Segments of Business

Commencing in the first quarter of 2019, a new segment reporting structure was implemented, and we report our financial results in three reportable segments on a retrospective basis: U.S. Pharmaceutical and Specialty Solutions, European Pharmaceutical Solutions and Medical-Surgical Solutions. All remaining operating segments and business activities that are not significant enough to require separate reportable segment disclosure are included in Other also on a retrospective basis. 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 revenues and operating profit before interest expense and income taxes. Assets by operating segment are not reviewed by management for the purpose of assessing performance or allocating resources.

Our U.S. Pharmaceutical and Specialty Solutions segment distributes pharmaceutical and other healthcare-related products and also provides pharmaceutical solutions to pharmaceutical manufacturers in the United States.

Our European Pharmaceutical Solutions segment provides distribution and services to wholesale, institutional and retail customers and serves patients and consumers in 13 European countries through our own pharmacies and participating pharmacies that operate under brand partnership and franchise arrangements.

Our Medical-Surgical Solutions segment distributes medical-surgical supplies and provides logistics and other services to healthcare providers in the United States.

Other primarily consists of the following:


•	McKesson Canada which distributes pharmaceutical and medical products and operates Rexall Health retail pharmacies;


•	McKesson Prescription Technology Solutions which provides innovative technologies that support retail pharmacies; and


•	Our 70% equity ownership interest in a joint venture, Change Healthcare, which is accounted for by us using the equity investment method of accounting.

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

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



	Years Ended March 31,
(In millions)	2019			2018			2017
Revenues
U.S. Pharmaceutical and Specialty Solutions ⁽¹⁾	$	167,763		$	162,587		$	155,236
European Pharmaceutical Solutions ⁽¹⁾	27,242			27,320			24,847
Medical-Surgical Solutions ⁽¹⁾	7,618			6,611			6,244
Other	11,696			11,839			12,206
Total Revenues	$	214,319		$	208,357		$	198,533

Operating profit ⁽²⁾
U.S. Pharmaceutical and Specialty Solutions ⁽³⁾	$	2,697		$	2,535		$	2,488
European Pharmaceutical Solutions ⁽⁴⁾	(1,978		)	(1,681		)	173
Medical-Surgical Solutions	455			461			401
Other ^{(5) (6) (7)}	394			(107		)	4,514
Total	1,568			1,208			7,576
Corporate Expenses, Net ⁽⁸⁾	(694		)	(564		)	(377		)
Loss on Debt Extinguishment	—			(122		)	—
Interest Expense	(264		)	(283		)	(308		)
Income from Continuing Operations Before Income Taxes	$	610		$	239		$	6,891

Depreciation and amortization ⁽⁹⁾
U.S. Pharmaceutical and Specialty Solutions	$	238		$	210		$	235
European Pharmaceutical Solutions	257			296			315
Medical-Surgical Solutions	118			97			101
Other	214			237			149
Corporate	122			111			110
Total	$	949		$	951		$	910

Expenditures for long-lived assets ⁽¹⁰⁾
U.S. Pharmaceutical and Specialty Solutions	$	88		$	126		$	109
European Pharmaceutical Solutions	85			104			125
Medical-Surgical Solutions	110			34			9
Other	68			42			63
Corporate	75			99			98
Total	$	426		$	405		$	404

Revenues, net by geographic area
United States	$	176,296		$	169,943		$	164,428
Foreign	38,023			38,414			34,105
Total Revenues	$	214,319		$	208,357		$	198,533


(1)	Revenues derived from services represent less than 1% of our U.S. Pharmaceutical and Specialty Solutions segment’s total revenues, less than 10% of our European Pharmaceutical Solutions segment’s total revenues and less than 1% of our Medical-Surgical Solutions segment’s total revenues.


(2)	Segment operating profit includes gross profit, net of operating expenses, as well as other income, net, for our operating segments.

(3)

Our U.S. Pharmaceutical and Specialty Solutions segment’s operating profit for 2019, 2018 and 2017 includes pre-tax credits of $210 million, $99 million and $7 million related to our LIFO method of accounting for inventories. LIFO credits were higher in 2019 and 2018 compared to the comparable prior year periods primarily due to higher net effect of price declines. Operating profit for 2019 and 2017 includes $202 million and $144 million of net cash proceeds representing our share of net settlements of antitrust class action lawsuits. In addition, operating profit for 2018 includes a pre-tax gain of $43 million recognized from the sale of an equity investment.


(4)	European Pharmaceutical Solutions segment’s operating profit for 2019 and 2018 include non-cash pre-tax goodwill impairment charges of $1,776 million and $1,283 million. This segment’s operating profit for 2019 and 2018 also includes non-cash pre-tax long-lived asset impairment charges of $210 million and $446 million.

(5)

Operating profit for Other for 2019 and 2018 includes non-cash pre-tax goodwill and long-lived asset impairment charges of $35 million and $488 million recognized for our Rexall Health retail business. 2019 operating profit for Other also includes a pre-tax gain from escrow settlement of $97 million representing certain indemnity and other claims related to our 2017 acquisition of Rexall Health. In addition, operating profit for 2019 include pre-tax restructuring and asset impairment charges of $91 million, primarily associated with the lease and other exit-related costs and a pre-tax gain of $56 million recognized from the sale of an equity investment.


(6)	Operating profit for Other for 2019 includes a pre-tax credit of $90 million representing the derecognition of the TRA liability payable to the shareholders of Change. Operating profit for Other also includes our proportionate share of loss from Change Healthcare of $194 million and $248 million for 2019 and 2018.

(7)

Operating profit for Other for 2018 includes a pre-tax gain of $109 million from the sale of our EIS business and a pre-tax credit of $46 million representing a reduction in our TRA liability. Additionally, operating profit for 2017 includes a pre-tax gain of $3,947 million recognized from the Healthcare Technology Net Asset Exchange, net of transaction and related expenses, and a non-cash pre-tax charge of $290 million for goodwill impairment related to the EIS reporting unit.


(8)	Corporate expenses, net, for 2019 include pre-tax restructuring and asset impairment charges of $94 million primarily associated with employee severance and other exit-related costs.


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


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

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



	March 31,
(In millions)	2019		2018
Segment assets
U.S. Pharmaceutical and Specialty Solutions	$	32,310	$	31,431
European Pharmaceutical Solutions	7,829		10,467
Medical-Surgical Solutions	5,260		4,243
Other	11,006		11,509
Corporate	3,267		2,731
Total	$	59,672	$	60,381

Property, plant and equipment, net
United States	$	1,698	$	1,529
Foreign	850		935
Total	$	2,548	$	2,464