SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today reported that revenues for the
second quarter ended September 30, 2017, were $52.1 billion, up 4%
compared to $50.0 billion a year ago. On the basis of U.S. generally
accepted accounting principles (“GAAP”), second-quarter earnings per
diluted share from continuing operations was $0.01, compared to $1.35 a
year ago. During the quarter, McKesson initiated a number of strategic
and operational actions within our U.K. retail pharmacy business in
response to the previously discussed U.K. government reimbursement
reductions. As a result, second-quarter GAAP earnings per diluted share
included $2.41 of non-cash goodwill and other long-lived asset
impairment charges and $0.19 of restructuring charges.
Second-quarter Adjusted Earnings per diluted share was $3.28, up 11%
compared to $2.96 a year ago. Second-quarter results were driven by
organic growth across multiple business units, including the company’s
strategic sourcing benefits through ClarusONE, a lower share count and
incremental profit contribution from acquisitions. This growth more than
offset the year-over-year lapping effect of the previously disclosed
lower profit contribution from increased price competition in our
independent pharmacy business in Fiscal 2017, and the impact of reduced
reimbursement in the company’s U.K. retail pharmacy business.
For the first half of the fiscal year, McKesson generated cash from
operations of $1.3 billion and ended the quarter with cash and cash
equivalents of $2.6 billion. During the first half of the year, McKesson
repaid $545 million in long-term debt, paid $1.9 billion for
acquisitions, repurchased $650 million of its common stock, invested
$255 million internally and paid $121 million in dividends.
In addition, immediately following the close of the second quarter,
McKesson completed the sale to Allscripts of the company’s Enterprise
Information Solutions (EIS) business within the Technology Solutions
segment.
“As expected, we generated strong sequential results in the second
quarter, and our solid year-to-date cash flow performance allowed us to
deploy meaningful capital for acquisitions and share repurchases,
delivering further value for our shareholders,” said John H. Hammergren,
chairman and chief executive officer. “Additionally, we took important
actions during the quarter to better position our business in light of
reimbursement pressures levied by the National Health Service across our
retail pharmacy operations in the U.K.”
“We continue to focus on executing across our businesses and are
reiterating our previous Fiscal 2018 Adjusted Earnings outlook of $11.80
to $12.50 per diluted share, as we work towards a strong finish to our
Fiscal 2018,” Hammergren concluded.
McKesson Executive Management Update
Paul Julian, executive vice president and group president, Distribution
Solutions, will retire at the close of the calendar year, following 21
years of dedicated service to McKesson. Among his many accomplishments,
Julian helped McKesson regain its position as the largest North American
pharmaceutical distributor during his tenure as president of McKesson
Pharmaceutical.
“For more than two decades, Paul has been a tremendous asset to
McKesson. He has helped the company become the healthcare leader that it
is today, and has developed a deep bench of talented leaders who are
ready to take the company forward. Paul’s dedication and tireless
commitment to our customers, our people, and the industry set him apart.
Paul and I have worked together for longer than just his time at
McKesson. He has been a great business partner and friend, and I will
miss him,” commented Hammergren.
Segment Results
Distribution Solutions revenues were $51.9 billion for the quarter, up
5% both on a reported and constant currency basis.
North America pharmaceutical distribution and services revenues of $43.5
billion for the quarter were up 5% both on a reported and constant
currency basis, primarily reflecting market growth and acquisitions.
International pharmaceutical distribution and services revenues were
$6.8 billion for the quarter, up 8% on a reported basis and 4% on a
constant currency basis, driven by acquisitions and market growth.
Medical-Surgical distribution and services revenues were $1.7 billion
for the quarter, up 2%, primarily driven by market growth.
In the second quarter, Distribution Solutions GAAP operating profit was
$388 million and GAAP operating margin was 0.75%. Second-quarter
adjusted operating profit was $1.0 billion, up 13% from the prior year
on a reported basis and 12% on a constant currency basis. Adjusted
operating margin for the Distribution Solutions segment was 2.01% on a
constant currency basis. Adjusted operating margin excluding
noncontrolling interests for the Distribution Solutions segment was
1.92% on a constant currency basis.
Technology Solutions revenues were down 82% on both a reported and
constant currency basis in the second quarter, following the
contribution of the majority of McKesson’s Technology Solutions
businesses to the Change Healthcare joint venture on March 1, 2017.
Technology Solutions revenues now reflect the remaining EIS business.
Second-quarter GAAP loss from McKesson’s equity investment in Change
Healthcare was $61 million. Adjusted income from McKesson’s equity
investment in Change Healthcare was $75 million for the second quarter.
Technology Solutions GAAP operating loss was $33 million for the second
quarter. Adjusted operating profit was $92 million for the second
quarter, primarily reflecting our equity share of Change Healthcare’s
net income.
Fiscal Year 2018 Outlook
McKesson expects GAAP earnings per diluted share of $4.80 to $6.90 for
the fiscal year ending March 31, 2018, which includes the following
items:
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Amortization of acquisition-related intangibles of $2.40 to $2.70 per
diluted share;
-
Acquisition-related expenses and adjustments of $0.90 to 1.10 per
diluted share;
-
LIFO inventory-related charges of 20 cents to credits of 10 cents per
diluted share;
-
Gains from antitrust legal settlements of up to 10 cents per diluted
share;
-
Restructuring charges of $1.10 to $1.40 per diluted share; and
-
Other adjustments of $1.40 to $1.60 per diluted share.
McKesson expects Adjusted Earnings of $11.80 to $12.50 per diluted share
for the fiscal year ending March 31, 2018.
Dividend Declaration
The company’s Board of Directors yesterday declared a regular dividend
of thirty-four cents per share of common stock. The dividend will be
payable on January 2, 2018, to stockholders of record on December 1,
2017.
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, October
26th, at 8:00 AM ET. The dial-in number for individuals
wishing to participate on the call is 323-794-2423. 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 1076652. 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 September 30,
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Six Months Ended September 30,
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2017
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2016
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Change
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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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52,061
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$
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49,957
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4
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%
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$
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103,112
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$
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99,690
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3
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%
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Cost of sales (1)
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(49,227)
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(47,201)
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4
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(97,718)
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(94,027)
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4
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Gross profit
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2,834
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2,756
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3
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5,394
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5,663
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(5)
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Operating expenses (2)
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(2,009)
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(1,886)
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7
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(3,936)
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(3,821)
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3
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Goodwill impairment charges (3)
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(350)
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(290)
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21
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(350)
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(290)
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21
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Restructuring and asset impairment charges (4)
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(236)
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-
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-
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(236)
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-
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-
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Total operating expenses
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(2,595)
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(2,176)
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19
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(4,522)
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(4,111)
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10
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Operating income
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239
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580
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(59)
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872
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1,552
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(44)
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Other income, net (5)
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69
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23
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200
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82
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42
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95
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Loss from equity method investment in Change Healthcare (6)
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(61)
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-
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-
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(181)
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-
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-
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Interest expense
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(69)
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(78)
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(12)
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(137)
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(157)
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(13)
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Income from continuing operations before income taxes
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178
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525
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(66)
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636
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1,437
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(56)
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Income tax expense (7)
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(122)
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(200)
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(39)
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(217)
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(439)
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(51)
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Income from continuing operations after tax
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56
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325
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(83)
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419
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998
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(58)
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Income (Loss) from discontinued operations, net of tax (8)
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-
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(1)
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(100)
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2
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(114)
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(102)
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Net income
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56
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324
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(83)
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421
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884
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(52)
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Net income attributable to noncontrolling interests
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(55)
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(17)
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224
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(111)
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(35)
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217
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Net income attributable to McKesson Corporation
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$
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1
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$
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307
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(100)
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%
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$
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310
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$
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849
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(63)
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%
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Earnings (loss) per common share attributable to
McKesson Corporation (9)
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Diluted
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Continuing operations
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$
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0.01
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$
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1.35
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(99)
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%
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$
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1.46
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$
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4.22
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(65)
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%
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Discontinued operations
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-
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(0.01)
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(100)
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0.01
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(0.50)
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(102)
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Total
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$
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0.01
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$
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1.34
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(99)
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%
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$
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1.47
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$
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3.72
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(60)
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%
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Basic
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Continuing operations
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$
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0.01
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$
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1.36
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(99)
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%
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$
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1.47
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$
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4.27
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(66)
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%
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Discontinued operations
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-
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-
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-
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0.01
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(0.51)
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(102)
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Total
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$
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0.01
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$
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1.36
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(99)
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%
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$
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1.48
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$
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3.76
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(61)
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%
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Dividends declared per common share
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$
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0.34
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$
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0.28
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$
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0.62
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$
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0.56
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Weighted average common shares
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Diluted
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210
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228
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(8)
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%
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211
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228
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(7)
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%
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Basic
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209
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226
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(8)
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210
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226
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(7)
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(1)
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The second quarters of fiscal 2018 and 2017 include pre-tax credits
of $29 million and $43 million, and the first half of fiscal 2018
and 2017 include pre-tax credits of $3 million and pre-tax charges
of $4 million related to our last-in-first-out (“LIFO”) method of
accounting for inventories. The first half of fiscal 2017 include
$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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The first half of fiscal 2018 includes a pre-tax gain of $37 million
($22 million after-tax) related to the final net working capital and
other adjustments from the fiscal 2017 fourth quarter Healthcare
Technology Net Asset Exchange within our Technology Solutions
segment.
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(3)
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Fiscal 2018 includes a non-cash pre-tax and after-tax goodwill
impairment charge of $350 million for our McKesson Europe reporting
unit within the Distribution Solutions segment. There were no tax
benefits associated with this goodwill impairment charge. Fiscal
2017 includes a non-cash pre-tax goodwill impairment charge of $290
million ($282 million after-tax) for our EIS reporting unit within
the Technology Solutions segment.
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(4)
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Fiscal 2018 includes a non-cash pre-tax charge of $189 million ($157
million after-tax) to impair the carrying value of certain
intangible assets and other assets primarily related to our retail
business in the United Kingdom ("U.K.") within our Distribution
Solutions segment. Fiscal 2018 also includes a pre-tax restructuring
charge of $47 million ($40 million after-tax) primarily representing
employee severance.
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(5)
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Fiscal 2018 includes a pre-tax gain of $43 million ($26 million
after-tax) recognized from the fiscal 2018 second quarter sale of an
equity method investment within our Distribution Solutions segment.
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(6)
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In the fourth quarter of fiscal 2017, we contributed the majority
of our McKesson Technology Solutions businesses ("Core MTS
Business") to form a joint venture, Change Healthcare. Our
investment in Change Healthcare is accounted for using the equity
method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture.
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(7)
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The first half of fiscal 2017 includes a tax benefit of $46 million
related to the adoption of the amended accounting guidance on
share-based compensation in the first quarter of fiscal 2017.
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(8)
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The first half of fiscal 2017 includes an after-tax loss of $113
million recognized from the fiscal 2017 first quarter sale of our
Brazilian pharmaceutical distribution business within our
discontinued operations.
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(9)
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Certain computations may reflect rounding adjustments.
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Schedule 2A
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McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
|
(unaudited)
|
(in millions, except per share amounts)
|
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Change
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Quarter Ended September 30, 2017
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|
Vs. Prior Quarter
|
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As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition- Related Expenses and Adjustments
|
|
LIFO Inventory- Related Adjustments
|
|
Gains from Antitrust Legal Settlements
|
|
Restructuring Charges, Net
|
|
Other Adjustments, Net
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
2,834
|
|
|
$
|
-
|
|
|
$
|
2
|
|
|
$
|
(29
|
)
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,807
|
|
|
3
|
|
%
|
|
3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1) (2)
|
|
$
|
(2,595
|
)
|
|
$
|
125
|
|
|
$
|
6
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
257
|
|
|
$
|
341
|
|
|
$
|
(1,866
|
)
|
|
19
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net (3)
|
|
$
|
69
|
|
|
$
|
1
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
(43
|
)
|
|
$
|
27
|
|
|
200
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (4)
|
|
$
|
(61
|
)
|
|
$
|
73
|
|
|
$
|
63
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
75
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
178
|
|
|
$
|
199
|
|
|
$
|
71
|
|
|
$
|
(29
|
)
|
|
$
|
-
|
|
$
|
257
|
|
|
$
|
298
|
|
|
$
|
974
|
|
|
(66
|
)
|
%
|
|
5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(122
|
)
|
|
$
|
(64
|
)
|
|
$
|
(24
|
)
|
|
$
|
11
|
|
|
$
|
-
|
|
$
|
(51
|
)
|
|
$
|
20
|
|
|
$
|
(230
|
)
|
|
(39
|
)
|
%
|
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
1
|
|
|
$
|
135
|
|
|
$
|
47
|
|
|
$
|
(18
|
)
|
|
$
|
-
|
|
$
|
206
|
|
|
$
|
318
|
|
|
$
|
689
|
|
|
(100
|
)
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (5)
|
|
$
|
0.01
|
|
|
$
|
0.63
|
|
|
$
|
0.23
|
|
|
$
|
(0.09
|
)
|
|
$
|
-
|
|
$
|
0.98
|
|
|
$
|
1.52
|
|
|
$
|
3.28
|
|
(6)
|
(99
|
)
|
%
|
|
11
|
|
%
|
Diluted weighted average common shares
|
|
|
210
|
|
|
|
210
|
|
|
|
210
|
|
|
|
210
|
|
|
|
-
|
|
|
210
|
|
|
|
210
|
|
|
|
210
|
|
|
(8
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2016
|
|
|
|
|
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition- Related Expenses and Adjustments
|
|
LIFO Inventory- Related Adjustments
|
|
Gains from Antitrust Legal Settlements
|
|
Restructuring Charges, Net
|
|
Other Adjustments, Net
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
2,756
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
(43
|
)
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (7)
|
|
$
|
(2,176
|
)
|
|
$
|
113
|
|
|
$
|
39
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
3
|
|
|
$
|
290
|
|
|
$
|
(1,731
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
23
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
-
|
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
525
|
|
|
$
|
115
|
|
|
$
|
41
|
|
|
$
|
(43
|
)
|
|
$
|
-
|
|
$
|
3
|
|
|
$
|
290
|
|
|
$
|
931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(200
|
)
|
|
$
|
(33
|
)
|
|
$
|
(11
|
)
|
|
$
|
16
|
|
|
$
|
-
|
|
$
|
(2
|
)
|
|
$
|
(8
|
)
|
|
$
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
308
|
|
|
$
|
82
|
|
|
$
|
30
|
|
|
$
|
(27
|
)
|
|
$
|
-
|
|
$
|
1
|
|
|
$
|
282
|
|
|
$
|
676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (5)
|
|
$
|
1.35
|
|
|
$
|
0.36
|
|
|
$
|
0.13
|
|
|
$
|
(0.12
|
)
|
|
$
|
-
|
|
$
|
-
|
|
|
$
|
1.24
|
|
|
$
|
2.96
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
-
|
|
|
-
|
|
|
|
228
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the sale of an
equity method investment within our Distribution Solutions segment.
|
(4)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture. The
amortization of acquisition-related intangibles of $73 million is
included in our proportionate share of the income (loss) from this
equity method investment.
|
(5)
|
|
Certain computations may reflect rounding adjustments.
|
(6)
|
|
Adjusted Earnings per share on a Constant Currency basis for the
second quarter of fiscal 2018 was $3.24 per diluted share, which
excludes the foreign currency exchange effect of $0.04 per diluted
share.
|
(7)
|
|
Fiscal 2017 includes a non-cash pre-tax goodwill impairment charge
of $290 million ($282 million after-tax) for our EIS reporting unit
within the Technology Solutions segment.
|
|
|
|
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
|
|
|
Six Months Ended September 30, 2017
|
|
Vs. Prior Period
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition- Related Expenses and Adjustments
|
|
LIFO Inventory- Related Adjustments
|
|
Gains from Antitrust Legal Settlements
|
|
Restructuring Charges, Net
|
|
Other Adjustments, Net
|
|
Adjusted Earnings (Non-GAAP)
|
|
As Reported (GAAP)
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
5,394
|
|
|
$
|
-
|
|
|
$
|
6
|
|
|
$
|
(3
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,397
|
|
|
(5
|
)
|
%
|
|
(2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1) (2) (3)
|
|
$
|
(4,522
|
)
|
|
$
|
246
|
|
|
$
|
(5
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
260
|
|
|
$
|
339
|
|
|
$
|
(3,682
|
)
|
|
10
|
|
%
|
|
5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net (4)
|
|
$
|
82
|
|
|
$
|
1
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(43
|
)
|
|
$
|
40
|
|
|
95
|
|
%
|
|
(17
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (5)
|
|
$
|
(181
|
)
|
|
$
|
144
|
|
|
$
|
182
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
145
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
636
|
|
|
$
|
391
|
|
|
$
|
183
|
|
|
$
|
(3
|
)
|
|
$
|
-
|
|
|
$
|
260
|
|
|
$
|
296
|
|
|
$
|
1,763
|
|
|
(56
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(217
|
)
|
|
$
|
(130
|
)
|
|
$
|
(63
|
)
|
|
$
|
1
|
|
|
$
|
-
|
|
|
$
|
(52
|
)
|
|
$
|
21
|
|
|
$
|
(440
|
)
|
|
(51
|
)
|
%
|
|
(10
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
308
|
|
|
$
|
261
|
|
|
$
|
120
|
|
|
$
|
(2
|
)
|
|
$
|
-
|
|
|
$
|
208
|
|
|
$
|
317
|
|
|
$
|
1,212
|
|
|
(68
|
)
|
%
|
|
(13
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (6)
|
|
$
|
1.46
|
|
|
$
|
1.23
|
|
|
$
|
0.57
|
|
|
$
|
(0.01
|
)
|
|
$
|
-
|
|
|
$
|
0.98
|
|
|
$
|
1.50
|
|
|
$
|
5.73
|
|
(7)
|
(65
|
)
|
%
|
|
(6
|
)
|
%
|
Diluted weighted average common shares
|
|
|
211
|
|
|
|
211
|
|
|
|
211
|
|
|
|
211
|
|
|
|
-
|
|
|
|
211
|
|
|
|
211
|
|
|
|
211
|
|
|
(7
|
)
|
%
|
|
(7
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30, 2016
|
|
|
|
|
|
|
|
|
As Reported (GAAP)
|
|
Amortization of Acquisition- Related Intangibles
|
|
Acquisition- Related Expenses and Adjustments
|
|
LIFO Inventory- Related Adjustments
|
|
Gains from Antitrust Legal Settlements
|
|
Restructuring Charges, Net
|
|
Other Adjustments, Net
|
|
Adjusted Earnings (Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (8)
|
|
$
|
5,663
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
(142
|
)
|
|
$
|
(1
|
)
|
|
$
|
-
|
|
|
$
|
5,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (9)
|
|
$
|
(4,111
|
)
|
|
$
|
226
|
|
|
$
|
85
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13
|
|
|
$
|
284
|
|
|
$
|
(3,503
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
42
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
1,437
|
|
|
$
|
230
|
|
|
$
|
91
|
|
|
$
|
4
|
|
|
$
|
(142
|
)
|
|
$
|
12
|
|
|
$
|
284
|
|
|
$
|
1,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (10)
|
|
$
|
(439
|
)
|
|
$
|
(69
|
)
|
|
$
|
(23
|
)
|
|
$
|
(2
|
)
|
|
$
|
55
|
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
$
|
(489
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
963
|
|
|
$
|
161
|
|
|
$
|
68
|
|
|
$
|
2
|
|
|
$
|
(87
|
)
|
|
$
|
7
|
|
|
$
|
278
|
|
|
$
|
1,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (6)
|
|
$
|
4.22
|
|
|
$
|
0.70
|
|
|
$
|
0.30
|
|
|
$
|
0.02
|
|
|
$
|
(0.38
|
)
|
|
$
|
0.03
|
|
|
$
|
1.22
|
|
|
$
|
6.11
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $37
million ($22 million after-tax) related to the final net working
capital and other adjustments from the fiscal 2017 fourth quarter
Healthcare Technology Net Asset Exchange within our Technology
Solutions segment.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge.
|
(4)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the fiscal 2018
second quarter sale of an equity method investment within our
Distribution Solutions segment.
|
(5)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture. The
amortization of acquisition-related intangibles of $144 million is
included in our proportionate share of the income (loss) from this
equity method investment.
|
(6)
|
|
Certain computations may reflect rounding adjustments.
|
(7)
|
|
Adjusted Earnings per share on a Constant Currency basis for fiscal
2018 was $5.72 per diluted share, which excludes the foreign
currency exchange effect of $0.01 per diluted share.
|
(8)
|
|
Fiscal 2017, as reported under GAAP, includes $142 million of net
cash proceeds representing our share of antitrust legal settlements
within our Distribution Solutions segment.
|
(9)
|
|
Fiscal 2017 includes a non-cash pre-tax goodwill impairment charge
of $290 million ($282 million after-tax) for our EIS reporting unit
within the Technology Solutions segment.
|
(10)
|
|
Fiscal 2017 includes a tax benefit of $46 million related to the
amended accounting guidance on share-based compensation adopted in
the first quarter of fiscal 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 3A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2017
|
|
Quarter Ended September 30, 2016
|
|
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
|
|
$
|
43,508
|
|
|
$
|
-
|
|
|
$
|
43,508
|
|
|
$
|
41,375
|
|
|
$
|
-
|
|
|
$
|
41,375
|
|
|
$
|
(107
|
)
|
|
$
|
43,401
|
|
|
$
|
(107
|
)
|
|
$
|
43,401
|
|
|
|
5
|
|
%
|
|
5
|
|
%
|
|
5
|
|
%
|
|
5
|
|
%
|
International pharmaceutical distribution & services
|
|
|
6,773
|
|
|
|
-
|
|
|
|
6,773
|
|
|
|
6,271
|
|
|
|
-
|
|
|
|
6,271
|
|
|
|
(237
|
)
|
|
|
6,536
|
|
|
|
(237
|
)
|
|
|
6,536
|
|
|
|
8
|
|
|
|
8
|
|
|
|
4
|
|
|
|
4
|
|
|
Medical-Surgical distribution & services
|
|
|
1,660
|
|
|
|
-
|
|
|
|
1,660
|
|
|
|
1,631
|
|
|
|
-
|
|
|
|
1,631
|
|
|
|
-
|
|
|
|
1,660
|
|
|
|
-
|
|
|
|
1,660
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
Total Distribution Solutions
|
|
|
51,941
|
|
|
|
-
|
|
|
|
51,941
|
|
|
|
49,277
|
|
|
|
-
|
|
|
|
49,277
|
|
|
|
(344
|
)
|
|
|
51,597
|
|
|
|
(344
|
)
|
|
|
51,597
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
|
5
|
|
|
Technology Solutions - Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Services
|
|
|
120
|
|
|
|
-
|
|
|
|
120
|
|
|
|
680
|
|
|
|
-
|
|
|
|
680
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
120
|
|
|
|
(82
|
)
|
|
|
(82
|
)
|
|
|
(82
|
)
|
|
|
(82
|
)
|
|
Revenues
|
|
$
|
52,061
|
|
|
$
|
-
|
|
|
$
|
52,061
|
|
|
$
|
49,957
|
|
|
$
|
-
|
|
|
$
|
49,957
|
|
|
$
|
(344
|
)
|
|
$
|
51,717
|
|
|
$
|
(344
|
)
|
|
$
|
51,717
|
|
|
|
4
|
|
%
|
|
4
|
|
%
|
|
4
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
$
|
2,774
|
|
|
$
|
(27
|
)
|
|
$
|
2,747
|
|
|
$
|
2,396
|
|
|
$
|
(42
|
)
|
|
$
|
2,354
|
|
|
$
|
(32
|
)
|
|
$
|
2,742
|
|
|
$
|
(33
|
)
|
|
$
|
2,714
|
|
|
|
16
|
|
%
|
|
17
|
|
%
|
|
14
|
|
%
|
|
15
|
|
%
|
Technology Solutions
|
|
|
60
|
|
|
|
-
|
|
|
|
60
|
|
|
|
360
|
|
|
|
1
|
|
|
|
361
|
|
|
|
-
|
|
|
|
60
|
|
|
|
-
|
|
|
|
60
|
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
Gross profit
|
|
$
|
2,834
|
|
|
$
|
(27
|
)
|
|
$
|
2,807
|
|
|
$
|
2,756
|
|
|
$
|
(41
|
)
|
|
$
|
2,715
|
|
|
$
|
(32
|
)
|
|
$
|
2,802
|
|
|
$
|
(33
|
)
|
|
$
|
2,774
|
|
|
|
3
|
|
%
|
|
3
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2)
|
|
$
|
(2,452
|
)
|
|
$
|
725
|
|
|
$
|
(1,727
|
)
|
|
$
|
(1,557
|
)
|
|
$
|
116
|
|
|
$
|
(1,441
|
)
|
|
$
|
51
|
|
|
$
|
(2,401
|
)
|
|
$
|
26
|
|
|
$
|
(1,701
|
)
|
|
|
57
|
|
%
|
|
20
|
|
%
|
|
54
|
|
%
|
|
18
|
|
%
|
Technology Solutions (2)
|
|
|
(33
|
)
|
|
|
(11
|
)
|
|
|
(44
|
)
|
|
|
(535
|
)
|
|
|
327
|
|
|
|
(208
|
)
|
|
|
1
|
|
|
|
(32
|
)
|
|
|
-
|
|
|
|
(44
|
)
|
|
|
(94
|
)
|
|
|
(79
|
)
|
|
|
(94
|
)
|
|
|
(79
|
)
|
|
Corporate
|
|
|
(110
|
)
|
|
|
15
|
|
|
|
(95
|
)
|
|
|
(84
|
)
|
|
|
2
|
|
|
|
(82
|
)
|
|
|
-
|
|
|
|
(110
|
)
|
|
|
(1
|
)
|
|
|
(96
|
)
|
|
|
31
|
|
|
|
16
|
|
|
|
31
|
|
|
|
17
|
|
|
Operating expenses
|
|
$
|
(2,595
|
)
|
|
$
|
729
|
|
|
$
|
(1,866
|
)
|
|
$
|
(2,176
|
)
|
|
$
|
445
|
|
|
$
|
(1,731
|
)
|
|
$
|
52
|
|
|
$
|
(2,543
|
)
|
|
$
|
25
|
|
|
$
|
(1,841
|
)
|
|
|
19
|
|
%
|
|
8
|
|
%
|
|
17
|
|
%
|
|
6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (3)
|
|
$
|
66
|
|
|
$
|
(42
|
)
|
|
$
|
24
|
|
|
$
|
12
|
|
|
$
|
2
|
|
|
$
|
14
|
|
|
$
|
1
|
|
|
$
|
67
|
|
|
$
|
-
|
|
|
$
|
24
|
|
|
|
450
|
|
%
|
|
71
|
|
%
|
|
458
|
|
%
|
|
71
|
|
%
|
Technology Solutions
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(100
|
)
|
|
|
-
|
|
|
Corporate
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
|
10
|
|
|
|
-
|
|
|
|
10
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
|
|
(80
|
)
|
|
|
(80
|
)
|
|
|
(80
|
)
|
|
|
(80
|
)
|
|
Other income, net
|
|
$
|
69
|
|
|
$
|
(42
|
)
|
|
$
|
27
|
|
|
$
|
23
|
|
|
$
|
2
|
|
|
$
|
25
|
|
|
$
|
-
|
|
|
$
|
69
|
|
|
$
|
-
|
|
|
$
|
27
|
|
|
|
200
|
|
%
|
|
8
|
|
%
|
|
200
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT IN
CHANGE HEALTHCARE - Technology Solutions (4)
|
|
$
|
(61
|
)
|
|
$
|
136
|
|
|
$
|
75
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(61
|
)
|
|
$
|
-
|
|
|
$
|
75
|
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2) (3)
|
|
$
|
388
|
|
|
$
|
656
|
|
|
$
|
1,044
|
|
|
$
|
851
|
|
|
$
|
76
|
|
|
$
|
927
|
|
|
$
|
20
|
|
|
$
|
408
|
|
|
$
|
(7
|
)
|
|
$
|
1,037
|
|
|
|
(54
|
)
|
%
|
|
13
|
|
%
|
|
(52
|
)
|
%
|
|
12
|
|
%
|
Technology Solutions (2) (4) (6)
|
|
|
(33
|
)
|
|
|
125
|
|
|
|
92
|
|
|
|
(174
|
)
|
|
|
328
|
|
|
|
154
|
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
-
|
|
|
|
92
|
|
|
|
(81
|
)
|
|
|
(40
|
)
|
|
|
(81
|
)
|
|
|
(40
|
)
|
|
Operating profit
|
|
|
355
|
|
|
|
781
|
|
|
|
1,136
|
|
|
|
677
|
|
|
|
404
|
|
|
|
1,081
|
|
|
|
20
|
|
|
|
375
|
|
|
|
(7
|
)
|
|
|
1,129
|
|
|
|
(48
|
)
|
|
|
5
|
|
|
|
(45
|
)
|
|
|
4
|
|
|
Corporate
|
|
|
(108
|
)
|
|
|
15
|
|
|
|
(93
|
)
|
|
|
(74
|
)
|
|
|
2
|
|
|
|
(72
|
)
|
|
|
-
|
|
|
|
(108
|
)
|
|
|
(1
|
)
|
|
|
(94
|
)
|
|
|
46
|
|
|
|
29
|
|
|
|
46
|
|
|
|
31
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
$
|
247
|
|
|
$
|
796
|
|
|
$
|
1,043
|
|
|
$
|
603
|
|
|
$
|
406
|
|
|
$
|
1,009
|
|
|
$
|
20
|
|
|
$
|
267
|
|
|
$
|
(8
|
)
|
|
$
|
1,035
|
|
|
|
(59
|
)
|
%
|
|
3
|
|
%
|
|
(56
|
)
|
%
|
|
3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
0.75
|
|
%
|
|
|
|
|
2.01
|
|
%
|
|
1.73
|
|
%
|
|
|
|
|
1.88
|
|
%
|
|
|
|
|
0.79
|
|
%
|
|
|
|
|
2.01
|
|
%
|
|
(98
|
)
|
bp
|
|
13
|
|
bp
|
|
(94
|
)
|
bp
|
|
13
|
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit excluding noncontrolling interests as a %
of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (5)
|
|
|
|
|
|
|
|
|
1.93
|
|
%
|
|
|
|
|
|
|
|
1.87
|
|
%
|
|
|
|
|
|
|
|
|
|
|
1.92
|
|
%
|
|
|
|
|
6
|
|
bp
|
|
|
|
|
5
|
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge. Fiscal 2017, as reported under GAAP, includes a
non-cash pre-tax goodwill impairment charge of $290 million ($282
million after-tax) for our EIS reporting unit within the Technology
Solutions segment.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the sale of an
equity method investment.
|
(4)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture.
|
(5)
|
|
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.
|
(6)
|
|
Operating profit for our Technology Solutions segment for fiscal
2018 only includes our EIS business and our proportionate share of
income (loss) from Change Healthcare. Fiscal 2017 operating profit
for this segment also included the Core MTS Business.
|
|
|
|
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 3B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30, 2017
|
|
Six Months Ended September 30, 2016
|
|
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
|
|
$
|
86,524
|
|
|
$
|
-
|
|
|
$
|
86,524
|
|
|
$
|
82,586
|
|
|
$
|
-
|
|
|
$
|
82,586
|
|
|
$
|
3
|
|
|
$
|
86,527
|
|
|
$
|
3
|
|
|
$
|
86,527
|
|
|
5
|
|
%
|
|
5
|
|
%
|
|
|
5
|
|
%
|
|
5
|
|
%
|
International pharmaceutical distribution & services
|
|
|
13,155
|
|
|
|
-
|
|
|
|
13,155
|
|
|
|
12,601
|
|
|
|
-
|
|
|
|
12,601
|
|
|
|
96
|
|
|
|
13,251
|
|
|
|
96
|
|
|
|
13,251
|
|
|
4
|
|
|
|
4
|
|
|
|
|
5
|
|
|
|
5
|
|
|
Medical-Surgical distribution & services
|
|
|
3,193
|
|
|
|
-
|
|
|
|
3,193
|
|
|
|
3,099
|
|
|
|
-
|
|
|
|
3,099
|
|
|
|
-
|
|
|
|
3,193
|
|
|
|
-
|
|
|
|
3,193
|
|
|
3
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
3
|
|
|
Total Distribution Solutions
|
|
|
102,872
|
|
|
|
-
|
|
|
|
102,872
|
|
|
|
98,286
|
|
|
|
-
|
|
|
|
98,286
|
|
|
|
99
|
|
|
|
102,971
|
|
|
|
99
|
|
|
|
102,971
|
|
|
5
|
|
|
|
5
|
|
|
|
|
5
|
|
|
|
5
|
|
|
Technology Solutions - Products and Services
|
|
|
240
|
|
|
|
-
|
|
|
|
240
|
|
|
|
1,404
|
|
|
|
-
|
|
|
|
1,404
|
|
|
|
-
|
|
|
|
240
|
|
|
|
-
|
|
|
|
240
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
|
|
(83
|
)
|
|
|
(83
|
)
|
|
Revenues
|
|
$
|
103,112
|
|
|
$
|
-
|
|
|
$
|
103,112
|
|
|
$
|
99,690
|
|
|
$
|
-
|
|
|
$
|
99,690
|
|
|
$
|
99
|
|
|
$
|
103,211
|
|
|
$
|
99
|
|
|
$
|
103,211
|
|
|
3
|
|
%
|
|
3
|
|
%
|
|
|
4
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1)
|
|
$
|
5,274
|
|
|
$
|
2
|
|
|
$
|
5,276
|
|
|
$
|
4,909
|
|
|
$
|
(137
|
)
|
|
$
|
4,772
|
|
|
$
|
27
|
|
|
$
|
5,301
|
|
|
$
|
26
|
|
|
$
|
5,302
|
|
|
7
|
|
%
|
|
11
|
|
%
|
|
|
8
|
|
%
|
|
11
|
|
%
|
Technology Solutions
|
|
|
120
|
|
|
|
1
|
|
|
|
121
|
|
|
|
754
|
|
|
|
2
|
|
|
|
756
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
121
|
|
|
(84
|
)
|
|
|
(84
|
)
|
|
|
|
(84
|
)
|
|
|
(84
|
)
|
|
Gross profit
|
|
$
|
5,394
|
|
|
$
|
3
|
|
|
$
|
5,397
|
|
|
$
|
5,663
|
|
|
$
|
(135
|
)
|
|
$
|
5,528
|
|
|
$
|
27
|
|
|
$
|
5,421
|
|
|
$
|
26
|
|
|
$
|
5,423
|
|
|
(5
|
)
|
%
|
|
(2
|
)
|
%
|
|
|
(4
|
)
|
%
|
|
(2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (2) (3)
|
|
$
|
(4,250
|
)
|
|
$
|
865
|
|
|
$
|
(3,385
|
)
|
|
$
|
(3,156
|
)
|
|
$
|
266
|
|
|
$
|
(2,890
|
)
|
|
$
|
(5
|
)
|
|
$
|
(4,255
|
)
|
|
$
|
(28
|
)
|
|
$
|
(3,413
|
)
|
|
35
|
|
%
|
|
17
|
|
%
|
|
|
35
|
|
%
|
|
18
|
|
%
|
Technology Solutions (3) (4)
|
|
|
(51
|
)
|
|
|
(37
|
)
|
|
|
(88
|
)
|
|
|
(761
|
)
|
|
|
338
|
|
|
|
(423
|
)
|
|
|
-
|
|
|
|
(51
|
)
|
|
|
-
|
|
|
|
(88
|
)
|
|
(93
|
)
|
|
|
(79
|
)
|
|
|
|
(93
|
)
|
|
|
(79
|
)
|
|
Corporate
|
|
|
(221
|
)
|
|
|
12
|
|
|
|
(209
|
)
|
|
|
(194
|
)
|
|
|
4
|
|
|
|
(190
|
)
|
|
|
-
|
|
|
|
(221
|
)
|
|
|
-
|
|
|
|
(209
|
)
|
|
14
|
|
|
|
10
|
|
|
|
|
14
|
|
|
|
10
|
|
|
Operating expenses
|
|
$
|
(4,522
|
)
|
|
$
|
840
|
|
|
$
|
(3,682
|
)
|
|
$
|
(4,111
|
)
|
|
$
|
608
|
|
|
$
|
(3,503
|
)
|
|
$
|
(5
|
)
|
|
$
|
(4,527
|
)
|
|
$
|
(28
|
)
|
|
$
|
(3,710
|
)
|
|
10
|
|
%
|
|
5
|
|
%
|
|
|
10
|
|
%
|
|
6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (5)
|
|
$
|
77
|
|
|
$
|
(42
|
)
|
|
$
|
35
|
|
|
$
|
26
|
|
|
$
|
6
|
|
|
$
|
32
|
|
|
$
|
-
|
|
|
$
|
77
|
|
|
$
|
-
|
|
|
$
|
35
|
|
|
196
|
|
%
|
|
9
|
|
%
|
|
|
196
|
|
%
|
|
9
|
|
%
|
Technology Solutions
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
Corporate
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
|
15
|
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
(73
|
)
|
|
|
(73
|
)
|
|
|
|
(73
|
)
|
|
|
(73
|
)
|
|
Other income, net
|
|
$
|
82
|
|
|
$
|
(42
|
)
|
|
$
|
40
|
|
|
$
|
42
|
|
|
$
|
6
|
|
|
$
|
48
|
|
|
$
|
-
|
|
|
$
|
82
|
|
|
$
|
-
|
|
|
$
|
40
|
|
|
95
|
|
%
|
|
(17
|
)
|
%
|
|
|
95
|
|
%
|
|
(17
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT IN
CHANGE HEALTHCARE - Technology Solutions (6)
|
|
$
|
(181
|
)
|
|
$
|
326
|
|
|
$
|
145
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(181
|
)
|
|
$
|
-
|
|
|
$
|
145
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2) (3) (5)
|
|
$
|
1,101
|
|
|
$
|
825
|
|
|
$
|
1,926
|
|
|
$
|
1,779
|
|
|
$
|
135
|
|
|
$
|
1,914
|
|
|
$
|
22
|
|
|
$
|
1,123
|
|
|
$
|
(2
|
)
|
|
$
|
1,924
|
|
|
(38
|
)
|
%
|
|
1
|
|
%
|
|
|
(37
|
)
|
%
|
|
1
|
|
%
|
Technology Solutions (3) (4) (6) (8)
|
|
|
(111
|
)
|
|
|
290
|
|
|
|
179
|
|
|
|
(6
|
)
|
|
|
340
|
|
|
|
334
|
|
|
|
-
|
|
|
|
(111
|
)
|
|
|
-
|
|
|
|
179
|
|
|
1,750
|
|
|
|
(46
|
)
|
|
|
|
1,750
|
|
|
|
(46
|
)
|
|
Operating profit
|
|
|
990
|
|
|
|
1,115
|
|
|
|
2,105
|
|
|
|
1,773
|
|
|
|
475
|
|
|
|
2,248
|
|
|
|
22
|
|
|
|
1,012
|
|
|
|
(2
|
)
|
|
|
2,103
|
|
|
(44
|
)
|
|
|
(6
|
)
|
|
|
|
(43
|
)
|
|
|
(6
|
)
|
|
Corporate
|
|
|
(217
|
)
|
|
|
12
|
|
|
|
(205
|
)
|
|
|
(179
|
)
|
|
|
4
|
|
|
|
(175
|
)
|
|
|
-
|
|
|
|
(217
|
)
|
|
|
-
|
|
|
|
(205
|
)
|
|
21
|
|
|
|
17
|
|
|
|
|
21
|
|
|
|
17
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
$
|
773
|
|
|
$
|
1,127
|
|
|
$
|
1,900
|
|
|
$
|
1,594
|
|
|
$
|
479
|
|
|
$
|
2,073
|
|
|
$
|
22
|
|
|
$
|
795
|
|
|
$
|
(2
|
)
|
|
$
|
1,898
|
|
|
(52
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
(50
|
)
|
%
|
|
(8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
1.07
|
|
%
|
|
|
|
|
1.87
|
|
%
|
|
1.81
|
|
%
|
|
|
|
|
1.95
|
|
%
|
|
|
|
|
1.09
|
|
%
|
|
|
|
|
1.87
|
|
%
|
(74
|
)
|
bp
|
|
(8
|
)
|
bp
|
|
(72
|
)
|
bp
|
|
(8
|
)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit excluding noncontrolling interests as a %
of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (7)
|
|
|
|
|
|
|
|
|
1.78
|
|
%
|
|
|
|
|
|
|
|
1.94
|
|
%
|
|
|
|
|
|
|
|
|
|
|
1.78
|
|
%
|
|
|
|
(16
|
)
|
bp
|
|
|
|
|
(16
|
)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2017, as reported under GAAP, includes $142 million of net
cash proceeds representing our share of antitrust legal settlements
within our Distribution Solutions segment.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge. Fiscal 2017, as reported under GAAP, includes a
non-cash pre-tax goodwill impairment charge of $290 million ($282
million after-tax) for our EIS reporting unit within the Technology
Solutions segment.
|
(4)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $37
million ($22 million after-tax) related to the final net working
capital and other adjustments from the fiscal 2017 fourth quarter
Healthcare Technology Net Asset Exchange within our Technology
Solutions segment.
|
(5)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the fiscal 2018
second quarter sale of an equity method investment.
|
(6)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture.
|
(7)
|
|
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.
|
(8)
|
|
Operating profit for our Technology Solutions segment for fiscal
2018 only includes our EIS business and our proportionate share of
income (loss) from Change Healthcare. Fiscal 2017 operating profit
for this segment also included the Core MTS Business.
|
|
|
|
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 4A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2017
|
|
Quarter Ended September 30, 2016
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
51,941
|
|
|
$
|
120
|
|
|
$
|
-
|
|
|
$
|
52,061
|
|
|
$
|
49,277
|
|
|
$
|
680
|
|
|
$
|
-
|
|
|
$
|
49,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5)
|
|
$
|
388
|
|
|
$
|
(33
|
)
|
|
$
|
(108
|
)
|
|
$
|
247
|
|
|
$
|
851
|
|
|
$
|
(174
|
)
|
|
$
|
(74
|
)
|
|
$
|
603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangibles (4)
|
|
$
|
126
|
|
|
$
|
73
|
|
|
$
|
-
|
|
|
$
|
199
|
|
|
$
|
105
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related Expenses and Adjustments
|
|
|
18
|
|
|
|
52
|
|
|
|
1
|
|
|
|
71
|
|
|
|
17
|
|
|
|
21
|
|
|
|
3
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO Inventory-Related Adjustments
|
|
|
(29
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(29
|
)
|
|
|
(43
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains from Antitrust Legal Settlements
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Charges, Net
|
|
|
238
|
|
|
|
-
|
|
|
|
19
|
|
|
|
257
|
|
|
|
(3
|
)
|
|
|
7
|
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments, Net
|
|
|
303
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
298
|
|
|
|
-
|
|
|
|
290
|
|
|
|
-
|
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
$
|
656
|
|
|
$
|
125
|
|
|
$
|
15
|
|
|
$
|
796
|
|
|
$
|
76
|
|
|
$
|
328
|
|
|
$
|
2
|
|
|
$
|
406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
51,941
|
|
|
$
|
120
|
|
|
$
|
-
|
|
|
$
|
52,061
|
|
|
$
|
49,277
|
|
|
$
|
680
|
|
|
$
|
-
|
|
|
$
|
49,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (4) (5)
|
|
$
|
1,044
|
|
|
$
|
92
|
|
|
$
|
(93
|
)
|
|
$
|
1,043
|
|
|
$
|
927
|
|
|
$
|
154
|
|
|
$
|
(72
|
)
|
|
$
|
1,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the sale of an
equity method investment within our Distribution Solutions segment.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge. Fiscal 2017, as reported under GAAP, includes a
non-cash pre-tax goodwill impairment charge of $290 million ($282
million after-tax) for our EIS reporting unit within the Technology
Solutions segment.
|
(4)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture. The
amortization of acquisition-related intangibles of $73 million is
included in our proportionate share of the income (loss) from this
equity method investment.
|
(5)
|
|
The results of our Technology Solutions segment for fiscal 2018
only include our EIS business and our proportionate share of
income (loss) from Change Healthcare. Fiscal 2017 results for this
segment also included the Core MTS Business.
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30, 2017
|
|
Six Months Ended September 30, 2016
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
102,872
|
|
|
$
|
240
|
|
|
$
|
-
|
|
|
$
|
103,112
|
|
|
$
|
98,286
|
|
|
$
|
1,404
|
|
|
$
|
-
|
|
|
$
|
99,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5) (6) (7)
|
|
$
|
1,101
|
|
|
$
|
(111
|
)
|
|
$
|
(217
|
)
|
|
$
|
773
|
|
|
$
|
1,779
|
|
|
$
|
(6
|
)
|
|
$
|
(179
|
)
|
|
$
|
1,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquisition-related intangibles (5)
|
|
$
|
247
|
|
|
$
|
144
|
|
|
$
|
-
|
|
|
$
|
391
|
|
|
$
|
211
|
|
|
$
|
19
|
|
|
$
|
-
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related Expenses and Adjustments
|
|
|
37
|
|
|
|
146
|
|
|
|
-
|
|
|
|
183
|
|
|
|
61
|
|
|
|
25
|
|
|
|
5
|
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO Inventory-Related Adjustments
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains from Antitrust Legal Settlements
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(142
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(142
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Charges, Net
|
|
|
241
|
|
|
|
-
|
|
|
|
19
|
|
|
|
260
|
|
|
|
7
|
|
|
|
6
|
|
|
|
(1
|
)
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments, Net
|
|
|
303
|
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
296
|
|
|
|
(6
|
)
|
|
|
290
|
|
|
|
-
|
|
|
|
284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
$
|
825
|
|
|
$
|
290
|
|
|
$
|
12
|
|
|
$
|
1,127
|
|
|
$
|
135
|
|
|
$
|
340
|
|
|
$
|
4
|
|
|
$
|
479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
102,872
|
|
|
$
|
240
|
|
|
$
|
-
|
|
|
$
|
103,112
|
|
|
$
|
98,286
|
|
|
$
|
1,404
|
|
|
$
|
-
|
|
|
$
|
99,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest
expense and income taxes (5) (7)
|
|
$
|
1,926
|
|
|
$
|
179
|
|
|
$
|
(205
|
)
|
|
$
|
1,900
|
|
|
$
|
1,914
|
|
|
$
|
334
|
|
|
$
|
(175
|
)
|
|
$
|
2,073
|
|
(1)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $37
million ($22 million after-tax) related to the final net working
capital and other adjustments from the fiscal 2017 fourth quarter
Healthcare Technology Net Asset Exchange within our Technology
Solutions segment.
|
(2)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax
charge of $189 million ($157 million after-tax) to impair the
carrying value of certain intangible assets and other assets
primarily related to our retail business in the U.K. within our
Distribution Solutions segment. Fiscal 2018, as reported under GAAP,
also includes a pre-tax restructuring charge of $47 million ($40
million after-tax) primarily representing employee severance.
|
(3)
|
|
Fiscal 2018, as reported under GAAP, includes a non-cash pre-tax and
after-tax goodwill impairment charge of $350 million for our
McKesson Europe reporting unit within the Distribution Solutions
segment. There were no tax benefits associated with this goodwill
impairment charge. Fiscal 2017, as reported under GAAP, includes a
non-cash pre-tax goodwill impairment charge of $290 million ($282
million after-tax) for our EIS reporting unit within the Technology
Solutions segment.
|
(4)
|
|
Fiscal 2018, as reported under GAAP, includes a pre-tax gain of $43
million ($26 million after-tax) recognized from the fiscal 2018
second quarter sale of an equity method investment within our
Distribution Solutions segment.
|
(5)
|
|
Our investment in Change Healthcare is accounted for using the
equity method of accounting. The amount represents our proportionate
share of the net income or loss of the joint venture. The
amortization of acquisition-related intangibles of $144 million is
included in our proportionate share of the income (loss) from this
equity method investment.
|
(6)
|
|
Fiscal 2017, as reported under GAAP, includes $142 million of net
cash proceeds representing our share of antitrust legal settlements
within our Distribution Solutions segment.
|
(7)
|
|
The results of our Technology Solutions segment for fiscal 2018
only include our EIS business and our proportionate share of
income (loss) from Change Healthcare. Fiscal 2017 results for this
segment also included the Core MTS Business.
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
March 31,
|
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,563
|
|
$
|
2,783
|
Receivables, net
|
|
|
19,627
|
|
|
18,215
|
Inventories, net
|
|
|
16,885
|
|
|
15,278
|
Prepaid expenses and other
|
|
|
719
|
|
|
672
|
Total Current Assets
|
|
|
39,794
|
|
|
36,948
|
Property, Plant and Equipment, Net
|
|
|
2,348
|
|
|
2,292
|
Goodwill
|
|
|
11,732
|
|
|
10,586
|
Intangible Assets, Net
|
|
|
4,206
|
|
|
3,665
|
Equity Method Investment in Change Healthcare
|
|
|
3,795
|
|
|
4,063
|
Other Noncurrent Assets
|
|
|
1,971
|
|
|
3,415
|
Total Assets
|
|
$
|
63,846
|
|
$
|
60,969
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
AND EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Drafts and accounts payable
|
|
$
|
33,580
|
|
$
|
31,022
|
Short-term borrowings
|
|
|
306
|
|
|
183
|
Deferred revenue
|
|
|
63
|
|
|
346
|
Current portion of long-term debt
|
|
|
525
|
|
|
1,057
|
Other accrued liabilities
|
|
|
3,291
|
|
|
3,004
|
Total Current Liabilities
|
|
|
37,765
|
|
|
35,612
|
Long-Term Debt
|
|
|
7,490
|
|
|
7,305
|
Long-Term Deferred Tax Liabilities
|
|
|
3,724
|
|
|
3,678
|
Other Noncurrent Liabilities
|
|
|
2,082
|
|
|
1,774
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
1,423
|
|
|
1,327
|
|
|
|
|
|
|
|
McKesson Corporation Stockholders' Equity
|
|
|
11,143
|
|
|
11,095
|
Noncontrolling Interests
|
|
|
219
|
|
|
178
|
Total Equity
|
|
|
11,362
|
|
|
11,273
|
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
$
|
63,846
|
|
$
|
60,969
|
|
|
|
|
|
|
|
Schedule 6
|
|
|
|
|
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
|
|
Six Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
421
|
|
|
$
|
884
|
|
Adjustments to reconcile to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
463
|
|
|
|
459
|
|
Goodwill impairment and other asset impairment charges
|
|
|
539
|
|
|
|
290
|
|
Deferred taxes
|
|
|
42
|
|
|
|
(90
|
)
|
Share-based compensation expense
|
|
|
57
|
|
|
|
79
|
|
LIFO charges (credits)
|
|
|
(3
|
)
|
|
|
4
|
|
Loss from equity method investment in Change Healthcare
|
|
|
181
|
|
|
|
-
|
|
Loss (gain) from sale of businesses and equity investments
|
|
|
(47
|
)
|
|
|
113
|
|
Other non-cash items
|
|
|
(28
|
)
|
|
|
5
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
Receivables
|
|
|
(812
|
)
|
|
|
(657
|
)
|
Inventories
|
|
|
(1,217
|
)
|
|
|
162
|
|
Drafts and accounts payable
|
|
|
1,808
|
|
|
|
2,172
|
|
Deferred revenue
|
|
|
(138
|
)
|
|
|
(254
|
)
|
Taxes
|
|
|
86
|
|
|
|
151
|
|
Other
|
|
|
(13
|
)
|
|
|
(390
|
)
|
Net cash provided by operating activities
|
|
|
1,339
|
|
|
|
2,928
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
Property acquisitions
|
|
|
(164
|
)
|
|
|
(151
|
)
|
Capitalized software expenditures
|
|
|
(91
|
)
|
|
|
(89
|
)
|
Acquisitions, net of cash and cash equivalents acquired
|
|
|
(1,874
|
)
|
|
|
(2,041
|
)
|
Proceeds from/(payments for) sale of businesses and equity
investments, net
|
|
|
164
|
|
|
|
(98
|
)
|
Payments received on Healthcare Technology Net Asset Exchange
|
|
|
126
|
|
|
|
-
|
|
Restricted cash for acquisitions
|
|
|
1,469
|
|
|
|
935
|
|
Other
|
|
|
(26
|
)
|
|
|
98
|
|
Net cash used in investing activities
|
|
|
(396
|
)
|
|
|
(1,346
|
)
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
8,464
|
|
|
|
10
|
|
Repayments of short-term borrowings
|
|
|
(8,343
|
)
|
|
|
(17
|
)
|
Repayments of long-term debt
|
|
|
(545
|
)
|
|
|
(6
|
)
|
Common stock transactions:
|
|
|
|
|
Issuances
|
|
|
83
|
|
|
|
75
|
|
Share repurchases, including shares surrendered for tax withholding
|
|
|
(701
|
)
|
|
|
(58
|
)
|
Dividends paid
|
|
|
(121
|
)
|
|
|
(129
|
)
|
Other
|
|
|
(109
|
)
|
|
|
11
|
|
Net cash used in financing activities
|
|
|
(1,272
|
)
|
|
|
(114
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
109
|
|
|
|
(52
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(220
|
)
|
|
|
1,416
|
|
Cash and cash equivalents at beginning of period
|
|
|
2,783
|
|
|
|
4,048
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,563
|
|
|
$
|
5,464
|
|
|
|
|
|
|
|
|
|
|
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
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 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.
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.
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.
LIFO
inventory-related adjustments - LIFO inventory-related non-cash
expense or credit adjustments.
Gains
from antitrust legal settlements - Net cash proceeds
representing the Company’s share of antitrust lawsuit settlements.
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.
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.
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.
Additionally, our equity method
investments' financial results are adjusted for the above noted items.
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued)
-
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.
-
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.
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 internationally 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. 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.