our Retail/LTC Segment increased 6.2% compared to the prior year. |
• | In 2016 and 2015, the Pharmacy Services Segment continued to grow from net new business and specialty. The increase in our generic dispensing rates in both of our operating segments continued to have a negative effect on net revenue in 2016 as compared to 2015, as well as in 2015 as compared to 2014. |
• | During 2016, gross profit in our Pharmacy Services Segment and Retail/LTC Segment increased by 12.9% and 7.9%, respectively, compared to the prior year. For the year ended December 31, 2016, gross profit as a percentage of net revenues in our Pharmacy Services Segment and Retail/LTC Segment was 4.9% and 29.3%, respectively. |
• | 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 percentage of net revenues in our Pharmacy Services Segment and Retail/LTC Segment was 5.2% and 30.5%, 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 2016 as compared to 2015. In addition, gross profit for 2016 and 2015 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 2016 and 2015, partially offsetting the negative impacts described above. |
In millions | 2016 | 2015 | 2014 | ||||||||
Interest expense | $ | 1,078 | $ | 859 | $ | 615 | |||||
Interest income | (20 | ) | (21 | ) | (15 | ) | |||||
Interest expense, net | $ | 1,058 | $ | 838 | $ | 600 |
In millions | Pharmacy Services Segment(1)(2) | Retail/LTC Segment(2) | Corporate Segment | Intersegment Eliminations(2) | Consolidated Totals | ||||||||||||||
2016: | |||||||||||||||||||
Net revenues | $ | 119,963 | $ | 81,100 | $ | — | $ | (23,537 | ) | $ | 177,526 | ||||||||
Gross profit(3) | 5,901 | 23,738 | — | (782 | ) | 28,857 | |||||||||||||
Operating profit (loss)(4)(5)(6) | 4,672 | 7,281 | (894 | ) | (721 | ) | 10,338 | ||||||||||||
2015: | |||||||||||||||||||
Net revenues | $ | 100,363 | $ | 72,007 | $ | — | $ | (19,080 | ) | $ | 153,290 | ||||||||
Gross profit | 5,227 | 21,992 | — | (691 | ) | 26,528 | |||||||||||||
Operating profit (loss)(5)(6) | 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 |
(1) | Net revenues of the Pharmacy Services Segment include approximately $10.5 billion, $8.9 billion and $8.1 billion of Retail/LTC Co-Payments for 2016, 2015 and 2014, respectively. See Note 1 “Significant Accounting Policies - Revenue Recognition” to the consolidated financial statements for additional information about Retail/LTC 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 our retail pharmacies to purchase covered products, when members enrolled in programs such as Maintenance Choice ® elect to pick up maintenance prescriptions at one of our retail pharmacies instead of receiving them through the mail, or when members have prescriptions filled at our long-term care pharmacies. When these occur, both the Pharmacy Services and Retail/LTC segments record the revenues, gross profit and operating profit on a standalone basis. |
(3) | The Retail/LTC Segment gross profit for the year ended December 31, 2016 includes $46 million of acquisition-related integration costs. The integration costs are related to the acquisitions of Omnicare and the pharmacies and clinics of Target. |
(4) | The Pharmacy Services Segment operating profit for the year ended December 31, 2016 includes the reversal of an accrual of $88 million in connection with a legal settlement. |
(5) | The Retail/LTC Segment operating profit for the 2016 and 2015 include $281 million and $64 million, respectively, of acquisition-related integration costs. The integration costs are related to the acquisitions of Omnicare and the pharmacies and clinics of Target. Operating profit for the year ended December 31, 2016 also includes a $34 million asset impairment charge in connection with planned store closures in 2017 related to our enterprise streamlining initiative. |
(6) | The Corporate Segment operating loss for the year ended December 31, 2016 includes integration costs of $10 million related to the acquisitions of Omnicare and the pharmacies and clinics of Target. For the year ended December 31, 2015, the Corporate Segment operating loss includes $156 million of acquisition-related transaction and integration costs related to the acquisitions of Omnicare and the pharmacies and clinics of Target 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. |
Year Ended December 31, | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Net revenues | $ | 119,963 | $ | 100,363 | $ | 88,440 | |||||
Gross profit | $ | 5,901 | $ | 5,227 | $ | 4,771 | |||||
Gross profit % of net revenues | 4.9 | % | 5.2 | % | 5.4 | % | |||||
Operating expenses(3) | $ | 1,229 | $ | 1,238 | $ | 1,257 | |||||
Operating expenses % of net revenues | 1.0 | % | 1.2 | % | 1.4 | % | |||||
Operating profit | $ | 4,672 | $ | 3,989 | $ | 3,514 | |||||
Operating profit % of net revenues | 3.9 | % | 4.0 | % | 4.0 | % | |||||
Net revenues: | |||||||||||
Mail choice(1) | $ | 42,783 | $ | 37,828 | $ | 31,081 | |||||
Pharmacy network(2) | $ | 76,848 | $ | 62,240 | $ | 57,122 | |||||
Other | $ | 332 | $ | 295 | $ | 237 | |||||
Pharmacy claims processed: | |||||||||||
Total | 1,230.0 | 1,011.9 | 932.0 | ||||||||
Mail choice(1) | 89.5 | 85.7 | 82.4 | ||||||||
Pharmacy network(2) | 1,140.5 | 926.2 | 849.6 | ||||||||
Generic dispensing rate: | |||||||||||
Total | 85.4 | % | 83.7 | % | 82.2 | % | |||||
Mail choice(1) | 78.2 | % | 76.4 | % | 74.6 | % | |||||
Pharmacy network(2) | 85.9 | % | 84.4 | % | 83.0 | % | |||||
Mail choice penetration rate | 18.0 | % | 20.6 | % | 21.4 | % |
(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 our retail pharmacies 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 retail pharmacies, including our retail pharmacies and long-term care pharmacies, but excluding Maintenance Choice activity. |
(3) | The Pharmacy Services Segment operating expenses for the year ended December 31, 2016 includes the reversal of an accrual of $88 million in connection with a legal settlement. |
• | Our mail choice claims processed increased 4.4% to 89.5 million claims in the year ended December 31, 2016, compared to 85.7 million claims in the prior year. The increase in mail choice claims was driven by growth in specialty pharmacy claims, increase in net new business, and continuing adoption of our Maintenance Choice offerings. During 2015, our mail choice claims processed increased 4.0% to 85.7 million claims. The increase in mail choice claims was driven by net new business, specialty and continuing adoption of our Maintenance Choice offerings. |
• | During 2016 and 2015, our average revenue per mail choice claim increased by 8.3% and 17.0%, compared to 2015 and 2014, respectively. The increase in both years was primarily due to growth in specialty pharmacy and inflation. |
• | Our pharmacy network claims processed increased 23.1% to 1,140.5 million claims in the year ended December 31, 2016, compared to 926.2 million claims in the prior year. This increase was primarily due to volume from net new business. During 2015, our pharmacy network claims processed increased 9.0% to 926.2 million compared to 849.6 million pharmacy network claims processed in 2014. This increase was primarily due to net new business. |
• | During 2016 and 2015, our average revenue per pharmacy network claim processed remained flat. |
• | Our mail choice generic dispensing rate was 78.2%, 76.4% and 74.6% in the years ended December 31, 2016, 2015 and 2014, respectively. Our pharmacy network generic dispensing rate increased to 85.9% in the year ended December 31, 2016, compared to 84.4% in the prior year. During 2015, our pharmacy network generic dispensing rate increased to 84.4% compared to our pharmacy network generic dispensing rate of 83.0% in 2014. 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 brand and generic drug introductions and our success at encouraging plan members to utilize generic drugs when they are available and clinically appropriate. |
• | 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 continue to have an impact on our gross profit dollars and gross profit as a percentage of net revenues. In particular, competitive pressures in the PBM industry have caused us and other PBMs to continue to share with clients a larger portion of rebates and/or discounts received from pharmaceutical manufacturers. In addition, market dynamics and regulatory changes have limited our ability to offer plan sponsors pricing that includes retail network “differential” or “spread,” and 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. |
• | Our gross profit as a percentage of revenues benefited from the increase in our total generic dispensing rate, which increased to 85.4% and 83.7% in 2016 and 2015, respectively, compared to our generic dispensing rate of 82.2% in 2014. These increases were primarily due to new generic drug introductions and our continual 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. The increased use by patients of generic drugs has also 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. |
• | Operating expenses decreased $9 million or 0.7% in the year ended December 31, 2016, compared to the prior year. The decrease in operating expense dollars is primarily due to an $88 million reversal of an accrual in connection with a legal settlement, partially offset by an increase in costs associated with the growth of our business. |
• | 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 ACS Pharmacy from the Omnicare acquisition in August 2015. Operating expenses as a percentage of net revenues improved slightly from 1.4% in 2014 to 1.2% in 2015. |
Year Ended December 31, | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Net revenues | $ | 81,100 | $ | 72,007 | $ | 67,798 | |||||
Gross profit(1) | $ | 23,738 | $ | 21,992 | $ | 21,277 | |||||
Gross profit % of net revenues | 29.3 | % | 30.5 | % | 31.4 | % | |||||
Operating expenses(2) | $ | 16,457 | $ | 14,862 | $ | 14,515 | |||||
Operating expenses % of net revenues | 20.3 | % | 20.6 | % | 21.4 | % | |||||
Operating profit | $ | 7,281 | $ | 7,130 | $ | 6,762 | |||||
Operating profit % of net revenues | 9.0 | % | 9.9 | % | 10.0 | % | |||||
Prescriptions filled (90 Day = 3 prescriptions) (3) | 1,223.5 | 1,031.6 | 935.9 | ||||||||
Net revenue increase (decrease): | |||||||||||
Total | 12.6 | % | 6.2 | % | 3.3 | % | |||||
Pharmacy | 15.9 | % | 9.5 | % | 5.1 | % | |||||
Front Store | 0.3 | % | (2.5 | )% | (2.5 | )% | |||||
Total prescription volume (90 Day = 3 prescriptions) (3) | 18.6 | % | 10.2 | % | 5.2 | % | |||||
Same store sales increase (decrease)(4): | |||||||||||
Total | 1.9 | % | 1.7 | % | 2.1 | % | |||||
Pharmacy | 3.2 | % | 4.5 | % | 4.8 | % | |||||
Front Store(5) | (1.5 | )% | (5.0 | )% | (4.0 | )% | |||||
Prescription volume (90 Day = 3 prescriptions) (3) | 3.6 | % | 4.8 | % | 4.1 | % | |||||
Generic dispensing rates | 85.7 | % | 84.5 | % | 83.1 | % | |||||
Pharmacy % of net revenues | 75.0 | % | 72.9 | % | 70.7 | % |
(1) | Gross profit for the year ended December 31, 2016 includes $46 million of acquisition-related integration costs related to the acquisitions of Omnicare and the pharmacies and clinics of Target. |
(2) | Operating expenses for the years ended December 31, 2016 and 2015 include $235 million and $64 million, respectively, of acquisition-related integration costs related to the acquisitions of Omnicare and the pharmacies and clinics of Target. Operating expenses for the year ended December 31, 2016 also includes a $34 million asset impairment charge in connection with planned store closures in 2017 related to our enterprise streamlining initiative. |
(3) | 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. |
(4) | Same store sales and prescriptions exclude revenues from MinuteClinic, and revenue and prescriptions from stores in Brazil, from LTC operations and from commercialization services. |
(5) | 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 1.5% in the year ended December 31, 2016, as compared to the prior year. The decrease is primarily driven by softer customer traffic and efforts to rationalize promotional strategies, partially offset by an increase in basket size. |
• | Pharmacy same store sales rose 3.2% in the year ended December 31, 2016, as compared to the prior year. Pharmacy same store sales were positively impacted by same store script growth of 3.6%, as well as approximately 20 basis points due to an additional day in 2016 related to leap year for the year ended December 31, 2016. Due to marketplace changes in the latter half of 2016, we expect script growth to be negatively impacted for the next several quarters by restricted network relationships that exclude CVS Pharmacy. |
• | 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 360 and 390 basis points for the years ended December 31, 2016 and 2015, respectively, due to recent generic introductions. The generic dispensing rate grew to 85.7% for the year ended December 31, 2016, compared to 84.5% in the prior year. In addition, our pharmacy revenue growth has also been negatively affected by the mix of drugs sold, continued reimbursement pressure and the lack of significant new brand name drug introductions. |
• | As of December 31, 2016, we operated 9,709 retail stores, including the 1,674 locations in Target stores, compared to 9,655 retail stores as of December 31, 2015 and 7,822 retail stores as of December 31, 2014. Total net revenues from new and acquired stores contributed approximately 6.4%, 1.6% and 1.1% to our total net revenue percentage increase in 2016, 2015, and 2014, respectively. The majority of the increase in 2016 was primarily due to the addition of the pharmacies of Target in December 2015. |
• | Pharmacy revenue continued to benefit from the increased utilization by Medicare Part D beneficiaries, our ability to attract and retain managed care customers, the increased use of pharmaceuticals by an aging population and as the first line of defense for individual health care. |
• | Front store revenues as a percentage of total net revenues for the years ended December 31, 2016, 2015 and 2014 were 23.6%, 26.5% and 28.8%, respectively. 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 210, 220 and 120 basis points in the years ended December 31, 2016, 2015 and 2014, respectively. This was due to pharmacy revenues growing faster than front store revenues, largely driven by the acquisitions of the pharmacies and clinics of Target and LTC. The mix effect from a higher proportion of pharmacy sales had a negative effect on our overall gross profit as a percentage of net revenues for the years ended December 31, 2016, 2015 and 2014, respectively. This negative effect was partially offset by an increase in generic drugs dispensed, an improved front store gross margin rate, which includes efforts to rationalize promotional strategies. |
• | During 2016 and 2015, our front store gross profit as a percentage of net revenues increased compared to the prior year. In both years, the increase reflects a change in the mix of products sold, including store brand products, as a result of our efforts to rationalize promotional strategies. The increase in 2015 was also partially due to the removal of tobacco products from our stores in late 2014. |
• | 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, including the use of restrictive networks, as well as changes in the mix of our business within the pharmacy portion of the Retail/LTC Segment. In the event the reimbursement pressure 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. |
Year Ended December 31, | ||||||||||||
In millions | 2016 | 2015 | 2014 | |||||||||
Net cash provided by operating activities | $ | 10,069 | $ | 8,412 | $ | 8,137 | ||||||
Net cash used in investing activities | (2,470 | ) | (13,420 | ) | (4,045 | ) | ||||||
Net cash provided by (used in) financing activities | (6,689 | ) | 5,006 | (5,694 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 2 | (20 | ) | (6 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | $ | 912 | $ | (22 | ) | $ | (1,608 | ) |
2016(2) | 2015(2) | 2014(2) | ||||||
Total stores (beginning of year) | 9,665 | 7,866 | 7,702 | |||||
New and acquired stores(1) | 132 | 1,833 | 187 | |||||
Closed stores(1) | (47 | ) | (34 | ) | (23 | ) | ||
Total stores (end of year) | 9,750 | 9,665 | 7,866 | |||||
Relocated stores | 50 | 58 | 60 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
November 2, 2016 (“2016 Repurchase Program”) | $ | 15.0 | $ | 15.0 | ||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 3.2 | ||
December 17, 2013 (“2013 Repurchase Program”) | $ | 6.0 | $ | — |
Payments Due by Period | |||||||||||||||||||
In millions | Total | 2017 | 2018 to 2019 | 2020 to 2021 | Thereafter | ||||||||||||||
Operating leases | $ | 27,346 | $ | 2,458 | $ | 4,570 | $ | 3,950 | $ | 16,368 | |||||||||
Lease obligations from discontinued operations | 19 | 7 | 7 | 5 | — | ||||||||||||||
Capital lease obligations | 1,314 | 74 | 143 | 141 | 956 | ||||||||||||||
Contractual lease obligations with Target(1) | 1,737 | — | — | — | 1,737 | ||||||||||||||
Long-term debt | 25,204 | 21 | 4,350 | 5,050 | 15,783 | ||||||||||||||
Interest payments on long-term debt(2) | 11,385 | 916 | 1,724 | 1,480 | 7,265 | ||||||||||||||
Other long-term liabilities reflected in our consolidated balance sheet | 806 | 76 | 377 | 112 | 241 | ||||||||||||||
$ | 67,811 | $ | 3,552 | $ | 11,171 | $ | 10,738 | $ | 42,350 |
(1) | The Company leases pharmacy and clinic space from Target. See Note 6 “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, 2016. |
• | 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, retail and specialty pharmacy payors 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 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” or the use of maximum allowable cost pricing. |
• | 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 our 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. |
• | Efforts to increase reimbursement rates in PBM pharmacy networks and to inhibit the ability of PBMs to audit network pharmacies for fraud, waste and abuse. |
• | Risks related to increasing oversight of PBM activities by state departments of insurance. |
• | A highly competitive business environment, including the uncertain impact of increased consolidation in the PBM industry, the possibility of combinations, joint ventures or other collaboration between PBMs and retailers, 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, and the possibility of our retail stores or specialty pharmacies being excluded from narrow or restricted 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, including limited distribution drugs. |
• | Reform of the U.S. health care system, including ongoing implementation of ACA and the possible repeal and replacement of all or parts 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 related to changes in legislation, regulation and government policy (including through the use of Executive Orders) that could significantly impact our business and the health care and retail industries, including the possibility of major developments in tax policy or trade relations, such as the disallowance of tax deductions for imported merchandise or the imposition of unilateral tariffs on imported products. |
• | 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, network pharmacy reimbursement and auditing, 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. |
• | 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, 2017 |
Year Ended December 31, | |||||||||||
In millions, except per share amounts | 2016 | 2015 | 2014 | ||||||||
Net revenues | $ | 177,526 | $ | 153,290 | $ | 139,367 | |||||
Cost of revenues | 148,669 | 126,762 | 114,000 | ||||||||
Gross profit | 28,857 | 26,528 | 25,367 | ||||||||
Operating expenses | 18,519 | 17,074 | 16,568 | ||||||||
Operating profit | 10,338 | 9,454 | 8,799 | ||||||||
Interest expense, net | 1,058 | 838 | 600 | ||||||||
Loss on early extinguishment of debt | 643 | — | 521 | ||||||||
Income before income tax provision | 8,637 | 8,616 | 7,678 | ||||||||
Income tax provision | 3,317 | 3,386 | 3,033 | ||||||||
Income from continuing operations | 5,320 | 5,230 | 4,645 | ||||||||
Income (loss) from discontinued operations, net of tax | (1 | ) | 9 | (1 | ) | ||||||
Net income | 5,319 | 5,239 | 4,644 | ||||||||
Net income attributable to noncontrolling interest | (2 | ) | (2 | ) | — | ||||||
Net income attributable to CVS Health | $ | 5,317 | $ | 5,237 | $ | 4,644 | |||||
Basic earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.93 | $ | 4.65 | $ | 3.98 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | |||||
Net income attributable to CVS Health | $ | 4.93 | $ | 4.66 | $ | 3.98 | |||||
Weighted average shares outstanding | 1,073 | 1,118 | 1,161 | ||||||||
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.91 | $ | 4.62 | $ | 3.96 | |||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | |||||
Net income attributable to CVS Health | $ | 4.90 | $ | 4.63 | $ | 3.96 | |||||
Weighted average shares outstanding | 1,079 | 1,126 | 1,169 | ||||||||
Dividends declared per share | $ | 1.70 | $ | 1.40 | $ | 1.10 |
Year Ended December 31, | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Net income | $ | 5,319 | $ | 5,239 | $ | 4,644 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments, net of tax | 38 | (100 | ) | (35 | ) | ||||||
Net cash flow hedges, net of tax | 2 | 2 | 4 | ||||||||
Pension and other postretirement benefits, net of tax | 13 | (43 | ) | (37 | ) | ||||||
Total other comprehensive income (loss) | 53 | (141 | ) | (68 | ) | ||||||
Comprehensive income | 5,372 | 5,098 | 4,576 | ||||||||
Comprehensive income attributable to noncontrolling interest | (2 | ) | (2 | ) | — | ||||||
Comprehensive income attributable to CVS Health | $ | 5,370 | $ | 5,096 | $ | 4,576 |
December 31, | |||||||
In millions, except per share amounts | 2016 | 2015 | |||||
Assets: | |||||||
Cash and cash equivalents | $ | 3,371 | $ | 2,459 | |||
Short-term investments | 87 | 88 | |||||
Accounts receivable, net | 12,164 | 11,888 | |||||
Inventories | 14,760 | 14,001 | |||||
Other current assets | 660 | 722 | |||||
Total current assets | 31,042 | 29,158 | |||||
Property and equipment, net | 10,175 | 9,855 | |||||
Goodwill | 38,249 | 38,106 | |||||
Intangible assets, net | 13,511 | 13,878 | |||||
Other assets | 1,485 | 1,440 | |||||
Total assets | $ | 94,462 | $ | 92,437 | |||
Liabilities: | |||||||
Accounts payable | $ | 7,946 | $ | 7,490 | |||
Claims and discounts payable | 9,451 | 7,653 | |||||
Accrued expenses | 6,937 | 6,829 | |||||
Short-term debt | 1,874 | — | |||||
Current portion of long-term debt | 42 | 1,197 | |||||
Total current liabilities | 26,250 | 23,169 | |||||
Long-term debt | 25,615 | 26,267 | |||||
Deferred income taxes | 4,214 | 4,217 | |||||
Other long-term liabilities | 1,549 | 1,542 | |||||
Commitments and contingencies (Note 11) | — | — | |||||
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; 1,705 shares issued and 1,061 | |||||||
shares outstanding at December 31, 2016 and 1,699 shares issued and 1,101 shares | |||||||
outstanding at December 31, 2015 | 17 | 17 | |||||
Treasury stock, at cost: 643 shares at December 31, 2016 and 597 shares at December 31, | |||||||
2015 | (33,452 | ) | (28,886 | ) | |||
Shares held in trust: 1 share at December 31, 2016 and 2015 | (31 | ) | (31 | ) | |||
Capital surplus | 31,618 | 30,948 | |||||
Retained earnings | 38,983 | 35,506 | |||||
Accumulated other comprehensive income (loss) | (305 | ) | (358 | ) | |||
Total CVS Health shareholders’ equity | 36,830 | 37,196 | |||||
Noncontrolling interest | 4 | 7 | |||||
Total shareholders’ equity | 36,834 | 37,203 | |||||
Total liabilities and shareholders’ equity | $ | 94,462 | $ | 92,437 |
Year Ended December 31, | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Cash flows from operating activities: | |||||||||||
Cash receipts from customers | $ | 172,310 | $ | 148,954 | $ | 132,406 | |||||
Cash paid for inventory and prescriptions dispensed by retail network pharmacies | (142,511 | ) | (122,498 | ) | (105,362 | ) | |||||
Cash paid to other suppliers and employees | (15,550 | ) | (14,162 | ) | (15,344 | ) | |||||
Interest received | 20 | 21 | 15 | ||||||||
Interest paid | (1,140 | ) | (629 | ) | (647 | ) | |||||
Income taxes paid | (3,060 | ) | (3,274 | ) | (2,931 | ) | |||||
Net cash provided by operating activities | 10,069 | 8,412 | 8,137 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (2,224 | ) | (2,367 | ) | (2,136 | ) | |||||
Proceeds from sale-leaseback transactions | 230 | 411 | 515 | ||||||||
Proceeds from sale of property and equipment and other assets | 37 | 35 | 11 | ||||||||
Acquisitions (net of cash acquired) and other investments | (539 | ) | (11,475 | ) | (2,439 | ) | |||||
Purchase of available-for-sale investments | (65 | ) | (267 | ) | (157 | ) | |||||
Maturity of available-for-sale investments | 91 | 243 | 161 | ||||||||
Net cash used in investing activities | (2,470 | ) | (13,420 | ) | (4,045 | ) | |||||
Cash flows from financing activities: | |||||||||||
Increase (decrease) in short-term debt | 1,874 | (685 | ) | 685 | |||||||
Proceeds from issuance of long-term debt | 3,455 | 14,805 | 1,483 | ||||||||
Repayments of long-term debt | (5,943 | ) | (2,902 | ) | (3,100 | ) | |||||
Purchase of noncontrolling interest in subsidiary | (39 | ) | — | — | |||||||
Payment of contingent consideration | (26 | ) | (58 | ) | — | ||||||
Dividends paid | (1,840 | ) | (1,576 | ) | (1,288 | ) | |||||
Proceeds from exercise of stock options | 224 | 299 | 421 | ||||||||
Excess tax benefits from stock-based compensation | 72 | 127 | 106 | ||||||||
Repurchase of common stock | (4,461 | ) | (5,001 | ) | (4,001 | ) | |||||
Other | (5 | ) | (3 | ) | — | ||||||
Net cash (used in) provided by financing activities | (6,689 | ) | 5,006 | (5,694 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 2 | (20 | ) | (6 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 912 | (22 | ) | (1,608 | ) | ||||||
Cash and cash equivalents at the beginning of the year | 2,459 | 2,481 | 4,089 | ||||||||
Cash and cash equivalents at the end of the year | $ | 3,371 | $ | 2,459 | $ | 2,481 | |||||
Reconciliation of net income to net cash provided by operating activities: | |||||||||||
Net income | $ | 5,319 | $ | 5,239 | $ | 4,644 | |||||
Adjustments required to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 2,475 | 2,092 | 1,931 | ||||||||
Stock-based compensation | 222 | 230 | 165 | ||||||||
Loss on early extinguishment of debt | 643 | — | 521 | ||||||||
Deferred income taxes and other noncash items | 153 | (266 | ) | (58 | ) | ||||||
Change in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
Accounts receivable, net | (243 | ) | (1,594 | ) | (737 | ) | |||||
Inventories | (742 | ) | (1,141 | ) | (770 | ) | |||||
Other current assets | 35 | 355 | (383 | ) | |||||||
Other assets | (43 | ) | 2 | 9 | |||||||
Accounts payable and claims and discounts payable | 2,189 | 2,834 | 1,742 | ||||||||
Accrued expenses | 59 | 765 | 1,060 | ||||||||
Other long-term liabilities | 2 | (104 | ) | 13 | |||||||
Net cash provided by operating activities | $ | 10,069 | $ | 8,412 | $ | 8,137 |
Shares | Dollars | |||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||
In millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||
Common stock: | ||||||||||||||||||||
Beginning of year | 1,699 | 1,691 | 1,680 | $ | 17 | $ | 17 | $ | 17 | |||||||||||
Stock options exercised and issuance of stock awards | 6 | 8 | 11 | — | — | — | ||||||||||||||
End of year | 1,705 | 1,699 | 1,691 | $ | 17 | $ | 17 | $ | 17 | |||||||||||
Treasury stock: | ||||||||||||||||||||
Beginning of year | (597 | ) | (550 | ) | (500 | ) | $ | (28,886 | ) | $ | (24,078 | ) | $ | (20,169 | ) | |||||
Purchase of treasury shares | (47 | ) | (48 | ) | (51 | ) | (4,606 | ) | (4,856 | ) | (4,001 | ) | ||||||||
Employee stock purchase plan issuances | 1 | 1 | 1 | 40 | 48 | 92 | ||||||||||||||
End of year | (643 | ) | (597 | ) | (550 | ) | $ | (33,452 | ) | $ | (28,886 | ) | $ | (24,078 | ) | |||||
Shares held in trust: | ||||||||||||||||||||
Balance at beginning and end of year | (1 | ) | (1 | ) | (1 | ) | $ | (31 | ) | $ | (31 | ) | $ | (31 | ) | |||||
Capital surplus: | ||||||||||||||||||||
Beginning of year | $ | 30,948 | $ | 30,418 | $ | 29,777 | ||||||||||||||
Stock option activity, stock awards and other | 449 | 533 | 535 | |||||||||||||||||
Excess tax benefit on stock options and stock awards | 76 | 142 | 106 | |||||||||||||||||
2015 accelerated share repurchase not settled until 2016 | 145 | (145 | ) | — | ||||||||||||||||
End of year | $ | 31,618 | $ | 30,948 | $ | 30,418 | ||||||||||||||
Retained earnings: | ||||||||||||||||||||
Beginning of year | $ | 35,506 | $ | 31,849 | $ | 28,493 | ||||||||||||||
Changes in inventory accounting principles | — | (4 | ) | — | ||||||||||||||||
Net income attributable to CVS Health | 5,317 | 5,237 | 4,644 | |||||||||||||||||
Common stock dividends | (1,840 | ) | (1,576 | ) | (1,288 | ) | ||||||||||||||
End of year | $ | 38,983 | $ | 35,506 | $ | 31,849 | ||||||||||||||
Accumulated other comprehensive loss: | ||||||||||||||||||||
Beginning of year | $ | (358 | ) | $ | (217 | ) | $ | (149 | ) | |||||||||||
Foreign currency translation adjustments, net of tax | 38 | (100 | ) | (35 | ) | |||||||||||||||
Net cash flow hedges, net of tax | 2 | 2 | 4 | |||||||||||||||||
Pension and other postretirement benefits, net of tax | 13 | (43 | ) | (37 | ) | |||||||||||||||
End of year | $ | (305 | ) | $ | (358 | ) | $ | (217 | ) | |||||||||||
Total CVS Health shareholders’ equity | $ | 36,830 | $ | 37,196 | $ | 37,958 | ||||||||||||||
Noncontrolling interest: | ||||||||||||||||||||
Beginning of year | $ | 7 | $ | 5 | $ | — | ||||||||||||||
Business combinations | — | 1 | 5 | |||||||||||||||||
Capital contributions | 1 | 2 | — | |||||||||||||||||
Net income attributable to noncontrolling interest(1) | 1 | 1 | — | |||||||||||||||||
Distributions | (5 | ) | (2 | ) | — | |||||||||||||||
End of year | $ | 4 | $ | 7 | $ | 5 | ||||||||||||||
Total shareholders’ equity | $ | 36,834 | $ | 37,203 | $ | 37,963 |
• | 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 | 2016 | 2015 | 2014 | ||||||||
Beginning balance | $ | 161 | $ | 256 | $ | 256 | |||||
Additions charged to bad debt expense | 221 | 216 | 185 | ||||||||
Write-offs charged to allowance | (96 | ) | (311 | ) | (185 | ) | |||||
Ending balance | $ | 286 | $ | 161 | $ | 256 |
In millions | 2016 | 2015 | |||||
Land | $ | 1,734 | $ | 1,635 | |||
Building and improvements | 3,226 | 3,168 | |||||
Fixtures and equipment | 10,956 | 10,001 | |||||
Leasehold improvements | 4,494 | 4,015 | |||||
Software | 2,392 | 2,217 | |||||
22,802 | 21,036 | ||||||
Accumulated depreciation and amortization | (12,627 | ) | (11,181 | ) | |||
Property and equipment, net | $ | 10,175 | $ | 9,855 |
In millions | 2016 | 2015 | |||||
Beginning balance | $ | 39 | $ | — | |||
Acquisition of noncontrolling interest | — | 39 | |||||
Net income attributable to noncontrolling interest | 1 | 1 | |||||
Distributions | (2 | ) | (1 | ) | |||
Purchase of noncontrolling interest | (39 | ) | — | ||||
Reclassification to capital surplus in connection with purchase of noncontrolling interest | 1 | — | |||||
Ending balance | $ | — | $ | 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. |
In millions | 2016 | 2015 | 2014 | ||||||||
Interest expense | $ | 1,078 | $ | 859 | $ | 615 | |||||
Interest income | (20 | ) | (21 | ) | (15 | ) | |||||
Interest expense, net | $ | 1,058 | $ | 838 | $ | 600 |
Year Ended December 31, 20161) | |||||||||||||||
In millions | Foreign Currency | Losses on Cash Flow Hedges | Pension and Other Postretirement Benefits | Total | |||||||||||
Balance, December 31, 2015 | $ | (165 | ) | $ | (7 | ) | $ | (186 | ) | $ | (358 | ) | |||
Other comprehensive income before reclassifications | 38 | — | — | 38 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (2) | — | 2 | 13 | 15 | |||||||||||
Net other comprehensive income | 38 | 2 | 13 | 53 | |||||||||||
Balance, December 31, 2016 | $ | (127 | ) | $ | (5 | ) | $ | (173 | ) | $ | (305 | ) | |||
Year Ended December 31, 2015(1) | |||||||||||||||
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 | ) |
(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 | 2016 | 2015 | 2014 | |||||||||
Income (loss) from discontinued operations | $ | (2 | ) | $ | 15 | $ | (1 | ) | ||||
Income tax expense | 1 | (6 | ) | — | ||||||||
Income (loss) from discontinued operations, net of tax | $ | (1 | ) | $ | 9 | $ | (1 | ) |
In millions | As Previously Reported | Adjustments | As Revised | |||||||||
Deferred tax assets - current | $ | 1,220 | $ | (1,220 | ) | $ | — | |||||
Total current assets | 30,378 | (1,220 | ) | 29,158 | ||||||||
Total assets | 93,657 | (1,220 | ) | 92,437 | ||||||||
Deferred tax liabilities - noncurrent | 5,437 | (1,220 | ) | 4,217 | ||||||||
Total liabilities and shareholders’ equity | 93,657 | (1,220 | ) | 92,437 |
(In millions) | |||
Current assets (including cash of $298) | $ | 1,657 | |
Property and equipment | 313 | ||
Goodwill | 9,139 | ||
Intangible assets | 3,962 | ||
Other noncurrent assets | 63 | ||
Current liabilities | (773 | ) | |
Long-term debt | (3,110 | ) | |
Deferred income tax liabilities | (1,498 | ) | |
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 | 467 | ||
Property and equipment | 9 | ||
Intangible assets | 490 | ||
Goodwill | 900 | ||
Total cash consideration | $ | 1,868 |
In millions | Pharmacy Services | Retail/LTC | Total | ||||||||
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 | ||||||||
Acquisitions | — | 126 | 126 | ||||||||
Foreign currency translation adjustments | — | 17 | 17 | ||||||||
Other (1) | (48 | ) | 48 | — | |||||||
Balance, December 31, 2016 | $ | 21,637 | $ | 16,612 | $ | 38,249 |
In millions | |||
2017 | $ | 780 | |
2018 | 748 | ||
2019 | 704 | ||
2020 | 534 | ||
2021 | 473 |
2016 | 2015 | ||||||||||||||||||||||
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 | 11,485 | (4,802 | ) | 6,683 | 10,594 | (4,092 | ) | 6,502 | |||||||||||||||
Favorable leases and other | 1,123 | (693 | ) | 430 | 1,595 | (617 | ) | 978 | |||||||||||||||
$ | 19,006 | $ | (5,495 | ) | $ | 13,511 | $ | 18,587 | $ | (4,709 | ) | $ | 13,878 |
In billions | ||||||
Authorization Date | Authorized | Remaining | ||||
November 2, 2016 (“2016 Repurchase Program”) | $ | 15.0 | $ | 15.0 | ||
December 15, 2014 (“2014 Repurchase Program”) | $ | 10.0 | $ | 3.2 | ||
December 17, 2013 (“2013 Repurchase Program”) | $ | 6.0 | $ | — | ||
September 19, 2012 (“2012 Repurchase Program”) | $ | 6.0 | $ | — |
In millions | 2016 | 2015 | |||||
Short-term debt | |||||||
Commercial paper | $ | 1,874 | $ | — | |||
Long-term debt | |||||||
1.2% senior notes due 2016 | — | 750 | |||||
6.125% senior notes due 2016 | — | 421 | |||||
5.75% senior notes due 2017 | — | 1,080 | |||||
1.9% senior notes due 2018 | 2,250 | 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 | |||||
2.8% senior notes due 2020 | 2,750 | 2,750 | |||||
4.75% senior notes due 2020 | — | 450 | |||||
2.125% senior notes due 2021 | 1,750 | — | |||||
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 | 1,500 | |||||
4.75% senior notes due 2022 | 399 | 400 | |||||
4% senior notes due 2023 | 1,250 | 1,250 | |||||
3.375% senior notes due 2024 | 650 | 650 | |||||
5% senior notes due 2024 | 299 | 300 | |||||
3.875% senior notes due 2025 | 2,828 | 3,000 | |||||
2.875% senior notes due 2026 | 1,750 | — | |||||
6.25% senior notes due 2027 | 372 | 453 | |||||
3.25% senior exchange debentures due 2035 | 1 | 5 | |||||
4.875% senior notes due 2035 | 652 | 2,000 | |||||
6.125% senior notes due 2039 | 447 | 734 | |||||
5.75% senior notes due 2041 | 133 | 493 | |||||
5.3% senior notes due 2043 | 750 | 750 | |||||
5.125% senior notes due 2045 | 3,500 | 3,500 | |||||
Capital lease obligations | 648 | 644 | |||||
Other | 23 | 20 | |||||
Total debt principal | 27,726 | 27,694 | |||||
Debt premiums | 33 | 39 | |||||
Debt discounts and deferred financing costs | (228 | ) | (269 | ) | |||
27,531 | 27,464 | ||||||
Less: | |||||||
Short-term debt (commercial paper) | (1,874 | ) | — | ||||
Current portion of long-term debt | (42 | ) | (1,197 | ) | |||
Long-term debt | $ | 25,615 | $ | 26,267 |
In millions | ||||
2017 | $ | 1,916 | ||
2018 | 3,521 | |||
2019 | 872 | |||
2020 | 2,774 | |||
2021 | 2,326 | |||
Thereafter | 16,317 | |||
Total | $ | 27,726 |
In millions | 2016 | 2015 | 2014 | ||||||||
Minimum rentals | $ | 2,418 | $ | 2,317 | $ | 2,320 | |||||
Contingent rentals | 35 | 34 | 36 | ||||||||
2,453 | 2,351 | 2,356 | |||||||||
Less: sublease income | (24 | ) | (22 | ) | (21 | ) | |||||
$ | 2,429 | $ | 2,329 | $ | 2,335 |
In millions | Capital Leases | Operating Leases(1) | |||||
2017 | $ | 74 | $ | 2,458 | |||
2018 | 72 | 2,361 | |||||
2019 | 71 | 2,209 | |||||
2020 | 71 | 2,040 | |||||
2021 | 70 | 1,910 | |||||
Thereafter | 956 | 16,368 | |||||
Total future lease payments(2) | 1,314 | $ | 27,346 | ||||
Less: imputed interest | (666 | ) | |||||
Present value of capital lease obligations | $ | 648 |
(1) | Future operating lease payments have not been reduced by minimum sublease rentals of $176 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 | 2016 | 2015 | ||||||
Change in benefit obligation: | ||||||||
Benefit obligation at beginning of year | $ | 844 | $ | 796 | ||||
Acquisition | — | 8 | ||||||
Interest cost | 27 | 31 | ||||||
Actuarial loss | 13 | 45 | ||||||
Benefit payments | (37 | ) | (36 | ) | ||||
Settlements | (3 | ) | — | |||||
Benefit obligation at end of year | $ | 844 | $ | 844 |
In millions | 2016 | 2015 | ||||||
Change in plan assets: | ||||||||
Fair value of plan assets at the beginning of the year | $ | 613 | $ | 635 | ||||
Acquisitions | — | 5 | ||||||
Actual return on plan assets | 26 | (13 | ) | |||||
Employer contributions | 25 | 22 | ||||||
Benefit payments | (37 | ) | (36 | ) | ||||
Settlements | (3 | ) | — | |||||
Fair value of plan assets at the end of the year | 624 | 613 | ||||||
Funded status | $ | (220 | ) | $ | (231 | ) |
In millions | 2016 | 2015 | 2014 | |||||||||
Components of net periodic benefit cost: | ||||||||||||
Interest cost | $ | 27 | $ | 31 | $ | 32 | ||||||
Expected return on plan assets | (32 | ) | (33 | ) | (31 | ) | ||||||
Amortization of net loss | 32 | 21 | 16 | |||||||||
Settlement loss | — | — | 3 | |||||||||
Service cost | — | — | 1 | |||||||||
Net periodic pension cost | $ | 27 | $ | 19 | $ | 21 |
In millions | Fair value of plan assets at December 31, 2016 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Cash and money market funds | $ | 8 | $ | — | $ | — | $ | 8 | |||||||
Fixed income funds | 3 | 580 | — | 583 | |||||||||||
Equity mutual funds | 33 | — | — | 33 | |||||||||||
Total assets at fair value | $ | 44 | $ | 580 | $ | — | $ | 624 | |||||||
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 |
In millions | |||
2017(1) | $ | 39 | |
2018 | 52 | ||
2019 | 50 | ||
2020 | 49 | ||
2021 | 61 | ||
Thereafter | 236 |
In millions | 2016 | 2015 | 2014 | ||||||||
Stock options(1) | $ | 79 | $ | 90 | $ | 103 | |||||
Restricted stock awards(2) | 143 | 140 | 62 | ||||||||
Total stock-based compensation | $ | 222 | $ | 230 | $ | 165 |
(1) | Includes the Employee Stock Purchase Plan (the “ESPP”) |
2016 | 2015 | 2014 | |||||||||
Dividend yield(1) | 0.88 | % | 0.71 | % | 0.75 | % | |||||
Expected volatility(2) | 20.64 | % | 13.92 | % | 14.87 | % | |||||
Risk-free interest rate(3) | 0.45 | % | 0.11 | % | 0.08 | % | |||||
Expected life (in years)(4) | 0.5 | 0.5 | 0.5 | ||||||||
Weighted-average grant date fair value | $ | 14.98 | $ | 18.72 | $ | 13.74 |
(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., six 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 | 5,418 | $ | 59.22 | |||
Granted | 1,992 | $ | 103.26 | |||
Vested | (2,219 | ) | $ | 102.47 | ||
Forfeited | (316 | ) | $ | 89.71 | ||
Nonvested at end of year | 4,875 | $ | 55.56 |
2016 | 2015 | 2014 | |||||||||
Dividend yield(1) | 1.62 | % | 1.37 | % | 1.47 | % | |||||
Expected volatility(2) | 17.22 | % | 18.07 | % | 19.92 | % | |||||
Risk-free interest rate(3) | 1.24 | % | 1.24 | % | 1.35 | % | |||||
Expected life (in years)(4) | 4.2 | 4.2 | 4.0 | ||||||||
Weighted-average grant date fair value | $ | 13.00 | $ | 14.01 | $ | 11.04 |
(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, 2015 | 24,341 | $ | 42.17 | |||||||||
Granted | 4,343 | $ | 104.62 | |||||||||
Exercised | (4,328 | ) | $ | 42.07 | ||||||||
Forfeited | (768 | ) | $ | 85.34 | ||||||||
Expired | (313 | ) | $ | 39.73 | ||||||||
Outstanding at December 31, 2016 | 23,275 | $ | 68.60 | 3.69 | $ | 427,311,414 | ||||||
Exercisable at December 31, 2016 | 12,196 | $ | 49.22 | 2.35 | $ | 375,563,490 | ||||||
Vested at December 31, 2016 and expected to vest in the future | 22,734 | $ | 67.86 | 3.64 | $ | 426,628,851 |
In millions | 2016 | 2015 | 2014 | ||||||||
Current: | |||||||||||
Federal | $ | 2,803 | $ | 3,065 | $ | 2,581 | |||||
State | 511 | 555 | 495 | ||||||||
3,314 | 3,620 | 3,076 | |||||||||
Deferred: | |||||||||||
Federal | 5 | (180 | ) | (43 | ) | ||||||
State | (2 | ) | (54 | ) | — | ||||||
3 | (234 | ) | (43 | ) | |||||||
Total | $ | 3,317 | $ | 3,386 | $ | 3,033 |
2016 | 2015 | 2014 | ||||||
Statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal tax benefit | 4.1 | 4.0 | 4.3 | |||||
Other | (0.7 | ) | 0.3 | 0.2 | ||||
Effective income tax rate | 38.4 | % | 39.3 | % | 39.5 | % |
In millions | 2016 | 2015 | |||||
Deferred tax assets: | |||||||
Lease and rents | $ | 375 | $ | 378 | |||
Inventory | 57 | 99 | |||||
Employee benefits | 400 | 359 | |||||
Allowance for doubtful accounts | 301 | 279 | |||||
Retirement benefits | 65 | 105 | |||||
Net operating loss and capital loss carryforwards | 125 | 115 | |||||
Deferred income | 144 | 83 | |||||
Other | 336 | 498 | |||||
Valuation allowance | (135 | ) | (115 | ) | |||
Total deferred tax assets | 1,668 | 1,801 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | (5,882 | ) | (6,018 | ) | |||
Total deferred tax liabilities | (5,882 | ) | (6,018 | ) | |||
Net deferred tax liabilities | $ | (4,214 | ) | $ | (4,217 | ) |
In millions | 2016 | 2015 | 2014 | ||||||||
Beginning balance | $ | 338 | $ | 188 | $ | 117 | |||||
Additions based on tax positions related to the current year | 68 | 57 | 32 | ||||||||
Additions based on tax positions related to prior years | 70 | 122 | 70 | ||||||||
Reductions for tax positions of prior years | (100 | ) | (11 | ) | (15 | ) | |||||
Expiration of statutes of limitation | (22 | ) | (13 | ) | (15 | ) | |||||
Settlements | (47 | ) | (5 | ) | (1 | ) | |||||
Ending balance | $ | 307 | $ | 338 | $ | 188 |
• | In re Pharmacy Benefit Managers Antitrust Litigation (U.S. District Court for the Eastern District of Pennsylvania) (consolidating North Jackson Pharmacy, Inc. et al v. Caremark Rx Inc. et al. (U.S. District Court for the Northern District of Alabama)). Beginning in August 2003, various lawsuits were filed by pharmacies alleging that various PBMs were violating certain antitrust laws. In October 2003, two independent pharmacies, North Jackson Pharmacy, Inc. and C&C, Inc. filed three putative class action complaints seeking treble damages and injunctive relief against Caremark (the term “Caremark” as used herein refers to one or more PBM subsidiaries of the Company, as applicable). 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. The consolidated action is now known as In re Pharmacy Benefit Managers Antitrust Litigation. On January 18, 2017, the court denied the plaintiffs’ motion for class certification filed against Caremark, denied a similar motion filed against another PBM, and decertified classes that had been previously certified against other PBMs. |
• | Indiana State District Council of Laborers and HOD Carriers Pension and Welfare Fund v. Omnicare, Inc. et al. (U.S. District Court for the Eastern District of Kentucky). In February 2006, two substantially similar putative class action lawsuits were filed and subsequently consolidated. 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 2016, Omnicare filed an answer to plaintiffs’ third amended complaint, and discovery commenced. |
• | Claims Processing Matter. 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 pharmacy benefit management clients to the applicable government agencies) on one of the Company’s adjudication platforms. In September 2014, the Company settled the OIG’s claims, as well as related claims by the Department of Justice and private plaintiffs, without any admission of liability. The Company concluded its discussions with the OIG concerning other claim processing issues and resolved those additional matters on December 22, 2016 for the payment of an immaterial amount. |
• | FTC and Multi-State Investigation. 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. |
• | United States ex rel. Jack Chin v. Walgreen Company et al. (U.S. District Court for the Central District of California). 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. In October 2016, the U.S. District Court for the Central District of California unsealed a qui tam complaint, filed in April 2009 against CVS Pharmacy and other retail pharmacies, alleging that the Company violated the federal False Claims Act, and the false claims acts of several states, by offering such programs. The federal government has declined intervention in the case. |
• | United States ex rel. James Banigan and Richard Templin v. Organon USA Inc. et al. (U.S. District Court for the District of Massachusetts). On October 29, 2010, the court unsealed a qui tam complaint, which had been under seal |
• | United States ex rel. Anthony R. Spay v. CVS Caremark Corporation et al. (U.S. District Court for the Eastern District of Pennsylvania). In January 2012, the court 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 2015, the Court granted Caremark's motion for summary judgment in its entirety, and entered judgment in favor of Caremark and against Spay. In October 2015, Spay filed a notice of appeal in the United States Court of Appeals for the Third Circuit; that court heard oral arguments on the appeal in November 2016. |
• | State of Texas ex rel. Myron Winkelman and Stephani Martinson et al. v. CVS Health Corporation (Travis County District Court). In February 2012, the Attorney General of the State of Texas issued Civil Investigative Demands and has issued a series of subsequent requests for documents and information in connection with its investigation concerning the Health Savings Pass program and other pricing practices with respect to claims for reimbursement from the Texas Medicaid program. In January 2017, the court unsealed a first amended petition. The amended petition alleges the Company violated the Texas Medicaid Fraud Prevention Act by submitting false claims for reimbursement to Texas Medicaid by, among other things, failing to use the price available to members of the CVS Health Savings Pass program as the usual and customary price. The amended petition was unsealed following the Company’s filing of CVS Pharmacy, Inc. v. Charles Smith et al. (Travis County District Court), a declaratory judgment action against the State of Texas in December 2016 seeking a declaration that the prices charged to members of the Health Savings Pass program do not constitute usual and customary prices under the Medicaid regulation. |
• | California ReadyFill Subpoena. In November 2012, the Company received a subpoena for documents from the OIG requesting information concerning automatic refill programs used by pharmacies to refill prescriptions for customers. The subpoena was issued in connection with an investigation conducted out of the U.S. Attorney’s Office for the Central District of California. The Company produced documents and data. |
• | Pure Services Subpoena. In 2013, Omnicare received a subpoena seeking information regarding Omnicare’s May 2008 acquisition of Pure Service Pharmacy. In 2016, Omnicare reached an agreement regarding financial terms to resolve, for $1.5 million plus interest, the subpoena regarding the acquisition of Pure Service Pharmacy. 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. 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. |
• | Auto Label Subpoena. In 2014, Omnicare received a subpoena seeking information regarding Omnicare’s Auto Label Verification system. In 2016, Omnicare reached an agreement regarding financial terms to resolve, for $8 million plus interest, the subpoena regarding Omnicare’s Auto Label Verification system. 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. 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. |
• | Subpoena Concerning PBM Administrative Fees. 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 |
• | ReadyFill Subpoena (Minnesota). 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. |
• | Corcoran et al. v. CVS Health Corporation (U.S. District Court for the Northern District of California) and Podgorny et al. v. CVS Health Corporation (U.S. District Court for the Northern District of Illinois). These putative class actions were filed against the Company in July and September 2015. The cases were consolidated in United States District Court in the Northern District of California. Plaintiffs seek damages and injunctive relief on behalf of a class of consumers who purchased certain prescription drugs under the consumer protection statutes and common laws of certain states. Several third-party payors filed similar putative class actions on behalf of payors captioned Sheet Metal Workers Local No. 20 Welfare and Benefit Fund v. CVS Health Corp. (U.S. District Court for the District of Rhode Island) and Plumbers Welfare Fund, Local 130 v. CVS Health Corporation (U.S. District Court for the District of Rhode Island) in February and August 2016. In all of these cases the plaintiffs allege the Company overcharged for certain prescription drugs by not submitting as the pharmacy’s usual and customary price the price available to members of the CVS Health Savings Pass program. The Company is defending these actions. |
• | Omnicare DEA Subpoena. In September 2015, Omnicare was served with an administrative subpoena by the U.S. Drug Enforcement Agency (“DEA”). The subpoena seeks documents related to controlled substance policies, procedures, and practices at eight pharmacy locations from May 2012 to the present. The Company has been cooperating and providing documents in response to this administrative subpoena. |
• | Omnicare Cycle Fill CID. 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. |
• | PBM Pricing CID. 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. |
• | United States ex rel. Sally Schimelpfenig and John Segura v. Dr. Reddy's Laboratories Limited and Dr. Reddy's Laboratories, Inc. (U.S. District Court for the Eastern District of Pennsylvania). In November 2015, the court unsealed a second amended qui tam complaint filed in September 2015. 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. The Company's motion to dismiss remains pending. |
• | Barchock et al. v. CVS Health Corporation et al. (U.S. District Court for the District of Rhode Island). In February 2016, an ERISA class action lawsuit was filed against the Company, the Benefit Plans Committee of the Company, and Galliard Capital Management, Inc., by Mary Barchock, Thomas Wasecko, and Stacy Weller, purportedly on behalf of the 401(k) Plan and the Employee Stock Ownership Plan of the Company (the “Plan”), and participants in the Plan. The complaint alleges that the defendants breached fiduciary duties owed to the plaintiffs and the Plan by investing too much of the Plan’s Stable Value Fund in short-term money market funds and cash management accounts. The Company has moved to dismiss the plaintiffs’ amended complaint. |
• | State of California ex rel. Matthew Omlansky v. CVS Caremark Corporation (Superior Court of the State of California, County of Sacramento). In April 2016, the court unsealed a first amended qui tam complaint filed in July 2013. The government has declined intervention in this case. The relator alleges that the Company submitted false |
• | DEA Matters. In October 2016, the Company reached an agreement in principle with the U.S. Attorney’s Office for the Eastern District of California to resolve alleged violations of the Controlled Substances Act (“CSA”) for $5 million. The settlement is contingent on the negotiation of terms of a settlement agreement. The Company is also undergoing several audits by the 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. |
• | State of Mississippi v. CVS Health Corporation et al. (Chancery Court of Desoto County, Mississippi, Third Judicial District). In July 2016, the Company was served with a complaint filed on behalf of the State of Mississippi alleging that CVS retail pharmacies in Mississippi submitted false claims for reimbursement to Mississippi Medicaid by not submitting as the pharmacy’s usual and customary price the price available to members of the CVS Health Savings Pass program. The Company has responded to the complaint, filed a counterclaim, and moved to transfer the case to circuit court. |
In millions | Pharmacy Services Segment(1)(2) | Retail/LTC Segment(2) | Corporate Segment | Intersegment Eliminations(2) | Consolidated Totals | ||||||||||||||
2016: | |||||||||||||||||||
Net revenues | $ | 119,963 | $ | 81,100 | $ | — | $ | (23,537 | ) | $ | 177,526 | ||||||||
Gross profit(3) | 5,901 | 23,738 | — | (782 | ) | 28,857 | |||||||||||||
Operating profit(4)(5)(6) | 4,672 | 7,281 | (894 | ) | (721 | ) | 10,338 | ||||||||||||
Depreciation and amortization | 714 | 1,642 | 119 | — | 2,475 | ||||||||||||||
Additions to property and equipment | 295 | 1,732 | 252 | — | 2,279 | ||||||||||||||
2015: | |||||||||||||||||||
Net revenues | $ | 100,363 | $ | 72,007 | $ | — | $ | (19,080 | ) | $ | 153,290 | ||||||||
Gross profit | 5,227 | 21,992 | — | (691 | ) | 26,528 | |||||||||||||
Operating profit(5)(6) | 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 |
(1) | Net revenues of the Pharmacy Services Segment include approximately $10.5 billion, $8.9 billion and $8.1 billion of Retail Co-Payments for 2016, 2015 and 2014, respectively. See Note 1 “Significant Accounting Policies” 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 the Company’s retail pharmacies to purchase covered products, when members enrolled in programs such as Maintenance Choice ® elect to pick up maintenance prescriptions at one of the Company’s retail pharmacies instead of receiving them through the mail, or when members have prescriptions filled at the Company’s long-term care pharmacies. When these occur, both the Pharmacy Services and Retail/LTC segments record the revenues, gross profit and operating profit on a standalone basis. |
(3) | The Retail/LTC Segment gross profit for the year ended December 31, 2016 includes $46 million of acquisition-related integration costs. The integration costs are related to the acquisitions of Omnicare and the pharmacies and clinics of Target. |
(4) | The Pharmacy Services Segment operating profit for the year ended December 31, 2016 includes the reversal of an accrual of $88 million in connection with a legal settlement. |
(5) | The Retail/LTC Segment operating profit for the three months and year ended December 31, 2016 includes a $34 million asset impairment charge in connection with planned store closures in 2017 related to the Company’s enterprise streamlining initiative. The Retail/LTC Segment operating profit for the 2016 and 2015 include $281 million and $64 million, respectively, of acquisition-related integration costs. The integration costs are related to the acquisitions of Omnicare and the pharmacies and clinics of Target. |
(6) | The Corporate Segment operating loss for the year ended December 31, 2016 includes $10 million of integration costs. 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. |
In millions, except per share amounts | 2016 | 2015 | 2014 | ||||||||
Numerator for earnings per share calculation: | |||||||||||
Income from continuing operations | $ | 5,320 | $ | 5,230 | $ | 4,645 | |||||
Income allocated to participating securities | (27 | ) | (26 | ) | (19 | ) | |||||
Net income attributable to noncontrolling interest | (2 | ) | (2 | ) | — | ||||||
Income from continuing operations attributable to CVS Health | $ | 5,291 | $ | 5,202 | $ | 4,626 | |||||
Denominator for earnings per share calculation: | |||||||||||
Weighted average shares, basic | 1,073 | 1,118 | 1,161 | ||||||||
Effect of dilutive securities | 6 | 8 | 8 | ||||||||
Weighted average shares, diluted | 1,079 | 1,126 | 1,169 | ||||||||
Earnings per share from continuing operations: | |||||||||||
Basic | $ | 4.93 | $ | 4.65 | $ | 3.98 | |||||
Diluted | $ | 4.91 | $ | 4.62 | $ | 3.96 |
In millions, except per share amounts | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Year | ||||||||||||||
2016: | |||||||||||||||||||
Net revenues | $ | 43,215 | $ | 43,725 | $ | 44,615 | $ | 45,971 | $ | 177,526 | |||||||||
Gross profit | 6,744 | 7,015 | 7,492 | 7,606 | 28,857 | ||||||||||||||
Operating profit | 2,176 | 2,350 | 2,817 | 2,995 | 10,338 | ||||||||||||||
Income from continuing operations | 1,147 | 924 | 1,542 | 1,707 | 5,320 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | — | — | (1 | ) | — | (1 | ) | ||||||||||||
Net income attributable to CVS Health | 1,146 | 924 | 1,540 | 1,707 | 5,317 | ||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 1.04 | $ | 0.86 | $ | 1.44 | $ | 1.60 | $ | 4.93 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Net income attributable to CVS Health | $ | 1.04 | $ | 0.86 | $ | 1.44 | $ | 1.60 | $ | 4.93 | |||||||||
Diluted earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 1.04 | $ | 0.86 | $ | 1.43 | $ | 1.59 | $ | 4.91 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Net income attributable to CVS Health | $ | 1.04 | $ | 0.86 | $ | 1.43 | $ | 1.59 | $ | 4.90 | |||||||||
Dividends per share | $ | 0.425 | $ | 0.425 | $ | 0.425 | $ | 0.425 | $ | 1.70 | |||||||||
Stock price: (New York Stock Exchange) | |||||||||||||||||||
High | $ | 104.05 | $ | 106.10 | $ | 98.06 | $ | 88.80 | $ | 106.10 | |||||||||
Low | $ | 89.65 | $ | 93.21 | $ | 88.99 | $ | 73.53 | $ | 73.53 |
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 | $ | 0.35 | $ | 0.35 | $ | 0.35 | $ | 0.35 | $ | 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 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||
Statement of operations data: | |||||||||||||||||||
Net revenues | $ | 177,526 | $ | 153,290 | $ | 139,367 | $ | 126,761 | $ | 123,120 | |||||||||
Gross profit | 28,857 | 26,528 | 25,367 | 23,783 | 22,488 | ||||||||||||||
Operating expenses | 18,519 | 17,074 | 16,568 | 15,746 | 15,278 | ||||||||||||||
Operating profit | 10,338 | 9,454 | 8,799 | 8,037 | 7,210 | ||||||||||||||
Interest expense, net | 1,058 | 838 | 600 | 509 | 557 | ||||||||||||||
Loss on early extinguishment of debt | 643 | — | 521 | — | 348 | ||||||||||||||
Income tax provision(1) | 3,317 | 3,386 | 3,033 | 2,928 | 2,436 | ||||||||||||||
Income from continuing operations | 5,320 | 5,230 | 4,645 | 4,600 | 3,869 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | (1 | ) | 9 | (1 | ) | (8 | ) | (7 | ) | ||||||||||
Net income | 5,319 | 5,239 | 4,644 | 4,592 | 3,862 | ||||||||||||||
Net (income) loss attributable to noncontrolling interest | (2 | ) | (2 | ) | — | — | 2 | ||||||||||||
Net income attributable to CVS Health | $ | 5,317 | $ | 5,237 | $ | 4,644 | $ | 4,592 | $ | 3,864 | |||||||||
Per share data: | |||||||||||||||||||
Basic earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.93 | $ | 4.65 | $ | 3.98 | $ | 3.78 | $ | 3.05 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |||||||
Net income attributable to CVS Health | $ | 4.93 | $ | 4.66 | $ | 3.98 | $ | 3.77 | $ | 3.04 | |||||||||
Diluted earnings per share: | |||||||||||||||||||
Income from continuing operations attributable to CVS Health | $ | 4.91 | $ | 4.62 | $ | 3.96 | $ | 3.75 | $ | 3.02 | |||||||||
Income (loss) from discontinued operations attributable to CVS Health | $ | — | $ | 0.01 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | |||||||
Net income attributable to CVS Health | $ | 4.90 | $ | 4.63 | $ | 3.96 | $ | 3.74 | $ | 3.02 | |||||||||
Cash dividends per share | $ | 1.70 | $ | 1.40 | $ | 1.10 | $ | 0.90 | $ | 0.65 | |||||||||
Balance sheet and other data: | |||||||||||||||||||
Total assets(1) | $ | 94,462 | $ | 92,437 | $ | 73,202 | $ | 70,550 | $ | 65,474 | |||||||||
Long-term debt | $ | 25,615 | $ | 26,267 | $ | 11,630 | $ | 12,767 | $ | 9,079 | |||||||||
Total shareholders’ equity | $ | 36,834 | $ | 37,203 | $ | 37,963 | $ | 37,938 | $ | 37,653 | |||||||||
Number of stores (at end of year) | 9,750 | 9,681 | 7,866 | 7,702 | 7,508 |
(1) | As of January 1, 2016, the Company early adopted Accounting Standard Update No. 2015-17, Income Taxes (Topic 740) issued by the Financial Accounting Standards Board in November 2015. The effect of the retrospective adoption on the Company’s historical consolidated balance sheets is a reduction in current assets and deferred income taxes of $1.2 billion, $985 million, $902 million and $693 million as of December 31, 2015, 2014, 2013 and 2012, respectively. |
/s/ Ernst & Young LLP | |
Boston, Massachusetts | |
February 9, 2017 |
(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 57 entities that operate drugstores, all of which drugstores are in the United States and its territories except approximately 37 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 and specialty 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 Nos. 333-205156 and 333-210872) of CVS Health Corporation, |
(2) | Registration Statement (Form S-4 No. 333-210873) of CVS Health Corporation, and |
(3) | 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, 2017 | 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, 2017 | 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, 2017 | /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, 2017 | /S/ DAVID M. DENTON |
David M. Denton | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2016 |
Feb. 03, 2017 |
Jun. 30, 2016 |
|
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, 2016 | ||
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 | $ 101,661,618,666 | ||
Entity Common Stock, Shares Outstanding | 1,025,699,605 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY |
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 5,319 | $ 5,239 | $ 4,644 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments, net of tax | 38 | (100) | (35) |
Net cash flow hedges, net of tax | 2 | 2 | 4 |
Pension and other postretirement benefits, net of tax | 13 | (43) | (37) |
Net other comprehensive income (loss) | 53 | (141) | (68) |
Comprehensive income | 5,372 | 5,098 | 4,576 |
Comprehensive income attributable to noncontrolling interest | (2) | (2) | 0 |
Comprehensive income attributable to CVS Health | $ 5,370 | $ 5,096 | $ 4,576 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized (in shares) | 100,000.0 | 100,000.0 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 3,200,000,000 | 3,200,000,000 |
Common Stock, shares issued (in shares) | 1,705,000,000 | 1,699,000,000 |
Common Stock, shares outstanding (in shares) | 1,061,000,000 | 1,101,000,000 |
Treasury Stock, shares (in shares) | 643,000,000 | 597,000,000 |
Shares held in trust: 1 share at December 31, 2016 and 2015 (in shares) | 1,000,000 | 1,000,000 |
Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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. Pharmacy Services Segment (the “PSS”) - The PSS provides a full range of pharmacy benefit management services including plan design offerings and administration, formulary management, Medicare Part D services, mail order, specialty pharmacy and infusion services, retail pharmacy network management services, prescription management systems, clinical services, disease management services and medical spend management. The Company’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, Medicare Part D, Managed Medicaid plans, plans offered on the public and private exchanges, 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 (“ACS Pharmacy”) 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 (collectively, “Coram”). In August 2015, the Company further expanded its specialty offerings with the acquisition of ACS Pharmacy which was part of the Omnicare, Inc. (“Omnicare”) acquisition. See Note 2 “Acquisitions.” The PSS also provides health management programs, which include integrated disease management for 18 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 PSS operates under the CVS Caremark® Pharmacy Services, Caremark®, CVS CaremarkTM, CarePlus CVS PharmacyTM, Accordant®, SilverScript®, Coram®, CVS SpecialtyTM, NovoLogix®, Navarro® Health Services and ACS Pharmacy names. As of December 31, 2016, the PSS operated 23 retail specialty pharmacy stores, 13 specialty mail order pharmacies and four mail order dispensing pharmacies, and 84 branches for infusion and enteral services, including 73 ambulatory infusion suites and three centers of excellence, located in 41 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, personal care products, convenience foods, photo finishing services, seasonal merchandise, and greeting cards, through the Company’s CVS Pharmacy®, CVS®, CVS Pharmacy y más®, Longs Drugs®, Navarro Discount Pharmacy® and Drogaria OnofreTM retail stores and online through CVS.com®, Navarro.com and Onofre.com.br. 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 provides long-term care (“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 December 2015 acquisition of the pharmacies and clinics of Target Corporation (“Target”), the Company added 1,672 pharmacies and approximately 79 clinics. As of December 31, 2016, the retail pharmacy business included 9,709 retail stores (of which 7,980 were our stores that operated a pharmacy and 1,674 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, CVS Pharmacy y más®, Longs Drugs, Navarro Discount Pharmacy and Drogaria Onofre names, the online retail websites, CVS.com, Navarro.com and Onofre.com.br, and 1,139 retail health care clinics operating under the MinuteClinic name (of which 1,053 were located in our retail pharmacy stores, 79 were located in Target stores and seven were located in corporate campuses or other locations). LTC operations is comprised of 152 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, 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 material 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, 2016 and 2015. Fair value of financial instruments - As of December 31, 2016, 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 $25.7 billion and $26.5 billion, respectively, as of December 31, 2016. 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. There were no outstanding derivative financial instruments as of December 31, 2016 and 2015. 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 - Inventories are stated at the lower of weighted average cost or market. 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 $547 million and $528 million as of December 31, 2016 and 2015, respectively. Accumulated amortization of property and equipment under capital lease was $119 million and $97 million as of December 31, 2016 and 2015, respectively. Amortization of property and equipment under capital lease is included within depreciation expense. Depreciation expense totaled $1.7 billion in 2016, $1.5 billion in 2015 and $1.4 billion in 2014. 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 3 “Goodwill and Other Intangibles” 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 3 “Goodwill and Other Intangibles” 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 was recorded as a redeemable noncontrolling interest at fair value. During 2016, the noncontrolling shareholder of the LLC exercised its option to sell its ownership interest and the Company purchased the noncontrolling interest in the LLC for approximately $39 million. Below is a summary of the changes in redeemable noncontrolling interest for the years ended December 31:
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 the 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 revenue 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 12 “Segment Reporting” 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 12 “Segment Reporting” 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 $181 million and $217 million in 2016 and 2015, respectively. Advertising costs - Advertising costs are expensed when the related advertising takes place. Advertising costs, net of vendor funding (included in operating expenses), were $216 million, $221 million and $212 million in 2016, 2015 and 2014, respectively. Interest expense, net - The following are the components of net interest expense for the years ended December 31:
Capitalized interest totaled $13 million, $12 million and $19 million in 2016, 2015 and 2014, respectively. Shares held in trust - The Company maintains grantor trusts, which held approximately one million shares of its common stock at December 31, 2016 and 2015, 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 $284 million pre-tax ($173 million after-tax) as of December 31, 2016 and $305 million pre-tax ($186 million after-tax) as of December 31, 2015. The net impact on cash flow hedges totaled $9 million pre-tax ($5 million after-tax) and $14 million pre-tax ($7 million after-tax) as of December 31, 2016 and 2015, respectively. Cumulative foreign currency translation adjustments at December 31, 2016 and 2015 were $127 million and $165 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 $163 million, $122 million and $26 million from Cardinal during the years ended December 31, 2016, 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, 2016, 2015 and 2014, as well as amounts due to or due from Cardinal at December 31, 2016 and 2015 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 $39 million in the year ended December 31, 2016, and $50 million in the years ended December 31, 2015 and 2014, for the use of this network. The Company’s investment in and equity in earnings of SureScripts for all periods presented is immaterial. The Company has an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several long-term care pharmacies in four states. Heartland paid the Company approximately $140 million and $25 million for pharmaceutical inventory purchases during the years ended December 31, 2016 and 2015, respectively. 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 years ended December 31, 2016 and 2015 is immaterial. In 2016 and 2014, the Company made charitable contributions of $32 million and $25 million, respectively, to the CVS Foundation (the “Foundation”) to fund future giving. The Foundation is a non-profit entity managed by employees of the Company that focuses on health, education and community involvement programs. The charitable contributions were recorded as operating expenses in the Company's consolidated statements of income for the years ended December 31, 2016 and 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 or years in which the differences are expected to reverse. The effect of a change in the tax rates on deferred tax assets 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 Bob's Stores and Linens ‘n Things which filed for bankruptcy in 2016 and 2008, respectively. The Company's loss from discontinued operations in 2016 and 2014 includes lease-related costs which the Company believes it will likely be required to satisfy pursuant to its lease guarantees. 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. 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 6.7 million, 2.7 million and 2.1 million shares of common stock were outstanding as of December 31, 2016, 2015 and 2014, 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 pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net),” which amends the principal-versus-agent implementation guidance and in April 2016 the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing,” which amends the guidance in those areas in the new revenue recognition standard. Both ASU's were issued in response to feedback received from the FASB-International Accounting Standards Board joint revenue recognition transition resource group. This new standard could impact the timing and amounts of revenue recognized. The new revenue standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning January 1, 2018. Early adoption of the standard in 2017 is permitted; however, the Company does not intend to early adopt the new standard. Companies have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. The Company formed a project team to assess and implement the new standard. While the Company is continuing to assess all of the potential impacts of the new standard including the potential impact from recent acquisitions, the Company does not expect the implementation of the standard will have a material effect on the Company's consolidated results of operations, cash flows or financial position. The Company intends to adopt the new standard on a modified retrospective basis. In July 2015, the FASB issued ASU 2015-11, Inventory, which amends ASU Topic 330. This ASU simplifies current accounting treatments by requiring entities to measure most inventories at “the lower of cost and net realizable value” rather than using lower of cost or market. This guidance does not apply to inventories measured using the last-in, first-out method or the retail inventory method. This ASU is effective prospectively for annual periods beginning after December 15, 2016 and interim periods thereafter with early adoption permitted. Upon transition, entities must disclose the accounting change. The Company is evaluating the effect of adopting this new accounting guidance but does not expect the adoption will have a material impact on the Company’s results of operations, financial position or cash flows. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740). The new guidance simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The updated standard is effective for the Company beginning on January 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. The Company elected to early adopt this standard as of January 1, 2016 and has, accordingly, reclassified the current deferred tax assets to noncurrent deferred tax liabilities for all periods presented. The following is a reconciliation of the effect of the reclassification on the Company's consolidated balance sheet as of December 31, 2015:
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Lessees will be required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company believes that the new standard will have a material impact on its consolidated balance sheet. The Company is currently evaluating the effect that implementation of this standard will have on the Company's consolidated results of operations, cash flows, financial position and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standard Codification Topic 718, Compensation - Stock Compensation, in three areas. (1) The new guidance eliminates accounting for tax benefits and deficiencies through equity to the extent of previous windfalls, and then to the income statement. The new requirement is to record all tax benefits and deficiencies through the income statement. This amendment is required to be applied prospectively. The amendment also requires the presentation of excess tax benefits on the statements of cash flows as operating activities, a change which may be applied prospectively or retrospectively at the election of the Company. The amendment requires the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes as financing activities, a change which must be applied retrospectively. (2) The new guidance also permits companies to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. (3) Finally, the new guidance provides companies with an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. If elected, the change to recognize forfeitures when they occur needs to be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that annual reporting period. The Company is currently evaluating the effect of adopting this new accounting guidance. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect on its consolidated statement of cash flows of adopting this new accounting guidance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, which amends ASU Topic 230. This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer be required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted. Entities are required to apply the guidance retrospectively. The Company is currently evaluating the effect of adopting this new accounting guidance. |
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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. 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 ACS Pharmacy, and provides commercialization services under the name of RxCrossroads®. The Company includes LTC and the commercialization services business in the Retail/LTC Segment, and includes 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 following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:
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 $8.7 billion was allocated to the Retail/LTC Segment and the remaining goodwill of $0.4 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. 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 years 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 $60 million based on future prescription growth over a three year period. 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 were rebranded as MinuteClinic. The Company acquired the Target pharmacy and clinic businesses primarily to expand the geographic reach of its retail pharmacy business. The fair values of the assets acquired at the date of acquisition were approximately as follows:
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 connection with the closing of the transaction, the Company and Target entered into pharmacy and clinic operating and master lease agreements. See Note 6 “Leases” 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. |
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 2016, 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, 2016 and 2015:
(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 2016, 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, 2016 and 2015. 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 life of the Company’s customer contracts and relationships and covenants not to compete is 15.5 years. The weighted average life of the Company’s favorable leases and other intangible assets is 15.9 years. Amortization expense for intangible assets totaled $795 million, $611 million and $518 million in 2016, 2015 and 2014, 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 2016 and 2014 Repurchase Programs may be modified or terminated by the Board of Directors at any time. Pursuant to the authorization under the 2014 Repurchase Program, effective August 29, 2016, the Company entered into two fixed dollar ASRs with Barclays Bank PLC (“Barclays”) for a total of $3.6 billion. Upon payment of the $3.6 billion purchase price on January 6, 2017, the Company received a number of shares of its common stock equal to 80% of the $3.6 billion notional amount of the ASRs or approximately 36.1 million shares at a price of $80.34 per share, which were placed into treasury stock in January 2017. At the conclusion of the ASRs, the Company may receive additional shares equal to the remaining 20% of the $3.6 billion notional amount. The ultimate number of shares the Company may receive will fluctuate based on changes in the daily volume-weighted average price of the Company's stock over a period beginning on January 6, 2017 and ending on or before July 6, 2017. If the mean daily volume-weighted average price of the Company's common stock, less a discount (the “forward price”), during the ASRs falls below $80.34 per share, the Company will receive a higher number of shares from Barclays. If the forward price rises above $80.34 per share, the Company will either receive fewer shares from Barclays or, potentially have an obligation to Barclays which, at the Company's option, could be settled in additional cash or by issuing shares. Under the terms of the ASRs, the maximum number of shares that could be received or delivered is 90.1 million. 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. 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. 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 of $580 million and a forward contract of $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 of $1.6 billion and a forward contract of $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. In the ASR transactions described above, the initial repurchase of the shares and delivery of the remainder of the shares to conclude the 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, 2016, the Company repurchased an aggregate of 47.5 million shares of common stock for approximately $4.5 billion under the 2014 Repurchase Program. As of December 31, 2016, there remained an aggregate of approximately $18.2 billion available for future repurchases under the 2016 and 2014 Repurchase Programs. 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. |
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 had approximately $1.9 billion of commercial paper outstanding at a weighted average interest rate of 1.22% as of December 31, 2016. 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, 2016, there were no borrowings outstanding under the back-up credit facilities. On January 3, 2017, the Company entered into a $2.5 billion revolving credit facility. The credit facility allows for borrowings at various rates that are dependent, in part, on the Company’s debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage. The maximum available under the credit facility decreases by $750 million on both March 31, 2017 and June 30, 2017 and by $500 million on September 30, 2017. The credit facility expires on December 31, 2017. On May 16, 2016, the Company issued $1.75 billion aggregate principal amount of 2.125% unsecured senior notes due June 1, 2021 and $1.75 billion aggregate principal amount of 2.875% unsecured senior notes due June 1, 2026 (collectively, the “2016 Notes”) for total proceeds of approximately $3.5 billion, net of discounts and underwriting fees. The 2016 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 2016 Notes were used for general corporate purposes and to repay certain corporate debt. On May 16, 2016, the Company announced tender offers for (1) any and all of its 5.75% Senior Notes due 2017, its 6.60% Senior Notes due 2019 and its 4.75% Senior Notes due 2020 (collectively, the “Any and All Notes”) and (2) up to $1.5 billion aggregate principal amount of its 6.25% Senior Notes due 2027, its 6.125% Senior Notes due 2039, its 5.75% Senior Notes due 2041, the 5.00% Senior Notes due 2024 issued by its wholly-owned subsidiary, Omnicare, Inc. (“Omnicare”), the 4.75% Senior Notes due 2022 issued by Omnicare, its 4.875% Senior Notes due 2035 and its 3.875% Senior Notes due 2025 (collectively, the “Maximum Tender Offer Notes” and together with the Any and All Notes, the “Notes”). On May 31, 2016, the Company increased the aggregate principal amount of the tender offers for the Maximum Tender Offer Notes to $2.25 billion. The Company purchased approximately $835 million aggregate principal amount of the Any and All Notes and $2.25 billion aggregate principal amount of the Maximum Tender Offer Notes pursuant to the tender offers, which expired on June 13, 2016. The Company paid a premium of $486 million in excess of the debt principal in connection with the purchase of the Notes, wrote off $50 million of unamortized deferred financing costs and incurred $6 million in fees, for a total loss on the early extinguishment of debt of $542 million which was recorded in income from continuing operations in the consolidated statement of income for the year ended December 31, 2016. On June 27, 2016, the Company notified the holders of the remaining Any and All Notes that the Company was exercising its option to redeem the outstanding Any and All Notes pursuant to the terms of the Any and All Notes and the Indenture dated as of August 15, 2006, between the Company and The Bank of New York Mellon Trust Company, N.A. Approximately $1.1 billion aggregate principal amount of Any and All Notes was redeemed on July 27, 2016. The Company paid a premium of $97 million in excess of the debt principal and wrote off $4 million of unamortized deferred financing costs, for a total loss on early extinguishment of debt of $101 million during the year ended December 31, 2016. The Company recorded a total loss on the early extinguishment of debt of $643 million which was recorded in the income from continuing operations in the consolidated statement of income for the year ended December 31, 2016. 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 of $388 million of the 4.75% senior notes due 2022 and $296 million of the 5% senior notes due 2024 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. Consequently, no gain or loss on extinguishment was recognized in the Company's consolidated income statement as a result of this exchange transaction and the issuance costs of the new debt 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 in 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. 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. As of December 31, 2016, the Company is in compliance with all debt covenants. 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, 2016:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases most of its retail and mail order locations, 11 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, 2016:
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 $230 million in 2016, $411 million in 2015 and $515 million in 2014. |
Medicare Part D |
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Dec. 31, 2016 | |
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. |
Pension Plans and Other Postretirement Benefits |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans and Other Postretirement Benefits | Pension 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 $295 million, $251 million and $238 million in 2016, 2015 and 2014, respectively. Defined Benefit Pension Plans As of December 31, 2016 and 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, 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. The settlement of the terminated plan is expected to occur around the third quarter of 2017. The pension liability for the terminated plan will be settled in either lump sum payments or purchased annuities. Since the amount of the settlement depends on a number of factors determined as of the liquidation date, including the annuity pricing interest rate environment, lump sum election rates, and asset experience, the Company is currently unable to determine the ultimate cost of the settlement. 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 $225 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 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 is 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 4.0% in 2016 and 4.25% in 2015 for all plans except the terminated qualified plan. The discount rate for the terminated qualified plan was 3.09% and 3.25% in 2016 and 2015, respectively. The expected long-term rate of return for the plans ranged from 4.0% to 5.5% in 2016 and ranged from 5.75% to 6.75% in 2015. The rate of compensation increases for certain of the plans with active participants ranged from 4.0% to 6.0% in 2016 and 2015. Return on Plan Assets The Company's investment strategy is liability management driven. The qualified pension plan asset allocations targets are to hold fixed income investments based upon this strategy. As of December 31, 2016, 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, 2016 and 2015.
As of December 31, 2016, the Company’s qualified defined benefit pension plan assets consisted of 5% equity, 94% fixed income and 1% money market securities of which 7% were classified as Level 1 and 93% as Level 2 in the fair value hierarchy. The Company’s qualified defined benefit pension plan assets as of December 31, 2015 consisted of 19% equity, 79% 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 continued to have no investments in Level 3 alternative investments during the years ended December 31, 2016 and 2015. Cash Flows The Company contributed $25 million, $22 million and $42 million to the pension plans during 2016, 2015 and 2014, respectively. The Company plans to make approximately $39 million in contributions to the pension plans during 2017. 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, 2016:
(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 $15 million in 2016 and $14 million in 2015 and 2014. 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, 2016 and 2015, the Company’s other postretirement benefits have an accumulated postretirement benefit obligation of $24 million and $33 million, respectively. Net periodic benefit costs related to these other postretirement benefits were $1 million, $2 million and $1 million in 2016, 2015 and 2014, respectively. 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 $52 million, $60 million and $58 million in 2016, 2015 and 2014, 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 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. The following table is a summary of stock-based compensation for each of the respective periods:
(2) 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 recognized tax benefit was $22 million, $26 million and $33 million for 2016, 2015 and 2014, respectively. The ESPP provides for the purchase of up to 30 million shares of common stock. Under the ESPP in 2016, eligible employees could purchase common stock at the end of each six month offering period at a purchase price equal to 90% of the lower of the fair market value on the first day or the last day of the offering period. Prior to 2016, the purchase price was equal to 85% of the lower of the fair market value on the first day or the last day of the offering period. During 2016, approximately 1 million shares of common stock were purchased under the provisions of the ESPP at an average price of $84.68 per share. As of December 31, 2016, approximately 12 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. As of December 31, 2016, there were approximately 18 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 1,992,000, 2,695,000 and 2,708,000 restricted stock units with a weighted average fair value of $103.26, $100.81 and $73.60 in 2016, 2015 and 2014, respectively. As of December 31, 2016, there was $327 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 2.29 years. The total fair value of restricted shares vested during 2016, 2015 and 2014 was $218 million, $164 million and $57 million, respectively. The following table is a summary of the restricted stock unit and restricted share award activity for the year ended December 31, 2016.
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 $72 million, $127 million and $106 million were included in financing activities in the accompanying consolidated statements of cash flow during 2016, 2015 and 2014, respectively. Cash received from stock options exercised, which includes the ESPP, totaled $224 million, $299 million and $421 million during 2016, 2015 and 2014, respectively. The total intrinsic value of stock options exercised was $244 million, $394 million and $372 million in 2016, 2015 and 2014, respectively. The total fair value of stock options vested during 2016, 2015 and 2014 was $298 million, $334 million and $292 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, 2016, unrecognized compensation expense related to unvested options totaled $79 million, which the Company expects to be recognized over a weighted-average period of 1.79 years. After considering anticipated forfeitures, the Company expects approximately 11 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, 2016:
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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 Company has $4.2 billion of net deferred tax liabilities as of December 31, 2016 and 2015. The following table is a summary of the components of the Company’s deferred tax assets and liabilities as of December 31:
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. 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 2015 and 2016 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, 2016, 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. Certain state exams will be concluded and certain state statutes will lapse in 2017, and 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 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 $10 million in 2016, $5 million in 2015 and $6 million in 2014. The Company had approximately $30 million and $16 million accrued for interest and penalties as of December 31, 2016 and 2015, respectively. There are no material uncertain tax positions as of December 31, 2016 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, 2016, the total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is approximately $276 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, 2016, the Company guaranteed approximately 87 such store leases (excluding the lease guarantees related to Linens ‘n Things, which are discussed in Note 1 “Significant Accounting Policies”), with the maximum remaining lease term extending through 2047. In April 2016, the parent entity of Bob’s Stores filed for Chapter 11 bankruptcy protection. As described above, the Company, through one or more of its affiliates, is alleged to have guaranteed certain of the Bob’s Stores’ leases (the “Bob’s Leases”). On June 20, 2016, the bankruptcy court approved the sale of substantially all of the assets of Bob’s Stores and certain other assets to a new entity (“Buyer”), which designated Buyer’s affiliate Bob’s Stores, LLC, a Delaware limited liability company (“New Bob’s”), to acquire substantially all of the assets of Bob’s Stores. The Company, through its subsidiary, CVS Pharmacy, Inc., and New Bob’s entered into an agreement in October 2016, pursuant to which, in exchange for an immaterial payment to be made by CVS Pharmacy, Inc., New Bob’s agreed to accept the assignment of the Bob’s Leases and to be bound by certain restrictions regarding renewals, extensions and modifications to the Bob’s Leases. The Company believed these restrictions would potentially reduce the Company's exposure to liability under guarantees of the Bob’s Leases in the future. The bankruptcy court approved the assignment of the Bob’s Leases to New Bob's on November 7, 2016, and all of the Bob’s Leases were assigned to New Bob’s. On February 5, 2017, New Bob’s and certain of its affiliates (collectively, the “Debtors”) filed for Chapter 11 bankruptcy protection. Certain documents filed in connection with the Debtors’ bankruptcy case suggest that the Debtors may enter into an asset purchase agreement with Sports Direct Retail Ltd. (“Sports Direct”), for Sports Direct to serve as an initial bidder in an asset sale process to be conducted pursuant to Section 363 of the Bankruptcy Code. The Company will monitor the Debtors’ bankruptcy proceedings. 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.
The Company is also a party to other legal proceedings, government investigations, inquiries and audits, and has received and is cooperating with subpoenas or similar process from various governmental agencies requesting information, all 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, specialty pharmacy, 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, specialty pharmacy, 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, specialty pharmacy, 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/RxCrossroads 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 segments’ performance based on net revenue, gross profit and operating profit before the effect of nonrecurring charges and gains and certain intersegment activities. The Company evaluates the performance of its Corporate Segment based on operating expenses before the effect of nonrecurring charges and gains and certain intersegment activities. The chief operating decision maker does not use total assets by segment to make decisions regarding resources, therefore the total asset disclosure by segment has not been included. See Note 1 “Significant Accounting Policies” for a description of the Pharmacy Services, Retail/LTC and Corporate segments and related significant accounting policies. In 2016, approximately 11.2% of the Company’s consolidated net revenues were from Aetna, a Pharmacy Services Segment client. In 2015 and 2014, no single customer accounted for 10% or more of the Company’s consolidated net revenues. More than 99% of the Company’s consolidated net revenues are earned and long-lived assets are located in the United States. 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 | 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 (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 material 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, 2016 and 2015. |
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Fair Value of Financial Instruments | Fair value of financial instruments - As of December 31, 2016, 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 $25.7 billion and $26.5 billion, respectively, as of December 31, 2016. 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 - Inventories are stated at the lower of weighted average cost or market. 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. |
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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 | 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 was recorded as a redeemable noncontrolling interest at fair value. |
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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 the 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 revenue 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 one million shares of its common stock at December 31, 2016 and 2015, 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 $163 million, $122 million and $26 million from Cardinal during the years ended December 31, 2016, 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 $39 million in the year ended December 31, 2016, and $50 million in the years ended December 31, 2015 and 2014, for the use of this network. The Company’s investment in and equity in earnings of SureScripts for all periods presented is immaterial. The Company has an equity method investment in Heartland Healthcare Services (“Heartland”). Heartland operates several long-term care pharmacies in four states. Heartland paid the Company approximately $140 million and $25 million for pharmaceutical inventory purchases during the years ended December 31, 2016 and 2015, respectively. 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 years ended December 31, 2016 and 2015 is immaterial. In 2016 and 2014, the Company made charitable contributions of $32 million and $25 million, respectively, to the CVS Foundation (the “Foundation”) to fund future giving. The Foundation is a non-profit entity managed by employees of the Company that focuses on health, education and community involvement programs. The charitable contributions were recorded as operating expenses in the Company's consolidated statements of income for the years ended December 31, 2016 and 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 or years in which the differences are expected to reverse. The effect of a change in the tax rates on deferred tax assets 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 Bob's Stores and Linens ‘n Things which filed for bankruptcy in 2016 and 2008, respectively. The Company's loss from discontinued operations in 2016 and 2014 includes lease-related costs which the Company believes it will likely be required to satisfy pursuant to its 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 6.7 million, 2.7 million and 2.1 million shares of common stock were outstanding as of December 31, 2016, 2015 and 2014, 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 pronouncements - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In March 2016, the FASB issued ASU 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net),” which amends the principal-versus-agent implementation guidance and in April 2016 the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing,” which amends the guidance in those areas in the new revenue recognition standard. Both ASU's were issued in response to feedback received from the FASB-International Accounting Standards Board joint revenue recognition transition resource group. This new standard could impact the timing and amounts of revenue recognized. The new revenue standard is effective for annual reporting periods (including interim reporting periods within those periods) beginning January 1, 2018. Early adoption of the standard in 2017 is permitted; however, the Company does not intend to early adopt the new standard. Companies have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. The Company formed a project team to assess and implement the new standard. While the Company is continuing to assess all of the potential impacts of the new standard including the potential impact from recent acquisitions, the Company does not expect the implementation of the standard will have a material effect on the Company's consolidated results of operations, cash flows or financial position. The Company intends to adopt the new standard on a modified retrospective basis. In July 2015, the FASB issued ASU 2015-11, Inventory, which amends ASU Topic 330. This ASU simplifies current accounting treatments by requiring entities to measure most inventories at “the lower of cost and net realizable value” rather than using lower of cost or market. This guidance does not apply to inventories measured using the last-in, first-out method or the retail inventory method. This ASU is effective prospectively for annual periods beginning after December 15, 2016 and interim periods thereafter with early adoption permitted. Upon transition, entities must disclose the accounting change. The Company is evaluating the effect of adopting this new accounting guidance but does not expect the adoption will have a material impact on the Company’s results of operations, financial position or cash flows. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740). The new guidance simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The updated standard is effective for the Company beginning on January 1, 2017 with early application permitted as of the beginning of any interim or annual reporting period. The Company elected to early adopt this standard as of January 1, 2016 and has, accordingly, reclassified the current deferred tax assets to noncurrent deferred tax liabilities for all periods presented. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Lessees will be required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company believes that the new standard will have a material impact on its consolidated balance sheet. The Company is currently evaluating the effect that implementation of this standard will have on the Company's consolidated results of operations, cash flows, financial position and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends Accounting Standard Codification Topic 718, Compensation - Stock Compensation, in three areas. (1) The new guidance eliminates accounting for tax benefits and deficiencies through equity to the extent of previous windfalls, and then to the income statement. The new requirement is to record all tax benefits and deficiencies through the income statement. This amendment is required to be applied prospectively. The amendment also requires the presentation of excess tax benefits on the statements of cash flows as operating activities, a change which may be applied prospectively or retrospectively at the election of the Company. The amendment requires the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes as financing activities, a change which must be applied retrospectively. (2) The new guidance also permits companies to withhold an amount up to the employees' maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. (3) Finally, the new guidance provides companies with an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as required today, or recognized when they occur. If elected, the change to recognize forfeitures when they occur needs to be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that annual reporting period. The Company is currently evaluating the effect of adopting this new accounting guidance. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 is intended to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows and to eliminate the diversity in practice related to such classifications. The guidance in ASU 2016-15 is required for annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect on its consolidated statement of cash flows of adopting this new accounting guidance. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, which amends ASU Topic 230. This ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer be required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet. Entities will also have to disclose the nature of their restricted cash and restricted cash equivalent balances. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted. Entities are required to apply the guidance retrospectively. The Company is currently evaluating the effect of adopting this new accounting guidance. |
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 years ended December 31:
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Interest Income and Interest Expense | The following are the components of net interest expense for the years ended December 31:
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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 the reclassification on the Company's consolidated balance sheet as of December 31, 2015:
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Acquisitions (Table) |
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Omnicare, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The fair values of the assets acquired at the date of acquisition were approximately as follows:
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Goodwill and Other Intangibles (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016 and 2015:
(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) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016:
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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, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 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, 2016 and 2015.
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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, 2016:
(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, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of share-based compensation, activity | The following table is a summary of stock-based compensation for each of the respective periods:
(2) 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. |
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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, 2016.
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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, 2016:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 components of the Company’s deferred tax assets and liabilities as of December 31:
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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, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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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, 2016
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 | 18 | |
Centers of excellence for infusion and enteral services | Center | 3 | |
Number of states pharmacies operated | state | 41 | |
Pharmacy Services Segment | Specialty stores | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 23 | |
Pharmacy Services Segment | Specialty mail order | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 13 | |
Pharmacy Services Segment | Mail service | ||
Segment reporting information | ||
Number of pharmacies (more than 68,000) | 4 | |
Pharmacy Services Segment | Infusion and Enteral Branches | ||
Segment reporting information | ||
Number of infusion and enteral branches | Branch | 84 | |
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 | 9,709 | |
Number of LTC spoke pharmacies | drugstore | 152 | |
Number of LTC hub pharmacies | drugstore | 32 | |
Retail/LTC Segment | MinuteClinic | ||
Segment reporting information | ||
Number of drugstores | clinic | 1,139 | |
Retail/LTC Segment | Minute Clinic Within C V S Pharmacy Stores | ||
Segment reporting information | ||
Number of drugstores | clinic | 1,053 | |
Retail/LTC Segment | Minute Clinic within Target Stores | ||
Segment reporting information | ||
Number of drugstores | clinic | 79 | |
Retail/LTC Segment | Minute Clinic in Corporate Campuses or Other Locations | ||
Segment reporting information | ||
Number of drugstores | clinic | 7 | |
Retail/LTC Segment | Pharmacy | ||
Segment reporting information | ||
Number of drugstores | 7,980 | |
Target Pharmacy Acquisition | Retail/LTC Segment | ||
Segment reporting information | ||
Number of states pharmacies operated | state | 47 | |
Number of pharmacies acquired | 1,672 | 1,674 |
Number of clinics acquired | clinic | 79 |
Significant Accounting Policies - Fair Value of Financial Instruments (Details) $ in Billions |
Dec. 31, 2016
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
Carrying amount of long-term debt | $ 25.7 |
Estimated fair value of long-term debt | $ 26.5 |
Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Beginning balance | $ 161 | $ 256 | $ 256 |
Additions charged to bad debt expense | 221 | 216 | 185 |
Write-offs charged to allowance | (96) | (311) | (185) |
Ending balance | $ 286 | $ 161 | $ 256 |
Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 22,802 | $ 21,036 | |
Accumulated depreciation and amortization | (12,627) | (11,181) | |
Property and equipment, net | 10,175 | 9,855 | |
Property and equipment under capital leases | 547 | 528 | |
Capital leases, accumulated depreciation | 119 | 97 | |
Depreciation expense | 1,700 | 1,500 | $ 1,400 |
Leasehold Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 4,494 | 4,015 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,734 | 1,635 | |
Building and Building Improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,226 | 3,168 | |
Fixtures and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 10,956 | 10,001 | |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 2,392 | $ 2,217 | |
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, 2016 | |
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 and Revenue Recognition (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2016
USD ($)
component
|
Dec. 31, 2015
USD ($)
|
Aug. 31, 2015 |
Aug. 18, 2015 |
|
Redeemable Noncontrolling Interest [Line Items] | ||||
Number of components | component | 2 | |||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | ||||
Beginning balance | $ 7 | |||
Net income attributable to noncontrolling interest | 1 | $ 1 | ||
Ending balance | 4 | 7 | ||
Omnicare, Inc. | ||||
Redeemable Noncontrolling Interest [Line Items] | ||||
Percentage of voting interests acquired | 73.00% | 100.00% | ||
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract] | ||||
Beginning balance | 39 | 0 | ||
Acquisition of noncontrolling interest | 0 | 39 | ||
Net income attributable to noncontrolling interest | 1 | 1 | ||
Distributions | (2) | (1) | ||
Purchase of noncontrolling interest | (39) | 0 | ||
Reclassification to capital surplus in connection with purchase of noncontrolling interest | 1 | 0 | ||
Ending balance | $ 0 | $ 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, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounting Policies [Abstract] | |||
Billing duration (in days) | 30 days | ||
Long-term portion of lease obligations associated with facility closings | $ 181 | $ 217 | |
Advertising costs, net of vendor funding | 216 | 221 | $ 212 |
Interest expense, net of capitalized interest | 1,078 | 859 | 615 |
Interest income | (20) | (21) | (15) |
Interest expense), net | 1,058 | 838 | 600 |
Capitalized interest | $ 13 | $ 12 | $ 19 |
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, 2016 |
Dec. 31, 2015 |
|
Accounting Policies [Abstract] | ||
AOCI related to pension and postretirement plans, pre-tax | $ 284 | $ 305 |
AOCI related to pension and postretirement plans, after-tax | 173 | 186 |
Net impact on cash flow hedges, pre-tax | 9 | 14 |
Net impact on cash flow hedges, after-tax | 5 | 7 |
Foreign currency translation adjustment, net of tax | 127 | 165 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Stockholders' equity attributable to parent, beginning balance | 37,196 | |
Stockholders' equity attributable to parent, ending balance | 36,830 | 37,196 |
Foreign Currency | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Stockholders' equity attributable to parent, beginning balance | (165) | (65) |
Other comprehensive income before reclassifications | 38 | (100) |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 |
Net other comprehensive income | 38 | (100) |
Stockholders' equity attributable to parent, ending balance | (127) | (165) |
Losses on Cash Flow Hedges | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Stockholders' equity attributable to parent, beginning balance | (7) | (9) |
Other comprehensive income before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income | 2 | 2 |
Net other comprehensive income | 2 | 2 |
Stockholders' equity attributable to parent, ending balance | (5) | (7) |
Pension and Other Postretirement Benefits | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Stockholders' equity attributable to parent, beginning balance | (186) | (143) |
Other comprehensive income before reclassifications | 0 | (56) |
Amounts reclassified from accumulated other comprehensive income | 13 | 13 |
Net other comprehensive income | 13 | (43) |
Stockholders' equity attributable to parent, ending balance | (173) | (186) |
AOCI Attributable to Parent | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Stockholders' equity attributable to parent, beginning balance | (358) | (217) |
Other comprehensive income before reclassifications | 38 | (156) |
Amounts reclassified from accumulated other comprehensive income | 15 | 15 |
Net other comprehensive income | 53 | (141) |
Stockholders' equity attributable to parent, ending balance | $ (305) | $ (358) |
Significant Accounting Policies - Stock-based Compensation and Variable Interest Entity (Details) $ in Millions |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jul. 31, 2014 |
Dec. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Oct. 31, 2014
payment
|
|
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 (in years) | 10 years | ||||
Number of quarterly payments due (in quarterly payments) | payment | 39 | ||||
Increase in contractual obligation payment received | $ | $ 163 | $ 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 |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016
USD ($)
state
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Related Party Transaction [Line Items] | |||
Expenses from transactions with related party | $ 39 | $ 50 | $ 50 |
Charitable contribution to the CVS foundation | 32 | $ 25 | |
Equity Method Investee | |||
Related Party Transaction [Line Items] | |||
Other revenues from transactions with related party | $ 140 | $ 25 | |
Heartland Healthcare Services | |||
Related Party Transaction [Line Items] | |||
Number of states in which entity operates | state | 4 |
Significant Accounting Policies - Discontinued Operations and Earnings per Common Share (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounting Policies [Abstract] | |||||||||||
Income (loss) from discontinued operations | $ (2) | $ 15 | $ (1) | ||||||||
Income tax expense | 1 | (6) | 0 | ||||||||
Income (loss) from discontinued operations, net of tax | $ 0 | $ (1) | $ 0 | $ 0 | $ (1) | $ 10 | $ 0 | $ 0 | $ (1) | $ 9 | $ (1) |
Antidilutive securities excluded from computation of earnings per share (in shares) | 6.7 | 2.7 | 2.1 |
Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Total current assets | $ 31,042 | $ 29,158 |
Total assets | 94,462 | 92,437 |
Deferred tax liabilities - noncurrent | 4,214 | 4,217 |
Total liabilities and shareholders’ equity | $ 94,462 | 92,437 |
Adjustments for New Accounting Principle, Early Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred income taxes | 0 | |
Total current assets | 29,158 | |
Total assets | 92,437 | |
Deferred tax liabilities - noncurrent | 4,217 | |
Total liabilities and shareholders’ equity | 92,437 | |
Adjustments for New Accounting Principle, Early Adoption | Scenario, Previously Reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred income taxes | 1,220 | |
Total current assets | 30,378 | |
Total assets | 93,657 | |
Deferred tax liabilities - noncurrent | 5,437 | |
Total liabilities and shareholders’ equity | 93,657 | |
Adjustments for New Accounting Principle, Early Adoption | Scenario, Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Deferred income taxes | (1,220) | |
Total current assets | (1,220) | |
Total assets | (1,220) | |
Deferred tax liabilities - noncurrent | (1,220) | |
Total liabilities and shareholders’ equity | $ (1,220) |
Acquisitions - Omnicare Acquisition (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 4 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 18, 2015 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Aug. 31, 2015 |
|
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Goodwill | $ 38,249 | $ 38,106 | $ 38,106 | $ 38,249 | $ 38,106 | $ 28,142 | ||||||||
Goodwill | 126 | 10,006 | ||||||||||||
Net revenues | 45,971 | $ 44,615 | $ 43,725 | $ 43,215 | 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | 177,526 | 153,290 | 139,367 | |||
Net income | 5,319 | 5,239 | 4,644 | |||||||||||
Business Acquisition, Pro Forma Information: | ||||||||||||||
Loss on early extinguishment of debt | 643 | 0 | 521 | |||||||||||
Retail/LTC Segment | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Goodwill | 16,612 | 16,421 | 16,421 | 16,612 | 16,421 | 6,908 | ||||||||
Goodwill | 126 | 9,554 | ||||||||||||
Pharmacy Services Segment | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Goodwill | $ 21,637 | $ 21,685 | 21,685 | 21,637 | 21,685 | 21,234 | ||||||||
Goodwill | $ 0 | 452 | ||||||||||||
Omnicare, Inc. | ||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||
Percentage of voting interests acquired | 100.00% | 73.00% | ||||||||||||
Business acquisition, share price (in dollars per share) | $ 98.00 | |||||||||||||
Consideration transferred | $ 9,645 | |||||||||||||
Consideration transferred, liabilities incurred | 3,100 | |||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Current assets (including cash of $298) | 1,657 | |||||||||||||
Cash | 298 | |||||||||||||
Property and equipment | 313 | |||||||||||||
Goodwill | 9,139 | |||||||||||||
Intangible assets | 3,962 | |||||||||||||
Other noncurrent assets | 63 | |||||||||||||
Current liabilities | (773) | |||||||||||||
Long-term debt | (3,110) | |||||||||||||
Deferred income tax liabilities | (1,498) | |||||||||||||
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. | Retail/LTC Segment | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Goodwill | $ 8,700 | |||||||||||||
Omnicare, Inc. | Pharmacy Services Segment | ||||||||||||||
Fair Values of Assets Acquired and Liabilities Assumed: | ||||||||||||||
Goodwill | 400 | |||||||||||||
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 |
Acquisitions - Target Pharmacy Acquisition (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 16, 2015
USD ($)
clinic
state
pharmacy
|
Dec. 31, 2016
USD ($)
state
pharmacy
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Business Acquisition [Line Items] | ||||
Contingent consideration, liability | $ 0 | |||
Assets Acquired: | ||||
Goodwill | $ 38,249,000,000 | $ 38,106,000,000 | $ 28,142,000,000 | |
Retail/LTC Segment | ||||
Business Acquisition [Line Items] | ||||
Number of states pharmacies operated | state | 49 | |||
Assets Acquired: | ||||
Goodwill | $ 16,612,000,000 | 16,421,000,000 | $ 6,908,000,000 | |
Target Pharmacy Acquisition | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ 1,900,000,000 | |||
Contingent consideration, liability | $ 60,000,000 | |||
Contingent consideration, liability term (in years) | 3 years | |||
Assets Acquired: | ||||
Accounts receivable | $ 2,000,000 | |||
Inventories | 467,000,000 | |||
Property and equipment | 9,000,000 | |||
Intangible assets | 490,000,000 | |||
Goodwill | 900,000,000 | |||
Total cash consideration | $ 1,868,000,000 | |||
Acquisition related costs | $ 26,000,000 | |||
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 | 1,674 | ||
Number of states pharmacies operated | state | 47 | |||
Number of clinics acquired | clinic | 79 |
Goodwill and Other Intangibles - Goodwill (Details) - USD ($) |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill [Line Items] | |||
Goodwill, impairment loss | $ 0 | ||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 38,106,000,000 | $ 38,106,000,000 | $ 28,142,000,000 |
Acquisitions | 126,000,000 | 10,006,000,000 | |
Foreign currency translation adjustments | 17,000,000 | (40,000,000) | |
Other | 0 | (2,000,000) | |
Goodwill, ending balance | 38,249,000,000 | 38,106,000,000 | |
Pharmacy Services Segment | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 21,685,000,000 | 21,685,000,000 | 21,234,000,000 |
Acquisitions | 0 | 452,000,000 | |
Foreign currency translation adjustments | 0 | 0 | |
Other | (48,000,000) | (1,000,000) | |
Goodwill, ending balance | 21,637,000,000 | 21,685,000,000 | |
Retail/LTC Segment | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 16,421,000,000 | 16,421,000,000 | 6,908,000,000 |
Acquisitions | 126,000,000 | 9,554,000,000 | |
Foreign currency translation adjustments | 17,000,000 | (40,000,000) | |
Other | 48,000,000 | (1,000,000) | |
Goodwill, ending balance | $ 16,612,000,000 | $ 16,421,000,000 |
Goodwill and Other Intangibles - Intangible Assets (Details) - USD ($) |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Intangible assets | ||||
Amortization expense related to finite-lived intangible assets | $ 795,000,000 | $ 611,000,000 | $ 518,000,000 | |
Anticipated annual amortization expenses | ||||
2017 | 780,000,000 | |||
2018 | 748,000,000 | |||
2019 | 704,000,000 | |||
2020 | 534,000,000 | |||
2021 | 473,000,000 | |||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross carrying amount | 19,006,000,000 | 18,587,000,000 | ||
Intangible assets, accumulated amortization | (5,495,000,000) | (4,709,000,000) | ||
Intangible assets, net carrying amount | $ 13,511,000,000 | 13,878,000,000 | ||
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 | $ 11,485,000,000 | 10,594,000,000 | ||
Intangible assets, accumulated amortization | (4,802,000,000) | (4,092,000,000) | ||
Intangible assets, net carrying amount | $ 6,683,000,000 | 6,502,000,000 | ||
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 | $ 1,123,000,000 | 1,595,000,000 | ||
Intangible assets, accumulated amortization | (693,000,000) | (617,000,000) | ||
Intangible assets, net carrying amount | $ 430,000,000 | 978,000,000 | ||
Favorable leases and other | Weighted Average | ||||
Intangible assets | ||||
Finite-Lived intangible asset, useful life (in years) | 15 years 10 months 24 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) |
12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 06, 2017
$ / shares
shares
|
Aug. 29, 2016
USD ($)
agreement
|
Dec. 11, 2015
USD ($)
|
Jan. 02, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
shares
|
Dec. 31, 2015
USD ($)
shares
|
Dec. 31, 2014
USD ($)
shares
|
Nov. 02, 2016
USD ($)
|
Jan. 28, 2016
shares
|
Dec. 14, 2015
shares
|
May 01, 2015
shares
|
Jan. 05, 2015
shares
|
Dec. 15, 2014
USD ($)
|
Dec. 17, 2013
USD ($)
|
Sep. 19, 2012
USD ($)
|
|
August 29, 2016 | |||||||||||||||
Share repurchases | |||||||||||||||
Number of agreements | agreement | 2 | ||||||||||||||
Amount under ASR agreement | $ 3,600,000,000.0 | ||||||||||||||
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 (in shares) | shares | 1,400,000 | 6,200,000 | |||||||||||||
ASR, shares to be received at end of program as a percent of notional amount | 20.00% | ||||||||||||||
ASR, settlement receipt (payment) | (580,000,000) | ||||||||||||||
Transfer of shares to treasury stock value | $ (145,000,000) | ||||||||||||||
January 02, 2015 [Member] | |||||||||||||||
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 (in shares) | shares | 3,100,000 | 16,800,000 | |||||||||||||
ASR, shares to be received at end of program as a percent of notional amount | 20.00% | ||||||||||||||
ASR, settlement receipt (payment) | 1,600,000,000 | ||||||||||||||
Transfer of shares to treasury stock value | $ (400,000,000) | ||||||||||||||
2016 Repurchase Program | |||||||||||||||
Share repurchases | |||||||||||||||
Share repurchase program, authorized amount | $ 15,000,000,000.0 | ||||||||||||||
Amount available for repurchases | $ 15,000,000,000 | ||||||||||||||
2014 Repurchase Program | |||||||||||||||
Share repurchases | |||||||||||||||
Share repurchase program, authorized amount | $ 10,000,000,000 | ||||||||||||||
Amount available for repurchases | $ 3,200,000,000 | $ 7,700,000,000 | |||||||||||||
Repurchase of common stock (in shares) | shares | 47,500,000 | ||||||||||||||
Repurchase of common stock | $ 4,500,000,000 | ||||||||||||||
Share Repurchase Program 2016 and 2014 | |||||||||||||||
Share repurchases | |||||||||||||||
Amount available for repurchases | 18,200,000,000 | ||||||||||||||
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 | ||||||||||||||
Amount available for repurchases | $ 0 | ||||||||||||||
2014 and 2013 Repurchase Programs | |||||||||||||||
Share repurchases | |||||||||||||||
Amount available for repurchases | $ 12,700,000,000 | ||||||||||||||
Repurchase of common stock (in shares) | shares | 48,000,000 | ||||||||||||||
Repurchase of common stock | $ 5,000,000,000 | ||||||||||||||
2013 and 2012 Repurchase Programs | |||||||||||||||
Share repurchases | |||||||||||||||
Repurchase of common stock (in shares) | shares | 51,400,000 | ||||||||||||||
Repurchase of common stock | $ 4,000,000,000 | ||||||||||||||
Subsequent Event | August 29, 2016 | |||||||||||||||
Share repurchases | |||||||||||||||
ASR, shares received as a percent of notional amount | 80.00% | ||||||||||||||
Shares repurchased under ASR agreement (in shares) | shares | 36,100,000 | ||||||||||||||
Common stock price of shares repurchased under ASR agreement with Barclays (in dollars per share) | $ / shares | $ 80.34 | ||||||||||||||
ASR, shares to be received at end of program as a percent of notional amount | 20.00% | ||||||||||||||
ASR, maximum number of shares (in shares) | shares | 90,100,000.0 |
Borrowing and Credit Agreements - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt principal | $ 27,726 | $ 27,694 |
Debt premiums | 33 | 39 |
Debt discounts and deferred financing costs | (228) | (269) |
Long-term debt, net of premiums, discounts and deferred costs | 27,531 | 27,464 |
Short-term debt (commercial paper) | (1,874) | 0 |
Current portion of long-term debt | (42) | (1,197) |
Long-term debt | 25,615 | 26,267 |
1.2% senior notes due 2016 | ||
Debt Instrument [Line Items] | ||
Total debt principal | 0 | $ 750 |
Interest rate, stated percentage | 1.20% | |
6.125% senior notes due 2016 | ||
Debt Instrument [Line Items] | ||
Total debt principal | 0 | $ 421 |
Interest rate, stated percentage | 6.125% | |
5.75% senior notes due 2017 | ||
Debt Instrument [Line Items] | ||
Total debt principal | 0 | $ 1,080 |
Interest rate, stated percentage | 5.75% | |
1.9% senior notes due 2018 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 2,250 | $ 2,250 |
Interest rate, stated percentage | 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% senior notes due 2019 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 850 | 850 |
Interest rate, stated percentage | 2.25% | |
6.6% senior notes due 2019 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 0 | $ 394 |
Interest rate, stated percentage | 6.60% | |
2.8% senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 2,750 | $ 2,750 |
Interest rate, stated percentage | 2.80% | |
4.75% senior notes due 2020 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 0 | $ 450 |
Interest rate, stated percentage | 4.75% | |
2.125% senior notes due 2021 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1,750 | $ 0 |
Interest rate, stated percentage | 2.125% | |
4.125% senior notes due 2021 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 550 | 550 |
Interest rate, stated percentage | 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% | |
3.5% senior notes due 2022 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1,500 | 1,500 |
Interest rate, stated percentage | 3.50% | |
4.75% senior notes due 2022 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 399 | 400 |
Interest rate, stated percentage | 4.75% | |
4% senior notes due 2023 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1,250 | 1,250 |
Interest rate, stated percentage | 4.00% | |
3.375% senior notes due 2024 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 650 | 650 |
Interest rate, stated percentage | 3.375% | |
5% senior notes due 2024 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 299 | 300 |
Interest rate, stated percentage | 5.00% | |
3.875% senior notes due 2025 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 2,828 | 3,000 |
Interest rate, stated percentage | 3.875% | |
2.875% senior notes due 2026 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1,750 | 0 |
Interest rate, stated percentage | 2.875% | |
6.25% senior notes due 2027 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 372 | 453 |
Interest rate, stated percentage | 6.25% | |
3.25% senior exchange debentures due 2035 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1 | 5 |
Interest rate, stated percentage | 3.25% | |
4.875% senior notes due 2035 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 652 | 2,000 |
Interest rate, stated percentage | 4.875% | |
6.125% senior notes due 2039 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 447 | 734 |
Interest rate, stated percentage | 6.125% | |
5.75% senior notes due 2041 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 133 | 493 |
Interest rate, stated percentage | 5.75% | |
5.3% senior notes due 2043 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 750 | 750 |
Interest rate, stated percentage | 5.30% | |
5.125% senior notes due 2045 | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 3,500 | 3,500 |
Interest rate, stated percentage | 5.125% | |
Capital lease obligations | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 648 | 644 |
Other | ||
Debt Instrument [Line Items] | ||
Total debt principal | 23 | 20 |
Commercial paper | ||
Debt Instrument [Line Items] | ||
Total debt principal | $ 1,874 | $ 0 |
Borrowing and Credit Agreements - Additional Information (Details) - USD ($) |
1 Months Ended | 4 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 03, 2017 |
Jul. 27, 2016 |
May 31, 2016 |
May 16, 2016 |
Jul. 20, 2015 |
May 20, 2015 |
Sep. 04, 2014 |
Aug. 07, 2014 |
Aug. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jun. 13, 2016 |
|
Debt Instrument [Line Items] | ||||||||||||||
Loss on early extinguishment of debt | $ 643,000,000 | $ 0 | $ 521,000,000 | |||||||||||
Proceeds from issuance of senior long-term debt | $ 1,500,000,000 | |||||||||||||
Carrying amount of long-term debt | $ 25,700,000,000 | |||||||||||||
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 | |||||||||||||
Commercial paper | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Weighted average interest rate | 1.22% | |||||||||||||
Bridge Loan | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Bridge loan | $ 13,000,000,000 | |||||||||||||
Loan processing fee | $ 52,000,000 | |||||||||||||
5.75% senior notes due 2017 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 5.75% | |||||||||||||
6.25% senior notes due 2027 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 6.25% | |||||||||||||
6.125% senior notes due 2039 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 6.125% | |||||||||||||
5.75% senior notes due 2041 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 5.75% | |||||||||||||
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 | |||||||||||||
2.25% senior notes due 2019 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | $ 850,000,000 | |||||||||||||
Interest rate, stated percentage | 2.25% | |||||||||||||
3.375% senior notes due 2024 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | $ 650,000,000 | |||||||||||||
Interest rate, stated percentage | 3.375% | |||||||||||||
6.25% senior notes due in 2027 and 6.125% due in 2039 and 5.75 Percent Due in 2041 and 5.75 Percent Due in 2017 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Redemption premium | $ 490,000,000 | |||||||||||||
Loss on early extinguishment of debt | 521,000,000 | |||||||||||||
Extinguishment of debt amount tender offer | 2,000,000,000.0 | $ 1,500,000,000.0 | ||||||||||||
Write-off of unamortized deferred financing charges | 26,000,000 | |||||||||||||
Extinguishment of debt tender fees | $ 5,000,000 | |||||||||||||
Unsecured Backup Credit Facilities | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Commitment fee percentage | 0.03% | |||||||||||||
Long-term line of credit | $ 0 | |||||||||||||
Unsecured Backup Credit Facilities | Unsecured Backup Credit Facility Expiring May 2018 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 1,000,000,000 | |||||||||||||
Line of credit facility term (in years) | 5 years | |||||||||||||
Unsecured Backup Credit Facilities | Unsecured Backup Credit Facility Expiring July 2019 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 1,250,000,000.00 | |||||||||||||
Line of credit facility term (in years) | 5 years | |||||||||||||
Unsecured Backup Credit Facilities | Unsecured Backup Credit Facility Expiring July 1, 2020 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 1,250,000,000.00 | |||||||||||||
Line of credit facility term (in years) | 5 years | |||||||||||||
Line of Credit | Revolving Credit Facility | Subsequent Event | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Maximum borrowing capacity | $ 2,500,000,000.0 | |||||||||||||
Commitment fee percentage | 0.03% | |||||||||||||
Borrowing capacity reduction 1 | $ 750,000,000 | |||||||||||||
Borrowing capacity reduction 2 | $ 500,000,000 | |||||||||||||
Unsecured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Proceeds from issuance of senior long-term debt | 14,800,000,000 | |||||||||||||
Unsecured Debt | 2.125% senior notes due 2021 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | $ 1,750,000,000.00 | |||||||||||||
Interest rate, stated percentage | 2.125% | |||||||||||||
Unsecured Debt | 2.875% senior notes due 2026 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | $ 1,750,000,000.00 | |||||||||||||
Interest rate, stated percentage | 2.875% | |||||||||||||
Unsecured Debt | 2016 Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Proceeds from issuance of debt | $ 3,500,000,000 | |||||||||||||
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 | 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 | 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 | 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% | |||||||||||||
Senior Notes | 5.75% senior notes due 2017 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 5.75% | |||||||||||||
Senior Notes | 6.6% senior notes due 2019 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 6.60% | |||||||||||||
Senior Notes | 4.75% senior notes due 2020 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 4.75% | |||||||||||||
Senior Notes | Maximum Tender Offer Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Authorized face amount to be repurchased | $ 2,250,000,000.00 | $ 1,500,000,000.0 | ||||||||||||
Repurchased face amount | $ 2,250,000,000 | |||||||||||||
Senior Notes | 6.25% senior notes due 2027 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 6.25% | |||||||||||||
Senior Notes | 6.125% senior notes due 2039 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 6.125% | |||||||||||||
Senior Notes | 5.75% senior notes due 2041 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 5.75% | |||||||||||||
Senior Notes | 5% senior notes due 2024 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | 296,000,000 | |||||||||||||
Interest rate, stated percentage | 5.00% | 5.00% | ||||||||||||
Senior Notes | 5% senior notes due 2024 | Omnicare, Inc. | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Carrying amount of long-term debt | 300,000,000 | |||||||||||||
Senior Notes | 4.750% senior notes due in 2022 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt instrument, face amount | 388,000,000 | |||||||||||||
Interest rate, stated percentage | 4.75% | 4.75% | ||||||||||||
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 | 4.875% senior notes due 2035 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 4.875% | |||||||||||||
Senior Notes | 3.875% senior notes due 2025 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest rate, stated percentage | 3.875% | |||||||||||||
Senior Notes | Any and All Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Repurchased face amount | $ 1,100,000,000 | $ 835,000,000 | ||||||||||||
Redemption premium | 97,000,000 | |||||||||||||
Write off of deferred debt issuance cost | $ 4,000,000 | |||||||||||||
Loss on early extinguishment of debt | $ 101,000,000 | |||||||||||||
Senior Notes | The Notes | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Redemption premium | $ 486,000,000 | |||||||||||||
Write off of deferred debt issuance cost | 50,000,000 | |||||||||||||
Payments of debt extinguishment costs | $ 6,000,000 | |||||||||||||
Loss on early extinguishment of debt | $ 542,000,000 | |||||||||||||
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 | |||||||||||||
Enhanced Capital Advantage Preferred Securities | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Repayment of ECAPS | $ 41,000,000 |
Borrowing and Credit Agreements - Debt Maturities (Details) - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 1,916 | |
2018 | 3,521 | |
2019 | 872 | |
2020 | 2,774 | |
2021 | 2,326 | |
Thereafter | 16,317 | |
Total debt | $ 27,726 | $ 27,694 |
Leases - Additional Information (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016
USD ($)
Center
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Operating Leased Assets [Line Items] | |||
Capital lease obligations | $ 300 | ||
Proceeds from sale-leaseback transactions | $ 230 | $ 411 | $ 515 |
Retail and mail order locations, distribution centers and corporate offices | |||
Operating Leased Assets [Line Items] | |||
Number of distribution centers leased | Center | 11 | ||
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, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Leases [Abstract] | |||
Minimum rentals | $ 2,418 | $ 2,317 | $ 2,320 |
Contingent rentals | 35 | 34 | 36 |
Gross lease rental expense | 2,453 | 2,351 | 2,356 |
Less: sublease income | (24) | (22) | (21) |
Net lease rental expense | $ 2,429 | $ 2,329 | $ 2,335 |
Leases - Schedule of Future Minimum Lease Payments (Details) $ in Millions |
Dec. 31, 2016
USD ($)
|
---|---|
Capital Leases | |
2017 | $ 74 |
2018 | 72 |
2019 | 71 |
2020 | 71 |
2021 | 70 |
Thereafter | 956 |
Total future lease payments | 1,314 |
Less: imputed interest | (666) |
Present value of capital lease obligations | 648 |
Operating Leases | |
2017 | 2,458 |
2018 | 2,361 |
2019 | 2,209 |
2020 | 2,040 |
2021 | 1,910 |
Thereafter | 16,368 |
Total future lease payments | 27,346 |
Minimum sublease rentals due in future under non-cancelable subleases | 176 |
Obligation in excess of future minimum payments | $ 1,700 |
Pension Plans and Other Postretirement Benefits - Additional Information (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2015
Plan
|
Dec. 31, 2016
USD ($)
Plan
|
Dec. 31, 2015
USD ($)
Plan
|
Dec. 31, 2014
USD ($)
Plan
|
|
Compensation and Retirement Disclosure [Abstract] | ||||
Employer's contributions under defined contribution plans | $ 295 | $ 251 | $ 238 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of defined benefit plans | Plan | 7 | 7 | 9 | |
Multiemployer Plans, Pension | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Period contributions | $ 15 | $ 14 | $ 14 | |
Pension Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 0 | $ 0 | 3 | |
Discount rate | 4.00% | 4.25% | ||
Employer contributions | $ 25 | $ 22 | 42 | |
Estimated future employer contributions in next fiscal year | 39 | |||
Benefit obligation | 844 | 844 | 796 | |
Net periodic pension cost | $ 27 | $ 19 | $ 21 | |
Pension Plans | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 7.00% | 21.00% | ||
Pension Plans | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 93.00% | 79.00% | ||
Pension Plans | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 94.00% | 79.00% | ||
Pension Plans | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 5.00% | 19.00% | ||
Pension Plans | Money Market Funds | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 1.00% | 2.00% | ||
Pension Plans | Minimum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 175 | |||
Expected long-term rate of return on plan assets | 4.00% | 5.75% | ||
Rate of compensation increase | 4.00% | 4.00% | ||
Pension Plans | Minimum | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 80.00% | |||
Pension Plans | Minimum | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 0.00% | |||
Pension Plans | Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Settlement loss | $ 225 | |||
Expected long-term rate of return on plan assets | 5.50% | 6.75% | ||
Rate of compensation increase | 6.00% | 6.00% | ||
Pension Plans | Maximum | Fixed Income Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 100.00% | |||
Pension Plans | Maximum | Equity Securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Actual plan asset allocations percent | 20.00% | |||
Tax Qualified Pension Plans, Defined Benefit | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of defined benefit plans | Plan | 4 | 2 | 2 | 4 |
Discount rate | 3.09% | 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] | ||||
Period contributions | $ 52 | $ 60 | $ 58 | |
Benefit obligation | 24 | 33 | ||
Net periodic pension cost | $ 1 | $ 2 | $ 1 |
Pension Plans and Other Postretirement Benefits - Change in Benefit Obligation (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Benefit obligation at beginning of year | $ 844 | $ 796 | |
Acquisition | 0 | 8 | |
Interest cost | 27 | 31 | $ 32 |
Actuarial loss | 13 | 45 | |
Benefit payments | (37) | (36) | |
Settlements | (3) | 0 | |
Benefit obligation at end of year | $ 844 | $ 844 | $ 796 |
Pension Plans and Other Postretirement Benefits - Change in Plan Assets (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Benefit Plan, Change in Fair Value of Plan Assets | |||
Fair value of plan assets at the beginning of the year | $ 613 | $ 635 | |
Acquisitions | 0 | 5 | |
Actual return on plan assets | 26 | (13) | |
Employer contributions | 25 | 22 | $ 42 |
Benefit payments | (37) | (36) | |
Settlements | (3) | 0 | |
Fair value of plan assets at the end of the year | 624 | 613 | $ 635 |
Funded status | $ (220) | $ (231) |
Pension Plans and Other Postretirement Benefits - Components of Net Periodic Benefit Cost (Details) - Pension Plans - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Interest cost | $ 27 | $ 31 | $ 32 |
Expected return on plan assets | (32) | (33) | (31) |
Amortization of net loss | 32 | 21 | 16 |
Settlement loss | 0 | 0 | 3 |
Service cost | 0 | 0 | 1 |
Net periodic pension cost | $ 27 | $ 19 | $ 21 |
Pension Plans and Other Postretirement Benefits - Fair Value Allocation of Plan Assets (Details) - Pension Plans - USD ($) $ in Millions |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | $ 624 | $ 613 | $ 635 |
Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 44 | 129 | |
Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 580 | 484 | |
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 | 8 | 10 | |
Cash and money market funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 8 | 10 | |
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 | 583 | 488 | |
Fixed income funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 3 | 4 | |
Fixed income funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 580 | 484 | |
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 | 33 | 115 | |
Equity mutual funds | Level 1 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 33 | 115 | |
Equity mutual funds | Level 2 | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Fair value of plan assets | 0 | 0 | |
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, 2016
USD ($)
|
---|---|
Defined Benefit Plan Disclosure [Line Items] | |
2017 | $ 39 |
2018 | 52 |
2019 | 50 |
2020 | 49 |
2021 | 61 |
Thereafter | $ 236 |
Stock Incentive Plans - Schedule of Stock-based Compensation (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense related to share-based compensation | $ 222 | $ 230 | $ 165 |
Stock Options and ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense related to share-based compensation | 79 | 90 | 103 |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense related to share-based compensation | $ 143 | 140 | $ 62 |
Restricted Stock | Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense related to share-based compensation | $ 38 |
Stock Incentive Plans - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Compensation | |||
Recognized tax benefit on compensation expense | $ 22 | $ 26 | $ 33 |
Excess tax benefits from stock-based compensation | 72 | 127 | 106 |
Proceeds from exercise of stock options | 224 | 299 | 421 |
Total intrinsic value of options exercised | 244 | 394 | 372 |
Restricted Stock | |||
Compensation | |||
Total fair value of restricted shares vested | $ 218 | $ 164 | $ 57 |
Restricted Stock Units (RSUs) | |||
Compensation | |||
Granted (in shares) | 1,992,000 | 2,695,000 | 2,708,000 |
Granted (in dollars per share) | $ 103.26 | $ 100.81 | $ 73.60 |
Unrecognized compensation expense related to unvested options | $ 327 | ||
Unrecognized compensation expense related to unvested options, period of recognition (in years) | 2 years 3 months 15 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 | |||
Unrecognized compensation expense related to unvested options | $ 79 | ||
Unrecognized compensation expense related to unvested options, period of recognition (in years) | 1 year 9 months 16 days | ||
Fair value of options vested | $ 298 | $ 334 | $ 292 |
Unvested options to vest over the requisite service period (in shares) | $ 11 | ||
Employee Stock Purchase Plan 2007 | |||
Compensation | |||
Maximum number of shares that can be purchased under ESPP (in shares) | 30,000,000 | ||
Employee purchase price, percentage of fair market value of ordinary shares | 90.00% | 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) | $ 84.68 | ||
Shares available for future grants under the ICP (in shares) | 12,000,000 | ||
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) | 18,000,000 | ||
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, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 0.88% | 0.71% | 0.75% |
Expected volatility | 20.64% | 13.92% | 14.87% |
Risk-free interest rate | 0.45% | 0.11% | 0.08% |
Expected life (in years) | 6 months | 6 months | 6 months |
Weighted-average grant date fair value (in dollars per share) | $ 14.98 | $ 18.72 | $ 13.74 |
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, 2016
$ / shares
shares
| |
Units | |
Nonvested at beginning of year (in shares) | shares | 5,418 |
Granted (in shares) | shares | 1,992 |
Vested (in shares) | shares | (2,219) |
Forfeited (in shares) | shares | (316) |
Nonvested at end of year (in shares) | shares | 4,875 |
Weighted Average Grant Date Fair Value | |
Nonvested at beginning of year (in dollars per share) | $ / shares | $ 59.22 |
Granted (in dollars per share) | $ / shares | 103.26 |
Vested (in dollars per share) | $ / shares | 102.47 |
Forfeited (in dollars per share) | $ / shares | 89.71 |
Nonvested at end of year (in dollars per share) | $ / shares | $ 55.56 |
Stock Incentive Plans - Fair Value of Options Using Black-Scholes (Details) - Employee Stock Option - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 1.62% | 1.37% | 1.47% |
Expected volatility | 17.22% | 18.07% | 19.92% |
Risk-free interest rate | 1.24% | 1.24% | 1.35% |
Expected life (in years) | 4 years 2 months 9 days | 4 years 2 months 12 days | 4 years |
Weighted-average grant date fair value (in dollars per share) | $ 13.00 | $ 14.01 | $ 11.04 |
Stock Incentive Plans - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at the beginning of the period (in shares) | 24,341 | |
Granted (in shares) | 4,343 | |
Exercised (in shares) | (4,328) | |
Forfeited (in shares) | (768) | |
Expired (in shares) | (313) | |
Outstanding at the end of the period (in shares) | 23,275 | 24,341 |
Options exercisable (in shares) | 12,196 | |
Options vested and expected to vest end of the period (in shares) | 22,734 | |
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) | $ 42.17 | |
Granted (in dollars per share) | 104.62 | |
Exercised (in dollars per share) | 42.07 | |
Forfeited (in dollars per share) | 85.34 | |
Expired (in dollars per share) | 39.73 | |
Outstanding at the end of the period (in dollars per share) | 68.60 | $ 42.17 |
Exercisable at end of period (in dollars per share) | 49.22 | |
Vested and expected to vest (in dollars per share) | $ 67.86 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted average remaining contractual term, options outstanding (in years) | 3 years 8 months 10 days | |
Weighted average remaining contractual term, options exercisable (in years) | 2 years 4 months 6 days | |
Weighted average remaining contractual term, options vested and expected to vest (in years) | 3 years 7 months 22 days | |
Aggregate intrinsic value, options outstanding | $ 427,311,414 | |
Aggregate intrinsic value, options exercisable | 375,563,490 | |
Aggregate intrinsic value, options vested and expected to vest | $ 426,628,851 |
Income Taxes (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current: | |||
Federal | $ 2,803 | $ 3,065 | $ 2,581 |
State | 511 | 555 | 495 |
Total current income tax provision | 3,314 | 3,620 | 3,076 |
Deferred: | |||
Federal | 5 | (180) | (43) |
State | (2) | (54) | 0 |
Total deferred income tax provision | 3 | (234) | (43) |
Total | $ 3,317 | $ 3,386 | $ 3,033 |
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 | 4.10% | 4.00% | 4.30% |
Other | (0.70%) | 0.30% | 0.20% |
Effective income tax rate | 38.40% | 39.30% | 39.50% |
Deferred tax assets: | |||
Lease and rents | $ 375 | $ 378 | |
Inventory | 57 | 99 | |
Employee benefits | 400 | 359 | |
Allowance for doubtful accounts | 301 | 279 | |
Retirement benefits | 65 | 105 | |
Net operating loss and capital loss carryforwards | 125 | 115 | |
Deferred income | 144 | 83 | |
Other | 336 | 498 | |
Valuation allowance | (135) | (115) | |
Total deferred tax assets | 1,668 | 1,801 | |
Deferred tax liabilities: | |||
Depreciation and amortization | (5,882) | (6,018) | |
Total deferred tax liabilities | (5,882) | (6,018) | |
Net deferred tax liabilities | (4,214) | (4,217) | |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Beginning balance | 338 | 188 | $ 117 |
Additions based on tax positions related to the current year | 68 | 57 | 32 |
Additions based on tax positions related to prior years | 70 | 122 | 70 |
Reductions for tax positions of prior years | (100) | (11) | (15) |
Expiration of statutes of limitation | (22) | (13) | (15) |
Settlements | (47) | (5) | (1) |
Ending balance | 307 | 338 | 188 |
Interest recognized related to unrecognized tax benefits | 10 | 5 | $ 6 |
Accrued interest and penalties related to unrecognized tax benefits | 30 | $ 16 | |
Unrecognized tax benefits that would impact effective tax rate | $ 276 |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Oct. 29, 2010
USD ($)
plaintiff
|
Oct. 31, 2016
USD ($)
|
Sep. 30, 2015
pharmacy
|
Mar. 31, 2010
state
|
Feb. 28, 2006
director
class_action_complaint
officer
|
Oct. 31, 2003
pharmacy
class_action_complaint
|
Dec. 31, 2016
lease
|
|
Loss contingencies | |||||||
Number of store leases guaranteed | lease | 87 | ||||||
Number of pharmacies filing putative action | pharmacy | 2 | ||||||
New claims filed, number | class_action_complaint | 3 | ||||||
Number of pharmacies indicated in subpoena | pharmacy | 8 | ||||||
Omnicare, Inc. | |||||||
Loss contingencies | |||||||
New claims filed, number | class_action_complaint | 2 | ||||||
Number of officers named in lawsuit | officer | 3 | ||||||
Number of directors named in lawsuit | director | 2 | ||||||
Multi-state Investigation | |||||||
Loss contingencies | |||||||
Number of states participating in multi-state investigation | state | 28 | ||||||
Banigan and Templin v. Organon USA, Inc., Omnicare, Inc. and PharMerica Corporation | Omnicare, Inc. | |||||||
Loss contingencies | |||||||
Litigation settlement, amount | $ 23.0 | ||||||
Number of plaintiffs | plaintiff | 2 | ||||||
Omnicare's Nationwide Billing Practices, Pure Service Pharmacy | Omnicare, Inc. | |||||||
Loss contingencies | |||||||
Litigation settlement, amount | $ 1.5 | ||||||
Auto Label Verification | Omnicare, Inc. | |||||||
Loss contingencies | |||||||
Litigation settlement, amount | 8.0 | ||||||
Controlled Substances Act | |||||||
Loss contingencies | |||||||
Litigation settlement, amount | $ 5.0 |
Segment Reporting (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
segment
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Segment reporting information | |||||||||||
Number of segments | segment | 3 | ||||||||||
Net revenues | $ 45,971 | $ 44,615 | $ 43,725 | $ 43,215 | $ 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | $ 177,526 | $ 153,290 | $ 139,367 |
Gross profit | 7,606 | 7,492 | 7,015 | 6,744 | 7,301 | 6,661 | 6,402 | 6,164 | 28,857 | 26,528 | 25,367 |
Operating profit | 2,995 | $ 2,817 | $ 2,350 | $ 2,176 | $ 2,729 | $ 2,331 | $ 2,262 | $ 2,132 | 10,338 | 9,454 | 8,799 |
Depreciation and amortization | 2,475 | 2,092 | 1,931 | ||||||||
Additions to property and equipment | 2,279 | 2,367 | 2,136 | ||||||||
Operating Segments | Pharmacy Services Segment | |||||||||||
Segment reporting information | |||||||||||
Net revenues | 119,963 | 100,363 | 88,440 | ||||||||
Gross profit | 5,901 | 5,227 | 4,771 | ||||||||
Operating profit | 4,672 | 3,989 | 3,514 | ||||||||
Depreciation and amortization | 714 | 654 | 630 | ||||||||
Additions to property and equipment | 295 | 359 | 308 | ||||||||
Net revenues, retail co-payments | 10,500 | 8,900 | 8,100 | ||||||||
Litigation settlement, amount | 88 | ||||||||||
Operating Segments | Retail/LTC Segment | |||||||||||
Segment reporting information | |||||||||||
Net revenues | 81,100 | 72,007 | 67,798 | ||||||||
Gross profit | 23,738 | 21,992 | 21,277 | ||||||||
Operating profit | 7,281 | 7,130 | 6,762 | ||||||||
Depreciation and amortization | 1,642 | 1,336 | 1,205 | ||||||||
Additions to property and equipment | 1,732 | 1,883 | 1,745 | ||||||||
Acquisition related costs | 46 | ||||||||||
Asset impairment charges | $ 34 | 34 | |||||||||
Operating Segments | Retail/LTC Segment | Operating Income (Loss) | |||||||||||
Segment reporting information | |||||||||||
Acquisition related costs | 281 | 64 | |||||||||
Operating Segments | Corporate Segment | |||||||||||
Segment reporting information | |||||||||||
Net revenues | 0 | 0 | 0 | ||||||||
Gross profit | 0 | 0 | 0 | ||||||||
Operating profit | (894) | (1,037) | (796) | ||||||||
Depreciation and amortization | 119 | 102 | 96 | ||||||||
Additions to property and equipment | 252 | 125 | 83 | ||||||||
Acquisition related costs | 10 | 156 | |||||||||
Payments for legal settlements | 90 | ||||||||||
Intersegment Eliminations | |||||||||||
Segment reporting information | |||||||||||
Net revenues | (23,537) | (19,080) | (16,871) | ||||||||
Gross profit | (782) | (691) | (681) | ||||||||
Operating profit | (721) | (628) | (681) | ||||||||
Depreciation and amortization | 0 | 0 | 0 | ||||||||
Additions to property and equipment | $ 0 | $ 0 | $ 0 | ||||||||
Customer Concentration Risk | Sales Revenue, Net | |||||||||||
Segment reporting information | |||||||||||
Concentration risk, percentage | 11.20% | ||||||||||
Geographic Concentration Risk | United States | Sales Revenue, Net | |||||||||||
Segment reporting information | |||||||||||
Concentration risk, percentage | 99.00% | ||||||||||
Geographic Concentration Risk | United States | Long-lived Assets | |||||||||||
Segment reporting information | |||||||||||
Concentration risk, percentage | 99.00% |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Numerator for earnings per share calculation: | |||||||||||
Income from continuing operations | $ 1,707 | $ 1,542 | $ 924 | $ 1,147 | $ 1,500 | $ 1,237 | $ 1,272 | $ 1,221 | $ 5,320 | $ 5,230 | $ 4,645 |
Income allocated to participating securities | (27) | (26) | (19) | ||||||||
Net income attributable to noncontrolling interest | (2) | (2) | 0 | ||||||||
Income from continuing operations attributable to common stockholders | $ 5,291 | $ 5,202 | $ 4,626 | ||||||||
Denominator for earnings per share calculation: | |||||||||||
Weighted average shares, basic (in shares) | 1,073 | 1,118 | 1,161 | ||||||||
Effect of dilutive securities (in shares) | 6 | 8 | 8 | ||||||||
Weighted average shares, diluted (in shares) | 1,079 | 1,126 | 1,169 | ||||||||
Earnings per share from continuing operations: | |||||||||||
Earnings per share, basic (in dollars per share) | $ 1.60 | $ 1.44 | $ 0.86 | $ 1.04 | $ 1.35 | $ 1.10 | $ 1.13 | $ 1.08 | $ 4.93 | $ 4.65 | $ 3.98 |
Earnings per share, diluted (in dollars per share) | $ 1.59 | $ 1.43 | $ 0.86 | $ 1.04 | $ 1.34 | $ 1.10 | $ 1.12 | $ 1.07 | $ 4.91 | $ 4.62 | $ 3.96 |
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Quarterly financial information | |||||||||||
Net revenues | $ 45,971 | $ 44,615 | $ 43,725 | $ 43,215 | $ 41,145 | $ 38,644 | $ 37,169 | $ 36,332 | $ 177,526 | $ 153,290 | $ 139,367 |
Gross profit | 7,606 | 7,492 | 7,015 | 6,744 | 7,301 | 6,661 | 6,402 | 6,164 | 28,857 | 26,528 | 25,367 |
Operating profit | 2,995 | 2,817 | 2,350 | 2,176 | 2,729 | 2,331 | 2,262 | 2,132 | 10,338 | 9,454 | 8,799 |
Income from continuing operations | 1,707 | 1,542 | 924 | 1,147 | 1,500 | 1,237 | 1,272 | 1,221 | 5,320 | 5,230 | 4,645 |
Income (loss) from discontinued operations, net of tax | 0 | (1) | 0 | 0 | (1) | 10 | 0 | 0 | (1) | 9 | (1) |
Net income attributable to CVS Health | $ 1,707 | $ 1,540 | $ 924 | $ 1,146 | $ 1,498 | $ 1,246 | $ 1,272 | $ 1,221 | $ 5,317 | $ 5,237 | $ 4,644 |
Basic earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health (in dollars per share) | $ 1.60 | $ 1.44 | $ 0.86 | $ 1.04 | $ 1.35 | $ 1.10 | $ 1.13 | $ 1.08 | $ 4.93 | $ 4.65 | $ 3.98 |
Income (loss) from discontinued operations attributable to CVS Health (in dollars per share) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 |
Net income attributable to CVS Health (in dollars per share) | 1.60 | 1.44 | 0.86 | 1.04 | 1.35 | 1.11 | 1.13 | 1.08 | 4.93 | 4.66 | 3.98 |
Diluted earnings per share: | |||||||||||
Income from continuing operations attributable to CVS Health (in dollars per share) | 1.59 | 1.43 | 0.86 | 1.04 | 1.34 | 1.10 | 1.12 | 1.07 | 4.91 | 4.62 | 3.96 |
Income (loss) from discontinued operations attributable to CVS Health (in dollars per share) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 | 0.00 | 0.00 | 0.01 | 0.00 |
Net income attributable to CVS Health (in dollars per share) | 1.59 | 1.43 | 0.86 | 1.04 | 1.34 | 1.11 | 1.12 | 1.07 | 4.90 | 4.63 | 3.96 |
Dividends per share (in dollars per share) | 0.425 | 0.425 | 0.425 | 0.425 | 0.35 | 0.35 | 0.35 | 0.35 | 1.700 | 1.40 | $ 1.10 |
High | |||||||||||
Diluted earnings per share: | |||||||||||
NYSE Stock Price (in dollars per share) | 88.8 | 98.06 | 106.1 | 104.05 | 105.29 | 113.45 | 106.47 | 104.56 | 106.1 | 113.45 | |
Low | |||||||||||
Diluted earnings per share: | |||||||||||
NYSE Stock Price (in dollars per share) | $ 73.53 | $ 88.99 | $ 93.21 | $ 89.65 | $ 91.56 | $ 95.12 | $ 98.74 | $ 94.16 | $ 73.53 | $ 91.56 |
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