Segment Information

9 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Information

13. Segment Information

Our operations are principally managed on a products and services basis and are comprised of two operating segments, which are the same as our reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.

The following table presents revenue for each reportable segment and Corporate:

	Three Months Ended March 31,
(in millions)	2017			2016
Pharmaceutical	$	28,406		$	27,527
Medical	3,418			3,138
Total segment revenue	31,824			30,665
Corporate (1)	(3		)	(3		)
Total revenue	$	31,821		$	30,662

	Nine Months Ended March 31,
(in millions)	2017			2016
Pharmaceutical	$	86,911		$	80,954
Medical	10,107			9,220
Total segment revenue	97,018			90,174
Corporate (1)	(8		)	(12		)
Total revenue	$	97,010		$	90,162

(1) Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

We evaluate segment performance based on segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general and administrative ("SG&A") expenses. Segment SG&A expenses include share-based compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal and compliance. The results attributable to noncontrolling interests are recorded within segment profit. Corporate expenses are allocated to the segments based on headcount, level of benefit provided and other ratable allocation methodologies.

We do not allocate the following items to our segments: LIFO inventory charges/(credits); restructuring and employee severance; amortization and other acquisition-related costs; impairments and (gain)/loss on disposal of assets; litigation (recoveries)/charges, net; other income, net; interest expense, net; loss on extinguishment of debt; and provision for income taxes.

In addition, certain investment spending, certain portions of enterprise-wide incentive compensation and other spending are not allocated to the segments. Investment spending generally includes the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. We encourage our segments and corporate functions to identify investment projects that will promote innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are often retained at Corporate. Investment spending within Corporate was $2 million and $9 million for the three months ended March 31, 2017 and 2016, respectively, and $4 million and $20 million for the nine months ended March 31, 2017 and 2016, respectively.

The following table presents segment profit by reportable segment and Corporate:

	Three Months Ended March 31,
(in millions)	2017			2016
Pharmaceutical	$	611		$	660
Medical	148			128
Total segment profit	759			788
Corporate	(154		)	(132		)
Total operating earnings	$	605		$	656

	Nine Months Ended March 31,
(in millions)	2017			2016
Pharmaceutical	$	1,682		$	1,945
Medical	435			335
Total segment profit	2,117			2,280
Corporate	(436		)	(441		)
Total operating earnings	$	1,681		$	1,839

The following table presents total assets for each reportable segment and Corporate at:

(in millions)	March 31, 2017		June 30, 2016
Pharmaceutical	$	21,469	$	20,662
Medical	10,645		10,236
Corporate	2,060		3,224
Total assets	$	34,174	$	34,122