SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today reported that revenues for the
first quarter ended June 30, 2017 were $51.1 billion, up 3% compared to
$49.7 billion a year ago. On the basis of U.S. generally accepted
accounting principles (“GAAP”), first-quarter earnings per diluted share
from continuing operations was $1.44, compared to $2.88 a year ago.
First-quarter Adjusted Earnings per diluted share was $2.46, down 22%
compared to $3.15 a year ago. First-quarter results included the lapping
effect of the lower profit contribution from increased price competition
in our independent pharmacy business in Fiscal 2017 and weaker
pharmaceutical manufacturer pricing trends in our U.S. Pharmaceutical
business within our Distribution Solutions segment, and lower profit in
our Technology Solutions segment driven primarily by the contribution of
the majority of the businesses to Change Healthcare.
For the first quarter, McKesson generated cash from operations of $741
million, and ended the quarter with cash and cash equivalents of $2.3
billion. During the quarter, McKesson repaid $541 million in long-term
debt, paid $1.5 billion for acquisitions, repurchased $250 million of
its common stock, invested $118 million internally and paid $62 million
in dividends. Yesterday, the Board of Directors approved an increase to
the quarterly dividend from 28 cents to 34 cents per share.
“McKesson's first-quarter operating results were consistent with our
expectations,” said John H. Hammergren, chairman and chief executive
officer. “We’re off to a solid start to the year and are raising our
previous Fiscal 2018 Adjusted Earnings outlook to a range of $11.80 to
$12.50 per diluted share. In addition, we generated strong first-quarter
cash flows, which allowed us to allocate capital in line with our
portfolio approach to capital deployment.”
Segment Results
Distribution Solutions revenues were $50.9 billion for the quarter, up
4% on a reported basis and 5% on a constant currency basis.
North America pharmaceutical distribution and services revenues of $43.0
billion for the quarter were up 4% on a reported basis and 5% on a
constant currency basis, primarily reflecting market growth and
acquisitions.
International pharmaceutical distribution and services revenues were
$6.4 billion for the quarter, up 1% on a reported basis and 6% on a
constant currency basis, driven by acquisitions and market growth.
Medical-Surgical distribution and services revenues were up 4% for the
quarter, driven by market growth.
In the first quarter, Distribution Solutions GAAP operating profit was
$713 million and GAAP operating margin was 1.40%. First-quarter adjusted
operating profit was $887 million and adjusted operating margin was
1.73%, both on a constant currency basis. Adjusted operating margin
excluding noncontrolling interests for the Distribution Solutions
segment was 1.64% on a constant currency basis.
Technology Solutions revenues were down 83% on both a reported and
constant currency basis in the first quarter, following the contribution
of the majority of our Technology Solutions businesses to the Change
Healthcare joint venture on March 1, 2017, and reflecting our remaining
Enterprise Information Solutions business.
First-quarter GAAP loss from McKesson’s equity investment in Change
Healthcare was $120 million. Adjusted income from McKesson’s equity
investment in Change Healthcare was $70 million for the first quarter.
Technology Solutions GAAP operating loss was $78 million for the first
quarter. Adjusted operating profit was $87 million for the first
quarter, primarily reflecting our equity share of Change Healthcare’s
net income.
Fiscal Year 2018 Outlook
McKesson expects GAAP earnings per diluted share between $7.10 to $9.00
for the fiscal year ending March 31, 2018, which includes the following
items:
-
Amortization of acquisition-related intangibles of $2.40 to $2.70 per
diluted share;
-
Acquisition-related expenses and adjustments of $1.10 to $1.30 per
diluted share;
-
LIFO inventory-related adjustments include charges of 20 cents to 60
cents per diluted share;
-
Gains from antitrust legal settlements of up to 10 cents per diluted
share;
-
Restructuring charges of up to 10 cents per diluted share; and
-
Other adjustments include net credits of up to 10 cents per diluted
share.
McKesson expects Adjusted Earnings of $11.80 to $12.50 per diluted share
for the fiscal year ending March 31, 2018.
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-related expenses and
adjustments, Last-In-First-Out (“LIFO”) inventory-related adjustments,
gains from antitrust legal settlements, restructuring charges, and other
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.
Adjusted Operating Profit Margin Excluding Noncontrolling Interests
McKesson also provides adjusted operating profit margin excluding
noncontrolling interests. The company has arrangements involving
third-party noncontrolling interests. As a result, pre-tax results are
affected by the portion of pre-tax earnings attributable to
noncontrolling interests. Adjusted operating profit margin excluding
noncontrolling interests information is presented to provide a framework
for assessing how the company’s business performed excluding the effect
of pre-tax earnings that is not attributable to McKesson. The
supplemental adjusted operating profit margin excluding noncontrolling
interests 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.
Conference Call Details
The company has scheduled a conference call for today, Thursday, July 27th,
at 8:30 AM ET. The dial-in number for individuals wishing to participate
on the call is 323-794-2130. Craig Mercer, senior vice president,
Investor Relations, is the leader of the call, and the password to join
the call is ‘McKesson’. 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
3179042. An archive of the conference call will also be available on the
company’s Investor Relations website at http://investor.mckesson.com.
Shareholders are encouraged to review the company’s filings with the
Securities and Exchange Commission.
About McKesson Corporation
McKesson Corporation, currently ranked 5th on the FORTUNE
500, is a global leader in healthcare supply chain management solutions,
retail pharmacy, community oncology and specialty care, and healthcare
information technology. McKesson partners with pharmaceutical
manufacturers, providers, pharmacies, governments and other
organizations in healthcare to help provide the right medicines, medical
products and healthcare services to the right patients at the right
time, safely and cost-effectively. United by our ICARE shared
principles, our employees work every day to innovate and deliver
opportunities that make our customers and partners more successful — all
for the better health of patients. McKesson has been named the “Most
Admired Company” in the healthcare wholesaler category by FORTUNE, a
“Best
Place to Work” by the Human Rights Campaign Foundation, and a top military-friendly
company by Military Friendly. For more information, visit www.mckesson.com.
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Schedule 1
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McKESSON CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
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(unaudited)
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(in millions, except per share amounts)
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Quarter Ended June 30,
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2017
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2016
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Change
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Revenues
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$
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51,051
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$
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49,733
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3
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%
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Cost of sales (1)
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(48,491
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)
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(46,826
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)
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4
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Gross profit
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2,560
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2,907
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(12
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)
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Operating expenses
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(1,964
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)
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(1,935
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)
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1
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Gain on net asset exchange (2)
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37
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-
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-
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Total operating expenses
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(1,927
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)
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(1,935
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)
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-
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Operating income
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633
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972
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(35
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)
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Other income, net
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13
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19
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(32
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)
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Loss from equity method investment in Change Healthcare (3)
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(120
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)
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-
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-
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Interest expense
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(68
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)
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(79
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)
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(14
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)
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Income from continuing operations before income taxes
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458
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912
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(50
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)
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Income tax expense (4)
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(95
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)
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(239
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)
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(60
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)
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Income from continuing operations after tax
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363
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673
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(46
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)
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Income (Loss) from discontinued operations, net of tax (5)
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2
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(113
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)
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(102
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)
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Net income
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365
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560
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(35
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)
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Net income attributable to noncontrolling interests
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(56
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)
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(18
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)
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211
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|
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Net income attributable to McKesson Corporation
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$
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309
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$
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542
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(43
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)
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%
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Earnings (loss) per common share attributable to
McKesson Corporation (6)
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Diluted
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Continuing operations
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$
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1.44
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$
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2.88
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(50
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)
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%
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Discontinued operations
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0.01
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(0.50
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)
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(102
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)
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Total
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$
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1.45
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$
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2.38
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(39
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)
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%
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Basic
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Continuing operations
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$
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1.46
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$
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2.91
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(50
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)
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%
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Discontinued operations
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-
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(0.50
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)
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(100
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)
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Total
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$
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1.46
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$
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2.41
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(39
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)
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%
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Dividends declared per common share
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$
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0.28
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$
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0.28
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Weighted average common shares
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Diluted
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213
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228
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(7
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%
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Basic
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211
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225
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(6
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(1)
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Fiscal years 2018 and 2017 include pre-tax charges of $26 million
and $47 million related to our last-in-first-out (“LIFO”) method
of accounting for inventories. Fiscal year 2017 includes $142
million of net cash proceeds representing our share of antitrust
legal settlements. These charges and credits are included within
our Distribution Solutions segment.
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(2)
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Fiscal year 2018 operating expenses include a pre-tax gain of $37
million (after-tax gain of $22 million) related to the final net
working capital and other adjustments from the Healthcare Technology
Net Asset Exchange.
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(3)
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On March 1, 2017, we contributed the majority of our McKesson
Technology Solutions businesses to form a joint venture, Change
Healthcare.
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(4)
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Fiscal year 2017 includes a tax benefit of $37 million related to
the amended accounting guidance on share-based compensation adopted
in the first quarter of fiscal year 2017.
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(5)
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Fiscal year 2017 includes an after-tax loss of $113 million
recognized from the 2017 first quarter sale of our Brazilian
pharmaceutical distribution business within our discontinued
operations.
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(6)
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Certain computations may reflect rounding adjustments.
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Schedule 2
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McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
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(unaudited)
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(in millions, except per share amounts)
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Change
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Quarter Ended June 30, 2017
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Vs. Prior Quarter
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Amortization
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Acquisition-
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LIFO
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of Acquisition-
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Related
|
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Inventory-
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Gains from
|
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Other
|
|
|
Adjusted
|
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As
|
|
Adjusted
|
|
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As Reported
|
|
|
Related
|
|
|
Expenses and
|
|
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Related
|
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Antitrust Legal
|
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Restructuring
|
|
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Adjustments,
|
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Earnings
|
|
|
|
Reported
|
|
Earnings
|
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|
|
(GAAP)
|
|
|
Intangibles
|
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Adjustments
|
|
|
Adjustments
|
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Settlements
|
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Charges, Net
|
|
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Net
|
|
|
(Non-GAAP)
|
|
|
|
(GAAP)
|
|
(Non-GAAP)
|
Gross profit
|
|
|
$
|
2,560
|
|
|
|
$
|
-
|
|
|
|
$
|
4
|
|
|
|
$
|
26
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
2,590
|
|
|
|
|
(12
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
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|
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1)
|
|
|
$
|
(1,927
|
)
|
|
|
$
|
121
|
|
|
|
$
|
(11
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
3
|
|
|
|
$
|
(2
|
)
|
|
|
$
|
(1,816
|
)
|
|
|
|
-
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
$
|
13
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
13
|
|
|
|
|
(32
|
)
|
%
|
|
(43
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare
|
|
|
$
|
(120
|
)
|
|
|
$
|
71
|
|
|
|
$
|
119
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
70
|
|
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
$
|
458
|
|
|
|
$
|
192
|
|
|
|
$
|
112
|
|
|
|
$
|
26
|
|
|
|
$
|
-
|
|
|
|
$
|
3
|
|
|
|
$
|
(2
|
)
|
|
|
$
|
789
|
|
|
|
|
(50
|
)
|
%
|
|
(20
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
$
|
(95
|
)
|
|
|
$
|
(66
|
)
|
|
|
$
|
(39
|
)
|
|
|
$
|
(10
|
)
|
|
|
$
|
-
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
1
|
|
|
|
$
|
(210
|
)
|
|
|
|
(60
|
)
|
%
|
|
(16
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
307
|
|
|
|
$
|
126
|
|
|
|
$
|
73
|
|
|
|
$
|
16
|
|
|
|
$
|
-
|
|
|
|
$
|
2
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
523
|
|
|
|
|
(53
|
)
|
%
|
|
(27
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (2)
|
|
|
$
|
1.44
|
|
|
|
$
|
0.60
|
|
|
|
$
|
0.34
|
|
|
|
$
|
0.08
|
|
|
|
$
|
-
|
|
|
|
$
|
0.01
|
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
2.46
|
|
(3)
|
|
(50
|
)
|
%
|
|
(22
|
)
|
%
|
Diluted weighted average common shares
|
|
|
|
213
|
|
|
|
|
213
|
|
|
|
|
213
|
|
|
|
|
213
|
|
|
|
|
-
|
|
|
|
|
213
|
|
|
|
|
213
|
|
|
|
|
213
|
|
|
|
|
(7
|
)
|
%
|
|
(7
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
Acquisition-
|
|
|
LIFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Acquisition-
|
|
|
Related
|
|
|
Inventory-
|
|
|
Gains from
|
|
|
|
|
|
Other
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Reported
|
|
|
Related
|
|
|
Expenses and
|
|
|
Related
|
|
|
Antitrust Legal
|
|
|
Restructuring
|
|
|
Adjustments,
|
|
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(GAAP)
|
|
|
Intangibles
|
|
|
Adjustments
|
|
|
Adjustments
|
|
|
Settlements
|
|
|
Charges, Net
|
|
|
Net
|
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
$
|
2,907
|
|
|
|
$
|
2
|
|
|
|
$
|
-
|
|
|
|
$
|
47
|
|
|
|
$
|
(142
|
)
|
|
|
$
|
(1
|
)
|
|
|
$
|
-
|
|
|
|
$
|
2,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
$
|
(1,935
|
)
|
|
|
$
|
113
|
|
|
|
$
|
46
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
10
|
|
|
|
$
|
(6
|
)
|
|
|
$
|
(1,772
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
$
|
19
|
|
|
|
$
|
-
|
|
|
|
$
|
4
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
$
|
912
|
|
|
|
$
|
115
|
|
|
|
$
|
50
|
|
|
|
$
|
47
|
|
|
|
$
|
(142
|
)
|
|
|
$
|
9
|
|
|
|
$
|
(6
|
)
|
|
|
$
|
985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (4)
|
|
|
$
|
(239
|
)
|
|
|
$
|
(36
|
)
|
|
|
$
|
(12
|
)
|
|
|
$
|
(18
|
)
|
|
|
$
|
55
|
|
|
|
$
|
(3
|
)
|
|
|
$
|
2
|
|
|
|
$
|
(251
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
|
$
|
655
|
|
|
|
$
|
79
|
|
|
|
$
|
38
|
|
|
|
$
|
29
|
|
|
|
$
|
(87
|
)
|
|
|
$
|
6
|
|
|
|
$
|
(4
|
)
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (2)
|
|
|
$
|
2.88
|
|
|
|
$
|
0.35
|
|
|
|
$
|
0.17
|
|
|
|
$
|
0.12
|
|
|
|
$
|
(0.38
|
)
|
|
|
$
|
0.03
|
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
3.15
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal year 2018 operating expenses as reported under GAAP include a
pre-tax gain of $37 million (after-tax gain of $22 million) related
to the final net working capital and other adjustments from the
Healthcare Technology Net Asset Exchange.
|
(2)
|
|
Certain computations may reflect rounding adjustments.
|
(3)
|
|
Adjusted Earnings per share on a Constant Currency basis for the
first quarter of fiscal year 2018 was $2.48 per diluted share, which
excludes the foreign currency exchange effect of $0.02 per diluted
share.
|
(4)
|
|
Fiscal year 2017 includes a tax benefit of $37 million related to
the amended accounting guidance on share-based compensation adopted
in the first quarter of fiscal year 2017.
|
|
|
|
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 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2017
|
|
|
Quarter Ended June 30, 2016
|
|
|
GAAP
|
|
|
|
Non-GAAP
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
As
|
|
|
Earnings
|
|
|
|
Constant
|
|
|
Currency
|
|
|
|
|
As Reported
|
|
|
|
|
|
|
Earnings
|
|
|
|
As Reported
|
|
|
|
|
|
|
|
Earnings
|
|
|
Currency
|
|
|
|
Constant
|
|
|
|
|
Currency
|
|
|
|
Constant
|
|
|
|
Reported
|
|
|
(Non-
|
|
|
|
Currency
|
|
|
(Non-
|
|
|
|
|
(GAAP)
|
|
|
|
Adjustments
|
|
|
(Non-GAAP)
|
|
|
|
(GAAP)
|
|
|
|
|
Adjustments
|
|
|
(Non-GAAP)
|
|
|
Effects
|
|
|
|
Currency
|
|
|
|
|
Effects
|
|
|
|
Currency
|
|
|
|
(GAAP)
|
|
|
GAAP)
|
|
|
|
(GAAP)
|
|
|
GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America pharmaceutical distribution & services
|
|
|
$
|
43,016
|
|
|
|
$
|
-
|
|
|
$
|
43,016
|
|
|
|
$
|
41,211
|
|
|
|
|
$
|
-
|
|
|
$
|
41,211
|
|
|
|
$
|
110
|
|
|
|
$
|
43,126
|
|
|
|
|
$
|
110
|
|
|
|
$
|
43,126
|
|
|
|
4
|
|
%
|
|
4
|
|
%
|
|
|
5
|
|
%
|
|
5
|
|
%
|
International pharmaceutical distribution & services
|
|
|
|
6,382
|
|
|
|
|
-
|
|
|
|
6,382
|
|
|
|
|
6,330
|
|
|
|
|
|
-
|
|
|
|
6,330
|
|
|
|
|
333
|
|
|
|
|
6,715
|
|
|
|
|
|
333
|
|
|
|
|
6,715
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
6
|
|
|
|
6
|
|
|
Medical-Surgical distribution & services
|
|
|
|
1,533
|
|
|
|
|
-
|
|
|
|
1,533
|
|
|
|
|
1,468
|
|
|
|
|
|
-
|
|
|
|
1,468
|
|
|
|
|
-
|
|
|
|
|
1,533
|
|
|
|
|
|
-
|
|
|
|
|
1,533
|
|
|
|
4
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
4
|
|
|
Total Distribution Solutions
|
|
|
|
50,931
|
|
|
|
|
-
|
|
|
|
50,931
|
|
|
|
|
49,009
|
|
|
|
|
|
-
|
|
|
|
49,009
|
|
|
|
|
443
|
|
|
|
|
51,374
|
|
|
|
|
|
443
|
|
|
|
|
51,374
|
|
|
|
4
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
5
|
|
|
Technology Solutions - Products and Services
|
|
|
|
120
|
|
|
|
|
-
|
|
|
|
120
|
|
|
|
|
724
|
|
|
|
|
|
-
|
|
|
|
724
|
|
|
|
|
-
|
|
|
|
|
120
|
|
|
|
|
|
-
|
|
|
|
|
120
|
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
Revenues
|
|
|
$
|
51,051
|
|
|
|
$
|
-
|
|
|
$
|
51,051
|
|
|
|
$
|
49,733
|
|
|
|
|
$
|
-
|
|
|
$
|
49,733
|
|
|
|
$
|
443
|
|
|
|
$
|
51,494
|
|
|
|
|
$
|
443
|
|
|
|
$
|
51,494
|
|
|
|
3
|
|
%
|
|
3
|
|
%
|
|
|
4
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
2,500
|
|
|
|
$
|
29
|
|
|
$
|
2,529
|
|
|
|
$
|
2,513
|
|
|
|
|
$
|
(95
|
)
|
|
$
|
2,418
|
|
|
|
$
|
59
|
|
|
|
$
|
2,559
|
|
|
|
|
$
|
59
|
|
|
|
$
|
2,588
|
|
|
|
(1
|
)
|
%
|
|
5
|
|
%
|
|
|
2
|
|
%
|
|
7
|
|
%
|
Technology Solutions
|
|
|
|
60
|
|
|
|
|
1
|
|
|
|
61
|
|
|
|
|
394
|
|
|
|
|
|
1
|
|
|
|
395
|
|
|
|
|
-
|
|
|
|
|
60
|
|
|
|
|
|
-
|
|
|
|
|
61
|
|
|
|
(85
|
)
|
|
|
(85
|
)
|
|
|
|
(85
|
)
|
|
|
(85
|
)
|
|
Gross profit
|
|
|
$
|
2,560
|
|
|
|
$
|
30
|
|
|
$
|
2,590
|
|
|
|
$
|
2,907
|
|
|
|
|
$
|
(94
|
)
|
|
$
|
2,813
|
|
|
|
$
|
59
|
|
|
|
$
|
2,619
|
|
|
|
|
$
|
59
|
|
|
|
$
|
2,649
|
|
|
|
(12
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
(10
|
)
|
%
|
|
(6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
(1,798
|
)
|
|
|
$
|
140
|
|
|
$
|
(1,658
|
)
|
|
|
$
|
(1,599
|
)
|
|
|
|
$
|
150
|
|
|
$
|
(1,449
|
)
|
|
|
$
|
(56
|
)
|
|
|
$
|
(1,854
|
)
|
|
|
|
$
|
(54
|
)
|
|
|
$
|
(1,712
|
)
|
|
|
12
|
|
%
|
|
14
|
|
%
|
|
|
16
|
|
%
|
|
18
|
|
%
|
Technology Solutions (1)
|
|
|
|
(18
|
)
|
|
|
|
(26
|
)
|
|
|
(44
|
)
|
|
|
|
(226
|
)
|
|
|
|
|
11
|
|
|
|
(215
|
)
|
|
|
|
(1
|
)
|
|
|
|
(19
|
)
|
|
|
|
|
-
|
|
|
|
|
(44
|
)
|
|
|
(92
|
)
|
|
|
(80
|
)
|
|
|
|
(92
|
)
|
|
|
(80
|
)
|
|
Corporate
|
|
|
|
(111
|
)
|
|
|
|
(3
|
)
|
|
|
(114
|
)
|
|
|
|
(110
|
)
|
|
|
|
|
2
|
|
|
|
(108
|
)
|
|
|
|
-
|
|
|
|
|
(111
|
)
|
|
|
|
|
1
|
|
|
|
|
(113
|
)
|
|
|
1
|
|
|
|
6
|
|
|
|
|
1
|
|
|
|
5
|
|
|
Operating expenses
|
|
|
$
|
(1,927
|
)
|
|
|
$
|
111
|
|
|
$
|
(1,816
|
)
|
|
|
$
|
(1,935
|
)
|
|
|
|
$
|
163
|
|
|
$
|
(1,772
|
)
|
|
|
$
|
(57
|
)
|
|
|
$
|
(1,984
|
)
|
|
|
|
$
|
(53
|
)
|
|
|
$
|
(1,869
|
)
|
|
|
-
|
|
%
|
|
2
|
|
%
|
|
|
3
|
|
%
|
|
5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
11
|
|
|
|
$
|
-
|
|
|
$
|
11
|
|
|
|
$
|
14
|
|
|
|
|
$
|
4
|
|
|
$
|
18
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
10
|
|
|
|
|
$
|
-
|
|
|
|
$
|
11
|
|
|
|
(21
|
)
|
%
|
|
(39
|
)
|
%
|
|
|
(29
|
)
|
%
|
|
(39
|
)
|
%
|
Technology Solutions
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
Corporate
|
|
|
|
2
|
|
|
|
|
-
|
|
|
|
2
|
|
|
|
|
5
|
|
|
|
|
|
-
|
|
|
|
5
|
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
(60
|
)
|
|
|
(60
|
)
|
|
|
|
(60
|
)
|
|
|
(60
|
)
|
|
Other income, net
|
|
|
$
|
13
|
|
|
|
$
|
-
|
|
|
$
|
13
|
|
|
|
$
|
19
|
|
|
|
|
$
|
4
|
|
|
$
|
23
|
|
|
|
$
|
-
|
|
|
|
$
|
13
|
|
|
|
|
$
|
-
|
|
|
|
$
|
13
|
|
|
|
(32
|
)
|
%
|
|
(43
|
)
|
%
|
|
|
(32
|
)
|
%
|
|
(43
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT IN
CHANGE HEALTHCARE - Technology Solutions
|
|
|
$
|
(120
|
)
|
|
|
$
|
190
|
|
|
$
|
70
|
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(120
|
)
|
|
|
|
$
|
-
|
|
|
|
$
|
70
|
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
$
|
713
|
|
|
|
$
|
169
|
|
|
$
|
882
|
|
|
|
$
|
928
|
|
|
|
|
$
|
59
|
|
|
$
|
987
|
|
|
|
$
|
2
|
|
|
|
$
|
715
|
|
|
|
|
$
|
5
|
|
|
|
$
|
887
|
|
|
|
(23
|
)
|
%
|
|
(11
|
)
|
%
|
|
|
(23
|
)
|
%
|
|
(10
|
)
|
%
|
Technology Solutions (1)
|
|
|
|
(78
|
)
|
|
|
|
165
|
|
|
|
87
|
|
|
|
|
168
|
|
|
|
|
|
12
|
|
|
|
180
|
|
|
|
|
-
|
|
|
|
|
(78
|
)
|
|
|
|
|
-
|
|
|
|
|
87
|
|
|
|
(146
|
)
|
|
|
(52
|
)
|
|
|
|
(146
|
)
|
|
|
(52
|
)
|
|
Operating profit
|
|
|
|
635
|
|
|
|
|
334
|
|
|
|
969
|
|
|
|
|
1,096
|
|
|
|
|
|
71
|
|
|
|
1,167
|
|
|
|
|
2
|
|
|
|
|
637
|
|
|
|
|
|
5
|
|
|
|
|
974
|
|
|
|
(42
|
)
|
|
|
(17
|
)
|
|
|
|
(42
|
)
|
|
|
(17
|
)
|
|
Corporate
|
|
|
|
(109
|
)
|
|
|
|
(3
|
)
|
|
|
(112
|
)
|
|
|
|
(105
|
)
|
|
|
|
|
2
|
|
|
|
(103
|
)
|
|
|
|
-
|
|
|
|
|
(109
|
)
|
|
|
|
|
1
|
|
|
|
|
(111
|
)
|
|
|
4
|
|
|
|
9
|
|
|
|
|
4
|
|
|
|
8
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
|
$
|
526
|
|
|
|
$
|
331
|
|
|
$
|
857
|
|
|
|
$
|
991
|
|
|
|
|
$
|
73
|
|
|
$
|
1,064
|
|
|
|
$
|
2
|
|
|
|
$
|
528
|
|
|
|
|
$
|
6
|
|
|
|
$
|
863
|
|
|
|
(47
|
)
|
%
|
|
(19
|
)
|
%
|
|
|
(47
|
)
|
%
|
|
(19
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
|
1.40
|
|
%
|
|
|
|
|
|
|
1.73
|
|
%
|
|
|
1.89
|
|
%
|
|
|
|
|
|
|
|
2.01
|
|
%
|
|
|
|
|
|
|
|
1.39
|
|
%
|
|
|
|
|
|
1.73
|
|
%
|
|
(49
|
)
|
bp
|
|
(28
|
)
|
bp
|
|
|
(50
|
)
|
bp
|
|
(28
|
)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit excluding noncontrolling interests as a %
of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
1.64
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
2.00
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.64
|
|
%
|
|
|
|
|
|
(36
|
)
|
bp
|
|
|
|
|
|
|
(36
|
)
|
bp
|
(1)
|
|
Fiscal year 2018 operating expenses as reported under GAAP include a
pre-tax gain of $37 million (after-tax gain of $22 million) related
to the final net working capital and other adjustments from the
Healthcare Technology Net Asset Exchange.
|
(2)
|
|
Our Distribution Solutions segment's noncontrolling interests
primarily include the third-party equity interests related to
Vantage Oncology Holdings, LLC and ClarusONE Sourcing Services LLP.
|
For more information relating to the Adjusted Earnings (Non-GAAP),
Constant Currency (Non-GAAP) and Adjusted Operating Profit Margin
Excluding Noncontrolling Interests (Non-GAAP) definitions, refer to
the section entitled “Supplemental Non-GAAP Financial Information”
of this release.
|
|
|
Schedule 4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2017
|
|
|
Quarter Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
|
Technology
|
|
|
|
|
|
|
|
|
Distribution
|
|
|
Technology
|
|
|
|
|
|
|
|
|
|
Solutions
|
|
|
Solutions
|
|
|
Corporate
|
|
|
Total
|
|
|
Solutions
|
|
|
Solutions
|
|
|
Corporate
|
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
50,931
|
|
|
$
|
120
|
|
|
|
$
|
-
|
|
|
|
$
|
51,051
|
|
|
|
$
|
49,009
|
|
|
|
$
|
724
|
|
|
|
$
|
-
|
|
|
|
$
|
49,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and income
taxes (1) (2)
|
|
|
$
|
713
|
|
|
$
|
(78
|
)
|
|
|
$
|
(109
|
)
|
|
|
$
|
526
|
|
|
|
$
|
928
|
|
|
|
$
|
168
|
|
|
|
$
|
(105
|
)
|
|
|
$
|
991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangibles
|
|
|
$
|
121
|
|
|
$
|
71
|
|
|
|
$
|
-
|
|
|
|
$
|
192
|
|
|
|
$
|
106
|
|
|
|
$
|
9
|
|
|
|
$
|
-
|
|
|
|
$
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related Expenses and Adjustments
|
|
|
|
19
|
|
|
|
94
|
|
|
|
|
(1
|
)
|
|
|
|
112
|
|
|
|
|
44
|
|
|
|
|
4
|
|
|
|
|
2
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO Inventory-Related Adjustments
|
|
|
|
26
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
26
|
|
|
|
|
47
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains from Antitrust Legal Settlements
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(142
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(142
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Charges, Net
|
|
|
|
3
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
|
10
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments, Net
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
|
|
|
(6
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
|
$
|
169
|
|
|
$
|
165
|
|
|
|
$
|
(3
|
)
|
|
|
$
|
331
|
|
|
|
$
|
59
|
|
|
|
$
|
12
|
|
|
|
$
|
2
|
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
50,931
|
|
|
$
|
120
|
|
|
|
$
|
-
|
|
|
|
$
|
51,051
|
|
|
|
$
|
49,009
|
|
|
|
$
|
724
|
|
|
|
$
|
-
|
|
|
|
$
|
49,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and income
taxes (2)
|
|
|
$
|
882
|
|
|
$
|
87
|
|
|
|
$
|
(112
|
)
|
|
|
$
|
857
|
|
|
|
$
|
987
|
|
|
|
$
|
180
|
|
|
|
$
|
(103
|
)
|
|
|
$
|
1,064
|
|
(1)
|
|
Fiscal year 2018 operating expenses as reported under GAAP include a
pre-tax gain of $37 million (after-tax gain of $22 million) related
to the final net working capital and other adjustments from the
Healthcare Technology Net Asset Exchange.
|
(2)
|
|
Fiscal year 2018 includes our proportionate share of income or loss
from Change Healthcare.
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
March 31,
|
|
|
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,339
|
|
$
|
2,783
|
|
Receivables, net
|
|
|
|
19,132
|
|
|
18,215
|
|
Inventories, net
|
|
|
|
15,498
|
|
|
15,278
|
|
Prepaid expenses and other
|
|
|
|
728
|
|
|
672
|
|
Total Current Assets
|
|
|
|
37,697
|
|
|
36,948
|
|
Property, Plant and Equipment, Net
|
|
|
|
2,349
|
|
|
2,292
|
|
Goodwill
|
|
|
|
11,750
|
|
|
10,586
|
|
Intangible Assets, Net
|
|
|
|
4,238
|
|
|
3,665
|
|
Equity Method Investment in Change Healthcare
|
|
|
|
3,855
|
|
|
4,063
|
|
Other Noncurrent Assets
|
|
|
|
1,927
|
|
|
3,415
|
|
Total Assets
|
|
|
$
|
61,816
|
|
$
|
60,969
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Drafts and accounts payable
|
|
|
$
|
32,015
|
|
$
|
31,022
|
|
Short-term borrowings
|
|
|
|
3
|
|
|
183
|
|
Deferred revenue
|
|
|
|
279
|
|
|
346
|
|
Current portion of long-term debt
|
|
|
|
525
|
|
|
1,057
|
|
Other accrued liabilities
|
|
|
|
2,977
|
|
|
3,004
|
|
Total Current Liabilities
|
|
|
|
35,799
|
|
|
35,612
|
|
Long-Term Debt
|
|
|
|
7,424
|
|
|
7,305
|
|
Long-Term Deferred Tax Liabilities
|
|
|
|
3,752
|
|
|
3,678
|
|
Other Noncurrent Liabilities
|
|
|
|
1,938
|
|
|
1,774
|
|
|
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
|
1,390
|
|
|
1,327
|
|
|
|
|
|
|
|
|
|
|
McKesson Corporation Stockholders' Equity
|
|
|
|
11,303
|
|
|
11,095
|
|
Noncontrolling Interests
|
|
|
|
210
|
|
|
178
|
|
Total Equity
|
|
|
|
11,513
|
|
|
11,273
|
|
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
|
$
|
61,816
|
|
$
|
60,969
|
|
|
|
|
|
|
|
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|
|
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|
Schedule 6
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McKESSON CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income
|
|
|
$
|
365
|
|
|
|
$
|
560
|
|
Adjustments to reconcile to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
227
|
|
|
|
|
242
|
|
Other deferred taxes
|
|
|
|
85
|
|
|
|
|
31
|
|
LIFO charges
|
|
|
|
26
|
|
|
|
|
47
|
|
Loss from equity method investment in Change Healthcare
|
|
|
|
120
|
|
|
|
|
-
|
|
Loss (gain) from sale of businesses
|
|
|
|
(1
|
)
|
|
|
|
113
|
|
Other non-cash items
|
|
|
|
8
|
|
|
|
|
29
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
Receivables
|
|
|
|
(363
|
)
|
|
|
|
(300
|
)
|
Inventories
|
|
|
|
(59
|
)
|
|
|
|
(121
|
)
|
Drafts and accounts payable
|
|
|
|
463
|
|
|
|
|
1,549
|
|
Deferred revenue
|
|
|
|
(73
|
)
|
|
|
|
(113
|
)
|
Taxes
|
|
|
|
(18
|
)
|
|
|
|
95
|
|
Other
|
|
|
|
(39
|
)
|
|
|
|
(273
|
)
|
Net cash provided by operating activities
|
|
|
|
741
|
|
|
|
|
1,859
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Property acquisitions
|
|
|
|
(75
|
)
|
|
|
|
(76
|
)
|
Capitalized software expenditures
|
|
|
|
(43
|
)
|
|
|
|
(38
|
)
|
Acquisitions, net of cash and cash equivalents acquired
|
|
|
|
(1,485
|
)
|
|
|
|
(1,819
|
)
|
Proceeds from/(payments for) sale of businesses, net
|
|
|
|
3
|
|
|
|
|
(101
|
)
|
Restricted cash for acquisitions
|
|
|
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1,469
|
|
|
|
|
935
|
|
Other
|
|
|
|
2
|
|
|
|
|
(55
|
)
|
Net cash used in investing activities
|
|
|
|
(129
|
)
|
|
|
|
(1,154
|
)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
|
2,282
|
|
|
|
|
7
|
|
Repayments of short-term borrowings
|
|
|
|
(2,463
|
)
|
|
|
|
(14
|
)
|
Repayments of long-term debt
|
|
|
|
(541
|
)
|
|
|
|
(1
|
)
|
Common stock transactions:
|
|
|
|
|
|
|
Issuances
|
|
|
|
27
|
|
|
|
|
36
|
|
Share repurchases, including shares surrendered for tax withholding
|
|
|
|
(300
|
)
|
|
|
|
(58
|
)
|
Dividends paid
|
|
|
|
(62
|
)
|
|
|
|
(66
|
)
|
Other
|
|
|
|
(74
|
)
|
|
|
|
14
|
|
Net cash used in financing activities
|
|
|
|
(1,131
|
)
|
|
|
|
(82
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
75
|
|
|
|
|
(12
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
(444
|
)
|
|
|
|
611
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
2,783
|
|
|
|
|
4,048
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
2,339
|
|
|
|
$
|
4,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
|
|
|
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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 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.
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•
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Adjusted Earnings (Non-GAAP): We define Adjusted Earnings
as GAAP income from continuing operations attributable to
McKesson, excluding amortization of acquisition-related
intangibles, acquisition-related expenses and adjustments,
Last-In-First-Out (“LIFO”) inventory-related adjustments, gains
from antitrust legal settlements, restructuring charges, other
adjustments as well as the related income tax effects for each of
these items, as applicable. 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 aspects 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.
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Amortization of acquisition-related
intangibles - Amortization expenses of intangible assets
directly related to business combinations and/or the formation of
joint ventures and equity method investments.
|
|
|
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|
Acquisition-related expenses and adjustments
- Transaction, integration and other expenses that are directly
related to business combinations, the formation of joint ventures
and the Healthcare Technology Net Asset Exchange. Examples include
transaction closing costs, professional service fees, legal fees,
restructuring or severance charges, retention payments and
employee relocation expenses, facility or other exit-related
expenses, certain fair value adjustments including deferred
revenues, contingent consideration and inventory, recoveries of
acquisition-related expenses or post-closing expenses, bridge loan
fees, gains or losses related to foreign currency contracts
entered into directly due to acquisitions, gains or losses on
business combinations, and gain on the Healthcare Technology Net
Asset Exchange.
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|
|
|
|
|
|
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LIFO inventory-related adjustments -
LIFO inventory-related non-cash expense or credit adjustments.
|
|
|
|
|
|
|
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Gains from antitrust legal settlements
- Net cash proceeds representing the Company’s share of antitrust
lawsuit settlements.
|
|
|
|
|
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Restructuring charges -
Non-acquisition related restructuring charges that are incurred
for significant programs in which we change our operations, the
scope of a business undertaken by our business units, or the
manner in which that business is conducted. Such charges may
include employee severance, retention bonuses, facility closure or
consolidation costs, lease or contract termination costs, asset
impairments, accelerated depreciation and amortization, and other
related expenses. The restructuring programs may be implemented
due to the sale or discontinuation of a product line,
reorganization or management structure changes, headcount
rationalization, realignment of operations or products, and/or
Company-wide cost saving initiatives. The amount and/or frequency
of these restructuring charges are not part of our underlying
business, which includes normal levels of reinvestment in the
business. Any credit adjustments due to subsequent changes in
estimates are also excluded.
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|
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Other adjustments - The Company
evaluates the nature and significance of transactions
qualitatively and quantitatively on an individual basis and may
include them in the determination of our Adjusted Earnings from
time to time. While not all-inclusive, other adjustments may
include: gains or losses from divestitures of businesses that do
not qualify as discontinued operations and from dispositions of
assets; asset impairments; adjustments to claim and litigation
reserves for estimated probable losses; and other similar
substantive and/or infrequent items as deemed appropriate.
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|
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|
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.
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Additionally, our equity method investments' financial results are
adjusted for the above noted items.
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SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued)
|
|
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•
|
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.
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•
|
Adjusted Operating Profit Margin Excluding Noncontrolling
Interests (Non-GAAP): The Company has arrangements involving
third-party noncontrolling interests. As a result, our pre-tax
results are affected by the portion of pre-tax earnings
attributable to noncontrolling interests. To provide additional
useful information to investors, we present adjusted operating
profit margin excluding noncontrolling interests for our
Distribution Solutions segment. We believe such information
provides a framework for assessing how our business performed
excluding the effect of pre-tax earnings that is not attributable
to McKesson. We calculate adjusted operating profit excluding
noncontrolling interests by removing pre-tax earnings attributable
to noncontrolling interests from adjusted operating profit
(Non-GAAP). Adjusted operating profit margin excluding
noncontrolling interests is calculated by dividing the adjusted
operating profit excluding noncontrolling interests with the
applicable segment’s revenues. This information is supplemental to
the Company’s GAAP financial results and is provided in Schedule 3
of this document.
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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 sterling and Canadian
dollars. 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. In addition, the Company has arrangements involving
third party noncontrolling interests. As a result, our pre-tax
results are affected by the portion of pre-tax earnings
attributable to noncontrolling interests. We present adjusted
operating profit margin excluding noncontrolling interests to
provide a framework for assessing how our business performed
excluding the effect of net income that is not attributable to
McKesson. 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.
|