Market Overview

McKesson Reports Fiscal 2017 Fourth-Quarter and Full-Year Results

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McKesson Corporation (NYSE:MCK) today reported that revenues for the
fourth quarter ended March 31, 2017, were $48.7 billion, up 4% compared
to $46.7 billion a year ago. On a constant currency basis, revenues
increased 5% over the prior year. For the fiscal year, McKesson had
revenues of $198.5 billion, up 4% compared to $190.9 billion a year ago.
On a constant currency basis, revenues increased 5% over the prior year.

On the basis of U.S. generally accepted accounting principles ("GAAP"),
fourth-quarter earnings per diluted share from continuing operations was
$16.79, compared to $1.97 a year ago. Full-year GAAP earnings per
diluted share from continuing operations was $23.28 compared to $9.84 a
year ago, up 137% year-over-year.

Fourth-quarter and full-year GAAP earnings included a pre-tax net gain
of $3.9 billion, or $14.10 and $13.53 per diluted share, respectively,
related to the creation of the Change Healthcare joint venture, as
disclosed on March 2, 2017.

Fourth-quarter and full-year GAAP and Adjusted Earnings included charges
of three cents and four cents per diluted share, respectively, related
to the company's cost alignment plan that was announced in March 2016
(the "Cost Alignment Plan"). Additionally, full-year GAAP and Adjusted
Earnings included a non-cash, pre-tax goodwill impairment charge of $290
million, or $1.26 per diluted share, taken in the second quarter related
to the company's Enterprise Information Solutions (EIS) business within
McKesson Technology Solutions (MTS).

Excluding Cost Alignment Plan charges from Adjusted Earnings,
fourth-quarter results of $3.42 per diluted share, were up 8% compared
to $3.18 in the prior year.

Excluding Cost Alignment Plan charges and the goodwill impairment charge
taken in the second quarter from Adjusted Earnings, full-year results of
$12.91 per diluted share, were up 3% compared to $12.52 in the prior
year.

Fourth-quarter and full-year Fiscal 2016 GAAP and Adjusted Earnings
included pre-tax charges totaling $229 million, or approximately 73
cents per diluted share, related to the Cost Alignment Plan.

Full-year Fiscal 2016 GAAP and Adjusted Earnings included pre-tax gains
of $103 million, or 29 cents per diluted share, related to the sale of
two businesses in the first and second quarters of Fiscal 2016.

"As we exit a challenging fiscal year, I am encouraged by our strong
fourth-quarter results," said John H. Hammergren, chairman and chief
executive officer. "Our Fiscal 2017 was impacted by both
company-specific and industry pressures. However, due to the actions we
have taken, I believe we have positioned our businesses well to address
evolving market dynamics and to capitalize on future growth
opportunities."

For the full year, McKesson generated cash from operations of $4.7
billion, and ended the year with cash and cash equivalents of $2.8
billion. During the year, McKesson paid $4.2 billion for acquisitions,
repurchased $2.3 billion of its common stock, repaid approximately $1.6
billion in long-term debt, invested $562 million internally and paid
$253 million in dividends.

"Despite the difficult business environment, we were able to drive
record operating cash flow results in Fiscal 2017," Hammergren
continued. "As a result of our strong cash generation, McKesson was able
to deploy meaningful capital during the year, closing 11 acquisitions
and returning more than $2.5 billion in cash to our shareholders. We
were also pleased with the creation of Change Healthcare, which we
believe will drive significant value for our shareholders."

Segment Results

Distribution Solutions revenues were $48.2 billion for the quarter, up
5% on a reported basis and 6% on a constant currency basis. For the full
year, Distribution Solutions revenues were $195.9 billion, up 4% on a
reported basis and 5% on a constant currency basis, compared to the
prior year.

North America pharmaceutical distribution and services revenues of $40.6
billion for the quarter were up 5% both on a reported and constant
currency basis, primarily reflecting market growth and acquisitions,
partially offset by branded to generic conversions. For the full year,
North America pharmaceutical distribution and services revenues were
$164.8 billion, up 4% on a reported and constant currency basis,
compared to the prior year.

International pharmaceutical distribution and services revenues were
$6.1 billion for the quarter, up 5% on a reported basis and 12% on a
constant currency basis, driven by acquisitions and market growth. For
the full year, International pharmaceutical distribution and services
revenues were $24.8 billion, up 6% on a reported basis and up 11% on a
constant currency basis, compared to the prior year.

Medical-Surgical distribution and services revenues were $1.6 billion
for the quarter, up 9%, driven by market growth and an acquisition. For
the full year, Medical-Surgical distribution and services revenues were
$6.2 billion, up 3% compared to the prior year.

Fourth-quarter Distribution Solutions GAAP operating profit was $769
million and GAAP operating margin was 1.60%. On a constant currency
basis, fourth-quarter adjusted operating profit was $1.1 billion, up 10%
from the prior year, and the adjusted operating margin was 2.18%.

For the full year, Distribution Solutions GAAP operating profit was $3.4
billion and GAAP operating margin was 1.72%. On a constant currency
basis, full-year adjusted operating profit was $3.9 billion, down 9%
from the prior year, and the adjusted operating margin was 1.99%.

Fourth quarter and full-year revenue and operating results of MTS were
impacted by the creation of Change Healthcare, to which McKesson
contributed the majority of its MTS businesses. As announced on March 2,
2017, McKesson will account for its equity share of Change Healthcare's
earnings on a one-month lag. Therefore, for the month of March,
McKesson's consolidated income statement contained neither the results
of the MTS contributed businesses, nor any equity earnings from the new
company.

MTS revenues of $0.5 billion were down 30% both on a reported and
constant currency basis in the fourth quarter. For the full year, MTS
revenues of $2.6 billion were down 10% on a reported basis and 9% on a
constant currency basis.

Fourth-quarter MTS GAAP operating profit was $4.1 billion and full-year
MTS GAAP operating profit was $4.2 billion, both driven by the
recognition of a gain related to the creation of Change Healthcare. On a
constant currency basis, fourth-quarter adjusted operating profit was
$99 million, down 3% from the prior year, and the adjusted operating
margin was 19.30%.

For the full year, MTS' adjusted operating profit was $303 million on a
constant currency basis, and the adjusted operating margin was 11.60%.
Excluding the second-quarter goodwill impairment charge related to our
EIS business and credits related to the company's Cost Alignment Plan,
MTS' adjusted operating profit was $584 million for the full year, and
the adjusted operating margin was 22.38%.

Fiscal Year 2017 Reconciliation of GAAP Results to Adjusted Earnings

Adjusted Earnings per diluted share of $11.61 for the fiscal year ended
March 31, 2017 excludes the following GAAP items:

  • Amortization of acquisition-related intangible assets of $1.39 per
    diluted share;
  • Acquisition expenses and related adjustments of $13.03 per diluted
    share;
  • Claim and litigation reserve credits of two cents per diluted share
    for average wholesale price litigation matters; and
  • LIFO inventory-related credits of one cent per diluted share.

Revised Adjusted Earnings Definition and Fiscal Year 2018 Outlook

McKesson is revising its definition of Adjusted Earnings to closely
align with management's view of the company's operating performance and
portfolio of businesses. Please refer to the second 8-K filed today with
the Securities and Exchange Commission for the full description of each
item included in our revised Adjusted Earnings definition, as well as a
recast of Fiscal 2017 results.

On this revised basis, the company's recast Fiscal 2017 Adjusted
Earnings was $12.54 per diluted share. For the fiscal year ending March
31, 2018, McKesson expects GAAP earnings per diluted share of $7.10 to
$8.80 and Adjusted Earnings per diluted share of $11.75 to $12.45. "Our
Fiscal 2018 outlook incorporates headwinds related to the lapping effect
of the competitive customer pricing environment and branded
pharmaceutical manufacturer pricing trends, partially offset by our
capital deployment efforts and solid growth across our businesses,"
concluded Hammergren.

Key Assumptions for Fiscal Year 2018 Outlook

The Fiscal 2018 outlook is based on the following key assumptions and is
also subject to the Risk Factors outlined below:

  • Distribution Solutions revenue growth is expected to increase by
    mid-single digits driven by market growth and acquisitions.
  • We expect North America pharmaceutical distribution and services to
    deliver mid-single digit revenue growth in Fiscal 2018.
  • International pharmaceutical distribution and services revenues are
    anticipated to grow mid-single digits on a constant currency basis in
    Fiscal 2018.
  • Medical-Surgical distribution and services is expected to deliver
    mid-single digit revenue growth in Fiscal 2018.
  • In the U.S. market, branded pharmaceutical manufacturer percentage
    price increases are assumed to be in the mid-single digits in Fiscal
    2018.
  • We expect a nominal contribution to our Fiscal 2018 results from
    generic pharmaceuticals that increase in price.
  • We expect the profit contribution from the launch of new oral generic
    pharmaceuticals in the U.S. market to be nominal.
  • We anticipate a full year contribution from Rite Aid of approximately
    $13 billion in annual revenues.
  • We assume that our ownership position in Celesio will continue to be
    approximately 76% for Fiscal 2018.
  • We expect our Distribution Solutions adjusted operating margin to be
    between 198 basis points and 208 basis points.
  • Technology Solutions revenues, which reflects our Enterprise
    Information Solutions (EIS) business, are expected to be between
    approximately $450 million and $500 million in Fiscal 2018. As
    previously disclosed, McKesson is evaluating strategic alternatives
    for this business.
  • We expect adjusted equity earnings from our investment in Change
    Healthcare to be between approximately $370 million and $430 million,
    and that our ownership position in Change Healthcare will be
    approximately 70% for Fiscal 2018. Equity earnings under GAAP will be
    reported in the income statement line "Equity income or loss from
    Change Healthcare".
  • Corporate expenses are expected to be between approximately $435
    million and $465 million in Fiscal 2018.
  • We expect our interest expense to decrease by approximately 10%
    compared to Fiscal 2017.
  • The guidance range assumes a full-year adjusted tax rate of
    approximately 27.0%, which may vary from quarter to quarter.
  • Income attributable to noncontrolling interests is expected to
    increase approximately 200% from Fiscal 2017, driven primarily by the
    joint sourcing agreement with Walmart.
  • We expect the impact of foreign currency exchange rate movements will
    have a net unfavorable impact of up to 5 cents per diluted share
    year-over-year.
  • Property acquisitions and capitalized software expenditures are
    expected to be between $650 million and $750 million.
  • Weighted average diluted shares used in the calculation of earnings
    per share are expected to be approximately 213 million for the year.
  • Cash flow from operations is expected to decline by approximately 10%
    relative to the prior year, primarily due to a very strong Fiscal 2017
    close as well as the loss of the majority of MTS' cash flow following
    the creation of Change Healthcare.
  • Based on acquisitions announced as of March 31, 2017:
    • We expect amortization of acquisition-related intangible assets of
      approximately $2.40 to $2.70 per diluted share;
    • We expect acquisition expenses and related adjustments of $1.10 to
      $1.30 per diluted share;
    • We expect LIFO inventory-related charges of 20 cents to 60 cents
      per diluted share;
    • We expect antitrust legal settlement credits of up to 4 cents per
      diluted share; and
    • We expect restructuring charges of up to 5 cents per diluted share.
  • The Fiscal 2018 guidance range does not include the impact of any
    potential new acquisitions and divestitures, or other adjustments,
    including items such as impairments, gains or losses on disposal of
    assets or potential claim or litigation reserve adjustments.

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.

Fiscal 2017 Adjusted Earnings

McKesson separately reports financial results on the basis of Adjusted
Earnings. Adjusted Earnings is a non-GAAP financial measure defined as
GAAP income from continuing operations, excluding amortization of
acquisition-related intangible assets, acquisition expenses and related
adjustments, claim and litigation reserve adjustments, reflecting the
company's reserves for controlled substance distribution claims and
average wholesale price litigation matters, and Last-In-First-Out
("LIFO") inventory-related adjustments. A reconciliation of McKesson's
GAAP financial results to Adjusted Earnings is provided in Schedules 2,
3 and 4 of the financial statement tables included with this release.

Constant Currency

McKesson also presents its financial results on a constant currency
basis. The company conducts business worldwide in local currencies,
including the Euro, British pound and Canadian dollar. As a result, the
comparability of the financial results reported in U.S. dollars can be
affected by changes in foreign currency exchange rates. Constant
currency information is presented to provide a framework for assessing
how the company's business performed excluding the effect of foreign
currency exchange rate fluctuations. The supplemental constant currency
information of the company's GAAP financial results and Adjusted
Earnings (Non-GAAP) is provided in Schedule 3 of the financial statement
tables included with this release.

Conference Call Details

The company has scheduled a conference call for today, Thursday, May 18th,
at 5:00 PM ET. The dial-in number for individuals wishing to participate
on the call is 719-234-7317. Craig Mercer, senior vice president,
Investor Relations, is the leader of the call, and the password to join
the call is ‘McKesson'. The live webcast and supplementary slide
presentation for the conference call can be accessed on the company's
Investor Relations website at http://investor.mckesson.com.

A telephonic replay of this conference call will be available for five
calendar days. The dial-in number for individuals wishing to listen to
the replay is 719-457-0820 and the pass code is 9327588.

The audio webcast and supplemental slide presentation will be archived
on the company's Investor Relations website after the conclusion of the
call. Shareholders are encouraged to review the company's filings with
the Securities and Exchange Commission and the supplementary slide
presentation for the conference call, which are located on the company's
website.

About McKesson Corporation

McKesson Corporation, currently ranked 5th on the FORTUNE
500, is a global leader in healthcare supply chain management solutions,
retail pharmacy, community oncology and specialty care, and healthcare
information technology. McKesson partners with pharmaceutical
manufacturers, providers, pharmacies, governments and other
organizations in healthcare to help provide the right medicines, medical
products and healthcare services to the right patients at the right
time, safely and cost-effectively. United by our ICARE shared
principles, our 70,000 employees across more than 16 countries 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, a top military-friendly
company
by Military Friendly®, and a "Best
Employer for Healthy Lifestyles
" by The National Business Group on
Health. 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 March 31,         Year Ended March 31,
2017     2016 Change 2017 2016 Change
 
Revenues $ 48,713 $ 46,678 4 % $ 198,533 $ 190,884 4 %
Cost of sales (1) (5)   (45,917 )   (43,826 ) 5   (187,262 )   (179,468 ) 4
Gross profit 2,796 2,852 (2 ) 11,271 11,416 (1 )
Operating expenses (2) (3) (4) (2,007 ) (1,909 ) 5 (7,801 ) (7,668 ) 2
Restructuring charges (5) (10 ) (203 ) (95 ) (18 ) (203 ) (91 )
Gain on net asset exchange, net (6) 3,947 - - 3,947 - -
Goodwill impairment charge (7)   -     -   -   (290 )   -   -
Total operating expenses   1,930     (2,112 ) (191 )   (4,162 )   (7,871 ) (47 )
Operating income 4,726 740 539 7,109 3,545 101
Other income, net 25 15 67 90 58 55
Interest expense   (77 )   (86 ) (10 )   (308 )   (353 ) (13 )
Income from continuing operations before income taxes 4,674

 

669 599

 

6,891 3,250 112
Income tax expense (8)   (1,044 )   (204 ) 412   (1,614 )   (908 ) 78
Income from continuing operations after tax 3,630 465 681 5,277 2,342 125
Loss from discontinued operations, net of tax (9)   (7 )   (21 ) (67 )   (124 )   (32 ) 288
Net income 3,623 444 716 5,153 2,310 123
Net income attributable to noncontrolling interests   (35 )   (13 ) 169   (83 )   (52 ) 60
Net income attributable to McKesson Corporation $ 3,588   $ 431   732 % $ 5,070   $ 2,258   125 %
 
 
Earnings (loss) per common share attributable to

McKesson Corporation (10)

Diluted
Continuing operations $ 16.79 $ 1.97 752 % $ 23.28 $ 9.84 137 %
Discontinued operations   (0.03 )   (0.09 ) (67 )   (0.55 )   (0.14 ) 293
Total $ 16.76   $ 1.88   791 % $ 22.73   $ 9.70   134 %
 
 
Basic
Continuing operations $ 16.95 $ 1.99 752 % $ 23.50 $ 9.96 136 %
Discontinued operations   (0.03 )   (0.09 ) (67 )   (0.55 )   (0.14 ) 293
Total $ 16.92   $ 1.90   791 % $ 22.95   $ 9.82   134 %
 
Dividends declared per common share $ 0.28   $ 0.28   $ 1.12   $ 1.08  
 
Weighted average common shares
Diluted 214 229 (7 ) % 223 233 (4 ) %
Basic 212 227 (7 ) 221 230 (4 )
 
(1)     Fourth quarters of fiscal year 2017 and 2016 include pre-tax charges
of $144 million and $29 million and fiscal years 2017 and 2016
include pre-tax credits of $7 million and pre-tax charges of $244
million related to our last-in-first-out ("LIFO") method of
accounting for inventories. Fiscal years 2017 and 2016 include $144
million and $76 million of net cash proceeds representing our share
of antitrust legal settlements. These charges and credits are
included within our Distribution Solutions Segment.
(2) Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the 2016 second quarter sale of our ZEE
Medical business within our Distribution Solutions segment.
(3) Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the 2016 first quarter sale of our nurse
triage business within our Technology Solutions segment.
(4) Fiscal year 2017 includes a $15 million pre-tax ($9 million
after-tax) gain related to the sale-leaseback of our corporate
headquarters building.
(5) In the fourth quarter of fiscal year 2016, the Company approved a
restructuring plan to reduce its operating expenses ("Cost Alignment
Plan"). Fourth quarter and fiscal year 2016 include pre-tax
restructuring charges of $229 million ($26 million in cost of sales
and $203 million in operating expenses). For the fourth quarter and
fiscal year 2017, restructuring charges were primarily recorded in
operating expenses.
(6) Fiscal year 2017 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.
(7) Fiscal year 2017 includes a non-cash pre-tax charge of $290 million
($282 million after-tax) recorded to impair the carrying value of
goodwill related to our Enterprise Information Solutions ("EIS")
business, which is a reporting unit within our Technology Solutions
segment.
(8) Fourth quarter and fiscal year 2017 include a tax benefit of $7
million and $54 million related to the amended accounting guidance
on share-based compensation adopted in the first quarter of fiscal
year 2017. Fiscal year 2016 includes a $19 million tax benefit
related to enacted tax law changes in foreign jurisdictions and a
$25 million tax benefit related to the reversal of a tax reserve.
(9) Fiscal year 2017 includes an after-tax loss of $113 million
recognized from the 2017 first quarter sale of our Brazilian
pharmaceutical distribution business within our discontinued
operations.
(10) Certain computations may reflect rounding adjustments.
 
     

Schedule 2A

 
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
(unaudited)
(in millions, except per share amounts)
   
Change
Quarter Ended March 31, 2017 Vs. Prior Quarter  
                   
Amortization Acquisition Claim and
of Acquisition- Expenses Litigation

 

Adjusted As Adjusted
As Reported Related and Related Reserve

LIFO-Related

Earnings Reported Earnings
(GAAP)     Intangibles     Adjustments     Adjustments     Adjustments    

(Non-GAAP)

(GAAP)       (Non-GAAP)  
 
Gross profit $ 2,796 $ - $ - $ - $ 144 $ 2,940 (2 ) % 2 %
 

Operating expenses (1) (2) (3)

$ 1,930 $ 112 $ (3,964 ) $ - $ - $ (1,922 ) (191 ) % (3 ) %
 
Other income, net $ 25 $ - $ 2 $ - $ - $ 27 67 % 59 %
 

Income from continuing operations before income taxes

$ 4,674 $ 112 $ (3,962 ) $ - $ 144 $ 968 599 % 17 %
 
Income tax expense (4) $ (1,044 ) $ (35 ) $ 927 $ - $ (56 ) $ (208 ) 412 % (18 ) %
 

Income from continuing operations, net of tax, attributable to
McKesson Corporation

$ 3,595 $ 77 $ (3,035 ) $ - $ 88 $ 725 695 % 29 %
 

Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (5)

$ 16.79       $ 0.37       $ (14.18 )     $ -     $ 0.41       $ 3.39  

(6)

752 % 39 %
Diluted weighted average common shares   214         214         214         -       214         214   (7 ) % (7 ) %
 
 
Quarter Ended March 31, 2016
 
Amortization Acquisition Claim and
of Acquisition- Expenses and Litigation Adjusted
As Reported Related Related Reserve LIFO-Related Earnings
(GAAP)     Intangibles     Adjustments     Adjustments     Adjustments     (Non-GAAP)
 

Gross profit (1)

$ 2,852

 

$ 2 $ -

 

$ - $ 29 $ 2,883
 

Operating expenses (1)

$ (2,112 ) $ 100 $ 26 $ - $ - $ (1,986 )
 
Other income, net $ 15 $ - $ 2 $ - $ - $ 17
 

Income from continuing operations before income taxes

$ 669 $ 102 $ 28 $ - $ 29 $ 828
 
Income tax expense $ (204 ) $ (33 ) $ (7 ) $ - $ (11 ) $ (255 )
 

Income from continuing operations, net of tax, attributable to
McKesson Corporation

$ 452 $ 69 $ 21 $ - $ 18 $ 560
 

Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (5)

$ 1.97       $ 0.31

 

    $ 0.09       $ -     $ 0.07       $ 2.44  
Diluted weighted average common shares   229         229         229         -       229         229  
 
(1)     Fiscal years 2017 and 2016 include Cost Alignment Plan pre-tax
restructuring charges of $10 million in operating expenses and $229
million ($26 million in cost of sales and $203 million in operating
expenses).
(2) Fiscal year 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.
(3) Fiscal year 2017 includes a $15 million pre-tax ($9 million
after-tax) gain related to the sale-leaseback of our corporate
headquarters building.
(4) Fiscal year 2017 includes a tax benefit of $7 million related to the
amended accounting guidance on share-based compensation adopted in
the first quarter of fiscal year 2017.
(5) Certain computations may reflect rounding adjustments.
(6) Adjusted Earnings per share on a Constant Currency basis for the
fourth quarter of fiscal year 2017 was $3.40 per diluted share,
which excludes the foreign currency exchange effect of $0.01 per
diluted share.
 

For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled "Supplemental Non-GAAP Financial Information" of this
release.

                           

Schedule 2B

 
McKESSON CORPORATION
RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED EARNINGS
(NON-GAAP)
(unaudited)
(in millions, except per share amounts)
 
Change
Year Ended March 31, 2017 Vs. Prior Period  
 
Amortization Acquisition Claim and
of Acquisition- Expenses and Litigation Adjusted As Adjusted
As Reported Related Related Reserve LIFO-Related Earnings Reported Earnings
(GAAP)     Intangibles     Adjustments     Adjustments     Adjustments     (Non-GAAP) (GAAP)     (Non-GAAP)  
 
Gross profit (1) $ 11,271 $ 3 $ 1 $ - $ (7 ) $ 11,268 (1 ) % (3 ) %
 
Operating expenses (2) (3) (4) (5) $ (4,162 ) $ 440 $ (3,807 ) $ (6 ) $ - $ (7,535 ) (47 ) % 3 %
 
Other income, net $ 90 $ 1 $ 10 $ - $ - $ 101 55 % 60 %
 

Income from continuing operations before income taxes

$ 6,891 $ 444 $ (3,796 ) $ (6 ) $ (7 ) $ 3,526 112 % (13 ) %
 
Income tax expense (6) $ (1,614 ) $ (135 ) $ 890 $ 2 $ 3 $ (854 ) 78 % (27 ) %
 

Income from continuing operations, net of tax, attributable to
McKesson Corporation

$ 5,194 $ 309 $ (2,906 ) $ (4 ) $ (4 ) $ 2,589 127 % (8 ) %
 

Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (7)

$ 23.28       $ 1.39       $ (13.03 )     $ (0.02 )     $ (0.01 )     $ 11.61  

(8)

137 % (4 ) %
Diluted weighted average common shares   223         223         223         223         223         223   (4 ) % (4 ) %
 
 
Year Ended March 31, 2016
 
Amortization Acquisition Claim and
of Acquisition- Expenses and Litigation Adjusted
As Reported Related Related Reserve LIFO-Related Earnings
(GAAP)     Intangibles     Adjustments     Adjustments     Adjustments     (Non-GAAP)
 
Gross profit (1) (2) $ 11,416

 

$ 7 $ -

 

$ - $ 244 $ 11,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (2) (9) (10)

$

(7,871

)

$

423

$

110

$

-

$

-

$

(7,338

)

 
Other income, net $ 58 $ 1 $ 4 $ - $ - $ 63
 

Income from continuing operations before income taxes

$ 3,250 $ 431 $ 114 $ - $ 244 $ 4,039
 
Income tax expense (11) $ (908 ) $ (136 ) $ (36 ) $ - $ (95 ) $ (1,175 )
 

Income from continuing operations, net of tax, attributable to
McKesson Corporation

$ 2,290 $ 295 $ 78 $ - $ 149 $ 2,812
 

Diluted earnings per common share from continuing operations, net
of tax, attributable to McKesson Corporation (7)

$ 9.84       $ 1.27       $ 0.34       $ -       $ 0.63       $ 12.08  
Diluted weighted average common shares   233         233         233         -         233         233  
 
(1)     Fiscal year 2017 and 2016 include $144 million and $76 million of
net cash proceeds representing our share of antitrust legal
settlements within our Distribution Solutions segment.
(2) Fiscal years 2017 and 2016 include Cost Alignment Plan pre-tax
restructuring net charges of $18 million in operating expenses and
$229 million ($26 million in cost of sales and $203 million in
operating expenses).
(3) Fiscal year 2017 includes a non-cash pre-tax charge of $290 million
($282 million after-tax) recorded to impair the carrying value of
goodwill related to our EIS business within our Technology Solutions
segment.
(4) Fiscal year 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.
(5) Fiscal year 2017 includes a $15 million pre-tax ($9 million
after-tax) gain related to the sale-leaseback of our corporate
headquarters building.
(6) Fiscal year 2017 includes a tax benefit of $54 million related to
the amended accounting guidance on share-based compensation adopted
in the first quarter of fiscal year 2017.
(7) Certain computations may reflect rounding adjustments.
(8) Adjusted Earnings per share on a Constant Currency basis for fiscal
year 2017 was $11.70 per diluted share, which excludes the foreign
currency exchange effect of $0.09 per diluted share.
(9) Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the 2016 second quarter sale of our ZEE
Medical business within our Distribution Solutions segment.
(10) Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the 2016 first quarter sale of our nurse
triage business within our Technology Solutions segment.
(11) Fiscal year 2016 includes a $19 million tax benefit related to
enacted tax law changes in foreign jurisdictions and a $25 million
tax benefit related to the reversal of a tax reserve.
 

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, 2017 Quarter Ended March 31, 2016 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
Distribution Solutions

North America pharmaceutical distribution & services

$ 40,561 $ - $ 40,561 $ 38,719 $ - $ 38,719 $ (89 ) $ 40,472 $ (89 ) $ 40,472 5 % 5 % 5 % 5 %

International pharmaceutical distribution & services

6,053 - 6,053 5,771 - 5,771 395 6,448 395 6,448 5 5 12 12

Medical-Surgical distribution & services

  1,587         -         1,587     1,454         -       1,454     -         1,587     -         1,587   9 9 9 9
Total Distribution Solutions 48,201 - 48,201 45,944 - 45,944 306 48,507 306 48,507 5 5 6 6

Technology Solutions - Products and Services

  512         -         512     734         -       734     1         513     1         513   (30 ) (30 ) (30 ) (30 )
Revenues $ 48,713       $ -       $ 48,713   $ 46,678       $ -     $ 46,678   $ 307       $ 49,020   $ 307       $ 49,020   4 % 4 % 5 % 5 %
 
GROSS PROFIT (1)
Distribution Solutions $ 2,523 $ 144 $ 2,667 $ 2,486 $ 30 $ 2,516 $ 43 $ 2,566 $ 43 $ 2,710 1 % 6 % 3 % 8 %
Technology Solutions   273         -         273     366         1       367     -         273     -         273   (25 ) (26 ) (25 ) (26 )
Gross profit $ 2,796       $ 144       $ 2,940   $ 2,852       $ 31     $ 2,883   $ 43       $ 2,839   $ 43       $ 2,983   (2 ) % 2 % - % 3 %
 
OPERATING EXPENSES (2)
Distribution Solutions $ (1,775 ) $ 136 $ (1,639 ) $ (1,686 ) $ 118 $ (1,568 ) $ (45 ) $ (1,820 ) $ (39 ) $ (1,678 ) 5 % 5 % 8 % 7 %
Technology Solutions (3) 3,816 (3,990 ) (174 ) (273 ) 8 (265 ) - 3,816 - (174 ) (1,498 ) (34 ) (1,498 ) (34 )
Corporate (4)   (111 )       2         (109 )   (153 )       -       (153 )   (1 )       (112 )   (1 )       (110 ) (27 ) (29 ) (27 ) (28 )
Operating expenses $ 1,930       $ (3,852 )     $ (1,922 ) $ (2,112 )     $ 126     $ (1,986 ) $ (46 )     $ 1,884   $ (40 )     $ (1,962 ) (191 ) % (3 ) % (189 ) % (1 ) %
 
OTHER INCOME, NET
Distribution Solutions $ 21 $ 2 $ 23 $ 11 $ 2 $ 13 $ 2 $ 23 $ 1 $ 24 91 % 77 % 109 % 85 %
Technology Solutions - - - - - - - - - - - - - -
Corporate   4         -         4     4         -       4     -         4     -         4   - - - -
Other income, net $ 25       $ 2       $ 27   $ 15       $ 2     $ 17   $ 2       $ 27   $ 1       $ 28   67 % 59 % 80 % 65 %
 
OPERATING PROFIT
Distribution Solutions (1) (2) $ 769 $ 282 $ 1,051 $ 811 $ 150 $ 961 $ - $ 769 $ 5 $ 1,056 (5 ) % 9 % (5 ) % 10 %
Technology Solutions (1) (2) (3)   4,089         (3,990 )       99     93         9       102     -         4,089     -         99   4,297 (3 ) 4,297 (3 )
Operating profit 4,858 (3,708 ) 1,150 904 159 1,063 - 4,858 5 1,155 437 8 437 9
Corporate (4)   (107 )       2         (105 )   (149 )       -       (149 )   (1 )       (108 )   (1 )       (106 ) (28 ) (30 ) (28 ) (29 )

Income from continuing operations before interest expense and
income taxes

$ 4,751       $ (3,706 )     $ 1,045   $ 755       $ 159     $ 914   $ (1 )     $ 4,750   $ 4       $ 1,049   529 % 14 % 529 % 15 %
 
STATISTICS
Operating profit as a % of revenues
Distribution Solutions 1.60

 

%

2.18

 

%

1.77

 

%

2.09 % 1.59 % 2.18 % (17 ) bp 9 bp (18 ) bp 9 bp
Technology Solutions 798.63 19.34 12.67 13.90 797.08 19.30 78,596 544 78,441 540
 
(1)     Gross profit for fiscal year 2016 includes pre-tax restructuring
charges associated with the Cost Alignment Plan of $5 million and
$21 million within our Distribution Solutions segment and Technology
Solutions segment.
(2) Operating expenses for fiscal year 2017 include pre-tax
restructuring charges associated with the Cost Alignment Plan of $6
million and $5 million within our Distribution Solutions segment and
Corporate and pre-tax restructuring credits of $1 million within our
Technology Solutions segment. Fiscal year 2016 includes pre-tax
restructuring charges of $156 million, $30 million and $17 million
within our Distribution Solutions segment, Technology Solutions
segment and Corporate.
(3) Operating expenses for fiscal year 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) Operating expenses for fiscal year 2017 includes a $15 million
pre-tax ($9 million after-tax) gain related to the sale-leaseback of
our corporate headquarters building.
 
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled "Supplemental Non-GAAP Financial Information" of this
release.
 
                                       

Schedule 3B

 
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP)
(unaudited)
(in millions)
 
 
Year Ended March 31, 2017 Year Ended March 31, 2016 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
Distribution Solutions

North America pharmaceutical distribution & services

$ 164,832 $ - $ 164,832 $ 158,469 $ - $ 158,469 $ 17 $ 164,849 $ 17 $ 164,849 4 % 4 % 4 % 4 %

International pharmaceutical distribution & services

24,847 - 24,847 23,497 - 23,497 1,176 26,023 1,176 26,023 6 6 11 11

Medical-Surgical distribution & services

  6,244         -         6,244     6,033         -       6,033     -         6,244     -         6,244   3 3 3 3
Total Distribution Solutions 195,923 - 195,923 187,999 - 187,999 1,193 197,116 1,193 197,116 4 4 5 5

Technology Solutions - Products and Services

  2,610         -         2,610     2,885         -       2,885     1         2,611     1         2,611   (10 ) (10 ) (9 ) (9 )
Revenues $ 198,533       $ -       $ 198,533   $ 190,884       $ -     $ 190,884   $ 1,194       $ 199,727   $ 1,194       $ 199,727   4 % 4 % 5 % 5 %
 
GROSS PROFIT (2)
Distribution Solutions (1) $ 9,856 $ (6 ) $ 9,850 $ 9,948 $ 245 $ 10,193 $ 192 $ 10,048 $ 192 $ 10,042 (1 ) % (3 ) % 1 % (1 ) %
Technology Solutions   1,415         3         1,418     1,468         6       1,474     -         1,415     -         1,418   (4 ) (4 ) (4 ) (4 )
Gross profit $ 11,271       $ (3 )     $ 11,268   $ 11,416       $ 251     $ 11,667   $ 192       $ 11,463   $ 192       $ 11,460   (1 ) % (3 ) % - % (2 ) %
 
OPERATING EXPENSES (3)
Distribution Solutions (4) $ (6,559 ) $ 535 $ (6,024 ) $ (6,436 ) $ 497 $ (5,939 ) $ (189 ) $ (6,748 ) $ (168 ) $ (6,192 ) 2 % 1 % 5 % 4 %
Technology Solutions (5) (6) (7) 2,799 (3,914 ) (1,115 ) (951 ) 34 (917 ) (1 ) 2,798 (1 ) (1,116 ) (394 ) 22 (394 ) 22
Corporate (8)   (402 )       6         (396 )   (484 )       2       (482 )   -         (402 )   (1 )       (397 ) (17 ) (18 ) (17 ) (18 )
Operating expenses $ (4,162 )     $ (3,373 )     $ (7,535 ) $ (7,871 )     $ 533     $ (7,338 ) $ (190 )     $ (4,352 ) $ (170 )     $ (7,705 ) (47 ) % 3 % (45 ) % 5 %
 
OTHER INCOME, NET
Distribution Solutions $ 64 $ 11 $ 75 $ 41 $ 5 $ 46 $ 3 $ 67 $ 2 $ 77 56 % 63 % 63 % 67 %
Technology Solutions 1 - 1 2 - 2 - 1 - 1 (50 ) (50 ) (50 ) (50 )
Corporate   25         -         25     15         -       15     -         25     -         25   67 67 67 67
Other income, net $ 90       $ 11       $ 101   $ 58       $ 5     $ 63   $ 3       $ 93   $ 2       $ 103   55 % 60 % 60 % 63 %
 
OPERATING PROFIT
Distribution Solutions (1) (2) (3) (4) $ 3,361 $ 540 $ 3,901 $ 3,553 $ 747 $ 4,300 $ 6 $ 3,367 $ 26 $ 3,927 (5 ) % (9 ) % (5 ) % (9 ) %
Technology Solutions (2) (3) (5) (6) (7) 4,215         (3,911 )       304     519         40       559     (1 )       4,214     (1 )       303   712 (46 ) 712 (46 )
Operating profit 7,576 (3,371 ) 4,205 4,072 787 4,859 5 7,581 25 4,230 86 (13 ) 86 (13 )
Corporate (8)   (377 )       6         (371 )   (469 )       2       (467 )   -         (377 )   (1 )       (372 ) (20 ) (21 ) (20 ) (20 )

Income from continuing operations before interest expense and
income taxes

$ 7,199       $ (3,365 )     $ 3,834   $ 3,603       $ 789     $ 4,392   $ 5       $ 7,204   $ 24       $ 3,858   100 % (13 ) % 100 % (12 ) %
 
STATISTICS
Operating profit as a % of revenues
Distribution Solutions 1.72 % 1.99 % 1.89 % 2.29 % 1.71 % 1.99 % (17 ) bp (30 ) bp (18 ) bp (30 ) bp
Technology Solutions 161.49 11.65 17.99 19.38 161.39 11.60 14,350 (773 ) 14,340 (778 )
 
(1)     Fiscal year 2017 and 2016 include $144 million and $76 million of
net cash proceeds representing our share of antitrust legal
settlements.
(2) Gross profit for fiscal year 2017 includes pre-tax restructuring
credits associated with the Cost Alignment Plan of $4 million within
our Technology Solutions segment. Gross profit for fiscal year 2016
includes pre-tax restructuring charges of $5 million and $21 million
within our Distribution Solutions segment and Technology Solutions
segment.
(3) Operating expenses for fiscal year 2017 include pre-tax
restructuring charges associated with the Cost Alignment Plan of $19
million and $5 million within our Distribution Solutions segment and
Corporate and pre-tax restructuring credits of $6 million within our
Technology Solutions segment. Fiscal year 2016 includes pre-tax
restructuring charges of $156 million, $30 million and $17 million
within our Distribution Solutions segment, Technology Solutions
segment and Corporate.
(4) Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the fiscal year 2016 second quarter sale
of our ZEE Medical business.
(5) Fiscal year 2017 includes a non-cash pre-tax charge of $290 million
($282 million after-tax) recorded to impair the carrying value of
goodwill related to our EIS business.
(6) Operating expenses for fiscal year 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.
(7) Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the fiscal year 2016 first quarter sale
of our nurse triage business.
(8) Operating expenses for fiscal year 2017 includes a $15 million
pre-tax ($9 million after-tax) gain related to the sale-leaseback of
our corporate headquarters building.
 
For more information relating to the Adjusted Earnings (Non-GAAP)
and Constant Currency (Non-GAAP) definitions, refer to the section
entitled "Supplemental Non-GAAP Financial Information" of this
release.
 
 
                           

Schedule 4A

 
McKESSON CORPORATION
RECONCILIATION OF GAAP SEGMENT FINANCIAL RESULTS TO ADJUSTED
EARNINGS (NON-GAAP) - BY ADJUSTMENT TYPE
(unaudited)
(in millions)
 
   
Quarter Ended March 31, 2017 Quarter Ended March 31, 2016
 
Distribution Technology Distribution Technology
Solutions     Solutions     Corporate     Total Solutions     Solutions     Corporate     Total

As Reported (GAAP):

Revenues $ 48,201 $ 512 $ - $ 48,713 $ 45,944 $ 734 $ - $ 46,678
 
Income from continuing operations before interest expense and income
taxes (1) (2) (3)
$ 769 $ 4,089 $ (107 ) $ 4,751 $ 811 $ 93 $ (149 ) $ 755
 

Pre-Tax Adjustments:

Amortization of acquisition-related intangibles $ 108 $ 4 $ - $ 112 $ 93 $ 9 $ - $ 102
 
Acquisition expenses and related adjustments 30 (3,994 ) 2 (3,962 ) 28 - - 28
 
Claim and litigation reserve adjustments - - - - - - - -
 
LIFO-related adjustments 144 - - 144 29 - - 29
                                       

Total pre-tax adjustments

$ 282     $ (3,990 )     $ 2       $ (3,706 ) $ 150     $ 9     $ -       $ 159
 
 

Adjusted Earnings (Non-GAAP):

Revenues $ 48,201 $ 512 $ - $ 48,713 $ 45,944 $ 734 $ - $ 46,678
 
Income from continuing operations before interest expense and income
taxes (1) (3)
$ 1,051 $ 99 $ (105 ) $ 1,045 $ 961 $ 102 $ (149 ) $ 914
 
(1)     Fiscal year 2017 includes pre-tax restructuring charges associated
with the Cost Alignment Plan of $6 million and $5 million within our
Distribution Solutions segment and Corporate and pre-tax
restructuring credits of $1 million within our Technology Solutions
segment. Fiscal year 2016 includes pre-tax restructuring charges of
$161 million, $51 million and $17 million within our Distribution
Solutions segment, Technology Solutions segment and Corporate.
(2) Fiscal year 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.
(3) Fiscal year 2017 includes a $15 million pre-tax ($9 million
after-tax) gain related to the sale-leaseback of our corporate
headquarters building.
 
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, 2017 Year Ended March 31, 2016
 
Distribution Technology Distribution Technology
Solutions     Solutions     Corporate     Total Solutions     Solutions     Corporate     Total

As Reported (GAAP):

Revenues $ 195,923 $ 2,610 $ - $ 198,533 $ 187,999 $ 2,885 $ - $ 190,884
 

Income from continuing operations before interest expense and
income taxes (1) (2) (3) (4) (5) (6) (7)

$ 3,361 $ 4,215 $ (377 ) $ 7,199 $ 3,553 $ 519 $ (469 ) $ 3,603
 

Pre-Tax Adjustments:

Amortization of acquisition-related intangibles $ 419 $ 25 $ - $ 444 $ 391 $ 40 $ - $ 431
 
Acquisition expenses and related adjustments 134 (3,936 ) 6 (3,796 ) 112 - 2 114
 
Claim and litigation reserve adjustments (6 ) - - (6 ) - - - -
 
LIFO-related adjustments (7 ) - - (7 ) 244 - - 244
                                       
Total pre-tax adjustments $ 540       $ (3,911 )     $ 6       $ (3,365 ) $ 747     $ 40     $ 2       $ 789
 
 

Adjusted Earnings (Non-GAAP):

Revenues $ 195,923 $ 2,610 $ - $ 198,533 $ 187,999 $ 2,885 $ - $ 190,884
 

Income from continuing operations before interest expense and
income taxes (1) (2) (3) (5) (6) (7)

$ 3,901 $ 304 $ (371 ) $ 3,834 $ 4,300 $ 559 $ (467 ) $ 4,392
 
(1)     Fiscal year 2017 and 2016 include $144 million and $76 million of
net cash proceeds representing our share of antitrust legal
settlements within our Distribution Solutions segment.
(2) Fiscal year 2017 includes pre-tax restructuring charges associated
with the Cost Alignment Plan of $19 million and $5 million within
our Distribution Solutions segment and Corporate and pre-tax
restructuring credits of $10 million within our Technology Solutions
segment. Fiscal year 2016 includes pre-tax restructuring charges of
$161 million, $51 million and $17 million within our Distribution
Solutions segment, Technology Solutions segment and Corporate.
(3) Fiscal year 2017 includes a non-cash pre-tax charge of $290 million
($282 million after-tax) recorded to impair the carrying value of
goodwill related to our EIS business within our Technology Solutions
segment.
(4) Fiscal year 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.
(5) Fiscal year 2017 includes a $15 million pre-tax ($9 million
after-tax) gain related to the sale-leaseback of our corporate
headquarters building.
(6) Fiscal year 2016 includes a pre-tax gain of $52 million ($29 million
after-tax) recognized from the fiscal year 2016 second quarter sale
of our ZEE Medical business within our Distribution Solutions
segment.
(7) Fiscal year 2016 includes a pre-tax gain of $51 million ($38 million
after-tax) recognized from the fiscal year 2016 first quarter sale
of our nurse triage business within our Technology Solutions segment.
 
For more information relating to the Adjusted Earnings (Non-GAAP)
definition, refer to the section entitled "Supplemental Non-GAAP
Financial Information" of this release.
 
 
   

Schedule 5

 
McKESSON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions)
   
 

 March 31, 

March 31,

 2017

2016
 
ASSETS
Current Assets
Cash and cash equivalents $ 2,783 $ 4,048
Receivables, net 18,215 17,980
Inventories, net 15,278 15,335
Prepaid expenses and other 672 1,072
Total Current Assets 36,948