Company Profile of CVS Pharmacy : CVS Pharmacy, or simply CVS, is the second largest pharmacy chain in the United States (after Walgreens), with approximately 7,027 stores in 45 states and Puerto Rico.[1] As the retail pharmacy division of CVS Caremark, it sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, seasonal merchandise, greeting cards and convenience foods through their CVS Pharmacy and Longs Drugs retail stores and online through CVS.com. It also provides healthcare services through its MinuteClinic healthcare clinics as well as their Diabetes Care Centers. Most of these clinics are located within CVS stores.
CVS is incorporated in Delaware, and is based in Woonsocket, Rhode Island. It was founded in Lowell, Massachusetts in 1963.

CVS Caremark Corporation (CVS Caremark) is a pharmacy healthcare provider in the United States. CVS Caremark provides pharmacy services through its pharmacy benefit management (PBM), mail order and specialty pharmacy division, Caremark Pharmacy Services; approximately 7,000 CVS/pharmacy retail stores; retail-based health clinic subsidiary, MinuteClinic, and through its online pharmacy, CVS.com. The Company operates in three business segments: Pharmacy Services, Retail Pharmacy and Corporate.
Pharmacy Services Segment
The Pharmacy Services segment provides a range of PBM services, including mail order pharmacy services, specialty pharmacy services, plan design and administration, formulary management and claims processing. Its clients primarily include employers, insurance companies, unions, government employee groups, managed care organizations and other sponsors of health benefit plans and individuals throughout the United States. In addition, through CVS Caremark’s SilverScript Insurance Company (SilverScript) and Accendo Insurance Company (Accendo) subsidiaries, it is a national provider of drug benefits to eligible beneficiaries under the Federal Government’s Medicare Part D program.
As of December 31, 2010, CVS Caremark’s Pharmacy Services business operated under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, CarePlus, RxAmerica, Accordant and TheraCom brand names. As of December 31, 2010, the Pharmacy Services segment operated 44 retail specialty pharmacy stores, 18 specialty mail order pharmacies and four mail service pharmacies located in 25 states, the District of Columbia and Puerto Rico.
The Company’s PBM services include the design and administration of programs, such as plan design and administration, formulary management, discounted drug purchase arrangements, prescription management systems, mail pharmacy program, specialty pharmacy, onsite pharmacies, retail pharmacy network, Medicare part D services, clinical services, disease management programs and pharmacogenomic services. Its clients sponsor pharmacy benefit plans that facilitate the members in these plans to receive medications prescribed by their physicians. The Company assist its clients in designing pharmacy benefit plans that minimize the costs to the client while prioritizing the welfare and safety of the clients’ members. It uses a panel of doctors, pharmacists and other medical, to select drugs. CVS Caremark dispenses prescription drugs both directly, through one of its mail service or specialty pharmacies, or through a network of retail pharmacies.
As of December 31, 2010, the Company operated four automated mail service pharmacies in the United States; its specialty pharmacies consisted of 18 specialty mail order pharmacies located throughout the United States and are used for delivery of advanced medications to individuals with chronic or genetic diseases and disorders, and operated a network of 44 retail specialty pharmacy stores, which operate under the CarePlus CVS/pharmacy name. These stores average 2,000 square feet in size and sell prescription drugs and a limited assortment of front store items, such as alternative medications, homeopathic remedies and vitamins. Through its TheraCom subsidiary, it provides new product launch and other services for manufacturers of specialty drugs.
CVS Caremark operates small pharmacies located at client sites under the CarePlus CVS/pharmacy or CVS/pharmacy name, which provide members with an alternative for filling their prescriptions. As of December 31, 2010, it maintained a national network of approximately 65,000 retail pharmacies, including CVS/pharmacy stores. The Company offers multiple clinical programs and services to clients. Its AccordantCare health management programs include integrated rare disease management programs, which cover diseases, such as rheumatoid arthritis, Parkinson’s disease, seizure disorders and multiple sclerosis. As of December 31, 2010, the Company operated multiple information systems platforms to support its Pharmacy Services segment. These information systems incorporate architecture that centralizes the data generated from filling mail service prescriptions, adjudicating retail pharmacy claims and fulfilling other PBM clients’ service contracts. During the year ended December 31, 2010, its PBM filled or managed approximately 585 million prescriptions.
Retail Pharmacy Segment
As of December 31, 2010, the Company’s Retail Pharmacy segment included 7,182 retail drugstores, of which 7,123 operated a pharmacy, which is its CVS.com, and retail health care clinics. The retail drugstores are located in 41 states, Puerto Rico and the District of Columbia operating primarily under the CVS/pharmacy name. As of December 31, 2010, the Company operated in 92 United States drugstore markets. CVS/pharmacy stores sell prescription drugs and a range of assortment of general merchandise, front store products. Existing retail stores range in size from approximately 8,000 to 25,000 square feet, although new stores range in size from approximately 10,000 to 13,000 square feet and include a drive-thru pharmacy. During 2010, it filled approximately 636 million retail prescriptions.
As of December 31, 2010, CVS Caremark operated 560 retail healthcare clinics in 26 states and the District of Columbia under the MinuteClinic name, of which 550 were located within CVS/pharmacy stores. Its products and services include front store and pharmacy. Front store categories include over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, seasonal merchandise, greeting cards and convenience foods. A key component of the Company’s front store is its ExtraCare card program. During 2010, it carried over 4,400 CVS brand and own brand products, which accounted for approximately 17% of its front store revenues.
During 2010, CVS Caremark opened 179 new retail pharmacy stores, relocated 106 stores and closed 22 stores. In September 2010, the Company completed the rollout of Rx Connect, which is its new pharmacy fulfillment system.
The Company competes with Medco Health Solutions, Inc., Express Scripts, Inc., United Healthcare and CIGNA.


The newly focused CVS moved quickly to become one of the top players in the rapidly consolidating U.S. drugstore industry. In May 1997 CVS acquired Twinsburg, Ohio-based Revco D.S., Inc. for $2.8 billion in stock plus the assumption of $900 million of Revco debt. Revco had about 2,600 drugstores located in 17 midwestern, southeastern, and eastern states. To gain regulatory approval, CVS had to sell 120 Revco drugstores, mainly located in Virginia. As a result, CVS emerged from the deal with nearly 4,000 drugstores in 24 states and the District of Columbia, giving it the largest store count in the industry. In terms of revenues, however, it ranked number two behind Walgreen Co. CVS, in the meantime, sold the last of its non-drugstore units in November 1997 when it sold Bob's Stores to a management-led group.
In early 1998 Ryan was named president and CEO of CVS, with Goldstein remaining chairman. The company completed yet another significant--albeit much smaller--acquisition in March 1998, a $1.48 billion deal for Troy, Michigan-based Arbor Drugs, Inc. Operating primarily in southeastern Michigan, Arbor had more than 200 stores and nearly $1 billion in revenue during fiscal 1997. The addition of Arbor increased CVS's store count to nearly 4,100 and also made CVS the country's largest dispenser of prescription drugs as it now filled more than 11 percent of all prescriptions. CVS still trailed Walgreen in revenue, but its 1998 sales of $15.27 billion were nearly three times the level of 1996.
In addition to pursuing acquisitions, CVS also was growing organically by aggressively opening new locations. In 1998, for example, the company announced plans to open as many as 200 stores in New York City over a three-year period. At the same time, some of the older locations, particularly those in strip malls, were being closed down in favor of freestanding sites, some of which began featuring drive-through pharmacies.
An end of another era occurred in April 1999 when Goldstein retired as chairman of CVS, 36 years after cofounding the first Consumer Value Store. Ryan was named chairman and CEO. Later in 1999 CVS acquired Soma.com, the first major online pharmacy, for $30 million in stock. The web site, soon rebranded CVS.com, enabled customers to order prescriptions and general merchandise for either in-store pickup or mail delivery. Another initiative in 1999 was the launching of CVS ProCare, a chain of specialty pharmacies, about 1,500 square feet in size, serving patients with chronic diseases and conditions that require complex and expensive drug regimens. The market for specialty pharmaceuticals, estimated at about $16 billion in 1999, was a particularly fast-growing segment of the drug industry, but it was highly fragmented, consisting mostly of mom-and-pop operations. CVS clearly saw the potential for being a consolidator in this segment of the market. Its first such acquisition came in September 2000 with the purchase of Stadtlander Pharmacy, a Pittsburgh-based subsidiary of Bergen Brunswig Corporation, for $124 million. Stadtlander generated annual revenues of $500 million by selling drugs by mail-order to patients with chronic conditions. By the end of 2000, CVS's specialty pharmacy business consisted of mail-order operations and 46 CVS ProCare pharmacies located in 17 states and the District of Columbia. Overall, CVS saw its revenues surpass the $20 billion mark for the first time in 2000, while net income reached a record $746 million.
After entering four new markets in 2000--Chicago; Tampa and Orlando, Florida; and Grand Rapids, Michigan--CVS continued to enter new territories in 2001, expanding into Fort Lauderdale, Florida, and Las Vegas, Nevada. The latter would represent the chain's first presence west of the Mississippi since selling its California stores in 1992. CVS also announced in 2001 plans to expand into Phoenix, Arizona; Miami Beach, Florida; and three new markets in Texas: Dallas, Houston, and Fort Worth. In February 2001 CVS launched a chainwide loyalty card program called ExtraCare that would offer cardholders exclusive savings, mailings, and health information. The company's fortunes turned south later in the year, however, as profits began to decline. Management cited a lack of new prescription drug introductions, the growth of mail-order prescription services, and increasing competition. CVS had also had difficulty filling positions for pharmacists and been forced to shut down some pharmacy counters as a result. Furthermore, the general economic slowdown had taken a toll on sales of general merchandise. In October a major restructuring was launched, involving the elimination of 300 jobs, the closure of 200 underperforming stores (including ten CVS ProCare units), and a $350 million charge. It was difficult to foresee whether these events were a momentary blip in a record of consistently positive performance for CVS since its emergence out of Melville in 1996 or the beginning of a deeper crisis.
Principal Subsidiaries: CVS Rhode Island, Inc.; CVS Center, Inc.; CVS Foreign, Inc.; CVS Pharmacy, Inc.; Nashua Hollis CVS, Inc.; CVS Vanguard, Inc.; CVS Meridian, Inc.; CVS New York, Inc.; CVS Revco D.S., Inc.; Revco Discount Drug Centers, Inc.; Hook-SupeRx, Inc.; Big B, Inc.; Arbor Drugs, Inc.; PharmaCare Management Services, Inc.; ProCare Pharmacy, Inc. (95%); CVS Washington, Inc.; CVS Rx Services, Inc.
Principal Competitors: Walgreen Co.; Wal-Mart Stores, Inc.; Rite Aid Corporation; Eckerd Corporation; The Kroger Co.; Albertson's, Inc.



OVERALL
Beta: 0.79
Market Cap (Mil.): $49,878.67
Shares Outstanding (Mil.): 1,366.17
Annual Dividend: 0.50
Yield (%): 1.37
FINANCIALS
CVS Industry Sector
P/E (TTM): 14.59 4.76 20.78
EPS (TTM): -2.38 -- --
ROI: 6.85 3.21 8.13
ROE: 9.37 4.25 14.55


Statistics:
Public Company
Incorporated: 1922 as Melville Shoe Corporation
Employees: 99,000
Sales: $20.09 billion (2000)
Stock Exchanges: New York
Ticker Symbol: CVS
NAIC: 446110 Pharmacies and Drug Stores; 454110 Electronic Shopping and Mail-Order Houses


Company Perspectives:
We operate in an extremely vibrant industry with highly favorable long-term trends. The key drivers of the pharmacy industry include the aging American population, the growth of managed care and the introduction of new and better drug therapies. CVS has expertise in serving the managed care industry and continues to take a growing share of the growing pharmacy industry.


Key Dates:
1892: Frank Melville, a shoe jobber, takes over three stores owned by his employer.
1909: Melville's son, Ward Melville, joins the company and will eventually become the driving force behind much of the company's growth.
1922: Company opens the first Thom McAn shoe store; Melville Shoe Corporation, which will later be renamed Melville Corporation, is incorporated.
1936: Melville goes public, gaining a listing on the New York Stock Exchange.
1963: The first Consumer Value Store (CVS) opens in Lowell, Massachusetts, as a discount health and beauty aid store in which customers bag their own merchandise; founders are brothers Sid and Stanley Goldstein and Ralph Hoagland.
1964: The CVS name is used for the first time.
1968: Melville begins diversifying outside of shoes with the opening of the first Chess King clothing store; CVS outlets begin to add pharmacy departments, prompting CVS's development into a leading drugstore chain.
1969: Melville acquires the CVS chain.
1975: Melville acquires the Marshalls apparel store chain.
1981: Kay-Bee Toys chain is acquired by Melville.
1982: Linens 'n Things is added to the Melville roster.
1985: Stanley Goldstein is named president of Melville, becoming CEO and chairman the following year.
1990: Peoples Drug Stores, a 490-store chain, is acquired by Melville and is merged into the CVS chain during the early to mid-1990s.
1992: Restructuring of Melville, involving the closure of as many as 800 stores, is launched.
1993: The Chess King and Accessory Lady chains are sold off.
1994: CVS enters the pharmacy benefits management field with the creation of PharmaCare Management Services.
1995: Melville announces a sweeping overhaul, aimed at concentrating on the CVS chain; Marshalls is sold to TJX Co.
1996: Kay-Bee Toys, the Wilsons leather goods chain, and the This End Up furniture chain are sold off; FootAction and Meldisco are spun off into a new public company called Footstar, Inc.; the Thom McAn chain is folded; Melville moves its headquarters to that of CVS, in Woonsocket, Rhode Island; Melville Corporation changes its name to CVS Corporation; CVS completes an IPO of 67.5 percent of Linens 'n Things.
1997: The company acquires Revco D.S., Inc. and its more than 2,500 drugstores; CVS divests its remaining interest in Linens 'n Things and sells Bob's Stores to a management-led group, thereby jettisoning its last non-drugstore operations.
1998: CVS pays $1.48 billion for Arbor Drugs, Inc., a chain with more than 200 stores mainly in southeastern Michigan.
1999: Goldstein retires as chairman of CVS; Thomas M. Ryan succeeds him as chairman and CEO; Soma.com, the first major online pharmacy, is acquired and is rebranded CVS.com; CVS ProCare, a chain of specialty pharmacies, is launched to serve patients with chronic diseases and conditions.
2000: Stadtlander Pharmacy, a mail-order specialty pharmacy serving patients with chronic diseases, is acquired.

Name Age Since Current Position
Ryan, Thomas 58 2011 Non-Executive Chairman of the Board
Merlo, Larry 55 2011 President, Chief Executive Officer, Director
Denton, David 45 2010 Chief Financial Officer, Executive Vice President
Foulkes, Helena 46 2011 Executive Vice President & Chief Health Care Strategy and Marketing Officer
Brennan, Troyen 56 2008 Executive Vice President, Chief Marketing Officer
Sgarro, Douglas 51 2004 Executive Vice President, Chief Legal Officer; President of CVS Realty Co.
Roberts, Jonathan 55 2010 Executive Vice President, Chief Operating Officer - Caremark Pharmacy Services
Lofberg, Per 63 2010 Executive Vice President, President of Caremark Pharmacy Services
Daniels, Laird 42 2010 Senior Vice President, Chief Accounting Officer, Controller
McGuigan, Stuart 52 2009 Senior Vice President, Chief Information Officer
Finley, Sara 50 2009 Senior Vice President, General Counsel
Bisaccia, Lisa 54 2010 Senior Vice President, Chief Human Resources Officer
Murray, Terrence 71 2007 Lead Independent Director
Joyce, William 74 1994 Director
Rosenberg, Sheli 69 1997 Director
Heard, Marian 70 1999 Independent Director
Dorman, David 57 2006 Independent Director
Swift, Richard 66 2006 Independent Director
Banks, Edwin 48 2007 Independent Director
Brown, C. David 59 2007 Independent Director
Gibney Williams, Kristen 62 2007 Independent Director
Millon, Jean-Pierre 60 2007 Independent Director
Piccolo, C. A. Lance 70 2007 Independent Director
Finucane, Anne 58 2011 Independent Director
White, Tony 64 2011 Independent Director

Address:
One CVS Drive
Woonsocket, Rhode Island 02895
U.S.A.
 
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