Segment information

6 Months Ended

Jun. 30, 2011

Segment information [Abstract]

Segment information

Note 10 — Segment information

     We report segments on the basis of services offered and have determined we have two reportable segments: PBM and EM. Our domestic and Canadian PBM operating segments have similar characteristics and as such have been aggregated into a single PBM reporting segment. As described in Note 3, our PMG line of business was classified as a discontinued operation in the second quarter of 2010. The results of operations for PMG, previously included in our EM segment, are reported as discontinued operations for all periods presented in the accompanying unaudited consolidated statements of operations in accordance with applicable accounting guidance.

     Operating income is the measure used by our chief operating decision maker to assess the performance of each of our operating segments. The following table presents information about our reportable segments for the three and six months ended June 30, 2011 and 2010.

(in millions)	PBM		EM		Total
For the three months ended June 30, 2011
Product revenues:
Network revenues(1)	$	7,389.0	$	—	$	7,389.0
Home delivery and specialty revenues(2)		3,518.6		—		3,518.6
Other revenues		—		382.6		382.6
Service revenues		65.9		5.3		71.2
Total revenues		10,973.5		387.9		11,361.4
Depreciation and amortization expense		61.2		2.1		63.3
Operating income		569.2		10.1		579.3
Interest income						1.5
Interest expense						(50.3	)
Income before income taxes						530.5
Capital expenditures		33.7		0.9		34.6

(in millions)	PBM		EM		Total
For the three months ended June 30, 2010
Product revenue:
Network revenues(1)	$	7,590.6	$	—	$	7,590.6
Home delivery and specialty revenues(2)		3,295.2		—		3,295.2
Other revenues		—		334.2		334.2
Service revenues		65.8		3.0		68.8
Total revenues		10,951.6		337.2		11,288.8
Depreciation and amortization expense		58.5		2.0		60.5
Operating income		525.4		4.9		530.3
Interest income						0.5
Interest expense						(42.0	)
Income before income taxes						488.8
Capital expenditures		16.3		1.1		17.4
For the six months ended June 30, 2011
Product revenues:
Network revenues(1)	$	14,647.1	$	—	$	14,647.1
Home delivery and specialty revenues(2)		6,925.7		—		6,925.7
Other revenues		—		733.1		733.1
Service revenues		139.4		10.6		150.0
Total revenues		21,712.2		743.7		22,455.9
Depreciation and amortization expense		122.0		4.2		126.2
Operating income		1,113.3		18.4		1,131.7
Interest income						1.9
Interest expense						(90.0	)
Income before income taxes						1,043.6
Capital expenditures		52.8		1.3		54.1
For the six months ended June 30, 2010
Product revenue:
Network revenues(1)	$	15,105.5	$	—	$	15,105.5
Home delivery and specialty revenues(2)		6,525.8		—		6,525.8
Other revenues		—		658.2		658.2
Service revenues		131.7		6.0		137.7
Total revenues		21,763.0		664.2		22,427.2
Depreciation and amortization expense		115.2		4.0		119.2
Operating income		976.0		9.0		985.0
Interest income						2.2
Interest expense						(84.8	)
Income before income taxes						902.4
Capital expenditures		49.8		1.3		51.1

(1)	Includes retail pharmacy co-payments of $1,457.1 million and $1,547.3 million for the three months ended June 30, 2011 and 2010, respectively and $2,983.6 million and $3,209.9 million for the six months ended June 30, 2011 and 2010, respectively.
(2)	Includes home delivery, specialty and other including: (a) drugs distributed through patient assistance programs and (b) drugs we distribute to other PBMs’ clients under limited distribution contracts with pharmaceutical manufacturers.

     The following table presents balance sheet information about our reportable segments:

(in millions)	PBM		EM		Total
Total Assets
As of June 30, 2011	$	9,709.1	$	528.8	$	10,237.9
As of December 31, 2010	$	10,078.4	$	479.4	$	10,557.8

     PBM product revenues consist of revenues from the sale of prescription drugs by retail pharmacies in our retail pharmacy networks, revenues from the dispensing of prescription drugs from our home delivery pharmacies and distribution of certain specialty drugs. EM product revenues consist of distribution of certain fertility drugs and revenues from specialty distribution activities. PBM service revenues include administrative fees associated with the administration of retail pharmacy networks contracted by certain clients, informed decision counseling services, and specialty distribution services. EM service revenues include revenues from healthcare card administration.

     The following table shows the percentage of total revenue represented by our top five clients and clients representing 10% or greater of our consolidated revenue for each respective period:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
WellPoint		29.9	%		28.6	%		29.6	%		28.4	%
Department of Defense (“DoD”)		21.7	%		19.1	%		21.7	%		18.9	%
Other		6.3	%		6.4	%		6.2	%		6.2	%
Top five clients		57.9	%		54.1	%		57.5	%		53.5	%

     None of our other clients accounted for 10% or more of our consolidated revenues during the three and six months ended June 30, 2011 or 2010.

     Revenues earned by our Canadian PBM totaled $15.5 million and $12.8 million for the three months ended June 30, 2011 and 2010, respectively and $30.9 million and $25.0 million for the six months ended June 30, 2011 and 2010, respectively. All other revenues were earned in the United States. Long-lived assets of our Canadian PBM (consisting primarily of fixed assets) totaled $16.8 million and $16.7 million as of June 30, 2011 and December 31, 2010, respectively. All other long-lived assets are domiciled in the United States.