CVS Health 2015 FInancial Statements.xlsx

CVS Health 2015 FInancial Statements.xlsx - 12 Months Ended...

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Unformatted text preview: 12 Months Ended Dec. 31, 2014 Document and Entity Information (USD $) Document and Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Well-known Seasoned Issuer Entity Voluntary Filers Entity Current Reporting Status Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Year Focus Document Fiscal Period Focus Feb. 03, 2015 Jun. 30, 2014 CVS HEALTH CORP 64803 10-K 31-Dec-14 0 -19 No No Yes Large Accelerated Filer $87,242,957,318 1,125,252,739 2014 FY Consolidated Statements of Income (USD $) 12 Months Ended In Millions, except Per Share data, unless Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2012 otherwise specified Income Statement [Abstract] Net revenues $139,367 $126,761 $123,120 Cost of revenues 114,000 102,978 100,632 Gross profit 25,367 23,783 22,488 Operating expenses 16,568 15,746 15,278 Operating profit 8,799 8,037 7,210 Interest expense, net 600 509 557 Loss on early extinguishment of debt 521 0 348 Income before income tax provision 7,678 7,528 6,305 Income tax provision 3,033 2,928 2,436 Income from continuing operations 4,645 4,600 3,869 Loss from discontinued operations, net of tax Net income Net loss attributable to noncontrolling interest Net income attributable to CVS Health Basic earnings per share: Income from continuing operations attributable to CVS Caremark (in dollars per share) Loss from discontinued operations attributable to CVS Caremark (in dollars per share) Net income attributable to CVS Caremark (in dollars per share) Weighted average common shares outstanding (in shares) Diluted earnings per share: Income from continuing operations attributable to CVS Caremark (in dollars per share) Loss from discontinued operations attributable to CVS Caremark (in dollars per share) Net income attributable to CVS Caremark (in dollars per share) Weighted average common shares outstanding (in shares) Dividends declared per common share -1 4,644 -8 4,592 -7 3,862 0 $4,644 0 $4,592 2 $3,864 $3.98 $3.78 $3.05 $0 ($0.01) ($0.01) $3.98 $3.77 $3.04 1,161 1,217 1,271 $3.96 $3.75 $3.02 $0 ($0.01) ($0.01) $3.96 $3.74 $3.02 1,169 $1.10 1,226 $0.90 1,280 $0.65 Consolidated Statements of Comprehensive 12 Months Ended Income (USD $) In Millions, unless otherwise specified Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2012 Statement of Comprehensive Income [Abstract] Net income Other comprehensive income (loss): Foreign currency translation adjustments, net of tax Net cash flow hedges, net of tax Pension and other postretirement benefits, net of tax Net other comprehensive income (loss) Comprehensive income Comprehensive loss attributable to noncontrolling interest Comprehensive income attributable to CVS Health [1] $4,644 $4,592 $3,862 -35 4 -30 3 0 3 -37 59 -12 -68 [1] 4,576 32 [1] 4,624 -9 3,855 0 0 2 $4,576 $4,624 $3,853 All amounts are net of tax. Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified Assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Deferred income taxes Other current assets Total current assets Property and equipment, net Goodwill Intangible assets, net Other assets Total assets Liabilities: Accounts payable Claims and discounts payable Accrued expenses Short-term debt Current portion of long-term debt Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Commitments and contingencies (Note 11) 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; 1,691 shares issued and 1,140 shares outstanding at December 31, 2014 and 1,680 shares issued and 1,180 shares outstanding at December 31, 2013 Treasury stock, at cost: 550 shares at December 31, 2014 and 500 shares at December 31, 2013 Shares held in trust: 1 share at December 31, 2014 and 2013 Capital surplus Retained earnings Accumulated other comprehensive income (loss) Dec. 31, 2014 Dec. 31, 2013 $2,481 34 9,687 11,930 985 866 25,983 8,843 28,142 9,774 1,510 74,252 $4,089 88 8,729 11,045 902 472 25,325 8,615 26,542 9,529 1,515 71,526 6,547 5,404 5,816 685 575 19,027 11,695 4,036 1,531 5,548 4,548 4,768 0 561 15,425 12,841 3,901 1,421 0 0 0 17 17 -24,078 -20,169 -31 30,418 31,849 -31 29,777 28,493 -217 [1] -149 [1] Stockholders' Equity Attributable to Parent Stockholders' Equity Attributable to Noncontrolling Interest Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Total liabilities and shareholders’ equity [1] 37,958 37,938 5 0 37,963 37,938 $74,252 $71,526 All amounts are net of tax. Consolidated Balance Sheets (Parenthetical) Dec. 31, 2014 Dec. 31, 2013 (USD $) Statement of Financial Position [Abstract] Preferred Stock, par value (in dollars per share) Preferred Stock, shares authorized Preferred Stock, shares issued Preferred Stock, shares outstanding Common Stock, par value (in dollars per share) Common Stock, shares authorized Common Stock, shares issued Common Stock, shares outstanding Treasury Stock, shares Shares held in trust, shares $0.01 100,000 0 0 $0.01 100,000 0 0 $0.01 $0.01 3,200,000,000 3,200,000,000 1,691,000,000 1,680,000,000 1,140,000,000 1,180,000,000 550,000,000 500,000,000 1,000,000 1,000,000 Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified Cash flows from operating activities: Cash receipts from customers Cash paid for inventory and prescriptions dispensed by retail network pharmacies Cash paid to other suppliers and employees Interest received Interest paid Income taxes paid Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Proceeds from sale-leaseback transactions Proceeds from sale of property and equipment and other assets Acquisitions (net of cash acquired) and other investments Purchase of available-for-sale investments Maturity of available-for-sale investments Proceeds from sale of subsidiary Net cash used in investing activities Cash flows from financing activities: Increase (decrease) in short-term debt Proceeds from issuance of long-term debt Repayments of long-term debt Purchase of noncontrolling interest in subsidiary Dividends paid Proceeds from exercise of stock options Excess tax benefits from stock-based compensation Repurchase of common stock Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents 12 Months Ended Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2012 $132,406 $114,993 $113,205 -105,362 -91,178 -90,032 -15,344 15 -647 -2,931 -14,295 8 -534 -3,211 -13,643 4 -581 -2,282 8,137 5,783 6,671 -2,136 -1,984 -2,030 515 600 529 11 54 23 -2,439 -415 -378 -157 -226 0 161 0 -4,045 136 0 -1,835 0 7 -1,849 685 -690 -60 1,483 -3,100 3,964 0 1,239 -1,718 0 -1,288 0 -1,097 -26 -829 421 500 836 106 -4,001 -5,694 62 -3,976 -1,237 28 -4,330 -4,860 -6 3 0 -1,608 2,714 -38 Cash and cash equivalents at the beginning of the year 4,089 1,375 1,413 2,481 4,089 1,375 Net income Adjustments required to reconcile net income to net cash provided by operating activities: 4,644 4,592 3,862 Depreciation and amortization Stock-based compensation Loss on early extinguishment of debt Deferred income taxes and other noncash items 1,931 165 521 1,870 141 0 1,753 132 348 -58 -86 -111 -737 -770 -383 9 -2,210 12 105 -135 -387 -853 3 -99 1,742 1,060 1,024 471 1,147 766 13 -1 110 $8,137 $5,783 $6,671 Cash and cash equivalents at the end of the year Reconciliation of net income to net cash provided by operating activities: Change in operating assets and liabilities, net of effects from acquisitions: Accounts receivable, net Inventories Other current assets Other assets Accounts payable and claims and discounts payable Accrued expenses Increase (Decrease) in Other Operating Liabilities Net cash provided by operating activities Consolidated Statements of Shareholders' Equity (USD $) In Millions, except Share data, unless otherwise specified Beginning of year at Dec. 31, 2011 Beginning of year at Dec. 31, 2011 Balance Beginning (in shares) at Dec. 31, 2011 Total Common stock: Increase (Decrease) in Stockholders' Equity Stock options exercised and issuance of stock awards (in shares) Treasury stock: 16 -11,953 1,640,000,000 340,000,000 27,000,000 Purchase of treasury shares (in shares) Employee stock purchase plan issuances (in shares) -95,000,000 1,000,000 Transfer of shares from shares held in trust (in shares) -1,000,000 Transfer of shares held in trust to treasury stock (in shares) Stock options exercised and issuance of stock awards 1 Purchase of treasury shares Employee stock purchase plan issuances -4,330 47 Transfer of shares from shares held in trust -34 Transfer of shares to treasury stock Stock option activity and stock awards Excess tax benefit on stock options and stock awards Purchase of noncontrolling interest in subsidiary Changes in inventory accounting principles Net income attributable to CVS Health Common stock dividends Foreign currency translation adjustments, net of tax Net cash flow hedges, net of tax Pension and other postretirement benefits, net of tax Business combinations End of year at Dec. 31, 2012 Beginning of year at Dec. 31, 2012 Balance Beginning (in shares) at Dec. 31, 2012 3,864 0 3 12 37,653 37,653 17 -16,270 -1,667,000,000 -435,000,000 Increase (Decrease) in Stockholders' Equity Stock options exercised and issuance of stock awards (in shares) 13,000,000 Purchase of treasury shares (in shares) Employee stock purchase plan issuances (in shares) -66,000,000 1,000,000 Transfer of shares from shares held in trust (in shares) 0 Transfer of shares held in trust to treasury stock (in shares) Stock options exercised and issuance of stock awards 0 Purchase of treasury shares Employee stock purchase plan issuances -3,976 77 Transfer of shares from shares held in trust 0 Transfer of shares to treasury stock Stock option activity and stock awards Excess tax benefit on stock options and stock awards Purchase of noncontrolling interest in subsidiary Changes in inventory accounting principles Net income attributable to CVS Health Common stock dividends Foreign currency translation adjustments, net of tax Net cash flow hedges, net of tax Pension and other postretirement benefits, net of tax Business combinations End of year at Dec. 31, 2013 Beginning of year at Dec. 31, 2013 Balance Beginning (in shares) at Dec. 31, 2013 Increase (Decrease) in Stockholders' Equity Stock options exercised and issuance of stock awards (in shares) Purchase of treasury shares (in shares) Employee stock purchase plan issuances (in shares) 4,592 -30 3 -59 37,938 37,938 17 -20,169 -1,680,000,000 -500,000,000 11,000,000 -51,000,000 1,000,000 Transfer of shares from shares held in trust (in shares) 0 Transfer of shares held in trust to treasury stock (in shares) Stock options exercised and issuance of stock awards 0 Purchase of treasury shares Employee stock purchase plan issuances -4,001 92 Transfer of shares from shares held in trust 0 Transfer of shares to treasury stock Stock option activity and stock awards Excess tax benefit on stock options and stock awards Purchase of noncontrolling interest in subsidiary Changes in inventory accounting principles Net income attributable to CVS Health Common stock dividends Foreign currency translation adjustments, net of tax Net cash flow hedges, net of tax Pension and other postretirement benefits, net of tax Business combinations End of year at Dec. 31, 2014 Beginning of year at Dec. 31, 2014 Balance Beginning (in shares) at Dec. 31, 2014 4,644 -35 4 37 37,963 $37,958 $17 ($24,078) -1,691,000,000 -550,000,000 Shares held in trust: -56 Capital surplus: 28,126 Retained earnings: 22,052 2,000,000 1,000,000 25 9 955 28 2 -89 3,864 -829 -31 -1,000,000 29,120 24,998 0 0 0 588 69 0 0 4,592 -1,097 -31 -1,000,000 29,777 28,493 0 0 0 535 106 0 0 4,644 -1,288 ($31) -1,000,000 $30,418 $31,849 Accumulated other comprehensive loss: Noncontrolling Interest: $0 -172 0 3 -12 0 0 -181 -30 3 59 0 0 -149 -35 4 -37 5 5 ($217) Significant Accounting Policies Accounting Policies [Abstract] Significant Accounting Policies Significant Accounting Policies Description of business - CVS Health Corporation and its subsidiaries (the described below. Pharmacy Services Segment (the “PSS”) - The PSS provides a full range of ph companies, unions, government employee groups, health plans, Managed M As a pharmacy benefits manager, the PSS manages the dispensing of pharm the Company’s clients and utilizes its information systems to perform, amon The PSS’ specialty pharmacies support individuals that require complex and of specialty infusion services and began offering enteral nutrition services th The PSS also provides health management programs, which include integrat In addition, through the Company’s SilverScript Insurance Company (“SilverS The PSS generates net revenues primarily by contracting with clients to prov services such as claims processing and formulary management, as well as h The pharmacy services business operates under the CVS/caremarkTM Pharma specialty mail order pharmacies and four mail order dispensing pharmacies, Retail Pharmacy Segment (the “RPS”) - The RPS sells prescription drugs and Pharmacy and Drogaria OnofreTM retail stores and online through CVS.com®, N The RPS also provides health care services through its MinuteClinic® health c As of December 31, 2014, the retail pharmacy business included 7,822 retai CVS.com, Navarro.com and Onofre.com.br, and 971 retail health care clinics Corporate Segment - The Corporate Segment provides management and adm Principles of consolidation - The consolidated financial statements includ The Company continually evaluates its investments to determine if they repr has the ability to direct the activities of a VIE that most significantly impact t Assets and liabilities of VIEs for which the Company is the primary beneficiar Use of estimates - The preparation of financial statements in conformity w those estimates. Fair value hierarchy - The Company utilizes the three-level valuation hiera following: • • • Cash and cash equivalents - Cash and cash equivalents consist of cash an accompanying consolidated balance sheets, as these funds are highly liquid Short-term and long-term investments - The Company’s short-term inve classified as noncurrent other assets within the accompanying consolidated Fair value of financial instruments - As of December 31, 2014, the Comp approximates fair value. The carrying amount and estimated fair value of tot the fair value hierarchy. The Company had outstanding letters of credit, whic Foreign currency translation and transactions - For local currency func a component of accumulated other comprehensive income (loss). For U.S. dollar functional currency locations, foreign currency assets and liab except for those expenses related to the nonmonetary balance sheet amoun Gains and losses arising from foreign currency transactions and the effects o Accounts receivable - Accounts receivable are stated net of an allowance f Charges to bad debt are based on both historical write-offs and specifically id The activity in the allowance for doubtful accounts receivable for the years e In millions Beginning balance Additions charged to bad debt expense Write-offs charged to allowance Ending balance Inventories - All inventories are stated at the lower of cost or market. Presc distribution centers are accounted for using the cost method on a first-in, firs reflected in the accompanying consolidated financial statements are properl Property and equipment - Property, equipment and improvements to leas leasehold improvements and 3 to 10 years for fixtures, equipment and intern internally developed software projects are capitalized and depreciated. The following are the components of property and equipment at December 3 In millions Land Building and improvements Fixtures and equipment Leasehold improvements Software Accumulated depreciation and amortization Property and equipment, net The gross amount of property and equipment under capital leases was $268 equipment under capital lease is included within depreciation expense. Depr Goodwill and other indefinitely-lived assets - Goodwill and other indefin Intangible assets - Purchased customer contracts and relationships are am remaining life of the lease. See Note 3 for additional information about intan Impairment of long-lived assets - The Company groups and evaluates fix present, the Company first compares the carrying amount of the asset group impairment loss calculation compares the carrying amount of the asset grou interest charges). Redeemable noncontrolling interest for the year ended December 31, 2012: In millions Balance, December 31, 2011 Net loss attributable to noncontrolling interest Purchase of noncontrolling interest Reclassification to capital surplus in connection with purchase of noncontrolling interest Balance, December 31, 2012 Revenue Recognition Pharmacy Services Segment The PSS sells prescription drugs directly through its mail service dispensing p contract prices negotiated with its clients. Net revenues include: (i) the porti to retail network pharmacies by client plan members for retail prescriptions ( Revenue is recognized when: (i) persuasive evidence of an arrangement exis • • The PSS determines whether it is the principal or agent for its retail pharmac part of the service, (iii) having discretion in supplier selection, (iv) having inv pharmacies included in its retail pharmacy network contracts. Pursuant to th and coverage levels, communicating the prescription price and the co-paym Although the PSS does not have credit risk with respect to Retail Co-Payment Drug Discounts - The PSS deducts from its revenues any rebates, inclusive o specific products dispensed. The liability for rebates due to clients is included Medicare Part D - The PSS, through its SilverScript subsidiary, participates in Medicare and Medicaid Services (“CMS”). The insurance premiums include a net revenues over the period in which members are entitled to receive bene In addition to these premiums, net revenues include co-payments, coverage Payment subsidy amount each month. The prospective Member Co-Payment either accounts receivable or accrued expenses. The PSS accounts for CMS obligations and Member Co-Payments (including t Retail Pharmacy Segment The RPS recognizes revenue at the time the customer takes possession of th Loyalty Program - The Company’s customer loyalty program, ExtraCare®, is c estimated breakage. The Company determines breakage based on historical See Note 12 for additional information about the revenues of the Company’s Cost of revenues Pharmacy Services Segment - The PSS’ cost of revenues includes: (i) the cos client service operations and related information technology support costs in service dispensing pharmacies, net of any volume-related or other discounts Retail Pharmacy Segment - The RPS’ cost of revenues includes: the cost of m See Note 12 for additional information about the cost of revenues of the Com Vendor allowances and purchase discounts The Company accounts for vendor allowances and purchase discounts as fol Pharmacy Services Segment - The PSS receives purchase discounts on produ direct discount at the time of purchase, (ii) a discount for the prompt paymen calculated and billed to manufacturers within 30 days of the end of each com in accounting estimate in the period the reconciliation is completed. The PSS service fees are recorded as a reduction of “Cost of revenues”. Retail Pharmacy Segment - Vendor allowances received by the RPS reduce th linked to advertising commitments are recognized as a reduction of advertisi vendors that are linked to purchase commitments is initially deferred. The de amounts are then amorti...
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