CVS Caremark Corporation Research Paper Example | Topics and Well Written Essays - 2000 words

CVS Caremark Corporation - Research Paper Example CVS Caremark’s annual financial reporting structure depicts the company as divided into three business segments: Pharmacy Services, Retail Pharmacy and Corporate (CVS Caremark, CVS Caremark 2011 Annual Report 22). However, from an operations perspective the company is divided into three strategic business units (SBUs): Pharmacy Services, Retail Pharmacy and MinuteClinic (CVS Caremark, â€Å"Our Businesses†). SBUs are mostly autonomous units set up within a corporation that are run like separate companies with their leadership entrusted with full responsibility over their profit and loss (Distelzweig Para 22). CVS Caremark’s three business segments are clearly SBUs because we see each unit being led a president who reports to the corporation’s CEO. Per Lofberg is the president of Pharmacy Services, Mark Cosby, the president of CVS/Pharmacy and Andrew Sussman, president of MinuteClinic. These SBUs are organized along the company’s three broad product lines. The Pharmacy Services business provides a full range of pharmacy benefit management (PBM) services targeting employers, unions, insurance companies, managed care organizations and other sponsors of health benefit plans throughout the US. Retail Pharmacy SBU sells prescription drugs and a wide assortment of general merchandise through the CVS/pharmacies and Longs Drugs retail stores and online through CVS.com. The corporate segment provides management and administrative services such as corporate relations, legal, human resources, corporate information technology and finance departments and so on to support the Company (CVS Caremark, CVS Caremark 2011 Annual Report 23). MinuteClinics are small retail-based, walk-in health clinics located in CVS/Pharmacy stores that offer wellness services, treatment of common ailments and physicals. These clinics provide CVS Caremark with the capabilities to meet its goal of lowering the cost of health care. Given that MinuteClinics operate within t he CVS/Pharmacy stores, in the financial statements, MinuteClinics results are reported under Retail Pharmacy. The performance of the Retail Pharmacy and Pharmacy Services segments are evaluated based on net revenues, gross profit and operating profit before the effect of certain intersegment activities and charges. On the other hand, the corporate segment’s performance is evaluated based on operating expenses before the effect of certain intersegment activities and charges (CVS Caremark, CVS Caremark 2011 Annual Report 26). In 2011, the company’s net revenue was $107.1 billion, an increase of $11.3 billion in comparison to 2010. Of these net revenues, the revenue-generating segments, Pharmacy Services and Retail Pharmacy, contributed almost equally towards this amount. However, from a growth perspective, Pharmacy Services segment net sales increased by 24.9% in 2011 in comparison to Retail Pharmacy’s 3.9% increase. CVS Caremark’s more prominent innovat ions in the recent past have been attained through the integration of services with either other CVS services or other third parties. An example of CVS’