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Segment Reporting (Tables)
 3 Months Ended
Mar. 31, 2018
Segment Reporting  
Reconciliation of the Company's business segments to the consolidated financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

 

Retail/LTC

 

Corporate

 

Intersegment

 

Consolidated

In millions

    

Segment

    

Segment

    

Segment

    

Eliminations

    

Totals

Cost of revenues, as previously reported

 

$

30,127

 

$

13,665

 

 

 

 

$

(5,858)

 

$

37,934

Adjustments

 

 

14

 

 

(5)

 

 

 

 

 

 —

 

 

 9

Cost of revenues, as adjusted

 

$

30,141

 

$

13,660

 

 

 

 

$

(5,858)

 

$

37,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit, as previously reported

 

$

1,096

 

$

5,676

 

 

 

 

$

(192)

 

$

6,580

Adjustments

 

 

(14)

 

 

 5

 

 

 

 

 

 —

 

 

(9)

Gross profit, as adjusted

 

$

1,082

 

$

5,681

 

 

 

 

$

(192)

 

$

6,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses, as previously reported

 

$

312

 

$

4,265

 

$

226

 

$

(16)

 

$

4,787

Adjustments

 

 

13

 

 

(17)

 

 

(5)

 

 

 —

 

 

(9)

Operating expenses, as adjusted

 

$

325

 

$

4,248

 

$

221

 

$

(16)

 

$

4,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit (loss), as previously reported

 

$

784

 

$

1,411

 

$

(226)

 

$

(176)

 

$

1,793

Adjustments

 

 

(27)

 

 

22

 

 

 5

 

 

 —

 

 

 —

Operating profit (loss), as adjusted

 

$

757

 

$

1,433

 

$

(221)

 

$

(176)

 

$

1,793

 

The following is a reconciliation of the Company’s segments to the accompanying condensed consolidated financial statements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pharmacy 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Services

 

Retail/LTC

 

Corporate

 

Intersegment

 

Consolidated

In millions

    

Segment(1)

    

Segment

    

Segment

    

Eliminations(2)

    

Totals

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net revenues

 

$

32,218

 

$

20,432

 

$

 —

 

$

(6,957)

 

$

45,693

 Gross profit

 

 

1,138

 

 

5,916

 

 

 —

 

 

(195)

 

 

6,859

 Operating profit (loss) (3)(4)

 

 

761

 

 

1,624

 

 

(264)

 

 

(175)

 

 

1,946

March 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net revenues

 

 

31,223

 

 

19,341

 

 

—

 

 

(6,050)

 

 

44,514

 Gross profit

 

 

1,082

 

 

5,681

 

 

—

 

 

(192)

 

 

6,571

 Operating profit (loss) (5)

 

 

757

 

 

1,433

 

 

(221)

 

 

(176)

 

 

1,793

(1)

Net revenues of the Pharmacy Services Segment include approximately $3.3 billion and $3.1 billion of retail co‑payments for the three months ended March 31, 2018 and 2017, respectively.

(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 operating profit for the three months ended March 31, 2018 includes an $86 million loss on the divestiture of the RxCrossroads subsidiary (see “Note 3 – Goodwill” to the condensed consolidated financial statements) and $3 million of acquisition-related integration costs related to the acquisition of Omnicare.

(4)

The Corporate Segment operating loss for the three months ended March 31, 2018 includes $40 million in acquisition-related transaction and integration costs related to the proposed Aetna acquisition.

The Retail/LTC Segment operating profit for the three months ended March 31, 2017 includes a $199 million charge associated with store closures and $15 million of acquisition-related integration costs related to the acquisition of Omnicare.