QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Title of each class) | (Trading Symbol) | (Name of each exchange on which registered) | ||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Item | Page | |||||||
1 | ||||||||
Condensed Consolidated Statements of Comprehensive Income for the three months ended June 30, 2021 and 2020 | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
1 | ||||||||
1A | ||||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
Three Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Revenues | $ | $ | |||||||||
Cost of sales | ( | ( | |||||||||
Gross profit | |||||||||||
Selling, distribution, general, and administrative expenses | ( | ( | |||||||||
Claims and litigation charges, net | ( | ||||||||||
Restructuring, impairment, and related charges | ( | ( | |||||||||
Total operating expenses | ( | ( | |||||||||
Operating income | |||||||||||
Other income, net | |||||||||||
Interest expense | ( | ( | |||||||||
Income from continuing operations before income taxes | |||||||||||
Income tax expense | ( | ( | |||||||||
Income from continuing operations | |||||||||||
Loss from discontinued operations, net of tax | ( | ( | |||||||||
Net income | |||||||||||
Net income attributable to noncontrolling interests | ( | ( | |||||||||
Net income attributable to McKesson Corporation | $ | $ | |||||||||
Earnings (loss) per common share attributable to McKesson Corporation | |||||||||||
Diluted | |||||||||||
Continuing operations | $ | $ | |||||||||
Discontinued operations | ( | ||||||||||
Total | $ | $ | |||||||||
Basic | |||||||||||
Continuing operations | $ | $ | |||||||||
Discontinued operations | ( | ||||||||||
Total | $ | $ | |||||||||
Weighted-average common shares outstanding | |||||||||||
Diluted | |||||||||||
Basic |
Three Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive income (loss), net of tax | |||||||||||
Foreign currency translation adjustments | |||||||||||
Unrealized losses on cash flow hedges | ( | ||||||||||
Changes in retirement-related benefit plans | |||||||||||
Other comprehensive income, net of tax | |||||||||||
Comprehensive income | |||||||||||
Comprehensive income attributable to noncontrolling interests | ( | ( | |||||||||
Comprehensive income attributable to McKesson Corporation | $ | $ |
June 30, 2021 | March 31, 2021 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
Inventories, net | |||||||||||
Assets held for sale | |||||||||||
Prepaid expenses and other | |||||||||||
Total current assets | |||||||||||
Property, plant, and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND EQUITY (DEFICIT) | |||||||||||
Current liabilities | |||||||||||
Drafts and accounts payable | $ | $ | |||||||||
Current portion of long-term debt | |||||||||||
Current portion of operating lease liabilities | |||||||||||
Liabilities held for sale | |||||||||||
Other accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Long-term deferred tax liabilities | |||||||||||
Long-term operating lease liabilities | |||||||||||
Long-term litigation liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Redeemable noncontrolling interests | |||||||||||
McKesson Corporation stockholders’ deficit | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury shares, at cost, | ( | ( | |||||||||
Total McKesson Corporation stockholders’ deficit | ( | ( | |||||||||
Noncontrolling interests | |||||||||||
Total equity (deficit) | ( | ||||||||||
Total liabilities, redeemable noncontrolling interests, and equity (deficit) | $ | $ |
Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury | Noncontrolling Interests | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Common Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | $ | $ | $ | $ | ( | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Issuance of shares under employee plans | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Payments to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | ( | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | — | — | — | ( | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of McKesson Europe AG redeemable noncontrolling interests | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2021 | $ | $ | $ | $ | ( | ( | $ | ( | $ | $ | ( |
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Common Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balances, March 31, 2020 | $ | $ | $ | $ | ( | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Opening retained earnings adjustment: adoption of new accounting standard | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balances, April 1, 2020 | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares under employee plans | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Payments to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | — | — | — | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | ( | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balances, June 30, 2020 | $ | $ | $ | $ | ( | ( | $ | ( | $ | $ |
Three Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile to net cash used in operating activities: | |||||||||||
Depreciation | |||||||||||
Amortization | |||||||||||
Long-lived asset impairment charges | |||||||||||
Deferred taxes | |||||||||||
Credits associated with last-in, first-out inventory method | ( | ( | |||||||||
Non-cash operating lease expense | |||||||||||
Loss from sales of businesses and investments | |||||||||||
Other non-cash items | |||||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||
Receivables | ( | ||||||||||
Inventories | ( | ||||||||||
Drafts and accounts payable | ( | ( | |||||||||
Operating lease liabilities | ( | ( | |||||||||
Taxes | ( | ||||||||||
Litigation liabilities | |||||||||||
Other | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
INVESTING ACTIVITIES | |||||||||||
Payments for property, plant, and equipment | ( | ( | |||||||||
Capitalized software expenditures | ( | ( | |||||||||
Acquisitions, net of cash, cash equivalents, and restricted cash acquired | ( | ( | |||||||||
Proceeds from sales of businesses and investments, net | |||||||||||
Other | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from short-term borrowings | |||||||||||
Repayments of short-term borrowings | ( | ||||||||||
Repayments of long-term debt | ( | ( | |||||||||
Common stock transactions: | |||||||||||
Issuances | |||||||||||
Share repurchases | ( | ||||||||||
Dividends paid | ( | ( | |||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | ( | ||||||||||
Net decrease in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | |||||||||||
Less: Restricted cash at end of period included in Prepaid expenses and other | ( | ( | |||||||||
Cash and cash equivalents at end of period | $ | $ |
Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||||||||||
(In millions) | U.S. Pharmaceutical (1) | Prescription Technology Solutions (1) | Medical-Surgical Solutions (1) | International (2) | Corporate (1) | Total | |||||||||||||||||||||||||||||
Severance and employee-related costs, net | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Exit and other-related costs (3) | |||||||||||||||||||||||||||||||||||
Asset impairments and accelerated depreciation | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, 2020 | |||||||||||||||||||||||||||||||||||
(In millions) | U.S. Pharmaceutical | Prescription Technology Solutions | Medical-Surgical Solutions | International (1) | Corporate (2) | Total | |||||||||||||||||||||||||||||
Severance and employee-related costs, net | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Exit and other-related costs (3) | |||||||||||||||||||||||||||||||||||
Asset impairments and accelerated depreciation | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(In millions) | U.S. Pharmaceutical | Prescription Technology Solutions | Medical-Surgical Solutions | International | Corporate | Total | |||||||||||||||||||||||||||||
Balance, March 31, 2021 (1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Restructuring, impairment, and related charges | |||||||||||||||||||||||||||||||||||
Non-cash charges | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Cash payments | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Other | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Balance, June 30, 2021 (2) | $ | $ | $ | $ | $ | $ |
(In millions) | Noncontrolling Interests | Redeemable Noncontrolling Interests | |||||||||
Balance, March 31, 2021 | $ | $ | |||||||||
Net income attributable to noncontrolling interests | |||||||||||
Other comprehensive income | |||||||||||
Reclassification of recurring compensation to other accrued liabilities | — | ( | |||||||||
Payments to noncontrolling interests | ( | ||||||||||
Exercises of Put Right | — | ( | |||||||||
Reclassification of McKesson Europe redeemable noncontrolling interests | ( | ||||||||||
Other | |||||||||||
Balance, June 30, 2021 | $ | $ |
(In millions) | Noncontrolling Interests | Redeemable Noncontrolling Interests | |||||||||
Balance, March 31, 2020 | $ | $ | |||||||||
Net income attributable to noncontrolling interests | |||||||||||
Other comprehensive income | |||||||||||
Reclassification of recurring compensation to other accrued liabilities | — | ( | |||||||||
Payments to noncontrolling interests | ( | ||||||||||
Exercises of Put Right | — | ( | |||||||||
Other | ( | ||||||||||
Balance, June 30, 2020 | $ | $ |
Three Months Ended June 30, | |||||||||||
(In millions, except per share amounts) | 2021 | 2020 | |||||||||
Income from continuing operations | $ | $ | |||||||||
Net income attributable to noncontrolling interests | ( | ( | |||||||||
Income from continuing operations attributable to McKesson Corporation | |||||||||||
Loss from discontinued operations, net of tax | ( | ( | |||||||||
Net income attributable to McKesson Corporation | $ | $ | |||||||||
Weighted-average common shares outstanding: | |||||||||||
Basic | |||||||||||
Effect of dilutive securities: | |||||||||||
Stock options | |||||||||||
Restricted stock units (1) | |||||||||||
Diluted | |||||||||||
Earnings (loss) per common share attributable to McKesson: (2) | |||||||||||
Diluted | |||||||||||
Continuing operations | $ | $ | |||||||||
Discontinued operations | ( | ||||||||||
Total | $ | $ | |||||||||
Basic | |||||||||||
Continuing operations | $ | $ | |||||||||
Discontinued operations | ( | ||||||||||
Total | $ | $ |
(In millions) | U.S. Pharmaceutical | Prescription Technology Solutions | Medical-Surgical Solutions | International | Total | ||||||||||||||||||||||||
Balance, March 31, 2021 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Foreign currency translation adjustments, net | |||||||||||||||||||||||||||||
Balance, June 30, 2021 | $ | $ | $ | $ | $ |
June 30, 2021 | March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | Weighted- Average Remaining Amortization Period (Years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Service agreements | ( | ( | |||||||||||||||||||||||||||||||||||||||
Pharmacy licenses | ( | ( | |||||||||||||||||||||||||||||||||||||||
Trademarks and trade names | ( | ( | |||||||||||||||||||||||||||||||||||||||
Technology | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ | ( | $ |
(In millions) | June 30, 2021 | March 31, 2021 | |||||||||
U.S. Dollar notes (1) (2) | |||||||||||
$ | $ | ||||||||||
Foreign currency notes (1) (3) | |||||||||||
Lease and other obligations | |||||||||||
Total debt | |||||||||||
Less: Current portion | |||||||||||
Total long-term debt | $ | $ |
Balance Sheet Caption | June 30, 2021 | March 31, 2021 | ||||||||||||||||||||||||||||||
Fair Value of Derivative | U.S. Dollar Notional | Fair Value of Derivative | U.S. Dollar Notional | |||||||||||||||||||||||||||||
(In millions) | Asset | Liability | Asset | Liability | ||||||||||||||||||||||||||||
Derivatives designated for hedge accounting | ||||||||||||||||||||||||||||||||
Cross-currency swaps (current) | Prepaid expenses and other/Other accrued liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Cross-currency swaps (non-current) | Other non-current assets/liabilities | |||||||||||||||||||||||||||||||
Forward starting interest rate swaps (current) | Other accrued liabilities | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Derivatives not designated for hedge accounting | ||||||||||||||||||||||||||||||||
Foreign exchange contracts (current) | Prepaid expenses and other | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
Foreign exchange contracts (current) | Other accrued liabilities | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2021 | March 31, 2021 | ||||||||||||||||||||||
(In millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||
Long-term debt, including current maturities | $ | $ | $ | $ |
(In millions) | June 30, 2021 | ||||
Current litigation liabilities (1) | $ | ||||
Long-term litigation liabilities | |||||
Total litigation liabilities | $ |
Three Months Ended June 30, | |||||||||||
(In millions) | 2021 | 2020 | |||||||||
Foreign currency translation adjustments (1) | |||||||||||
Foreign currency translation adjustments arising during period, net of income tax expense of | $ | $ | |||||||||
Reclassified to income statement, net of income tax expense of | |||||||||||
Unrealized losses on net investment hedges | |||||||||||
Unrealized losses on net investment hedges arising during period, net of income tax benefit of $ | ( | ( | |||||||||
Reclassified to income statement, net of income tax expense of | |||||||||||
( | ( | ||||||||||
Unrealized losses on cash flow hedges | |||||||||||
Unrealized losses on cash flow hedges arising during period, net of income tax benefit of | ( | ||||||||||
Reclassified to income statement, net of income tax expense of | |||||||||||
( | |||||||||||
Changes in retirement-related benefit plans (4) | |||||||||||
Net actuarial gain and prior service cost arising during the period, net of income tax expense of | |||||||||||
Amortization of actuarial gain (loss), prior service cost and transition obligation, net of income tax benefit expense of | ( | ||||||||||
Foreign currency translation adjustments and other, net of income tax benefit of | ( | ||||||||||
Reclassified to income statement, net of income tax benefit of $ | ( | ||||||||||
Other comprehensive income, net of tax | $ | $ |
Foreign Currency Translation Adjustments | |||||||||||||||||||||||||||||
(In millions) | Foreign Currency Translation Adjustments, Net of Tax | Unrealized Losses on Net Investment Hedges, Net of Tax | Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax | Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax | Total Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||
Balance at March 31, 2021 | $ | ( | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||||||||
Amounts reclassified to earnings and other | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | ( | ||||||||||||||||||||||||||||
Other comprehensive income (loss) attributable to McKesson | ( | ||||||||||||||||||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | ( | ( | ( | ||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | $ | ( | $ | ( |
Foreign Currency Translation Adjustments | |||||||||||||||||||||||||||||
(In millions) | Foreign Currency Translation Adjustments, Net of Tax | Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax | Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax | Unrealized Net Gains (Losses) and Other Components of Benefit Plans, Net of Tax | Total Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||
Balance at March 31, 2020 | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||
Amounts reclassified to earnings and other | |||||||||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests | |||||||||||||||||||||||||||||
Other comprehensive income (loss) attributable to McKesson | ( | ( | ( | ( | |||||||||||||||||||||||||
Balance at June 30, 2020 | $ | ( | $ | $ | $ | ( | $ | ( |
Three Months Ended June 30, | |||||||||||
(In millions) | 2021 | 2020 | |||||||||
Segment revenues (1) | |||||||||||
U.S. Pharmaceutical | $ | $ | |||||||||
Prescription Technology Solutions | |||||||||||
Medical-Surgical Solutions | |||||||||||
International | |||||||||||
Total revenues | $ | $ | |||||||||
Segment operating profit (2) | |||||||||||
U.S. Pharmaceutical (3) | $ | $ | |||||||||
Prescription Technology Solutions | |||||||||||
Medical-Surgical Solutions (4) | |||||||||||
International | |||||||||||
Subtotal | |||||||||||
Corporate expenses, net (5) | ( | ( | |||||||||
Interest expense | ( | ( | |||||||||
Income from continuing operations before income taxes | $ | $ |
(In millions, except per share data) | Three Months Ended June 30, | |||||||||||||||||||
2021 | 2020 | Change | ||||||||||||||||||
Revenues | $ | 62,674 | $ | 55,679 | 13 | % | ||||||||||||||
Gross profit | 3,032 | 2,700 | 12 | |||||||||||||||||
Gross profit margin | 4.84 | % | 4.85 | % | (1) | bp | ||||||||||||||
Total operating expenses | $ | (2,464) | $ | (2,022) | 22 | % | ||||||||||||||
Total operating expenses as a percentage of revenues | 3.93 | % | 3.63 | % | 30 | bp | ||||||||||||||
Other income, net | $ | 43 | $ | 27 | 59 | % | ||||||||||||||
Interest expense | (49) | (60) | (18) | |||||||||||||||||
Income from continuing operations before income taxes | 562 | 645 | (13) | |||||||||||||||||
Income tax expense | (26) | (150) | (83) | |||||||||||||||||
Income from continuing operations | 536 | 495 | 8 | |||||||||||||||||
Loss from discontinued operations, net of tax | (3) | (1) | 200 | |||||||||||||||||
Net income | 533 | 494 | 8 | |||||||||||||||||
Net income attributable to noncontrolling interests | (47) | (50) | (6) | |||||||||||||||||
Net income attributable to McKesson Corporation | $ | 486 | $ | 444 | 9 | % | ||||||||||||||
Diluted earnings (loss) per common share attributable to McKesson Corporation | ||||||||||||||||||||
Continuing operations | $ | 3.09 | $ | 2.72 | 14 | % | ||||||||||||||
Discontinued operations | (0.02) | — | — | |||||||||||||||||
Total | $ | 3.07 | $ | 2.72 | 13 | % | ||||||||||||||
Weighted-average diluted common shares outstanding | 158.1 | 163.2 | (3) | % |
Three Months Ended June 30, | ||||||||||||||||||||
(Dollars in millions) | 2021 | 2020 | Change | |||||||||||||||||
Selling, distribution, general, and administrative expenses | $ | 2,232 | $ | 2,097 | 6 | % | ||||||||||||||
Claims and litigation charges, net | 74 | (131) | (156) | |||||||||||||||||
Restructuring, impairment, and related charges | 158 | 56 | 182 | |||||||||||||||||
Total operating expenses | $ | 2,464 | $ | 2,022 | 22 | % | ||||||||||||||
Percent of revenues | 3.93 | % | 3.63 | % | 30 | bp |
Three Months Ended June 30, | ||||||||||||||||||||
(Dollars in millions) | 2021 | 2020 | Change | |||||||||||||||||
Segment revenues | ||||||||||||||||||||
U.S. Pharmaceutical | $ | 50,019 | $ | 44,670 | 12 | % | ||||||||||||||
Prescription Technology Solutions | 881 | 656 | 34 | |||||||||||||||||
Medical-Surgical Solutions | 2,528 | 1,801 | 40 | |||||||||||||||||
International | 9,246 | 8,552 | 8 | |||||||||||||||||
Total revenues | $ | 62,674 | $ | 55,679 | 13 | % |
(Dollars in billions) | Increase (decrease) | ||||
Sales to pharmacies and institutional healthcare providers | $ | 4.6 | |||
Sales to specialty practices and other (1) | 0.7 | ||||
Total change in U.S. Pharmaceutical revenues | $ | 5.3 | |||
Total change in Prescription Technology Solutions revenues | $ | 0.2 | |||
Sales to primary care customers | $ | 0.6 | |||
Sales to extended care customers | — | ||||
Other (2) | 0.1 | ||||
Total change in Medical-Surgical Solutions revenues | $ | 0.7 | |||
Sales in Europe, excluding FX impact | $ | (0.7) | |||
Sales in Canada, excluding FX impact | 0.5 | ||||
Impact from FX | 1.0 | ||||
Total change in International revenues | $ | 0.8 | |||
Total change in revenues | $ | 7.0 |
Three Months Ended June 30, | ||||||||||||||||||||
(Dollars in millions) | 2021 | 2020 | Change | |||||||||||||||||
Segment operating profit (1) | ||||||||||||||||||||
U.S. Pharmaceutical | $ | 682 | $ | 613 | 11 | % | ||||||||||||||
Prescription Technology Solutions | 104 | 68 | 53 | |||||||||||||||||
Medical-Surgical Solutions (2) | 75 | 89 | (16) | |||||||||||||||||
International | 53 | 3 | — | |||||||||||||||||
Subtotal | 914 | 773 | 18 | |||||||||||||||||
Corporate expenses, net (3) | (303) | (68) | 346 | |||||||||||||||||
Interest expense | (49) | (60) | (18) | |||||||||||||||||
Income from continuing operations before income taxes | $ | 562 | $ | 645 | (13) | |||||||||||||||
Segment operating profit margin | ||||||||||||||||||||
U.S. Pharmaceutical | 1.36 | % | 1.37 | % | (1) | bp | ||||||||||||||
Prescription Technology Solutions | 11.80 | 10.37 | 143 | |||||||||||||||||
Medical-Surgical Solutions | 2.97 | 4.94 | (197) | |||||||||||||||||
International | 0.57 | 0.04 | 53 |
Three Months Ended June 30, | |||||||||||||||||
(Dollars in millions) | 2021 | 2020 | Change | ||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities | $ | (1,622) | $ | (1,062) | $ | (560) | |||||||||||
Investing activities | (99) | (130) | 31 | ||||||||||||||
Financing activities | (2,151) | 61 | (2,212) | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 11 | (28) | 39 | ||||||||||||||
Net change in cash, cash equivalents, and restricted cash | $ | (3,861) | $ | (1,159) | $ | (2,702) | |||||||||||
(Dollars in millions) | June 30, 2021 | March 31, 2021 | ||||||||||||
Cash, cash equivalents, and restricted cash | $ | 2,535 | $ | 6,396 | ||||||||||
Working capital | (485) | 1,279 | ||||||||||||
Debt to capital ratio (1) | 86.7 | % | 83.1 | % | ||||||||||
Return on McKesson stockholders’ deficit (2) | (218.2) | % | (142.5) | % |
Share Repurchases (1) | |||||||||||||||||||||||
(In millions, except price per share) | Total Number of Shares Purchased | Average Price Paid Per Share (2) | Total Number of Shares Purchased As Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | |||||||||||||||||||
April 1, 2021 – April 30, 2021 | — | $ | — | — | $ | 2,785 | |||||||||||||||||
May 1, 2021 – May 31, 2021 | 4.3 | 197.07 | 4.3 | 1,785 | |||||||||||||||||||
June 1, 2021 – June 30, 2021 | — | — | — | 1,785 | |||||||||||||||||||
Total | 4.3 | 4.3 |
Exhibit Number | Description | ||||
31.1 | |||||
31.2 | |||||
32†† | |||||
101 | The following materials from the McKesson Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Stockholders’ Equity (Deficit), (v) Condensed Consolidated Statements of Cash Flows, and (vi) related Financial Notes. | ||||
104 | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101). |
MCKESSON CORPORATION | |||||||||||
Date: | August 4, 2021 | /s/ Britt J. Vitalone | |||||||||
Britt J. Vitalone | |||||||||||
Executive Vice President and Chief Financial Officer |
MCKESSON CORPORATION | |||||||||||
Date: | August 4, 2021 | /s/ Sundeep G. Reddy | |||||||||
Sundeep G. Reddy | |||||||||||
Senior Vice President and Controller |
Date: | August 4, 2021 | /s/ Brian S. Tyler | |||||||||
Brian S. Tyler | |||||||||||
Chief Executive Officer |
Date: | August 4, 2021 | /s/ Britt J. Vitalone | |||||||||
Britt J. Vitalone | |||||||||||
Executive Vice President and Chief Financial Officer |
/s/ Brian S. Tyler | ||||||||
Brian S. Tyler | ||||||||
Chief Executive Officer | ||||||||
August 4, 2021 | ||||||||
/s/ Britt J. Vitalone | ||||||||
Britt J. Vitalone | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
August 4, 2021 | ||||||||
5,L\#1M$^ =IR,$X/\)-
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 533 | $ 494 |
Other comprehensive income (loss), net of tax | ||
Foreign currency translation adjustments | 24 | 33 |
Unrealized losses on cash flow hedges | 0 | (5) |
Changes in retirement-related benefit plans | 2 | 1 |
Other comprehensive income (loss), net of tax | 26 | 29 |
Comprehensive income | 559 | 523 |
Comprehensive income attributable to noncontrolling interests | (50) | (111) |
Comprehensive income attributable to McKesson Corporation | $ 509 | $ 412 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Mar. 31, 2021 |
---|---|---|
McKesson Corporation stockholders’ deficit | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 274,000,000 | 273,000,000 |
Treasury stock, shares (in shares) | 119,000,000 | 115,000,000 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Millions |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury |
Noncontrolling Interests |
Opening retained earnings adjustment: adoption of new accounting standard |
Opening retained earnings adjustment: adoption of new accounting standard
Retained Earnings
|
Adjusted balance, April 1 |
Adjusted balance, April 1
Common Stock
|
Adjusted balance, April 1
Additional Paid-in Capital
|
Adjusted balance, April 1
Retained Earnings
|
Adjusted balance, April 1
Accumulated Other Comprehensive Loss
|
Adjusted balance, April 1
Treasury
|
Adjusted balance, April 1
Noncontrolling Interests
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance (shares) at Mar. 31, 2020 | 272,000,000 | 272,000,000 | ||||||||||||||
Beginning balance (shares) at Mar. 31, 2020 | (110,000,000) | (110,000,000) | ||||||||||||||
Beginning balance at Mar. 31, 2020 | $ 5,309 | $ 2 | $ 6,663 | $ 13,022 | $ (1,703) | $ (12,892) | $ 217 | $ (13) | $ (13) | $ 5,296 | $ 2 | $ 6,663 | $ 13,009 | $ (1,703) | $ (12,892) | $ 217 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of shares under employee plans | (3) | 21 | $ (24) | |||||||||||||
Share-based compensation | 23 | 23 | ||||||||||||||
Payments to noncontrolling interests | (43) | (43) | ||||||||||||||
Other comprehensive income (loss) | (32) | (32) | ||||||||||||||
Net income | $ 483 | 444 | 39 | |||||||||||||
Repurchase of common stock (shares) | 0 | |||||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | $ 3 | 3 | ||||||||||||||
Cash dividends declared | (67) | (67) | ||||||||||||||
Other | (7) | 1 | (2) | (6) | ||||||||||||
Ending balance (shares) at Jun. 30, 2020 | 272,000,000 | |||||||||||||||
Ending balance (shares) at Jun. 30, 2020 | (110,000,000) | |||||||||||||||
Ending balance at Jun. 30, 2020 | $ 5,653 | $ 2 | 6,711 | 13,384 | (1,735) | $ (12,916) | 207 | |||||||||
Beginning balance (shares) at Mar. 31, 2021 | 273,000,000 | |||||||||||||||
Beginning balance (shares) at Mar. 31, 2021 | (115,000,000) | (115,000,000) | ||||||||||||||
Beginning balance at Mar. 31, 2021 | $ 175 | $ 2 | 6,925 | 8,202 | (1,480) | $ (13,670) | 196 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of shares under employee plans (shares) | 1,000,000 | |||||||||||||||
Issuance of shares under employee plans | 12 | 71 | $ (59) | |||||||||||||
Share-based compensation | 33 | 33 | ||||||||||||||
Payments to noncontrolling interests | (39) | (39) | ||||||||||||||
Other comprehensive income (loss) | 23 | 23 | ||||||||||||||
Net income | 525 | 486 | 39 | |||||||||||||
Repurchase of common stock (shares) | (4,000,000) | |||||||||||||||
Repurchase of common stock | (1,000) | (150) | $ (850) | |||||||||||||
Exercise of put right by noncontrolling shareholders of McKesson Europe AG | 8 | 178 | (170) | |||||||||||||
Reclassification of McKesson Europe redeemable noncontrolling interests | 287 | 287 | ||||||||||||||
Cash dividends declared | (65) | (65) | ||||||||||||||
Other | $ (4) | (5) | 1 | |||||||||||||
Ending balance (shares) at Jun. 30, 2021 | 274,000,000 | |||||||||||||||
Ending balance (shares) at Jun. 30, 2021 | (119,000,000) | (119,000,000) | ||||||||||||||
Ending balance at Jun. 30, 2021 | $ (45) | $ 2 | $ 7,057 | $ 8,618 | $ (1,627) | $ (14,579) | $ 484 |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per common share (in dollars per share) | $ 0.42 | $ 0.41 |
Significant Accounting Policies |
3 Months Ended |
---|---|
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Nature of Operations: McKesson Corporation (“McKesson,” or the “Company,”) is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information solutions. 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. The Company reports its financial results in four reportable segments: U.S. Pharmaceutical, Prescription Technology Solutions (“RxTS”), Medical-Surgical Solutions, and International. Refer to Financial Note 14, “Segments of Business,” for more information. Basis of Presentation: The condensed consolidated financial statements of McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where the Company’s ownership is less than 100%, the portion of the net income or loss allocable to the noncontrolling interests is reported as “Net income attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All significant intercompany balances and transactions have been eliminated in consolidation including the intercompany portion of transactions with equity method investees. The Company considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the variable interest entity (“VIE”). The Company consolidates VIEs when it is determined that it is the primary beneficiary of the VIE. Investments in business entities in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and therefore do not include all information and disclosures normally included in the annual consolidated financial statements. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. The Company continues to evaluate the ongoing impacts, including the economic consequences, of the coronavirus disease 2019 (“COVID-19”) pandemic. As COVID-19 evolves, the Company’s accounting estimates and assumptions may change over time and may change materially in future periods. In the opinion of management, the unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows of McKesson for the interim periods presented. The results of operations for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year. These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies, and financial notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, previously filed with the SEC on May 12, 2021 (“2021 Annual Report”). The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. Certain prior year amounts have been reclassified to conform to the current year presentation. Recently Adopted Accounting Pronouncements In the first quarter of 2022, the Company adopted Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies and clarifies certain other aspects of accounting for income taxes. The adoption of this amended guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.
|
Held for Sale |
3 Months Ended |
---|---|
Jun. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Held for Sale | Held for Sale Assets and liabilities to be disposed of by sale (“disposal groups”) are reclassified into “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The reclassification occurs when the disposal group is available for immediate sale and the sale is highly probable. These criteria are generally met when an agreement to sell exists, or management has committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying amount or fair value less costs to sell and are not depreciated or amortized. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less cost to sell is reported as an adjustment to the carrying value of the disposal group. Assets and liabilities that have met the classification of held for sale were $7 million and $5 million, respectively, at June 30, 2021 and $12 million and $9 million, respectively, at March 31, 2021. Based on its analysis, the Company determined that the disposal groups classified as held for sale do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. On July 5, 2021, the Company entered into an agreement to sell certain of its European businesses (“disposal group”) to the PHOENIX Group for a purchase price of €1.2 billion (or, approximately $1.5 billion), subject to certain adjustments, including net debt adjustments, and reduced by the value of the noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) at the divestiture date. The Company concluded that the held for sale criteria were not met in the first quarter of 2022 and continued to classify the assets and liabilities of these businesses as held and used in the condensed consolidated balance sheet. Beginning in the second quarter of 2022, the disposal group will be reflected in the Company’s condensed consolidated financial statements as held for sale. The disposal group will be remeasured to the lower of its carrying amount or fair value less costs to sell, which the Company estimates will result in a charge of between $500 million and $700 million, primarily related to the inclusion of the accumulated other comprehensive income balances into the carrying amount of the disposal group and the impairment of internal-use software that will not be completed. While this range reflects the Company’s best estimate as of the date of this Quarterly Report on Form 10-Q, actual charges could differ based on operating results, changes in foreign exchange rates, and other factors prior to closing of the transaction. The transaction is anticipated to close during 2023, pursuant to the satisfaction of customary closing conditions, including receipt of regulatory approvals, as applicable.
|
Restructuring, Impairment, and Related Charges |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Impairment, and Related Charges | Restructuring, Impairment, and Related Charges The Company recorded restructuring, impairment, and related charges of $158 million and $56 million during the three months ended June 30, 2021 and 2020, respectively. These charges are included in “Restructuring, impairment, and related charges” in the Condensed Consolidated Statements of Operations. In addition, charges related to restructuring initiatives are included in “Cost of sales” in the Condensed Consolidated Statements of Operations and were not material for the three months ended June 30, 2021 and 2020. Restructuring Initiatives During the first quarter of 2022, the Company approved an initiative to increase operational efficiencies and flexibility by transitioning to a partial remote work model for certain employees. This initiative primarily includes the rationalization of the Company’s office space in North America. Where it determines to cease using office space, the Company plans to exit the portion of the facility no longer used. It also may retain and repurpose certain other office locations. The Company expects to incur total charges of approximately $180 million to $280 million for this initiative, consisting primarily of exit related costs, accelerated depreciation and amortization of long-lived assets, and asset impairments. The Company recorded charges of $95 million in the three months ended June 30, 2021. This initiative is anticipated to be completed in 2022. Charges primarily relate to lease right-of-use and other long-lived asset impairments, lease exit costs, and accelerated depreciation and amortization. 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 operational changes in technologies and business processes, 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 $85 million to $90 million, of which $63 million of charges were recorded to date. The Company recorded charges of $6 million and $14 million, respectively, in the three months ended June 30, 2021 and 2020, primarily related to asset impairments and accelerated depreciation expense as well as employee severance and other employee-related costs. The initiative is anticipated to be substantially complete in 2022 and estimated remaining charges primarily consist of accelerated amortization of long-lived assets, facility and other exit costs, and employee-related costs. Restructuring, impairment, and related charges during the three months ended June 30, 2021 consisted of the following:
(1)Costs primarily relate to the transition to the partial remote work model described above. (2)Primarily represents costs related to the transition to the partial remote work model and U.K. operating model and cost optimization efforts described above, as well as costs for optimization programs in Canada. (3)Exit and other-related costs primarily consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Restructuring, impairment, and related charges during the three months ended June 30, 2020 consisted of the following:
(1)Primarily represents costs associated with the U.K. operating model and cost optimization efforts described above, and an operating model and cost optimization initiative which was substantially completed in the year ended March 31, 2021. (2)Primarily represents costs associated with an operating model and cost optimization initiative which was substantially completed in the year ended March 31, 2021. (3)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 three months ended June 30, 2021:
(1)As of March 31, 2021, the total reserve balance was $151 million, of which $99 million was recorded in “Other accrued liabilities” and $52 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet. (2)As of June 30, 2021, the total reserve balance was $177 million, of which $127 million was recorded in “Other accrued liabilities” and $50 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.
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Income Taxes |
3 Months Ended |
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Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended June 30, 2021 and 2020, the Company recorded income tax expense of $26 million and $150 million, respectively. The Company’s reported income tax rates were 4.6% and 23.3% for the three months ended June 30, 2021 and 2020, respectively. Fluctuations in the Company’s reported income tax rates are primarily due to discrete items recognized in the quarter and changes in the mix of earnings between various taxing jurisdictions. As of June 30, 2021, the Company had $1.7 billion of unrecognized tax benefits, of which $1.3 billion would reduce income tax expense and the effective tax rate if recognized. During the three months ended June 30, 2021, the Company recognized a net discrete tax benefit of $97 million primarily related to statute of limitation expirations in various taxing jurisdictions. During the next twelve months, the Company does not estimate any material reduction in its unrecognized tax benefits. However, this may change as the Company continues to have ongoing negotiations with various taxing authorities throughout the year. The unrecognized tax benefit may also increase or decrease due to future developments in the Opioid related litigation and claims, as discussed in Financial Note 12, “Commitments and Contingent Liabilities.” The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. The Internal Revenue Service (“IRS”) is currently examining the Company’s U.S. corporation income tax returns for 2018 and 2019. The Company is generally subject to audit by taxing authorities in various U.S. states and in foreign jurisdictions for fiscal years 2013 through the current fiscal year.
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Redeemable Noncontrolling Interests and Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Noncontrolling Interests and Noncontrolling Interests | Redeemable Noncontrolling Interests and Noncontrolling Interests Redeemable Noncontrolling Interests The Company’s redeemable noncontrolling interests primarily related to its consolidated subsidiary, McKesson Europe. Under the December 2014 domination and profit and loss transfer agreement (the “Domination Agreement”), the noncontrolling shareholders of McKesson Europe are entitled to receive an annual recurring compensation amount of €0.83 per share. As a result, during the three months ended June 30, 2021 and 2020, the Company recorded a total attribution of net income to the noncontrolling shareholders of McKesson Europe of $8 million and $11 million, respectively. All amounts were recorded in “Net income attributable to noncontrolling interests” in the Company’s Condensed Consolidated Statements of Operations and the corresponding liability balance was recorded in “Other accrued liabilities” in the Company’s Condensed Consolidated Balance Sheets. Under the Domination Agreement, the noncontrolling shareholders of McKesson Europe had a right to put (“Put Right”) their noncontrolling shares at €22.99 per share, increased annually for interest in the amount of five percentage points above a base rate published by the German Bundesbank semi-annually, less any compensation amount or guaranteed dividend already paid by McKesson with respect to the relevant time period (“Put Amount”). Subsequent to the Domination Agreement’s registration, certain noncontrolling shareholders of McKesson Europe initiated appraisal proceedings (“Appraisal Proceedings”) with the Stuttgart Regional Court (the “Court”) to challenge the adequacy of the Put Amount, annual recurring compensation amount, and/or the guaranteed dividend. During the pendency of the Appraisal Proceedings, such amount was paid as specified currently in the Domination Agreement. On September 19, 2018, the Court ruled that the Put Amount shall be increased by €0.51 resulting in an adjusted Put Amount of €23.50. The annual recurring compensation amount and/or the guaranteed dividend remained unadjusted. Noncontrolling shareholders of McKesson Europe appealed this decision. McKesson Europe Holdings GmbH & Co. KGaA also appealed the decision. On April 12, 2021, the Company received notice that the Stuttgart Court of Appeals ruled that the Put Amount shall remain €22.99, thereby rejecting the lower court’s increase, and the recurring compensation remained at €0.83 per share. During the three months ended June 30, 2021 and 2020, the Company paid $1.0 billion and $49 million, respectively, to purchase 34.5 million and 1.8 million shares, respectively, of McKesson Europe through exercises of the Put Right by the noncontrolling shareholders. This decreased the carrying value of the noncontrolling interests by $983 million and $49 million, respectively, for the three months ended June 30, 2021 and 2020, and the Company recorded the associated effect of the increase in the Company’s ownership interest of $178 million and $3 million, respectively, as an increase to McKesson’s stockholders additional paid-in capital. The Put Right expired on June 15, 2021, at which point the remaining shares owned by the minority shareholders, with a carrying value of $287 million, were transferred from “Redeemable noncontrolling interests” to “Noncontrolling interests” on the Condensed Consolidated Balance Sheet. The redeemable noncontrolling interest was adjusted each period for the proportion of other comprehensive income, primarily due to changes in foreign currency exchange rates, attributable to the noncontrolling shareholders. Prior to expiration of the Put Right, the balance of the redeemable noncontrolling interests was reported as the greater of its carrying value or its maximum redemption value at each reporting date. At March 31, 2021, the carrying value of $1.3 billion exceeded the maximum redemption value of $1.2 billion and the Company owned approximately 78% of McKesson Europe’s outstanding common shares. At June 30, 2021, the Company owned approximately 95%, of McKesson Europe’s outstanding common shares. Noncontrolling Interests Noncontrolling interests represent third-party equity interests in the Company’s consolidated entities primarily related to ClarusONE Sourcing Services LLP and Vantage Oncology Holdings, LLC. As of June 30, 2021, noncontrolling interests also represent minority shareholder equity interests in McKesson Europe, as discussed above. During the three months ended June 30, 2021 and 2020, the Company allocated a total of $39 million of net income to noncontrolling interests. Changes in redeemable noncontrolling interests and noncontrolling interests for the three months ended June 30, 2021 were as follows:
Changes in redeemable noncontrolling interests and noncontrolling interests for the three months ended June 30, 2020 were as follows:
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Earnings (Loss) Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share Basic earnings (loss) per common share are computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. The computation of diluted earnings (loss) per common share is similar to that of basic earnings (loss) per common share, except that the former reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. Potentially dilutive securities include outstanding stock options, restricted stock units, and performance-based and other restricted stock units. Approximately 1 million and 3 million of potentially dilutive securities for the three months ended June 30, 2021 and 2020 were excluded from the computation of diluted net earnings per common share as they were anti-dilutive. The computations for basic and diluted earnings or loss per common share are as follows:
(1)Includes dilutive effect from restricted stock units, performance-based restricted stock units, and performance-based stock units. (2)Certain computations may reflect rounding adjustments.
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Goodwill and Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Changes in the carrying amount of goodwill were as follows:
Information regarding intangible assets is as follows:
Amortization expense of intangible assets was $98 million and $106 million for the three months ended June 30, 2021 and 2020, respectively. Estimated amortization expense of these assets is as follows: $279 million, $273 million, $261 million, $255 million, and $223 million for the remainder of 2022 and each of the succeeding years through 2026 and $1.5 billion thereafter. All intangible assets were subject to amortization as of June 30, 2021 and March 31, 2021.
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Debt and Financing Activities |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Financing Activities | Debt and Financing Activities Long-term debt consisted of the following:
(1)These notes are unsecured and unsubordinated obligations of the Company. (2)Interest on these notes is payable semi-annually. (3)Interest on these foreign currency notes is payable annually. Long-Term Debt The Company’s long-term debt includes both U.S. dollar and foreign currency-denominated borrowings. Debt outstanding totaled $7.2 billion and $7.1 billion at June 30, 2021 and March 31, 2021, respectively, of which $752 million and $742 million, respectively, was included under the caption “Current portion of long-term debt” within the Company’s Condensed Consolidated Balance Sheets. On July 17, 2021, the Company redeemed its 0.63% €600 million (or, approximately $709 million) total principal Euro-denominated notes, originally due on August 17, 2021, prior to maturity. The notes were redeemed at par value using cash on hand. Tender Offer On July 23, 2021, the Company completed a cash tender offer for a portion of its existing outstanding (i) 2.85% Notes due 2023, (ii) 3.80% Notes due 2024, (iii) 7.65% Debentures due 2027, (iv) 3.95% Notes due 2028, (v) 4.75% Notes due 2029, (vi) 6.00% Notes due 2041, and (vii) 4.88% Notes due 2044 (collectively referred to herein as the “Tender Offer Notes”). In connection with the tender offer, the Company paid an aggregate consideration of $1.1 billion to redeem $922 million principal amount of the notes at a redemption price equal to 100% of the principal amount and premiums of $182 million. The redemption of the Tender Offer Notes was accounted for as a debt extinguishment and in the second quarter of 2022 the Company will record a loss on debt extinguishment, consisting of the premiums paid and a portion of the unamortized discounts and debt issuance costs proportional to the principal amount of debt retired. Revolving Credit Facilities The Company has a Credit Agreement, dated as of September 25, 2019 (the “2020 Credit Facility”), that provides a syndicated $4.0 billion five-year senior unsecured credit facility with a $3.6 billion aggregate sublimit of availability in Canadian dollars, British pound sterling, and Euro. Borrowings under the 2020 Credit Facility bear interest based upon the London Interbank Offered Rate (“LIBOR”), Canadian Dealer Offered Rate for credit extensions denominated in Canadian dollars, a prime rate, or alternative overnight rates as applicable, plus agreed margins. The 2020 Credit Facility matures in September 2024 and had no borrowings during the three months ended June 30, 2021 and 2020 and no amounts outstanding as of June 30, 2021 and March 31, 2021. On March 31, 2021, the Company entered into Amendment No. 2 to the 2020 Credit Facility, which superseded Amendment No. 1, dated as of February 1, 2021. The 2020 Credit Facility, as amended, contains various customary investment grade covenants, including a financial covenant which obligates the Company to maintain a maximum Total Debt to Consolidated EBITDA ratio, as defined in the amended credit agreement. If the Company does not comply with these covenants, its ability to use the 2020 Credit Facility may be suspended and repayment of any outstanding balances under the 2020 Credit Facility may be required. At June 30, 2021, the Company was in compliance with all covenants. The Company also maintains bilateral credit facilities primarily denominated in Euro with a committed amount of $8 million and an uncommitted amount of $118 million as of June 30, 2021. Borrowings and repayments were not material during the three months ended June 30, 2021 and 2020, and amounts outstanding under these credit lines were not material as of June 30, 2021 and March 31, 2021. Commercial Paper The Company maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. Under the program, the Company can issue up to $4.0 billion in outstanding commercial paper notes. There were no borrowings or repayments during the three months ended June 30, 2021. During the three months ended June 30, 2020, the Company borrowed $5.3 billion and repaid $5.3 billion under the program. At June 30, 2021 and March 31, 2021, there were no commercial paper notes outstanding.
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Pension Benefits |
3 Months Ended |
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Jun. 30, 2021 | |
Retirement Benefits [Abstract] | |
Pension Benefits | Pension Benefits The net periodic expense for defined benefit pension plans was approximately zero and $7 million for the three months ended June 30, 2021 and 2020, respectively. Cash contributions to these plans were $14 million and $7 million for the three months ended June 30, 2021 and 2020, respectively. The projected unit credit method is utilized in measuring net periodic pension expense over the employees’ service life for the pension plans. Unrecognized actuarial losses exceeding 10% of the greater of the projected benefit obligation or the market value of assets are amortized on a straight-line basis over the average remaining future service periods and expected life expectancy.
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Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hedging Activities | Hedging Activities In the normal course of business, the Company is exposed to interest rate and foreign currency exchange rate fluctuations. At times, the Company limits these risks through the use of derivatives such as cross-currency swaps, foreign currency forward contracts, and interest rate swaps. In accordance with the Company’s policy, derivatives are only used for hedging purposes. It does not use derivatives for trading or speculative purposes. Foreign Currency Exchange Risk The Company conducts its business worldwide in U.S. dollars and the functional currencies of its foreign subsidiaries, including Euro, British pound sterling, and Canadian dollars. Changes in foreign currency exchange rates could have a material adverse impact on the Company’s financial results that are reported in U.S. dollars. The Company is also exposed to foreign currency exchange rate risk related to its foreign subsidiaries, including intercompany loans denominated in non-functional currencies. The Company has certain foreign currency exchange rate risk programs that use foreign currency forward contracts and cross-currency swaps. These forward contracts and cross-currency swaps are generally used to offset the potential income statement effects from intercompany loans and other obligations denominated in non-functional currencies. These programs reduce but do not entirely eliminate foreign currency exchange rate risk. Non-Derivative Instruments Designated as Hedges At June 30, 2021 and March 31, 2021, the Company had €1.7 billion of Euro-denominated notes designated as non-derivative net investment hedges. These hedges are utilized to hedge portions of the Company’s net investments in non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For all notes that are designated as net investment hedges and meet effectiveness requirements, the changes in carrying value of the notes attributable to the change in spot rates are recorded in foreign currency translation adjustments in “Accumulated other comprehensive loss” in the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) where they offset foreign currency translation gains and losses recorded on the Company’s net investments. To the extent foreign currency denominated notes designated as net investment hedges are ineffective, changes in carrying value attributable to the change in spot rates are recorded in earnings. Losses from net investment hedges recorded within Other comprehensive income were $22 million and $34 million during the three months ended June 30, 2021 and 2020, respectively. There was no ineffectiveness in non-derivative net investment hedges during the three months ended June 30, 2021 and 2020. Derivatives Designated as Hedges At June 30, 2021 and March 31, 2021, the Company had cross-currency swaps designated as net investment hedges with a total gross notional amount of $500 million Canadian dollars. Under the terms of the cross-currency swap contracts, the Company agrees with third parties to exchange fixed interest payments in one currency for fixed interest payments in another currency at specified intervals and to exchange principal in one currency for principal in another currency, calculated by reference to agreed-upon notional amounts. These swaps are utilized to hedge portions of the Company’s net investments denominated in Canadian dollars against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. The changes in the fair value of these derivatives attributable to the changes in spot currency exchange rates and differences between spot and forward interest rates are recorded in “Accumulated other comprehensive loss” in the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) where they offset foreign currency translation gains and losses recorded on the Company’s net investments denominated in Canadian dollars. To the extent cross-currency swaps designated as hedges are ineffective, changes in carrying value attributable to the change in spot rates are recorded in earnings. There was no ineffectiveness in the Company’s net investment hedges for the three months ended June 30, 2021 and 2020. The remaining cross-currency swaps will mature November 2024. Gains or losses from the Company’s cross-currency swaps designated as net investment hedges recorded in Other comprehensive income were losses of $5 million and $51 million during the three months ended June 30, 2021 and 2020, respectively. There was no ineffectiveness in the Company’s cross-currency swap hedges for the three months ended June 30, 2021 and 2020. On September 30, 2019, the Company entered into a number of cross-currency swaps designated as fair value hedges with total notional amounts of £450 million British pound sterling. Under the terms of the cross-currency swap contracts, the Company agreed with third parties to exchange fixed interest payments in British pound sterling for floating interest payments in U.S. dollars based on three-month LIBOR plus a spread. These swaps are utilized to hedge the changes in the fair value of the underlying £450 million British pound sterling notes resulting from changes in benchmark interest rates and foreign exchange rates. The changes in the fair value of these derivatives, which are designated as fair value hedges, and the offsetting changes in the fair value of the hedged notes are recorded in earnings. Gains from these fair value hedges recorded in earnings were largely offset by the losses recorded in earnings related to these notes. The swaps will mature in February 2023. From time to time, the Company also enters into cross-currency swaps to hedge intercompany loans denominated in non-functional currencies. For cross-currency swap transactions, the Company agrees with third parties to exchange fixed interest payments in one currency for fixed interest payments in another currency at specified intervals and to exchange principal in one currency for principal in another currency, calculated by reference to agreed-upon notional amounts. These cross-currency swaps are designed to reduce the income statement effects arising from fluctuations in foreign exchange rates and have been designated as cash flow hedges. At June 30, 2021 and March 31, 2021, the Company had cross-currency swaps with total gross notional amounts of approximately $2.6 billion, which are designated as cash flow hedges. These swaps will mature between August 2021 and January 2024. For forward contracts and cross-currency swaps that are designated as cash flow hedges, the effective portion of changes in the fair value of the hedges is recorded in Accumulated other comprehensive loss and reclassified into earnings in the same period in which the hedged transaction affects earnings. Changes in fair values representing hedge ineffectiveness are recognized in current earnings. On April 27, 2020, the Company entered into forward starting interest rate swaps designated as cash flow hedges, with combined notional amounts of $500 million and €600 million, to hedge the variability of future benchmark interest rates on planned bond issuances. Under the terms of the forward interest rate swap contracts, the Company agreed with third parties to pay fixed interest payments for the $500 million swaps for floating interest payments in U.S. dollars based on three-month LIBOR and to pay fixed interest payments for floating interest payments in Euros based on six-month Euro Interbank Offered Rate (“EURIBOR”) for the €600 million swaps. The $500 million swaps were terminated upon the issuance of the 2025 Notes in November 2020. The settlement loss on the swaps was not material and will be amortized on a straight-line basis as interest expense over the five-year life of the 2025 Notes. Refer to Financial Note 8, “Debt and Financing Activities,” for more information. Gains or losses from cash flow hedges recorded in Other comprehensive income were zero and a loss of $5 million during the three months ended June 30, 2021 and 2020, respectively. Gains or losses reclassified from Accumulated other comprehensive income and recorded in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations were not material in the three months ended June 30, 2021 and 2020. There was no ineffectiveness in the Company’s cash flow hedges for the three months ended June 30, 2021 and 2020. Derivatives Not Designated as Hedges Derivative instruments not designated as hedges are marked-to-market at the end of each accounting period with the change in fair value included in earnings. The Company has a number of forward contracts to hedge the Euro against cash flows denominated in British pound sterling and other European currencies. At June 30, 2021 and March 31, 2021, the total gross notional amounts of these contracts were $54 million and $39 million, respectively. These contracts will predominantly mature between July 2021 and December 2021 and none of these contracts were designated for hedge accounting. Changes in the fair values for contracts not designated as hedges are recorded directly into earnings in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. Changes in the fair values were not material in the three months ended June 30, 2021 and 2020. Gains or losses from these contracts are largely offset by changes in the value of the underlying intercompany obligations. Information regarding the fair value of derivatives on a gross basis is as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company measures certain assets and liabilities at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures. The fair value hierarchy consists of three levels of inputs that may be used to measure fair value as follows: Level 1 - quoted prices in active markets for identical assets or liabilities. Level 2 - significant other observable market-based inputs. Level 3 - significant unobservable inputs for which little or no market data exists and requires considerable assumptions that are significant to the fair value measurement. Assets and Liabilities Measured at Fair Value on a Recurring Basis Cash and cash equivalents at June 30, 2021 and March 31, 2021 included investments in money market funds of $521 million and $1.6 billion, respectively, which are reported at fair value. The fair value of money market funds was determined using quoted prices for identical investments in active markets, which are considered to be Level 1 inputs under the fair value measurements and disclosure guidance. The carrying value of all other cash equivalents approximates their fair value due to their relatively short-term nature. Fair values for the Company’s marketable securities were not material at June 30, 2021 and March 31, 2021. Fair values of the Company’s interest rate swaps, foreign currency forward contracts, and cross-currency swaps were determined using observable inputs from available market information, including quoted interest rates, foreign currency exchange rates, and other observable inputs from available market information. These inputs are considered Level 2 under the fair value measurements and disclosure guidance, and may not be representative of actual values that could have been realized or that will be realized in the future. Refer to Financial Note 10, “Hedging Activities,” for fair value and other information on the Company’s derivatives including interest rate swaps, forward foreign currency contracts, and cross-currency swaps. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis In addition to assets and liabilities that are measured at fair value on a recurring basis, the Company’s assets and liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges. At June 30, 2021, assets measured at fair value on a nonrecurring basis included long-lived assets associated with the Company’s restructuring initiatives as discussed in more detail in Financial Note 3, “Restructuring, Impairment, and Related Charges.” At March 31, 2021, assets measured at fair value on a nonrecurring basis included long-lived assets of the Company’s International segment and goodwill of the Company’s Europe Retail Pharmacy reporting unit within the International segment. There were no liabilities measured at fair value on a nonrecurring basis at June 30, 2021 and March 31, 2021. Other Fair Value Disclosures At June 30, 2021 and March 31, 2021, the carrying amounts of cash, certain cash equivalents, restricted cash, marketable securities, receivables, drafts and accounts payable, short-term borrowings, and other current liabilities approximated their estimated fair values because of the short maturity of these financial instruments. The Company determines the fair value of commercial paper using quoted prices in active markets for identical instruments, which are considered Level 1 inputs under the fair value measurements and disclosure guidance. The Company’s long-term debt is recorded at amortized cost. The carrying value and fair value of the Company’s long-term debt was as follows:
The estimated fair value of the Company’s long-term debt was determined using quoted market prices in a less active market and other observable inputs from available market information, which are considered to be Level 2 inputs, and may not be representative of actual values that could have been realized or that will be realized in the future. Restricted Cash Restricted cash, included within “Prepaid expenses and other” on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021, primarily consists of funds temporarily held on behalf of unaffiliated medical practice groups related to their COVID-19 business continuity borrowings. The amounts have been designated as restricted cash due to contractual provisions requiring their segregation from all other funds until utilized by the medical practices for a limited list of qualified activities. Corresponding deposit liabilities associated with these funds have been recorded by the Company within “Other accrued liabilities” on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021. Goodwill Fair value assessments of the reporting unit and the reporting unit's net assets, which are performed for goodwill impairment tests, are considered a Level 3 measurement due to the significance of unobservable inputs developed using company-specific information. The Company considered a market approach as well as an income approach using a discounted cash flow (“DCF”) model to determine the fair value of the reporting unit. Long-lived Assets The Company measures certain long-lived and intangible assets at fair value on a nonrecurring basis when events occur that indicate an asset group may not be recoverable. If the carrying amount of an asset group is not recoverable, an impairment charge is recorded to reduce the carrying amount by the excess over its fair value. The Company utilizes multiple approaches including the DCF model and market approaches for estimating the fair value of intangible assets. The future cash flows used in the analysis are based on internal cash flow projections from its long-range plans and include significant assumptions by management. Accordingly, the fair value assessment of the long-lived assets is considered a Level 3 fair value measurement.
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Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities In addition to commitments and obligations incurred in the ordinary course of business, the Company is subject to a variety of claims and legal proceedings, including claims from customers and vendors, pending and potential legal actions for damages, governmental investigations, and other matters. The Company and its affiliates are parties to the legal claims and proceedings described below and in Financial Note 19 to the Company’s 2021 Annual Report, which disclosure is incorporated in this footnote by this reference. The Company is vigorously defending itself against those claims and in those proceedings. Significant developments in those matters are described below. If the Company is unsuccessful in defending, or if it determines to settle, any of these matters, it may be required to pay substantial sums, be subject to injunction and/or be forced to change how it operates its business, which could have a material adverse impact on its financial position or results of operations. Unless otherwise stated, the Company is unable to reasonably estimate the loss or a range of possible loss for the matters described below. Often, the Company is unable to determine that a loss is probable, or to reasonably estimate the amount of loss or a range of loss, for a claim because of the limited information available and the potential effects of future events and decisions by third parties, such as courts and regulators, that will determine the ultimate resolution of the claim. Many of the matters described are at preliminary stages, raise novel theories of liability or seek an indeterminate amount of damages. It is not uncommon for claims to remain unresolved over many years. The Company reviews loss contingencies at least quarterly to determine whether the likelihood of loss has changed and whether it can make a reasonable estimate of the loss or range of loss. When the Company determines that a loss from a claim is probable and reasonably estimable, it records a liability for an estimated amount. The Company also provides disclosure when it is reasonably possible that a loss may be incurred or when it is reasonably possible that the amount of a loss will exceed its recorded liability. I. Litigation and Claims Involving Distribution of Controlled Substances The Company and its affiliates are defendants in many cases asserting claims related to distribution of controlled substances. They are named as defendants along with other pharmaceutical wholesale distributors, pharmaceutical manufacturers, and retail pharmacy chains. The plaintiffs in these actions include state attorneys general, county and municipal governments, tribal nations, hospitals, health and welfare funds, third-party payors, and individuals. These actions have been filed in state and federal courts throughout the U.S., and in Puerto Rico and Canada. They seek monetary damages and other forms of relief based on a variety of causes of action, including negligence, public nuisance, unjust enrichment, and civil conspiracy, as well as alleging violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), state and federal controlled substances laws, and other statutes. Since December 5, 2017, nearly all such cases pending in federal district courts have been transferred for consolidated pre-trial proceedings to a multi-district litigation (“MDL”) in the United States District Court for the Northern District of Ohio captioned In re: National Prescription Opiate Litigation, Case No. 17-md-2804. At present, there are approximately 2,900 cases under the jurisdiction of the MDL court. Three cases involving McKesson that were previously part of the federal MDL have been remanded to other federal courts for discovery and trial. On January 14, 2020, the Judicial Panel on Multidistrict Litigation finalized its Conditional Remand Order, ordering that the cases brought by Cabell County, West Virginia and the City of Huntington, West Virginia be remanded to the U.S. District Court for the Southern District of West Virginia. Trial in that case ended on July 28, 2021 and the outcome is pending. On February 5, 2020, the case brought by the City and County of San Francisco was remanded to the U.S. District Court for the Northern District of California; trial has been set for April 25, 2022. Also on February 5, 2020, the case brought by the Cherokee Nation was remanded by the MDL court to the U.S. District Court for the Eastern District of Oklahoma; trial has been set for September 2022. The Company is also named in approximately 300 similar state court cases pending in 38 states plus Puerto Rico, along with 3 cases in Canada. These include actions filed by 26 state attorneys general, and some by or on behalf of individuals, including wrongful death lawsuits, and putative class action lawsuits brought on behalf of children with neonatal abstinence syndrome due to alleged exposure to opioids in utero. Trial dates have been set in several of these state court cases. For example, trials in the cases brought by the Ohio and Washington attorneys general are scheduled for September 2021; the case brought by the Alabama attorney general is scheduled to go to trial in November 2021; the case brought by the Rhode Island attorney general is scheduled for January 2022; and the case brought by Dallas County, Texas, is scheduled for trial in January 2022. On July 21, 2021, the Company and the two other national pharmaceutical distributors announced that they had negotiated a comprehensive proposed settlement agreement which, if all conditions are satisfied, would result in the settlement of a substantial majority of opioid lawsuits filed by state and local governmental entities. If the proposed settlement agreement and settlement process leads to final settlement, the three distributors would pay up to approximately $21 billion over 18 years, with up to $7.9 billion to be paid by the Company for its 38.1% portion; a minimum of 85% of such payments must be used by state and local governmental entities to remediate the opioid epidemic. Most of the remaining percentage relates to plaintiffs’ attorneys’ fees and costs, and would be payable over a shorter time period. The proposed agreement would also establish a clearinghouse that would consolidate controlled-substance distribution data from the three largest U.S. distributors, which will be available to the settling states to use as part of their anti-diversion efforts. The Agreement is subject to contingencies and will not become effective unless the Company determines that (1) following a sign-on period of 30 days, a sufficient number of states have agreed to be bound by the proposed agreement; and, subsequently, (2) following a sign-on period of 120 days, that a sufficient number of states and political subdivisions, including those that have not sued, have agreed to be bound by the agreement (or otherwise had their claims foreclosed). The exact amount that would be due under the proposed agreement depends on several factors, including the participation rate of states and political subdivisions, the extent to which states take action to foreclose opioid lawsuits by political subdivisions, and the extent to which political subdivisions in settling states file additional opioid lawsuits against the Company after the proposed agreement becomes effective. The proposed agreement contemplates that if certain governmental entities do not agree to a settlement under the framework, but the distributors nonetheless conclude that there is sufficient participation to warrant the settlement, there would be a corresponding reduction in the amount due from the Company to account for the unresolved claims of the governmental entities that do not participate. Those non-participating governmental entities would be entitled to pursue their claims against the Company and other defendants. This settlement process only addresses the claims of U.S. state attorneys general and political subdivisions in participating states. The West Virginia subdivisions and Native American tribes are not part of this settlement process. The proposed agreement provides that the Company will place its first annual payment, estimated to be approximately $482 million, into escrow on or before September 30, 2021, to be disbursed when and if the proposed agreement becomes effective. Subsequent payments would be due on July 15 of each year. On July 20, 2021, the Company announced that it and the two other national pharmaceutical distributors had agreed to pay up to $1.2 billion, of which the Company’s portion would be 38.1%, in a settlement with the State of New York and its participating subdivisions, including Nassau and Suffolk Counties, to resolve opioid-related claims. This settlement was negotiated in connection with the broad proposed settlement described above, but provides assurance that New York and its participating subdivisions will receive a settlement amount consistent with their allocations under the broad settlement framework, as well as certain attorneys’ fees and costs. If the broad settlement is finalized, New York and its participating subdivisions will become part of that broader agreement. The Company believes that a broad settlement of opioid claims by governmental entities is probable, and that the loss related thereto can be reasonably estimated. The Company recorded a charge of $8.1 billion ($6.8 billion after-tax) in the fiscal year ended March 31, 2021 related to its share of the global settlement as well as claims of West Virginia municipalities and the Native American tribes. In connection with the matters described above, the Company recorded additional charges of $74 million ($61 million after-tax) in the quarter ended June 30, 2021 within “Claims and litigation charges, net” in the Condensed Consolidated Statements of Operations, including a pre-tax charge of $27 million ($22 million after-tax) related to the settlement with New York and its participating subdivisions, and a pre-tax charge of $47 million ($39 million after-tax) related to the proposed settlement agreement with state and local governmental entities. The Company’s estimated accrued liability for opioid-related claims of governmental entities, including the $482 million initial payment under the proposed settlement agreement, is as follows as of June 30, 2021:
(1)This amount, recorded in “Other accrued liabilities” on the Condensed Consolidated Balance Sheet, is the amount estimated to be paid prior to June 30, 2022. If a broad settlement is not reached under the proposed agreement, litigation will continue. The Company continues to prepare for trial in these pending matters, and believes that it has valid defenses to the claims pending against it, and it intends to vigorously defend against all such claims if acceptable settlement terms are not achieved. Although the vast majority of opioid claims have been brought by governmental entities in the U.S., the Company is also a defendant in cases brought in the U.S. by private plaintiffs, such as hospitals, health and welfare funds, third-party payors, and individuals, as well as 3 cases brought in Canada (two by governmental entities and one by an individual). These claims, and those of private entities generally, are not included in the settlement framework for governmental entities, or in the charges recorded by the Company, described above. The Company believes it has valid legal defenses in these matters and intends to mount a vigorous defense. One such case brought by a group of individual plaintiffs in Glynn County, Georgia Superior Court seeks to recover for damages allegedly arising from their family members’ abuse of prescription opioids; trial in that case is scheduled to begin in October 2021. Poppell v. Cardinal Health, Inc. et al., CE19-00472. The Company has not concluded a loss is probable in any of these matters; nor is the amount of any loss reasonably estimable. Because of the many uncertainties associated with any potential settlement arrangement or other resolution of all of these opioid-related litigation matters, including the uncertain scope of participation by governmental entities in any potential settlement under the framework described above, the Company is not able to reasonably estimate the upper or lower ends of the range of ultimate possible loss for all opioid-related litigation matters. An adverse judgment or negotiated resolution in any of these matters could have a material adverse impact on the Company’s financial position, cash flows or liquidity, or results of operations. In December 2019, the Company was served with two qui tam complaints filed by the same two relators alleging violations of the federal False Claims Act, the California False Claims Act, and the California Unfair Business Practices statute based on alleged predicate violations of the Controlled Substances Act and its implementing regulations, United States ex rel. Kelley, 19-cv-2233, and State of California ex rel. Kelley, CGC-19-576931. The complaints seek relief including treble damages, civil penalties, attorney fees, and costs in unspecified amounts. On February 16, 2021, the court in the federal action dismissed the second amended complaint with prejudice, and the relators appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit. On June 28, 2021, the court in the state action dismissed the complaint with prejudice. II. Other Litigation and Claims On March 5, 2018, the Company’s subsidiary, RxC Acquisition Company (d/b/a RxCrossroads), was served with a qui tam complaint filed in July 2017 in the United States District Court for the Southern District of Illinois by a relator against RxC Acquisition Company, among others, alleging that UCB, Inc. provided illegal “kickbacks” to providers, including nurse educator services and reimbursement assistance services provided through RxC Acquisition Company, in violation of the Anti-Kickback Statute, the False Claims Act, and various state false claims statutes. United States ex rel. CIMZNHCA, LLC v. UCB, Inc., et al., No. 17-cv-00765. The complaint sought treble damages, civil penalties, and further relief. The United States and the states named in the complaint declined to intervene in the suit. On December 17, 2018, the United States filed a motion to dismiss the complaint in its entirety; this motion was denied on April 15, 2019. On June 7, 2019, the court denied the United States’ motion for reconsideration. On July 8, 2019, the United States appealed to the United States Court of Appeals for the Seventh Circuit seeking interlocutory review of the denial of its motion for reconsideration of the denial of the motion to dismiss the complaint. On September 3, 2019, the United States District Court for the Southern District of Illinois stayed the district court proceedings pending the appeal. On August 17, 2020, the Seventh Circuit reversed the district court’s decision on the United States’ motion to dismiss and remanded the case with instructions that the district court enter judgment for the defendants on the relator’s claims under the False Claims Act. The relator sought a re-hearing en banc at the Seventh Circuit, which was denied. The relator’s False Claims Act case was dismissed, with judgment entered in favor of the defendants on September 30, 2020. On February 10, 2021, the relator filed a Petition for Writ of Certiorari at the United States Supreme Court seeking review of the Seventh Circuit’s ruling; that petition was denied on June 28, 2021. III. Government Subpoenas and Investigations From time to time, the Company receives subpoenas or requests for information from various government agencies. The Company generally responds to such subpoenas and requests in a cooperative, thorough and timely manner. These responses sometimes require time and effort and can result in considerable costs being incurred by the Company. Such subpoenas and requests can lead to the assertion of claims or the commencement of civil or criminal legal proceedings against the Company and other members of the health care industry, as well as to settlements of claims against the Company. The Company responds to these requests in the ordinary course of business. On May 19, 2021, the Norwegian Competition Authority carried out an inspection of Norsk Medisinaldepot AS regarding alleged sharing of competitively sensitive information. In June 2021, the United States Department of Justice served a Civil Investigative Demand on the Company seeking documents related to distribution arrangements for ophthalmology products. IV. State Opioid Statutes Legislative, regulatory or industry measures to address the misuse of prescription opioid medications could affect the Company’s business in ways that it may not be able to predict. For example, in April 2018, the State of New York adopted the Opioid Stewardship Act (the “OSA”) which required the creation of an aggregate $100 million annual surcharge on all manufacturers and distributors licensed to sell or distribute opioids in New York. The initial surcharge payment would have been due on January 1, 2019 for opioids sold or distributed during calendar year 2017. On July 6, 2018, the Healthcare Distribution Alliance filed a lawsuit challenging the constitutionality of the law and seeking an injunction against its enforcement. On December 19, 2018, the U.S. District Court for the Southern District of New York found the law unconstitutional and issued an injunction preventing the State of New York from enforcing the law. The State appealed that decision. On September 14, 2020, a panel of the U.S. Court of Appeals for the Second Circuit reversed the district court’s decision on procedural grounds. The Company has accrued a $50 million pre-tax charge ($37 million after-tax) as its estimated share of the OSA surcharge for calendar years 2017 and 2018. This OSA provision was recognized in “Selling, distribution, general, and administrative expenses” in the Consolidated Statement of Operations for the year ended March 31, 2021 and in “Other accrued liabilities” in the Consolidated Balance Sheet as of March 31, 2021. The State of New York adopted an excise tax on sales of opioids in the State, which became effective July 1, 2019. The law adopting the excise tax made clear that the OSA does not apply to sales or distributions occurring after December 31, 2018. The Healthcare Distribution Alliance filed a petition for panel rehearing, or, in the alternative, for rehearing en banc with the U.S. Court of Appeals for the Second Circuit; that petition was denied on December 18, 2020. On February 12, 2021, the Court of Appeals for the Second Circuit granted a motion by the Healthcare Distribution Alliance to stay its mandate pending the filing and disposition of a petition for writ of certiorari before the U.S. Supreme Court. The petition was filed on May 17, 2021.
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity (Deficit) | Stockholders' Equity (Deficit) Each share of the Company’s outstanding common stock is permitted one vote on proposals presented to stockholders and is entitled to share equally in any dividends declared by the Company’s Board of Directors (the “Board”). On July 23, 2021, the Company raised its quarterly dividend from $0.42 to $0.47 per common share for dividends declared on or after such date by the Board. The Company anticipates that it will continue to pay quarterly cash dividends in the future. However, the payment and amount of future dividends remain within the discretion of the Board and will depend upon the Company's future earnings, financial condition, capital requirements, and other factors. Share Repurchase Plans Stock repurchases may be made from time to time in open market transactions, privately negotiated transactions, through accelerated share repurchase (“ASR”) programs, or by combinations of such methods, any of which may use pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including the Company’s stock price, corporate and regulatory requirements, restrictions under the Company’s debt obligations, and other market and economic conditions. In May 2021, the Company entered into an ASR program with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. Pursuant to the ASR agreement, the Company paid $1.0 billion to the financial institution and received an initial delivery of 4.3 million shares in May 2021. The transaction will be completed during the second quarter of 2022, at which point the Company expects to receive additional shares. There were no share repurchases during the three months ended June 30, 2020. In January 2021, the Board approved an increase of $2.0 billion for the authorized share repurchase of McKesson’s common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at June 30, 2021 was $1.8 billion. Other Comprehensive Income (Loss) Information regarding Other comprehensive income (loss) including noncontrolling interests and redeemable noncontrolling interests, net of tax, by component is as follows:
(1)Foreign currency translation adjustments primarily result from the conversion of non-U.S. dollar financial statements of the Company’s foreign subsidiary, McKesson Europe, and its operations in Canada into the Company’s reporting currency, U.S. dollars. (2)The three months ended June 30, 2021 and 2020 includes net foreign currency translation adjustments of $9 million and $58 million, respectively, attributable to redeemable noncontrolling interests. (3)The three months ended June 30, 2021 includes foreign currency losses of $22 million on the net investment hedges from the €1.7 billion Euro-denominated notes, losses of $5 million on the net investment hedges from cross-currency swaps, and losses on net investment hedges of $6 million attributable to redeemable noncontrolling interests. The three months ended June 30, 2020 include foreign currency losses of $34 million on the net investment hedges from the €1.7 billion Euro-denominated notes and losses of $51 million on the net investment hedges from cross-currency swaps. (4)The three months ended June 30, 2021 and 2020 include net actuarial gains of zero and $3 million, respectively, which are attributable to redeemable noncontrolling interests. (5)Pre-tax amount was reclassified into “Cost of sales” and “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The related tax expense was reclassified into “Income tax expense” in the Condensed Consolidated Statements of Operations. Accumulated Other Comprehensive Income (Loss) Information regarding changes in the Company’s Accumulated other comprehensive income (loss) by component for the three months ended June 30, 2021 are as follows:
Information regarding changes in the Company’s Accumulated other comprehensive income (loss) by component for the three months ended June 30, 2020 are as follows:
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Segments of Business |
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Segments of Business | Segments of Business Commencing with the second quarter of 2021, the Company implemented a new segment reporting structure which resulted in four reportable segments: U.S. Pharmaceutical, RxTS, Medical-Surgical Solutions, and International. All prior segment information has been recast to reflect the Company’s new segment structure and current period presentation. The organizational structure also includes Corporate, which consists of income and expenses associated with administrative functions and projects, and the results of certain investments. 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. The Company evaluates the performance of its 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. The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare-related products. This segment also provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices. In addition, the segment sells financial, operational, and clinical solutions to pharmacies (retail, hospital, alternate site) and provides consulting, outsourcing, technological, and other services. The RxTS segment unifies the solutions and services of CoverMyMeds, RelayHealth, RxCrossroads, and McKesson Prescription Automation to serve biopharma and life sciences partners and patients. By combining automation and expert navigation of the healthcare ecosystem, RxTS connects pharmacies, providers, payers, and biopharma to address patients’ medication access, adherence, and affordability challenges to help people get the medicine they need to live healthier lives. RxCrossroads was previously included in the former U.S. Pharmaceutical and Specialty Solutions reportable segment and CoverMyMeds, RelayHealth, and McKesson Prescription Automation were previously included in Other. The Medical-Surgical Solutions segment provides medical-surgical supply distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies. This segment offers more than 275,000 national brand medical-surgical products as well as McKesson’s own line of products through a network of distribution centers within the United States. The International segment includes the Company’s operations in Europe and Canada, bringing together non-U.S.-based drug distribution services, specialty pharmacy, retail, and infusion care services. The Company’s operations in Europe provide distribution and services to wholesale, institutional, and retail customers in 12 European countries where it owns, partners, or franchises with retail pharmacies and operates through two businesses: Pharmaceutical Distribution and Retail Pharmacy. The Company’s Canada operations deliver vital medicines, supplies, and information technology services throughout Canada and includes Rexall Health retail pharmacies. McKesson Europe was previously reflected as the European Pharmaceutical Solutions reportable segment and McKesson Canada was previously included in Other. In the second quarter of 2022, the Company entered into an agreement to sell certain of its Europe businesses, primarily located in France, Italy, Ireland, Portugal, Belgium, and Slovenia. The sale also includes the Company’s German headquarters and wound-care business, business center in Lithuania, and an ownership stake in its joint venture in the Netherlands. Refer to Financial Note 2, “Held for Sale,” for more information. Financial information relating to the Company’s reportable operating segments and reconciliations to the condensed consolidated totals is as follows:
(1)Revenues from services on a disaggregated basis represent less than 1% of the U.S. Pharmaceutical segment’s total revenues, approximately 35% of the RxTS segment’s total revenues, less than 2% of the Medical-Surgical Solutions segment’s total revenues, and approximately 7% of the International segment’s total revenues. The International segment reflects foreign revenues. Revenues for the remaining three reportable segments are domestic. (2)Segment operating profit includes gross profit, net of total operating expenses, as well as other income, net, for the Company’s reportable segments. (3)The Company’s U.S. Pharmaceutical segment’s operating profit for the three months ended June 30, 2021 and 2020 includes $23 million and $52 million, respectively, of credits related to the last-in, first-out (“LIFO”) method of accounting for inventories. (4)The Company’s Medical-Surgical Solutions segment’s operating profit for the three months ended June 30, 2021 includes inventory charges totaling $164 million on certain personal protective equipment and other related products. (5)Corporate expenses, net for the three months ended June 30, 2021 includes charges of $74 million related to the Company’s estimated liability for opioid-related claims, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities." Corporate expenses, net for the three months ended June 30, 2020 includes a net gain of $131 million recorded in connection with insurance proceeds received during the first quarter of 2021 from the settlement of the shareholder derivative action related to the Company’s controlled substances monitoring program.
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The condensed consolidated financial statements of McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled companies. For those consolidated subsidiaries where the Company’s ownership is less than 100%, the portion of the net income or loss allocable to the noncontrolling interests is reported as “Net income attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations. All significant intercompany balances and transactions have been eliminated in consolidation including the intercompany portion of transactions with equity method investees. The Company considers itself to control an entity if it is the majority owner of or has voting control over such entity. The Company also assesses control through means other than voting rights and determines which business entity is the primary beneficiary of the variable interest entity (“VIE”). The Company consolidates VIEs when it is determined that it is the primary beneficiary of the VIE. Investments in business entities in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.”) of America (“GAAP”) for interim financial reporting and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and therefore do not include all information and disclosures normally included in the annual consolidated financial statements.
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Use of Estimates | To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of these financial statements and income and expenses during the reporting period. Actual amounts may differ from these estimated amounts. The Company continues to evaluate the ongoing impacts, including the economic consequences, of the coronavirus disease 2019 (“COVID-19”) pandemic. As COVID-19 evolves, the Company’s accounting estimates and assumptions may change over time and may change materially in future periods. In the opinion of management, the unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows of McKesson for the interim periods presented. |
Results of Operations | The results of operations for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire year. These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies, and financial notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021, previously filed with the SEC on May 12, 2021 (“2021 Annual Report”). |
Fiscal Period | The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year. |
Reclassification | Certain prior year amounts have been reclassified to conform to the current year presentation. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In the first quarter of 2022, the Company adopted Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also simplifies and clarifies certain other aspects of accounting for income taxes. The adoption of this amended guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures.
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Held for Sale | Assets and liabilities to be disposed of by sale (“disposal groups”) are reclassified into “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The reclassification occurs when the disposal group is available for immediate sale and the sale is highly probable. These criteria are generally met when an agreement to sell exists, or management has committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying amount or fair value less costs to sell and are not depreciated or amortized. The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less cost to sell is reported as an adjustment to the carrying value of the disposal group. |
Commitments and Contingencies | In addition to commitments and obligations incurred in the ordinary course of business, the Company is subject to a variety of claims and legal proceedings, including claims from customers and vendors, pending and potential legal actions for damages, governmental investigations, and other matters. The Company and its affiliates are parties to the legal claims and proceedings described below and in Financial Note 19 to the Company’s 2021 Annual Report, which disclosure is incorporated in this footnote by this reference. The Company is vigorously defending itself against those claims and in those proceedings. Significant developments in those matters are described below. If the Company is unsuccessful in defending, or if it determines to settle, any of these matters, it may be required to pay substantial sums, be subject to injunction and/or be forced to change how it operates its business, which could have a material adverse impact on its financial position or results of operations.Unless otherwise stated, the Company is unable to reasonably estimate the loss or a range of possible loss for the matters described below. Often, the Company is unable to determine that a loss is probable, or to reasonably estimate the amount of loss or a range of loss, for a claim because of the limited information available and the potential effects of future events and decisions by third parties, such as courts and regulators, that will determine the ultimate resolution of the claim. Many of the matters described are at preliminary stages, raise novel theories of liability or seek an indeterminate amount of damages. It is not uncommon for claims to remain unresolved over many years. The Company reviews loss contingencies at least quarterly to determine whether the likelihood of loss has changed and whether it can make a reasonable estimate of the loss or range of loss. When the Company determines that a loss from a claim is probable and reasonably estimable, it records a liability for an estimated amount. The Company also provides disclosure when it is reasonably possible that a loss may be incurred or when it is reasonably possible that the amount of a loss will exceed its recorded liability. |
Restructuring, Impairment, and Related Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Impairment, and Related Costs | Restructuring, impairment, and related charges during the three months ended June 30, 2021 consisted of the following:
(1)Costs primarily relate to the transition to the partial remote work model described above. (2)Primarily represents costs related to the transition to the partial remote work model and U.K. operating model and cost optimization efforts described above, as well as costs for optimization programs in Canada. (3)Exit and other-related costs primarily consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Restructuring, impairment, and related charges during the three months ended June 30, 2020 consisted of the following:
(1)Primarily represents costs associated with the U.K. operating model and cost optimization efforts described above, and an operating model and cost optimization initiative which was substantially completed in the year ended March 31, 2021. (2)Primarily represents costs associated with an operating model and cost optimization initiative which was substantially completed in the year ended March 31, 2021. (3)Exit and other-related costs primarily include project consulting fees.
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Schedule of Restructuring and Asset Impairment Charges | The following table summarizes the activity related to the restructuring liabilities associated with the Company’s restructuring initiatives for the three months ended June 30, 2021:
(1)As of March 31, 2021, the total reserve balance was $151 million, of which $99 million was recorded in “Other accrued liabilities” and $52 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet. (2)As of June 30, 2021, the total reserve balance was $177 million, of which $127 million was recorded in “Other accrued liabilities” and $50 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.
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Redeemable Noncontrolling Interests and Noncontrolling Interests (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Redeemable Noncontrolling Interests and Noncontrolling Interests | Changes in redeemable noncontrolling interests and noncontrolling interests for the three months ended June 30, 2021 were as follows:
Changes in redeemable noncontrolling interests and noncontrolling interests for the three months ended June 30, 2020 were as follows:
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Earnings (Loss) Per Common Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computations for basic and diluted earnings per common share | The computations for basic and diluted earnings or loss per common share are as follows:
(1)Includes dilutive effect from restricted stock units, performance-based restricted stock units, and performance-based stock units. (2)Certain computations may reflect rounding adjustments.
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Goodwill and Intangible Assets, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill were as follows:
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Schedule of information regarding intangible assets | Information regarding intangible assets is as follows:
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Debt and Financing Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consisted of the following:
(1)These notes are unsecured and unsubordinated obligations of the Company. (2)Interest on these notes is payable semi-annually. (3)Interest on these foreign currency notes is payable annually.
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Hedging Activities (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of information regarding the fair value of derivatives on a gross basis | Information regarding the fair value of derivatives on a gross basis is as follows:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | The Company’s long-term debt is recorded at amortized cost. The carrying value and fair value of the Company’s long-term debt was as follows:
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Commitments and Contingent Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Estimated Accrual Liability | The Company’s estimated accrued liability for opioid-related claims of governmental entities, including the $482 million initial payment under the proposed settlement agreement, is as follows as of June 30, 2021:
(1)This amount, recorded in “Other accrued liabilities” on the Condensed Consolidated Balance Sheet, is the amount estimated to be paid prior to June 30, 2022.
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Stockholders' Equity (Deficit) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of information regarding other comprehensive income (loss) including noncontrolling and redeemable noncontrolling interests, net of tax, by component | Information regarding Other comprehensive income (loss) including noncontrolling interests and redeemable noncontrolling interests, net of tax, by component is as follows:
(1)Foreign currency translation adjustments primarily result from the conversion of non-U.S. dollar financial statements of the Company’s foreign subsidiary, McKesson Europe, and its operations in Canada into the Company’s reporting currency, U.S. dollars. (2)The three months ended June 30, 2021 and 2020 includes net foreign currency translation adjustments of $9 million and $58 million, respectively, attributable to redeemable noncontrolling interests. (3)The three months ended June 30, 2021 includes foreign currency losses of $22 million on the net investment hedges from the €1.7 billion Euro-denominated notes, losses of $5 million on the net investment hedges from cross-currency swaps, and losses on net investment hedges of $6 million attributable to redeemable noncontrolling interests. The three months ended June 30, 2020 include foreign currency losses of $34 million on the net investment hedges from the €1.7 billion Euro-denominated notes and losses of $51 million on the net investment hedges from cross-currency swaps. (4)The three months ended June 30, 2021 and 2020 include net actuarial gains of zero and $3 million, respectively, which are attributable to redeemable noncontrolling interests. (5)Pre-tax amount was reclassified into “Cost of sales” and “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The related tax expense was reclassified into “Income tax expense” in the Condensed Consolidated Statements of Operations.
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Schedule of information regarding changes in accumulated other comprehensive income (loss), net of tax, by component | Information regarding changes in the Company’s Accumulated other comprehensive income (loss) by component for the three months ended June 30, 2021 are as follows:
Information regarding changes in the Company’s Accumulated other comprehensive income (loss) by component for the three months ended June 30, 2020 are as follows:
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Segments of Business (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial information relating to reportable operating segments and reconciliations to the condensed consolidated totals | Financial information relating to the Company’s reportable operating segments and reconciliations to the condensed consolidated totals is as follows:
(1)Revenues from services on a disaggregated basis represent less than 1% of the U.S. Pharmaceutical segment’s total revenues, approximately 35% of the RxTS segment’s total revenues, less than 2% of the Medical-Surgical Solutions segment’s total revenues, and approximately 7% of the International segment’s total revenues. The International segment reflects foreign revenues. Revenues for the remaining three reportable segments are domestic. (2)Segment operating profit includes gross profit, net of total operating expenses, as well as other income, net, for the Company’s reportable segments. (3)The Company’s U.S. Pharmaceutical segment’s operating profit for the three months ended June 30, 2021 and 2020 includes $23 million and $52 million, respectively, of credits related to the last-in, first-out (“LIFO”) method of accounting for inventories. (4)The Company’s Medical-Surgical Solutions segment’s operating profit for the three months ended June 30, 2021 includes inventory charges totaling $164 million on certain personal protective equipment and other related products. (5)Corporate expenses, net for the three months ended June 30, 2021 includes charges of $74 million related to the Company’s estimated liability for opioid-related claims, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities." Corporate expenses, net for the three months ended June 30, 2020 includes a net gain of $131 million recorded in connection with insurance proceeds received during the first quarter of 2021 from the settlement of the shareholder derivative action related to the Company’s controlled substances monitoring program.
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Significant Accounting Policies - Narrative (Details) - segment |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
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Accounting Policies [Abstract] | ||
Number of reportable segments | 4 | 4 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
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Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) related to continuing operations | $ 26 | $ 150 |
Reported income tax expense (benefit) rates (percent) | 4.60% | 23.30% |
Unrecognized tax benefits | $ 1,700 | |
Unrecognized tax benefits that would reduce income tax expense and the effective tax rate | 1,300 | |
Discrete tax benefit recognized | $ 97 |
Goodwill and Intangible Assets, Net - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 9,493 |
Foreign currency translation adjustments, net | 27 |
Ending balance | 9,520 |
U.S. Pharmaceutical | |
Goodwill [Roll Forward] | |
Beginning balance | 3,963 |
Foreign currency translation adjustments, net | 7 |
Ending balance | 3,970 |
Prescription Technology Solutions | |
Goodwill [Roll Forward] | |
Beginning balance | 1,542 |
Foreign currency translation adjustments, net | 0 |
Ending balance | 1,542 |
Medical-Surgical Solutions | |
Goodwill [Roll Forward] | |
Beginning balance | 2,453 |
Foreign currency translation adjustments, net | 0 |
Ending balance | 2,453 |
International | |
Goodwill [Roll Forward] | |
Beginning balance | 1,535 |
Foreign currency translation adjustments, net | 20 |
Ending balance | $ 1,555 |
Goodwill and Intangible Assets, Net - Narrative - Intangible Assets (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense of intangible assets | $ 98 | $ 106 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
Estimated annual amortization expense, remainder of 2022 | 279 | |
Estimated annual amortization expense, 2023 | 273 | |
Estimated annual amortization expense, 2024 | 261 | |
Estimated annual amortization expense, 2025 | 255 | |
Estimated annual amortization expense, 2026 | 223 | |
Estimated annual amortization expense, thereafter | $ 1,500 |
Debt and Financing Activities - Revolving Credit Facilities (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Sep. 30, 2019 |
Mar. 31, 2021 |
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Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Committed balance | $ 8,000,000 | |||
Uncommitted balance | 118,000,000 | |||
Unsecured Debt | Revolving Credit Facility | The 2020 Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Syndicated senior unsecured revolving credit facility | $ 4,000,000,000.0 | |||
Syndicated senior unsecured revolving credit facility term | 5 years | |||
Borrowings under facility | 0 | $ 0 | ||
Amounts outstanding under facility | $ 0 | $ 0 | ||
Unsecured Debt | Revolving Credit Facility | Canadian Dollar, British Pound Sterling, and Euros Sublimit | ||||
Line of Credit Facility [Line Items] | ||||
Syndicated senior unsecured revolving credit facility | $ 3,600,000,000 |
Debt and Financing Activities - Commercial Paper (Details) - Commercial Paper - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Mar. 31, 2021 |
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Debt Instrument [Line Items] | |||
Outstanding notes (up to) | $ 4,000,000,000.0 | ||
Proceeds from issuance of commercial paper | 0 | $ 5,300,000,000 | |
Repayments of commercial paper | 0 | $ 5,300,000,000 | |
Commercial paper | $ 0 | $ 0 |
Pension Benefits - Narrative (Details) - Pension Plan - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
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Defined Benefit Plan Disclosure [Line Items] | ||
Net periodic pension expense | $ 0 | $ 7 |
Cash contributions to the plans | $ 14 | $ 7 |
Percentage threshold of greater of projected benefit obligation or market value of assets (percent) | 10.00% |
Fair Value Measurements (Details) - USD ($) |
Jun. 30, 2021 |
Mar. 31, 2021 |
---|---|---|
Recurring | Fair value, inputs, level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | $ 521,000,000 | $ 1,600,000,000 |
Recurring | Fair value, inputs, level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying amount of liabilities | 7,176,000,000 | 7,148,000,000 |
Estimated fair values of liabilities | 7,865,000,000 | 7,785,000,000 |
Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | $ 0 | $ 0 |
Commitments and Contingent Liabilities - Estimated Accrual Liability (Details) - National Prescription Opioid Litigation $ in Millions |
Jun. 30, 2021
USD ($)
|
---|---|
Loss Contingencies [Line Items] | |
Current litigation liabilities | $ 545 |
Long-term litigation liabilities | 7,596 |
Total litigation liabilities | $ 8,141 |