SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today reported that revenues for the
fourth quarter ended March 31, 2016 were $46.7 billion, up 4% compared
to $44.9 billion a year ago. On a constant currency basis, revenues
increased 5% over the prior year. On the basis of U.S. generally
accepted accounting principles (“GAAP”), fourth-quarter earnings per
diluted share from continuing operations was $1.97 compared to $1.69 a
year ago. Fourth-quarter Adjusted Earnings per diluted share was $2.44,
down 17% compared to the prior year.
For the fiscal year, McKesson had revenues of $190.9 billion, up 7%
compared to $179.0 billion a year ago. On a constant currency basis,
revenues increased 9% over the prior year. Full-year GAAP earnings per
diluted share from continuing operations was $9.84 compared to $7.54 a
year ago, up 31% year-over-year. Full-year Adjusted Earnings per diluted
share was $12.08, up 9% compared to the prior year.
Full-year GAAP and Adjusted Earnings include pre-tax charges totaling
$229 million, or 73 cents per diluted share, related to the company’s
cost alignment plan as disclosed in March 2016 (the “Cost Alignment
Plan”). Full-year GAAP and Adjusted Earnings also include pre-tax gains
of $103 million, or 29 cents per diluted share, related to the sale of
two businesses earlier in Fiscal 2016. Excluding the Cost Alignment Plan
charges and the gains on the sale of two businesses from Adjusted
Earnings, full-year results per diluted share was $12.52, up 14% on a
constant currency basis, year-over-year.
“I am pleased with our fourth-quarter results, driven by solid execution
across both our Distribution Solutions and Technology Solutions
segments,” said John H. Hammergren, chairman and chief executive
officer. “Fiscal 2016 was a year of growth at McKesson, and I am
encouraged by the many new and expanded customer relationships
throughout our businesses. McKesson’s focus on driving value and
innovation in our daily interactions with our customers, built on a deep
foundation of operational excellence, will continue to propel our
company going forward as we look to Fiscal 2017 and beyond.”
For the full year, McKesson generated cash from operations of $3.7
billion, repaid approximately $1.6 billion in long-term debt and ended
the year with cash and cash equivalents of $4.0 billion. During the
year, McKesson had internal capital spending of $677 million, spent $40
million on acquisitions, repurchased approximately $1.5 billion of its
common stock and paid $244 million in dividends.
“We delivered strong cash flow results for Fiscal 2016, which exceeded
our original expectations,” Hammergren commented. “In Fiscal 2016, we
executed across the full range of our portfolio approach to capital
deployment, which included capital investments in support of growth of
our businesses, more than $4.0 billion in announced acquisitions, which
will contribute to McKesson’s growth in Fiscal 2017 and beyond, $1.5
billion in share repurchases, and $244 million in dividends paid. I am
exceptionally proud of our disciplined approach to capital deployment
and our track record of creating long-term value for our shareholders.”
Segment Results
Distribution Solutions revenues were $45.9 billion for the quarter, up
4% on a reported basis and 5% on a constant currency basis. For the full
year, Distribution Solutions revenues were $188.0 billion, up 7% on a
reported basis and 9% on a constant currency basis, compared to the
prior year.
North America pharmaceutical distribution and services revenues were
$38.7 billion for the quarter, up 5% on a reported basis and 6% on a
constant currency basis, primarily reflecting market growth and growth
from existing customers. For the full year, North America pharmaceutical
distribution and services revenues were $158.5 billion, up 10% on a
reported basis and 11% on a constant currency basis, compared to the
prior year.
International pharmaceutical distribution and services revenues were
$5.8 billion for the quarter, down 1% on a reported basis and up 2% on a
constant currency basis, driven by market growth. For the full year,
International pharmaceutical distribution and services revenues were
$23.5 billion, down 11% on a reported basis and up 1% on a constant
currency basis, compared to the prior year.
Medical-Surgical distribution and services revenues were up modestly for
the fourth quarter and full year, driven by market growth, partially
offset by the sale of our ZEE Medical business in the second quarter.
Fourth-quarter Distribution Solutions GAAP operating profit was $811
million and GAAP operating margin was 1.77%. On a constant currency
basis, fourth-quarter adjusted operating profit was $970 million and
adjusted operating margin was 2.09%.
For the full year, Distribution Solutions GAAP operating profit was $3.6
billion and GAAP operating margin was 1.89%. On a constant currency
basis, full-year adjusted operating profit was $4.4 billion, up 5%
compared to the prior year, and adjusted operating margin was 2.28%.
Distribution Solutions fourth-quarter and full-year results include $161
million in pre-tax charges related to the Cost Alignment Plan.
“Distribution Solutions concluded another solid year with good
performance within the segment. During Fiscal 2016, we expanded our
global pharmaceutical sourcing and procurement scale, grew our Health
Mart franchise to more than 4,600 members, delivered strong growth in
our Specialty Health and Canadian businesses, and continued to
successfully execute on our planned Celesio acquisition synergies,” said
Hammergren.
Technology Solutions products and services revenues were down 5% for the
fourth quarter and down 6% for the full year. Fourth-quarter and
full-year Technology Solutions revenues were impacted by an anticipated
year-over-year decline in our hospital software business and the sale of
our nurse triage business in the first quarter. This revenue decline was
partially offset by growth in our other technology businesses.
In the fourth quarter, GAAP operating profit was $93 million and GAAP
operating margin was 12.67%. Fourth-quarter adjusted operating profit
was $99 million and adjusted operating margin was 13.45% on a constant
currency basis.
For the full year, GAAP operating profit was $519 million and GAAP
operating margin was 17.99%. For the full year, adjusted operating
profit was $542 million and adjusted operating margin was 18.72% on a
constant currency basis. Technology Solutions fourth-quarter and
full-year results include $51 million in pre-tax charges related to the
Cost Alignment Plan.
“Our Technology Solutions segment had strong performance in Fiscal 2016.
Over the past few years, we have made significant progress in shaping
the focus of our Technology Solutions portfolio and have delivered
meaningful improvements in our core, adjusted operating margin rate for
the segment,” added Hammergren.
Fiscal Year 2016 Reconciliation of GAAP Results to Adjusted Earnings
Adjusted Earnings per diluted share of $12.08 for the fiscal year ended
March 31, 2016 excludes the following GAAP items:
-
Amortization of acquisition-related intangible assets of $1.27 per
diluted share;
-
Acquisition expenses and related adjustments of 34 cents per diluted
share; and
-
LIFO inventory-related adjustments of 63 cents per diluted share.
Fiscal Year 2017 Outlook
For the fiscal year ending March 31, 2017, McKesson expects $13.30 to
$13.80 per diluted share, which excludes approximately 12 to 15 cents in
expected charges from Adjusted Earnings related to the Cost Alignment
Plan.
“Our Fiscal 2017 outlook balances solid growth across our businesses and
growth from capital deployment, with the negative impact from customer
consolidation and generic pharmaceutical pricing trends in the United
States,” concluded Hammergren.
Key Assumptions for Fiscal Year 2017 Outlook
The Fiscal 2017 outlook is based on the following key assumptions and is
also subject to the Risk Factors outlined below:
-
Distribution Solutions revenue growth is expected to increase by
high-single digits driven by market growth and acquisitions.
-
We expect North America pharmaceutical distribution and services to
deliver high-single digit revenue growth in Fiscal 2017.
-
International pharmaceutical distribution and services revenues are
anticipated to grow low-double digits on a constant currency basis in
Fiscal 2017.
-
Medical-Surgical distribution and services is expected to deliver
mid-single digit revenue growth in Fiscal 2017.
-
Technology Solutions revenues are expected to be down slightly
year-over-year driven by an anticipated revenue decline in our
hospital software business.
-
Fiscal 2017 branded pharmaceutical price trends in the U.S. market are
expected to be modestly below those experienced in Fiscal 2016.
-
We expect a nominal contribution to our Fiscal 2017 results from
generic pharmaceuticals that increase in price.
-
We expect the profit contribution from the launch of new oral generic
pharmaceuticals in the U.S. market to decrease year-over-year.
-
Proceeds from anticipated antitrust litigation settlements are
estimated to be $140 million, pre-tax, for Fiscal 2017, compared to
$76 million, pre-tax, in Fiscal 2016.
-
Fiscal 2017 pre-tax charges associated with our Cost Alignment Plan
are expected to be between $40 million and $50 million and are
excluded from our Fiscal 2017 outlook of $13.30 to $13.80 per diluted
share.
-
The guidance range assumes a full-year adjusted tax rate of
approximately 31.0%, which may vary from quarter to quarter.
-
Property acquisitions and capitalized software expenditures are
expected to be between $700 million and $800 million.
-
We assume that our ownership position in Celesio will be approximately
76% for Fiscal 2017.
-
We expect the impact of foreign currency exchange rate movements will
have a net unfavorable impact of approximately 3 cents per diluted
share year-over-year as modest improvements in the Euro / USD average
rate will be more than offset by the GBP / Euro average rate when
compared to the prior year.
-
Weighted average diluted shares used in the calculation of earnings
per share are expected to be approximately 228 million for the year.
-
Cash flow from operations is expected to increase approximately 15%
year-over-year, excluding approximately $270 million in cash payments
expected in Fiscal 2017 related to the Cost Alignment Plan and a
settlement agreement with the U.S. Drug Enforcement Administration and
the U.S. Department of Justice as disclosed in April 2015.
-
Based on acquisitions announced as of March 31, 2016:
-
We expect amortization of acquisition-related intangible assets of
approximately $1.36 per diluted share;
-
We expect acquisition expenses and related adjustments of 30 cents
per diluted share; and
-
We expect LIFO inventory-related charges of 48 cents per diluted
share.
-
The Fiscal 2017 guidance range does not include the impact of any
potential new acquisitions or divestitures, impairments or incremental
material restructuring charges, or any potential claim or litigation
reserve adjustments beyond those disclosed in the Form 8-K as filed on
March 18, 2016.
Adjusted Earnings
McKesson separately reports financial results on the basis of Adjusted
Earnings. Adjusted Earnings is a non-GAAP financial measure defined as
GAAP income from continuing operations, excluding amortization of
acquisition-related intangible assets, acquisition expenses and related
adjustments, certain claim and litigation reserve adjustments reflecting
changes to the company’s reserves for controlled substance distribution
claims and average wholesale price litigation matters, and
Last-In-First-Out (“LIFO”) inventory-related adjustments. A
reconciliation of McKesson’s GAAP financial results to Adjusted Earnings
is provided in Schedules 2, 3 and 4 of the financial statement tables
included with this release.
Constant Currency
McKesson also presents its financial results on a constant currency
basis. The company conducts business worldwide in local currencies,
including the Euro, British pound and Canadian dollar. As a result, the
comparability of the financial results reported in U.S. dollars can be
affected by changes in foreign currency exchange rates. Constant
currency information is presented to provide a framework for assessing
how the company’s business performed excluding the effect of foreign
currency exchange rate fluctuations. The supplemental constant currency
information of the company’s GAAP financial results and Adjusted
Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement
tables included with this release.
Risk Factors
Except for historical information contained in this press release,
matters discussed may constitute “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties that could cause actual results to differ materially from
those projected, anticipated or implied. These statements may be
identified by their use of forward-looking terminology such as
“believes”, “expects”, “anticipates”, “may”, “will”, “should”, “seeks”,
“approximately”, “intends”, “plans”, “estimates” or the negative of
these words or other comparable terminology. The discussion of financial
trends, strategy, plans or intentions may also include forward-looking
statements. It is not possible to predict or identify all such risks and
uncertainties; however, the most significant of these risks and
uncertainties are described in the company’s Form 10-K, Form 10-Q and
Form 8-K reports filed with the Securities and Exchange Commission and
include, but are not limited to: changes in the U.S. healthcare industry
and regulatory environment; managing foreign expansion, including the
related operating, economic, political and regulatory risks; changes in
the Canadian healthcare industry and regulatory environment; exposure to
European economic conditions, including recent austerity measures taken
by certain European governments; changes in the European regulatory
environment with respect to privacy and data protection regulations;
fluctuations in foreign currency exchange rates; the company’s ability
to successfully identify, consummate, finance and integrate
acquisitions; the company’s ability to manage and complete divestitures;
material adverse resolution of pending legal proceedings; competition
and industry consolidation; substantial defaults in payment or a
material reduction in purchases by, or the loss of, a large customer or
group purchasing organization; the loss of government contracts as a
result of compliance or funding challenges; public health issues in the
U.S. or abroad; cyberattack, natural disaster, or malfunction of
sophisticated internal computer systems to perform as designed; the
adequacy of insurance to cover property loss or liability claims; the
company’s failure to attract and retain customers for its software
products and solutions due to integration and implementation challenges,
or due to an inability to keep pace with technological advances; the
company’s proprietary products and services may not be adequately
protected, and its products and solutions may be found to infringe on
the rights of others; system errors or failure of our technology
products or services to conform to specifications; disaster or other
event causing interruption of customer access to data residing in our
service centers; the delay or extension of our sales or implementation
cycles for external software products; changes in circumstances that
could impair our goodwill or intangible assets; new or revised tax
legislation or challenges to our tax positions; general economic
conditions, including changes in the financial markets that may affect
the availability and cost of credit to the company, its customers or
suppliers; changes in accounting principles generally accepted in the
United States of America; withdrawal from participation in multiemployer
pension plans or if such plans are reported to have underfunded
liabilities; inability to realize the expected benefits from the
company’s restructuring and business process initiatives; difficulties
with outsourcing and similar third party relationships; risks associated
with the company’s retail expansion; and the company’s inability to keep
existing retail store locations or open new retail locations in
desirable places. The reader should not place undue reliance on
forward-looking statements, which speak only as of the date they are
first made. Except to the extent required by law, the company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements to reflect events or circumstances after the
date hereof, or to reflect the occurrence of unanticipated events.
The company has scheduled a conference call for today, Wednesday, May 4th,
at 5:00 PM ET. The dial-in number for individuals wishing to participate
on the call is 719-234-7317. Erin Lampert, senior vice president,
Investor Relations, is the leader of the call, and the password to join
the call is ‘McKesson’. The live webcast and supplementary slide
presentation for the conference call can be accessed on the company’s
Investor Relations website at http://investor.mckesson.com.
A telephonic replay of this conference call will be available for five
calendar days. The dial-in number for individuals wishing to listen to
the replay is 719-457-0820 and the pass code is 8642209.
The audio webcast and supplemental slide presentation will be archived
on the company’s Investor Relations website after the conclusion of the
call. Shareholders are encouraged to review SEC filings and the
supplementary slide presentation for the conference call, which are
located on the company’s website.
About McKesson Corporation
McKesson Corporation, currently ranked 11th on the FORTUNE 500, is a
healthcare services and information technology company dedicated to
making the business of healthcare run better. McKesson partners with
payers, hospitals, physician offices, pharmacies, pharmaceutical
companies and others across the spectrum of care to build healthier
organizations that deliver better care to patients in every setting.
McKesson helps its customers improve their financial, operational, and
clinical performance with solutions that include pharmaceutical and
medical-surgical supply management, healthcare information technology,
and business and clinical services. For more information, visit http://www.mckesson.com.
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|
|
Schedule 1
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|
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McKESSON CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31,
|
|
|
|
|
Year Ended March 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
46,678
|
|
|
$
|
44,925
|
|
|
4
|
|
%
|
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
7
|
|
%
|
Cost of sales (1) (4)
|
|
|
|
(43,826
|
)
|
|
|
(42,008
|
)
|
|
4
|
|
|
|
|
(179,468
|
)
|
|
|
(167,634
|
)
|
|
7
|
|
|
Gross profit
|
|
|
|
2,852
|
|
|
|
2,917
|
|
|
(2
|
)
|
|
|
|
11,416
|
|
|
|
11,411
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (2) (3)
|
|
|
|
(1,909
|
)
|
|
|
(2,067
|
)
|
|
(8
|
)
|
|
|
|
(7,668
|
)
|
|
|
(8,293
|
)
|
|
(8
|
)
|
|
Restructuring charges (4)
|
|
|
|
(203
|
)
|
|
|
-
|
|
|
-
|
|
|
|
|
(203
|
)
|
|
|
-
|
|
|
-
|
|
|
Claim and litigation charges (5)
|
|
|
|
-
|
|
|
|
(150
|
)
|
|
(100
|
)
|
|
|
|
-
|
|
|
|
(150
|
)
|
|
(100
|
)
|
|
Total operating expenses
|
|
|
|
(2,112
|
)
|
|
|
(2,217
|
)
|
|
(5
|
)
|
|
|
|
(7,871
|
)
|
|
|
(8,443
|
)
|
|
(7
|
)
|
|
Operating income
|
|
|
|
740
|
|
|
|
700
|
|
|
6
|
|
|
|
|
3,545
|
|
|
|
2,968
|
|
|
19
|
|
|
Other income, net
|
|
|
|
15
|
|
|
|
10
|
|
|
50
|
|
|
|
|
58
|
|
|
|
63
|
|
|
(8
|
)
|
|
Interest expense
|
|
|
|
(86
|
)
|
|
|
(90
|
)
|
|
(4
|
)
|
|
|
|
(353
|
)
|
|
|
(374
|
)
|
|
(6
|
)
|
|
Income from continuing operations before income taxes
|
|
|
|
669
|
|
|
|
620
|
|
|
8
|
|
|
|
|
3,250
|
|
|
|
2,657
|
|
|
22
|
|
|
Income tax expense (6)
|
|
|
|
(204
|
)
|
|
|
(209
|
)
|
|
(2
|
)
|
|
|
|
(908
|
)
|
|
|
(815
|
)
|
|
11
|
|
|
Income from continuing operations after tax
|
|
|
|
465
|
|
|
|
411
|
|
|
13
|
|
|
|
|
2,342
|
|
|
|
1,842
|
|
|
27
|
|
|
Loss from discontinued operations, net of tax (7)
|
|
|
|
(21
|
)
|
|
|
(267
|
)
|
|
(92
|
)
|
|
|
|
(32
|
)
|
|
|
(299
|
)
|
|
(89
|
)
|
|
Net income
|
|
|
|
444
|
|
|
|
144
|
|
|
208
|
|
|
|
|
2,310
|
|
|
|
1,543
|
|
|
50
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
(13
|
)
|
|
|
(12
|
)
|
|
8
|
|
|
|
|
(52
|
)
|
|
|
(67
|
)
|
|
(22
|
)
|
|
Net income attributable to McKesson Corporation
|
|
|
$
|
431
|
|
|
$
|
132
|
|
|
227
|
|
%
|
|
$
|
2,258
|
|
|
$
|
1,476
|
|
|
53
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to McKesson
Corporation (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
1.97
|
|
|
$
|
1.69
|
|
|
17
|
|
%
|
|
$
|
9.84
|
|
|
$
|
7.54
|
|
|
31
|
|
%
|
Discontinued operations
|
|
|
|
(0.09
|
)
|
|
|
(1.13
|
)
|
|
(92
|
)
|
|
|
|
(0.14
|
)
|
|
|
(1.27
|
)
|
|
(89
|
)
|
|
Total
|
|
|
$
|
1.88
|
|
|
$
|
0.56
|
|
|
236
|
|
%
|
|
$
|
9.70
|
|
|
$
|
6.27
|
|
|
55
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
1.99
|
|
|
$
|
1.72
|
|
|
16
|
|
%
|
|
$
|
9.96
|
|
|
$
|
7.66
|
|
|
30
|
|
%
|
Discontinued operations
|
|
|
|
(0.09
|
)
|
|
|
(1.15
|
)
|
|
(92
|
)
|
|
|
|
(0.14
|
)
|
|
|
(1.29
|
)
|
|
(89
|
)
|
|
Total
|
|
|
$
|
1.90
|
|
|
$
|
0.57
|
|
|
233
|
|
%
|
|
$
|
9.82
|
|
|
$
|
6.37
|
|
|
54
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
0.28
|
|
|
$
|
0.24
|
|
|
|
|
|
$
|
1.08
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
229
|
|
|
|
236
|
|
|
(3
|
)
|
%
|
|
|
233
|
|
|
|
235
|
|
|
(1
|
)
|
%
|
Basic
|
|
|
|
227
|
|
|
|
232
|
|
|
(2
|
)
|
|
|
|
230
|
|
|
|
232
|
|
|
(1
|
)
|
|
(1)
|
|
Fourth quarters and fiscal years of 2016 and 2015 include pre-tax
charges of $29 million and $50 million and $244 million and $337
million related to our last-in-first-out ("LIFO") method of
accounting for inventories within our Distribution Solutions
segment. Fiscal year 2016 includes $76 million of net cash proceeds
representing our share of antitrust legal settlements.
|
(2)
|
|
Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the sale of our ZEE Medical business
within our Distribution Solutions segment.
|
(3)
|
|
Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the sale of our nurse triage business
within our Technology Solutions segment.
|
(4)
|
|
During the fourth quarter of fiscal year 2016, the Company approved
a restructuring plan to reduce its operating expenses ("Cost
Alignment Plan") and recorded pre-tax restructuring charges of $229
million. Charges were recorded as follows: $26 million in cost of
sales and $203 million in operating expenses.
|
(5)
|
|
Fiscal year 2015 included a charge related to the settlement of our
controlled substance distribution claims within our Distribution
Solutions segment.
|
(6)
|
|
Fiscal year 2016 includes a $19 million tax benefit related to
enacted tax law changes in foreign jurisdictions and a $25 million
tax benefit related to the reversal of a tax reserve.
|
(7)
|
|
Fiscal year 2015 included a $241 million pre-tax ($235 million
after-tax) non-cash impairment charges related to our Brazilian
pharmaceutical business.
|
(8)
|
|
Certain computations may reflect rounding adjustments.
|
|
|
|
Schedule 2A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
Quarter Ended March 31, 2016
|
|
Vs. Prior Quarter
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition Expenses and Related Adjustments
|
|
Claim and Litigation Reserve Adjustments
|
|
LIFO-Related Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1)
|
|
|
$
|
2,852
|
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
29
|
|
|
$
|
2,883
|
|
|
(2
|
)
|
%
|
(3
|
)
|
%
|
Operating expenses
|
|
|
|
(1,909
|
)
|
|
|
100
|
|
|
|
26
|
|
|
|
-
|
|
|
-
|
|
|
|
(1,783
|
)
|
|
(14
|
)
|
|
(6
|
)
|
|
Restructuring charges (1)
|
|
|
|
(203
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(203
|
)
|
|
-
|
|
|
-
|
|
|
Other income, net
|
|
|
|
15
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
-
|
|
|
|
17
|
|
|
50
|
|
|
42
|
|
|
Interest expense
|
|
|
|
(86
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(86
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Income from continuing operations before income taxes
|
|
|
|
669
|
|
|
|
102
|
|
|
|
28
|
|
|
|
-
|
|
|
29
|
|
|
|
828
|
|
|
8
|
|
|
(17
|
)
|
|
Income tax expense
|
|
|
|
(204
|
)
|
|
|
(33
|
)
|
|
|
(7
|
)
|
|
|
-
|
|
|
(11
|
)
|
|
|
(255
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|
Income from continuing operations after tax
|
|
|
|
465
|
|
|
|
69
|
|
|
|
21
|
|
|
|
-
|
|
|
18
|
|
|
|
573
|
|
|
13
|
|
|
(19
|
)
|
|
Income from continuing operations, net of tax, attributable to
noncontrolling interests
|
|
|
|
(13
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(13
|
)
|
|
8
|
|
|
8
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
452
|
|
|
$
|
69
|
|
|
$
|
21
|
|
|
$
|
-
|
|
$
|
18
|
|
|
$
|
560
|
|
|
13
|
|
%
|
(19
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (2)
|
|
|
$
|
1.97
|
|
|
$
|
0.31
|
|
|
$
|
0.09
|
|
|
$
|
-
|
|
$
|
0.07
|
|
|
$
|
2.44
|
|
(3)
|
17
|
|
%
|
(17
|
)
|
%
|
Diluted weighted average common shares
|
|
|
|
229
|
|
|
|
229
|
|
|
|
229
|
|
|
|
-
|
|
|
229
|
|
|
|
229
|
|
|
(3
|
)
|
%
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2015
|
|
|
|
|
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition Expenses and Related Adjustments
|
|
Claim and Litigation Reserve Adjustments
|
|
LIFO-Related Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$
|
2,917
|
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
50
|
|
|
$
|
2,969
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
(2,217
|
)
|
|
|
106
|
|
|
|
62
|
|
|
|
150
|
|
|
-
|
|
|
|
(1,899
|
)
|
|
|
|
|
|
Other income, net
|
|
|
|
10
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
12
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(90
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
620
|
|
|
|
110
|
|
|
|
62
|
|
|
|
150
|
|
|
50
|
|
|
|
992
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
(209
|
)
|
|
|
(36
|
)
|
|
|
(23
|
)
|
|
|
-
|
|
|
(19
|
)
|
|
|
(287
|
)
|
|
|
|
|
|
Income from continuing operations after tax
|
|
|
|
411
|
|
|
|
74
|
|
|
|
39
|
|
|
|
150
|
|
|
31
|
|
|
|
705
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
noncontrolling interests
|
|
|
|
(12
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(12
|
)
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
399
|
|
|
$
|
74
|
|
|
$
|
39
|
|
|
$
|
150
|
|
$
|
31
|
|
|
$
|
693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (2)
|
|
|
$
|
1.69
|
|
|
$
|
0.31
|
|
|
$
|
0.17
|
|
|
$
|
0.64
|
|
$
|
0.13
|
|
|
$
|
2.94
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
|
236
|
|
|
|
236
|
|
|
|
236
|
|
|
|
236
|
|
|
236
|
|
|
|
236
|
|
|
|
|
|
|
(1)
|
|
During the fourth quarter of fiscal year 2016, the Company approved
the Cost Alignment Plan and recorded pre-tax restructuring charges
of $229 million. Charges were recorded as follows: $26 million in
cost of sales and $203 million in operating expenses.
|
(2)
|
|
Certain computations may reflect rounding adjustments.
|
(3)
|
|
Adjusted Earnings per share on a Constant Currency basis for the
fourth quarter of fiscal year 2016 was $2.46 per diluted share,
which excludes the foreign currency exchange effect of $0.02 per
diluted share.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
Schedule 2B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
Year Ended March 31, 2016
|
|
Vs. Prior Period
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition Expenses and Related Adjustments
|
|
Claim and Litigation Reserve Adjustments
|
|
LIFO-Related Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1) (4)
|
|
|
$
|
11,416
|
|
|
$
|
7
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
244
|
|
|
$
|
11,667
|
|
|
-
|
|
%
|
|
(1
|
)
|
%
|
Operating expenses (2) (3)
|
|
|
|
(7,668
|
)
|
|
|
423
|
|
|
|
110
|
|
|
|
-
|
|
|
-
|
|
|
|
(7,135
|
)
|
|
(9
|
)
|
|
|
(6
|
)
|
|
Restructuring charges (4)
|
|
|
|
(203
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(203
|
)
|
|
|
|
|
-
|
|
|
Other income, net
|
|
|
|
58
|
|
|
|
1
|
|
|
|
4
|
|
|
|
-
|
|
|
-
|
|
|
|
63
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
Interest expense
|
|
|
|
(353
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(353
|
)
|
|
(6
|
)
|
|
|
(6
|
)
|
|
Income from continuing operations before income taxes
|
|
|
|
3,250
|
|
|
|
431
|
|
|
|
114
|
|
|
|
-
|
|
|
244
|
|
|
|
4,039
|
|
|
22
|
|
|
|
5
|
|
|
Income tax expense (5)
|
|
|
|
(908
|
)
|
|
|
(136
|
)
|
|
|
(36
|
)
|
|
|
-
|
|
|
(95
|
)
|
|
|
(1,175
|
)
|
|
11
|
|
|
|
(1
|
)
|
|
Income from continuing operations after tax
|
|
|
|
2,342
|
|
|
|
295
|
|
|
|
78
|
|
|
|
-
|
|
|
149
|
|
|
|
2,864
|
|
|
27
|
|
|
|
7
|
|
|
Income from continuing operations, net of tax, attributable to
noncontrolling interests
|
|
|
|
(52
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(52
|
)
|
|
(22
|
)
|
|
|
(22
|
)
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
2,290
|
|
|
$
|
295
|
|
|
$
|
78
|
|
|
$
|
-
|
|
$
|
149
|
|
|
$
|
2,812
|
|
|
29
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (6)
|
|
|
$
|
9.84
|
|
|
$
|
1.27
|
|
|
$
|
0.34
|
|
|
$
|
-
|
|
$
|
0.63
|
|
|
$
|
12.08
|
|
(7)
|
31
|
|
%
|
|
9
|
|
%
|
Diluted weighted average common shares
|
|
|
|
233
|
|
|
|
233
|
|
|
|
233
|
|
|
|
-
|
|
|
233
|
|
|
|
233
|
|
|
(1
|
)
|
%
|
|
(1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition Expenses and Related Adjustments
|
|
Claim and Litigation Reserve Adjustments
|
|
LIFO-Related Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$
|
11,411
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
-
|
|
$
|
337
|
|
|
$
|
11,758
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
(8,443
|
)
|
|
|
483
|
|
|
|
223
|
|
|
|
150
|
|
|
-
|
|
|
|
(7,587
|
)
|
|
|
|
|
|
|
Other income, net
|
|
|
|
63
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
65
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(374
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(374
|
)
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
2,657
|
|
|
|
494
|
|
|
|
224
|
|
|
|
150
|
|
|
337
|
|
|
|
3,862
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
(815
|
)
|
|
|
(157
|
)
|
|
|
(78
|
)
|
|
|
-
|
|
|
(131
|
)
|
|
|
(1,181
|
)
|
|
|
|
|
|
|
Income from continuing operations after tax
|
|
|
|
1,842
|
|
|
|
337
|
|
|
|
146
|
|
|
|
150
|
|
|
206
|
|
|
|
2,681
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
noncontrolling interests
|
|
|
|
(67
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(67
|
)
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
1,775
|
|
|
$
|
337
|
|
|
$
|
146
|
|
|
$
|
150
|
|
$
|
206
|
|
|
$
|
2,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (6)
|
|
|
$
|
7.54
|
|
|
$
|
1.43
|
|
|
$
|
0.63
|
|
|
$
|
0.64
|
|
$
|
0.87
|
|
|
$
|
11.11
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
|
235
|
|
|
|
235
|
|
|
|
235
|
|
|
|
235
|
|
|
235
|
|
|
|
235
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal year 2016 includes $76 million of net cash proceeds
representing our share of antitrust legal settlements within our
Distribution Solutions segment.
|
(2)
|
|
Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the sale of our ZEE Medical business
within our Distribution Solutions segment.
|
(3)
|
|
Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the sale of our nurse triage business
within our Technology Solutions segment.
|
(4)
|
|
During the fourth quarter of fiscal year 2016, the Company approved
the Cost Alignment Plan and recorded pre-tax restructuring charges
of $229 million. Charges were recorded as follows: $26 million in
cost of sales and $203 million in operating expenses.
|
(5)
|
|
Fiscal year 2016 includes a $19 million tax benefit related to
enacted tax law changes in foreign jurisdictions and a $25 million
tax benefit related to the reversal of a tax reserve.
|
(6)
|
|
Certain computations may reflect rounding adjustments.
|
(7)
|
|
Adjusted Earnings per share on a Constant Currency basis for fiscal
year 2016 was $12.21 per diluted share, which excludes the foreign
currency exchange effect of $0.13 per diluted share.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
Schedule 3A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2016
|
|
Quarter Ended March 31, 2015
|
|
GAAP
|
|
Non-GAAP
|
|
Change
|
|
|
|
|
As Reported (GAAP)
|
|
Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
As Reported (GAAP)
|
|
Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
Foreign Currency Effects
|
|
Constant Currency
|
|
Foreign Currency Effects
|
|
Constant Currency
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non- GAAP)
|
|
Constant Currency (GAAP)
|
|
Constant Currency (Non- GAAP)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America pharmaceutical distribution & services
|
|
|
$
|
38,719
|
|
|
$
|
-
|
|
$
|
38,719
|
|
|
$
|
36,861
|
|
|
$
|
-
|
|
$
|
36,861
|
|
|
$
|
233
|
|
|
$
|
38,952
|
|
|
$
|
233
|
|
|
$
|
38,952
|
|
|
5
|
|
%
|
5
|
|
%
|
6
|
|
%
|
6
|
|
%
|
International pharmaceutical distribution & services
|
|
|
|
5,771
|
|
|
|
-
|
|
|
5,771
|
|
|
|
5,852
|
|
|
|
-
|
|
|
5,852
|
|
|
|
209
|
|
|
|
5,980
|
|
|
|
209
|
|
|
|
5,980
|
|
|
(1
|
)
|
|
(1
|
)
|
|
2
|
|
|
2
|
|
|
Medical-Surgical distribution & services
|
|
|
|
1,454
|
|
|
|
-
|
|
|
1,454
|
|
|
|
1,436
|
|
|
|
-
|
|
|
1,436
|
|
|
|
-
|
|
|
|
1,454
|
|
|
|
-
|
|
|
|
1,454
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Total Distribution Solutions
|
|
|
|
45,944
|
|
|
|
-
|
|
|
45,944
|
|
|
|
44,149
|
|
|
|
-
|
|
|
44,149
|
|
|
|
442
|
|
|
|
46,386
|
|
|
|
442
|
|
|
|
46,386
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
Technology Solutions - Products and Services
|
|
|
|
734
|
|
|
|
-
|
|
|
734
|
|
|
|
776
|
|
|
|
-
|
|
|
776
|
|
|
|
2
|
|
|
|
736
|
|
|
|
2
|
|
|
|
736
|
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
Revenues
|
|
|
$
|
46,678
|
|
|
$
|
-
|
|
$
|
46,678
|
|
|
$
|
44,925
|
|
|
$
|
-
|
|
$
|
44,925
|
|
|
$
|
444
|
|
|
$
|
47,122
|
|
|
$
|
444
|
|
|
$
|
47,122
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
2,486
|
|
|
$
|
30
|
|
$
|
2,516
|
|
|
$
|
2,536
|
|
|
$
|
50
|
|
$
|
2,586
|
|
|
$
|
48
|
|
|
$
|
2,534
|
|
|
$
|
48
|
|
|
$
|
2,564
|
|
|
(2
|
)
|
|
(3
|
)
|
|
-
|
|
|
(1
|
)
|
|
Technology Solutions
|
|
|
|
366
|
|
|
|
1
|
|
|
367
|
|
|
|
381
|
|
|
|
2
|
|
|
383
|
|
|
|
(2
|
)
|
|
|
364
|
|
|
|
(2
|
)
|
|
|
365
|
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
Gross profit
|
|
|
$
|
2,852
|
|
|
$
|
31
|
|
$
|
2,883
|
|
|
$
|
2,917
|
|
|
$
|
52
|
|
$
|
2,969
|
|
|
$
|
46
|
|
|
$
|
2,898
|
|
|
$
|
46
|
|
|
$
|
2,929
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
(1,686
|
)
|
|
$
|
118
|
|
$
|
(1,568
|
)
|
|
$
|
(1,829
|
)
|
|
$
|
308
|
|
$
|
(1,521
|
)
|
|
$
|
(43
|
)
|
|
$
|
(1,729
|
)
|
|
$
|
(39
|
)
|
|
$
|
(1,607
|
)
|
|
(8
|
)
|
|
3
|
|
|
(5
|
)
|
|
6
|
|
|
Technology Solutions
|
|
|
|
(273
|
)
|
|
|
8
|
|
|
(265
|
)
|
|
|
(248
|
)
|
|
|
8
|
|
|
(240
|
)
|
|
|
(1
|
)
|
|
|
(274
|
)
|
|
|
(1
|
)
|
|
|
(266
|
)
|
|
10
|
|
|
10
|
|
|
10
|
|
|
11
|
|
|
Corporate
|
|
|
|
(153
|
)
|
|
|
-
|
|
|
(153
|
)
|
|
|
(140
|
)
|
|
|
2
|
|
|
(138
|
)
|
|
|
-
|
|
|
|
(153
|
)
|
|
|
-
|
|
|
|
(153
|
)
|
|
9
|
|
|
11
|
|
|
9
|
|
|
11
|
|
|
Operating expenses
|
|
|
$
|
(2,112
|
)
|
|
$
|
126
|
|
$
|
(1,986
|
)
|
|
$
|
(2,217
|
)
|
|
$
|
318
|
|
$
|
(1,899
|
)
|
|
$
|
(44
|
)
|
|
$
|
(2,156
|
)
|
|
$
|
(40
|
)
|
|
$
|
(2,026
|
)
|
|
(5
|
)
|
|
5
|
|
|
(3
|
)
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
11
|
|
|
$
|
2
|
|
$
|
13
|
|
|
$
|
7
|
|
|
$
|
2
|
|
$
|
9
|
|
|
$
|
-
|
|
|
$
|
11
|
|
|
$
|
-
|
|
|
$
|
13
|
|
|
57
|
|
|
44
|
|
|
57
|
|
|
44
|
|
|
Technology Solutions
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Corporate
|
|
|
|
4
|
|
|
|
-
|
|
|
4
|
|
|
|
3
|
|
|
|
-
|
|
|
3
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
33
|
|
|
33
|
|
|
33
|
|
|
33
|
|
|
Other income, net
|
|
|
$
|
15
|
|
|
$
|
2
|
|
$
|
17
|
|
|
$
|
10
|
|
|
$
|
2
|
|
$
|
12
|
|
|
$
|
-
|
|
|
$
|
15
|
|
|
$
|
-
|
|
|
$
|
17
|
|
|
50
|
|
|
42
|
|
|
50
|
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2)
|
|
|
$
|
811
|
|
|
$
|
150
|
|
$
|
961
|
|
|
$
|
714
|
|
|
$
|
360
|
|
$
|
1,074
|
|
|
$
|
5
|
|
|
$
|
816
|
|
|
$
|
9
|
|
|
$
|
970
|
|
|
14
|
|
|
(11
|
)
|
|
14
|
|
|
(10
|
)
|
|
Technology Solutions (1) (2)
|
|
|
|
93
|
|
|
|
9
|
|
|
102
|
|
|
|
133
|
|
|
|
10
|
|
|
143
|
|
|
|
(3
|
)
|
|
|
90
|
|
|
|
(3
|
)
|
|
|
99
|
|
|
(30
|
)
|
|
(29
|
)
|
|
(32
|
)
|
|
(31
|
)
|
|
Operating profit
|
|
|
|
904
|
|
|
|
159
|
|
|
1,063
|
|
|
|
847
|
|
|
|
370
|
|
|
1,217
|
|
|
|
2
|
|
|
|
906
|
|
|
|
6
|
|
|
|
1,069
|
|
|
7
|
|
|
(13
|
)
|
|
7
|
|
|
(12
|
)
|
|
Corporate (2)
|
|
|
|
(149
|
)
|
|
|
-
|
|
|
(149
|
)
|
|
|
(137
|
)
|
|
|
2
|
|
|
(135
|
)
|
|
|
-
|
|
|
|
(149
|
)
|
|
|
-
|
|
|
|
(149
|
)
|
|
9
|
|
|
10
|
|
|
9
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
|
(86
|
)
|
|
|
-
|
|
|
(86
|
)
|
|
|
(90
|
)
|
|
|
-
|
|
|
(90
|
)
|
|
|
-
|
|
|
|
(86
|
)
|
|
|
-
|
|
|
|
(86
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Income from continuing operations before income taxes
|
|
|
$
|
669
|
|
|
$
|
159
|
|
$
|
828
|
|
|
$
|
620
|
|
|
$
|
372
|
|
$
|
992
|
|
|
$
|
2
|
|
|
$
|
671
|
|
|
$
|
6
|
|
|
$
|
834
|
|
|
8
|
|
|
(17
|
)
|
|
8
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
1.77
|
|
%
|
|
|
|
2.09
|
|
%
|
|
1.62
|
|
%
|
|
|
|
|
2.43
|
|
%
|
|
|
|
1.76
|
|
%
|
|
|
|
2.09
|
|
%
|
15
|
|
bp
|
(34
|
)
|
bp
|
14
|
|
bp
|
(34
|
)
|
bp
|
Technology Solutions
|
|
|
|
12.67
|
|
|
|
|
|
|
13.90
|
|
|
|
17.14
|
|
|
|
|
|
|
18.43
|
|
|
|
|
|
|
12.23
|
|
|
|
|
|
|
13.45
|
|
|
(447
|
)
|
|
(453
|
)
|
|
(491
|
)
|
|
(498
|
)
|
|
(1)
|
|
Gross profit for fiscal year 2016 includes pre-tax restructuring
charges associated with the Cost Alignment Plan of $5 million and
$21 million within our Distribution Solutions segment and Technology
Solutions segment.
|
(2)
|
|
Operating expenses for fiscal year 2016 include pre-tax
restructuring charges associated with the Cost Alignment Plan of
$156 million, $30 million and $17 million within our Distribution
Solutions segment, Technology Solutions segment and Corporate.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
Schedule 3B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2016
|
|
Year Ended March 31, 2015
|
|
GAAP
|
|
Non-GAAP
|
|
Change
|
|
|
|
|
As Reported (GAAP)
|
|
Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
As Reported (GAAP)
|
|
Adjustments
|
|
Adjusted Earnings (Non-GAAP)
|
|
Foreign Currency Effects
|
|
Constant Currency
|
|
Foreign Currency Effects
|
|
Constant Currency
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non-GAAP)
|
|
Constant Currency (GAAP)
|
|
Constant Currency (Non-GAAP)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America pharmaceutical distribution & services
|
|
|
$
|
158,469
|
|
|
$
|
-
|
|
$
|
158,469
|
|
|
$
|
143,711
|
|
|
$
|
-
|
|
$
|
143,711
|
|
|
$
|
1,377
|
|
|
$
|
159,846
|
|
|
$
|
1,377
|
|
|
$
|
159,846
|
|
|
10
|
|
%
|
10
|
|
%
|
11
|
|
%
|
11
|
|
%
|
International pharmaceutical distribution & services
|
|
|
|
23,497
|
|
|
|
-
|
|
|
23,497
|
|
|
|
26,358
|
|
|
|
-
|
|
|
26,358
|
|
|
|
3,024
|
|
|
|
26,521
|
|
|
|
3,024
|
|
|
|
26,521
|
|
|
(11
|
)
|
|
(11
|
)
|
|
1
|
|
|
1
|
|
|
Medical-Surgical distribution & services
|
|
|
|
6,033
|
|
|
|
-
|
|
|
6,033
|
|
|
|
5,907
|
|
|
|
-
|
|
|
5,907
|
|
|
|
1
|
|
|
|
6,034
|
|
|
|
1
|
|
|
|
6,034
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
Total Distribution Solutions
|
|
|
|
187,999
|
|
|
|
-
|
|
|
187,999
|
|
|
|
175,976
|
|
|
|
-
|
|
|
175,976
|
|
|
|
4,402
|
|
|
|
192,401
|
|
|
|
4,402
|
|
|
|
192,401
|
|
|
7
|
|
|
7
|
|
|
9
|
|
|
9
|
|
|
Technology Solutions - Products and Services
|
|
|
|
2,885
|
|
|
|
-
|
|
|
2,885
|
|
|
|
3,069
|
|
|
|
-
|
|
|
3,069
|
|
|
|
11
|
|
|
|
2,896
|
|
|
|
11
|
|
|
|
2,896
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
Revenues
|
|
|
$
|
190,884
|
|
|
$
|
-
|
|
$
|
190,884
|
|
|
$
|
179,045
|
|
|
$
|
-
|
|
$
|
179,045
|
|
|
$
|
4,413
|
|
|
$
|
195,297
|
|
|
$
|
4,413
|
|
|
$
|
195,297
|
|
|
7
|
|
|
7
|
|
|
9
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1)
|
|
|
$
|
9,948
|
|
|
$
|
245
|
|
$
|
10,193
|
|
|
$
|
9,937
|
|
|
$
|
339
|
|
$
|
10,276
|
|
|
$
|
422
|
|
|
$
|
10,370
|
|
|
$
|
422
|
|
|
$
|
10,615
|
|
|
-
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
|
Technology Solutions (2)
|
|
|
|
1,468
|
|
|
|
6
|
|
|
1,474
|
|
|
|
1,474
|
|
|
|
8
|
|
|
1,482
|
|
|
|
(8
|
)
|
|
|
1,460
|
|
|
|
(8
|
)
|
|
|
1,466
|
|
|
-
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Gross profit
|
|
|
$
|
11,416
|
|
|
$
|
251
|
|
$
|
11,667
|
|
|
$
|
11,411
|
|
|
$
|
347
|
|
$
|
11,758
|
|
|
$
|
414
|
|
|
$
|
11,830
|
|
|
$
|
414
|
|
|
$
|
12,081
|
|
|
-
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (4)
|
|
|
$
|
(6,436
|
)
|
|
$
|
497
|
|
$
|
(5,939
|
)
|
|
$
|
(6,938
|
)
|
|
$
|
803
|
|
$
|
(6,135
|
)
|
|
$
|
(370
|
)
|
|
$
|
(6,806
|
)
|
|
$
|
(342
|
)
|
|
$
|
(6,281
|
)
|
|
(7
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
2
|
|
|
Technology Solutions (5)
|
|
|
|
(951
|
)
|
|
|
34
|
|
|
(917
|
)
|
|
|
(1,039
|
)
|
|
|
40
|
|
|
(999
|
)
|
|
|
(9
|
)
|
|
|
(960
|
)
|
|
|
(9
|
)
|
|
|
(926
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|
Corporate
|
|
|
|
(484
|
)
|
|
|
2
|
|
|
(482
|
)
|
|
|
(466
|
)
|
|
|
13
|
|
|
(453
|
)
|
|
|
(1
|
)
|
|
|
(485
|
)
|
|
|
(1
|
)
|
|
|
(483
|
)
|
|
4
|
|
|
6
|
|
|
4
|
|
|
7
|
|
|
Operating expenses
|
|
|
$
|
(7,871
|
)
|
|
$
|
533
|
|
$
|
(7,338
|
)
|
|
$
|
(8,443
|
)
|
|
$
|
856
|
|
$
|
(7,587
|
)
|
|
$
|
(380
|
)
|
|
$
|
(8,251
|
)
|
|
$
|
(352
|
)
|
|
$
|
(7,690
|
)
|
|
(7
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
41
|
|
|
$
|
5
|
|
$
|
46
|
|
|
$
|
48
|
|
|
$
|
2
|
|
$
|
50
|
|
|
$
|
4
|
|
|
$
|
45
|
|
|
$
|
5
|
|
|
$
|
51
|
|
|
(15
|
)
|
|
(8
|
)
|
|
(6
|
)
|
|
2
|
|
|
Technology Solutions
|
|
|
|
2
|
|
|
|
-
|
|
|
2
|
|
|
|
3
|
|
|
|
-
|
|
|
3
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
(33
|
)
|
|
(33
|
)
|
|
(33
|
)
|
|
(33
|
)
|
|
Corporate
|
|
|
|
15
|
|
|
|
-
|
|
|
15
|
|
|
|
12
|
|
|
|
-
|
|
|
12
|
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
|
15
|
|
|
25
|
|
|
25
|
|
|
25
|
|
|
25
|
|
|
Other income, net
|
|
|
$
|
58
|
|
|
$
|
5
|
|
$
|
63
|
|
|
$
|
63
|
|
|
$
|
2
|
|
$
|
65
|
|
|
$
|
4
|
|
|
$
|
62
|
|
|
$
|
5
|
|
|
$
|
68
|
|
|
(8
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (3) (4) (6)
|
|
|
$
|
3,553
|
|
|
$
|
747
|
|
$
|
4,300
|
|
|
$
|
3,047
|
|
|
$
|
1,144
|
|
$
|
4,191
|
|
|
$
|
56
|
|
|
$
|
3,609
|
|
|
$
|
85
|
|
|
$
|
4,385
|
|
|
17
|
|
|
3
|
|
|
18
|
|
|
5
|
|
|
Technology Solutions (2) (3) (5) (6)
|
|
|
|
519
|
|
|
|
40
|
|
|
559
|
|
|
|
438
|
|
|
|
48
|
|
|
486
|
|
|
|
(17
|
)
|
|
|
502
|
|
|
|
(17
|
)
|
|
|
542
|
|
|
18
|
|
|
15
|
|
|
15
|
|
|
12
|
|
|
Operating profit
|
|
|
|
4,072
|
|
|
|
787
|
|
|
4,859
|
|
|
|
3,485
|
|
|
|
1,192
|
|
|
4,677
|
|
|
|
39
|
|
|
|
4,111
|
|
|
|
68
|
|
|
|
4,927
|
|
|
17
|
|
|
4
|
|
|
18
|
|
|
5
|
|
|
Corporate (6)
|
|
|
|
(469
|
)
|
|
|
2
|
|
|
(467
|
)
|
|
|
(454
|
)
|
|
|
13
|
|
|
(441
|
)
|
|
|
(1
|
)
|
|
|
(470
|
)
|
|
|
(1
|
)
|
|
|
(468
|
)
|
|
3
|
|
|
6
|
|
|
4
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
|
(353
|
)
|
|
|
-
|
|
|
(353
|
)
|
|
|
(374
|
)
|
|
|
-
|
|
|
(374
|
)
|
|
|
(6
|
)
|
|
|
(359
|
)
|
|
|
(6
|
)
|
|
|
(359
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
Income from continuing operations before income taxes
|
|
|
$
|
3,250
|
|
|
$
|
789
|
|
$
|
4,039
|
|
|
$
|
2,657
|
|
|
$
|
1,205
|
|
$
|
3,862
|
|
|
$
|
32
|
|
|
$
|
3,282
|
|
|
$
|
61
|
|
|
$
|
4,100
|
|
|
22
|
|
|
5
|
|
|
24
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
1.89
|
|
%
|
|
|
|
2.29
|
|
%
|
|
1.73
|
|
%
|
|
|
|
2.38
|
|
%
|
|
|
|
1.88
|
|
%
|
|
|
|
2.28
|
|
%
|
16
|
|
bp
|
(9
|
)
|
bp
|
15
|
|
bp
|
(10
|
)
|
bp
|
Technology Solutions
|
|
|
|
17.99
|
|
|
|
|
|
|
19.38
|
|
|
|
14.27
|
|
|
|
|
|
|
15.84
|
|
|
|
|
|
|
17.33
|
|
|
|
|
|
|
18.72
|
|
|
372
|
|
|
354
|
|
|
306
|
|
|
288
|
|
|
(1)
|
|
Fiscal year 2016 reflects $76 million of net cash proceeds
representing our share of antitrust legal settlements.
|
(2)
|
|
Fiscal year 2015 reflects a non-cash pre-tax charge of $34 million
primarily relating to depreciation and amortization expense due to
the reclassification of the workforce business within our
International Technology business from discontinued operations to
continuing operations. The charge was primarily recorded in cost of
sales.
|
(3)
|
|
Gross profit for fiscal year 2016 includes pre-tax restructuring
charges associated with the Cost Alignment Plan of $5 million and
$21 million within our Distribution Solutions segment and Technology
Solutions segment.
|
(4)
|
|
Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the sale of our ZEE Medical business.
|
(5)
|
|
Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the sale of our nurse triage business.
|
(6)
|
|
Operating expenses for fiscal year 2016 include pre-tax
restructuring charges associated with the Cost Alignment Plan of
$156 million, $30 million and $17 million within our Distribution
Solutions segment, Technology Solutions segment and Corporate.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
Schedule 4A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2016
|
|
Quarter Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
45,944
|
|
$
|
734
|
|
$
|
-
|
|
|
$
|
46,678
|
|
$
|
44,149
|
|
$
|
776
|
|
$
|
-
|
|
|
$
|
44,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and income
taxes (1)
|
|
|
$
|
811
|
|
$
|
93
|
|
$
|
(149
|
)
|
|
$
|
755
|
|
$
|
714
|
|
$
|
133
|
|
$
|
(137
|
)
|
|
$
|
710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangibles
|
|
|
$
|
93
|
|
$
|
9
|
|
$
|
-
|
|
|
$
|
102
|
|
$
|
99
|
|
$
|
10
|
|
$
|
1
|
|
|
$
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition expenses and related adjustments
|
|
|
|
28
|
|
|
-
|
|
|
-
|
|
|
|
28
|
|
|
61
|
|
|
-
|
|
|
1
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim and litigation reserve adjustments
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
150
|
|
|
-
|
|
|
-
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO-related adjustments
|
|
|
|
29
|
|
|
-
|
|
|
-
|
|
|
|
29
|
|
|
50
|
|
|
-
|
|
|
-
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
|
$
|
150
|
|
$
|
9
|
|
$
|
-
|
|
|
$
|
159
|
|
$
|
360
|
|
$
|
10
|
|
$
|
2
|
|
|
$
|
372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
45,944
|
|
$
|
734
|
|
$
|
-
|
|
|
$
|
46,678
|
|
$
|
44,149
|
|
$
|
776
|
|
$
|
-
|
|
|
$
|
44,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and income
taxes (1)
|
|
|
$
|
961
|
|
$
|
102
|
|
$
|
(149
|
)
|
|
$
|
914
|
|
$
|
1,074
|
|
$
|
143
|
|
$
|
(135
|
)
|
|
$
|
1,082
|
(1)
|
|
Fiscal year 2016 includes pre-tax restructuring charges associated
with the Cost Alignment Plan of $229 million. Pre-tax charges were
recorded as follows: $161 million, $51 million and $17 million
within our Distribution Solutions segment, Technology Solutions
segment and Corporate.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled “Supplemental Non-GAAP
Financial Information” of this release.
|
|
Schedule 4B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2016
|
|
Year Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
187,999
|
|
$
|
2,885
|
|
$
|
-
|
|
|
$
|
190,884
|
|
$
|
175,976
|
|
$
|
3,069
|
|
$
|
-
|
|
|
$
|
179,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5)
|
|
|
$
|
3,553
|
|
$
|
519
|
|
$
|
(469
|
)
|
|
$
|
3,603
|
|
$
|
3,047
|
|
$
|
438
|
|
$
|
(454
|
)
|
|
$
|
3,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangibles
|
|
|
$
|
391
|
|
$
|
40
|
|
$
|
-
|
|
|
$
|
431
|
|
$
|
445
|
|
$
|
48
|
|
$
|
1
|
|
|
$
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition expenses and related adjustments
|
|
|
|
112
|
|
|
-
|
|
|
2
|
|
|
|
114
|
|
|
212
|
|
|
-
|
|
|
12
|
|
|
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claim and litigation reserve adjustments
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
150
|
|
|
-
|
|
|
-
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO-related adjustments
|
|
|
|
244
|
|
|
-
|
|
|
-
|
|
|
|
244
|
|
|
337
|
|
|
-
|
|
|
-
|
|
|
|
337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
|
$
|
747
|
|
$
|
40
|
|
$
|
2
|
|
|
$
|
789
|
|
$
|
1,144
|
|
$
|
48
|
|
$
|
13
|
|
|
$
|
1,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
187,999
|
|
$
|
2,885
|
|
$
|
-
|
|
|
$
|
190,884
|
|
$
|
175,976
|
|
$
|
3,069
|
|
$
|
-
|
|
|
$
|
179,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5)
|
|
|
$
|
4,300
|
|
$
|
559
|
|
$
|
(467
|
)
|
|
$
|
4,392
|
|
$
|
4,191
|
|
$
|
486
|
|
$
|
(441
|
)
|
|
$
|
4,236
|
(1)
|
|
Fiscal year 2016 reflects $76 million of net cash proceeds
representing our share of antitrust legal settlements within our
Distribution Solutions segment.
|
(2)
|
|
Fiscal year 2015 reflects a non-cash pre-tax charge of $34 million
primarily relating to depreciation and amortization expense due to
the reclassification of the workforce business within our
International Technology business from discontinued operations to
continuing operations. The charge was primarily recorded in cost of
sales.
|
(3)
|
|
Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the sale of our ZEE Medical business
within our Distribution Solutions segment.
|
(4)
|
|
Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the sale of our nurse triage business
within our Technology Solutions segment.
|
(5)
|
|
Fiscal year 2016 includes pre-tax restructuring charges associated
with the Cost Alignment Plan of $229 million. Pre-tax charges were
recorded as follows: $161 million, $51 million and $17 million
within our Distribution Solutions segment, Technology Solutions
segment and Corporate.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled “Supplemental Non-GAAP
Financial Information” of this release.
|
|
Schedule 5
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
4,048
|
|
$
|
5,341
|
Receivables, net
|
|
|
|
17,980
|
|
|
15,914
|
Inventories, net
|
|
|
|
15,335
|
|
|
14,296
|
Prepaid expenses and other
|
|
|
|
1,074
|
|
|
1,119
|
Total Current Assets
|
|
|
|
38,437
|
|
|
36,670
|
Property, Plant and Equipment, Net
|
|
|
|
2,278
|
|
|
2,045
|
Goodwill
|
|
|
|
9,786
|
|
|
9,817
|
Intangible Assets, Net
|
|
|
|
3,021
|
|
|
3,441
|
Other Noncurrent Assets
|
|
|
|
3,041
|
|
|
1,897
|
Total Assets
|
|
|
$
|
56,563
|
|
$
|
53,870
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
Drafts and accounts payable
|
|
|
$
|
28,585
|
|
$
|
25,166
|
Short-term borrowings
|
|
|
|
7
|
|
|
135
|
Deferred revenue
|
|
|
|
919
|
|
|
1,078
|
Deferred tax liabilities
|
|
|
|
-
|
|
|
1,820
|
Current portion of long-term debt
|
|
|
|
1,612
|
|
|
1,529
|
Other accrued liabilities
|
|
|
|
3,948
|
|
|
3,769
|
Total Current Liabilities
|
|
|
|
35,071
|
|
|
33,497
|
Long-Term Debt
|
|
|
|
6,535
|
|
|
8,180
|
Long-Term Deferred Tax Liabilities
|
|
|
|
2,734
|
|
|
859
|
Other Noncurrent Liabilities
|
|
|
|
1,809
|
|
|
1,863
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
|
1,406
|
|
|
1,386
|
|
|
|
|
|
|
|
|
McKesson Corporation Stockholders' Equity
|
|
|
|
8,924
|
|
|
8,001
|
Noncontrolling Interests
|
|
|
|
84
|
|
|
84
|
Total Equity
|
|
|
|
9,008
|
|
|
8,085
|
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
|
$
|
56,563
|
|
$
|
53,870
|
|
|
|
|
|
|
|
|
Schedule 6
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
Year Ended March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income
|
|
|
$
|
2,310
|
|
|
$
|
1,543
|
|
Adjustments to reconcile to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
885
|
|
|
|
1,017
|
|
Other deferred taxes
|
|
|
|
64
|
|
|
|
171
|
|
Share-based compensation expense
|
|
|
|
123
|
|
|
|
174
|
|
LIFO charges
|
|
|
|
244
|
|
|
|
337
|
|
Gain from sales of businesses
|
|
|
|
(103
|
)
|
|
|
-
|
|
Other non-cash items
|
|
|
|
116
|
|
|
|
288
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
Receivables
|
|
|
|
(1,957
|
)
|
|
|
(2,821
|
)
|
Inventories
|
|
|
|
(1,251
|
)
|
|
|
(2,144
|
)
|
Drafts and accounts payable
|
|
|
|
3,302
|
|
|
|
4,718
|
|
Deferred revenue
|
|
|
|
(120
|
)
|
|
|
(141
|
)
|
Taxes
|
|
|
|
(78
|
)
|
|
|
(222
|
)
|
Claims and Litigation charges
|
|
|
|
-
|
|
|
|
150
|
|
Other
|
|
|
|
137
|
|
|
|
42
|
|
Net cash provided by operating activities
|
|
|
|
3,672
|
|
|
|
3,112
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Property acquisitions
|
|
|
|
(488
|
)
|
|
|
(376
|
)
|
Capitalized software expenditures
|
|
|
|
(189
|
)
|
|
|
(169
|
)
|
Acquisitions, less cash and cash equivalents acquired
|
|
|
|
(40
|
)
|
|
|
(170
|
)
|
Proceeds from sales of businesses
|
|
|
|
210
|
|
|
|
15
|
|
Restricted cash for acquisitions
|
|
|
|
(939
|
)
|
|
|
-
|
|
Other
|
|
|
|
(111
|
)
|
|
|
23
|
|
Net cash used in investing activities
|
|
|
|
(1,557
|
)
|
|
|
(677
|
)
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
|
1,561
|
|
|
|
3,100
|
|
Repayments of short-term borrowings
|
|
|
|
(1,688
|
)
|
|
|
(3,152
|
)
|
Proceeds from issuances of long-term debt
|
|
|
|
-
|
|
|
|
3
|
|
Repayments of long-term debt
|
|
|
|
(1,598
|
)
|
|
|
(353
|
)
|
Common stock transactions:
|
|
|
|
|
|
Issuances
|
|
|
|
123
|
|
|
|
152
|
|
Share repurchases, including shares surrendered for tax withholding
|
|
|
|
(1,612
|
)
|
|
|
(450
|
)
|
Dividends paid
|
|
|
|
(244
|
)
|
|
|
(227
|
)
|
Other
|
|
|
|
5
|
|
|
|
(41
|
)
|
Net cash used in financing activities
|
|
|
|
(3,453
|
)
|
|
|
(968
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
45
|
|
|
|
(319
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(1,293
|
)
|
|
|
1,148
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
5,341
|
|
|
|
4,193
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
4,048
|
|
|
$
|
5,341
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
In an effort to provide investors with additional information
regarding the company's financial results as determined by generally
accepted accounting principles ("GAAP"), McKesson Corporation (the
"Company" or "we") also presents the following non-GAAP measures in
this press release. The Company believes the presentation of
non-GAAP measures provides useful supplemental information to
investors with regard to its core operating performance, as well as
assists with the comparison of its past financial performance to the
Company’s future financial results. Moreover, the Company believes
that the presentation of non-GAAP measures assists investors’
ability to compare its financial results to those of other companies
in the same industry. However, the Company's non-GAAP measures used
in the press tables may be defined and calculated differently by
other companies in the same industry.
|
|
|
|
|
|
|
|
|
•
|
|
Adjusted Earnings (Non-GAAP): We define Adjusted Earnings as
GAAP income from continuing operations, excluding amortization of
acquisition-related intangible assets, acquisition expenses and
related adjustments, certain claim and litigation reserve
adjustments and Last-In-First-Out (“LIFO”) inventory-related
adjustments, as well as the related income tax effects. The Company
evaluates its definition of Adjusted Earnings on a periodic basis
and updates the definition from time to time. The evaluation
considers both the quantitative and qualitative aspect of the
Company’s presentation of Adjusted Earnings. A reconciliation of
McKesson’s GAAP financial results to Adjusted Earnings (Non-GAAP) is
provided in Schedules 2, 3 and 4 of the financial statement tables
included with this release.
|
|
|
|
|
|
|
|
Amortization of acquisition-related
intangibles - Amortization expense of acquired intangible
assets purchased in connection with business acquisitions by the
Company.
|
|
|
|
|
|
|
|
Acquisition expenses and related adjustments
- Transaction and integration expenses that are directly related
to business acquisitions by the Company. Examples include
transaction closing costs, professional service fees,
restructuring or severance charges, retention payments, employee
relocation expenses, facility or other exit-related expenses,
recoveries of acquisition-related expenses or post-closing
expenses, bridge loan fees, gains or losses related to foreign
currency contracts, and gains or losses on business combinations.
|
|
|
|
|
|
|
|
Claim and litigation reserve adjustments
- Adjustments to the Company’s reserves, including accrued
interest, for estimated probable losses for its Controlled
Substance Distribution Claims and the Average Wholesale Price
litigation matters, as such terms are defined in the Company’s
Annual Report on Form 10-K for the fiscal year ended March 31,
2016.
|
|
|
|
|
|
|
|
LIFO-related adjustments -
Last-In-First-Out ("LIFO") inventory-related adjustments.
|
|
|
|
|
|
|
|
Income taxes on Adjusted Earnings are calculated in accordance with
Accounting Standards Codification ("ASC") 740, “Income Taxes,” which
is the same accounting principle used by the Company when presenting
its GAAP financial results.
|
|
|
|
|
|
|
|
|
•
|
|
Constant Currency (Non-GAAP): To present our financial
results on a constant currency basis, we convert current year period
results of our operations in foreign countries, which are recorded
in local currencies, into U.S. dollars by applying the average
foreign currency exchange rates of the comparable prior year period.
To present Adjusted Earnings per diluted share on a constant
currency basis, we estimate the impact of foreign currency rate
fluctuations on the Company’s noncontrolling interests and adjusted
income tax expense, which may vary from quarter to quarter. The
supplemental constant currency information of the Company’s GAAP
financial results and Adjusted Earnings (Non-GAAP) is provided in
Schedule 3 of the financial statement tables included with this
release.
|
|
The Company internally uses non-GAAP financial measures in
connection with its own financial planning and reporting processes.
Specifically, Adjusted Earnings serves as one of the measures
management utilizes when allocating resources, deploying capital and
assessing business performance and employee incentive compensation.
The Company conducts its business worldwide in local currencies,
including Euro, British pound and Canadian dollar. As a result, the
comparability of our results reported in U.S. dollars can be
affected by changes in foreign currency exchange rates. We present
constant currency information to provide a framework for assessing
how our business performed excluding the estimated effect of foreign
currency exchange rate fluctuations. Nonetheless, non-GAAP financial
results and related measures disclosed by the Company should not be
considered a substitute for, nor superior to, financial results and
measures as determined or calculated in accordance with GAAP.
|
|
|
|
|
|
|
|
****
|
Euro to U.S. Dollar Average Foreign Exchange Rates by Quarter
|
Our international pharmaceutical distribution and services business
reflects the results from Celesio AG ("Celesio"). Celesio
independently reports its financial results in Euros. Our financial
results for the fourth quarter and fiscal year 2016, as provided on
a constant currency basis, exclude primarily the effects of the Euro
to the U.S. dollar exchange rate fluctuations between the current
periods and the comparable periods previously reported.
|
|
|
Euro to $1 U.S. Dollar *
|
|
|
Fiscal 2015
|
|
|
Fiscal 2016
|
First Quarter
|
|
1.37
|
|
|
1.10
|
Second Quarter
|
|
1.33
|
|
|
1.11
|
Third Quarter
|
|
1.25
|
|
|
1.09
|
Fourth Quarter
|
|
1.13
|
|
|
1.10
|
*
|
|
Quarterly exchange rates are computed as a simple average using the
average monthly Euro to U.S. dollar exchange rate as reported by the
European Central Bank.
|
