SAN FRANCISCO--(BUSINESS WIRE)--McKesson Corporation (NYSE:MCK) today reported that revenues for the
second quarter ended September 30, 2018, were $53.1 billion, up 2%
compared to $52.1 billion a year ago, and also up 2% on a constant
currency basis. On the basis of U.S. generally accepted accounting
principles (“GAAP”), second-quarter earnings per diluted share from
continuing operations was $2.51, compared to earnings per diluted share
of $0.01 a year ago. GAAP earnings per diluted share included a pre-tax
benefit of $90 million, or $0.33 per diluted share, related to a
reversal of a contractual liability associated with McKesson’s equity
investment in Change Healthcare. Prior year GAAP earnings per diluted
share included $2.60 per diluted share of non-cash goodwill and other
long-lived asset impairment charges, and restructuring charges.
Second-quarter Adjusted Earnings per diluted share was $3.60, up 10%
compared to $3.28 a year ago, primarily driven by a lower tax rate,
including a discrete tax benefit of $42 million, or $0.21 per diluted
share, and the aforementioned reversal of a contractual liability,
partially offset by the previously announced customer losses in our U.S.
Pharmaceutical business, incremental challenges in our businesses in the
U.K. and France, and increased litigation expenses related to opioids.
“While our operational performance reflects anticipated challenges
coming into the fiscal year, our second quarter results were primarily
affected by the incremental headwinds we are facing in the U.K. and
French markets, driving underperformance versus our expectations. We
continue to have conversations with the U.K. government to discuss the
patient-care services that pharmacies provide and how this low-cost
setting of care is vital to the healthcare system, while also working to
accelerate efficiency and growth opportunities across all of our
businesses,” said John H. Hammergren, chairman and chief executive
officer.
For the first half of the fiscal year, McKesson generated cash from
operations of $318 million, and invested $248 million internally,
resulting in free cash flow of $70 million, which was ahead of the
company’s expectations. During the first half of the fiscal year,
McKesson also paid $840 million for acquisitions, repurchased $877
million of its common stock, paid $139 million in dividends and the
company ended the quarter with cash and cash equivalents of $2.1 billion.
“We are pleased with the contribution of our recent acquisitions,
including MSD and RxCrossroads, which aligns with our stated multi-year
strategic growth initiative. And we also continue to return capital to
our shareholders through share repurchases and dividends,” concluded
Hammergren.
Multi-Year Strategic Growth Initiative Update
As previously announced on April 25, 2018, McKesson launched a
multi-year strategic growth initiative, inclusive of plans to optimize
the company’s operating and cost structures. The company expects these
cost actions will strengthen McKesson’s ability to focus resources,
reduce complexity and improve efficiency and cost-competitiveness,
enhancing and optimizing operations. McKesson expects these initiatives
and actions will generate approximately $300 million to $400 million in
annual pre-tax gross savings that will be substantially realized by the
end of Fiscal 2021.
“We’ve prioritized growth opportunities, which include our manufacturer
value proposition, services to support specialty pharmaceuticals and the
future of retail pharmacy, all supported by data and analytics. Our cost
reductions and operating model optimization will drive significant
savings to support these priority growth areas,” said Brian S. Tyler,
president and chief operating officer. “And as we move forward, the
savings generated will make McKesson a more streamlined and efficient
operation, complementing our investments and improving operating profit
growth for the organization.”
Segment Results
U.S. Pharmaceutical and Specialty Solutions revenues were $41.6 billion
for the quarter, up 2%, driven primarily by market growth and
acquisitions, partially offset by previously announced customer losses
and branded to generic conversions. Segment GAAP operating profit was
$610 million and GAAP operating margin was 1.47%. Segment adjusted
operating profit was $635 million and adjusted operating margin was
1.53%.
European Pharmaceutical Solutions revenues were $6.6 billion for the
quarter, down 2% on a reported basis and down 1% on a constant currency
basis, driven primarily by the previously disclosed reduction in owned
retail pharmacies and a challenging operating environment in the U.K.
and increased competition in France versus the prior year, partially
offset by market growth in other countries. Segment GAAP operating
profit was $10 million and GAAP operating margin was 0.15%. Segment
adjusted operating profit was $53 million and adjusted operating margin
was 0.80%. On a constant currency basis, adjusted operating profit was
$54 million and adjusted operating margin was 0.81%.
Medical-Surgical Solutions revenues were $1.9 billion for the quarter,
up 17%, driven primarily by an acquisition and market growth. Segment
GAAP operating profit was $105 million and GAAP operating margin was
5.39%. Segment adjusted operating profit was $138 million and adjusted
operating margin was 7.08%.
Revenues included in Other were $2.9 billion for the quarter, down 5% on
a reported basis and down 1% on a constant currency basis, driven
primarily by the prior year sale of the Enterprise Information Solutions
business, partially offset by market growth and acquisitions. Other GAAP
operating profit was $95 million and adjusted operating profit was $300
million. On a constant currency basis, adjusted operating profit was
$310 million.
Fiscal Year 2019 Outlook
McKesson now expects Adjusted Earnings per diluted share of $13.20 to
$13.80 for the fiscal year ending March 31, 2019, from the previous
range of $13.00 to $13.80 per diluted share.
McKesson does not provide 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.
Dividend Declaration
The company’s Board of Directors yesterday declared a regular dividend
of thirty-nine cents per share of common stock. The dividend will be
payable on January 2, 2019, to stockholders of record on December 3,
2018.
Conference Call Details
The company has scheduled a conference call for today, Thursday, October
25th, at 8:00 AM ET. The dial-in number for individuals
wishing to participate on the call is 323-794-2599. 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. For
individuals wishing to listen to the replay, the dial-in number is
719-457-0820 and the pass code is 5906405. An archive of the conference
call will also be available on the company’s Investor Relations website
at http://investor.mckesson.com.
Upcoming Investor Events
McKesson management will be participating in the following investor
conferences:
-
27th Annual Credit Suisse Healthcare Conference, November
12-15, 2018, Scottsdale, AZ;
-
Evercore ISI HealthCONx Conference, November 27-29, 2018, Boston, MA;
and
-
37th Annual J.P. Morgan Healthcare Conference, January
7-10, 2019, in San Francisco, CA.
Audio webcasts will be available live and archived on the company’s
Investor Relations website at http://investor.mckesson.com.
A complete listing of upcoming events for the investment community is
available on the company’s Investor Relations website.
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 and asset impairment charges, and other
adjustments. A reconciliation of McKesson’s GAAP financial results to
Adjusted Earnings is provided in Schedules 2 and 3 of the financial
statement tables included with this release.
The company does 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 and
asset impairment 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.
Free Cash Flow
McKesson also provides free cash flow, a non-GAAP measure. 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.
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.
|
|
|
|
|
|
|
Schedule 1
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30,
|
|
|
Six Months Ended September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
2018
|
|
|
2017
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
53,075
|
|
|
$
|
52,061
|
|
|
2
|
|
%
|
|
$
|
105,682
|
|
|
$
|
103,112
|
|
|
2
|
|
%
|
Cost of sales (1)
|
|
|
(50,271
|
)
|
|
|
(49,227
|
)
|
|
2
|
|
|
|
|
(100,099
|
)
|
|
|
(97,718
|
)
|
|
2
|
|
|
Gross profit
|
|
|
2,804
|
|
|
|
2,834
|
|
|
(1
|
)
|
|
|
|
5,583
|
|
|
|
5,394
|
|
|
4
|
|
|
Operating expenses (2) (3) (4) (5)
|
|
|
(2,033
|
)
|
|
|
(2,009
|
)
|
|
1
|
|
|
|
|
(4,063
|
)
|
|
|
(3,936
|
)
|
|
3
|
|
|
Goodwill impairment charges (6)
|
|
|
-
|
|
|
|
(350
|
)
|
|
(100
|
)
|
|
|
|
(570
|
)
|
|
|
(350
|
)
|
|
63
|
|
|
Restructuring and asset impairment charges (7)
|
|
|
(82
|
)
|
|
|
(236
|
)
|
|
(65
|
)
|
|
|
|
(178
|
)
|
|
|
(236
|
)
|
|
(25
|
)
|
|
Total operating expenses
|
|
|
(2,115
|
)
|
|
|
(2,595
|
)
|
|
(18
|
)
|
|
|
|
(4,811
|
)
|
|
|
(4,522
|
)
|
|
6
|
|
|
Operating income
|
|
|
689
|
|
|
|
239
|
|
|
188
|
|
|
|
|
772
|
|
|
|
872
|
|
|
(11
|
)
|
|
Other income, net
|
|
|
20
|
|
|
|
69
|
|
|
(71
|
)
|
|
|
|
60
|
|
|
|
82
|
|
|
(27
|
)
|
|
Loss from equity method investment in Change Healthcare (8)
|
|
|
(56
|
)
|
|
|
(61
|
)
|
|
(8
|
)
|
|
|
|
(112
|
)
|
|
|
(181
|
)
|
|
(38
|
)
|
|
Interest expense
|
|
|
(66
|
)
|
|
|
(69
|
)
|
|
(4
|
)
|
|
|
|
(127
|
)
|
|
|
(137
|
)
|
|
(7
|
)
|
|
Income from continuing operations before income taxes
|
|
|
587
|
|
|
|
178
|
|
|
230
|
|
|
|
|
593
|
|
|
|
636
|
|
|
(7
|
)
|
|
Income tax expense
|
|
|
(35
|
)
|
|
|
(122
|
)
|
|
(71
|
)
|
|
|
|
(122
|
)
|
|
|
(217
|
)
|
|
(44
|
)
|
|
Income from continuing operations after tax
|
|
|
552
|
|
|
|
56
|
|
|
886
|
|
|
|
|
471
|
|
|
|
419
|
|
|
12
|
|
|
Income from discontinued operations, net of tax
|
|
|
1
|
|
|
|
-
|
|
|
NM
|
|
|
|
|
2
|
|
|
|
2
|
|
|
-
|
|
|
Net income
|
|
|
553
|
|
|
|
56
|
|
|
888
|
|
|
|
|
473
|
|
|
|
421
|
|
|
12
|
|
|
Net income attributable to noncontrolling interests
|
|
|
(54
|
)
|
|
|
(55
|
)
|
|
(2
|
)
|
%
|
|
|
(112
|
)
|
|
|
(111
|
)
|
|
1
|
|
|
Net income attributable to McKesson Corporation
|
|
$
|
499
|
|
|
$
|
1
|
|
|
NM
|
|
|
|
$
|
361
|
|
|
$
|
310
|
|
|
16
|
|
%
|
|
|
|
|
|
|
|
Earnings per common share attributable to
McKesson Corporation (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.51
|
|
|
$
|
0.01
|
|
|
NM
|
|
|
|
$
|
1.79
|
|
|
$
|
1.46
|
|
|
23
|
|
%
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
%
|
|
|
0.01
|
|
|
|
0.01
|
|
|
-
|
|
|
Total
|
|
$
|
2.51
|
|
|
$
|
0.01
|
|
|
NM
|
|
|
|
$
|
1.80
|
|
|
$
|
1.47
|
|
|
22
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
2.52
|
|
|
$
|
0.01
|
|
|
NM
|
|
|
|
$
|
1.80
|
|
|
$
|
1.47
|
|
|
22
|
|
%
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
%
|
|
|
0.01
|
|
|
|
0.01
|
|
|
-
|
|
|
Total
|
|
$
|
2.52
|
|
|
$
|
0.01
|
|
|
NM
|
|
|
|
$
|
1.81
|
|
|
$
|
1.48
|
|
|
22
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.39
|
|
|
$
|
0.34
|
|
|
|
|
|
$
|
0.73
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
199
|
|
|
|
210
|
|
|
(5
|
)
|
%
|
|
|
201
|
|
|
|
211
|
|
|
(5
|
)
|
%
|
Basic
|
|
|
198
|
|
|
|
209
|
|
|
(5
|
)
|
|
|
|
200
|
|
|
|
210
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Certain computations may reflect rounding adjustments.
|
NM
|
|
Computation not meaningful
|
|
|
|
(1) (2) (3) (4) (5) (6) (7) (8) Refer to the section
entitled "Financial Statement Footnotes" of this release.
|
|
|
Schedule 2A
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
Quarter Ended September 30, 2018
|
|
Vs. Prior Quarter
|
|
|
|
|
Amortization
|
|
Acquisition-
|
|
LIFO
|
|
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
of Acquisition-
|
|
Related
|
|
Inventory-
|
|
Gains from
|
|
and Asset
|
|
Other
|
|
Adjusted
|
|
As
|
|
Adjusted
|
|
|
As Reported
|
|
Related
|
|
Expenses and
|
|
Related
|
|
Antitrust Legal
|
|
Impairment
|
|
Adjustments,
|
|
Earnings
|
|
Reported
|
|
Earnings
|
|
|
(GAAP)
|
|
Intangibles
|
|
Adjustments
|
|
Adjustments
|
|
Settlements
|
|
Charges, Net
|
|
Net
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1)
|
|
$
|
2,804
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(22
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
2,782
|
|
|
|
(1
|
)
|
%
|
|
(1
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (7)
|
|
$
|
(2,115
|
)
|
|
|
$
|
121
|
|
|
|
$
|
37
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
82
|
|
|
|
$
|
-
|
|
|
|
$
|
(1,875
|
)
|
|
|
(18
|
)
|
%
|
|
-
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
20
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
20
|
|
|
|
(71
|
)
|
%
|
|
(26
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (8)
|
|
$
|
(56
|
)
|
|
|
$
|
77
|
|
|
|
$
|
34
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
1
|
|
|
|
$
|
56
|
|
|
|
(8
|
)
|
%
|
|
(25
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
587
|
|
|
|
$
|
198
|
|
|
|
$
|
71
|
|
|
|
$
|
(22
|
)
|
|
|
$
|
-
|
|
|
$
|
82
|
|
|
|
$
|
1
|
|
|
|
$
|
917
|
|
|
|
230
|
|
%
|
|
(6
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(35
|
)
|
|
|
$
|
(48
|
)
|
|
|
$
|
(17
|
)
|
|
|
$
|
5
|
|
|
|
$
|
-
|
|
|
$
|
(15
|
)
|
|
|
$
|
(39
|
)
|
|
|
$
|
(149
|
)
|
|
|
(71
|
)
|
%
|
|
(35
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable
to McKesson Corporation
|
|
$
|
498
|
|
|
|
$
|
150
|
|
|
|
$
|
54
|
|
|
|
$
|
(17
|
)
|
|
|
$
|
-
|
|
|
$
|
67
|
|
|
|
$
|
(38
|
)
|
|
|
$
|
714
|
|
|
|
NM
|
|
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (a)
|
|
$
|
2.51
|
|
|
|
$
|
0.75
|
|
|
|
$
|
0.27
|
|
|
|
$
|
(0.08
|
)
|
|
|
$
|
-
|
|
|
$
|
0.34
|
|
|
|
$
|
(0.19
|
)
|
|
|
$
|
3.60(b)
|
|
|
|
NM
|
|
|
|
10
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
199
|
|
|
|
|
199
|
|
|
|
|
199
|
|
|
|
|
199
|
|
|
|
|
199
|
|
|
|
199
|
|
|
|
|
199
|
|
|
|
|
199
|
|
|
|
(5
|
)
|
%
|
|
(5
|
)
|
%
|
|
|
|
|
|
Quarter Ended September 30, 2017
|
|
|
|
|
|
|
Amortization
|
|
Acquisition-
|
|
LIFO
|
|
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
of Acquisition-
|
|
Related
|
|
Inventory-
|
|
Gains from
|
|
and Asset
|
|
Other
|
|
Adjusted
|
|
|
|
|
As Reported
|
|
Related
|
|
Expenses and
|
|
Related
|
|
Antitrust Legal
|
|
Impairment
|
|
Adjustments,
|
|
Earnings
|
|
|
|
|
(GAAP)
|
|
Intangibles
|
|
Adjustments
|
|
Adjustments
|
|
Settlements
|
|
Charges, Net
|
|
Net
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1)
|
|
$
|
2,834
|
|
|
|
$
|
-
|
|
|
|
$
|
2
|
|
|
|
$
|
(29
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
2,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (6) (7)
|
|
$
|
(2,595
|
)
|
|
|
$
|
125
|
|
|
|
$
|
6
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
257
|
|
|
|
$
|
341
|
|
|
|
$
|
(1,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
69
|
|
|
|
$
|
1
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
(43
|
)
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (8)
|
|
$
|
(61
|
)
|
|
|
$
|
73
|
|
|
|
$
|
63
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
178
|
|
|
|
$
|
199
|
|
|
|
$
|
71
|
|
|
|
$
|
(29
|
)
|
|
|
$
|
-
|
|
|
$
|
257
|
|
|
|
$
|
298
|
|
|
|
$
|
974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(122
|
)
|
|
|
$
|
(64
|
)
|
|
|
$
|
(24
|
)
|
|
|
$
|
11
|
|
|
|
$
|
-
|
|
|
$
|
(51
|
)
|
|
|
$
|
20
|
|
|
|
$
|
(230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
1
|
|
|
|
$
|
135
|
|
|
|
$
|
47
|
|
|
|
$
|
(18
|
)
|
|
|
$
|
-
|
|
|
$
|
206
|
|
|
|
$
|
318
|
|
|
|
$
|
689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (a)
|
|
$
|
0.01
|
|
|
|
$
|
0.63
|
|
|
|
$
|
0.23
|
|
|
|
$
|
(0.09
|
)
|
|
|
$
|
-
|
|
|
$
|
0.98
|
|
|
|
$
|
1.52
|
|
|
|
$
|
3.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
210
|
|
|
|
|
210
|
|
|
|
|
210
|
|
|
|
|
210
|
|
|
|
|
210
|
|
|
|
210
|
|
|
|
|
210
|
|
|
|
|
210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Certain computations may reflect rounding adjustments.
|
(b)
|
|
Adjusted Earnings per share on a Constant Currency basis for second
quarter of fiscal year 2019 was $3.64 per diluted share, which
excludes the foreign currency exchange effect of $0.04 per diluted
share.
|
NM
|
|
Computation not meaningful
|
|
|
|
(1) (6) (7) (8) Refer to the section entitled "Financial
Statement Footnotes" of this release.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
|
Schedule 2B
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
|
(unaudited)
|
(in millions, except per share amounts)
|
|
|
|
|
|
Change
|
|
|
Six Months Ended September 30, 2018
|
|
Vs. Prior Period
|
|
|
|
|
Amortization
|
|
Acquisition-
|
|
LIFO
|
|
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
of Acquisition-
|
|
Related
|
|
Inventory-
|
|
Gains from
|
|
and Asset
|
|
Other
|
|
Adjusted
|
|
As
|
|
Adjusted
|
|
|
As Reported
|
|
Related
|
|
Expenses and
|
|
Related
|
|
Antitrust Legal
|
|
Impairment
|
|
Adjustments,
|
|
Earnings
|
|
Reported
|
|
Earnings
|
|
|
(GAAP)
|
|
Intangibles
|
|
Adjustments
|
|
Adjustments
|
|
Settlements
|
|
Charges, Net
|
|
Net
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1)
|
|
$
|
5,583
|
|
|
|
$
|
-
|
|
|
|
$
|
1
|
|
|
|
$
|
(43
|
)
|
|
|
$
|
(35
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
5,506
|
|
|
|
4
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (4) (6) (7)
|
|
$
|
(4,811
|
)
|
|
|
$
|
242
|
|
|
|
$
|
57
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
178
|
|
|
|
$
|
487
|
|
|
|
$
|
(3,847
|
)
|
|
|
6
|
|
%
|
|
4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
60
|
|
|
|
$
|
1
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
61
|
|
|
|
(27
|
)
|
%
|
|
53
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (8)
|
|
$
|
(112
|
)
|
|
|
$
|
154
|
|
|
|
$
|
74
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
4
|
|
|
|
$
|
120
|
|
|
|
(38
|
)
|
%
|
|
(17
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
593
|
|
|
|
$
|
397
|
|
|
|
$
|
132
|
|
|
|
$
|
(43
|
)
|
|
|
$
|
(35
|
)
|
|
|
$
|
178
|
|
|
|
$
|
491
|
|
|
|
$
|
1,713
|
|
|
|
(7
|
)
|
%
|
|
(3
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(122
|
)
|
|
|
$
|
(98
|
)
|
|
|
$
|
(33
|
)
|
|
|
$
|
11
|
|
|
|
$
|
9
|
|
|
|
$
|
(26
|
)
|
|
|
$
|
(39
|
)
|
|
|
$
|
(298
|
)
|
|
|
(44
|
)
|
%
|
|
(32
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
359
|
|
|
|
$
|
299
|
|
|
|
$
|
99
|
|
|
|
$
|
(32
|
)
|
|
|
$
|
(26
|
)
|
|
|
$
|
152
|
|
|
|
$
|
452
|
|
|
|
$
|
1,303
|
|
|
|
17
|
|
%
|
|
8
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (a)
|
|
$
|
1.79
|
|
|
|
$
|
1.49
|
|
|
|
$
|
0.49
|
|
|
|
$
|
(0.16
|
)
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
0.76
|
|
|
|
$
|
2.26
|
|
|
|
$
|
6.50(b)
|
|
|
|
23
|
|
%
|
|
13
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
|
201
|
|
|
|
(5
|
)
|
%
|
|
(5
|
)
|
%
|
|
|
|
Six Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
Acquisition-
|
|
|
|
|
|
Restructuring
|
|
|
|
|
|
|
|
|
|
|
of Acquisition-
|
|
Related
|
|
LIFO Inventory-
|
|
Gains from
|
|
and Asset
|
|
Other
|
|
Adjusted
|
|
|
|
|
As Reported
|
|
Related
|
|
Expenses and
|
|
Related
|
|
Antitrust Legal
|
|
Impairment
|
|
Adjustments,
|
|
Earnings
|
|
|
|
|
(GAAP)
|
|
Intangibles
|
|
Adjustments
|
|
Adjustments
|
|
Settlements
|
|
Charges, Net
|
|
Net
|
|
(Non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (1)
|
|
$
|
5,394
|
|
|
|
$
|
-
|
|
|
|
$
|
6
|
|
|
|
$
|
(3
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
5,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (2) (6) (7)
|
|
$
|
(4,522
|
)
|
|
|
$
|
246
|
|
|
|
$
|
(5
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
260
|
|
|
|
$
|
339
|
|
|
|
$
|
(3,682
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
$
|
82
|
|
|
|
$
|
1
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
(43
|
)
|
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from equity method investment in Change Healthcare (8)
|
|
$
|
(181
|
)
|
|
|
$
|
144
|
|
|
|
$
|
182
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
$
|
636
|
|
|
|
$
|
391
|
|
|
|
$
|
183
|
|
|
|
$
|
(3
|
)
|
|
|
$
|
-
|
|
|
|
$
|
260
|
|
|
|
$
|
296
|
|
|
|
$
|
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
$
|
(217
|
)
|
|
|
$
|
(130
|
)
|
|
|
$
|
(63
|
)
|
|
|
$
|
1
|
|
|
|
$
|
-
|
|
|
|
$
|
(52
|
)
|
|
|
$
|
21
|
|
|
|
$
|
(440
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax, attributable to
McKesson Corporation
|
|
$
|
308
|
|
|
|
$
|
261
|
|
|
|
$
|
120
|
|
|
|
$
|
(2
|
)
|
|
|
$
|
-
|
|
|
|
$
|
208
|
|
|
|
$
|
317
|
|
|
|
$
|
1,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (a)
|
|
$
|
1.46
|
|
|
|
$
|
1.23
|
|
|
|
$
|
0.57
|
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
-
|
|
|
|
$
|
0.98
|
|
|
|
$
|
1.50
|
|
|
|
$
|
5.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Certain computations may reflect rounding adjustments.
|
(b)
|
|
Adjusted Earnings per share on a Constant Currency basis for fiscal
year 2019 was $6.49 per diluted share, which excludes the foreign
currency exchange effect of $0.01 per diluted share.
|
|
|
|
(1) (2) (4) (6) (7) (8) Refer to the section entitled
"Financial Statement Footnotes" of this release.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
|
|
Schedule 3A
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
Quarter Ended September 30, 2018
|
|
Quarter Ended September 30, 2017
|
|
GAAP
|
|
Non-GAAP
|
|
Change
|
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Adjusted
|
|
|
Foreign
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
Adjusted
|
|
Constant
|
|
Constant
|
|
|
|
As Reported
|
|
|
|
Earnings
|
|
As Reported
|
|
|
|
Earnings
|
|
|
Currency
|
|
|
Constant
|
|
|
Currency
|
|
Constant
|
|
As Reported
|
|
Earnings
|
|
Currency
|
|
Currency
|
|
|
|
(GAAP)
|
|
Adjustments
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
Adjustments
|
|
(Non-GAAP)
|
|
|
Effects
|
|
|
Currency
|
|
|
Effects
|
|
Currency
|
|
(GAAP)
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
(Non-GAAP)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions
|
|
$
|
41,610
|
|
|
|
$
|
-
|
|
|
$
|
41,610
|
|
|
|
$
|
40,603
|
|
|
|
$
|
-
|
|
|
$
|
40,603
|
|
|
|
$
|
-
|
|
|
$
|
41,610
|
|
|
|
$
|
-
|
|
|
|
$
|
41,610
|
|
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
European Pharmaceutical Solutions
|
|
|
6,639
|
|
|
|
|
-
|
|
|
|
6,639
|
|
|
|
|
6,773
|
|
|
|
|
-
|
|
|
|
6,773
|
|
|
|
|
68
|
|
|
|
6,707
|
|
|
|
|
68
|
|
|
|
|
6,707
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Medical-Surgical Solutions
|
|
|
1,948
|
|
|
|
|
-
|
|
|
|
1,948
|
|
|
|
|
1,660
|
|
|
|
|
-
|
|
|
|
1,660
|
|
|
|
|
-
|
|
|
|
1,948
|
|
|
|
|
-
|
|
|
|
|
1,948
|
|
|
|
17
|
|
|
|
17
|
|
|
|
17
|
|
|
|
17
|
|
|
Other (a)
|
|
|
2,878
|
|
|
|
|
-
|
|
|
|
2,878
|
|
|
|
|
3,025
|
|
|
|
|
-
|
|
|
|
3,025
|
|
|
|
|
113
|
|
|
|
2,991
|
|
|
|
|
113
|
|
|
|
|
2,991
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Revenues
|
|
$
|
53,075
|
|
|
|
$
|
-
|
|
|
$
|
53,075
|
|
|
|
$
|
52,061
|
|
|
|
$
|
-
|
|
|
$
|
52,061
|
|
|
|
$
|
181
|
|
|
$
|
53,256
|
|
|
|
$
|
181
|
|
|
|
$
|
53,256
|
|
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions (1)
|
|
$
|
610
|
|
|
|
$
|
25
|
|
|
$
|
635
|
|
|
|
$
|
710
|
|
|
|
$
|
(40
|
)
|
|
$
|
670
|
|
|
|
$
|
-
|
|
|
$
|
610
|
|
|
|
$
|
-
|
|
|
|
$
|
635
|
|
|
|
(14
|
)
|
%
|
|
(5
|
)
|
%
|
|
(14
|
)
|
%
|
|
(5
|
)
|
%
|
European Pharmaceutical Solutions (6)
|
|
|
10
|
|
|
|
|
43
|
|
|
|
53
|
|
|
|
|
(547
|
)
|
|
|
|
636
|
|
|
|
89
|
|
|
|
|
-
|
|
|
|
10
|
|
|
|
|
1
|
|
|
|
|
54
|
|
|
|
102
|
|
|
|
(40
|
)
|
|
|
102
|
|
|
|
(39
|
)
|
|
Medical-Surgical Solutions
|
|
|
105
|
|
|
|
|
33
|
|
|
|
138
|
|
|
|
|
118
|
|
|
|
|
18
|
|
|
|
136
|
|
|
|
|
-
|
|
|
|
105
|
|
|
|
|
-
|
|
|
|
|
138
|
|
|
|
(11
|
)
|
|
|
1
|
|
|
|
(11
|
)
|
|
|
1
|
|
|
Other (a) (8)
|
|
|
95
|
|
|
|
|
205
|
|
|
|
300
|
|
|
|
|
74
|
|
|
|
|
167
|
|
|
|
241
|
|
|
|
|
7
|
|
|
|
102
|
|
|
|
|
10
|
|
|
|
|
310
|
|
|
|
28
|
|
|
|
24
|
|
|
|
38
|
|
|
|
29
|
|
|
Operating profit
|
|
|
820
|
|
|
|
|
306
|
|
|
|
1,126
|
|
|
|
|
355
|
|
|
|
|
781
|
|
|
|
1,136
|
|
|
|
|
7
|
|
|
|
827
|
|
|
|
|
11
|
|
|
|
|
1,137
|
|
|
|
131
|
|
|
|
(1
|
)
|
|
|
133
|
|
|
|
-
|
|
|
Corporate
|
|
|
(167
|
)
|
|
|
|
24
|
|
|
|
(143
|
)
|
|
|
|
(108
|
)
|
|
|
|
15
|
|
|
|
(93
|
)
|
|
|
|
-
|
|
|
|
(167
|
)
|
|
|
|
(1
|
)
|
|
|
|
(144
|
)
|
|
|
55
|
|
|
|
54
|
|
|
|
55
|
|
|
|
55
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
$
|
653
|
|
|
|
$
|
330
|
|
|
$
|
983
|
|
|
|
$
|
247
|
|
|
|
$
|
796
|
|
|
$
|
1,043
|
|
|
|
$
|
7
|
|
|
$
|
660
|
|
|
|
$
|
10
|
|
|
|
$
|
993
|
|
|
|
164
|
|
%
|
|
(6
|
)
|
%
|
|
167
|
|
%
|
|
(5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT AS A % OF REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions
|
|
|
1.47
|
|
%
|
|
|
|
|
1.53
|
|
%
|
1.75
|
|
%
|
|
|
|
1.65
|
|
%
|
|
|
|
|
|
|
1.47
|
|
%
|
|
|
|
|
|
|
1.53
|
|
%
|
|
(28
|
)
|
bp
|
|
(12
|
)
|
bp
|
|
(28
|
)
|
bp
|
|
(12
|
)
|
bp
|
European Pharmaceutical Solutions
|
|
|
0.15
|
|
|
|
|
|
|
|
|
0.80
|
|
|
|
|
(8.08
|
)
|
|
|
|
|
|
|
1.31
|
|
|
|
|
|
|
|
|
0.15
|
|
|
|
|
|
|
|
|
0.81
|
|
|
|
823
|
|
|
|
(51
|
)
|
|
|
823
|
|
|
|
(50
|
)
|
|
Medical-Surgical Solutions
|
|
|
5.39
|
|
|
|
|
|
|
|
|
7.08
|
|
|
|
|
7.11
|
|
|
|
|
|
|
|
8.19
|
|
|
|
|
|
|
|
|
5.39
|
|
|
|
|
|
|
|
|
7.08
|
|
|
|
(172
|
)
|
|
|
(111
|
)
|
|
|
(172
|
)
|
|
|
(111
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Other primarily includes the results of our McKesson Canada and Rx
Technology Solutions businesses. Other for fiscal 2018 also
includes the Enterprise Information Solutions ("EIS") business,
which was sold in the third quarter of fiscal 2018. Operating
profit for Other also includes our proportionate share of income
(loss) from our equity method investment in Change Healthcare.
|
|
|
|
(1) (6) (7) (8) Refer to the section entitled "Financial
Statement Footnotes" of this release.
|
|
|
|
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled “Supplemental Non-GAAP Financial Information” of this
release.
|
|
|
Schedule 3B
|
McKESSON CORPORATION
|
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
|
(unaudited)
|
(in millions)
|
|
|
|
|
|
Six Months Ended September 30, 2018
|
|
Six Months Ended September 30, 2017
|
|
GAAP
|
|
Non-GAAP
|
|
Change
|
|
|
|
|
|
|
Adjusted
|
|
|
|
|
|
Adjusted
|
|
Foreign
|
|
|
|
|
Foreign
|
|
|
|
As
|
|
Adjusted
|
|
Constant
|
|
Constant
|
|
|
As Reported
|
|
|
|
Earnings
|
|
As Reported
|
|
|
|
Earnings
|
|
Currency
|
|
Constant
|
|
|
Currency
|
|
Constant
|
|
Reported
|
|
Earnings
|
|
Currency
|
|
Currency
|
|
|
(GAAP)
|
|
Adjustments
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
Adjustments
|
|
(Non-GAAP)
|
|
Effects
|
|
Currency
|
|
|
Effects
|
|
Currency
|
|
(GAAP)
|
|
(Non-GAAP)
|
|
(GAAP)
|
|
(Non-GAAP)
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions
|
|
$
|
82,587
|
|
|
|
$
|
-
|
|
|
$
|
82,587
|
|
|
|
$
|
80,885
|
|
|
|
$
|
-
|
|
$
|
80,885
|
|
|
|
$
|
-
|
|
|
$
|
82,587
|
|
|
|
$
|
-
|
|
|
$
|
82,587
|
|
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
European Pharmaceutical Solutions
|
|
13,574
|
|
|
|
|
-
|
|
|
|
13,574
|
|
|
|
|
13,155
|
|
|
|
|
-
|
|
|
13,155
|
|
|
|
|
(419
|
)
|
|
|
13,155
|
|
|
|
|
(419
|
)
|
|
|
13,155
|
|
|
|
3
|
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
Medical-Surgical Solutions
|
|
|
3,651
|
|
|
|
|
-
|
|
|
|
3,651
|
|
|
|
|
3,193
|
|
|
|
|
-
|
|
|
3,193
|
|
|
|
|
-
|
|
|
|
3,651
|
|
|
|
|
-
|
|
|
|
3,651
|
|
|
|
14
|
|
|
|
14
|
|
|
|
14
|
|
|
|
14
|
|
|
Other (a)
|
|
|
5,870
|
|
|
|
|
-
|
|
|
|
5,870
|
|
|
|
|
5,879
|
|
|
|
|
-
|
|
|
5,879
|
|
|
|
|
2
|
|
|
|
5,872
|
|
|
|
|
2
|
|
|
|
5,872
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Revenues
|
|
$
|
105,682
|
|
|
|
$
|
-
|
|
|
$
|
105,682
|
|
|
|
$
|
103,112
|
|
|
|
$
|
-
|
|
$
|
103,112
|
|
|
|
$
|
(417
|
)
|
|
$
|
105,265
|
|
|
|
$
|
(417
|
)
|
|
$
|
105,265
|
|
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
2
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions (1)
|
|
$
|
1,153
|
|
|
|
$
|
22
|
|
|
$
|
1,175
|
|
|
|
$
|
1,185
|
|
|
|
$
|
14
|
|
$
|
1,199
|
|
|
|
$
|
-
|
|
|
$
|
1,153
|
|
|
|
$
|
-
|
|
|
$
|
1,175
|
|
|
|
(3
|
)
|
%
|
|
(2
|
)
|
%
|
|
(3
|
)
|
%
|
|
(2
|
)
|
%
|
European Pharmaceutical Solutions (6)
|
|
(550
|
)
|
|
|
|
677
|
|
|
|
127
|
|
|
|
|
(512
|
)
|
|
|
|
685
|
|
|
173
|
|
|
|
|
21
|
|
|
|
(529
|
)
|
|
|
|
(4
|
)
|
|
|
123
|
|
|
|
(7
|
)
|
|
|
(27
|
)
|
|
|
(3
|
)
|
|
|
(29
|
)
|
|
Medical-Surgical Solutions
|
|
|
198
|
|
|
|
|
65
|
|
|
|
263
|
|
|
|
|
226
|
|
|
|
|
35
|
|
|
261
|
|
|
|
|
-
|
|
|
|
198
|
|
|
|
|
-
|
|
|
|
263
|
|
|
|
(12
|
)
|
|
|
1
|
|
|
|
(12
|
)
|
|
|
1
|
|
|
Other (a) (2) (4) (8)
|
|
|
209
|
|
|
|
|
304
|
|
|
|
513
|
|
|
|
|
91
|
|
|
|
|
381
|
|
|
472
|
|
|
|
|
(6
|
)
|
|
|
203
|
|
|
|
|
1
|
|
|
|
514
|
|
|
|
130
|
|
|
|
9
|
|
|
|
123
|
|
|
|
9
|
|
|
Operating profit
|
|
|
1,010
|
|
|
|
|
1,068
|
|
|
|
2,078
|
|
|
|
|
990
|
|
|
|
|
1,115
|
|
|
2,105
|
|
|
|
|
15
|
|
|
|
1,025
|
|
|
|
|
(3
|
)
|
|
|
2,075
|
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
4
|
|
|
|
(1
|
)
|
|
Corporate
|
|
|
(290
|
)
|
|
|
|
52
|
|
|
|
(238
|
)
|
|
|
|
(217
|
)
|
|
|
|
12
|
|
|
(205
|
)
|
|
|
|
-
|
|
|
|
(290
|
)
|
|
|
|
-
|
|
|
|
(238
|
)
|
|
|
34
|
|
|
|
16
|
|
|
|
34
|
|
|
|
16
|
|
|
Income from continuing operations before interest expense and
income taxes
|
|
$
|
720
|
|
|
|
$
|
1,120
|
|
|
$
|
1,840
|
|
|
|
$
|
773
|
|
|
|
$
|
1,127
|
|
$
|
1,900
|
|
|
|
$
|
15
|
|
|
$
|
735
|
|
|
|
$
|
(3
|
)
|
|
$
|
1,837
|
|
|
|
(7
|
)
|
%
|
|
(3
|
)
|
%
|
|
(5
|
)
|
%
|
|
(3
|
)
|
%
|
|
OPERATING PROFIT AS A % OF REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pharmaceutical and Specialty Solutions
|
|
1.40
|
|
%
|
|
|
|
|
|
|
1.42
|
|
%
|
|
|
1.47
|
|
%
|
|
|
|
|
|
1.48
|
|
%
|
|
|
|
|
|
1.40
|
|
%
|
|
|
|
|
|
1.42
|
|
%
|
|
(7
|
)
|
bp
|
|
(6
|
)
|
bp
|
|
(7
|
)
|
bp
|
|
(6
|
)
|
bp
|
European Pharmaceutical Solutions
|
|
(4.05
|
)
|
|
|
|
|
|
|
|
0.94
|
|
|
|
|
(3.89
|
)
|
|
|
|
|
|
|
1.32
|
|
|
|
|
|
|
|
(4.02
|
)
|
|
|
|
|
|
|
0.94
|
|
|
|
(16
|
)
|
|
|
(38
|
)
|
|
|
(13
|
)
|
|
|
(38
|
)
|
|
Medical-Surgical Solutions
|
|
|
5.42
|
|
|
|
|
|
|
|
|
7.20
|
|
|
|
|
7.08
|
|
|
|
|
|
|
|
8.17
|
|
|
|
|
|
|
|
5.42
|
|
|
|
|
|
|
|
7.20
|
|
|
|
(166
|
)
|
|
|
(97
|
)
|
|
|
(166
|
)
|
|
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Other primarily includes the results of our McKesson Canada and
McKesson Prescription Technology Solutions businesses. Other for
fiscal year 2018 includes EIS business, which was sold in the
third quarter of fiscal year 2018. Operating profit for Other also
includes our proportionate share of income (loss) from our equity
method investment in Change Healthcare.
|
|
|
|
(1) (2) (4) (6) (7) (8) Refer to the section entitled
"Financial Statement Footnotes" of this release.
|
|
|
|
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 4
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(unaudited)
|
(in millions)
|
|
|
|
|
September 30,
|
|
March 31,
|
|
|
2018
|
|
2018
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,118
|
|
$
|
2,672
|
Receivables, net
|
|
|
19,213
|
|
|
17,711
|
Inventories, net
|
|
|
16,671
|
|
|
16,310
|
Prepaid expenses and other
|
|
|
542
|
|
|
443
|
Total Current Assets
|
|
|
38,544
|
|
|
37,136
|
Property, Plant and Equipment, Net
|
|
|
2,488
|
|
|
2,464
|
Goodwill
|
|
|
10,627
|
|
|
10,924
|
Intangible Assets, Net
|
|
|
4,128
|
|
|
4,102
|
Equity Method Investment in Change Healthcare
|
|
|
3,609
|
|
|
3,728
|
Other Noncurrent Assets
|
|
|
2,025
|
|
|
2,027
|
Total Assets
|
|
$
|
61,421
|
|
$
|
60,381
|
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
AND EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Drafts and accounts payable
|
|
$
|
33,227
|
|
$
|
32,177
|
Short-term borrowings
|
|
|
1,394
|
|
|
-
|
Current portion of long-term debt
|
|
|
1,126
|
|
|
1,129
|
Other accrued liabilities
|
|
|
3,116
|
|
|
3,379
|
Total Current Liabilities
|
|
|
38,863
|
|
|
36,685
|
Long-Term Debt
|
|
|
6,568
|
|
|
6,751
|
Long-Term Deferred Tax Liabilities
|
|
|
2,844
|
|
|
2,804
|
Other Noncurrent Liabilities
|
|
|
2,197
|
|
|
2,625
|
|
|
|
|
|
|
|
Redeemable Noncontrolling Interests
|
|
|
1,415
|
|
|
1,459
|
|
|
|
|
|
|
|
McKesson Corporation Stockholders' Equity
|
|
|
9,326
|
|
|
9,804
|
Noncontrolling Interests
|
|
|
208
|
|
|
253
|
Total Equity
|
|
|
9,534
|
|
|
10,057
|
Total Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
$
|
61,421
|
|
$
|
60,381
|
|
|
|
|
|
|
Schedule 5
|
|
McKESSON CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(in millions)
|
|
|
|
Six Months Ended September 30,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
473
|
|
|
$
|
421
|
|
Adjustments to reconcile to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
475
|
|
|
|
463
|
|
Goodwill and other asset impairment charges
|
|
|
611
|
|
|
|
539
|
|
Deferred taxes
|
|
|
60
|
|
|
|
42
|
|
LIFO credits
|
|
|
(43
|
)
|
|
|
(3
|
)
|
Loss from equity method investment in Change Healthcare
|
|
|
112
|
|
|
|
181
|
|
Other non-cash items
|
|
|
(138
|
)
|
|
|
(18
|
)
|
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
Receivables
|
|
|
(1,705
|
)
|
|
|
(812
|
)
|
Inventories
|
|
|
(398
|
)
|
|
|
(1,217
|
)
|
Drafts and accounts payable
|
|
|
1,197
|
|
|
|
1,808
|
|
Taxes
|
|
|
(99
|
)
|
|
|
86
|
|
Other
|
|
|
(227
|
)
|
|
|
(151
|
)
|
Net cash provided by operating activities
|
|
|
318
|
|
|
|
1,339
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
Property acquisitions
|
|
|
(178
|
)
|
|
|
(164
|
)
|
Capitalized software expenditures
|
|
|
(70
|
)
|
|
|
(91
|
)
|
Acquisitions, net of cash, cash equivalents and restricted cash
acquired
|
|
|
(840
|
)
|
|
|
(1,874
|
)
|
Proceeds from sale of businesses and investments, net
|
|
|
46
|
|
|
|
164
|
|
Payments received on Healthcare Technology Net Asset Exchange, net
|
|
|
-
|
|
|
|
126
|
|
Other
|
|
|
59
|
|
|
|
(26
|
)
|
Net cash used in investing activities
|
|
|
(983
|
)
|
|
|
(1,865
|
)
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from short-term borrowings
|
|
|
19,735
|
|
|
|
8,464
|
|
Repayments of short-term borrowings
|
|
|
(18,342
|
)
|
|
|
(8,343
|
)
|
Repayments of long-term debt
|
|
|
(5
|
)
|
|
|
(545
|
)
|
Common stock transactions:
|
|
|
|
|
Issuances
|
|
|
38
|
|
|
|
83
|
|
Share repurchases, including shares surrendered for tax withholding
|
|
|
(888
|
)
|
|
|
(701
|
)
|
Dividends paid
|
|
|
(139
|
)
|
|
|
(121
|
)
|
Other
|
|
|
(201
|
)
|
|
|
(109
|
)
|
Net cash provided by (used in) financing activities
|
|
|
198
|
|
|
|
(1,272
|
)
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
|
|
|
(87
|
)
|
|
|
109
|
|
Net decrease in cash, cash equivalents and restricted cash
|
|
|
(554
|
)
|
|
|
(1,689
|
)
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
2,672
|
|
|
|
4,254
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
2,118
|
|
|
$
|
2,565
|
|
|
|
|
|
|
|
|
|
McKESSON CORPORATION
|
FINANCIAL STATEMENT FOOTNOTES
|
|
|
|
|
|
|
|
|
|
|
|
|
The following explanations are provided for the financial results as
reported under U.S. GAAP.
|
|
|
|
(1)
|
|
The second quarters of fiscal 2019 and 2018 include pre-tax credits
of $22 million and $29 million, and the first half of fiscal 2019
and 2018 include pre-tax credits of $43 million and $3 million
related to our last-in-first-out (“LIFO”) method of accounting for
inventories. The first half of fiscal 2019 includes $35 million of
net cash proceeds representing our share of antitrust legal
settlements. These credits are included within our U.S.
Pharmaceutical and Specialty Solutions segment.
|
|
|
|
(2)
|
|
Operating expenses for the first half of fiscal 2018 includes a
pre-tax gain of $37 million ($22 million after-tax) related to the
final net working capital settlement and other adjustments from
the contribution of the majority of our technology business to
form a joint venture, Change Healthcare in the fourth quarter of
2017. This credit is included under "Acquisition-Related Expenses
and Adjustments" in the reconciliation of McKesson's GAAP
financial results to Adjusted Earnings (Non-GAAP) provided in the
Schedule 2 of the accompanying financial statement tables.
|
|
|
|
(3)
|
|
Operating expenses for the second quarter and first half of fiscal
2019 include a pre-tax credit of $90 million ($66 million
after-tax) representing the reversal of a payable to the
shareholders of Change Healthcare Holdings, Inc. associated with
the Tax Receivables Agreement.
|
|
|
|
(4)
|
|
Operating expenses for the first half of fiscal 2019 includes a
gain from an escrow settlement of $97 million (pre-tax and
after-tax) representing certain indemnity and other claims related
to our third quarter 2017 acquisition of Rexall Health. This gain
is included under "Other Adjustments, Net" in the reconciliation
of McKesson's GAAP financial results to Adjusted Earnings
(Non-GAAP) provided in the Schedule 2 of the accompanying
financial statement tables.
|
|
|
|
(5)
|
|
Operating expenses for the second quarter and first half of fiscal
2019 include opioid-related costs of $34 million pre-tax ($25
million after-tax) and $76 million pre-tax ($60 million after-tax).
Corporate expenses for the second quarter and first half of fiscal
2019 include opioid-related costs of $43 million pre-tax ($32
million after-tax) and $59 million pre-tax ($48 million after-tax).
Opioid-related costs represent primarily litigation expenses and
other-related costs.
|
|
|
|
(6)
|
|
The first half of fiscal 2019 includes non-cash goodwill
impairment charges of $570 million (pre-tax and after-tax) for our
European Pharmaceutical Solutions segment. The second quarter and
first half of fiscal 2018 include non-cash goodwill impairment
charges of $350 million (pre-tax and after-tax) for our European
Pharmaceutical Solutions segment. These charges are included under
"Other Adjustments, Net" in the reconciliation of McKesson's GAAP
financial results to Adjusted Earnings (Non-GAAP) provided in the
Schedule 2 of the accompanying financial statement tables.
|
|
|
|
(7)
|
|
Operating expenses for the second quarter and first half of fiscal
2019 include pre-tax restructuring and asset impairment charges of
$82 million ($67 million after-tax) and $178 million ($152 million
after-tax), primarily for our Canada and Europe businesses and
Corporate. Operating expenses for the second quarter and first half
of fiscal 2018 include pre-tax restructuring and asset impairment
charges of $236 million ($197 million after-tax), primarily for our
Europe business.
|
|
|
|
(8)
|
|
Loss from our equity method investment in Change Healthcare includes
the amortization of equity investment intangibles and other acquired
intangibles of $77 million and $73 million for second quarters of
fiscal 2019 and 2018, and $154 million and $144 million for the
first half of fiscal 2019 and 2018. The amortization expenses are
included in our proportionate share of the loss from our equity
method investment in Change Healthcare.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 of 2
|
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 and transaction related expenses and
adjustments, Last-In-First-Out (“LIFO”) inventory-related
adjustments, gains from antitrust legal settlements, restructuring
and asset impairment 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 and 3 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 other transaction-related costs including initial public
offering costs. 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 and asset impairment 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 as well as long-lived asset
impairments. 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 from the Adjusted Earnings.
|
|
|
|
|
|
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; other asset impairments; adjustments to claim and
litigation reserves for estimated probable losses and settlements;
certain discrete benefits and subsequent true-up adjustments
related to the December 2017 enactment of the 2017 Tax Cuts and
Jobs Act during the one year measurement period; 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.
|
|
|
2 of 2
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Constant Currency (Non-GAAP): To present our financial
results on a constant currency basis, we convert current year period
results of our operations in foreign countries, which are recorded
in local currencies, into U.S. dollars by applying the average
foreign currency exchange rates of the comparable prior year period.
To present Adjusted Earnings per diluted share on a constant
currency basis, we estimate the impact of foreign currency rate
fluctuations on the Company’s noncontrolling interests and adjusted
income tax expense, which may vary from quarter to quarter. The
supplemental constant currency information of the Company’s GAAP
financial results and Adjusted Earnings (Non-GAAP) is provided in
Schedule 3 of the financial statement tables included with this
release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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.
|