Segments of Business

12 Months Ended

Mar. 31, 2016

Segment Reporting [Abstract]

Segments of Business

Segments of Business

We report our operations in two operating segments: McKesson Distribution Solutions and McKesson Technology Solutions. The factors for determining the reportable segments included the manner in which management evaluates the performance of the Company combined with the nature of the individual business activities. We evaluate the performance of our operating segments on a number of measures, including operating profit before interest expense, income taxes and results from discontinued operations.

The Distribution Solutions segment distributes branded and generic pharmaceutical drugs and other healthcare-related products worldwide and provides medical-surgical supply distribution, equipment, logistics and other services to healthcare providers within the United States. This segment provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. It also provides specialty pharmaceutical solutions for pharmaceutical manufacturers including offering multiple distribution channels and clinical trial access to our network of oncology physicians. Additionally, this segment operates retail pharmacies in Europe and supports independent pharmacy networks within North America. It also sells financial, operational and clinical solutions to pharmacies (retail, hospital, alternate site) and provides consulting, outsourcing and other services.

The McKesson Technology Solutions segment delivers enterprise-wide clinical, patient care, financial, supply chain, strategic management software solutions, as well as connectivity, outsourcing and other services, including remote hosting and managed services, to healthcare organizations.

Corporate includes expenses associated with Corporate functions and projects and the results of certain investments. Corporate expenses are allocated to the operating segments to the extent that these items can be directly attributable to the segment.

Financial information relating to our reportable operating segments and reconciliations to the consolidated totals is as follows:

	Years Ended March 31,
(In millions)	2016			2015			2014
Revenues
Distribution Solutions (1)
North America pharmaceutical distribution and services	$	158,469		$	143,711		$	123,929
International pharmaceutical distribution and services	23,497			26,358			4,485
Medical-Surgical distribution and services	6,033			5,907			5,648
Total Distribution Solutions	187,999			175,976			134,062
Technology Solutions - products and services	2,885			3,069			3,330
Total Revenues	$	190,884		$	179,045		$	137,392
Operating profit
Distribution Solutions (2) (4)	$	3,553		$	3,047		$	2,472
Technology Solutions (3) (4)	519			438			448
Total	4,072			3,485			2,920
Corporate Expenses, Net (4)	(469		)	(454		)	(449		)
Interest Expense	(353		)	(374		)	(300		)
Income From Continuing Operations Before Income Taxes	$	3,250		$	2,657		$	2,171
Depreciation and amortization (5)
Distribution Solutions	$	669		$	750		$	446
Technology Solutions	107			156			169
Corporate	109			111			120
Total	$	885		$	1,017		$	735
Expenditures for long-lived assets(6)
Distribution Solutions	$	306		$	301		$	179
Technology Solutions	15			27			47
Corporate	167			48			52
Total	$	488		$	376		$	278
Revenues, net by geographic area (7)
United States	$	158,255		$	142,810		$	122,426
Foreign	32,629			36,235			14,966
Total	$	190,884		$	179,045		$	137,392

(1) Revenues derived from services represent less than 2% of this segment’s total revenues.

(2) Distribution Solutions operating profit for the year ended March 31, 2016, 2015, and 2014 include $244 million, $337 million, and $311 million in pre-tax charges related to our last-in, first-out (“LIFO”) method of accounting for inventories. LIFO expense was less in 2016 primarily due to lower net price increases. For the year ended March 31, 2016 includes $76 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits as well as a pre-tax gain of $52 million recognized from the sale of our ZEE Medical business.

(3) Technology Solutions operating profit for the year ended March 31, 2016 includes a pre-tax gain of $51 million recognized from the sale of our nurse triage business, and for year ended March 31, 2015 includes a non-cash pre-tax charge of $34 million related to the retained workforce business within our International Technology business.

(4) During the fourth quarter of 2016, the Company approved the Cost Alignment Plan to reduce its operating expenses and recorded pre-tax restructuring charges of $229 million. Pre-tax charges were recorded as follows: $161 million, $51 million and $17 million within our Distribution Solutions segment, Technology Solutions segment and Corporate.

(5) Amounts primarily include amortization of acquired intangible assets purchased in connection with business acquisitions, capitalized software held for sale and capitalized software for internal use.

(6) Long-lived assets consist of property, plant and equipment.

(7) Net revenues were attributed to geographic areas based on the customers’ shipment locations.

Segment assets and property, plant and equipment, net by geographic areas were as follows:

	March 31,
(In millions)	2016		2015
Segment assets
Distribution Solutions	$	47,088	$	43,982
Technology Solutions	3,072		3,281
Total	50,160		47,263
Corporate
Cash and cash equivalents	4,048		5,341
Other	2,355		1,266
Total	$	56,563	$	53,870
Property, plant and equipment, net
United States	$	1,500	$	1,273
Foreign	778		772
Total	$	2,278	$	2,045