SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today reported that revenues for the
fourth quarter ended March 31, 2018, were $51.6 billion, up 6% compared
to $48.7 billion a year ago. On a constant currency basis, revenues
increased 4% over the prior year. For the fiscal year, McKesson had
revenues of $208.4 billion, up 5% compared to $198.5 billion a year ago.
On a constant currency basis, revenues increased 4% over the prior year.
On the basis of U.S. generally accepted accounting principles (“GAAP”),
fourth-quarter loss per diluted share from continuing operations was
$(5.58), compared to earnings per diluted share of $16.79 a year ago.
Full-year GAAP earnings per diluted share from continuing operations was
$0.30, compared to $23.28 a year ago. Fourth-quarter GAAP loss per
diluted share and full-year GAAP earnings per share included after-tax
net charges totaling $1.9 billion and $2.6 billion, respectively, or
$9.07 and $12.32 per diluted share, respectively, driven primarily by
non-cash goodwill and long-lived asset impairment charges in the
company’s European and Canadian retail businesses, partially offset by
benefits related to the Tax Cuts and Jobs Act of 2017.
Prior year fourth-quarter and full-year GAAP earnings per diluted share
included an after-tax net gain of $3.0 billion, or $14.10 per diluted
share and $13.53 per diluted share, respectively, related to the
creation of the Change Healthcare joint venture.
Fourth-quarter Adjusted Earnings per diluted share was $3.49, up 2%
compared to $3.41 a year ago. Full-year Adjusted Earnings per diluted
share was $12.62, up 1% compared to $12.54 for the prior year, which
includes the $0.31 per diluted share contribution to create a non-profit
foundation.
For the full year, McKesson generated cash from operations of $4.3
billion and ended the year with cash and cash equivalents of $2.7
billion. During the year, McKesson repaid approximately $765 million in
net long-term debt, paid $2.9 billion for acquisitions, repurchased
approximately $1.7 billion of its common stock, invested $580 million
internally and paid $262 million in dividends.
“While we realized significant charges in the fourth quarter reflecting
challenging market conditions in Europe and Canada, I’m pleased with the
Fiscal 2018 performance across our other businesses. And the strength of
our balance sheet and cash flow enabled us to make internal investments
and acquisitions that will drive growth,” said John H. Hammergren,
chairman and chief executive officer. “This strong financial position,
combined with actions we are taking in relation to our recently
announced multi-year strategic growth initiative, ensures McKesson’s
ongoing focus on delivering shareholder value.
“We also returned capital to shareholders through share repurchases and
a quarterly dividend. And yesterday, our Board of Directors approved an
additional share repurchase authorization of $4 billion, as we believe
that the company’s shares are an attractive investment opportunity and
repurchasing stock is an important part of our diversified capital
allocation strategy,” continued Hammergren.
Segment Results
Distribution Solutions revenues were $51.6 billion for the quarter, up
7% on a reported basis and 5% on a constant currency basis. For the full
year, Distribution Solutions revenues were $208.1 billion, up 6% on a
reported basis and 5% on a constant currency basis, compared to the
prior year.
North America pharmaceutical distribution and services revenues of $42.7
billion for the quarter were up 5% on both a reported basis and constant
currency basis. For the full year, North America pharmaceutical
distribution and services revenues were $174.2 billion, up 6% on both a
reported and constant currency basis, compared to the prior year.
Revenue growth for the quarter and the full year was driven primarily by
market growth and acquisitions, partially offset by branded to generic
conversions.
International pharmaceutical distribution and services revenues were
$7.2 billion for the quarter, up 19% on a reported basis and 4% on a
constant currency basis, driven by acquisitions and market growth, which
were the same factors that drove full year revenues of $27.3 billion, up
10% on a reported basis and up 5% on a constant currency basis, compared
to the prior year.
Medical-Surgical distribution and services revenues were $1.7 billion
for the quarter, up 9%, driven primarily by market growth, including the
impact of a stronger flu season. For the full year, Medical-Surgical
distribution and services revenues were $6.6 billion, up 6% compared to
the prior year.
Fourth-quarter Distribution Solutions GAAP operating loss was $(689)
million and GAAP operating margin was (1.33)%. On a constant currency
basis, fourth-quarter adjusted operating profit was $1.1 billion, up 8%
from the prior year on a reported basis and 7% on a constant currency
basis. Adjusted operating margin for the Distribution Solutions segment
was 2.26% on a constant currency basis. Adjusted operating margin
excluding noncontrolling interests for the Distribution Solutions
segment was 2.17% on a constant currency basis.
For the full year, Distribution Solutions GAAP operating profit was $1.2
billion and GAAP operating margin was 0.59%. On a constant currency
basis, full-year adjusted operating profit was $4.1 billion, up 8% from
the prior year on a reported basis and 7% on a constant currency basis.
Adjusted operating margin for the Distribution Solutions segment was
1.96% on a constant currency basis. Adjusted operating margin excluding
noncontrolling interests for the Distribution Solutions segment was
1.87% on a constant currency basis.
Fourth-quarter Technology Solutions GAAP operating profit was $23
million. Fourth-quarter adjusted operating profit was $72 million,
driven by the company’s proportionate share of the income from
McKesson’s equity investment in Change Healthcare.
Full-year Technology Solutions GAAP operating loss was $(23) million.
Full-year adjusted operating profit was $304 million, primarily driven
by the company’s proportionate share of the income from McKesson’s
equity investment in Change Healthcare.
Fiscal Year 2018 Reconciliation of GAAP Results to Adjusted Earnings
Adjusted Earnings per diluted share of $12.62 for the fiscal year ending
March 31, 2018, excludes the following GAAP items:
-
Amortization of acquisition-related intangibles of $2.60 per diluted
share;
-
Acquisition-related expenses and adjustments of $1.20 per diluted
share;
-
Last-In-First-Out (“LIFO”) inventory-related credits of 31 cents per
diluted share;
-
Restructuring charges of $2.82 per diluted share, including non-cash
long-lived asset impairment charges; and
-
Other adjustment net charges of $6.01 per diluted share, primarily
including non-cash goodwill asset impairment charges, partially offset
by benefits related to the Tax Cuts and Jobs Act of 2017.
Revised Segment Financial Reporting Effective Fiscal Year 2019
Following the retirement of the president of Distribution Solutions in
January 2018 and an evaluation of the company’s management and operating
structure, McKesson has revised its reportable segments commencing in
the first quarter of Fiscal 2019. McKesson’s new reportable segments are:
-
U.S. Pharmaceutical and Specialty Solutions, which includes the U.S.
Pharmaceutical and McKesson Specialty Health businesses;
-
European Pharmaceutical Solutions; and
-
Medical-Surgical Solutions.
All remaining operating segments and business activities that are not
significant enough to require reportable segment disclosure will be
included in Other. Other primarily includes McKesson Canada, McKesson
Prescription Technology Solutions (MRxTS) and the company’s equity
method investment in Change Healthcare.
Please refer to a second 8-K filed today with the Securities and
Exchange Commission for historical supplemental information for the
fiscal years ending March 31, 2018; March 31, 2017; and March 31, 2016
reflecting historical results by revised reportable segment.
Fiscal Year 2019 Outlook
McKesson expects Adjusted Earnings per diluted share of $13.00 to $13.80
for the fiscal year ending March 31, 2019.
“Our Fiscal 2019 outlook represents mid- to high-single digit percentage
growth year over year, reflecting a more stable market environment and
effective capital allocation, while including the previously outlined
headwinds in our European and Rexall businesses,” Hammergren concluded.
McKesson has ceased providing forward-looking guidance on a GAAP basis
as the company is unable to provide a quantitative reconciliation of
this forward-looking non-GAAP measure to the most directly comparable
forward-looking GAAP measure, without unreasonable effort, as items are
inherently uncertain and depend on various factors, many of which are
beyond the company’s control.
Key Assumptions for Fiscal 2019
The Fiscal 2019 outlook is based on the following key assumptions and is
also subject to the Risk Factors outlined below:
-
McKesson to deliver mid-single digit percent revenue growth and down
slightly to up mid-single digit percent adjusted income from
operations growth in Fiscal 2019.
-
U.S. Pharmaceutical and Specialty Solutions to deliver low- to
mid-single digit percent revenue growth and flat to down mid-single
digit percent adjusted operating profit growth in Fiscal 2019.
-
European Pharmaceutical Solutions to deliver flat to mid-single digit
percent revenue and adjusted operating profit growth in Fiscal 2019.
-
Medical-Surgical Solutions is expected to deliver low-double digit
percent revenue growth and mid- to high-single digit percent adjusted
operating profit growth in Fiscal 2019.
-
Other is expected to deliver low-single digit percent revenue growth
and adjusted operating profit to be flat in Fiscal 2019, which
includes a gross headwind of between $100 million and $120 million
related to the generic pricing initiative the Canadian provincial
governments enacted April 1, 2018, as well as the impact of an
increase in minimum wage in multiple provinces.
-
Adjusted equity earnings from the company’s investment in Change
Healthcare are expected to grow in the low- to mid-single digit
percent in Fiscal 2019.
-
Expect low-double digit percent decline in corporate expenses compared
to Fiscal 2018.
-
Interest expense is expected to decline year over year.
-
The guidance range assumes a full-year adjusted tax rate of
approximately 21% to 23%, which may vary from quarter to quarter.
-
Income attributable to noncontrolling interests is expected to decline
year over year.
-
The company’s ownership position in McKesson Europe is assumed to be
approximately 77% for Fiscal 2019.
-
Foreign currency exchange rate movements are assumed to have a net
favorable impact of up to 10 cents per diluted share year over year.
-
Commencing in Fiscal 2019, the company will provide free cash flow
guidance. Free cash flow is expected to be approximately $3.0 billion,
which is net of expected property acquisitions and capitalized
software expenditures of between $600 million and $800 million.
-
Weighted average diluted shares used in the calculation of earnings
per share are expected to be approximately 200 million for the year.
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, 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.
The company will not provide forward-looking guidance on a GAAP basis
prospectively as McKesson is unable to provide a quantitative
reconciliation of this forward-looking non-GAAP measure to the most
directly comparable forward-looking GAAP measure, without unreasonable
effort, because McKesson cannot reliably forecast LIFO inventory-related
adjustments, gains from antitrust legal settlements, restructuring
charges, and other adjustments, which are difficult to predict and
estimate. These items are inherently uncertain and depend on various
factors, many of which are beyond the company’s control, and as such,
any associated estimate and its impact on GAAP performance could vary
materially.
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.
Non-GAAP Measures
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.
McKesson also provides a free cash flow estimate on a forward-looking
basis. Free cash flow is defined as net cash provided by operating
activities less property acquisitions and capitalized software
expenditures, as outlined in the company’s condensed consolidated
statements of cash flows.
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 performance of the company’s investment in Change
Healthcare; 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 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; 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, May 24th,
at 8:00 AM ET. The dial-in number for individuals wishing to participate
on the call is 323-701-0225. 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
3609926. 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 6th 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
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS - GAAP
(unaudited)
(in
millions, except per share amounts)
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Quarter Ended March 31,
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Year Ended March 31,
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2018
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2017
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Change
|
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2018
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2017
|
|
Change
|
|
Revenues
|
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$
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51,628
|
|
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$
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48,713
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|
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6
|
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%
|
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$
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208,357
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|
|
$
|
198,533
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|
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5
|
|
%
|
Cost of sales (1)
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(48,553
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)
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|
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(45,917
|
)
|
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6
|
|
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|
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(197,173
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)
|
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|
(187,262
|
)
|
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5
|
|
|
Gross profit
|
|
|
3,075
|
|
|
|
2,796
|
|
|
10
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|
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|
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11,184
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|
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11,271
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|
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(1
|
)
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|
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|
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|
|
|
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|
|
|
|
|
Operating expenses
|
|
|
(2,316
|
)
|
|
|
(2,007
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)
|
|
15
|
|
|
|
|
(8,263
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)
|
|
|
(7,801
|
)
|
|
6
|
|
|
Goodwill impairment charges (2)
|
|
|
(1,388
|
)
|
|
|
-
|
|
|
-
|
|
|
|
|
(1,738
|
)
|
|
|
(290
|
)
|
|
499
|
|
|
Restructuring and asset impairment charges (3)
|
|
|
(315
|
)
|
|
|
(10
|
)
|
|
3,050
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|
|
|
|
(567
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)
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|
|
(18
|
)
|
|
3,050
|
|
|
Gain from sale of business (4)
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|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
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109
|
|
|
|
-
|
|
|
-
|
|
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Gain on net asset exchange, net (5)
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|
|
-
|
|
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3,947
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|
|
-
|
|
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|
|
37
|
|
|
|
3,947
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|
|
(99
|
)
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|
Total operating expenses
|
|
|
(4,019
|
)
|
|
|
1,930
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|
|
(308
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)
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|
|
|
(10,422
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)
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|
|
(4,162
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)
|
|
150
|
|
|
Operating income (loss)
|
|
|
(944
|
)
|
|
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4,726
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|
|
(120
|
)
|
|
|
|
762
|
|
|
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7,109
|
|
|
(89
|
)
|
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Other income, net (6)
|
|
|
28
|
|
|
|
25
|
|
|
12
|
|
|
|
|
130
|
|
|
|
90
|
|
|
44
|
|
|
Income (Loss) from equity method investment in Change Healthcare
|
|
|
23
|
|
|
|
-
|
|
|
-
|
|
|
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(248
|
)
|
|
|
-
|
|
|
-
|
|
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Loss on debt extinguishment (7)
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|
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(122
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)
|
|
|
-
|
|
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-
|
|
|
|
|
(122
|
)
|
|
|
-
|
|
|
-
|
|
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Interest expense
|
|
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(79
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)
|
|
|
(77
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)
|
|
3
|
|
|
|
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(283
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)
|
|
|
(308
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)
|
|
(8
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)
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Income (Loss) from continuing operations before income taxes
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|
|
(1,094
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)
|
|
|
4,674
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|
|
(123
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)
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|
|
|
239
|
|
|
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6,891
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|
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(97
|
)
|
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Income tax benefit (expense) (8)
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7
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|
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(1,044
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)
|
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(101
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)
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|
|
53
|
|
|
|
(1,614
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)
|
|
(103
|
)
|
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Income (Loss) from continuing operations after tax
|
|
|
(1,087
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)
|
|
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3,630
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|
|
(130
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)
|
|
|
|
292
|
|
|
|
5,277
|
|
|
(94
|
)
|
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Income (Loss) from discontinued operations, net of tax (9)
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|
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2
|
|
|
|
(7
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)
|
|
(129
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)
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|
|
|
5
|
|
|
|
(124
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)
|
|
(104
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)
|
|
Net income (loss)
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|
|
(1,085
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)
|
|
|
3,623
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|
|
(130
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)
|
|
|
|
297
|
|
|
|
5,153
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|
|
(94
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)
|
|
Net income attributable to noncontrolling interests (10)
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|
|
(61
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)
|
|
|
(35
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)
|
|
74
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|
|
|
|
(230
|
)
|
|
|
(83
|
)
|
|
177
|
|
|
Net income (loss) attributable to McKesson Corporation
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|
$
|
(1,146
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)
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|
$
|
3,588
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|
|
(132
|
)
|
%
|
|
$
|
67
|
|
|
$
|
5,070
|
|
|
(99
|
)
|
%
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to
McKesson Corporation (11)
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|
|
|
|
|
|
|
|
|
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|
|
|
|
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Diluted (12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(5.58
|
)
|
|
$
|
16.79
|
|
|
(133
|
)
|
%
|
|
$
|
0.30
|
|
|
$
|
23.28
|
|
|
(99
|
)
|
%
|
Discontinued operations
|
|
|
-
|
|
|
|
(0.03
|
)
|
|
(100
|
)
|
|
|
|
0.02
|
|
|
|
(0.55
|
)
|
|
(104
|
)
|
|
Total
|
|
$
|
(5.58
|
)
|
|
$
|
16.76
|
|
|
(133
|
)
|
%
|
|
$
|
0.32
|
|
|
$
|
22.73
|
|
|
(99
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(5.58
|
)
|
|
$
|
16.95
|
|
|
(133
|
)
|
%
|
|
$
|
0.30
|
|
|
$
|
23.50
|
|
|
(99
|
)
|
%
|
Discontinued operations
|
|
|
-
|
|
|
|
(0.03
|
)
|
|
(100
|
)
|
|
|
|
0.02
|
|
|
|
(0.55
|
)
|
|
(104
|
)
|
|
Total
|
|
$
|
(5.58
|
)
|
|
$
|
16.92
|
|
|
(133
|
)
|
%
|
|
$
|
0.32
|
|
|
$
|
22.95
|
|
|
(99
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
|
|
|
$
|
1.30
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares (12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
206
|
|
|
|
214
|
|
|
(4
|
)
|
%
|
|
|
209
|
|
|
|
223
|
|
|
(6
|
)
|
%
|
Basic
|
|
|
206
|
|
|
|
212
|
|
|
(3
|
)
|
|
|
|
208
|
|
|
|
221
|
|
|
(6
|
)
|
|
(1)
|
|
2018 and 2017 fourth quarters include pre-tax credits of $94 million
and pre-tax charges of $144 million, and 2018 and 2017 include
pre-tax credits of $99 million and $7 million related to our
last-in-first-out (“LIFO”) method of accounting for inventories.
2017 also includes $144 million of net cash proceeds representing
our share of antitrust legal settlements. These credits and charges
are included within our Distribution Solutions segment.
|
(2)
|
|
2018 fourth quarter and 2018 include non-cash goodwill impairment
charges (pre-tax and after-tax) of $933 million and $1,283 million
for our McKesson Europe reporting unit and $455 million for our
Rexall Health reporting unit. The 2018 goodwill impairment charges
are recorded within our Distribution Solutions segment. 2017
includes a non-cash pre-tax goodwill impairment charge of $290
million ($282 million after-tax) for our EIS reporting unit within
our Technology Solutions segment.
|
(3)
|
|
2018 fourth quarter and 2018 include non-cash pre-tax asset
impairment charges of $290 million ($286 million after-tax) and
$479 million ($443 million after-tax). 2018 fourth quarter and
2018 also include pre-tax restructuring charges of $21 million
($22 million after-tax) and $74 million ($67 million after-tax)
primarily representing employee severance and lease exit costs.
Both the asset impairment charges and the employee severance and
lease exit costs are included within our Distribution Solutions
segment.
|
(4)
|
|
2018 includes a pre-tax gain of $109 million ($30 million after-tax)
recognized from the 2018 third quarter sale of our Enterprise
Information Solutions ("EIS") business within our Technology
Solutions segment.
|
(5)
|
|
2018 includes a pre-tax gain of $37 million ($22 million after-tax)
related to the final net working capital settlement and other
adjustments from the 2017 fourth quarter Healthcare Technology Net
Asset Exchange within our Technology Solutions segment. 2017
includes a pre-tax gain of $3,947 million ($3,018 million
after-tax), net, recognized from the Healthcare Technology Net Asset
Exchange.
|
(6)
|
|
2018 includes a pre-tax gain of $43 million ($26 million after-tax)
recognized from the 2018 second quarter sale of an equity method
investment within our Distribution Solutions segment.
|
(7)
|
|
2018 fourth quarter and 2018 include a pre-tax loss of $122 million
($78 million after-tax) on debt extinguishment related to our
February 2018 tender offers to redeem a portion of our existing debt.
|
(8)
|
|
2018 fourth quarter and 2018 include net discrete tax benefits of
$54 million and $424 million realized in connection with the
December 2017 enactment of the 2017 Tax Cuts and Jobs Act ("2017 Tax
Act").
|
(9)
|
|
2017 includes an after-tax loss of $113 million recognized from the
2017 first quarter sale of our Brazilian pharmaceutical distribution
business within our discontinued operations.
|
(10)
|
|
2018 fourth quarter and 2018 primarily include the third-party
equity interests related to ClarusONE Sourcing Services LLP and
Vantage Oncology Holdings, LLC within our Distribution Solutions
segment's noncontrolling interests.
|
(11)
|
|
Certain computations may reflect rounding adjustments.
|
(12)
|
|
2018 fourth quarter diluted net loss per share is calculated by
excluding dilutive securities from the denominator due to their
antidilutive effects.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 2A
|
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING
RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
(unaudited)
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2018
|
|
Change
Vs. Prior Quarter
|
|
|
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
|
|
$
|
3,075
|
|
|
$
|
-
|
|
|
$
|
2
|
|
|
$
|
(94
|
)
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,983
|
|
|
10
|
|
%
|
|
1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1) (2)
|
|
$
|
(4,019
|
)
|
|
$
|
134
|
|
|
$
|
49
|
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
387
|
|
|
$
|
1,389
|
|
|
$
|
(2,060
|
)
|
|
(308
|
)
|
%
|
|
7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
28
|
|
|
$
|
-
|
|
|
$
|
1
|
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
(1
|
)
|
|
$
|
28
|
|
|
12
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from equity method investment in Change Healthcare (3)
|
|
$
|
23
|
|
|
$
|
74
|
|
|
$
|
48
|
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
(73
|
)
|
|
$
|
72
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment (4)
|
|
$
|
(122
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
122
|
|
|
$
|
-
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from continuing operations before income taxes
|
|
$
|
(1,094
|
)
|
|
$
|
208
|
|
|
$
|
100
|
|
|
$
|
(94
|
)
|
|
$
|
|
-
|
|
$
|
387
|
|
|
$
|
1,437
|
|
|
$
|
944
|
|
|
(123
|
)
|
%
|
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense) (5)
|
|
$
|
7
|
|
|
$
|
(64
|
)
|
|
$
|
(34
|
)
|
|
$
|
33
|
|
|
$
|
|
-
|
|
$
|
(33
|
)
|
|
$
|
(72
|
)
|
|
$
|
(163
|
)
|
|
(101
|
)
|
%
|
|
(22
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from continuing operations, net of tax, attributable
to McKesson Corporation
|
|
$
|
(1,148
|
)
|
|
$
|
144
|
|
|
$
|
66
|
|
|
$
|
(61
|
)
|
|
$
|
|
-
|
|
$
|
354
|
|
|
$
|
1,365
|
|
|
$
|
720
|
|
|
(132
|
)
|
%
|
|
(1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share from continuing
operations, net of tax, attributable to McKesson Corporation
(6) (7)
|
|
$
|
(5.58
|
)
|
|
$
|
0.70
|
|
|
$
|
0.31
|
|
|
$
|
(0.29
|
)
|
|
$
|
|
-
|
|
$
|
1.72
|
|
|
$
|
6.60
|
|
|
$
|
3.49
|
(8)
|
|
(133
|
)
|
%
|
|
2
|
|
%
|
Diluted weighted average common shares (7)
|
|
|
206
|
|
|
|
207
|
|
|
|
207
|
|
|
|
207
|
|
|
|
|
-
|
|
|
207
|
|
|
|
207
|
|
|
|
207
|
|
|
(4
|
)
|
%
|
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2017
|
|
|
|
|
|
|
|
|
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
|
|
$
|
2,796
|
|
|
$
|
-
|
|
|
$
|
10
|
|
|
$
|
144
|
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (9)
|
|
$
|
1,930
|
|
|
$
|
112
|
|
|
$
|
(3,964
|
)
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
10
|
|
|
$
|
(15
|
)
|
|
$
|
(1,927
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
25
|
|
|
$
|
-
|
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
|
-
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
4,674
|
|
|
$
|
112
|
|
|
$
|
(3,952
|
)
|
|
$
|
144
|
|
|
$
|
|
-
|
|
$
|
10
|
|
|
$
|
(15
|
)
|
|
$
|
973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(1,044
|
)
|
|
$
|
(35
|
)
|
|
$
|
924
|
|
|
$
|
(56
|
)
|
|
$
|
|
-
|
|
$
|
(3
|
)
|
|
$
|
6
|
|
|
$
|
(208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable
to McKesson Corporation
|
|
$
|
3,595
|
|
|
$
|
77
|
|
|
$
|
(3,028
|
)
|
|
$
|
88
|
|
|
$
|
|
-
|
|
$
|
7
|
|
|
$
|
(9
|
)
|
|
$
|
730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations,
net of tax, attributable to McKesson Corporation (6)
|
|
$
|
16.79
|
|
|
$
|
0.37
|
|
|
$
|
(14.15
|
)
|
|
$
|
0.41
|
|
|
$
|
|
-
|
|
$
|
0.03
|
|
|
$
|
(0.04
|
)
|
|
$
|
3.41
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
214
|
|
|
|
214
|
|
|
|
214
|
|
|
|
214
|
|
|
|
|
-
|
|
|
214
|
|
|
|
214
|
|
|
|
214
|
|
|
|
|
|
|
|
(1)
|
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $933 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment.
|
(2)
|
|
2018, as reported under GAAP, includes pre-tax asset impairment
charges of $290 million ($286 million after-tax) and pre-tax
restructuring charges of $21 million ($22 million after-tax)
primarily representing employee severance and lease exit costs.
These charges are included within our Distribution Solutions
segment.
|
(3)
|
|
The amortization of equity investment intangibles and other acquired
intangibles of $74 million is included in our proportionate share of
the income (loss) from our equity method investment in Change
Healthcare. 2018, as reported under GAAP, includes our proportionate
share of benefits recognized by Change Healthcare related to the
2017 Tax Act of $76 million.
|
(4)
|
|
2018, as reported under GAAP, includes a pre-tax loss of $122
million ($78 million after-tax) on debt extinguishment related to
our February 2018 tender offers to redeem a portion of our existing
debt.
|
(5)
|
|
2018, as reported under GAAP, includes net discrete tax benefits of
$54 million related to the 2017 Tax Act.
|
(6)
|
|
Certain computations may reflect rounding adjustments. Any
cross-footing differences in per share amounts is due to a
difference in weighted average shares outstanding in calculating
GAAP net loss and non-GAAP net income.
|
(7)
|
|
2018 fourth quarter diluted net loss per share as reported under
GAAP, is calculated using a weighted average of 206 million common
shares and excludes dilutive securities from the denominator due to
their antidilutive effects. Potentially dilutive securities were
excluded from the 2018 GAAP per share computations due to our
reported net loss for the fourth quarter of 2018. Diluted net
earnings per share (Non-GAAP), and GAAP to Non-GAAP per share
reconciling items, are calculated using a weighted average of 207
million common shares and includes dilutive securities.
|
(8)
|
|
Adjusted Earnings per share on a Constant Currency basis for the
fourth quarter of 2018 was $3.45 per diluted share, which excludes
the foreign currency exchange effect of $0.04 per diluted share.
|
(9)
|
|
2017, as reported under GAAP, includes a pre-tax gain of $3,947
million ($3,018 million after-tax), net, recognized from the
Healthcare Technology Net Asset Exchange within our 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2018
|
|
Change
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
|
|
$
|
11,184
|
|
|
$
|
-
|
|
|
$
|
14
|
|
|
$
|
(99
|
)
|
|
$
|
-
|
|
|
$
|
(1
|
)
|
|
$
|
-
|
|
|
$
|
11,098
|
|
|
(1
|
)
|
%
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (1) (2) (3) (4)
|
|
$
|
(10,422
|
)
|
|
$
|
503
|
|
|
$
|
68
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
680
|
|
|
$
|
1,571
|
|
|
$
|
(7,600
|
)
|
|
150
|
|
%
|
5
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net (5)
|
|
$
|
130
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(43
|
)
|
|
$
|
90
|
|
|
44
|
|
%
|
(11
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (6)
|
|
$
|
(248
|
)
|
|
$
|
288
|
|
|
$
|
293
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(61
|
)
|
|
$
|
272
|
|
|
-
|
|
%
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment (7)
|
|
$
|
(122
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
122
|
|
|
$
|
-
|
|
|
-
|
|
%
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
239
|
|
|
$
|
792
|
|
|
$
|
377
|
|
|
$
|
(99
|
)
|
|
$
|
-
|
|
|
$
|
679
|
|
|
$
|
1,589
|
|
|
$
|
3,577
|
|
|
(97
|
)
|
%
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense) (8)
|
|
$
|
53
|
|
|
$
|
(247
|
)
|
|
$
|
(124
|
)
|
|
$
|
35
|
|
|
$
|
-
|
|
|
$
|
(89
|
)
|
|
$
|
(331
|
)
|
|
$
|
(703
|
)
|
|
(103
|
)
|
%
|
(13
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable
to McKesson Corporation
|
|
$
|
62
|
|
|
$
|
545
|
|
|
$
|
253
|
|
|
$
|
(64
|
)
|
|
$
|
-
|
|
|
$
|
590
|
|
|
$
|
1,258
|
|
|
$
|
2,644
|
|
|
(99
|
)
|
%
|
(5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations,
net of tax, attributable to McKesson Corporation (9)
|
|
$
|
0.30
|
|
|
$
|
2.60
|
|
|
$
|
1.20
|
|
|
$
|
(0.31
|
)
|
|
$
|
-
|
|
|
$
|
2.82
|
|
|
$
|
6.01
|
|
|
$
|
12.62
|
(10)
|
|
(99
|
)
|
%
|
1
|
|
%
|
Diluted weighted average common shares
|
|
|
209
|
|
|
|
209
|
|
|
|
209
|
|
|
|
209
|
|
|
|
-
|
|
|
|
209
|
|
|
|
209
|
|
|
|
209
|
|
|
(6
|
)
|
%
|
(6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2017
|
|
|
|
|
|
|
|
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 (11)
|
|
$
|
11,271
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
(7
|
)
|
|
$
|
(144
|
)
|
|
$
|
(2
|
)
|
|
$
|
-
|
|
|
$
|
11,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (12) (13)
|
|
$
|
(4,162
|
)
|
|
$
|
440
|
|
|
$
|
(3,807
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
26
|
|
|
$
|
269
|
|
|
$
|
(7,234
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
90
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
6,891
|
|
|
$
|
444
|
|
|
$
|
(3,786
|
)
|
|
$
|
(7
|
)
|
|
$
|
(144
|
)
|
|
$
|
24
|
|
|
$
|
269
|
|
|
$
|
3,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(1,614
|
)
|
|
$
|
(135
|
)
|
|
$
|
887
|
|
|
$
|
3
|
|
|
$
|
56
|
|
|
$
|
(8
|
)
|
|
$
|
-
|
|
|
$
|
(811
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable
to McKesson Corporation
|
|
$
|
5,194
|
|
|
$
|
309
|
|
|
$
|
(2,899
|
)
|
|
$
|
(4
|
)
|
|
$
|
(88
|
)
|
|
$
|
16
|
|
|
$
|
269
|
|
|
$
|
2,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations,
net of tax, attributable to McKesson Corporation (9)
|
|
$
|
23.28
|
|
|
$
|
1.39
|
|
|
$
|
(13.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
0.07
|
|
|
$
|
1.20
|
|
|
$
|
12.54
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
223
|
|
|
|
|
|
|
(1)
|
|
2018, as reported under GAAP, includes a pre-tax gain of $37 million
($22 million after-tax) recognized in the first quarter of 2018
related to the final net working capital settlement and other
adjustments from the 2017 fourth quarter Healthcare Technology Net
Asset Exchange within our Technology Solutions segment.
|
(2)
|
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $1,283 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment.
|
(3)
|
|
2018, as reported under GAAP, includes non-cash pre-tax asset
impairment charges of $479 million ($443 million after-tax) and
pre-tax restructuring charges of $74 million ($67 million
after-tax) primarily representing employee severance and lease
exit costs. These charges are included within our Distribution
Solutions segment.
|
(4)
|
|
2018, as reported under GAAP, includes a pre-tax gain of $109
million ($30 million after-tax) recognized from the 2018 third
quarter sale of our EIS business within our Technology Solutions
segment.
|
(5)
|
|
2018, as reported under GAAP, includes a pre-tax gain of $43 million
($26 million after-tax) recognized from the 2018 second quarter sale
of an equity method investment within our Distribution Solutions
segment.
|
(6)
|
|
The amortization of equity investment intangibles and other acquired
intangibles of $288 million is included in our proportionate share
of the income (loss) from our equity method investment in Change
Healthcare. 2018, as reported under GAAP, includes our proportionate
share of benefits recognized by Change Healthcare related to the
2017 Tax Act of $76 million.
|
(7)
|
|
2018, as reported under GAAP, includes a pre-tax loss of $122
million ($78 million after-tax) on debt extinguishment related to
our February 2018 tender offers to redeem a portion of our existing
debt.
|
(8)
|
|
2018, as reported under GAAP, includes net discrete tax benefits of
$424 million related to the 2017 Tax Act.
|
(9)
|
|
Certain computations may reflect rounding adjustments.
|
(10)
|
|
Adjusted Earnings per share on a Constant Currency basis for 2018
was $12.56 per diluted share, which excludes the foreign currency
exchange effect of $0.06 per diluted share.
|
(11)
|
|
2017, as reported under GAAP, includes $144 million of net cash
proceeds primarily received in the first quarter of 2017
representing our share of antitrust legal settlements within our
Distribution Solutions segment.
|
(12)
|
|
2017, as reported under GAAP, includes a non-cash pre-tax goodwill
impairment charge of $290 million ($282 million after-tax)
recognized in the second quarter of 2017 for our EIS reporting unit
within our Technology Solutions segment.
|
(13)
|
|
2017, as reported under GAAP, includes a pre-tax gain of $3,947
million ($3,018 million after-tax), net, recognized from the 2017
fourth quarter Healthcare Technology Net Asset Exchange within our
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 3A
|
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT
FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP)
(unaudited)
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2018
|
|
Quarter Ended March 31, 2017
|
|
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
|
|
$
|
42,727
|
|
|
$
|
-
|
|
|
$
|
42,727
|
|
|
$
|
40,561
|
|
|
$
|
-
|
|
|
$
|
40,561
|
|
|
$
|
(122
|
)
|
|
$
|
42,605
|
|
|
$
|
(122
|
)
|
|
$
|
42,605
|
|
|
5
|
|
%
|
|
5
|
|
%
|
|
5
|
|
%
|
|
5
|
|
%
|
International pharmaceutical distribution & services
|
|
|
7,176
|
|
|
|
-
|
|
|
|
7,176
|
|
|
|
6,053
|
|
|
|
-
|
|
|
|
6,053
|
|
|
|
(890
|
)
|
|
|
6,286
|
|
|
|
(890
|
)
|
|
|
6,286
|
|
|
19
|
|
|
|
19
|
|
|
|
4
|
|
|
|
4
|
|
|
Medical-Surgical distribution & services
|
|
|
1,725
|
|
|
|
-
|
|
|
|
1,725
|
|
|
|
1,587
|
|
|
|
-
|
|
|
|
1,587
|
|
|
|
-
|
|
|
|
1,725
|
|
|
|
-
|
|
|
|
1,725
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
Total Distribution Solutions
|
|
|
51,628
|
|
|
|
-
|
|
|
|
51,628
|
|
|
|
48,201
|
|
|
|
-
|
|
|
|
48,201
|
|
|
|
(1,012
|
)
|
|
|
50,616
|
|
|
|
(1,012
|
)
|
|
|
50,616
|
|
|
7
|
|
|
|
7
|
|
|
|
5
|
|
|
|
5
|
|
|
Technology Solutions - Products and Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
512
|
|
|
|
-
|
|
|
|
512
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Revenues
|
|
$
|
51,628
|
|
|
$
|
-
|
|
|
$
|
51,628
|
|
|
$
|
48,713
|
|
|
$
|
-
|
|
|
$
|
48,713
|
|
|
$
|
(1,012
|
)
|
|
$
|
50,616
|
|
|
$
|
(1,012
|
)
|
|
$
|
50,616
|
|
|
6
|
|
%
|
|
6
|
|
%
|
|
4
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
$
|
3,075
|
|
|
$
|
(92
|
)
|
|
$
|
2,983
|
|
|
$
|
2,523
|
|
|
$
|
155
|
|
|
$
|
2,678
|
|
|
$
|
(97
|
)
|
|
$
|
2,978
|
|
|
$
|
(97
|
)
|
|
$
|
2,886
|
|
|
22
|
|
%
|
|
11
|
|
%
|
|
18
|
|
%
|
|
8
|
|
%
|
Technology Solutions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
273
|
|
|
|
(1
|
)
|
|
|
272
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Gross profit
|
|
$
|
3,075
|
|
|
$
|
(92
|
)
|
|
$
|
2,983
|
|
|
$
|
2,796
|
|
|
$
|
154
|
|
|
$
|
2,950
|
|
|
$
|
(97
|
)
|
|
$
|
2,978
|
|
|
$
|
(97
|
)
|
|
$
|
2,886
|
|
|
10
|
|
%
|
|
1
|
|
%
|
|
7
|
|
%
|
|
(2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2)
|
|
$
|
(3,789
|
)
|
|
$
|
1,938
|
|
|
$
|
(1,851
|
)
|
|
$
|
(1,775
|
)
|
|
$
|
141
|
|
|
$
|
(1,634
|
)
|
|
$
|
278
|
|
|
$
|
(3,511
|
)
|
|
$
|
90
|
|
|
$
|
(1,761
|
)
|
|
113
|
|
%
|
|
13
|
|
%
|
|
98
|
|
%
|
|
8
|
|
%
|
Technology Solutions (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,816
|
|
|
|
(3,991
|
)
|
|
|
(175
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Corporate
|
|
|
(230
|
)
|
|
|
21
|
|
|
|
(209
|
)
|
|
|
(111
|
)
|
|
|
(7
|
)
|
|
|
(118
|
)
|
|
|
(3
|
)
|
|
|
(233
|
)
|
|
|
(2
|
)
|
|
|
(211
|
)
|
|
107
|
|
|
|
77
|
|
|
|
110
|
|
|
|
79
|
|
|
Operating expenses
|
|
$
|
(4,019
|
)
|
|
$
|
1,959
|
|
|
$
|
(2,060
|
)
|
|
$
|
1,930
|
|
|
$
|
(3,857
|
)
|
|
$
|
(1,927
|
)
|
|
$
|
275
|
|
|
$
|
(3,744
|
)
|
|
$
|
88
|
|
|
$
|
(1,972
|
)
|
|
(308
|
)
|
%
|
|
7
|
|
%
|
|
(294
|
)
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
$
|
25
|
|
|
$
|
-
|
|
|
$
|
25
|
|
|
$
|
21
|
|
|
$
|
2
|
|
|
$
|
23
|
|
|
$
|
(3
|
)
|
|
$
|
22
|
|
|
$
|
(4
|
)
|
|
$
|
21
|
|
|
19
|
|
%
|
|
9
|
|
%
|
|
5
|
|
%
|
|
(9
|
)
|
%
|
Technology Solutions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Corporate
|
|
|
3
|
|
|
|
-
|
|
|
|
3
|
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
|
1
|
|
|
|
4
|
|
|
|
1
|
|
|
|
4
|
|
|
(25
|
)
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Other income, net
|
|
$
|
28
|
|
|
$
|
-
|
|
|
$
|
28
|
|
|
$
|
25
|
|
|
$
|
2
|
|
|
$
|
27
|
|
|
$
|
(2
|
)
|
|
$
|
26
|
|
|
$
|
(3
|
)
|
|
$
|
25
|
|
|
12
|
|
%
|
|
4
|
|
%
|
|
4
|
|
%
|
|
(7
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM EQUITY METHOD INVESTMENT IN CHANGE HEALTHCARE -
Technology Solutions
|
|
$
|
23
|
|
|
$
|
49
|
|
|
$
|
72
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
23
|
|
|
$
|
-
|
|
|
$
|
72
|
|
|
-
|
|
%
|
|
-
|
|
%
|
|
-
|
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2)
|
|
$
|
(689
|
)
|
|
$
|
1,846
|
|
|
$
|
1,157
|
|
|
$
|
769
|
|
|
$
|
298
|
|
|
$
|
1,067
|
|
|
$
|
178
|
|
|
$
|
(511
|
)
|
|
$
|
(11
|
)
|
|
$
|
1,146
|
|
|
(190
|
)
|
%
|
|
8
|
|
%
|
|
(166
|
)
|
%
|
|
7
|
|
%
|
Technology Solutions (3) (5)
|
|
|
23
|
|
|
|
49
|
|
|
|
72
|
|
|
|
4,089
|
|
|
|
(3,992
|
)
|
|
|
97
|
|
|
|
-
|
|
|
|
23
|
|
|
|
-
|
|
|
|
72
|
|
|
(99
|
)
|
|
|
(26
|
)
|
|
|
(99
|
)
|
|
|
(26
|
)
|
|
Operating profit (loss)
|
|
|
(666
|
)
|
|
|
1,895
|
|
|
|
1,229
|
|
|
|
4,858
|
|
|
|
(3,694
|
)
|
|
|
1,164
|
|
|
|
178
|
|
|
|
(488
|
)
|
|
|
(11
|
)
|
|
|
1,218
|
|
|
(114
|
)
|
|
|
6
|
|
|
|
(110
|
)
|
|
|
5
|
|
|
Corporate
|
|
|
(227
|
)
|
|
|
21
|
|
|
|
(206
|
)
|
|
|
(107
|
)
|
|
|
(7
|
)
|
|
|
(114
|
)
|
|
|
(2
|
)
|
|
|
(229
|
)
|
|
|
(1
|
)
|
|
|
(207
|
)
|
|
112
|
|
|
|
81
|
|
|
|
114
|
|
|
|
82
|
|
|
Income (Loss) from continuing operations before interest
expense and income taxes
|
|
$
|
(893
|
)
|
|
$
|
1,916
|
|
|
$
|
1,023
|
|
|
$
|
4,751
|
|
|
$
|
(3,701
|
)
|
|
$
|
1,050
|
|
|
$
|
176
|
|
|
$
|
(717
|
)
|
|
$
|
(12
|
)
|
|
$
|
1,011
|
|
|
(119
|
)
|
%
|
|
(3
|
)
|
%
|
|
(115
|
)
|
%
|
|
(4
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
(1.33
|
)
|
%
|
|
|
|
2.24
|
|
%
|
|
1.60
|
|
%
|
|
|
|
2.21
|
|
%
|
|
|
|
(1.01
|
)
|
%
|
|
|
|
2.26
|
|
%
|
(293
|
)
|
bp
|
|
3
|
|
bp
|
|
(261
|
)
|
bp
|
|
5
|
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit (loss) excluding noncontrolling
interests as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (4)
|
|
|
|
|
|
|
2.15
|
|
%
|
|
|
|
|
|
2.16
|
|
%
|
|
|
|
|
|
|
|
2.17
|
|
%
|
|
|
|
(1
|
)
|
bp
|
|
|
|
|
1
|
|
bp
|
(1)
|
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $933 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment.
|
(2)
|
|
2018, as reported under GAAP, includes pre-tax asset impairment
charges of $290 million ($286 million after-tax) and pre-tax
restructuring charges of $21 million ($22 million after-tax)
primarily representing employee severance and lease exit costs.
These charges are included within our Distribution Solutions
segment.
|
(3)
|
|
2017, as reported under GAAP, includes a pre-tax gain of $3,947
million ($3,018 million after-tax), net, recognized from the
Healthcare Technology Net Asset Exchange within our Technology
Solutions segment.
|
(4)
|
|
Our Distribution Solutions segment's noncontrolling interests
primarily include the third-party equity interests related to
ClarusONE Sourcing Services LLP and Vantage Oncology Holdings, LLC.
|
(5)
|
|
Operating profit for our Technology Solutions segment for 2018
includes only our proportionate share of income (loss) from our
equity method investment in Change Healthcare. 2017 operating profit
for this segment also included the majority of our McKesson
Technology Solutions businesses (“Core MTS Business”), which were
contributed to the Change Healthcare joint venture in the fourth
quarter of 2017, and the EIS business which was sold in the third
quarter of 2018.
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2018
|
|
Year Ended March 31, 2017
|
|
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
|
|
$
|
174,186
|
|
|
$
|
-
|
|
|
$
|
174,186
|
|
|
$
|
164,832
|
|
|
$
|
-
|
|
|
$
|
164,832
|
|
|
$
|
(252
|
)
|
|
$
|
173,934
|
|
|
$
|
(252
|
)
|
|
$
|
173,934
|
|
|
|
6
|
|
%
|
6
|
|
%
|
|
6
|
|
%
|
6
|
|
%
|
International pharmaceutical distribution & services
|
|
|
27,320
|
|
|
|
-
|
|
|
|
27,320
|
|
|
|
24,847
|
|
|
|
-
|
|
|
|
24,847
|
|
|
|
(1,324
|
)
|
|
|
25,996
|
|
|
|
(1,324
|
)
|
|
|
25,996
|
|
|
|
10
|
|
|
10
|
|
|
|
5
|
|
|
5
|
|
|
Medical-Surgical distribution & services
|
|
|
6,611
|
|
|
|
-
|
|
|
|
6,611
|
|
|
|
6,244
|
|
|
|
-
|
|
|
|
6,244
|
|
|
|
-
|
|
|
|
6,611
|
|
|
|
-
|
|
|
|
6,611
|
|
|
|
6
|
|
|
6
|
|
|
|
6
|
|
|
6
|
|
|
Total Distribution Solutions
|
|
|
208,117
|
|
|
|
-
|
|
|
|
208,117
|
|
|
|
195,923
|
|
|
|
-
|
|
|
|
195,923
|
|
|
|
(1,576
|
)
|
|
|
206,541
|
|
|
|
(1,576
|
)
|
|
|
206,541
|
|
|
|
6
|
|
|
6
|
|
|
|
5
|
|
|
5
|
|
|
Technology Solutions - Products and Services
|
|
|
240
|
|
|
|
-
|
|
|
|
240
|
|
|
|
2,610
|
|
|
|
-
|
|
|
|
2,610
|
|
|
|
-
|
|
|
|
240
|
|
|
|
-
|
|
|
|
240
|
|
|
|
(91
|
)
|
|
(91
|
)
|
|
|
(91
|
)
|
|
(91
|
)
|
|
Revenues
|
|
$
|
208,357
|
|
|
$
|
-
|
|
|
$
|
208,357
|
|
|
$
|
198,533
|
|
|
$
|
-
|
|
|
$
|
198,533
|
|
|
$
|
(1,576
|
)
|
|
$
|
206,781
|
|
|
$
|
(1,576
|
)
|
|
$
|
206,781
|
|
|
|
5
|
|
%
|
5
|
|
%
|
|
4
|
|
%
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1)
|
|
$
|
11,064
|
|
|
$
|
(87
|
)
|
|
$
|
10,977
|
|
|
$
|
9,856
|
|
|
$
|
(140
|
)
|
|
$
|
9,716
|
|
|
$
|
(136
|
)
|
|
$
|
10,928
|
|
|
$
|
(136
|
)
|
|
$
|
10,841
|
|
|
|
12
|
|
%
|
13
|
|
%
|
|
11
|
|
%
|
12
|
|
%
|
Technology Solutions
|
|
|
120
|
|
|
|
1
|
|
|
|
121
|
|
|
|
1,415
|
|
|
|
1
|
|
|
|
1,416
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
121
|
|
|
|
(92
|
)
|
|
(91
|
)
|
|
|
(92
|
)
|
|
(91
|
)
|
|
Gross profit
|
|
$
|
11,184
|
|
|
$
|
(86
|
)
|
|
$
|
11,098
|
|
|
$
|
11,271
|
|
|
$
|
(139
|
)
|
|
$
|
11,132
|
|
|
$
|
(136
|
)
|
|
$
|
11,048
|
|
|
$
|
(136
|
)
|
|
$
|
10,962
|
|
|
|
(1
|
)
|
%
|
-
|
|
%
|
|
(2
|
)
|
%
|
(2
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (2) (3)
|
|
$
|
(9,953
|
)
|
|
$
|
2,970
|
|
|
$
|
(6,983
|
)
|
|
$
|
(6,559
|
)
|
|
$
|
554
|
|
|
$
|
(6,005
|
)
|
|
$
|
336
|
|
|
$
|
(9,617
|
)
|
|
$
|
118
|
|
|
$
|
(6,865
|
)
|
|
|
52
|
|
%
|
16
|
|
%
|
|
47
|
|
%
|
14
|
|
%
|
Technology Solutions (3) (4) (5)
|
|
|
104
|
|
|
|
(194
|
)
|
|
|
(90
|
)
|
|
|
2,799
|
|
|
|
(3,622
|
)
|
|
|
(823
|
)
|
|
|
-
|
|
|
|
104
|
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
(96
|
)
|
|
(89
|
)
|
|
|
(96
|
)
|
|
(89
|
)
|
|
Corporate
|
|
|
(573
|
)
|
|
|
46
|
|
|
|
(527
|
)
|
|
|
(402
|
)
|
|
|
(4
|
)
|
|
|
(406
|
)
|
|
|
(1
|
)
|
|
|
(574
|
)
|
|
|
(1
|
)
|
|
|
(528
|
)
|
|
|
43
|
|
|
30
|
|
|
|
43
|
|
|
30
|
|
|
Operating expenses
|
|
$
|
(10,422
|
)
|
|
$
|
2,822
|
|
|
$
|
(7,600
|
)
|
|
$
|
(4,162
|
)
|
|
$
|
(3,072
|
)
|
|
$
|
(7,234
|
)
|
|
$
|
335
|
|
|
$
|
(10,087
|
)
|
|
$
|
117
|
|
|
$
|
(7,483
|
)
|
|
|
150
|
|
%
|
5
|
|
%
|
|
142
|
|
%
|
3
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (6)
|
|
$
|
120
|
|
|
$
|
(40
|
)
|
|
$
|
80
|
|
|
$
|
64
|
|
|
$
|
11
|
|
|
$
|
75
|
|
|
$
|
(3
|
)
|
|
$
|
117
|
|
|
$
|
(4
|
)
|
|
$
|
76
|
|
|
|
88
|
|
%
|
7
|
|
%
|
|
83
|
|
%
|
1
|
|
%
|
Technology Solutions
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
Corporate
|
|
|
9
|
|
|
|
-
|
|
|
|
9
|
|
|
|
25
|
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
|
9
|
|
|
|
-
|
|
|
|
9
|
|
|
|
(64
|
)
|
|
(64
|
)
|
|
|
(64
|
)
|
|
(64
|
)
|
|
Other income, net
|
|
$
|
130
|
|
|
$
|
(40
|
)
|
|
$
|
90
|
|
|
$
|
90
|
|
|
$
|
11
|
|
|
$
|
101
|
|
|
$
|
(3
|
)
|
|
$
|
127
|
|
|
$
|
(4
|
)
|
|
$
|
86
|
|
|
|
44
|
|
%
|
(11
|
)
|
%
|
|
41
|
|
%
|
(15
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM EQUITY METHOD INVESTMENT IN CHANGE
HEALTHCARE - Technology Solutions
|
|
$
|
(248
|
)
|
|
$
|
520
|
|
|
$
|
272
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(248
|
)
|
|
$
|
-
|
|
|
$
|
272
|
|
|
|
-
|
|
%
|
-
|
|
%
|
|
-
|
|
%
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (1) (2) (3) (6)
|
|
$
|
1,231
|
|
|
$
|
2,843
|
|
|
$
|
4,074
|
|
|
$
|
3,361
|
|
|
$
|
425
|
|
|
$
|
3,786
|
|
|
$
|
197
|
|
|
$
|
1,428
|
|
|
$
|
(22
|
)
|
|
$
|
4,052
|
|
|
|
(63
|
)
|
%
|
8
|
|
%
|
|
(58
|
)
|
%
|
7
|
|
%
|
Technology Solutions (3) (4) (5) (8)
|
|
|
(23
|
)
|
|
|
327
|
|
|
|
304
|
|
|
|
4,215
|
|
|
|
(3,621
|
)
|
|
|
594
|
|
|
|
-
|
|
|
|
(23
|
)
|
|
|
-
|
|
|
|
304
|
|
|
|
(101
|
)
|
|
(49
|
)
|
|
|
(101
|
)
|
|
(49
|
)
|
|
Operating profit
|
|
|
1,208
|
|
|
|
3,170
|
|
|
|
4,378
|
|
|
|
7,576
|
|
|
|
(3,196
|
)
|
|
|
4,380
|
|
|
|
197
|
|
|
|
1,405
|
|
|
|
(22
|
)
|
|
|
4,356
|
|
|
|
(84
|
)
|
|
-
|
|
|
|
(81
|
)
|
|
(1
|
)
|
|
Corporate
|
|
|
(564
|
)
|
|
|
46
|
|
|
|
(518
|
)
|
|
|
(377
|
)
|
|
|
(4
|
)
|
|
|
(381
|
)
|
|
|
(1
|
)
|
|
|
(565
|
)
|
|
|
(1
|
)
|
|
|
(519
|
)
|
|
|
50
|
|
|
36
|
|
|
|
50
|
|
|
36
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
$
|
644
|
|
|
$
|
3,216
|
|
|
$
|
3,860
|
|
|
$
|
7,199
|
|
|
$
|
(3,200
|
)
|
|
$
|
3,999
|
|
|
$
|
196
|
|
|
$
|
840
|
|
|
$
|
(23
|
)
|
|
$
|
3,837
|
|
|
|
(91
|
)
|
%
|
(3
|
)
|
%
|
|
(88
|
)
|
%
|
(4
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit as a % of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions
|
|
|
0.59
|
|
%
|
|
|
|
1.96
|
|
%
|
|
1.72
|
|
%
|
|
|
|
1.93
|
|
%
|
|
|
|
0.69
|
|
%
|
|
|
|
1.96
|
|
%
|
|
(113
|
)
|
bp
|
3
|
|
bp
|
|
(103
|
)
|
bp
|
3
|
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit excluding noncontrolling interests as a
% of revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution Solutions (7)
|
|
|
|
|
|
|
1.87
|
|
%
|
|
|
|
|
|
1.91
|
|
%
|
|
|
|
|
|
|
|
1.87
|
|
%
|
|
|
|
(4
|
)
|
bp
|
|
|
|
(4
|
)
|
bp
|
(1)
|
2017, as reported under GAAP, includes $144 million of net cash
proceeds primarily received in the first quarter of 2017
representing our share of antitrust legal settlements within our
Distribution Solutions segment.
|
(2)
|
2018, as reported under GAAP, includes non-cash pre-tax asset
impairment charges of $479 million ($443 million after-tax) and
pre-tax restructuring charges of $74 million ($67 million
after-tax) primarily representing employee severance and lease
exit costs. These charges are included within our Distribution
Solutions segment.
|
(3)
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $1,283 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment. 2017, as reported under
GAAP, includes the 2017 second quarter 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)
|
2018, as reported under GAAP, includes a pre-tax gain of $37 million
($22 million after-tax) recognized in the first quarter of 2018
related to the final net working capital settlement and other
adjustments from the 2017 fourth quarter Healthcare Technology Net
Asset Exchange within our Technology Solutions segment. 2017, as
reported under GAAP, includes a pre-tax gain of $3,947 million
($3,018 million after-tax), net, recognized from the 2017 fourth
quarter Healthcare Technology Net Asset Exchange within our
Technology Solutions segment.
|
(5)
|
2018, as reported under GAAP, includes a pre-tax gain of $109
million ($30 million after-tax) recognized from the 2018 third
quarter sale of our EIS reporting unit within the Technology
Solutions segment.
|
(6)
|
2018, as reported under GAAP, includes a pre-tax gain of $43 million
($26 million after-tax) recognized from the 2018 second quarter sale
of an equity method investment within our Distribution Solutions
segment.
|
(7)
|
Our Distribution Solutions segment's noncontrolling interests
primarily include the third-party equity interests related to
ClarusONE Sourcing Services LLP and Vantage Oncology Holdings, LLC.
|
(8)
|
Operating profit for our Technology Solutions segment for 2018
includes only our EIS business, the gain on sale of our EIS
business, as reported under GAAP, and our proportionate share of
income (loss) from our equity method investment in Change
Healthcare. 2017 operating profit for this segment also included the
Core MTS Business, which was contributed to the Change Healthcare
joint venture in the fourth quarter of 2017.
|
|
|
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 March 31, 2018
|
|
Quarter Ended March 31, 2017
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
51,628
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
51,628
|
|
|
$
|
48,201
|
|
$
|
512
|
|
|
$
|
-
|
|
|
$
|
48,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5)
|
|
$
|
(689
|
)
|
|
$
|
23
|
|
|
$
|
(227
|
)
|
|
$
|
(893
|
)
|
|
$
|
769
|
|
$
|
4,089
|
|
|
$
|
(107
|
)
|
|
$
|
4,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Acquisition-Related Intangibles (4)
|
|
$
|
134
|
|
|
$
|
74
|
|
|
$
|
-
|
|
|
$
|
208
|
|
|
$
|
108
|
|
$
|
4
|
|
|
$
|
-
|
|
|
$
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related Expenses and Adjustments
|
|
|
45
|
|
|
|
48
|
|
|
|
7
|
|
|
|
100
|
|
|
|
40
|
|
|
(3,994
|
)
|
|
|
2
|
|
|
|
(3,952
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO Inventory-Related Adjustments
|
|
|
(94
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(94
|
)
|
|
|
144
|
|
|
-
|
|
|
|
-
|
|
|
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains from Antitrust Legal Settlements
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Charges, Net
|
|
|
371
|
|
|
|
-
|
|
|
|
16
|
|
|
|
387
|
|
|
|
6
|
|
|
(2
|
)
|
|
|
6
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments, Net
|
|
|
1,390
|
|
|
|
(73
|
)
|
|
|
(2
|
)
|
|
|
1,315
|
|
|
|
-
|
|
|
-
|
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
$
|
1,846
|
|
|
$
|
49
|
|
|
$
|
21
|
|
|
$
|
1,916
|
|
|
$
|
298
|
|
$
|
(3,992
|
)
|
|
$
|
(7
|
)
|
|
$
|
(3,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
51,628
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
51,628
|
|
|
$
|
48,201
|
|
$
|
512
|
|
|
$
|
-
|
|
|
$
|
48,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and income
taxes (5)
|
|
$
|
1,157
|
|
|
$
|
72
|
|
|
$
|
(206
|
)
|
|
$
|
1,023
|
|
|
$
|
1,067
|
|
$
|
97
|
|
|
$
|
(114
|
)
|
|
$
|
1,050
|
|
(1)
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $933 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment.
|
(2)
|
2018, as reported under GAAP, includes pre-tax asset impairment
charges of $290 million ($286 million after-tax) and pre-tax
restructuring charges of $21 million ($22 million after-tax)
primarily representing employee severance and lease exit costs.
These charges are included within our Distribution Solutions
segment.
|
(3)
|
2017, as reported under GAAP, includes a pre-tax gain of $3,947
million ($3,018 million after-tax), net, recognized from the 2017
fourth quarter Healthcare Technology Net Asset Exchange within our
Technology Solutions segment.
|
(4)
|
2018 for our Technology Solutions segment includes amortization of
equity investment intangibles and other acquired intangibles of $74
million included in our proportionate share of income (loss) from
our equity method investment in Change Healthcare.
|
(5)
|
The results of our Technology Solutions segment for 2018 include
only our proportionate share of income (loss) from our equity method
investment in Change Healthcare. 2017 operating profit for this
segment also included the Core MTS Business, which was contributed
to the Change Healthcare joint venture in the fourth quarter of
2017, and the EIS business which was sold in the third quarter of
2018.
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled “Supplemental Non-GAAP
Financial Information” of this release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4B
|
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT
FINANCIAL RESULTS TO ADJUSTED EARNINGS (NON-GAAP) - BY ADJUSTMENT
TYPE
(unaudited)
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended March 31, 2018
|
|
Year Ended March 31, 2017
|
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
|
Distribution Solutions
|
|
Technology Solutions
|
|
Corporate
|
|
Total
|
As Reported (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
208,117
|
|
|
$
|
240
|
|
|
$
|
-
|
|
|
$
|
208,357
|
|
|
$
|
195,923
|
|
|
$
|
2,610
|
|
|
$
|
-
|
|
|
$
|
198,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before interest expense
and income taxes (1) (2) (3) (4) (5) (6) (7) (8)
|
|
$
|
1,231
|
|
|
$
|
(23
|
)
|
|
$
|
(564
|
)
|
|
$
|
644
|
|
|
$
|
3,361
|
|
|
$
|
4,215
|
|
|
$
|
(377
|
)
|
|
$
|
7,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Acquisition-Related Intangibles (6)
|
|
$
|
503
|
|
|
$
|
289
|
|
|
$
|
-
|
|
|
$
|
792
|
|
|
$
|
419
|
|
|
$
|
25
|
|
|
$
|
-
|
|
|
$
|
444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related Expenses and Adjustments
|
|
|
113
|
|
|
|
255
|
|
|
|
9
|
|
|
|
377
|
|
|
|
144
|
|
|
|
(3,936
|
)
|
|
|
6
|
|
|
|
(3,786
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO Inventory-Related Adjustments
|
|
|
(99
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(99
|
)
|
|
|
(7
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains from Antitrust Legal Settlements
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(144
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring Charges, Net
|
|
|
632
|
|
|
|
(1
|
)
|
|
|
48
|
|
|
|
679
|
|
|
|
19
|
|
|
|
-
|
|
|
|
5
|
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Adjustments, Net
|
|
|
1,694
|
|
|
|
(216
|
)
|
|
|
(11
|
)
|
|
|
1,467
|
|
|
|
(6
|
)
|
|
|
290
|
|
|
|
(15
|
)
|
|
|
269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax adjustments
|
|
$
|
2,843
|
|
|
$
|
327
|
|
|
$
|
46
|
|
|
$
|
3,216
|
|
|
$
|
425
|
|
|
$
|
(3,621
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings (Non-GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
208,117
|
|
|
$
|
240
|
|
|
$
|
-
|
|
|
$
|
208,357
|
|
|
$
|
195,923
|
|
|
$
|
2,610
|
|
|
$
|
-
|
|
|
$
|
198,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest expense and
income taxes (8)
|
|
$
|
4,074
|
|
|
$
|
304
|
|
|
$
|
(518
|
)
|
|
$
|
3,860
|
|
|
$
|
3,786
|
|
|
$
|
594
|
|
|
$
|
(381
|
)
|
|
$
|
3,999
|
|
(1)
|
2018, as reported under GAAP, includes a pre-tax gain of $37 million
($22 million after-tax) recognized in the first quarter of 2018
related to the final net working capital settlement and other
adjustments from the 2017 fourth quarter Healthcare Technology Net
Asset Exchange within our Technology Solutions segment. 2017, as
reported under GAAP, includes a pre-tax gain of $3,947 million
($3,018 million after-tax), net, recognized from the 2017 fourth
quarter Healthcare Technology Net Asset Exchange within our
Technology Solutions segment.
|
(2)
|
2018, as reported under GAAP, includes non-cash goodwill impairment
charges (pre-tax and after-tax) of $1,283 million for our McKesson
Europe reporting unit and $455 million for our Rexall Health
reporting unit. The 2018 goodwill impairment charges are recorded
within our Distribution Solutions segment. 2017, as reported under
GAAP, includes the 2017 second quarter 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)
|
2018, as reported under GAAP, includes non-cash pre-tax asset
impairment charges of $479 million ($443 million after-tax) and
pre-tax restructuring charges of $74 million ($67 million
after-tax) primarily representing employee severance and lease
exit costs. These charges are included within our Distribution
Solutions segment.
|
(4)
|
2018, as reported under GAAP, includes a pre-tax gain of $109
million ($30 million after-tax) recognized from the 2018 third
quarter sale of our EIS reporting unit within the Technology
Solutions segment.
|
(5)
|
2018, as reported under GAAP, includes a pre-tax gain of $43 million
($26 million after-tax) recognized from the 2018 second quarter sale
of an equity method investment within our Distribution Solutions
segment.
|
(6)
|
2018 for our Technology Solutions segment includes amortization of
equity investment intangibles and other acquired intangibles of $288
million included in our proportionate share of income (loss) from
our equity method investment in Change Healthcare.
|
(7)
|
2017, as reported under GAAP, includes $144 million of net cash
proceeds primarily received in the first quarter of 2017
representing our share of antitrust legal settlements within our
Distribution Solutions segment.
|
(8)
|
The results of our Technology Solutions segment for 2018 include
only our EIS business, the gain on sale of our EIS business, as
reported under GAAP, and our proportionate share of income (loss)
from our equity method investment in Change Healthcare. 2017
operating profit for this segment also included the Core MTS
Business, which was contributed to the Change Healthcare joint
venture in the fourth quarter of 2017.
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled “Supplemental Non-GAAP
Financial Information” of this release.
|
|
|
|
|
|
|
Schedule 5
|
McKESSON CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
(in millions)
|
|
|
|
|
|
|
|
March 31,
2018
|
|
March 31,
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,672
|
|
$
|
2,783
|
Receivables, net
|
|
|
17,711
|
|
|
18,215
|
Inventories, net
|
|
|
16,310
|
|
|
15,278
|
Prepaid expenses and other
|
|
|
443
|
|
|
672
|
Total Current Assets
|
|
|
37,136
|
|
|
36,948
|
Property, Plant and Equipment, Net
|
|
|
2,464
|
|
|
2,292
|
Goodwill
|
|
|
10,924
|
|
|
10,586
|
Intangible Assets, Net
|
|
|
4,102
|
|
|
3,665
|
Equity Method Investment in Change Healthcare
|
|
|
3,728
|
|
|
4,063
|
Other Noncurrent Assets
|
|
|
2,027
|
|
|
3,415
|
Total Assets
|
|
$
|
60,381
|
|
$
|
60,969
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
AND EQUITY
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Drafts and accounts payable
|
|
$
|
32,177
|
|
$
|
31,022
|
Short-term borrowings
|
|
|
-
|
|
|
183
|
Deferred revenue
|
|
|
63
|
|
|
346
|
Current portion of long-term debt
|
|
|
1,129
|
|
|
1,057
|
Other accrued liabilities
|
|
|
3,316
|
|
|
3,004
|
Total Current Liabilities
|
|
|
36,685
|
|
|
35,612
|
Long-Term Debt
|
|
|
6,751
|
|
|
7,305
|
Long-Term Deferred Tax Liabilities
|
|
|
2,804
|
|
|
3,678
|
Other Noncurrent Liabilities
|
|
|
2,625
|
|
|
1,774
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
1,459
|
|
|
1,327
|
|
|
|
|
|
McKesson Corporation Stockholders' Equity
|
|
|
9,804
|
|
|
11,095
|
Noncontrolling Interests
|
|
|
253
|
|
|
178
|
Total Equity
|
|
|
10,057
|
|
|
11,273
|
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
$
|
60,381
|
|
$
|
60,969
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 6
|
McKESSON CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(in
millions)
|
|
|
|
|
|
|
|
Year Ended March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
297
|
|
|
$
|
5,153
|
|
Adjustments to reconcile to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
951
|
|
|
|
910
|
|
Gain on net asset exchange, net
|
|
|
(37
|
)
|
|
|
(3,947
|
)
|
Goodwill and other asset impairment charges
|
|
|
2,217
|
|
|
|
290
|
|
Deferred taxes
|
|
|
(868
|
)
|
|
|
882
|
|
Share-based compensation expense
|
|
|
69
|
|
|
|
115
|
|
LIFO credits
|
|
|
(99
|
)
|
|
|
(7
|
)
|
Loss from equity method investment in Change Healthcare
|
|
|
248
|
|
|
|
-
|
|
Loss (gain) from sale of businesses and equity investments
|
|
|
(169
|
)
|
|
|
94
|
|
Other non-cash items
|
|
|
(2
|
)
|
|
|
88
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
Receivables
|
|
|
1,175
|
|
|
|
(762
|
)
|
Inventories
|
|
|
(458
|
)
|
|
|
320
|
|
Drafts and accounts payable
|
|
|
271
|
|
|
|
2,070
|
|
Deferred revenue
|
|
|
(143
|
)
|
|
|
(87
|
)
|
Taxes
|
|
|
671
|
|
|
|
146
|
|
Settlement payment
|
|
|
-
|
|
|
|
(150
|
)
|
Other
|
|
|
222
|
|
|
|
(371
|
)
|
Net cash provided by operating activities
|
|
|
4,345
|
|
|
|
4,744
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
Property acquisitions
|
|
|
(405
|
)
|
|
|
(404
|
)
|
Capitalized software expenditures
|
|
|
(175
|
)
|
|
|
(158
|
)
|
Acquisitions, net of cash and cash equivalents acquired
|
|
|
(2,893
|
)
|
|
|
(4,237
|
)
|
Proceeds from sale of businesses and other assets, net
|
|
|
374
|
|
|
|
206
|
|
Payments received on Healthcare Technology Net Asset Exchange, net
|
|
|
126
|
|
|
|
1,228
|
|
Restricted cash for acquisitions
|
|
|
1,469
|
|
|
|
(506
|
)
|
Other
|
|
|
(18
|
)
|
|
|
75
|
|
Net cash used in investing activities
|
|
|
(1,522
|
)
|
|
|
(3,796
|
)
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
20,542
|
|
|
|
8,294
|
|
Repayments of short-term borrowings
|
|
|
(20,725
|
)
|
|
|
(8,124
|
)
|
Proceeds from issuances of long-term debt
|
|
|
1,522
|
|
|
|
1,824
|
|
Repayments of long-term debt
|
|
|
(2,287
|
)
|
|
|
(1,601
|
)
|
Payments for debt extinguishments
|
|
|
(112
|
)
|
|
|
-
|
|
Common stock transactions:
|
|
|
|
|
Issuances
|
|
|
132
|
|
|
|
120
|
|
Share repurchases, including shares surrendered for tax withholding
|
|
|
(1,709
|
)
|
|
|
(2,311
|
)
|
Dividends paid
|
|
|
(262
|
)
|
|
|
(253
|
)
|
Other
|
|
|
(185
|
)
|
|
|
(18
|
)
|
Net cash used in financing activities
|
|
|
(3,084
|
)
|
|
|
(2,069
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
150
|
|
|
|
(144
|
)
|
Net decrease in cash and cash equivalents
|
|
|
(111
|
)
|
|
|
(1,265
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
2,783
|
|
|
|
4,048
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,672
|
|
|
$
|
2,783
|
|
|
|
|
|
|
|
|
|
|
|
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 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. These restructuring charges are reflected under various
captions within our operating expenses.
|
|
|
|
|
|
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; certain discrete benefits
related to the December 2017 enactment of the 2017 Tax Cuts and
Jobs Act; gains or losses from debt extinguishment; 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
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.
|