Restructuring, Impairment and Related Charges

6 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring, Impairment and Related Charges

Restructuring, Impairment, and Related Charges

The Company recorded restructuring, impairment, and related charges of $60 million and $116 million during the three and six months ended September 30, 2020, respectively, and $45 million and $68 million during the three and six months ended September 30, 2019, respectively. These charges are included under the caption, “Restructuring, impairment, and related charges” in Operating expenses in the Condensed Consolidated Statements of Operations. In addition, charges related to restructuring initiatives are included under the caption “Cost of sales” in its Condensed Consolidated Statements of Operations and were not material for the three and six months ended September 30, 2020 and 2019.

Restructuring Initiatives

As previously announced on November 30, 2018, the Company relocated its corporate headquarters, effective April 1, 2019, from San Francisco, California to Irving, Texas to improve efficiency, collaboration, and cost competitiveness. The Company expects to record total charges of approximately $90 million to $125 million, of which $90 million of charges were recorded to date. Charges recorded in the three and six months ended September 30, 2020 and 2019 were not material. The estimated remaining charges primarily consist of lease and other exit-related costs, and employee-related expenses. The Company anticipates that the relocation will be complete by January 2021.

During the fourth quarter of 2019, the Company committed to certain programs to continue its operating model and cost optimization efforts. The Company continues to implement centralization of certain functions and outsourcing through an expanded arrangement with a third-party vendor to achieve operational efficiency. The programs also include reorganization and consolidation of business operations, related headcount reductions, the further closures of retail pharmacy stores in Europe, and closures of other facilities. The Company expects to incur total charges of approximately $300 million to $320 million for these programs, of which $271 million of charges were recorded to date. Charges recorded in the three and six months ended September 30, 2020 and 2019 were not material and primarily represented employee severance, accelerated depreciation expense, and project consulting fees. The Company anticipates these additional programs will be substantially completed in 2022. The estimated remaining charges primarily consist of facility and other exit costs and employee-related costs.

During the first quarter of 2021, the Company committed to an initiative within the United Kingdom (“U.K.”), which is included in the Company’s International segment, to further drive transformational changes in technologies and business processes, operational efficiencies, and cost savings. The initiative includes reducing the number of retail pharmacy stores, decommissioning obsolete technologies and processes, reorganizing and consolidating certain business operations, and related headcount reductions. The Company expects to incur total charges of approximately $100 million to $120 million. The Company recorded charges of $27 million and $41 million, respectively, in the three and six months ended September 30, 2020, primarily related to asset impairments and accelerated depreciation expense as well as employee severance and other employee-related costs. The initiative is expected to be substantially complete by the end of 2021 and estimated remaining charges primarily consist of accelerated amortization and impairments of long-lived assets, facility and other exit costs, and employee-related costs.

Fiscal 2021

Restructuring, impairment, and related charges during the three and six months ended September 30, 2020 consisted of the following:

	Three Months Ended September 30, 2020
(In millions)	U.S. Pharmaceutical		International (1)		Medical-Surgical Solutions		Prescription Technology Solutions		Corporate (2)		Total
Severance and employee-related costs, net	$	6	$	3	$	3	$	—	$	4	$	16
Exit and other-related costs (3)	4		5		(1)		—		7		15
Asset impairments and accelerated depreciation	—		27		1		—		1		29
Total	$	10	$	35	$	3	$	—	$	12	$	60

(1)Primarily represents costs associated with the operating model and cost optimization efforts described above.

(2)Represents costs associated with the operating model cost optimization efforts and with the relocation of the Company’s corporate headquarters described above.

(3)Exit and other-related costs primarily consist of project consulting fees.

	Six Months Ended September 30, 2020
(In millions)	U.S. Pharmaceutical		International (1)		Medical-Surgical Solutions		Prescription Technology Solutions		Corporate (2)		Total
Severance and employee-related costs, net	$	7	$	20	$	3	$	—	$	24	$	54
Exit and other-related costs (3)	5		7		2		—		14		28
Asset impairments and accelerated depreciation	—		31		1		—		2		34
Total	$	12	$	58	$	6	$	—	$	40	$	116

(1)Primarily represents costs associated with the operating model and cost optimization efforts described above.

(2)Represents costs associated with the operating model cost optimization efforts and with the relocation of the Company’s corporate headquarters described above.

(3)Exit and other-related costs primarily consist of project consulting fees.

Fiscal 2020

Restructuring, impairment, and related charges during the three and six months ended September 30, 2019 consisted of the following:

	Three Months Ended September 30, 2019
(In millions)	U.S. Pharmaceutical (1)		International (2)		Medical-Surgical Solutions (3)		Prescription Technology Solutions		Corporate (4)		Total
Severance and employee-related costs, net	$	3	$	5	$	1	$	—	$	10	$	19
Exit and other-related costs (5)	—		4		2		—		13		19
Asset impairments and accelerated depreciation	—		3		—		—		4		7
Total	$	3	$	12	$	3	$	—	$	27	$	45

(1)Primarily represents costs associated with the relocation of the Company’s corporate headquarters described above.

(2)Primarily represents costs associated with the operating model and cost optimization efforts described above.

(3)Primarily represents costs associated with a growth initiative which included a reduction in workforce, facility consolidation, and store closures. These initiatives were substantially completed in the year ended March 31, 2020.

(4)Represents costs associated with the operating model cost optimization efforts and with the relocation of the Company’s corporate headquarters described above.

(5)Exit and other-related costs primarily include project consulting fees.

	Six Months Ended September 30, 2019
(In millions)	U.S. Pharmaceutical (1)		International (2)		Medical-Surgical Solutions (3)		Prescription Technology Solutions		Corporate (4)		Total
Severance and employee-related costs, net	$	2	$	4	$	1	$	—	$	16	$	23
Exit and other-related costs (5)	—		6		4		—		23		33
Asset impairments and accelerated depreciation	—		6		1		—		5		12
Total	$	2	$	16	$	6	$	—	$	44	$	68

(1)Primarily represents costs associated with the relocation of the Company’s corporate headquarters described above.

(2)Primarily represents costs associated with the operating model and cost optimization efforts described above.

(3)Primarily represents costs associated with a growth initiative which included a reduction in workforce, facility consolidation, and store closures. These initiatives were substantially completed in the year ended March 31, 2020.

(4)Represents costs associated with the operating model cost optimization efforts and with the relocation of the Company’s corporate headquarters described above.

(5)Exit and other-related costs primarily include project consulting fees.

The following table summarizes the activity related to the restructuring liabilities associated with the Company’s restructuring initiatives for the six months ended September 30, 2020:

(In millions)	U.S. Pharmaceutical		International		Medical-Surgical Solutions		Prescription Technology Solutions		Corporate		Total
Balance, March 31, 2020 (1)	$	29	$	66	$	22	$	1	$	39	$	157
Restructuring, impairment, and related charges	12		58		6		—		40		116
Non-cash charges	—		(31)		(1)		—		(2)		(34)
Cash payments	(15)		(16)		(11)		(1)		(34)		(77)
Other	—		(1)		(1)		—		(5)		(7)
Balance, September 30, 2020 (2)	$	26	$	76	$	15	$	—	$	38	$	155

(1)As of March 31, 2020, the total reserve balance was $157 million, of which $118 million was recorded in Other accrued liabilities and $39 million was recorded in Other non-current liabilities.

(2)As of September 30, 2020, the total reserve balance was $155 million, of which $128 million was recorded in Other accrued liabilities and $27 million was recorded in Other non-current liabilities.