10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Number: 1-13252

McKESSON CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	94-3207296
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6555 State Hwy 161,

Irving, TX 75039

(Address of principal executive offices, including zip code)

(972) 446-4800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)
Common stock, $0.01 par value	MCK	New York Stock Exchange
1.500% Notes due 2025	MCK25	New York Stock Exchange
1.625% Notes due 2026	MCK26	New York Stock Exchange
3.125% Notes due 2029	MCK29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 136,939,227 shares of the issuer’s common stock were outstanding as of December 31, 2022.

McKESSON CORPORATION

TABLE OF CONTENTS

Item		Page
	PART I—FINANCIAL INFORMATION
1	Condensed Consolidated Financial Statements
	Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022 and 2021	3
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2022 and 2021	4
	Condensed Consolidated Balance Sheets as of December 31, 2022 and March 31, 2022	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended December 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2022 and 2021	8
	Financial Notes	9
	Note 1 - Significant Accounting Policies	9
	Note 2 - Business Acquisitions and Divestitures	10
	Note 3 - Restructuring, Impairment, and Related Charges, Net	16
	Note 4 - Income Taxes	18
	Note 5 - Redeemable Noncontrolling Interests and Noncontrolling Interests	19
	Note 6 - Earnings (Loss) per Common Share	21
	Note 7 - Goodwill and Intangible Assets, Net	22
	Note 8 - Debt and Financing Activities	24
	Note 9 - Pension Benefits	26
	Note 10 - Hedging Activities	26
	Note 11 - Fair Value Measurements	30
	Note 12 - Commitments and Contingent Liabilities	32
	Note 13 - Stockholders’ Equity (Deficit)	35
	Note 14 - Segments of Business	39
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
3	Quantitative and Qualitative Disclosures About Market Risk	63
4	Controls and Procedures	63
	PART II—OTHER INFORMATION
1	Legal Proceedings	64
1A	Risk Factors	64
2	Unregistered Sales of Equity Securities and Use of Proceeds	64
3	Defaults Upon Senior Securities	64
4	Mine Safety Disclosures	65
5	Other Information	65
6	Exhibits	66
	Signatures	67

2

McKESSON CORPORATION

PART I—FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Revenues	$	70,490	$	68,614	$	207,801	$	197,864
Cost of sales	(67,316)		(65,186)		(198,509)		(188,052)
Gross profit	3,174		3,428		9,292		9,812
Selling, distribution, general, and administrative expenses	(1,903)		(3,105)		(5,812)		(8,006)
Claims and litigation charges, net	1		(7)		5		(193)
Restructuring, impairment, and related charges, net	(31)		(18)		(84)		(208)
Total operating expenses	(1,933)		(3,130)		(5,891)		(8,407)
Operating income	1,241		298		3,401		1,405
Other income, net	276		20		466		202
Loss on debt extinguishment	—		—		—		(191)
Interest expense	(69)		(41)		(169)		(135)
Income from continuing operations before income taxes	1,448		277		3,698		1,281
Income tax expense	(329)		(238)		(799)		(396)
Income from continuing operations	1,119		39		2,899		885
Income (loss) from discontinued operations, net of tax	1		—		(3)		(3)
Net income	1,120		39		2,896		882
Net income attributable to noncontrolling interests	(41)		(46)		(123)		(136)
Net income (loss) attributable to McKesson Corporation	$	1,079	$	(7)	$	2,773	$	746
Earnings (loss) per common share attributable to McKesson Corporation
Diluted
Continuing operations	$	7.65	$	(0.04)	$	19.32	$	4.81
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.66	$	(0.04)	$	19.30	$	4.79
Basic
Continuing operations	$	7.70	$	(0.04)	$	19.48	$	4.87
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.71	$	(0.04)	$	19.46	$	4.85
Weighted-average common shares outstanding
Diluted	141.0		151.6		143.7		155.8
Basic	139.9		151.6		142.5		154.0

See Financial Notes

3

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Net income	$	1,120	$	39	$	2,896	$	882
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	252		16		642		(8)
Unrealized gains (losses) on cash flow hedges	(65)		(6)		(29)		2
Changes in retirement-related benefit plans	28		(2)		66		2
Other comprehensive income (loss), net of tax	215		8		679		(4)
Comprehensive income	1,335		47		3,575		878
Comprehensive income attributable to noncontrolling interests	(41)		(44)		(167)		(137)
Comprehensive income attributable to McKesson Corporation	$	1,294	$	3	$	3,408	$	741

See Financial Notes

4

McKESSON CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(Unaudited)

	December 31, 2022		March 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	2,774	$	3,532
Receivables, net	20,537		18,583
Inventories, net	20,657		18,702
Assets held for sale	14		4,516
Prepaid expenses and other	675		898
Total current assets	44,657		46,231
Property, plant, and equipment, net	2,140		2,092
Operating lease right-of-use assets	1,653		1,548
Goodwill	9,934		9,451
Intangible assets, net	2,273		2,059
Other non-current assets	2,033		1,917
Total assets	$	62,690	$	63,298
LIABILITIES AND DEFICIT
Current liabilities
Drafts and accounts payable	$	42,238	$	38,086
Short-term borrowings	617		—
Current portion of long-term debt	404		799
Current portion of operating lease liabilities	292		297
Liabilities held for sale	2		4,741
Other accrued liabilities	4,453		4,543
Total current liabilities	48,006		48,466
Long-term debt	5,452		5,080
Long-term deferred tax liabilities	1,465		1,418
Long-term operating lease liabilities	1,410		1,366
Long-term litigation liabilities	6,642		7,220
Other non-current liabilities	1,804		1,540
McKesson Corporation stockholders’ deficit
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding	—		—
Common stock, $0.01 par value, 800 shares authorized, 277 and 275 shares issued at December 31, 2022 and March 31, 2022, respectively	3		2
Additional paid-in capital	7,536		7,275
Retained earnings	11,582		9,030
Accumulated other comprehensive loss	(899)		(1,534)
Treasury shares, at cost, 140 and 130 shares at December 31, 2022 and March 31, 2022, respectively	(20,677)		(17,045)
Total McKesson Corporation stockholders’ deficit	(2,455)		(2,272)
Noncontrolling interests	366		480
Total deficit	(2,089)		(1,792)
Total liabilities and deficit	$	62,690	$	63,298

See Financial Notes

5

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended December 31, 2022
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury			Noncontrolling Interests		Total Deficit
	Shares	Amount								Common Shares	Amount
Balance, September 30, 2022	277	$	3	$	7,609	$	10,579	$	(1,114)	(135)	$	(18,844)	$	518	$	(1,249)
Issuance of shares under employee plans, net of forfeitures	—	—		16		—		—		—	(3)		—		13
Share-based compensation	—	—		36		—		—		—	—		—		36
Repurchase of common stock	—	—		(146)		—		—		(5)	(1,830)		—		(1,976)
Net income	—	—		—		1,079		—		—	—		41		1,120
Other comprehensive income	—	—		—		—		215		—	—		—		215
Cash dividends declared, $0.54 per common share	—	—		—		(77)		—		—	—		—		(77)
Payments to noncontrolling interests	—	—		—		—		—		—	—		(36)		(36)
Reclassification of recurring compensation to other accrued liabilities	—	—		—		—		—		—	—		(1)		(1)
Formation of an oncology research business	—	—		22		—		—		—	—		225		247
Derecognition of noncontrolling interests in McKesson Europe AG	—	—		—		—		—		—	—		(382)		(382)
Other	—	—		(1)		1		—		—	—		1		1
Balance, December 31, 2022	277	$	3	$	7,536	$	11,582	$	(899)	(140)	$	(20,677)	$	366	$	(2,089)

	Three Months Ended December 31, 2021
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury			Noncontrolling Interests		Total  Deficit
	Shares	Amount								Common Shares	Amount
Balance, September 30, 2021	275	$	2	$	7,311	$	8,812	$	(1,665)	(122)	$	(15,031)	$	484	$	(87)
Issuance of shares under employee plans, net of forfeitures	—	—		63		—		—		—	(7)		—		56
Share-based compensation	—	—		36		—		—		—	—		—		36
Repurchase of common stock	—	—		—		—		—		(3)	(728)		—		(728)
Net income (loss)	—	—		—		(7)		—		—	—		46		39
Other comprehensive income (loss)	—	—		—		—		10		—	—		(2)		8
Cash dividends declared, $0.47 per common share	—	—		—		(72)		—		—	—		—		(72)
Payments to noncontrolling interests	—	—		—		—		—		—	—		(38)		(38)
Reclassification of recurring compensation to other accrued liabilities	—	—		—		—		—		—	—		(3)		(3)
Other	—	—		1		1		—		—	—		—		2
Balance, December 31, 2021	275	$	2	$	7,411	$	8,734	$	(1,655)	(125)	$	(15,766)	$	487	$	(787)

See Financial Notes

6

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In millions, except per share amounts)

(Unaudited)

	Nine Months Ended December 31, 2022
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury			Noncontrolling Interests		Total Deficit
	Shares	Amount								Common Shares	Amount
Balance, March 31, 2022	275	$	2	$	7,275	$	9,030	$	(1,534)	(130)	$	(17,045)	$	480	$	(1,792)
Issuance of shares under employee plans, net of forfeitures	2	1		143		—		—		—	(157)		—		(13)
Share-based compensation	—	—		122		—		—		—	—		—		122
Repurchase of common stock	—	—		(25)		—		—		(10)	(3,475)		—		(3,500)
Net income	—	—		—		2,773		—		—	—		123		2,896
Other comprehensive income	—	—		—		—		635		—	—		44		679
Cash dividends declared, $1.55 per common share	—	—		—		(222)		—		—	—		—		(222)
Payments to noncontrolling interests	—	—		—		—		—		—	—		(113)		(113)
Reclassification of recurring compensation to other accrued liabilities	—	—		—		—		—		—	—		(5)		(5)
Formation of an oncology research business	—	—		22		—		—		—	—		225		247
Derecognition of noncontrolling interests in McKesson Europe AG	—	—		—		—		—		—	—		(382)		(382)
Other	—	—		(1)		1		—		—	—		(6)		(6)
Balance, December 31, 2022	277	$	3	$	7,536	$	11,582	$	(899)	(140)	$	(20,677)	$	366	$	(2,089)

	Nine Months Ended December 31, 2021
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury			Noncontrolling Interests		Total Equity (Deficit)
	Shares	Amount								Common Shares	Amount
Balance, March 31, 2021	273	$	2	$	6,925	$	8,202	$	(1,480)	(115)	$	(13,670)	$	196	$	175
Issuance of shares under employee plans, net of forfeitures	2	—		174		—		—		—	(67)		—		107
Share-based compensation	—	—		112		—		—		—	—		—		112
Repurchase of common stock	—	—		21		—		—		(10)	(2,029)		—		(2,008)
Net income	—	—		—		746		—		—	—		128		874
Other comprehensive loss	—	—		—		—		(5)		—	—		(2)		(7)
Cash dividends declared, $1.36 per common share	—	—		—		(211)		—		—	—		—		(211)
Payments to noncontrolling interests	—	—		—		—		—		—	—		(117)		(117)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	—	—		178		—		(170)		—	—		—		8
Reclassification of McKesson Europe AG redeemable noncontrolling interests	—	—		—		—		—		—	—		287		287
Reclassification of recurring compensation to other accrued liabilities	—	—		—		—		—		—	—		(5)		(5)
Other	—	—		1		(3)		—		—	—		—		(2)
Balance, December 31, 2021	275	$	2	$	7,411	$	8,734	$	(1,655)	(125)	$	(15,766)	$	487	$	(787)

See Financial Notes

7

McKESSON CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Nine Months Ended December 31,
	2022		2021
OPERATING ACTIVITIES
Net income	$	2,896	$	882
Adjustments to reconcile to net cash provided by operating activities:
Depreciation	185		215
Amortization	262		383
Long-lived asset impairment charges	13		128
Deferred taxes	55		12
Credits associated with last-in, first-out inventory method	(31)		(79)
Non-cash operating lease expense	183		198
Gain from sales of businesses and investments	(215)		(117)
European businesses held for sale	—		1,271
Other non-cash items	221		452
Changes in assets and liabilities, net of acquisitions:
Receivables	(2,193)		(1,925)
Inventories	(2,190)		(1,659)
Drafts and accounts payable	3,531		1,612
Operating lease liabilities	(256)		(276)
Taxes	381		176
Litigation liabilities	(1,021)		146
Other	13		128
Net cash provided by operating activities	1,834		1,547
INVESTING ACTIVITIES
Payments for property, plant, and equipment	(265)		(253)
Capitalized software expenditures	(111)		(127)
Acquisitions, net of cash, cash equivalents, and restricted cash acquired	(856)		(6)
Proceeds from sales of businesses and investments, net	1,074		197
Other	(140)		(83)
Net cash used in investing activities	(298)		(272)
FINANCING ACTIVITIES
Proceeds from short-term borrowings	1,100		3,642
Repayments of short-term borrowings	(483)		(3,270)
Proceeds from issuances of long-term debt	499		498
Repayments of long-term debt	(412)		(1,646)
Payments for debt extinguishments	—		(184)
Common stock transactions:
Issuances	143		174
Share repurchases	(3,500)		(1,986)
Dividends paid	(216)		(206)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	—		(1,031)
Other	(309)		(323)
Net cash used in financing activities	(3,178)		(4,332)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	15		35
Change in cash, cash equivalents, and restricted cash classified within Assets held for sale	470		(215)
Net decrease in cash, cash equivalents, and restricted cash	(1,157)		(3,237)
Cash, cash equivalents, and restricted cash at beginning of period	3,935		6,396
Cash, cash equivalents, and restricted cash at end of period	2,778		3,159
Less: Restricted cash at end of period included in Prepaid expenses and other	(4)		(405)
Cash and cash equivalents at end of period	$	2,774	$	2,754

See Financial Notes

8

McKESSON CORPORATION

FINANCIAL NOTES

(UNAUDITED)

1.    Significant Accounting Policies

Nature of Operations: McKesson Corporation (“McKesson,” or the “Company,”) is a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. McKesson partners with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services to help make quality care more accessible and affordable. 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 additional information.

Basis of Presentation: The condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“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.

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 can exercise significant influence over operating and financial policies are accounted for using the equity method.

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.

Reclassifications: Certain prior period amounts have been reclassified to conform to the current year presentation.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires the Company to 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 could differ from those estimated amounts. The Company continues to evaluate the ongoing impacts, including the economic consequences, of the pandemic caused by the SARS-CoV-2 coronavirus (“COVID-19”), and therefore 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 results of operations, financial position, and cash flows of McKesson for the interim periods presented.

The results of operations for the three and nine months ended December 31, 2022 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, 2022, previously filed with the SEC on May 9, 2022 (“2022 Annual Report”).

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IR Act”). Among other provisions, the IR Act includes a 15% corporate minimum tax, a 1% excise tax on certain repurchases of an entity’s own common stock after December 31, 2022, and various drug pricing reforms. Based on its preliminary assessment, the Company does not currently expect the IR Act to have a material impact on its results of operations, financial position, or cash flows in the foreseeable future; however, the Company will continue to evaluate the full impact of these legislative changes.

9

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Recently Adopted Accounting Pronouncements

There were no adopted accounting standards during the nine months ended December 31, 2022 that had a material impact to the Company’s results of operations, financial position, cash flows, or notes to the financial statements upon their adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of the equity security, and requires additional disclosure requirements. ASU 2022-03 is effective for the Company on a prospective basis for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect that this guidance will have a material impact on its consolidated financial statements or related disclosures.

2.    Business Acquisitions and Divestitures

Acquisitions

Rx Savings Solutions, LLC

On November 1, 2022, the Company completed its acquisition of 100% of the shares of Rx Savings Solutions, LLC (“RxSS”), a privately-owned company headquartered in Overland Park, Kansas, to expand on connecting biopharma and payer services to patients. RxSS is a prescription price transparency and benefit insight company that offers affordability and adherence solutions to health plans and employers. The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration based on RxSS’ operational and financial performance through calendar year 2025. The payment made upon closing was funded from cash on hand. The financial results of RxSS are included in the Company’s RxTS segment as of the acquisition date. The transaction was accounted for as a business combination.

The Company recorded a liability for the contingent consideration at its fair value of $92 million as of the acquisition date, which is included within “Other non-current liabilities” in the Company’s Condensed Consolidated Balance Sheet as of December 31, 2022. The fair value of the contingent consideration liability was estimated using a Monte Carlo simulation, utilizing internal cash flow projections which are Level 3 inputs under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures. The contingent liability will be remeasured to fair value at each reporting date until the liability is resolved with changes in fair value being recognized within “Selling, distribution, general, and administrative expenses” in the Company’s Condensed Consolidated Statements of Operations. Recognition of the initial fair value of this contingent consideration is a non-cash investing activity.

The purchase price allocation included acquired identifiable intangible assets of $229 million, primarily representing customer relationships and technology with a weighted average amortization period of 12 years, and goodwill of $463 million. Goodwill has been preliminarily allocated to the Company’s RxTS segment, which reflects the expected future benefits from certain synergies and intangible assets that do not qualify for separate recognition. Goodwill attributable to the acquisition is deductible for tax purposes.

10

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	600
Contingent consideration	92
Total purchase consideration	$	692
Identifiable assets acquired and liabilities assumed:
Current assets	$	6
Intangible assets	229
Other non-current assets	3
Current liabilities	(9)
Total identifiable net assets	229
Goodwill	463
Net assets acquired	$	692

Oncology Research Business

On October 31, 2022, the Company completed a transaction with HCA Healthcare, Inc. (“HCA”) to form an oncology research business, combining McKesson’s U.S. Oncology Research (“USOR”) and HCA’s Sarah Cannon Research Institute (“SCRI”) based in Nashville, Tennessee, to advance cancer care and increase access to oncology clinical research. Upon consummation of the transaction, McKesson owns a 51% controlling interest in the combined business, and the financial results are consolidated by the Company and reported within its U.S. Pharmaceutical segment as of the acquisition date. Transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA, which was funded from cash on hand. The transaction was accounted for as a business combination.

The purchase price allocation included acquired identifiable intangible assets of $177 million, primarily representing customer relationships as well as trademarks and trade names with a weighted average amortization period of 17 years, and goodwill of $120 million. Goodwill has been allocated to the Company’s U.S. Pharmaceutical segment, which reflects the expected future benefits from certain synergies and intangible assets that do not qualify for separate recognition. Goodwill attributable to the acquisition of $49 million is deductible for tax purposes. The Company recorded noncontrolling interest of $225 million as a component of equity, which includes HCA’s proportionate interest in the identifiable net assets of SCRI at fair value of $205 million and its proportionate interest in the contributed net assets of USOR at carrying value of $20 million. The difference between the fair value of the Company’s acquired interest in SCRI net assets and the $173 million of cash paid to HCA was recognized as additional paid in capital, as well as the Company’s reduction in ownership interest in USOR net assets.

11

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	173
Contribution of USOR	40
Total purchase consideration	$	213
Identifiable assets acquired and liabilities assumed:
Receivables	$	224
Property, plant, and equipment	22
Operating lease right-of-use assets	31
Intangible assets	177
Current liabilities	(42)
Long-term operating lease liabilities	(29)
Other non-current liabilities	(43)
Total identifiable net assets	340
Noncontrolling interest	(225)
Additional paid-in capital	(22)
Goodwill	120
Net assets acquired	$	213

The fair value of the acquired identifiable intangible assets from the acquisitions discussed above were determined by applying the income approach, using a discounted cash flow model in which cash flows anticipated over several periods are discounted to their present value using an appropriate rate that is commensurate with the risk inherent with the transaction. These inputs are considered Level 3 inputs under the fair value measurements and disclosure guidance. Due to the recent timing of these acquisitions, the amounts presented above are subject to change as the Company’s fair value assessments are finalized. Pro forma financial information has not been provided as these acquisitions did not have a material impact, individually, or in the aggregate, to the Company’s consolidated results of operations.

Divestitures

In July 2021, the Company announced its intention to exit its businesses in Europe resulting in classification of certain assets and liabilities as held for sale. Assets and liabilities of $4.5 billion and $4.7 billion, respectively, at March 31, 2022, met the criteria for classification as held for sale in the Company’s Condensed Consolidated Balance Sheet, primarily consisting of disposal groups related to the Company’s European divestiture activities discussed below. At December 31, 2022, the Company had no assets or liabilities related to these divestiture activities that met the classification of held for sale. The decrease in assets and liabilities held for sale during fiscal 2023 was driven by the divestiture of the Company’s E.U. disposal group in October 2022 and U.K. disposal group in April 2022, as discussed in more detail below. During the three months ended December 31, 2022 and 2021, the Company recorded gains of $31 million and charges of $879 million, respectively, and during the nine months ended December 31, 2022 and 2021, recorded gains of $66 million and charges of $1.4 billion, respectively, primarily to remeasure the assets and liabilities of the disposal groups related to European divestiture activities discussed below to the lower of their carrying value or fair value less costs to sell. The fiscal 2022 charges were largely driven by declines in the British pound sterling and the Euro.

12

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Assets and liabilities to be disposed of by sale (“disposal groups”) are classified as “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The classification occurs when the disposal group is available for immediate sale and the sale is 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 long-lived assets included within the disposal group 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 costs to sell is reported as an adjustment to the carrying value of the disposal group. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was classified as held for sale. The Company determined that the disposal groups discussed below did not meet the criteria for classification as discontinued operations prior to being sold.

European Divestiture Activities

On October 31, 2022, the Company completed its previously announced transaction to sell certain of its businesses in the European Union (“E.U.”) located in France, Italy, Ireland, Portugal, Belgium, and Slovenia, along with its German headquarters and wound-care business, part of a shared services center in Lithuania, and its ownership stake in a joint venture in the Netherlands (“E.U. disposal group”) to the PHOENIX Group. As part of the transaction, the Company received cash proceeds of $892 million and divested net assets of $1.3 billion, including cash of $319 million, derecognized the carrying value of its noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) of $382 million, and released $153 million of net accumulated other comprehensive loss.

During the three and nine months ended December 31, 2022, the Company recorded net gains of $31 million and $66 million, respectively, and during the three and nine months ended December 31, 2021, recorded charges totaling $26 million and $517 million, respectively, to remeasure the assets and liabilities of the E.U. disposal group to fair value less costs to sell. The charges for the nine months ended December 31, 2021 also included impairments of individual assets, such as certain internal-use software that will not be utilized in the future, prior to adjusting the E.U. disposal group as a whole and net losses of $230 million related to the accumulated other comprehensive income balances associated with the E.U. disposal group, driven by declines in the Euro. These amounts were recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The Company’s measurement of the fair value of the E.U. disposal group was based on the total consideration expected to be received by the Company as outlined in the transaction agreement. Certain components of the total consideration included fair value measurements that fall within Level 3 of the fair value hierarchy.

13

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The total assets and liabilities of the E.U. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Receivables, net	$	1,322
Inventories, net	809
Prepaid expenses and other	72
Property, plant, and equipment, net	304
Operating lease right-of-use assets	224
Intangible assets, net	267
Other non-current assets	328
Remeasurement of assets of businesses held for sale to fair value less costs to sell (1)	(302)
Total assets held for sale	$	3,024
Liabilities
Current liabilities
Drafts and accounts payable	$	1,826
Current portion of long-term debt	4
Current portion of operating lease liabilities	33
Other accrued liabilities	473
Long-term debt	11
Long-term deferred tax liabilities	55
Long-term operating lease liabilities	180
Other non-current liabilities	138
Total liabilities held for sale	$	2,720

(1)Excludes charges in fiscal 2022 related to the impairment of individual assets, including a $113 million impairment of internally developed software recorded directly against the gross value of the assets impacted.

On April 6, 2022, the Company completed the previously announced sale of its retail and distribution businesses in the United Kingdom (“U.K. disposal group”) to Aurelius Elephant Limited for a purchase price of £110 million (or, approximately $144 million), including certain adjustments. As part of the transaction, the Company divested net assets of $615 million and released $731 million of accumulated other comprehensive loss, within the International segment, and the buyer assumed and repaid a note payable to the Company of $118 million.

During the three and nine months ended December 31, 2021, the Company recorded charges totaling $823 million to remeasure the U.K. disposal group to the lower of its carrying value or fair value less costs to sell. The remeasurement adjustment included a $731 million loss related to the accumulated other comprehensive loss balances associated with the U.K. disposal group, driven by declines in the British pound sterling. The charges were recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The Company’s measurement of the fair value of the U.K. disposal group was based on the total consideration expected to be received by the Company as outlined in the transaction agreement. Certain components of the total consideration included fair value measurements that fall within Level 3 of the fair value hierarchy.

14

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The total assets and liabilities of the U.K. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Cash and cash equivalents	$	531
Receivables, net	931
Inventories, net	563
Prepaid expenses and other	50
Property, plant, and equipment, net	91
Operating lease right-of-use assets	270
Intangible assets, net	117
Other non-current assets	88
Remeasurement of assets of businesses held for sale to fair value less costs to sell	(1,159)
Total assets held for sale	$	1,482
Liabilities
Current liabilities
Drafts and accounts payable	$	1,593
Current portion of operating lease liabilities	50
Other accrued liabilities	59
Long-term deferred tax liabilities	16
Long-term operating lease liabilities	262
Other non-current liabilities	38
Total liabilities held for sale	$	2,018

On January 31, 2022, the Company completed the sale of its Austrian business to Quadrifolia Management GmbH in a management-led buyout for a purchase price of €244 million (or, approximately $276 million), including certain adjustments. In the three and nine months ended December 31, 2021, the Company recognized a loss of $30 million to remeasure the assets and liabilities of the business to the lower of its carrying value or fair value less costs to sell. The charge was recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations.

Subsequent to the divestiture activities discussed above, the Company’s European operations primarily consist of its retail and distribution businesses in Norway.

Other

For the periods presented, the Company also completed de minimis acquisitions and divestitures within its operating segments. Financial results for the Company’s business acquisitions have been included in its consolidated financial statements as of their respective acquisition dates. Purchase prices for business acquisitions have been allocated based on estimated fair values at the respective acquisition dates.

15

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

3.    Restructuring, Impairment, and Related Charges, Net

The Company recorded restructuring, impairment, and related charges of $31 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $84 million and $208 million for the nine months ended December 31, 2022 and 2021, respectively. These charges were included in “Restructuring, impairment, and related charges, net” in the Condensed Consolidated Statements of Operations.

Restructuring Initiatives

During the first quarter of fiscal 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 included the rationalization of the Company’s office space in North America. Where the Company ceased using office space, it exited the portion of the facility no longer used. It also retained and repurposed certain other office locations. The Company recorded charges of $5 million and $115 million for the three and nine months ended December 31, 2021, respectively, primarily related to lease right-of-use and other long-lived asset impairments, lease exit costs, and accelerated depreciation and amortization. This initiative was substantially completed in fiscal 2022 and remaining costs the Company recorded and expects to record under this initiative are not material.

Restructuring, impairment, and related charges, net, for the three months ended December 31, 2022 and 2021 consisted of the following:

	Three Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	4	$	4
Exit and other-related costs (1)	1		1		1		7		15		25
Asset impairments and accelerated depreciation	1		—		—		1		—		2
Total	$	2	$	1	$	1	$	8	$	19	$	31

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Three Months Ended December 31, 2021
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	1	$	1
Exit and other-related costs (1)	3		—		1		6		6		16
Asset impairments and accelerated depreciation	—		—		—		(1)		2		1
Total	$	3	$	—	$	1	$	5	$	9	$	18

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred.

16

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Restructuring, impairment, and related charges, net, for the nine months ended December 31, 2022 and 2021 consisted of the following:

	Nine Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	3	$	—	$	—	$	2	$	(2)	$	3
Exit and other-related costs (1)	2		4		3		15		44		68
Asset impairments and accelerated depreciation	4		11		—		2		(4)		13
Total	$	9	$	15	$	3	$	19	$	38	$	84

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Nine Months Ended December 31, 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	$	2	$	(1)	$	1	$	10	$	2	$	14
Exit and other-related costs (3)	7		2		3		21		33		66
Asset impairments and accelerated depreciation	16		17		5		35		55		128
Total	$	25	$	18	$	9	$	66	$	90	$	208

(1)Includes costs related to the transition to a partial remote work model described above.

(2)Includes costs related to the transition to a partial remote work model described above, U.K. operating model and cost optimization efforts, and costs for optimization programs in Canada.

(3)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred.

17

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The following table summarizes the activity related to the liabilities associated with the Company’s restructuring initiatives for the nine months ended December 31, 2022:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Balance, March 31, 2022 (1)	$	11	$	3	$	1	$	56	$	59	$	130
Restructuring, impairment, and related charges, net	9		15		3		19		38		84
Non-cash charges	(4)		(11)		—		(2)		4		(13)
Cash payments	(4)		(4)		(3)		(7)		(57)		(75)
Other (2)	(1)		—		—		(54)		1		(54)
Balance, December 31, 2022 (3)	$	11	$	3	$	1	$	12	$	45	$	72

(1)As of March 31, 2022, the total reserve balance was $130 million, of which $58 million was recorded in “Other accrued liabilities,” $36 million was recorded in “Liabilities held for sale,” and $36 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

(2)Other primarily includes cumulative translation adjustments and transfers to certain other liabilities. For the Company’s International segment, other also includes a reduction to the liability for the divestitures of the E.U. disposal group and the U.K. disposal group in fiscal 2023, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.”

(3)As of December 31, 2022, the total reserve balance was $72 million, of which $48 million was recorded in “Other accrued liabilities” and $24 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

4.    Income Taxes

Income tax expense related to continuing operations was as follows:

	Three Months Ended December 31,						Nine Months Ended December 31,
(Dollars in millions)	2022			2021			2022			2021
Income tax expense	$	329		$	238		$	799		$	396
Reported income tax rate	22.7		%	85.9		%	21.6		%	30.9		%

Fluctuations in the Company’s reported income tax rates were primarily due to non-cash charges related to remeasuring the value of the E.U. and U.K. disposal groups held for sale to fair value less costs to sell in fiscal 2022, changes in the mix of earnings between various taxing jurisdictions, and discrete items recognized in the quarters.

During the nine months ended December 31, 2022, the Company recognized net discrete tax benefits primarily related to the tax impact of share-based compensation of $55 million. During the third quarter of fiscal 2022, the Company recognized a net discrete tax benefit of $42 million primarily related to a decrease in the income recognized pursuant to the global intangible low-tax income (“GILTI”) regime in its 2021 U.S. Federal income tax return and the statute of limitation expirations in various taxing jurisdictions. During the nine months ended December 31, 2021, the Company recognized net discrete tax benefits primarily related to statute of limitation expirations of $115 million in various taxing jurisdictions and $81 million related to a reduction of GILTI income in the prior year.

During the nine months ended December 31, 2021, the Company recorded non-cash pre-tax charges of $517 million primarily to remeasure the E.U. disposal group to fair value less costs to sell, and, during the three and nine months ended December 31, 2021, recorded non-cash pre-tax charges of $853 million to remeasure the U.K. disposal group and the Austrian business to fair value less costs to sell, as described in Financial Note 2, “Business Acquisitions and Divestitures.” The Company’s reported income tax rates for the three and nine months ended December 31, 2021 were unfavorably impacted by this due to the non-deductible nature of the majority of these charges for income tax purposes.

18

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

As of December 31, 2022, the Company had $1.5 billion of unrecognized tax benefits, of which $1.4 billion would reduce income tax expense and the effective tax rate if recognized. During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by as much as $170 million to $195 million due to settlements of tax examinations and statute of limitation expirations based on the information currently available. However, this may change as the Company continues to have ongoing discussions with various taxing authorities throughout the year, and if the ultimate resolution of unrecognized tax benefits differs from this estimated range, the Company will record any additional income tax expense or benefit as necessary in the appropriate period. The unrecognized tax benefit may also increase or decrease due to future developments in 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 2014 through the current fiscal year.

5.     Redeemable Noncontrolling Interests and Noncontrolling Interests

Redeemable Noncontrolling Interests

The Company’s previously recognized redeemable noncontrolling interests primarily related to its former 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. The Company recorded a total attribution of net income to the noncontrolling shareholders of McKesson Europe of $8 million during the nine months ended December 31, 2021. This amount was recorded in “Net income attributable to noncontrolling interests” in the Company’s Condensed Consolidated Statement of Operations and the corresponding liability balance was recorded in “Other accrued liabilities” in the Company’s Condensed Consolidated Balance Sheet.

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”). During the nine months ended December 31, 2021, the Company paid $1.0 billion to purchase 34.5 million shares of McKesson Europe through exercises of the Put Right by the noncontrolling shareholders. This decreased the carrying value of the redeemable noncontrolling interests by $983 million for the nine months ended December 31, 2021, and the Company recorded the associated effect of the increase in the Company’s ownership interest of $178 million as an increase to McKesson 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” in the Condensed Consolidated Balance Sheet.

Noncontrolling Interests

Noncontrolling interests represent third-party equity interests in the Company’s consolidated entities primarily related to the formation of an oncology research business during the third quarter of fiscal 2023, ClarusONE Sourcing Services LLP, and Vantage Oncology Holdings, LLC. As discussed above, after June 15, 2021, noncontrolling interests also represented minority shareholder equity interests in McKesson Europe. The Company’s noncontrolling interest in McKesson Europe was included in the divestiture of the E.U. disposal group in October 2022. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for more information on these transactions.

The Company allocated $41 million and $46 million of net income to noncontrolling interests during the three months ended December 31, 2022 and 2021, respectively, and $123 million and $128 million during the nine months ended December 31, 2022 and 2021, respectively, which was recorded in “Net income attributable to noncontrolling interests” in the Company’s Condensed Consolidated Statements of Operations.

19

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Changes in noncontrolling interests for the three and nine months ended December 31, 2022 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2022	$	518
Net income attributable to noncontrolling interests	41
Payments to noncontrolling interests	(36)
Reclassification of recurring compensation to other accrued liabilities	(1)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	1
Balance, December 31, 2022	$	366

(In millions)	Noncontrolling Interests
Balance, March 31, 2022	$	480
Net income attributable to noncontrolling interests	123
Other comprehensive income	44
Payments to noncontrolling interests	(113)
Reclassification of recurring compensation to other accrued liabilities	(5)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	(6)
Balance, December 31, 2022	$	366

20

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Changes in redeemable noncontrolling interests and noncontrolling interests for the three and nine months ended December 31, 2021 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2021	$	484
Net income attributable to noncontrolling interests	46
Other comprehensive loss	(2)
Payments to noncontrolling interests	(38)
Reclassification of recurring compensation to other accrued liabilities	(3)
Balance, December 31, 2021	$	487

(In millions)	Noncontrolling Interests		Redeemable Noncontrolling Interests
Balance, March 31, 2021	$	196	$	1,271
Net income attributable to noncontrolling interests	128		8
Other comprehensive income (loss)	(2)		3
Payments to noncontrolling interests	(117)		—
Reclassification of recurring compensation to other accrued liabilities	(5)		(8)
Exercises of Put Right	—		(983)
Reclassification of McKesson Europe redeemable noncontrolling interests	287		(287)
Other	—		(4)
Balance, December 31, 2021	$	487	$	—

6.    Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The computation of diluted earnings per common share is similar to that of basic earnings 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 restricted stock units. Diluted loss per common share for the three months ended December 31, 2021 was calculated by excluding all dilutive securities from the denominator of the share computation due to their anti-dilutive effects. Less than 1 million of potentially dilutive securities for the three and nine months ended December 31, 2022, and for the nine months ended December 31, 2021, were excluded from the computation of diluted earnings per common share as they were anti-dilutive.

21

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The computations for basic and diluted earnings per common share were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions, except per share amounts)	2022		2021		2022		2021
Income from continuing operations	$	1,119	$	39	$	2,899	$	885
Net income attributable to noncontrolling interests	(41)		(46)		(123)		(136)
Income (loss) from continuing operations attributable to McKesson Corporation	1,078		(7)		2,776		749
Income (loss) from discontinued operations, net of tax	1		—		(3)		(3)
Net income (loss) attributable to McKesson Corporation	$	1,079	$	(7)	$	2,773	$	746
Weighted-average common shares outstanding:
Basic	139.9		151.6		142.5		154.0
Effect of dilutive securities:
Stock options	0.2		—		0.3		0.2
Restricted stock units (1)	0.9		—		0.9		1.6
Diluted	141.0		151.6		143.7		155.8
Earnings (loss) per common share attributable to McKesson Corporation: (2)
Diluted
Continuing operations	$	7.65	$	(0.04)	$	19.32	$	4.81
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.66	$	(0.04)	$	19.30	$	4.79
Basic
Continuing operations	$	7.70	$	(0.04)	$	19.48	$	4.87
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.71	$	(0.04)	$	19.46	$	4.85

(1)Includes dilutive effect from restricted stock units and performance-based stock units.

(2)Certain computations may reflect rounding adjustments.

7.    Goodwill and Intangible Assets, Net

The Company evaluates goodwill for impairment on an annual basis and at an interim date, if indicators of potential impairment exist. During the first quarter of fiscal 2023, the Company voluntarily changed its annual goodwill impairment testing date from October 1st to April 1st to align with a change in timing of the Company’s annual long-term planning process. Accordingly, management determined that the change in accounting principle is preferable under the circumstance. This change has been applied prospectively from April 1, 2022 as retrospective application is deemed impracticable due to the inability to objectively determine the assumptions and significant estimates used in earlier periods without the benefit of hindsight. This change was not material to the Company’s consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge. The annual impairment testing performed as of April 1, 2022 did not indicate an impairment of goodwill.

22

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Changes in the carrying amount of goodwill were as follows:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Total
Balance, March 31, 2022	$	3,923	$	1,542	$	2,453	$	1,533	$	9,451
Goodwill acquired	160		463		—		2		625
Foreign currency translation adjustments, net	(21)		—		—		(109)		(130)
Other adjustments	(12)		—		—		—		(12)
Balance, December 31, 2022	$	4,050	$	2,005	$	2,453	$	1,426	$	9,934

Information regarding intangible assets was as follows:

	December 31, 2022							March 31, 2022
(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	12	$	2,974	$	(1,735)	$	1,239	$	2,777	$	(1,691)	$	1,086
Service agreements	8	1,071		(608)		463		1,085		(573)		512
Trademarks and trade names	12	833		(418)		415		819		(386)		433
Technology	11	261		(124)		137		128		(116)		12
Other	9	191		(172)		19		187		(171)		16
Total		$	5,330	$	(3,057)	$	2,273	$	4,996	$	(2,937)	$	2,059

Amortization expense of intangible assets was $57 million and $80 million for the three months ended December 31, 2022 and 2021, respectively, and $170 million and $262 million for the nine months ended December 31, 2022 and 2021, respectively. Estimated amortization expense of these assets is as follows: $63 million, $243 million, $237 million, $204 million, and $198 million for the remainder of fiscal 2023 and each of the succeeding years through fiscal 2027, respectively, and $1.3 billion thereafter. All intangible assets were subject to amortization as of December 31, 2022 and March 31, 2022. Amortization of intangible assets of the E.U. disposal group previously classified as held for sale and disposed of in October 2022 ceased in the second quarter of fiscal 2022.

Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for a description of the goodwill and intangible assets acquired as part of the RxSS acquisition and formation of an oncology research business.

23

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

8.    Debt and Financing Activities

Long-term debt consisted of the following:

(In millions)	December 31, 2022		March 31, 2022
U.S. Dollar notes (1) (2)
2.70% Notes due December 15, 2022	$	—	$	400
2.85% Notes due March 15, 2023	360		360
3.80% Notes due March 15, 2024	918		918
0.90% Notes due December 3, 2025	500		500
1.30% Notes due August 15, 2026	498		498
7.65% Debentures due March 1, 2027	150		150
3.95% Notes due February 16, 2028	343		343
4.75% Notes due May 30, 2029	196		196
6.00% Notes due March 1, 2041	218		217
4.88% Notes due March 15, 2044	255		255
Foreign currency notes (1) (3)
1.50% Euro Notes due November 17, 2025	640		662
1.63% Euro Notes due October 30, 2026	535		554
3.13% Sterling Notes due February 17, 2029	544		582
Term loan (4)	500		—
Lease and other obligations	199		244
Total debt	5,856		5,879
Less: Current portion	404		799
Total long-term debt	$	5,452	$	5,080

(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.

(4)This loan is under the 2022 Term Loan Credit Facility.

Long-Term Debt

The Company’s long-term debt includes both U.S. dollar and foreign currency-denominated borrowings. Debt outstanding totaled $5.9 billion at December 31, 2022 and March 31, 2022, of which $404 million and $799 million, respectively, was included under the caption “Current portion of long-term debt” within the Company’s Condensed Consolidated Balance Sheets. On December 15, 2022, the Company retired its $400 million outstanding principal amount of 2.70% notes upon maturity. These notes were repaid using cash on hand.

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, plus accrued and unpaid interest of $14 million. The redemption of the Tender Offer Notes was accounted for as a debt extinguishment. As a result of the redemption, the Company incurred a pre-tax loss on debt extinguishment of $191 million, which included premiums of $182 million as well as the write-off of unamortized debt issuance costs and transaction fees incurred totaling $9 million.

24

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Revolving Credit Facilities

On November 7, 2022, the Company entered into a Credit Agreement (the “2022 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. The 2022 Credit Facility replaced the Company’s previous syndicated $4.0 billion five-year senior unsecured credit facility, dated as of September 25, 2019, as amended (the “2020 Credit Facility”), which was scheduled to mature in September 2024. The 2020 Credit Facility was terminated in connection with the execution of the 2022 Credit Facility. There were no borrowings under the 2020 Credit Facility during the nine months ended December 31, 2022 and 2021, and no amounts outstanding at the time of its termination.

Borrowings under the 2022 Credit Facility bear interest based upon the Term Secured Overnight Financing Rate (“SOFR”) for credit extensions denominated in U.S. dollars, the Sterling Overnight Index Average Reference Rate for credit extensions denominated in British pound sterling, the Euro Interbank Offered Rate for credit extensions denominated in Euros, the Canadian Dealer Offered Rate for credit extensions denominated in Canadian dollars, a prime rate, or alternative overnight rates, as applicable, plus agreed upon margins. The 2022 Credit Facility 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 2022 Credit Facility. If the Company does not comply with these covenants, its ability to use the 2022 Credit Facility may be suspended and repayment of any outstanding balances under the 2022 Credit Facility may be required. At December 31, 2022, the Company was in compliance with all covenants under the 2022 Credit Facility. The 2022 Credit Facility also permits the Company to establish key performance indicators with respect to certain environmental, social, and governance targets of the Company in consultation with certain sustainability coordinators, and enter into an amendment to the 2022 Credit Facility to provide for certain adjustments to the otherwise applicable facility fee and margins. The 2022 Credit Facility is scheduled to mature in November 2027. The remaining terms and conditions of the 2022 Credit Facility are substantially similar to those previously in place under the 2020 Credit Facility. The Company can use funds obtained under the 2022 Credit Facility for general corporate purposes. There were no borrowings under the 2022 Credit Facility during the third quarter of fiscal 2023 and no amounts outstanding as of December 31, 2022.

The Company also maintained bilateral credit facilities primarily denominated in Euros which were transferred as part of the divestiture of the E.U. disposal group in October 2022. Borrowings and repayments were not material during the nine months ended December 31, 2022 and 2021. Amounts outstanding under these credit lines were not material as of March 31, 2022.

2022 Term Loan Credit Facility

On November 7, 2022, the Company entered into a Credit Agreement (the “2022 Term Loan Credit Facility”) pursuant to which the Company has an unsecured delayed draw term loan facility up to $500 million which was available for borrowing for 90 days after the closing date in up to three separate borrowings, and which is subject to increase as provided for in the 2022 Term Loan Credit Facility. The 2022 Term Loan Credit Facility 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 2022 Term Loan Credit Facility. At December 31, 2022, the Company was in compliance with all covenants under the 2022 Term Loan Credit Facility. In the case of event of default under the 2022 Term Loan Credit Facility, the lenders may elect, among other things, to declare any unpaid amounts obtained under the 2022 Term Loan Credit Facility to be immediately due and payable. The 2022 Term Loan Credit Facility bears interest based upon Term SOFR, a prime rate, or alternative overnight rates, as applicable, plus agreed upon margins. The remaining terms and conditions of the 2022 Term Loan Credit Facility are substantially similar to those under the 2022 Credit Facility. The Company can use funds obtained under the 2022 Term Loan Credit Facility for general corporate purposes. As of December 31, 2022, the Company had $500 million in borrowings outstanding under the 2022 Term Loan Credit Facility which bear interest at three-month Term SOFR plus 110 basis points, payable quarterly, and mature on November 7, 2025.

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. During the nine months ended December 31, 2022, the Company borrowed $1.1 billion and repaid $483 million under the program. During the nine months ended December 31, 2021, the Company borrowed $3.6 billion and repaid $3.3 billion under the program. At December 31, 2022, there were $617 million commercial paper notes outstanding at a weighted average interest rate of 4.73%. At March 31, 2022, there were no commercial paper notes outstanding.

25

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

9.    Pension Benefits

The net periodic expense for defined benefit pension plans was not material for each of the three and nine months ended December 31, 2022 and 2021. Cash contributions to these plans were $2 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $7 million and $35 million for the nine months ended December 31, 2022 and 2021, respectively. The cash contributions for the three and nine months ended December 31, 2021 included a $17 million payment to a U.K. pension plan. 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 estimated life expectancy.

As part of the European divestiture activities discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures,” pension liabilities of $85 million, as part of the E.U. disposal group, and pension assets of $49 million, as part of the U.K. disposal group, were included under the captions “Liabilities held for sale” and “Assets held for sale,” respectively, in the Condensed Consolidated Balance Sheet as of March 31, 2022. During the third quarter of fiscal 2023, the Company derecognized pension liabilities totaling $75 million and released $13 million of gains from accumulated other comprehensive loss related the divestiture of the E.U. disposal group. During the first quarter of fiscal 2023, the Company derecognized pension assets of $49 million and released $30 million of accumulated other comprehensive loss related to the divestiture of the U.K. disposal group.

10.    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 as described below. In accordance with the Company’s policy, derivatives are only used for hedging purposes. It does not use derivatives for trading or speculative purposes. The Company uses different counterparties for its derivative contracts to minimize the exposure to credit risk but does not anticipate non-performance by these parties.

Foreign Currency Exchange Risk

The Company conducts its business worldwide in U.S. dollars and the functional currencies of its foreign subsidiaries, including Euro, Canadian dollars, and British pound sterling. 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. Subsequent to the completion of the U.K. divestiture in April 2022 as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” the Company’s foreign currency exchange rate risk is limited to the Canadian dollar and Euro.

Non-Derivative Instruments Designated as Hedges

At March 31, 2022, the Company had €1.1 billion of Euro-denominated notes designated as non-derivative net investment hedges. These hedges were 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 were designated as net investment hedges and meet effectiveness requirements, the changes in carrying value of the notes attributable to the change in spot rates were recorded as 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 were ineffective, changes in carrying value attributable to the change in spot rates are recorded in earnings.

26

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

In connection with the sale of the E.U. disposal group in October 2022, the Company reclassified $112 million of gains from accumulated other comprehensive loss to “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022. This amount related to the €1.1 billion of Euro-denominated notes described above, along with certain other Euro-denominated notes which were previously accounted for as net investment hedges and matured in prior periods, and was included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell.

In connection with the sale of the U.K. disposal group in April 2022, the Company reclassified $26 million of gains from accumulated other comprehensive loss to “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2022. This amount related to the Company’s £450 million of British pound sterling-denominated notes, which were previously accounted for as net investment hedges until de-designated in fiscal 2020, and was included in the fiscal 2022 calculation of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell.

Foreign currency gains (losses) from non-derivative instruments included in other comprehensive income in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Non-derivatives designated as net investment hedges: (1)
Euro-denominated notes (2)	$	(132)	$	23	$	7	$	34

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)Includes amounts reclassified to earnings of $112 million for the three and nine months ended December 31, 2022.

Derivative Instruments

At December 31, 2022 and March 31, 2022, the notional amounts of the Company’s outstanding derivatives were as follows:

			December 31, 2022		March 31, 2022
(In millions)	Currency	Maturity Date	Notional
Derivatives designated as net investment hedges: (1)
Cross-currency swaps (2)	CAD	Nov-24	$	500	$	500
Derivatives designated as fair value hedges: (1)
Cross-currency swaps (3)	GBP	Feb-23	£	450	£	450
Cross-currency swaps (4)	EUR	Aug-25 to Jul-26	€	1,100	€	—
Floating interest rate swaps (5)	USD	Aug-27 to Sep-29	$	750	$	—
Derivatives designated as cash flow hedges: (1)
Cross-currency swaps (2)	CAD	Jul-22 to Jan-24	$	1,085	$	1,678
Fixed interest rate swaps (6)	USD	Nov-22	$	—	$	500

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)The Company agreed 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.

(3)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.

(4)The Company entered into cross-currency fixed-to-fixed interest rate swaps to mitigate the foreign currency exchange fluctuations on its Euro-denominated notes.

27

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

(5)The Company entered into fixed-to-floating interest rate swaps to hedge the changes in fair value caused by fluctuations in the benchmark interest rates.

(6)The Company entered into agreements with financial institutions to lock into the fixed benchmark interest rates for future bond issuance, which were terminated during the third quarter of fiscal 2023 as further discussed below.

Net Investment Hedges

The Company uses cross-currency swaps 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 and 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.

Fair Value Hedges

The Company uses cross-currency swaps to hedge the changes in the fair value of British pound sterling notes resulting from changes in benchmark interest rates and foreign exchange rates. During the third quarter of fiscal 2023, the Company entered into cross-currency fixed-to-fixed interest rate swaps with a total notional amount of €1.1 billion to hedge the changes in the fair value of its underlying Euro-denominated notes resulting from changes in benchmark interest rates and foreign currency exchange rates.

During the nine months ended December 31, 2022, the Company also entered into floating interest rate swaps to convert $750 million of its fixed rate debt to floating interest rate in order to hedge the changes in fair value caused by fluctuations in the benchmark interest rate. The changes in the fair value of these derivatives are recorded in “Interest expense” in the Condensed Consolidated Statements of Operations.

The changes in the fair value of these derivatives and the offsetting changes in the fair value of the hedged notes are recorded in earnings. Gains from the changes in the Company’s fair value hedges recorded in earnings were largely offset by the losses recorded in earnings on the hedged item.

Cash Flow Hedges

From time to time, the Company enters into cross-currency swaps to hedge intercompany loans denominated in non-functional currencies to reduce the income statement effects arising from fluctuations in foreign currency rates and also enters into forward contracts to hedge the variability future benchmark interest rates on planned bond issuances. The effective portion of changes in the fair value of these 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. Gains or losses reclassified from accumulated other comprehensive loss and recorded in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations were not material for the three and nine months ended December 31, 2022 and 2021.

During the third quarter of fiscal 2023, the Company terminated its $500 million notional fixed interest rate swaps and recognized a gain of $97 million within “Other income, net” in the Condensed Consolidated Statements of Operations.

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. From time to time, the Company has entered into forward contracts to hedge the Euro against cash flows denominated in British pound sterling and other European currencies. Changes in the fair values for contracts not designated as hedges were 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 for the three and nine months ended December 31, 2021 and the Company did not have any outstanding derivative instruments not designated as hedges during fiscal 2023. Gains or losses from these contracts were largely offset by changes in the value of the underlying intercompany obligations.

28

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Other Information on Derivative Instruments

Gains (losses) of derivatives included in other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Derivatives designated as net investment hedges:
Cross-currency swaps	$	(7)	$	(2)	$	26	$	3
Derivatives designated as cash flow hedges:
Cross-currency swaps	$	(1)	$	(5)	$	(6)	$	(6)
Fixed interest rate swaps	(85)		(3)		(30)		9

Information regarding the fair value of derivatives on a gross basis were as follows:

	Balance Sheet Caption	December 31, 2022						March 31, 2022
		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	$	18	$	17	$	1,080	$	30	$	39	$	1,537
Cross-currency swaps (non-current)	Other non-current assets/liabilities	68		—		1,774		—		36		679
Fixed interest rate swaps (current)	Prepaid expenses and other	—		—		—		31		—		500
Floating interest rate swaps (non-current)	Other non-current liabilities	—		30		750		—		—		—
Total		$	86	$	47			$	61	$	75

Refer to Financial Note 11, "Fair Value Measurements," for more information on these recurring fair value measurements.

29

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

11.     Fair Value Measurements

The Company measures certain assets and liabilities at fair value in accordance with 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 December 31, 2022 and March 31, 2022 included investments in money market funds of $696 million and $981 million, 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. The Company’s marketable securities were not material at December 31, 2022 and March 31, 2022.

Fair values of the Company’s interest rate swaps 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.

The Company holds investments in equity securities of U.S. growth stage companies that address both current and emerging business challenges in the healthcare industry and which had carrying values of $253 million and $346 million at December 31, 2022 and March 31, 2022, respectively. These investments primarily consist of equity securities without readily determinable fair values and are included in “Other non-current assets” in the Condensed Consolidated Balance Sheets. During the nine months ended December 31, 2022, the Company recognized impairment charges and realized gains on the exit of certain investments. During the nine months ended December 31, 2021, certain of the Company’s investments in equity securities without readily determinable fair values were remeasured to fair value based on transactions which resulted in changes in the observable price of those securities. The impact from the Company’s investments in these equity securities were net losses of $24 million and net gains of $104 million for the nine months ended December 31, 2022 and 2021, respectively. These amounts were recorded in “Other income, net” in the Condensed Consolidated Statements of Operations. The carrying value of publicly-traded investments, which was not material for the periods presented, was determined using quoted prices for identical investments in active markets and are considered to be Level 1 inputs.

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 or charges to remeasure assets classified as held for sale to fair value less costs to sell.

At December 31, 2022, the contingent consideration liability related to the Company’s acquisition of RxSS in November 2022 was measured at fair value on a nonrecurring basis. At March 31, 2022, the assets and liabilities associated with the disposal groups in Europe previously classified as held for sale were measured at the lower of carrying value or fair value less costs to sell. The E.U. disposal group was divested in October 2022 and the U.K. disposal group was divested in April 2022. Refer to Financial Note 2, “Business Acquisitions and Divestitures," for more information on these transactions. At March 31, 2022, assets measured at fair value on a nonrecurring basis also included certain long-lived assets within the International segment related to the Company’s previous operations in Denmark and its retail pharmacy businesses in Canada.

30

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

The aforementioned investments in equity securities of U.S. growth stage companies include the carrying value of investments without readily determinable fair values, which were determined using a measurement alternative and are recorded at cost less impairment, plus or minus any changes in observable price from orderly transactions of the same or similar security of the same issuer. The inputs related to changes in observable price 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. Inputs related to impairments of investments are generally considered Level 3 fair value measurements due to their inherently unobservable nature based on significant assumptions by management and use of company-specific information.

There were no other material assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2022 and March 31, 2022.

Other Fair Value Disclosures

At December 31, 2022 and March 31, 2022, 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-term 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:

	December 31, 2022				March 31, 2022
(In millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	5,856	$	5,607	$	5,879	$	5,999

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” in the Company’s Condensed Consolidated Balance Sheet, primarily consisted of $395 million as of March 31, 2022 held in escrow related to obligations under settlement agreements for opioid-related claims of governmental entities and were released during the nine months ended December 31, 2022, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities.”

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 each 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 long-lived assets is considered a Level 3 fair value measurement.

31

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

12.    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 18 to the Company’s 2022 Annual Report, Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended June 30, 2022, and Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended September 30, 2022, 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. Amounts included within “Claims and litigation charges, net” in the Condensed Consolidated Statements of Operations consist of estimated loss contingencies related to opioid-related litigation matters.

I. Litigation and Claims Involving Distribution of Controlled Substances

The Company and its affiliates have been sued as defendants in many cases asserting claims related to distribution of controlled substances. They have been named as defendants along with other pharmaceutical wholesale distributors, pharmaceutical manufacturers, and retail pharmacy chains. The plaintiffs in these actions have included state attorneys general, county and municipal governments, school districts, 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.

The Company and two other national pharmaceutical distributors (collectively “Distributors”) settled with 46 of 49 eligible states and their participating subdivisions, as well as the District of Columbia and all eligible territories (collectively, “Settling Governmental Entities”) effective on April 2, 2022 (“Settlement”). Under the Settlement, the Distributors will pay the Settling Governmental Entities up to approximately $19.5 billion over 18 years, with up to approximately $7.4 billion to be paid by the Company for its 38.1% portion. A minimum of 85% of the Settlement 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. Under the Settlement, the Distributors will establish a clearinghouse to consolidate their controlled-substance distribution data, which will be available to the settling U.S. states to use as part of their anti-diversion efforts. The Distributors do not admit liability or wrongdoing and do not waive any defenses pursuant to the Settlement. Consent judgments have been entered in all participating states and territories, and approximately 2,300 cases have been dismissed pursuant to the Settlement.

32

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Three eligible states, Alabama, Washington, and Oklahoma did not join the Settlement, but they have all reached agreements with the Company. With respect to the claims of the Alabama attorney general, the Company has an agreement under which the Company will pay $141 million in ten equal annual installments and an additional approximately $33 million in attorney fees and costs to resolve the opioid-related claims of the state of Alabama and its subdivisions. Under an agreement with the attorney general of Washington to settle the claims of the state of Washington and its subdivisions, the Distributors will pay up to $518 million over 18 years, of which the Company’s portion will be 38.1% (or approximately $197 million), consistent with Washington’s allocation under the comprehensive framework, as well as certain additional attorneys’ fees and costs. Under an agreement with the attorney general of Oklahoma to settle claims of the state of Oklahoma and its subdivisions, the Distributors will pay up to approximately $308 million over 18 years, of which the Company’s portion would be 38.1% (or approximately $117 million), consistent with Oklahoma’s allocation under the comprehensive framework.

The Company previously settled with the state of West Virginia, and West Virginia and its subdivisions were not eligible to participate in the comprehensive Settlement. Trial in the case of Cabell County and the City of Huntington occurred in the U.S. District Court for the Southern District of West Virginia and concluded on July 28, 2021. On July 4, 2022, the court entered judgment in defendants’ favor. On August 2, 2022, the plaintiffs filed an appeal. The claims of certain other West Virginia subdivisions were pending in the federal Multidistrict Litigation and before the state Mass Litigation Panel. On July 5, 2022, the Mass Litigation Panel entered an order noting an agreement in principle between a group of plaintiffs’ attorneys representing the municipalities and the Distributors. Under the settlement agreement with the participating West Virginia municipalities, the Distributors will pay $400 million over approximately 11 years, with the Company responsible for 38.1% of the total amount (or approximately $152 million). All participating litigating subdivisions have dismissed their claims against the Company. The agreement does not include school districts or the claims of Cabell County and the City of Huntington.

With respect to the claims of Native American tribes, on September 28, 2021, the Company announced that the Distributors reached an agreement with the Cherokee Nation to pay approximately $75 million over 6.5 years to resolve opioid-related claims, of which the Company’s portion will be 38.1% (or approximately $29 million). The Company has also negotiated an agreement to resolve opioid-related claims brought by other Native American tribes. Under that agreement, which was executed on October 26, 2022, the Distributors will pay those other Native American tribes approximately $440 million over 6 years, of which the Company’s portion will be 38.1% (or, approximately $167 million). The agreement achieves broad resolution of opioid-related claims brought against the Distributors by federally recognized Native American tribes. Under these agreements, a minimum of 85% of the settlement payments must be used by the Native American tribes to remediate the opioid epidemic.

Although the Settlement terminated the substantial majority of opioid-related suits by governmental entities pending against the Company, a small number of subdivisions have opted not to participate in the settlements described above. 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. The Company’s loss contingency accruals for these subdivisions are reflected in the estimated liability for the opioid-related claims consistent with what would be allocated under the framework of the Settlement.

The Company’s estimated accrued liability for the opioid-related claims of governmental entities was as follows:

(In millions)	December 31, 2022		March 31, 2022
Current litigation liabilities (1)	$	598	$	1,046
Long-term litigation liabilities	6,642		7,220
Total litigation liabilities	$	7,240	$	8,266

(1)These amounts as of December 31, 2022 and March 31, 2022, recorded in “Other accrued liabilities” in the Condensed Consolidated Balance Sheets, are the amounts estimated to be paid within the next twelve months following each respective period end date.

During the three and nine months ended December 31, 2022, the Company paid $106 million and $1.0 billion, respectively, associated with the Settlement and separate settlement agreements of opioid-related claims of participating states, subdivisions, and Native American tribes. In conjunction with the payments made in the nine months ended December 31, 2022, all funds have been released from escrow.

33

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Though 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 four cases brought in Canada (three by governmental or tribal entities and one by an individual). These claims, and those of private entities generally, are not included in the Settlement 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 was brought by a group of individual plaintiffs in Glynn County, Georgia Superior Court seeking to recover for damages allegedly arising from their family members’ abuse of prescription opioids; trial began on January 30, 2023. Poppell v. Cardinal Health, Inc., CE19-00472. In another, several hospitals brought suit in the Circuit Court of Conecuh County, Alabama; trial on the claims of eight of these hospitals is currently scheduled for July 2023. Fort Payne Hospital Corporation et al. v. McKesson Corp., CV-2021-900016. The Company has not concluded a loss is probable in any of these matters; nor is any possible loss or range of loss reasonably estimable.

Because of the many uncertainties associated with the remaining opioid-related litigation matters, 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.

II. 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.

III. State Opioid Statutes

In April 2018, the State of New York Opioid Stewardship Act (“OSA”) imposed an aggregate $100 million annual surcharge for 2017 and 2018 on all manufacturers and distributors licensed to sell or distribute opioids in New York. Pending resolution of a challenge to the OSA filed by the Healthcare Distribution Alliance (“HDA”), the Company accrued its estimated OSA surcharges as a $50 million provision 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. In December 2021, after the HDA challenge was dismissed, the Company paid $26 million for the 2017 OSA surcharge assessment. On May 18, 2022, the Company filed a lawsuit in New York state court challenging the constitutionality of the OSA. In November 2022, the Company received a 2018 OSA surcharge assessment of approximately $42 million, and therefore the Company accrued an additional $18 million provision in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2022. On December 14, 2022, the state court ruled that the OSA is constitutional. In December 2022, the Company paid $11 million as the first installment of the 2018 OSA surcharge assessment. The Company’s OSA challenge is pending before the New York Appellate Division. The Company reserves its rights and intends to vigorously challenge the OSA and the OSA surcharge assessments.

IV. Antitrust Settlements

In October 2022, the Company received proceeds of $129 million related to its share of an antitrust settlement. A lawsuit was filed against a brand manufacturer alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The Company was not a named party to the litigation but was a member of the class of those who purchased directly from the pharmaceutical manufacturer. The Company recognized a gain in that amount within "Cost of sales" in the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022 related to the settlement.

34

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

V. Environmental Matters

Primarily as a result of the operation of the Company’s former chemical businesses, which were fully divested by 1987, the Company is involved in various matters pursuant to environmental laws and regulations. The Company has been designated as a Potentially Responsible Party (“PRP”) under the Superfund law for environmental assessment and cleanup costs as the result of its alleged disposal of hazardous substances at 14 sites. For one such site, the Company was one of multiple recipients of a New Jersey Department of Environmental Protection Agency directive and a separate U.S. Environmental Protection Agency (“EPA”) directive concerning natural resources damages to the Passaic River associated with the Company's Newark, New Jersey facility. In March 2016, the EPA selected a preferred remedy for this Lower Passaic River site with an estimated cost of approximately $1.4 billion. In December 2022, the Company entered into a Consent Decree with the EPA that is currently pending approval by the U.S. District Court for the District of New Jersey and requires the Company to pay $3 million, which had already been accrued for in the Condensed Consolidated Balance Sheets based on past estimated probable loss.

13.    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 participate equally in any dividends declared by the Company’s Board of Directors (the “Board”).

In July 2022, the quarterly dividend was raised from $0.47 to $0.54 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

The Board has authorized the repurchase of McKesson’s common stock. 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, as amended. 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. The ASR programs discussed below were designed to comply with Rule 10b5-1(c).

In December 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $972 million of the Company’s common stock. Pursuant to the ASR agreement, the Company paid $972 million in cash to the financial institution and received an initial delivery of 2.2 million shares in December 2022. The transaction will be completed during the fourth quarter of fiscal 2023, at which point the Company expects to receive additional shares. The final number of shares repurchased and the average price per share paid will be determined based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a pre-negotiated discount.

In May 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 3.1 million shares at an average price per share of $321.05. The Company received 2.6 million shares as the initial share settlement, and in August 2022, the Company received an additional 0.5 million shares upon the completion of this ASR program.

In February 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $1.5 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 5.1 million shares at an average price per share of $295.16. The Company received 4.8 million shares as the initial share settlement in the fourth quarter of fiscal 2022, and in May 2022, the Company received an additional 0.3 million shares upon the completion of this ASR program.

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. The total number of shares repurchased under this ASR program was 5.2 million shares at an average price per share of $193.22. The Company received 4.3 million shares as the initial share settlement, and in August 2021, the Company received an additional 0.9 million shares upon the completion of this ASR program.

35

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

During the three months ended December 31, 2022, the Company repurchased 2.7 million of the Company’s shares of common stock for $1.0 billion through open market transactions at an average price per share of $370.13. During the three months ended September 30, 2022, the Company repurchased 1.5 million of the Company’s shares of common stock for $524 million through open market transactions at an average price per share of $355.75. There were no open market share repurchases during the three months ended June 30, 2022.

During the three months ended December 31, 2021, the Company repurchased 3.3 million of the Company’s shares of common stock for $728 million through open market transactions at an average price per share of $223.89, of which $30 million was accrued at December 31, 2021 within “Other accrued liabilities” in the Company’s Condensed Consolidated Balance Sheet for share repurchases that were executed in late December 2021 and settled in early January 2022. During the three months ended September 30, 2021, the Company repurchased 1.4 million of the Company’s shares of common stock for $280 million through open market transactions at an average price per share of $203.20. There were no open market share repurchases during the three months ended June 30, 2021.

In July 2022, the Board approved an increase of $4.0 billion in the authorization for repurchase of McKesson’s common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at December 31, 2022 was $3.8 billion.

Accumulated Other Comprehensive Loss

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests, by components for the three and nine months ended December 31, 2022 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2022	$	(1,254)	$	109		$	63	$	(32)	$	(1,114)
Other comprehensive income (loss) before reclassifications	96		(5)			8		18		117
Amounts reclassified to earnings and other (2)	280		(119)			(73)		10		98
Other comprehensive income (loss)	376		(124)		(3)	(65)		28		215
Less: amounts attributable to noncontrolling interests	—		—			—		—		—
Other comprehensive income (loss) attributable to McKesson	376		(124)			(65)		28		215
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestiture of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $22 million.

(3)Amounts recorded for the three months ended December 31, 2022 include losses of $132 million related to net investment hedges from Euro-denominated notes and losses of $7 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax benefit of $15 million.

36

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2022	$	(1,504)	$	10		$	27	$	(67)	$	(1,534)
Other comprehensive income (loss) before reclassifications	(360)		111			44		32		(173)
Amounts reclassified to earnings and other (2)	1,027		(136)			(73)		34		852
Other comprehensive income (loss)	667		(25)		(3)	(29)		66		679
Less: amounts attributable to noncontrolling interests	41		—			—		3		44
Other comprehensive income (loss) attributable to McKesson	626		(25)			(29)		63		635
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestitures of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, and U.K. disposal group in April 2022, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal groups to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $6 million.

(3)Amounts recorded for the nine months ended December 31, 2022 include net gains of $7 million related to net investment hedges from Euro-denominated notes and gains of $26 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $32 million and gains of $26 million reclassified to earnings related to previously de-designated British pound sterling notes.

37

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests and redeemable noncontrolling interests, by components for the three and nine months ended December 31, 2021 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Losses and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2021	$	(1,557)	$	(25)		$	21	$	(104)	$	(1,665)
Other comprehensive income (loss) before reclassifications	—		16			(6)		(1)		9
Amounts reclassified to earnings and other	—		—			—		(1)		(1)
Other comprehensive income (loss)	—		16		⁽²⁾	(6)		(2)		8
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	(2)		—			—		—		(2)
Other comprehensive income (loss) attributable to McKesson	2		16			(6)		(2)		10
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Amounts recorded for the three months ended December 31, 2021 include gains of $23 million related to net investment hedges from Euro-denominated notes and losses of $2 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $5 million.

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2021	$	(1,361)	$	(36)		$	13	$	(96)	$	(1,480)
Other comprehensive income (loss) before reclassifications	(47)		21			(3)		5		(24)
Amounts reclassified to earnings and other	18		—			5		(3)		20
Other comprehensive income (loss)	(29)		21		⁽²⁾	2		2		(4)
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	7		(6)			—		—		1
Other comprehensive income (loss) attributable to McKesson	(36)		27			2		2		(5)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	(158)		—			—		(12)		(170)
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

38

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

(2)Amounts recorded for the nine months ended December 31, 2021 include gains of $34 million related to net investment hedges from Euro-denominated notes and gains of $3 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $10 million.

14.    Segments of Business

The Company reports its financial results in four reportable segments: U.S. Pharmaceutical, RxTS, Medical-Surgical Solutions, and International. 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 include 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 (loss) 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 serves McKesson’s biopharma and life sciences partners and helps solve medication access, affordability, and adherence challenges for patients. RxTS works across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma to deliver innovative solutions that help people get the medicine they need to live healthier lives. RxTS also offers prescription price transparency, benefit insight, dispensing support services, third-party logistics, and wholesale distribution support across various therapeutic categories and temperature ranges to biopharma customers throughout the product lifecycle.

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 285,000 national brand medical-surgical products as well as McKesson’s own line of high-quality products through a network of distribution centers within the U.S.

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 remaining operations in Europe provide distribution and services to wholesale, institutional, and retail customers in Norway where it owns, partners, or franchises with retail pharmacies. The Company’s Canadian operations deliver vital medicines, supplies, and information technology solutions throughout Canada and includes Rexall Health retail pharmacies. International segment assets at December 31, 2022 were $6.2 billion, a decrease from the end of fiscal 2022 primarily due to the completed divestitures of the E.U. disposal group in October 2022 and the U.K. disposal group in April 2022, along with unfavorable effects of foreign currency exchange fluctuations. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for more information.

39

McKESSON CORPORATION

FINANCIAL NOTES (CONTINUED)

(UNAUDITED)

Financial information relating to the Company’s reportable operating segments and reconciliations to the condensed consolidated totals was as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Segment revenues (1)
U.S. Pharmaceutical	$	61,934	$	55,041	$	178,940	$	158,471
Prescription Technology Solutions	1,121		1,031		3,205		2,844
Medical-Surgical Solutions	2,986		3,082		8,421		8,734
International	4,449		9,460		17,235		27,815
Total revenues	$	70,490	$	68,614	$	207,801	$	197,864
Segment operating profit (loss) (2)
U.S. Pharmaceutical (3)	$	850	$	744	$	2,442	$	2,186
Prescription Technology Solutions	136		129		400		361
Medical-Surgical Solutions (4)	328		308		883		679
International (5)	136		(668)		93		(761)
Subtotal	1,450		513		3,818		2,465
Corporate expenses, net (6)	67		(195)		49		(858)
Loss on debt extinguishment (7)	—		—		—		(191)
Interest expense	(69)		(41)		(169)		(135)
Income from continuing operations before income taxes	$	1,448	$	277	$	3,698	$	1,281

(1)Revenues from services on a disaggregated basis represent less than 1% of the U.S. Pharmaceutical segment’s total revenues, less than 36% of the RxTS segment’s total revenues, less than 3% of the Medical-Surgical Solutions segment’s total revenues, and less than 8% of the International segment’s total revenues. The International segment reflects foreign revenues. Revenues for the remaining three reportable segments are derived in the U.S.

(2)Segment operating profit (loss) 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 includes the following:

•cash receipts for the Company’s share of antitrust legal settlements of $129 million for the three and nine months ended December 31, 2022 and $46 million for the nine months ended December 31, 2021;

•a charge of $5 million and a credit of $33 million related to the last-in, first-out (“LIFO”) method of accounting for inventories for the three months ended December 31, 2022 and 2021, respectively, and credits of $31 million and $79 million for the nine months ended December 31, 2022 and 2021, respectively; and

•a gain of $142 million for the nine months ended December 31, 2022 related to the exit of one of the Company’s investments in equity securities in July 2022 for proceeds of $179 million, which is reflected within “Other income, net” in the Company’s Condensed Consolidated Statements of Operations.

(4)The Company’s Medical-Surgical Solutions segment’s operating profit for the nine months ended December 31, 2021 includes $164 million of inventory charges on certain personal protective equipment and other related products.

(5)The Company’s International segment’s operating profit (loss) includes the following:

•charges of $3 million and $240 million for the three and nine months ended December 31, 2022, respectively, and charges of $58 million and $400 million for the three and nine months ended December 31, 2021, respectively, to remeasure the assets and liabilities of the E.U. disposal group to fair value less costs to sell and, in fiscal 2022, to impair certain assets, including internal-use software that will not be utilized in the future, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•charges of $787 million for the three and nine months ended December 31, 2021 to remeasure the assets and liabilities of the U.K. disposal group to fair value less costs to sell, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;” and

•a gain of $59 million for the nine months ended December 31, 2021 related to the sale of the Company’s Canadian health benefit claims management and plan administrative services business.

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(UNAUDITED)

(6)Corporate expenses, net includes the following:

•credits of $34 million and $306 million for the three and nine months ended December 31, 2022, respectively, and credits of $32 million and charges of $117 million for the three and nine months ended December 31, 2021, respectively, primarily related to the effect of accumulated other comprehensive loss components from the E.U. disposal group, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•a gain of $126 million for the three and nine months ended December 31, 2022 related to a cash payment received for the early termination of a tax receivable agreement (“TRA”) exercised by Change Healthcare Inc. (“Change”) in October 2022 and was recorded within “Other income, net” in the Condensed Consolidated Statements of Operations. The Company was a party to a TRA entered into as part of the formation of the joint venture with Change, from which McKesson has since exited. The TRA generally required Change to pay McKesson 85% of the net cash tax savings realized, or deemed to be realized, by Change resulting from the amortization allocated to Change by the joint venture. In October 2022, Change exercised its right pursuant to the TRA to terminate the agreement;

•a gain of $97 million for the three and nine months ended December 31, 2022 from the termination of fixed interest rate swaps accounted for as cash flow hedges, as discussed in more detail in Financial Note 10, “Hedging Activities;”

•charges of $193 million for the nine months ended December 31, 2021, related to the Company’s estimated liability for opioid-related claims, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities;”

•charges of $9 million and $33 million for the three months ended December 31, 2022 and 2021, respectively, and charges of $37 million and $104 million for the nine months ended December 31, 2022 and 2021, respectively, of opioid-related costs, primarily litigation expenses;

•restructuring charges of $90 million for the nine months ended December 31, 2021 primarily due to the transition to a partial remote work model for certain employees; and

•net losses of $24 million and net gains of $104 million for the nine months ended December 31, 2022 and 2021, respectively, associated with certain of the Company’s equity investments.

(7)Loss on debt extinguishment for the nine months ended December 31, 2021 consists of a charge of $191 million related to the Company’s July 2021 tender offer to redeem a portion of its existing debt, as discussed in more detail in Financial Note 8, “Debt and Financing Activities.”

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

INDEX TO MANAGEMENT’S DISCUSSION AND ANALYSIS

Section	Page
General	42
Overview of our Business	42
Executive Summary	44
Trends and Uncertainties	45
Overview of Consolidated Results	49
Overview of Segment Results	54
Business Combinations	58
New Accounting Pronouncements	58
Financial Condition, Liquidity, and Capital Resources	59
Cautionary Notice About Forward-Looking Statements	63

GENERAL

Management’s discussion and analysis of financial condition and results of operations, referred to as the “Financial Review,” is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of McKesson Corporation together with its subsidiaries (collectively, the “Company,” “McKesson,” “we,” “our,” or “us,” and other similar pronouns). This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and accompanying financial notes in Item 1 of Part I of this Quarterly Report on Form 10-Q (“Quarterly Report”) and in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 previously filed with the Securities and Exchange Commission on May 9, 2022 (“2022 Annual Report”).

Our fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all references to a particular year shall mean our fiscal year.

Certain statements in this report constitute forward-looking statements. See “Cautionary Notice About Forward-Looking Statements” included in this Quarterly Report.

Overview of our Business:

We are a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. Our teams partner with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services to help make quality care more accessible and affordable.

We report our financial results in four reportable segments: U.S. Pharmaceutical, Prescription Technology Solutions (“RxTS”), Medical-Surgical Solutions, and International. Our 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 include the manner in which management evaluates the performance of the Company combined with the nature of individual business activities. We evaluate the performance of our operating segments on a number of measures, including revenues and operating profit (loss) before interest expense and income taxes.

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The following summarizes our four reportable segments. Refer to Financial Note 14, “Segments of Business,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information regarding our reportable segments.

•U.S. Pharmaceutical is a reportable segment that 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.

•Prescription Technology Solutions is a reportable segment that combines automation and our ability to navigate the healthcare ecosystem to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies to address patients’ medication access, affordability, and adherence challenges. RxTS also offers prescription price transparency, benefit insight, dispensing support services, third-party logistics and wholesale distribution support across various therapeutic categories and temperature ranges to biopharma customers throughout the product lifecycle.

•Medical-Surgical Solutions is a reportable segment that provides medical-surgical supply distribution, logistics, and other services to healthcare providers in the United States (“U.S.”).

•International is a reportable segment that includes our operations in Europe and Canada, bringing together non-U.S.-based drug distribution services, specialty pharmacy, retail, and infusion care services. During fiscal 2023, we completed transactions to sell certain of our businesses in the European Union (“E.U.”) in October 2022, and our retail and distribution businesses in the United Kingdom (“U.K.”) in April 2022. In the fourth quarter of fiscal 2022, we completed the sale of our Austrian business. These divestitures are further described in the “European Divestiture Activities” section below. Subsequent to these divestiture activities, our remaining European business operations are in Norway.

Business Acquisitions and Divestitures

Rx Savings Solutions, LLC

On November 1, 2022, we completed the acquisition of 100% of the shares of Rx Savings Solutions, LLC (“RxSS”), a privately-owned company headquartered in Overland Park, Kansas, to expand on connecting our biopharma and payer services to patients. RxSS is a prescription price transparency and benefit insight company that offers affordability and adherence solutions to health plans and employers. The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration based on RxSS’ operational and financial performance through calendar year 2025. The payment made upon closing was funded from cash on hand, and we recorded a liability of $92 million as of the acquisition date representing the estimated fair value of the contingent consideration. The financial results of RxSS are included in our RxTS segment as of the acquisition date. The transaction was accounted for as a business combination.

Oncology Research Business

On October 31, 2022, we completed a transaction with HCA Healthcare, Inc. (“HCA”) to form an oncology research business, combining our U.S. Oncology Research (“USOR”) and HCA’s Sarah Cannon Research Institute (“SCRI”) based in Nashville, Tennessee, to advance cancer care and increase access to oncology clinical research. Upon consummation of the transaction, we own a 51% controlling interest in the combined business, and the financial results are consolidated and reported within our U.S. Pharmaceutical segment as of the acquisition date. Transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA, which was funded from cash on hand. The transaction was accounted for as a business combination.

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European Divestiture Activities

On October 31, 2022, we completed the previously announced transaction to sell certain of our businesses in the E.U. located in France, Italy, Ireland, Portugal, Belgium, and Slovenia, along with our German headquarters and wound-care business, part of a shared services center in Lithuania, and our ownership stake in a joint venture in the Netherlands (“E.U. disposal group”) to the PHOENIX Group. As part of the transaction, we received cash proceeds of $892 million and divested net assets of $1.3 billion, including cash of $319 million, derecognized the carrying value of the noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) of $382 million, and released $153 million of net accumulated other comprehensive loss. For the three months ended December 31, 2022 and 2021, we recorded net gains of $31 million and charges of $26 million, respectively, and for the nine months ended December 31, 2022 and 2021, we recorded net gains of $66 million and charges of $517 million, respectively, in total operating expenses to remeasure the assets and liabilities of our E.U. disposal group to fair value less costs to sell. The fiscal 2022 charges also included impairments of certain internal-use software that will not be utilized in the future, prior to adjusting the E.U. disposal group as a whole, and a $230 million loss related to the accumulated other comprehensive income balances associated with our E.U. disposal group, driven by declines in the Euro.

On April 6, 2022, we completed the previously announced sale of our retail and distribution businesses in the U.K. (“U.K. disposal group”) to Aurelius Elephant Limited for a purchase price of £110 million (or, approximately $144 million), including certain adjustments. As part of the transaction, we divested net assets of $615 million and released $731 million of accumulated other comprehensive loss. During the three and nine months ended December 31, 2021, we recorded charges totaling $823 million within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations to remeasure the U.K. disposal group to fair value less costs to sell. The remeasurement adjustment included a $731 million loss related to the accumulated other comprehensive loss balances associated with the U.K. disposal group, driven by declines in the British pound sterling.

On January 31, 2022, we completed the sale of our Austrian business to Quadrifolia Management GmbH in a management-led buyout for a purchase price of €244 million (or, approximately $276 million), including certain adjustments. In the three and nine months ended December 31, 2021, we recognized a loss of $30 million to remeasure the assets and liabilities of the business to fair value less costs to sell. The charge was recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations.

As of December 31, 2022, we had no assets or liabilities related to these European divestiture activities that met the classification of held for sale in the Condensed Consolidated Balance Sheet.

Refer to Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information regarding these acquisition and divestiture transactions.

Executive Summary:

The following summary provides highlights and key factors that impacted our business, operating results, financial condition, and liquidity for the three months ended December 31, 2022.

•On November 1, 2022, we completed our acquisition of RxSS. The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration, as discussed in further detail in the “Business Acquisitions and Divestitures” section above;

•On October 31, 2022, we completed a transaction with HCA to form an oncology research business. The transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA as discussed in further detail in the “Business Acquisitions and Divestitures” section above;

•On October 31, 2022, we completed the sale of our E.U. disposal group and received net cash proceeds of $892 million, as discussed in further detail in the “Business Acquisitions and Divestitures” section above;

•In October 2022, we received $129 million related to our share of an antitrust settlement. This amount was recorded as a gain within “Cost of sales” in the Condensed Consolidated Statements of Operations within our U.S. Pharmaceutical segment;

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•In October 2022, we received $126 million due to early termination of our tax receivable agreement with Change Healthcare Inc. (“Change”). This amount was recorded as a gain within “Other income, net” in the Condensed Consolidated Statements of Operations within Corporate;

•During the third quarter of fiscal 2023, we terminated our $500 million notional fixed interest rate swaps and recognized a gain on the termination of $97 million in “Other income, net” for the three and nine months ended December 31, 2022 in the Condensed Consolidated Statements of Operations within Corporate;

•McKesson continues to play a leading role in the fight against the pandemic disease caused by the SARS-CoV-2 coronavirus (“COVID-19”). For a more in-depth discussion of how COVID-19 impacted our business, operations, financial results, and outlook, refer to the COVID-19 section of "Trends and Uncertainties" included below;

•For the three months ended December 31, 2022 compared to the prior year, revenues increased by 3%, gross profit decreased by 7%, total operating expenses decreased by 38%, and other income, net increased by $256 million. For the nine months ended December 31, 2022 compared to the prior year, revenues increased by 5%, gross profit decreased by 5%, total operating expenses decreased by 30%, and other income, net increased by 131%. Refer to the “Overview of Consolidated Results” section below for an analysis of these changes;

•On November 7, 2022, we entered into a syndicated $4 billion five-year senior unsecured credit facility (the “2022 Credit Facility”), which has a $3.6 billion aggregate sublimit of availability in Canadian dollars, British pound sterling and Euro. The 2022 Credit Facility matures in November 2027 and replaced our previous syndicated senior unsecured credit facility which was scheduled to mature in September 2024;

•Concurrent with our entry into the 2022 Credit Facility, on November 7, 2022, we entered into a Credit Agreement (the “2022 Term Loan Credit Facility”) which provides an unsecured delayed draw term loan facility up to $500 million. The 2022 Term Loan Credit Facility will mature in November 2025. We drew $500 million of cash on the term loan in December 2022 which can be used for general corporate purposes;

•On December 15, 2022, we retired our $400 million outstanding principal amount of 2.70% notes upon maturity. These notes were repaid using cash on hand;

•During the third quarter of fiscal 2023, we entered into cross-currency fixed-to-fixed interest rate swaps with total notional amounts of €1.1 billion to hedge changes in the fair value of our underlying Euro-denominated notes resulting from changes in benchmark interest rates and foreign currency exchange rates. In connection with the sale of the E.U. disposal group in October 2022, we de-designated our €1.1 billion of Euro-denominated notes as net investment hedges upon divestiture of the E.U. disposal group;

•Diluted earnings (loss) per common share from continuing operations attributable to McKesson Corporation increased to $7.65 from $(0.04) in the three months ended December 31, 2022 and increased to $19.32 from $4.81 in the nine months ended December 31, 2022 compared to the prior year, primarily driven by year-over-year favorability from higher remeasurement charges of the U.K. and E.U. disposal groups recorded in the prior year, and a lower share count due to the cumulative effect of share repurchases; and

•We returned $3.7 billion of cash to shareholders during the nine months ended December 31, 2022 through $3.5 billion of common stock repurchases both under accelerated share repurchase (“ASR”) programs as well as through open market transactions and $216 million of dividend payments. The total remaining authorization outstanding for repurchases of the Company’s common stock at December 31, 2022 was $3.8 billion.

Trends and Uncertainties:

Legislative Developments

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IR Act”). Among other provisions, the IR Act includes a 15% corporate minimum tax, a 1% excise tax on certain repurchases of an entity’s own common stock after December 31, 2022, and various drug pricing reforms. Based on our preliminary assessment, we do not currently expect the IR Act to have a material impact on our results of operations, financial position, or cash flows in the foreseeable future; however, we will continue to evaluate the full impact of these legislative changes.

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The Impact of Inflationary and Global Events

Our business and results of operations, financial condition, and liquidity are impacted by broad economic conditions including rising interest rates, inflation, increased competition for talent, and disruption of the supply chain, as well as by political or civil unrest or military action, including indirect results such as commodity price increases from the conflict between Russia and Ukraine (“Russo-Ukrainian War”). Cost inflation generally affects us by increasing transportation, operational, and other administrative costs associated with our business operations which we might not be able to fully pass along to our customers. Although it is difficult to predict the impact that these factors may have on our business in the future, they did not have a material impact on our results of operations, financial condition, or liquidity for the three and nine months ended December 31, 2022.

COVID-19

COVID-19 has continued to evolve since it was declared a global pandemic by the World Health Organization on March 11, 2020. We continue to evaluate the nature and extent of the ongoing impacts of COVID-19 on our business, operations, and financial results. Refer to Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II of our 2022 Annual Report for additional disclosure of trends and uncertainties due to COVID-19. The disclosures below include significant updates that occurred during the first nine months of fiscal 2023 and the financial impacts compared to fiscal 2022.

Our Role in the Distribution of COVID-19 Vaccines and Ancillary Supply Kits

As a diversified healthcare services leader, we are well positioned to respond to the COVID-19 pandemic in the U.S., Canada, and, Europe, prior to the divestiture of the E.U. disposal group. We work closely with national and local governments, agencies, and industry partners to ensure that available supplies, including personal protective equipment (“PPE”), and medicine reach our customers and their patients.

In December 2020, we began distributing certain COVID-19 vaccines in support of the U.S. government through a contract with the Centers for Disease Control and Prevention (“CDC”). In July 2022, we renewed our relationship with the CDC, under which we serve as a centralized distributor of COVID-19 vaccines and ancillary supplies used to administer vaccines. The results of operations related to our vaccine distribution are reflected in our U.S. Pharmaceutical segment. We operate under a contract to manage the assembly, storage, and distribution of ancillary supply kits as directed by the Department of Health and Human Services (“HHS”), the results of which are reflected in our Medical-Surgical Solutions segment.

McKesson Canada and McKesson Europe, prior to the divestiture of the E.U. disposal group, support governments and public health entities through distributing COVID-19 vaccines and administering them in pharmacies as well as distributing COVID-19 tests and certain PPE.

Trends in our Business

We observed growth in prescription volumes within our U.S. Pharmaceutical segment and stability in patient visits in our primary care business within our Medical-Surgical Solutions segment during the three and nine months ended December 31, 2022 compared to the same prior year periods. The contributions from COVID-19 tests and our vaccine and related kitting distribution programs have decreased year over year primarily driven by lower demand.

Impacts to our Supply Chain

We continue to monitor and address the COVID-19 pandemic impacts on our supply chain. Although the availability of various products is dependent on our suppliers, their locations, and the extent to which they are impacted by the COVID-19 pandemic, we proactively work with manufacturers, industry partners, and government agencies to meet the needs of our customers. During the first nine months of fiscal 2023, we had an increase in supply chain costs primarily related to transportation and labor; however, this did not materially impact our results of operations for the three and nine months ended December 31, 2022. As potential shortages or disruptions of any products are identified, we address supply continuity which includes securing additional products when available, sourcing back-up products when needed, and following allocation procedures to maintain and protect supply as much as possible. We utilize business continuity action planning to maintain and protect operations across all locations and facilities.

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Impact to our Results of Operations, Financial Condition, and Liquidity

For the three months ended December 31, 2022, COVID-19 tests and the kitting and distribution of ancillary supplies for COVID-19 vaccines in our Medical-Surgical Solutions segment contributed approximately $211 million and $72 million to segment revenues and segment operating profit, respectively, and for the three months ended December 31, 2021, contributed approximately $544 million and $118 million to segment revenues and segment operating profit, respectively. For the nine months ended December 31, 2022, the contribution was approximately $639 million and $186 million to segment revenues and segment operating profit, respectively, and for the nine months ended December 31, 2021, the contribution was approximately $1.4 billion to segment revenues and, including total inventory charges that are further described below, increased our segment operating profit by approximately $121 million.

The distribution of COVID-19 vaccines in our U.S. Pharmaceutical segment decreased during the third quarter and first nine months of fiscal 2023 when compared to the same prior year periods. The contribution was less than 10% to segment operating profit for each of the three and nine months ended December 31, 2022 and 2021. The financial impact from our COVID-19 response efforts in the International segment during the three and nine months ended December 31, 2022 and 2021 was not material to our consolidated or segment operating results.

Additionally, we recorded inventory charges totaling $164 million on certain PPE and other related products in our Medical-Surgical Solutions segment during the nine months ended December 31, 2021. We have taken measures to mitigate risks for market price volatility and changes to anticipated customer demand that may require additional write-downs in future periods of other PPE and related product categories.

Excluding the prior year inventory charges on certain PPE and other related products for the nine months ended December 31, 2021 mentioned above, these COVID-19 related items had a net unfavorable impact on consolidated income from continuing operations before income taxes for the three and nine months ended December 31, 2022 compared to the same prior year periods, primarily driven by lower demand for COVID-19 tests as well as COVID-19 vaccines and related ancillary supply kits.

During the three and nine months ended December 31, 2022 and 2021, we maintained appropriate labor and overall vendor supply levels and experienced no material impacts to our liquidity or net working capital due to the COVID-19 pandemic.

Opioid-Related Litigation and Claims

We are a defendant in many legal proceedings asserting claims related to the distribution of controlled substances (opioids) in federal and state courts throughout the U.S., and in Puerto Rico and Canada. The plaintiffs in these actions have included state attorneys general, county and municipal governments, tribal nations, hospitals, health and welfare funds, third-party payors, and individuals.

The Company and two other national pharmaceutical distributors (collectively “Distributors”) settled with 46 of 49 eligible states and their participating subdivisions, as well as the District of Columbia and all eligible territories (collectively, “Settling Governmental Entities”) effective on April 2, 2022 (“Settlement”). Under the Settlement, the Distributors will pay the Settling Governmental Entities up to approximately $19.5 billion over 18 years, with up to approximately $7.4 billion to be paid by the Company for its 38.1% portion. Consent judgments have been entered in all participating states and territories, and approximately 2,300 cases have been dismissed pursuant to the Settlement. A minimum of 85% of the Settlement 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 is payable over a shorter time period. Under the Settlement, the Distributors will establish a clearinghouse to consolidate their controlled-substance distribution data, which will be available to the settling U.S. states to use as part of their anti-diversion efforts. The Settlement provides that the Distributors do not admit liability or wrongdoing and do not waive any defenses.

The Settlement only addresses the claims of attorneys general of U.S. states and territories and political subdivisions in participating states and territories. Governmental entities not participating in the Settlement may continue to pursue their claims. The states of Alabama, Oklahoma and Washington chose not to participate in the Settlement, but, since the announcement of the Settlement, we have reached separate agreements with the attorneys general of these states to settle the claims of the states and their subdivisions. The Distributors previously settled with the Cherokee Nation and reached an agreement to settle the claims of federally recognized Native American Tribes.

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Our total estimated liability for opioid-related claims was $7.2 billion as of December 31, 2022, of which $598 million was included in “Other accrued liabilities” for the amount estimated to be paid within the next twelve months, and the remaining liability was included in “Long-term litigation liabilities” in our Condensed Consolidated Balance Sheet.

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 four cases brought in Canada (three by governmental or tribal entities and one by an individual). These claims, and those of private individuals or entities generally, are not included in the Settlement 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.

Because of the many uncertainties associated with ongoing opioid-related litigation matters, we are not able to reasonably estimate the upper or lower ends of the range of ultimate possible loss for all opioid-related litigation matters. In light of the uncertainty, the amount of any ultimate loss may differ materially from the amount accrued.

Notwithstanding the Settlement, we also continue to prepare for trial in pending matters. We believe that we have valid defenses to the claims pending against us and, absent an acceptable settlement, intend to vigorously defend against all such claims. An adverse judgment or negotiated resolution in any of these matters could have a material adverse impact on our financial position, cash flows or liquidity, or results of operations. Refer to Financial Note 12, “Commitments and Contingent Liabilities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

Risks and Forward-Looking Information

Recent events such as the COVID-19 pandemic, the Russo-Ukrainian War, and associated economic impacts have disrupted the global economy and exacerbated uncertainties inherent in estimates, judgments, and assumptions used in our forecasts. We have experienced and may experience difficulties in sourcing products and changes in costs and pricing due to the effects of these events on supply chains. Our participation in government-sponsored vaccination distribution and related ancillary supply kit programs with the CDC and HHS exposes us to various uncertainties, such as the scope and length of related agreements and the amount of COVID-19 vaccines and ancillary supply kits that we are contracted to distribute, which could materially impact our future financial performance. Additionally, we periodically review our intangible and other long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Key assumptions and estimates about future values in our impairment assessments can be affected by a variety of factors, including the impacts of socio-political events on industry and economic trends as well as on our business strategy and internal forecasts. Impairment charges have been recognized in prior periods due to the impact from the COVID-19 pandemic. Material changes to key assumptions and estimates could decrease the projected cash flows or increase the discount rates that could potentially result in future impairment charges. Refer to Item 1A - Risk Factors in Part I of our 2022 Annual Report for a discussion of risk factors that could cause our actual results to differ materially from our projections.

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RESULTS OF OPERATIONS

Overview of Consolidated Results:

(Dollars in millions, except per share data)	Three Months Ended December 31,								Nine Months Ended December 31,
	2022			2021			Change		2022			2021			Change
Revenues	$	70,490		$	68,614		3	%	$	207,801		$	197,864		5	%
Gross profit	3,174			3,428			(7)		9,292			9,812			(5)
Gross profit margin	4.50		%	5.00		%	(50)	bp	4.47		%	4.96		%	(49)	bp
Total operating expenses	$	(1,933)		$	(3,130)		(38)	%	$	(5,891)		$	(8,407)		(30)	%
Total operating expenses as a percentage of revenues	2.74		%	4.56		%	(182)	bp	2.83		%	4.25		%	(142)	bp
Other income, net	$	276		$	20		—	%	$	466		$	202		131	%
Loss on debt extinguishment	—			—			—		—			(191)			(100)
Interest expense	(69)			(41)			68		(169)			(135)			25
Income from continuing operations before income taxes	1,448			277			423		3,698			1,281			189
Income tax expense	(329)			(238)			38		(799)			(396)			102
Reported income tax rate	(22.7)		%	(85.9)		%	6,320	bp	(21.6)		%	(30.9)		%	930	bp
Income from continuing operations	$	1,119		$	39		—	%	$	2,899		$	885		228	%
Income (loss) from discontinued operations, net of tax	1			—			—		(3)			(3)			—
Net income	1,120			39			—		2,896			882			228
Net income attributable to noncontrolling interests	(41)			(46)			(11)		(123)			(136)			(10)
Net income (loss) attributable to McKesson Corporation	$	1,079		$	(7)		—	%	$	2,773		$	746		272	%
Diluted earnings (loss) per common share attributable to McKesson Corporation
Continuing operations	$	7.65		$	(0.04)		—	%	$	19.32		$	4.81		302	%
Discontinued operations	0.01			—			—		(0.02)			(0.02)			—
Total	$	7.66		$	(0.04)		—	%	$	19.30		$	4.79		303	%
Weighted-average diluted common shares outstanding	141.0			151.6			(7)	%	143.7			155.8			(8)	%

All percentage changes displayed above which are not meaningful are displayed as zero percent.

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Revenues

Revenues increased for the three and nine months ended December 31, 2022 compared to the same prior year periods largely due to market growth in our U.S. Pharmaceutical segment. Market growth includes growing drug utilization, price increases, and newly launched products, partially offset by price deflation associated with branded to generic drug conversion. This revenue growth was partially offset by lower revenues in our International segment driven by the completed divestitures of our U.K. and E.U. disposal groups, our Austrian business, and unfavorable effects of foreign currency exchange fluctuations.

Gross Profit

Gross profit decreased for the three and nine months ended December 31, 2022 compared to the same prior year periods primarily in our International segment driven by the completed divestitures of our U.K. and E.U. disposal groups, our Austrian business, and unfavorable effects of foreign currency exchange fluctuations, partially offset by growth of specialty pharmaceuticals in our U.S. Pharmaceutical segment. For the nine months ended December 31, 2022, the decrease was partially offset by an increase in gross profit in our Medical-Surgical Solutions segment due to prior year inventory charges on certain PPE and other related products and favorability in our primary care business. Gross profit for the nine months ended December 31, 2022 was also favorably impacted by increased volume with new and existing customers in our RxTS segment.

For the three and nine months ended December 31, 2022, we recognized a gain of $129 million and for the nine months ended December 31, 2021, we recognized a gain of $46 million related to our share of antitrust settlements. We recognized these amounts within "Cost of sales" in the Condensed Consolidated Statement of Operations within our U.S. Pharmaceutical segment.

A last-in, first-out (“LIFO”) inventory charge of $5 million and a credit of $33 million were recognized during the three months ended December 31, 2022 and 2021, and credits of $31 million and $79 million were recognized during the nine months ended December 31, 2022 and 2021, respectively. LIFO credits were lower in the first nine months of fiscal 2023 compared to the same prior year period primarily due to higher expected brand inflation. Our U.S. Pharmaceutical business uses the LIFO method of accounting for the majority of its inventories, which results in cost of sales that more closely reflects replacement cost than under other accounting methods. The business’ practice is to pass on to customers published price changes from suppliers. Manufacturers generally provide us with price protection, which limits price related inventory losses. A LIFO charge is recognized when the net effect of price increases on pharmaceutical and non-pharmaceutical products held in inventory exceeds the impact of price declines, including the effect of branded pharmaceutical products that have lost market exclusivity. A LIFO credit is recognized when the net effect of price declines exceeds the impact of price increases on pharmaceutical and non-pharmaceutical products held in inventory. Our quarterly LIFO adjustment is based on our estimates of the annual LIFO credit which is impacted by expected changes in year-end inventory quantities, product mix, and manufacturer pricing practices, which may be influenced by market and other external factors. Changes to any of the above factors could have a material impact to our annual LIFO credit. The actual valuation of inventory under the LIFO method is calculated at the end of the fiscal year.

Total Operating Expenses

A summary of the components of our total operating expenses for the three and nine months ended December 31, 2022 and 2021 is as follows:

•Selling, distribution, general, and administrative expenses (“SDG&A”): SDG&A consists of personnel costs, transportation costs, depreciation and amortization, lease costs, professional fee expenses, administrative expenses, remeasurement charges to the lower of carrying value or fair value less costs to sell, and other general charges.

•Claims and litigation charges, net: These charges include adjustments for estimated probable settlements related to our controlled substance monitoring and reporting, and opioid-related claims, as well as any applicable income items or credit adjustments due to subsequent changes in estimates. Legal fees to defend claims, which are expensed as incurred, are included within SDG&A.

•Restructuring, impairment, and related charges, net: Restructuring charges are incurred for programs in which we change our operations, the scope of a business undertaken by our business units, or the manner in which that business is conducted, as well as long-lived asset impairments.

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	Three Months Ended December 31,								Nine Months Ended December 31,
(Dollars in millions)	2022			2021			Change		2022			2021			Change
Selling, distribution, general, and administrative expenses	$	1,903		$	3,105		(39)	%	$	5,812		$	8,006		(27)	%
Claims and litigation charges, net	(1)			7			114		(5)			193			103
Restructuring, impairment, and related charges, net	31			18			72		84			208			(60)
Total operating expenses	$	1,933		$	3,130		(38)	%	$	5,891		$	8,407		(30)	%
Percent of revenues	2.74		%	4.56		%	(182)	bp	2.83		%	4.25		%	(142)	bp

All percentage changes displayed above which are not meaningful are displayed as zero percent.

bp - basis points

For the three and nine months ended December 31, 2022, total operating expenses and total operating expenses as a percentage of revenues decreased compared to the same prior year periods. Total operating expenses were impacted by the following significant items:

•SDG&A for the three and nine months ended December 31, 2022 reflects lower operating expenses due to the completed divestitures of our U.K. and E.U. disposal groups in April 2022 and October 2022, respectively;

•SDG&A for the three and nine months ended December 31, 2022 includes gains of $31 million and $66 million, respectively, and for the three and nine months ended December 31, 2021 includes charges of $26 million and $517 million, respectively, to remeasure the assets and liabilities of our E.U. disposal group to fair value less costs to sell. The charges for the nine months ended December 31, 2021 include a $230 million loss related to the accumulated other comprehensive income balances associated with the E.U. disposal group, driven by declines in the Euro;

•SDG&A for the three and nine months ended December 31, 2021 includes charges totaling $823 million to remeasure the assets and liabilities of our U.K. disposal group to fair value less costs to sell. The remeasurement adjustment includes a $731 million loss related to the accumulated other comprehensive income balances associated with the U.K. disposal group, driven by declines in the British pound sterling;

•SDG&A for the for the nine months ended December 31, 2021 includes a gain of $59 million related to the sale of our Canadian health benefit claims management and plan administrative services business;

•SDG&A for the three months ended December 31, 2022 and 2021 includes charges of $9 million and $33 million, respectively, and for the nine months ended December 31, 2022 and 2021 includes charges of $37 million and $104 million, respectively, of opioid-related costs, primarily litigation expenses;

•Claims and litigation charges, net for fiscal 2023 was not material and for the three and nine months ended December 31, 2021 includes charges of $7 million and $193 million, respectively, related to our estimated liability for opioid-related claims of government entities, including Native American tribes. Refer to the Opioid-Related Litigation and Claims section of "Trends and Uncertainties" for further discussion;

•Restructuring, impairment, and related charges, net for fiscal 2023 was not material, and for the three and nine months ended December 31, 2021 includes charges of $5 million and $115 million, respectively, related to our transition to a partial remote work model approved during the first quarter of fiscal 2022 as further described below; and

•Total operating expenses were favorably impacted by foreign currency exchange fluctuations for the three and nine months ended December 31, 2022.

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Goodwill Impairment

We evaluate goodwill for impairment on an annual basis and at an interim date, if indicators of potential impairment exist. During the first quarter of fiscal 2023, we voluntarily changed our annual goodwill impairment testing date from October 1st to April 1st to align with the change in timing of our annual long-term planning process. This change was not material to our consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge. Refer to Financial Note 7, “Goodwill and Intangible Assets, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

The annual impairment testing performed in fiscal 2023 and fiscal 2022 did not indicate any impairment of goodwill and no goodwill impairment charges were recorded during the three and nine months ended December 31, 2022 and 2021. However, other risks, expenses, and future developments, such as additional government actions, increased regulatory uncertainty, and material changes in key market assumptions limit our ability to estimate projected cash flows, which could adversely affect the fair value of various reporting units in future periods, including our McKesson Canada reporting unit within our International segment, where the risk of a material goodwill impairment is higher than other reporting units.

Restructuring Initiatives and Long-Lived Asset Impairments

We recorded restructuring, impairment, and related charges of $31 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $84 million and $208 million for the nine months ended December 31, 2022 and 2021, respectively. These charges were included in “Restructuring, impairment, and related charges, net” in the Condensed Consolidated Statements of Operations.

During the first quarter of fiscal 2022, we approved an initiative to increase operational efficiencies and flexibility by transitioning to a partial remote work model for certain employees. This initiative primarily included the rationalization of our office space in North America. Where we ceased using office space, we exited the portion of the facility no longer used. We also retained and repurposed certain other office locations. We recorded charges of $5 million and $115 million for the three and nine months ended December 31, 2021, respectively, primarily related to lease right-of-use and other long-lived asset impairments, lease exit costs, and accelerated depreciation and amortization. This initiative was substantially completed in fiscal 2022 and remaining costs we recorded and expect to record under this initiative are not material.

Refer to Financial Note 3, “Restructuring, Impairment, and Related Charges, Net,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information on our restructuring initiatives.

Other Income, Net

Other income, net increased for the three and nine months ended December 31, 2022 compared to the same prior year periods primarily due to:

•a gain in the third quarter of fiscal 2023 of $126 million due to the cash received for the early termination of a tax receivable agreement (“TRA”) entered into as part of the formation of the joint venture with Change, from which McKesson has now exited. This gain was recorded within Corporate expenses, net;

•a gain in the third quarter of fiscal 2023 of $97 million from the termination of fixed interest rate swaps accounted for as cash flow hedges within Corporate expenses, net;

•a gain in the second quarter of fiscal 2023 of $142 million related to the exit of one of our investments in equity securities held within our U.S. Pharmaceutical segment; and

•a favorable impact to interest income from higher interest rates on certain of our cash balances compared to the prior year periods.

These gains were partially offset by prior year net gains from our equity investments held within Corporate of $104 million recognized for the nine months ended December 31, 2021 compared to net losses of $24 million recognized for the nine months ended December 31, 2022. Refer to Note 11, “Fair Value Measurements,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

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Loss on Debt Extinguishment

The loss on debt extinguishment recorded for the nine months ended December 31, 2021 of $191 million includes premiums of $182 million as well as the write-off of unamortized debt issuance costs and transaction fees incurred of $9 million, and was driven by our July 2021 tender offer to redeem a portion of our then-existing debt. Refer to Financial Note 8, “Debt and Financing Activities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

Interest Expense

Interest expense increased for the three and nine months ended December 31, 2022 compared to the same prior year periods primarily due to the unfavorable impact of higher interest rates, and unfavorable impacts from changes in our derivative portfolio as a result of our European divestiture activities. For the nine months ended December 31, 2022, this was partially offset by a decrease in interest expense driven by lower existing debt due to our tender offer in late July 2021. Interest expense may fluctuate based on timing, amounts, and interest rates of term debt repaid and new term debt issued, as well as amounts incurred associated with financing fees.

Income Tax Expense

For the three months ended December 31, 2022 and 2021, we recorded income tax expense of $329 million and $238 million, respectively. For the nine months ended December 31, 2022 and 2021, we recorded income tax expense of $799 million and $396 million, respectively. Our reported income tax rates were 22.7% and 85.9% for the three months ended December 31, 2022 and 2021, respectively, and 21.6% and 30.9% for the nine months ended December 31, 2022 and 2021, respectively. Fluctuations in our reported income tax rates are primarily due to non-cash charges related to remeasuring the value of our E.U. and U.K. disposal groups held for sale to fair value less costs to sell in fiscal 2022, changes in our business mix of earnings between various taxing jurisdictions, and discrete tax benefits recognized in the quarters. Refer to Financial Note 4, “Income Taxes,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests for the three and nine months ended December 31, 2022 and 2021 primarily represents ClarusONE Sourcing Services LLP, Vantage Oncology Holdings, LLC, and the accrual of the annual recurring compensation amount of €0.83 per McKesson Europe share that McKesson was obligated to pay to the noncontrolling shareholders of McKesson Europe under the December 2014 domination and profit and loss transfer agreement (the “Domination Agreement”) through its divestiture in October 2022. For the third quarter of fiscal 2023, noncontrolling interests also includes the proportionate results of our newly formed oncology research business from its acquisition date. Noncontrolling interests with redemption features, such as put rights, that are not solely within our control are considered redeemable noncontrolling interests. Refer to the “Selected Measures of Liquidity and Capital Resources” section of this Financial Review and Financial Note 5, “Redeemable Noncontrolling Interests and Noncontrolling Interests,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for more information on changes to our redeemable and noncontrolling interests during the third quarter of fiscal 2023 and the first quarter of fiscal 2022.

Net Income (Loss) Attributable to McKesson Corporation

Net income (loss) attributable to McKesson Corporation was $1.1 billion and $(7) million for the three months ended December 31, 2022 and 2021, respectively, and $2.8 billion and $746 million for the nine months ended December 31, 2022 and 2021, respectively. Diluted earnings (loss) per common share attributable to McKesson Corporation was $7.66 and $(0.04) for the three months ended December 31, 2022 and 2021, respectively, and $19.30 and $4.79 for the nine months ended December 31, 2022 and 2021, respectively. Diluted loss per common share attributable to McKesson Corporation for the three months ended December 31, 2021 was calculated excluding dilutive securities from the denominator due to their anti-dilutive effects.

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Weighted-Average Diluted Common Shares Outstanding

Diluted earnings per common share were calculated based on a weighted-average number of shares outstanding of 141.0 million and 151.6 million for the three months ended December 31, 2022 and 2021, respectively, and 143.7 million and 155.8 million for the nine months ended December 31, 2022 and 2021, respectively. Weighted-average diluted shares outstanding for the three and nine months ended December 31, 2022 decreased from the same prior year periods primarily due to the cumulative effect of share repurchases.

Overview of Segment Results:

Segment Revenues:

	Three Months Ended December 31,						Nine Months Ended December 31,
(Dollars in millions)	2022		2021		Change		2022		2021		Change
Segment revenues
U.S. Pharmaceutical	$	61,934	$	55,041	13	%	$	178,940	$	158,471	13	%
Prescription Technology Solutions	1,121		1,031		9		3,205		2,844		13
Medical-Surgical Solutions	2,986		3,082		(3)		8,421		8,734		(4)
International	4,449		9,460		(53)		17,235		27,815		(38)
Total revenues	$	70,490	$	68,614	3	%	$	207,801	$	197,864	5	%

U.S. Pharmaceutical

Three Months Ended December 31, 2022 vs. 2021

U.S. Pharmaceutical revenues for the three months ended December 31, 2022 increased $6.9 billion or 13% compared to the same prior year period. Within the segment, sales to pharmacies and institutional healthcare providers increased $6.6 billion and sales to specialty practices and other, which reflects the results for the distribution of COVID-19 vaccines, increased $305 million. Overall, these increases were primarily due to market growth, including growth in specialty pharmaceuticals driven by higher volumes from retail national account customers, higher volumes from other existing customers, and branded pharmaceutical price increases, partially offset by branded to generic drug conversions and unfavorability from one less sales day this quarter compared to the same prior year period.

Nine Months Ended December 31, 2022 vs. 2021

U.S. Pharmaceutical revenues for the nine months ended December 31, 2022 increased $20.5 billion or 13% compared to the same prior year period. Within the segment, sales to pharmacies and institutional healthcare providers increased $19.6 billion and sales to specialty practices and other, which reflects the results for the distribution of COVID-19 vaccines, increased $855 million. Overall, these increases were primarily due to market growth, including growth in specialty pharmaceuticals driven by higher volumes from retail national account customers, higher volumes from other existing customers, and branded pharmaceutical price increases, partially offset by branded to generic drug conversions.

Prescription Technology Solutions

Three Months Ended December 31, 2022 vs. 2021

RxTS revenues for the three months ended December 31, 2022 increased $90 million or 9% compared to the same prior year period due to increased volumes with new and existing customers primarily in our third-party logistics and wholesale distribution services as well as higher technology service revenues.

Nine Months Ended December 31, 2022 vs. 2021

RxTS revenues for the nine months ended December 31, 2022 increased $361 million or 13% compared to the same prior year period due to increased volumes with new and existing customers primarily in our third-party logistics and wholesale distribution services as well as higher technology service revenues.

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Medical-Surgical Solutions

Three Months Ended December 31, 2022 vs. 2021

Medical-Surgical Solutions revenues for the three months ended December 31, 2022 decreased $96 million or 3% compared to the same prior year period. Within the segment, sales to primary care and extended care customers decreased $30 million and $5 million, respectively. The decrease in our primary care business was driven by lower sales of COVID-19 tests, partially offset by underlying core business growth. Other sales declined $61 million driven by lower contribution from the kitting and distribution of ancillary supplies used to administer COVID-19 vaccines.

Nine Months Ended December 31, 2022 vs. 2021

Medical-Surgical Solutions revenues for the nine months ended December 31, 2022 decreased $313 million or 4% compared to the same prior year period. Within the segment, sales to primary care and extended care customers decreased $170 million and $3 million, respectively. The decrease in our primary care business was driven by lower sales of COVID-19 tests, partially offset by underlying core business growth including higher sales of flu test kits. Other sales declined $140 million driven by lower contribution from the kitting and distribution of ancillary supplies used to administer COVID-19 vaccines.

International

Three Months Ended December 31, 2022 vs. 2021

International revenues for the three months ended December 31, 2022 decreased $5.0 billion or 53% compared to the same prior year period. Within the segment, foreign currency exchange fluctuations were unfavorable by $461 million and sales in Europe declined by $4.9 billion, partially offset by increased sales in Canada of $318 million. Excluding the unfavorable effects of foreign currency exchange fluctuations, revenues for this segment decreased 48% largely due to the completed divestitures of our U.K. and E.U. disposal groups, and Austrian business.

Nine Months Ended December 31, 2022 vs. 2021

International revenues for the nine months ended December 31, 2022 decreased $10.6 billion or 38% compared to the same prior year period. Within the segment, foreign currency exchange fluctuations were unfavorable by $1.7 billion and sales in Europe declined by $9.6 billion, partially offset by increased sales in Canada of $718 million. Excluding the unfavorable effects of foreign currency exchange fluctuations, revenues for this segment decreased 32% largely due to the completed divestitures of our U.K. and E.U. disposal groups, and Austrian business.

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Segment Operating Profit (Loss) and Corporate Expenses, Net:

	Three Months Ended December 31,								Nine Months Ended December 31,
(Dollars in millions)	2022			2021			Change		2022			2021			Change
Segment operating profit (loss) (1)
U.S. Pharmaceutical (2)	$	850		$	744		14	%	$	2,442		$	2,186		12	%
Prescription Technology Solutions	136			129			5		400			361			11
Medical-Surgical Solutions (3)	328			308			6		883			679			30
International (4)	136			(668)			120		93			(761)			112
Subtotal	1,450			513			183		3,818			2,465			55
Corporate expenses, net (5)	67			(195)			134		49			(858)			106
Loss on debt extinguishment (6)	—			—			—		—			(191)			(100)
Interest expense	(69)			(41)			68		(169)			(135)			25
Income from continuing operations before income taxes	$	1,448		$	277		423	%	$	3,698		$	1,281		189	%
Segment operating profit (loss) margin
U.S. Pharmaceutical	1.37		%	1.35		%	2	bp	1.36		%	1.38		%	(2)	bp
Prescription Technology Solutions	12.13			12.51			(38)		12.48			12.69			(21)
Medical-Surgical Solutions	10.98			9.99			99		10.49			7.77			272
International	3.06			(7.06)			1,012		0.54			(2.74)			328

All percentage changes displayed above which are not meaningful are displayed as zero percent.

bp - basis points

(1)Segment operating profit (loss) includes gross profit, net of total operating expenses, as well as other income, net, for our reportable segments.

(2)Operating profit for our U.S. Pharmaceutical segment includes the following:

•cash receipts for our share of antitrust legal settlements of $129 million for the three and nine months ended December 31, 2022 and $46 million for the nine months ended December 31, 2021;

•a charge related to the LIFO method of accounting for inventories of $5 million and a credit of $33 million for the three months ended December 31, 2022 and 2021, respectively, and credits of $31 million and $79 million for the nine months ended December 31, 2022 and 2021, respectively; and

•a gain of $142 million related to the exit of one of our investments in equity securities in July 2022 for the nine months ended December 31, 2022.

(3)Operating profit for our Medical-Surgical Solutions segment for the nine months ended December 31, 2021 includes $164 million of inventory charges on certain PPE and other related products.

(4)Operating profit for our International segment includes the following:

•charges of $3 million and $240 million for the three and nine months ended December 31, 2022, respectively, and charges of $58 million and $400 million for the three and nine months ended December 31, 2021, respectively, to remeasure the assets and liabilities of our E.U. disposal group to fair value less costs to sell and, in fiscal 2022, to impair certain assets, including internal-use software that will not be utilized in the future;

•charges of $787 million for the three and nine months ended December 31, 2021 to remeasure the assets and liabilities of our U.K. disposal group to fair value less costs to sell; and

•a gain of $59 million for the nine months ended December 31, 2021 related to the sale of our Canadian health benefit claims management and plan administrative services business.

(5)Corporate expenses, net includes the following:

•credits of $34 million and $306 million for the three and nine months ended December 31, 2022, respectively, and a credit of $32 million and a charge of $117 million for the three and nine months ended December 31, 2021, respectively, primarily related to the effect of accumulated other comprehensive loss components from our E.U. disposal group;

•a gain of $126 million for the three and nine months ended December 31, 2022 related to the cash payment received for the early termination of our TRA with Change;

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•a gain of $97 million for the three and nine months ended December 31, 2022 from the termination of fixed interest rate swaps accounted for as cash flow hedges;

•a net loss of $24 million and a net gain of $104 million for the nine months ended December 31, 2022 and 2021, respectively, associated with certain of our equity investments;

•charges of $9 million and $33 million for the three months ended December 31, 2022 and 2021, respectively, and charges of $37 million and $104 million for the nine months ended December 31, 2022 and 2021, respectively, of opioid-related costs, primarily litigation expenses;

•charges of $193 million for the nine months ended December 31, 2021 related to our estimated liability for opioid-related claims; and

•restructuring charges of $90 million for the nine months ended December 31, 2021 primarily due to the transition to a partial remote work model for certain employees.

(6)Loss on debt extinguishment for the nine months ended December 31, 2021 consists of a charge of $191 million related to our July 2021 tender offer to redeem a portion of our existing debt.

U.S. Pharmaceutical

Three Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the three months ended December 31, 2022 compared to the same prior year period primarily due to an increase in net cash proceeds received of $129 million representing our share of antitrust legal settlements, and growth in specialty pharmaceuticals, partially offset by a decrease in our LIFO adjustment from a credit in the prior year period to a charge in the third quarter of 2023.

Nine Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the nine months ended December 31, 2022 compared to the same prior year period primarily due to a gain recognized from the exit of one of our investments in equity securities in July 2022, growth in specialty pharmaceuticals, and cash proceeds received representing our share of antitrust legal settlements. This was partially offset by a decrease in our LIFO credits, and a decrease in the contribution from our COVID-19 vaccine distribution program.

Prescription Technology Solutions

Three Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the three months ended December 31, 2022 compared to the same prior year period primarily driven by increased volumes with new and existing customers due to growth in our access, affordability, and adherence solutions.

Nine Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the nine months ended December 31, 2022 compared to the same prior year period primarily driven by increased volumes with new and existing customers due to growth in our access, affordability, and adherence solutions.

Medical-Surgical Solutions

Three Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the three months ended December 31, 2022 compared to the same prior year period due to favorability in our primary care business, partially offset by lower sales of COVID-19 tests, and a lower contribution from kitting and distribution of ancillary supplies for COVID-19 vaccines.

Nine Months Ended December 31, 2022 vs. 2021

Operating profit for this segment increased for the nine months ended December 31, 2022 compared to the same prior year period largely due to favorability in our core primary care business, and prior year inventory charges on certain PPE and other related products, partially offset by lower sales of COVID-19 tests, and a lower contribution from kitting and distribution of ancillary supplies for COVID-19 vaccines.

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International

Three Months Ended December 31, 2022 vs. 2021

Operating profit for this segment for the three months ended December 31, 2022 compared to operating loss in the same prior year period was largely due to the favorable impact of our divestitures of the U.K. and E.U. disposal groups and our Austrian business, primarily as a result of higher remeasurement charges recorded in the prior year.

Nine Months Ended December 31, 2022 vs. 2021

Operating profit for this segment for the nine months ended December 31, 2022 compared to operating loss in the same prior year period was due to the favorable impact of our divestitures of the U.K. and E.U. disposal groups and our Austrian business, primarily as a result of higher remeasurement charges recorded in the prior year, as well as lower restructuring expenses due to optimization programs in Canada. This was partially offset by a gain recognized in the prior year from the sale of our Canadian health benefit claims management and plan administrative services business.

Corporate Expenses, Net

Three Months Ended December 31, 2022 vs. 2021

Corporate expenses, net decreased for the three months ended December 31, 2022 compared to the same prior year period primarily due to gains of $126 million related to the cash payment received for the early termination of our TRA with Change and $97 million from the termination of fixed interest rate swaps accounted for as cash flow hedges.

Nine Months Ended December 31, 2022 vs. 2021

Corporate expenses, net decreased for the nine months ended December 31, 2022 compared to the same prior year period primarily due to:

•year-over-year favorability from the fair value remeasurement of our E.U. and U.K. disposal groups;

•lower charges related to our estimated liability for opioid-related claims;

•a gain related to the cash payment received for the early termination of our TRA with Change;

•a gain related to the termination of fixed interest rate swaps accounted for as cash flow hedges;

•a decrease in opioid-related costs, primarily litigation expenses;

•prior year restructuring charges for the transition to a partial remote work model for certain employees; and

•a favorable impact to interest income from higher interest rates on certain of our cash balances compared to the prior year periods.

These were partially offset by net losses from our equity investments compared to net gains in the prior year period.

Business Combinations

Refer to the Business Acquisitions and Divestitures section of the “Overview of our Business” within this Financial Review and Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for our disclosures on business combinations.

New Accounting Pronouncements

New accounting pronouncements that we have recently adopted as well as those that have been recently issued but not yet adopted by us are included in Financial Note 1, “Significant Accounting Policies,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

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FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

We expect our available cash generated from operations and our short-term investment portfolio, together with our existing sources of liquidity from our credit facilities and commercial paper program, will be sufficient to fund our short-term and long-term capital expenditures, working capital, and other cash requirements. We remain adequately capitalized with access to liquidity from our $4.0 billion revolving credit facility. At December 31, 2022, we were in compliance with all debt covenants, and believe we have the ability to continue to meet our debt covenants in the future.

The following table summarizes the net change in cash, cash equivalents, and restricted cash for the periods shown:

	Nine Months Ended December 31,
(Dollars in millions)	2022		2021		Change
Net cash provided by (used in):
Operating activities	$	1,834	$	1,547	$	287
Investing activities	(298)		(272)		(26)
Financing activities	(3,178)		(4,332)		1,154
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	15		35		(20)
Change in cash, cash equivalents, and restricted cash classified within Assets held for sale (1)	470		(215)		685
Net change in cash, cash equivalents, and restricted cash	$	(1,157)	$	(3,237)	$	2,080

(1)The fiscal 2023 change reflects a reversal of cash, cash equivalents, and restricted cash previously classified within assets held for sale at March 31, 2022 as part of the U.K. disposal group and is offset by cash outflows primarily related to the settlement of liabilities which is reflected in operating activities. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information.

Operating Activities

Operating activities provided cash of $1.8 billion and $1.5 billion during the nine months ended December 31, 2022 and 2021, respectively. Cash flows from operations can be significantly impacted by factors such as the timing of receipts from customers, inventory purchases, and payments to vendors. Additionally, working capital is primarily a function of sales and purchase volumes, inventory requirements, and vendor payment terms.

Operating activities for the nine months ended December 31, 2022 were affected by net income adjusted for non-cash items and changes in receivables, drafts and accounts payables, and inventories classified as held for sale. Refer Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information on our European divestiture activities. Operating activities for the nine months ended December 31, 2022 were affected by net income of $2.9 billion, increases in drafts and accounts payable of $3.5 billion, receivables of $2.2 billion, and inventories of $2.2 billion, all primarily driven by higher revenues and timing. Our litigation liabilities also decreased by $1.0 billion due to payments made during the first nine months of fiscal 2023 associated with the Settlement and separate settlement agreements of opioid-related claims of participating states, subdivisions, and Native American tribes. Operating activities for the nine months ended December 31, 2022 were also impacted by our share of antitrust legal settlements of $129 million, cash payment received for the early termination of our TRA with Change of $126 million, and proceeds from the termination of fixed interest rate swaps accounted for as cash flow hedges of $97 million.

Operating activities for the nine months ended December 31, 2021 were affected by net income adjusted for non-cash items, including the losses on our European businesses held for sale and our classifications of receivables, drafts and accounts payables, and inventories as held for sale. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for further information. Excluding the aforementioned classifications, operating activities for the nine months ended December 31, 2021 were affected by increases in inventory of $1.7 billion and drafts and accounts payable of $1.6 billion due to timing of purchases, and an increase in receivables of $1.9 billion resulting from timing of collections and higher revenues. Other non-cash items for the nine months ended December 31, 2021 includes an adjustment to net income of $191 million related to loss on debt extinguishment and non-cash inventory charges totaling $164 million on certain PPE and other related products in our Medical-Surgical Solutions segment.

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FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Investing Activities

Investing activities used cash of $298 million and $272 million during the nine months ended December 31, 2022 and 2021, respectively. Investing activities for the nine months ended December 31, 2022 include $856 million of net cash payments for acquisitions, including $600 million for our acquisition of RxSS and $173 million for our formation of an oncology research business with HCA. Investing activities for the nine months ended December 31, 2022 and 2021 includes $376 million and $380 million, respectively, in capital expenditures for property, plant, and equipment, and capitalized software, and reflects proceeds from sales of businesses and investments of $1.1 billion, including cash proceeds, net of cash divested, of $573 million from the completed divestiture of our E.U. disposal group, $202 million of net cash from the completed divestiture of our U.K. disposal group, and $179 million of cash from the exit of one our investments in equity securities in July 2022.

Financing Activities

Financing activities used cash of $3.2 billion and $4.3 billion during the nine months ended December 31, 2022 and 2021, respectively, which includes $3.5 billion and $2.0 billion of cash paid for share repurchases, respectively, as well as $216 million and $206 million of cash paid for dividends, respectively. Financing activities also includes cash receipts of $1.1 billion and $3.6 billion for the nine months ended December 31, 2022 and 2021, respectively, and repayments of $483 million and $3.3 billion for the nine months ended December 31, 2022 and 2021, respectively, for short-term borrowings, primarily commercial paper. In November 2022, we entered into the 2022 Term Loan Credit Facility which provides an unsecured term loan facility up to $500 million and matures in November 2025. We drew $500 million of cash on the loan in December 2022 which can be used for general corporate purposes. Also in December 2022, we retired our $400 million outstanding principal amount of 2.70% notes upon maturity using cash on hand. Cash used for other financing activities generally includes shares surrendered for tax withholding and payments to noncontrolling interests.

Financing activities for the nine months ended December 31, 2021 includes a payment of $1.0 billion to purchase shares of McKesson Europe through exercises of a put right option by noncontrolling shareholders. The put right option expired on June 15, 2021 as further described below. In July 2021, we completed a cash tender offer and paid an aggregate consideration of $1.1 billion to redeem certain notes with a principal amount of $922 million and also redeemed our 0.63% Euro-denominated notes with a principal amount of €600 million (or, approximately $709 million) prior to the maturity date of August 17, 2021 using cash on hand. This resulted in total repayments of long-term debt during the nine months ended December 31, 2021 of $1.8 billion, including $184 million of cash paid for premiums and transaction fees. This was partially offset by the issuance of long-term debt in August 2021 from a public offering of 1.30% notes due August 15, 2026 for proceeds received of $498 million, which was utilized for general corporate purposes.

Share Repurchase Plans

The Board has authorized the repurchase of McKesson’s common stock. Stock repurchases may be made from time-to-time in open market transactions, privately negotiated transactions, through 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, as amended (“Exchange Act”). 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. The ASR programs discussed below were designed to comply with Rule 10b5-1(c).

In December 2022, we entered into an ASR program with a third-party financial institution to repurchase $972 million of the Company’s common stock. Pursuant to the ASR agreement, we paid $972 million in cash to the financial institution and received an initial delivery of 2.2 million shares in December 2022. The transaction will be completed during the fourth quarter of fiscal 2023, at which point we expect to receive additional shares. The final number of shares repurchased and the average price per share paid will be determined based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a pre-negotiated discount.

In May 2022, we entered into an ASR program with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 3.1 million shares at an average price per share of $321.05. We received 2.6 million shares as the initial share settlement, and in August 2022, we received an additional 0.5 million shares upon the completion of this ASR program.

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FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

In February 2022, we entered into an ASR program with a third-party financial institution to repurchase $1.5 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 5.1 million shares at an average price per share of $295.16. We received 4.8 million shares as the initial share settlement in the fourth quarter of fiscal 2022, and in May 2022, we received an additional 0.3 million shares upon the completion of this ASR program.

In May 2021, we entered into an ASR program with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 5.2 million shares at an average price per share of $193.22. We received 4.3 million shares as the initial share settlement, and in August 2021, we received an additional 0.9 million shares upon the completion of this ASR program.

During the three months ended December 31, 2022, we repurchased 2.7 million of the Company’s shares of common stock for $1.0 billion through open market transactions at an average price per share of $370.13. During the three months ended September 30, 2022, we repurchased 1.5 million of the Company’s shares of common stock for $524 million through open market transactions at an average price per share of $355.75. There were no open market share repurchases during the three months ended June 30, 2022.

During the three months ended December 31, 2021, we repurchased 3.3 million of the Company’s shares of common stock for $728 million through open market transactions at an average price per share of $223.89, of which $30 million was accrued at December 31, 2021 within “Other accrued liabilities” in our Condensed Consolidated Balance Sheet for share repurchases that were executed in late December 2021 and settled in early January 2022. During the three months ended September 30, 2021, we repurchased 1.4 million of the Company’s shares of common stock for $280 million through open market transactions at an average price per share of $203.20. There were no open market share repurchases during the three months ended June 30, 2021.

In July 2022, the Board approved an increase of $4.0 billion in the authorization for repurchase of McKesson’s common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at December 31, 2022 was $3.8 billion.

Selected Measures of Liquidity and Capital Resources

(Dollars in millions)	December 31, 2022			March 31, 2022
Cash, cash equivalents, and restricted cash	$	2,778		$	3,935
Working capital	(3,349)			(2,235)
Debt to capital ratio (1)	131.6		%	114.5		%

(1)This ratio describes the relationship and changes within our capital resources, and is computed as the sum of short-term borrowings and total debt divided by the sum of short term borrowings, total debt, and McKesson stockholders’ deficit, which excludes noncontrolling interests and accumulated other comprehensive loss.

Cash equivalents, which are readily convertible to known amounts of cash, are carried at fair value. Cash equivalents are primarily invested in AAA-rated U.S. government money market funds and overnight deposits with financial institutions. Deposits with financial institutions are primarily denominated in U.S. dollars and the functional currencies of our foreign subsidiaries, including Euro, Canadian dollars, and British pound sterling. We mitigate the risk of our short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk profiles and investment strategies of money market funds.

Our cash and cash equivalents balance as of December 31, 2022 and March 31, 2022 included approximately $849 million and $1.5 billion of cash held by our subsidiaries outside of the U.S., respectively. Our primary intent is to utilize this cash for foreign operations for an indefinite period of time. Although the majority of cash held outside the U.S. is available for repatriation, doing so could subject us to foreign withholding taxes and state income taxes. Following enactment of the 2017 Tax Cuts and Jobs Act, the repatriation of cash to the U.S. is generally no longer taxable for federal income tax purposes.

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FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Working capital primarily includes cash and cash equivalents, receivables, inventories, and net assets or liabilities classified as held for sale, net of drafts and accounts payable, short-term borrowings, current portion of long-term debt, and other accrued liabilities. Our businesses require substantial investments in working capital that are susceptible to large variations during the year as a result of inventory purchase patterns and seasonal demands. Inventory purchase activity is a function of sales activity and other requirements.

Consolidated working capital decreased at December 31, 2022 compared to March 31, 2022 primarily due to an increase in drafts and accounts payable and short-term borrowings, and a decrease in cash and cash equivalents, partially offset by an increase in receivables and inventory, and a decrease in our current portion of long-term debt and net liabilities classified as held for sale related to our European divestiture activities.

Our debt to capital ratio increased for the nine months ended December 31, 2022 due to share repurchases, repayment of our $400 million outstanding principal amount of 2.70% notes in December 2022 upon maturity, and a decrease in the carrying value of our foreign currency denominated notes driven by foreign currency remeasurement, partially offset by net income attributable to McKesson for the year-to-date period, net issuance of commercial paper notes during fiscal 2023, and a draw of $500 million on our term loan facility in December 2022.

In July 2022, we raised our quarterly dividend from $0.47 to $0.54 per common share for dividends declared on or after such date by the Board. We anticipate that we 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 our future earnings, financial condition, capital requirements, and other factors.

Redeemable Noncontrolling Interests

Our previously recognized redeemable noncontrolling interests primarily related to our consolidated subsidiary, McKesson Europe. Under the Domination Agreement, the noncontrolling shareholders of McKesson Europe had a right to put (“Put Right”) their shares at €22.99 per share, increased annually for interest in the amount of five percentage points above a base rate published semi-annually by the German Bundesbank, less any compensation amount or guaranteed dividend already paid by McKesson (“Put Amount”). During the nine months ended December 31, 2021, we paid $1.0 billion to purchase 34.5 million shares of McKesson Europe through exercises of the Put Right by the noncontrolling shareholders, which reduced the balance of our redeemable noncontrolling interests.

The Put Right expired on June 15, 2021, at which point the remaining shares owned by the minority shareholders, valued at $287 million, were transferred from redeemable noncontrolling interests to noncontrolling interests and as a result, we no longer have redeemable noncontrolling interests presented in our condensed consolidated balance sheets at December 31, 2022 or March 31, 2022. Our noncontrolling interest in McKesson Europe was included in the sale of our E.U. disposal group in October 2022, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.”

Additionally, prior to the sale of our E.U. disposal group in October 2022, we were obligated to pay an annual recurring compensation of €0.83 per McKesson Europe share (the “Compensation Amount”) to the noncontrolling shareholders of McKesson Europe under the Domination Agreement. The Compensation Amount was recognized ratably during the applicable annual period through the October 31, 2022 divestiture. The Domination Agreement did not expire, but it may be terminated at the end of any fiscal year by giving at least six months’ advance notice.

Refer to Financial Note 5, “Redeemable Noncontrolling Interests and Noncontrolling Interests,” to the accompanying condensed consolidated financial statements included in this Quarterly Report for additional information on redeemable noncontrolling interests.

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FINANCIAL REVIEW (CONTINUED)

(UNAUDITED)

Credit Resources

We fund our working capital requirements primarily with cash and cash equivalents as well as short-term borrowings from our credit facilities and commercial paper issuances. Funds necessary for future debt maturities and our other cash requirements, including any completed and anticipated acquisitions, or future payments that may be made related to our total estimated litigation liability of $7.2 billion as of December 31, 2022 payable under the terms of various settlement agreements for opioid-related claims, are expected to be met by existing cash balances, cash flow from operations, existing credit sources, and other capital market transactions. Long-term debt markets and commercial paper markets, our principal sources of capital after cash flow from operations, are open and accessible to us should we decide to access those markets. Detailed information regarding our debt and financing activities is included in Financial Note 8, “Debt and Financing Activities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report.

We believe that our future operating cash flow, financial assets, and current access to capital and credit markets, including our existing credit facilities, will give us the ability to meet our financing needs for the foreseeable future. However, there can be no assurance that an increase in volatility or disruption in the global capital and credit markets will not impair our liquidity or increase our costs of borrowing.

CAUTIONARY NOTICE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Some of these statements can be identified by the use of terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “projects,” “plans,” “estimates,” or the negative of these words and other comparable terminology. The discussion of financial trends, strategy, plans, assumptions, or intentions may also include forward-looking statements. Readers should not place undue reliance on forward-looking statements, which speak only as of the date such statements were first made. Except to the extent required by law, we undertake no obligation to update or revise our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or implied. Although it is not possible to predict or identify all such risks and uncertainties, they include, but are not limited to, factors described in the Risk Factors discussion in Item 1A of Part I of our most recently filed Annual Report.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

We believe there has been no material change in our exposure to risks associated with fluctuations in interest and foreign currency exchange rates as disclosed in our 2022 Annual Report.

Item 4.Controls and Procedures.

Our Chief Executive Officer and our Chief Financial Officer, with the participation of other members of the Company’s management, have evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of the end of the period covered by this quarterly report, and our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

There were no changes in our “internal control over financial reporting” (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that occurred during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.Legal Proceedings.

The information set forth in Financial Note 12, “Commitments and Contingent Liabilities,” to the accompanying condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and in Financial Note 18, “Commitments and Contingent Liabilities,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, is incorporated herein by reference. Disclosure of an environmental proceeding with a governmental agency generally is included only if we expect monetary sanctions in the proceeding to exceed $1 million, unless otherwise material.

Item 1A.Risk Factors.

Other than factual updates discussed in this Quarterly Report on Form 10-Q, there have been no material changes for the period covered by this Quarterly Report on Form 10-Q to the risk factors disclosed in Part I, Item 1A, of our 2022 Annual Report on Form 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

The Company’s Board of Directors has authorized the repurchase of McKesson’s common stock. 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 Exchange Act. 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. The ASR program discussed below was designed to comply with Rule 10b5-1(c).

Refer to Financial Note 13, “Stockholders' Equity (Deficit),” to the accompanying condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a full discussion of the Company’s share repurchases for the three and nine months ended December 31, 2022 and 2021.

The following table provides information on the Company’s share repurchases during the three months ended December 31, 2022:

	Share Repurchases (1)
(In millions, except price per share)	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
October 1, 2022 – October 31, 2022	1.1	$	362.48	1.1	$	5,338
November 1, 2022 – November 30, 2022	1.0	374.23		1.0	4,957
December 1, 2022 – December 31, 2022 (2)	2.8	373.55		2.8	3,778
Total	4.9			4.9

(1)This table does not include the value of equity awards surrendered to satisfy tax withholding obligations or forfeitures of equity awards.

(2)In December 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $972 million of the Company’s common stock. Pursuant to the ASR agreement, the Company paid $972 million in cash to the financial institution and received an initial delivery of 2.2 million shares in December 2022 at a reference price of $372.31. The transaction will be completed during the fourth quarter of fiscal 2023, at which point the Company expects to receive additional shares. The final number of shares repurchased and the average price per share paid will be determined based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a pre-negotiated discount.

Item 3.Defaults Upon Senior Securities.

None.

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Item 4.Mine Safety Disclosures.

Not applicable.

Item 5.Other Information.

Not applicable.

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Item 6.Exhibits.

Exhibits identified in parentheses below are on file with the SEC and are incorporated by reference as exhibits hereto.

Exhibit Number	Description
10.1	Credit Agreement, dated as of November 7, 2022, among the Company, as borrower, the lenders party thereto, the letter of credit issuers party thereto, Bank of America, N.A., as administrative agent, and the other parties thereto (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 7, 2022, File No. 1-13252).
10.2	Credit Agreement, dated as of November 7, 2022, among the Company, as borrower, the lenders party thereto, Toronto Dominion (Texas) LLC, as administrative agent, and the other parties thereto (Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on November 7, 2022, File No. 1-13252).
31.1†	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32††	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the McKesson Corporation Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, 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).

†    Filed herewith.

††    Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MCKESSON CORPORATION
Date:	February 1, 2023	/s/ Britt J. Vitalone
		Britt J. Vitalone
		Executive Vice President and Chief Financial Officer

		MCKESSON CORPORATION
Date:	February 1, 2023	/s/ Napoleon B. Rutledge Jr.
		Napoleon B. Rutledge Jr.
		Senior Vice President and Controller

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) AND RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian S. Tyler, certify that:

1.I have reviewed this quarterly report on Form 10-Q of McKesson Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 1, 2023	/s/  Brian S. Tyler
		Brian S. Tyler
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) AND RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Britt J. Vitalone, certify that:

1.I have reviewed this quarterly report on Form 10-Q of McKesson Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	February 1, 2023	/s/ Britt J. Vitalone
		Britt J. Vitalone
		Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of McKesson Corporation (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Brian S. Tyler

Brian S. Tyler

Chief Executive Officer

February 1, 2023

/s/ Britt J. Vitalone

Britt J. Vitalone

Executive Vice President and Chief Financial Officer

February 1, 2023

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to McKesson Corporation and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover	9 Months Ended
	Dec. 31, 2022 shares
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	1-13252
Entity Registrant Name	McKESSON CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3207296
Entity Address, Address Line One	6555 State Hwy 161
Entity Address, City or Town	Irving
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75039
City Area Code	972
Local Phone Number	446-4800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	136,939,227
Entity Central Index Key	0000927653
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common stock, $0.01 par value
Trading Symbol	MCK
Security Exchange Name	NYSE
1.500% Notes Due 2025
Entity Information [Line Items]
Title of 12(b) Security	1.500% Notes due 2025
Trading Symbol	MCK25
Security Exchange Name	NYSE
1.625% Notes Due 2026
Entity Information [Line Items]
Title of 12(b) Security	1.625% Notes due 2026
Trading Symbol	MCK26
Security Exchange Name	NYSE
3.125% Notes Due 2029
Entity Information [Line Items]
Title of 12(b) Security	3.125% Notes due 2029
Trading Symbol	MCK29
Security Exchange Name	NYSE

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Revenues	$ 70,490	$ 68,614	$ 207,801	$ 197,864
Cost of sales	(67,316)	(65,186)	(198,509)	(188,052)
Gross profit	3,174	3,428	9,292	9,812
Selling, distribution, general, and administrative expenses	(1,903)	(3,105)	(5,812)	(8,006)
Claims and litigation charges, net	1	(7)	5	(193)
Restructuring, impairment, and related charges, net	(31)	(18)	(84)	(208)
Total operating expenses	(1,933)	(3,130)	(5,891)	(8,407)
Operating income	1,241	298	3,401	1,405
Other income, net	276	20	466	202
Loss on debt extinguishment	0	0	0	(191)
Interest expense	(69)	(41)	(169)	(135)
Income from continuing operations before income taxes	1,448	277	3,698	1,281
Income tax expense	(329)	(238)	(799)	(396)
Income from continuing operations	1,119	39	2,899	885
Income (loss) from discontinued operations, net of tax	1	0	(3)	(3)
Net income	1,120	39	2,896	882
Net income attributable to noncontrolling interests	(41)	(46)	(123)	(136)
Net income (loss) attributable to McKesson Corporation	$ 1,079	$ (7)	$ 2,773	$ 746
Diluted
Continuing operations (in usd per share)	$ 7.65	$ (0.04)	$ 19.32	$ 4.81
Discontinued operations (in usd per share)	0.01	0	(0.02)	(0.02)
Total (in dollars per share)	7.66	(0.04)	19.30	4.79
Basic
Continuing operations (in usd per share)	7.70	(0.04)	19.48	4.87
Discontinued operations (in usd per share)	0.01	0	(0.02)	(0.02)
Total (in dollars per share)	$ 7.71	$ (0.04)	$ 19.46	$ 4.85
Weighted-average common shares outstanding
Diluted (in usd per share)	141.0	151.6	143.7	155.8
Basic (in shares)	139.9	151.6	142.5	154.0

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 1,120	$ 39	$ 2,896	$ 882
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	252	16	642	(8)
Unrealized gains (losses) on cash flow hedges	(65)	(6)	(29)	2
Changes in retirement-related benefit plans	28	(2)	66	2
Other comprehensive income (loss), net of tax	215	8	679	(4)
Comprehensive income	1,335	47	3,575	878
Comprehensive income attributable to noncontrolling interests	(41)	(44)	(167)	(137)
Comprehensive income attributable to McKesson Corporation	$ 1,294	$ 3	$ 3,408	$ 741

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2022	Mar. 31, 2022
Current assets
Cash and cash equivalents	$ 2,774	$ 3,532
Receivables, net	20,537	18,583
Inventories, net	20,657	18,702
Assets held for sale	14	4,516
Prepaid expenses and other	675	898
Total current assets	44,657	46,231
Property, plant, and equipment, net	2,140	2,092
Operating lease right-of-use assets	1,653	1,548
Goodwill	9,934	9,451
Intangible assets, net	2,273	2,059
Other non-current assets	2,033	1,917
Total assets	62,690	63,298
Current liabilities
Drafts and accounts payable	42,238	38,086
Short-term borrowings	617	0
Current portion of long-term debt	404	799
Current portion of operating lease liabilities	292	297
Liabilities held for sale	2	4,741
Other accrued liabilities	4,453	4,543
Total current liabilities	48,006	48,466
Long-term debt	5,452	5,080
Long-term deferred tax liabilities	1,465	1,418
Long-term operating lease liabilities	1,410	1,366
Long-term litigation liabilities	6,642	7,220
Other non-current liabilities	1,804	1,540
McKesson Corporation stockholders’ deficit
Preferred stock, $0.01 par value, 100 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.01 par value, 800 shares authorized, 277 and 275 shares issued at December 31, 2022 and March 31, 2022, respectively	3	2
Additional paid-in capital	7,536	7,275
Retained earnings	11,582	9,030
Accumulated other comprehensive loss	(899)	(1,534)
Treasury shares, at cost, 140 and 130 shares at December 31, 2022 and March 31, 2022, respectively	(20,677)	(17,045)
Total McKesson Corporation stockholders’ deficit	(2,455)	(2,272)
Noncontrolling interests	366	480
Total deficit	(2,089)	(1,792)
Total liabilities and deficit	$ 62,690	$ 63,298

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2022	Mar. 31, 2022
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)	277,000,000	275,000,000
Treasury stock, shares (in shares)	140,000,000	130,000,000

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury	Noncontrolling Interests
Beginning balance (in shares) at Mar. 31, 2021		273
Beginning balance (in shares) at Mar. 31, 2021						(115)
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, net of forfeitures (in shares)		2
Issuance of shares under employee plans, net of forfeitures	107		174			(67)
Share-based compensation	112		112
Repurchase of common stock	(2,008)		21			$ (2,029)
Repurchase of common stock (in shares)						(10)
Net income (loss)	874			746			128
Other comprehensive income (loss)	(7)				(5)		(2)
Cash dividends declared	(211)			(211)
Payments to noncontrolling interests	(117)						(117)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	8		178		(170)
Reclassification of McKesson Europe AG redeemable noncontrolling interests	287						287
Reclassification of recurring compensation to other accrued liabilities	(5)						(5)
Other	(2)		1	(3)
Ending balance (in shares) at Dec. 31, 2021		275
Ending balance (in shares) at Dec. 31, 2021						(125)
Ending balance at Dec. 31, 2021	(787)	$ 2	7,411	8,734	(1,655)	$ (15,766)	487
Beginning balance (in shares) at Sep. 30, 2021		275
Beginning balance (in shares) at Sep. 30, 2021						(122)
Beginning balance at Sep. 30, 2021	(87)	$ 2	7,311	8,812	(1,665)	$ (15,031)	484
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares under employee plans, net of forfeitures	56		63			(7)
Share-based compensation	36		36
Repurchase of common stock	(728)					$ (728)
Repurchase of common stock (in shares)						(3)
Net income (loss)	39			(7)			46
Other comprehensive income (loss)	8				10		(2)
Cash dividends declared	(72)			(72)
Payments to noncontrolling interests	(38)						(38)
Reclassification of recurring compensation to other accrued liabilities	(3)						(3)
Other	2		1	1
Ending balance (in shares) at Dec. 31, 2021		275
Ending balance (in shares) at Dec. 31, 2021						(125)
Ending balance at Dec. 31, 2021	(787)	$ 2	7,411	8,734	(1,655)	$ (15,766)	487
Beginning balance (in shares) at Mar. 31, 2022		275
Beginning balance (in shares) at Mar. 31, 2022						(130)
Beginning balance at Mar. 31, 2022	(1,792)	$ 2	7,275	9,030	(1,534)	$ (17,045)	480
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares under employee plans, net of forfeitures (in shares)		2
Issuance of shares under employee plans, net of forfeitures	(13)	$ 1	143			(157)
Share-based compensation	122		122
Repurchase of common stock	(3,500)		(25)			$ (3,475)
Repurchase of common stock (in shares)						(10)
Net income (loss)	2,896			2,773			123
Other comprehensive income (loss)	679				635		44
Cash dividends declared	(222)			(222)
Payments to noncontrolling interests	(113)						(113)
Reclassification of recurring compensation to other accrued liabilities	(5)						(5)
Formation of an oncology research business	247		22				225
Derecognition of noncontrolling interests in McKesson Europe	(382)						(382)
Other	(6)		(1)	1			(6)
Ending balance (in shares) at Dec. 31, 2022		277
Ending balance (in shares) at Dec. 31, 2022						(140)
Ending balance at Dec. 31, 2022	(2,089)	$ 3	7,536	11,582	(899)	$ (20,677)	366
Beginning balance (in shares) at Sep. 30, 2022		277
Beginning balance (in shares) at Sep. 30, 2022						(135)
Beginning balance at Sep. 30, 2022	(1,249)	$ 3	7,609	10,579	(1,114)	$ (18,844)	518
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares under employee plans, net of forfeitures	13		16			(3)
Share-based compensation	36		36
Repurchase of common stock	(1,976)		(146)			$ (1,830)
Repurchase of common stock (in shares)						(5)
Net income (loss)	1,120			1,079			41
Other comprehensive income (loss)	215				215
Cash dividends declared	(77)			(77)
Payments to noncontrolling interests	(36)						(36)
Reclassification of recurring compensation to other accrued liabilities	(1)						(1)
Formation of an oncology research business	247		22				225
Derecognition of noncontrolling interests in McKesson Europe	(382)						(382)
Other	1		(1)	1			1
Ending balance (in shares) at Dec. 31, 2022		277
Ending balance (in shares) at Dec. 31, 2022						(140)
Ending balance at Dec. 31, 2022	$ (2,089)	$ 3	$ 7,536	$ 11,582	$ (899)	$ (20,677)	$ 366

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares	1 Months Ended	3 Months Ended			9 Months Ended
	Jul. 31, 2022	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Dividends declared per common share (in dollars per share)	$ 0.54	$ 0.54	$ 0.47	$ 0.47	$ 1.55	$ 1.36

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
OPERATING ACTIVITIES
Net income	$ 2,896	$ 882
Adjustments to reconcile to net cash provided by operating activities:
Depreciation	185	215
Amortization	262	383
Long-lived asset impairment charges	13	128
Deferred taxes	55	12
Credits associated with last-in, first-out inventory method	(31)	(79)
Non-cash operating lease expense	183	198
Gain from sales of businesses and investments	(215)	(117)
European businesses held for sale	0	1,271
Other non-cash items	221	452
Changes in assets and liabilities, net of acquisitions:
Receivables	(2,193)	(1,925)
Inventories	(2,190)	(1,659)
Drafts and accounts payable	3,531	1,612
Operating lease liabilities	(256)	(276)
Taxes	381	176
Litigation liabilities	(1,021)	146
Other	13	128
Net cash provided by operating activities	1,834	1,547
INVESTING ACTIVITIES
Payments for property, plant, and equipment	(265)	(253)
Capitalized software expenditures	(111)	(127)
Acquisitions, net of cash, cash equivalents, and restricted cash acquired	(856)	(6)
Proceeds from sales of businesses and investments, net	1,074	197
Other	(140)	(83)
Net cash used in investing activities	(298)	(272)
FINANCING ACTIVITIES
Proceeds from short-term borrowings	1,100	3,642
Repayments of short-term borrowings	(483)	(3,270)
Proceeds from issuances of long-term debt	499	498
Repayments of long-term debt	(412)	(1,646)
Payments for debt extinguishments	0	(184)
Common stock transactions:
Issuances	143	174
Share repurchases	(3,500)	(1,986)
Dividends paid	(216)	(206)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	0	(1,031)
Other	(309)	(323)
Net cash used in financing activities	(3,178)	(4,332)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	15	35
Change in cash, cash equivalents, and restricted cash classified within Assets held for sale	470	(215)
Net decrease in cash, cash equivalents, and restricted cash	(1,157)	(3,237)
Cash, cash equivalents, and restricted cash at beginning of period	3,935	6,396
Cash, cash equivalents, and restricted cash at end of period	2,778	3,159
Less: Restricted cash at end of period included in Prepaid expenses and other	(4)	(405)
Cash and cash equivalents at end of period	$ 2,774	$ 2,754

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Significant Accounting Policies

9 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Nature of Operations: McKesson Corporation (“McKesson,” or the “Company,”) is a diversified healthcare services leader dedicated to advancing health outcomes for patients everywhere. McKesson partners with biopharma companies, care providers, pharmacies, manufacturers, governments, and others to deliver insights, products, and services to help make quality care more accessible and affordable. 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 additional information.

Basis of Presentation: The condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“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.

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 can exercise significant influence over operating and financial policies are accounted for using the equity method.

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.

Reclassifications: Certain prior period amounts have been reclassified to conform to the current year presentation.

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires the Company to 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 could differ from those estimated amounts. The Company continues to evaluate the ongoing impacts, including the economic consequences, of the pandemic caused by the SARS-CoV-2 coronavirus (“COVID-19”), and therefore 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 results of operations, financial position, and cash flows of McKesson for the interim periods presented.

The results of operations for the three and nine months ended December 31, 2022 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, 2022, previously filed with the SEC on May 9, 2022 (“2022 Annual Report”).

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IR Act”). Among other provisions, the IR Act includes a 15% corporate minimum tax, a 1% excise tax on certain repurchases of an entity’s own common stock after December 31, 2022, and various drug pricing reforms. Based on its preliminary assessment, the Company does not currently expect the IR Act to have a material impact on its results of operations, financial position, or cash flows in the foreseeable future; however, the Company will continue to evaluate the full impact of these legislative changes.

Recently Adopted Accounting Pronouncements

There were no adopted accounting standards during the nine months ended December 31, 2022 that had a material impact to the Company’s results of operations, financial position, cash flows, or notes to the financial statements upon their adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of the equity security, and requires additional disclosure requirements. ASU 2022-03 is effective for the Company on a prospective basis for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect that this guidance will have a material impact on its consolidated financial statements or related disclosures.

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Business Acquisitions and Divestitures

9 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Business Acquisitions and Divestitures

Business Acquisitions and Divestitures

Acquisitions

Rx Savings Solutions, LLC

On November 1, 2022, the Company completed its acquisition of 100% of the shares of Rx Savings Solutions, LLC (“RxSS”), a privately-owned company headquartered in Overland Park, Kansas, to expand on connecting biopharma and payer services to patients. RxSS is a prescription price transparency and benefit insight company that offers affordability and adherence solutions to health plans and employers. The purchase consideration included a payment of $600 million in cash made upon closing and a maximum of $275 million of contingent consideration based on RxSS’ operational and financial performance through calendar year 2025. The payment made upon closing was funded from cash on hand. The financial results of RxSS are included in the Company’s RxTS segment as of the acquisition date. The transaction was accounted for as a business combination.

The Company recorded a liability for the contingent consideration at its fair value of $92 million as of the acquisition date, which is included within “Other non-current liabilities” in the Company’s Condensed Consolidated Balance Sheet as of December 31, 2022. The fair value of the contingent consideration liability was estimated using a Monte Carlo simulation, utilizing internal cash flow projections which are Level 3 inputs under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures. The contingent liability will be remeasured to fair value at each reporting date until the liability is resolved with changes in fair value being recognized within “Selling, distribution, general, and administrative expenses” in the Company’s Condensed Consolidated Statements of Operations. Recognition of the initial fair value of this contingent consideration is a non-cash investing activity.

The purchase price allocation included acquired identifiable intangible assets of $229 million, primarily representing customer relationships and technology with a weighted average amortization period of 12 years, and goodwill of $463 million. Goodwill has been preliminarily allocated to the Company’s RxTS segment, which reflects the expected future benefits from certain synergies and intangible assets that do not qualify for separate recognition. Goodwill attributable to the acquisition is deductible for tax purposes.

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	600
Contingent consideration	92
Total purchase consideration	$	692
Identifiable assets acquired and liabilities assumed:
Current assets	$	6
Intangible assets	229
Other non-current assets	3
Current liabilities	(9)
Total identifiable net assets	229
Goodwill	463
Net assets acquired	$	692

Oncology Research Business

On October 31, 2022, the Company completed a transaction with HCA Healthcare, Inc. (“HCA”) to form an oncology research business, combining McKesson’s U.S. Oncology Research (“USOR”) and HCA’s Sarah Cannon Research Institute (“SCRI”) based in Nashville, Tennessee, to advance cancer care and increase access to oncology clinical research. Upon consummation of the transaction, McKesson owns a 51% controlling interest in the combined business, and the financial results are consolidated by the Company and reported within its U.S. Pharmaceutical segment as of the acquisition date. Transaction consideration included the transfer of full ownership interest in USOR to the combined business and $173 million of cash paid to HCA, which was funded from cash on hand. The transaction was accounted for as a business combination.

The purchase price allocation included acquired identifiable intangible assets of $177 million, primarily representing customer relationships as well as trademarks and trade names with a weighted average amortization period of 17 years, and goodwill of $120 million. Goodwill has been allocated to the Company’s U.S. Pharmaceutical segment, which reflects the expected future benefits from certain synergies and intangible assets that do not qualify for separate recognition. Goodwill attributable to the acquisition of $49 million is deductible for tax purposes. The Company recorded noncontrolling interest of $225 million as a component of equity, which includes HCA’s proportionate interest in the identifiable net assets of SCRI at fair value of $205 million and its proportionate interest in the contributed net assets of USOR at carrying value of $20 million. The difference between the fair value of the Company’s acquired interest in SCRI net assets and the $173 million of cash paid to HCA was recognized as additional paid in capital, as well as the Company’s reduction in ownership interest in USOR net assets.

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	173
Contribution of USOR	40
Total purchase consideration	$	213
Identifiable assets acquired and liabilities assumed:
Receivables	$	224
Property, plant, and equipment	22
Operating lease right-of-use assets	31
Intangible assets	177
Current liabilities	(42)
Long-term operating lease liabilities	(29)
Other non-current liabilities	(43)
Total identifiable net assets	340
Noncontrolling interest	(225)
Additional paid-in capital	(22)
Goodwill	120
Net assets acquired	$	213

The fair value of the acquired identifiable intangible assets from the acquisitions discussed above were determined by applying the income approach, using a discounted cash flow model in which cash flows anticipated over several periods are discounted to their present value using an appropriate rate that is commensurate with the risk inherent with the transaction. These inputs are considered Level 3 inputs under the fair value measurements and disclosure guidance. Due to the recent timing of these acquisitions, the amounts presented above are subject to change as the Company’s fair value assessments are finalized. Pro forma financial information has not been provided as these acquisitions did not have a material impact, individually, or in the aggregate, to the Company’s consolidated results of operations.

Divestitures

In July 2021, the Company announced its intention to exit its businesses in Europe resulting in classification of certain assets and liabilities as held for sale. Assets and liabilities of $4.5 billion and $4.7 billion, respectively, at March 31, 2022, met the criteria for classification as held for sale in the Company’s Condensed Consolidated Balance Sheet, primarily consisting of disposal groups related to the Company’s European divestiture activities discussed below. At December 31, 2022, the Company had no assets or liabilities related to these divestiture activities that met the classification of held for sale. The decrease in assets and liabilities held for sale during fiscal 2023 was driven by the divestiture of the Company’s E.U. disposal group in October 2022 and U.K. disposal group in April 2022, as discussed in more detail below. During the three months ended December 31, 2022 and 2021, the Company recorded gains of $31 million and charges of $879 million, respectively, and during the nine months ended December 31, 2022 and 2021, recorded gains of $66 million and charges of $1.4 billion, respectively, primarily to remeasure the assets and liabilities of the disposal groups related to European divestiture activities discussed below to the lower of their carrying value or fair value less costs to sell. The fiscal 2022 charges were largely driven by declines in the British pound sterling and the Euro.

Assets and liabilities to be disposed of by sale (“disposal groups”) are classified as “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The classification occurs when the disposal group is available for immediate sale and the sale is 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 long-lived assets included within the disposal group 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 costs to sell is reported as an adjustment to the carrying value of the disposal group. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was classified as held for sale. The Company determined that the disposal groups discussed below did not meet the criteria for classification as discontinued operations prior to being sold.

European Divestiture Activities

On October 31, 2022, the Company completed its previously announced transaction to sell certain of its businesses in the European Union (“E.U.”) located in France, Italy, Ireland, Portugal, Belgium, and Slovenia, along with its German headquarters and wound-care business, part of a shared services center in Lithuania, and its ownership stake in a joint venture in the Netherlands (“E.U. disposal group”) to the PHOENIX Group. As part of the transaction, the Company received cash proceeds of $892 million and divested net assets of $1.3 billion, including cash of $319 million, derecognized the carrying value of its noncontrolling interest held by minority shareholders of McKesson Europe AG (“McKesson Europe”) of $382 million, and released $153 million of net accumulated other comprehensive loss.

During the three and nine months ended December 31, 2022, the Company recorded net gains of $31 million and $66 million, respectively, and during the three and nine months ended December 31, 2021, recorded charges totaling $26 million and $517 million, respectively, to remeasure the assets and liabilities of the E.U. disposal group to fair value less costs to sell. The charges for the nine months ended December 31, 2021 also included impairments of individual assets, such as certain internal-use software that will not be utilized in the future, prior to adjusting the E.U. disposal group as a whole and net losses of $230 million related to the accumulated other comprehensive income balances associated with the E.U. disposal group, driven by declines in the Euro. These amounts were recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The Company’s measurement of the fair value of the E.U. disposal group was based on the total consideration expected to be received by the Company as outlined in the transaction agreement. Certain components of the total consideration included fair value measurements that fall within Level 3 of the fair value hierarchy.

The total assets and liabilities of the E.U. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Receivables, net	$	1,322
Inventories, net	809
Prepaid expenses and other	72
Property, plant, and equipment, net	304
Operating lease right-of-use assets	224
Intangible assets, net	267
Other non-current assets	328
Remeasurement of assets of businesses held for sale to fair value less costs to sell (1)	(302)
Total assets held for sale	$	3,024
Liabilities
Current liabilities
Drafts and accounts payable	$	1,826
Current portion of long-term debt	4
Current portion of operating lease liabilities	33
Other accrued liabilities	473
Long-term debt	11
Long-term deferred tax liabilities	55
Long-term operating lease liabilities	180
Other non-current liabilities	138
Total liabilities held for sale	$	2,720

(1)Excludes charges in fiscal 2022 related to the impairment of individual assets, including a $113 million impairment of internally developed software recorded directly against the gross value of the assets impacted.

On April 6, 2022, the Company completed the previously announced sale of its retail and distribution businesses in the United Kingdom (“U.K. disposal group”) to Aurelius Elephant Limited for a purchase price of £110 million (or, approximately $144 million), including certain adjustments. As part of the transaction, the Company divested net assets of $615 million and released $731 million of accumulated other comprehensive loss, within the International segment, and the buyer assumed and repaid a note payable to the Company of $118 million.

During the three and nine months ended December 31, 2021, the Company recorded charges totaling $823 million to remeasure the U.K. disposal group to the lower of its carrying value or fair value less costs to sell. The remeasurement adjustment included a $731 million loss related to the accumulated other comprehensive loss balances associated with the U.K. disposal group, driven by declines in the British pound sterling. The charges were recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations. The Company’s measurement of the fair value of the U.K. disposal group was based on the total consideration expected to be received by the Company as outlined in the transaction agreement. Certain components of the total consideration included fair value measurements that fall within Level 3 of the fair value hierarchy.

The total assets and liabilities of the U.K. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Cash and cash equivalents	$	531
Receivables, net	931
Inventories, net	563
Prepaid expenses and other	50
Property, plant, and equipment, net	91
Operating lease right-of-use assets	270
Intangible assets, net	117
Other non-current assets	88
Remeasurement of assets of businesses held for sale to fair value less costs to sell	(1,159)
Total assets held for sale	$	1,482
Liabilities
Current liabilities
Drafts and accounts payable	$	1,593
Current portion of operating lease liabilities	50
Other accrued liabilities	59
Long-term deferred tax liabilities	16
Long-term operating lease liabilities	262
Other non-current liabilities	38
Total liabilities held for sale	$	2,018

On January 31, 2022, the Company completed the sale of its Austrian business to Quadrifolia Management GmbH in a management-led buyout for a purchase price of €244 million (or, approximately $276 million), including certain adjustments. In the three and nine months ended December 31, 2021, the Company recognized a loss of $30 million to remeasure the assets and liabilities of the business to the lower of its carrying value or fair value less costs to sell. The charge was recorded within “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations.

Subsequent to the divestiture activities discussed above, the Company’s European operations primarily consist of its retail and distribution businesses in Norway.

Other

For the periods presented, the Company also completed de minimis acquisitions and divestitures within its operating segments. Financial results for the Company’s business acquisitions have been included in its consolidated financial statements as of their respective acquisition dates. Purchase prices for business acquisitions have been allocated based on estimated fair values at the respective acquisition dates.

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Restructuring, Impairment, and Related Charges, Net

9 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring, Impairment, and Related Charges

Restructuring, Impairment, and Related Charges, Net

The Company recorded restructuring, impairment, and related charges of $31 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $84 million and $208 million for the nine months ended December 31, 2022 and 2021, respectively. These charges were included in “Restructuring, impairment, and related charges, net” in the Condensed Consolidated Statements of Operations.

Restructuring Initiatives

During the first quarter of fiscal 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 included the rationalization of the Company’s office space in North America. Where the Company ceased using office space, it exited the portion of the facility no longer used. It also retained and repurposed certain other office locations. The Company recorded charges of $5 million and $115 million for the three and nine months ended December 31, 2021, respectively, primarily related to lease right-of-use and other long-lived asset impairments, lease exit costs, and accelerated depreciation and amortization. This initiative was substantially completed in fiscal 2022 and remaining costs the Company recorded and expects to record under this initiative are not material.

Restructuring, impairment, and related charges, net, for the three months ended December 31, 2022 and 2021 consisted of the following:

	Three Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	4	$	4
Exit and other-related costs (1)	1		1		1		7		15		25
Asset impairments and accelerated depreciation	1		—		—		1		—		2
Total	$	2	$	1	$	1	$	8	$	19	$	31

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Three Months Ended December 31, 2021
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	1	$	1
Exit and other-related costs (1)	3		—		1		6		6		16
Asset impairments and accelerated depreciation	—		—		—		(1)		2		1
Total	$	3	$	—	$	1	$	5	$	9	$	18

(1)Exit and other-related costs 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, net, for the nine months ended December 31, 2022 and 2021 consisted of the following:

	Nine Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	3	$	—	$	—	$	2	$	(2)	$	3
Exit and other-related costs (1)	2		4		3		15		44		68
Asset impairments and accelerated depreciation	4		11		—		2		(4)		13
Total	$	9	$	15	$	3	$	19	$	38	$	84

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Nine Months Ended December 31, 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	$	2	$	(1)	$	1	$	10	$	2	$	14
Exit and other-related costs (3)	7		2		3		21		33		66
Asset impairments and accelerated depreciation	16		17		5		35		55		128
Total	$	25	$	18	$	9	$	66	$	90	$	208

(1)Includes costs related to the transition to a partial remote work model described above.

(2)Includes costs related to the transition to a partial remote work model described above, U.K. operating model and cost optimization efforts, and costs for optimization programs in Canada.

(3)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred.

The following table summarizes the activity related to the liabilities associated with the Company’s restructuring initiatives for the nine months ended December 31, 2022:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Balance, March 31, 2022 (1)	$	11	$	3	$	1	$	56	$	59	$	130
Restructuring, impairment, and related charges, net	9		15		3		19		38		84
Non-cash charges	(4)		(11)		—		(2)		4		(13)
Cash payments	(4)		(4)		(3)		(7)		(57)		(75)
Other (2)	(1)		—		—		(54)		1		(54)
Balance, December 31, 2022 (3)	$	11	$	3	$	1	$	12	$	45	$	72

(1)As of March 31, 2022, the total reserve balance was $130 million, of which $58 million was recorded in “Other accrued liabilities,” $36 million was recorded in “Liabilities held for sale,” and $36 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

(2)Other primarily includes cumulative translation adjustments and transfers to certain other liabilities. For the Company’s International segment, other also includes a reduction to the liability for the divestitures of the E.U. disposal group and the U.K. disposal group in fiscal 2023, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.”

(3)As of December 31, 2022, the total reserve balance was $72 million, of which $48 million was recorded in “Other accrued liabilities” and $24 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

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Income Taxes

9 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense related to continuing operations was as follows:

	Three Months Ended December 31,						Nine Months Ended December 31,
(Dollars in millions)	2022			2021			2022			2021
Income tax expense	$	329		$	238		$	799		$	396
Reported income tax rate	22.7		%	85.9		%	21.6		%	30.9		%

Fluctuations in the Company’s reported income tax rates were primarily due to non-cash charges related to remeasuring the value of the E.U. and U.K. disposal groups held for sale to fair value less costs to sell in fiscal 2022, changes in the mix of earnings between various taxing jurisdictions, and discrete items recognized in the quarters.

During the nine months ended December 31, 2022, the Company recognized net discrete tax benefits primarily related to the tax impact of share-based compensation of $55 million. During the third quarter of fiscal 2022, the Company recognized a net discrete tax benefit of $42 million primarily related to a decrease in the income recognized pursuant to the global intangible low-tax income (“GILTI”) regime in its 2021 U.S. Federal income tax return and the statute of limitation expirations in various taxing jurisdictions. During the nine months ended December 31, 2021, the Company recognized net discrete tax benefits primarily related to statute of limitation expirations of $115 million in various taxing jurisdictions and $81 million related to a reduction of GILTI income in the prior year.

During the nine months ended December 31, 2021, the Company recorded non-cash pre-tax charges of $517 million primarily to remeasure the E.U. disposal group to fair value less costs to sell, and, during the three and nine months ended December 31, 2021, recorded non-cash pre-tax charges of $853 million to remeasure the U.K. disposal group and the Austrian business to fair value less costs to sell, as described in Financial Note 2, “Business Acquisitions and Divestitures.” The Company’s reported income tax rates for the three and nine months ended December 31, 2021 were unfavorably impacted by this due to the non-deductible nature of the majority of these charges for income tax purposes.

As of December 31, 2022, the Company had $1.5 billion of unrecognized tax benefits, of which $1.4 billion would reduce income tax expense and the effective tax rate if recognized. During the next twelve months, it is reasonably possible that our unrecognized tax benefits may decrease by as much as $170 million to $195 million due to settlements of tax examinations and statute of limitation expirations based on the information currently available. However, this may change as the Company continues to have ongoing discussions with various taxing authorities throughout the year, and if the ultimate resolution of unrecognized tax benefits differs from this estimated range, the Company will record any additional income tax expense or benefit as necessary in the appropriate period. The unrecognized tax benefit may also increase or decrease due to future developments in 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 2014 through the current fiscal year.

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Redeemable Noncontrolling Interests and Noncontrolling Interests

9 Months Ended

Dec. 31, 2022

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interests and Noncontrolling Interests

Redeemable Noncontrolling Interests and Noncontrolling Interests

Redeemable Noncontrolling Interests

The Company’s previously recognized redeemable noncontrolling interests primarily related to its former 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. The Company recorded a total attribution of net income to the noncontrolling shareholders of McKesson Europe of $8 million during the nine months ended December 31, 2021. This amount was recorded in “Net income attributable to noncontrolling interests” in the Company’s Condensed Consolidated Statement of Operations and the corresponding liability balance was recorded in “Other accrued liabilities” in the Company’s Condensed Consolidated Balance Sheet.

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”). During the nine months ended December 31, 2021, the Company paid $1.0 billion to purchase 34.5 million shares of McKesson Europe through exercises of the Put Right by the noncontrolling shareholders. This decreased the carrying value of the redeemable noncontrolling interests by $983 million for the nine months ended December 31, 2021, and the Company recorded the associated effect of the increase in the Company’s ownership interest of $178 million as an increase to McKesson 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” in the Condensed Consolidated Balance Sheet.

Noncontrolling Interests

Noncontrolling interests represent third-party equity interests in the Company’s consolidated entities primarily related to the formation of an oncology research business during the third quarter of fiscal 2023, ClarusONE Sourcing Services LLP, and Vantage Oncology Holdings, LLC. As discussed above, after June 15, 2021, noncontrolling interests also represented minority shareholder equity interests in McKesson Europe. The Company’s noncontrolling interest in McKesson Europe was included in the divestiture of the E.U. disposal group in October 2022. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for more information on these transactions.

The Company allocated $41 million and $46 million of net income to noncontrolling interests during the three months ended December 31, 2022 and 2021, respectively, and $123 million and $128 million during the nine months ended December 31, 2022 and 2021, respectively, which was recorded in “Net income attributable to noncontrolling interests” in the Company’s Condensed Consolidated Statements of Operations.

Changes in noncontrolling interests for the three and nine months ended December 31, 2022 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2022	$	518
Net income attributable to noncontrolling interests	41
Payments to noncontrolling interests	(36)
Reclassification of recurring compensation to other accrued liabilities	(1)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	1
Balance, December 31, 2022	$	366

(In millions)	Noncontrolling Interests
Balance, March 31, 2022	$	480
Net income attributable to noncontrolling interests	123
Other comprehensive income	44
Payments to noncontrolling interests	(113)
Reclassification of recurring compensation to other accrued liabilities	(5)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	(6)
Balance, December 31, 2022	$	366

Changes in redeemable noncontrolling interests and noncontrolling interests for the three and nine months ended December 31, 2021 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2021	$	484
Net income attributable to noncontrolling interests	46
Other comprehensive loss	(2)
Payments to noncontrolling interests	(38)
Reclassification of recurring compensation to other accrued liabilities	(3)
Balance, December 31, 2021	$	487

(In millions)	Noncontrolling Interests		Redeemable Noncontrolling Interests
Balance, March 31, 2021	$	196	$	1,271
Net income attributable to noncontrolling interests	128		8
Other comprehensive income (loss)	(2)		3
Payments to noncontrolling interests	(117)		—
Reclassification of recurring compensation to other accrued liabilities	(5)		(8)
Exercises of Put Right	—		(983)
Reclassification of McKesson Europe redeemable noncontrolling interests	287		(287)
Other	—		(4)
Balance, December 31, 2021	$	487	$	—

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Earnings (Loss) Per Common Share

9 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

Earnings (Loss) Per Common ShareBasic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The computation of diluted earnings per common share is similar to that of basic earnings 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 restricted stock units. Diluted loss per common share for the three months ended December 31, 2021 was calculated by excluding all dilutive securities from the denominator of the share computation due to their anti-dilutive effects. Less than 1 million of potentially dilutive securities for the three and nine months ended December 31, 2022, and for the nine months ended December 31, 2021, were excluded from the computation of diluted earnings per common share as they were anti-dilutive.

The computations for basic and diluted earnings per common share were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions, except per share amounts)	2022		2021		2022		2021
Income from continuing operations	$	1,119	$	39	$	2,899	$	885
Net income attributable to noncontrolling interests	(41)		(46)		(123)		(136)
Income (loss) from continuing operations attributable to McKesson Corporation	1,078		(7)		2,776		749
Income (loss) from discontinued operations, net of tax	1		—		(3)		(3)
Net income (loss) attributable to McKesson Corporation	$	1,079	$	(7)	$	2,773	$	746
Weighted-average common shares outstanding:
Basic	139.9		151.6		142.5		154.0
Effect of dilutive securities:
Stock options	0.2		—		0.3		0.2
Restricted stock units (1)	0.9		—		0.9		1.6
Diluted	141.0		151.6		143.7		155.8
Earnings (loss) per common share attributable to McKesson Corporation: (2)
Diluted
Continuing operations	$	7.65	$	(0.04)	$	19.32	$	4.81
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.66	$	(0.04)	$	19.30	$	4.79
Basic
Continuing operations	$	7.70	$	(0.04)	$	19.48	$	4.87
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.71	$	(0.04)	$	19.46	$	4.85

(1)Includes dilutive effect from restricted stock units and performance-based stock units.

(2)Certain computations may reflect rounding adjustments.

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Goodwill and Intangible Assets, Net

9 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

Goodwill and Intangible Assets, Net The Company evaluates goodwill for impairment on an annual basis and at an interim date, if indicators of potential impairment exist. During the first quarter of fiscal 2023, the Company voluntarily changed its annual goodwill impairment testing date from October 1st to April 1st to align with a change in timing of the Company’s annual long-term planning process. Accordingly, management determined that the change in accounting principle is preferable under the circumstance. This change has been applied prospectively from April 1, 2022 as retrospective application is deemed impracticable due to the inability to objectively determine the assumptions and significant estimates used in earlier periods without the benefit of hindsight. This change was not material to the Company’s consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge. The annual impairment testing performed as of April 1, 2022 did not indicate an impairment of goodwill.

Changes in the carrying amount of goodwill were as follows:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Total
Balance, March 31, 2022	$	3,923	$	1,542	$	2,453	$	1,533	$	9,451
Goodwill acquired	160		463		—		2		625
Foreign currency translation adjustments, net	(21)		—		—		(109)		(130)
Other adjustments	(12)		—		—		—		(12)
Balance, December 31, 2022	$	4,050	$	2,005	$	2,453	$	1,426	$	9,934

Information regarding intangible assets was as follows:

	December 31, 2022							March 31, 2022
(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	12	$	2,974	$	(1,735)	$	1,239	$	2,777	$	(1,691)	$	1,086
Service agreements	8	1,071		(608)		463		1,085		(573)		512
Trademarks and trade names	12	833		(418)		415		819		(386)		433
Technology	11	261		(124)		137		128		(116)		12
Other	9	191		(172)		19		187		(171)		16
Total		$	5,330	$	(3,057)	$	2,273	$	4,996	$	(2,937)	$	2,059

Amortization expense of intangible assets was $57 million and $80 million for the three months ended December 31, 2022 and 2021, respectively, and $170 million and $262 million for the nine months ended December 31, 2022 and 2021, respectively. Estimated amortization expense of these assets is as follows: $63 million, $243 million, $237 million, $204 million, and $198 million for the remainder of fiscal 2023 and each of the succeeding years through fiscal 2027, respectively, and $1.3 billion thereafter. All intangible assets were subject to amortization as of December 31, 2022 and March 31, 2022. Amortization of intangible assets of the E.U. disposal group previously classified as held for sale and disposed of in October 2022 ceased in the second quarter of fiscal 2022.

Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for a description of the goodwill and intangible assets acquired as part of the RxSS acquisition and formation of an oncology research business.

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Debt and Financing Activities

9 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt and Financing Activities

Debt and Financing Activities

Long-term debt consisted of the following:

(In millions)	December 31, 2022		March 31, 2022
U.S. Dollar notes (1) (2)
2.70% Notes due December 15, 2022	$	—	$	400
2.85% Notes due March 15, 2023	360		360
3.80% Notes due March 15, 2024	918		918
0.90% Notes due December 3, 2025	500		500
1.30% Notes due August 15, 2026	498		498
7.65% Debentures due March 1, 2027	150		150
3.95% Notes due February 16, 2028	343		343
4.75% Notes due May 30, 2029	196		196
6.00% Notes due March 1, 2041	218		217
4.88% Notes due March 15, 2044	255		255
Foreign currency notes (1) (3)
1.50% Euro Notes due November 17, 2025	640		662
1.63% Euro Notes due October 30, 2026	535		554
3.13% Sterling Notes due February 17, 2029	544		582
Term loan (4)	500		—
Lease and other obligations	199		244
Total debt	5,856		5,879
Less: Current portion	404		799
Total long-term debt	$	5,452	$	5,080

(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.

(4)This loan is under the 2022 Term Loan Credit Facility.

Long-Term Debt

The Company’s long-term debt includes both U.S. dollar and foreign currency-denominated borrowings. Debt outstanding totaled $5.9 billion at December 31, 2022 and March 31, 2022, of which $404 million and $799 million, respectively, was included under the caption “Current portion of long-term debt” within the Company’s Condensed Consolidated Balance Sheets. On December 15, 2022, the Company retired its $400 million outstanding principal amount of 2.70% notes upon maturity. These notes were repaid using cash on hand.

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, plus accrued and unpaid interest of $14 million. The redemption of the Tender Offer Notes was accounted for as a debt extinguishment. As a result of the redemption, the Company incurred a pre-tax loss on debt extinguishment of $191 million, which included premiums of $182 million as well as the write-off of unamortized debt issuance costs and transaction fees incurred totaling $9 million.

Revolving Credit Facilities

On November 7, 2022, the Company entered into a Credit Agreement (the “2022 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. The 2022 Credit Facility replaced the Company’s previous syndicated $4.0 billion five-year senior unsecured credit facility, dated as of September 25, 2019, as amended (the “2020 Credit Facility”), which was scheduled to mature in September 2024. The 2020 Credit Facility was terminated in connection with the execution of the 2022 Credit Facility. There were no borrowings under the 2020 Credit Facility during the nine months ended December 31, 2022 and 2021, and no amounts outstanding at the time of its termination.

Borrowings under the 2022 Credit Facility bear interest based upon the Term Secured Overnight Financing Rate (“SOFR”) for credit extensions denominated in U.S. dollars, the Sterling Overnight Index Average Reference Rate for credit extensions denominated in British pound sterling, the Euro Interbank Offered Rate for credit extensions denominated in Euros, the Canadian Dealer Offered Rate for credit extensions denominated in Canadian dollars, a prime rate, or alternative overnight rates, as applicable, plus agreed upon margins. The 2022 Credit Facility 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 2022 Credit Facility. If the Company does not comply with these covenants, its ability to use the 2022 Credit Facility may be suspended and repayment of any outstanding balances under the 2022 Credit Facility may be required. At December 31, 2022, the Company was in compliance with all covenants under the 2022 Credit Facility. The 2022 Credit Facility also permits the Company to establish key performance indicators with respect to certain environmental, social, and governance targets of the Company in consultation with certain sustainability coordinators, and enter into an amendment to the 2022 Credit Facility to provide for certain adjustments to the otherwise applicable facility fee and margins. The 2022 Credit Facility is scheduled to mature in November 2027. The remaining terms and conditions of the 2022 Credit Facility are substantially similar to those previously in place under the 2020 Credit Facility. The Company can use funds obtained under the 2022 Credit Facility for general corporate purposes. There were no borrowings under the 2022 Credit Facility during the third quarter of fiscal 2023 and no amounts outstanding as of December 31, 2022.

The Company also maintained bilateral credit facilities primarily denominated in Euros which were transferred as part of the divestiture of the E.U. disposal group in October 2022. Borrowings and repayments were not material during the nine months ended December 31, 2022 and 2021. Amounts outstanding under these credit lines were not material as of March 31, 2022.

2022 Term Loan Credit Facility

On November 7, 2022, the Company entered into a Credit Agreement (the “2022 Term Loan Credit Facility”) pursuant to which the Company has an unsecured delayed draw term loan facility up to $500 million which was available for borrowing for 90 days after the closing date in up to three separate borrowings, and which is subject to increase as provided for in the 2022 Term Loan Credit Facility. The 2022 Term Loan Credit Facility 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 2022 Term Loan Credit Facility. At December 31, 2022, the Company was in compliance with all covenants under the 2022 Term Loan Credit Facility. In the case of event of default under the 2022 Term Loan Credit Facility, the lenders may elect, among other things, to declare any unpaid amounts obtained under the 2022 Term Loan Credit Facility to be immediately due and payable. The 2022 Term Loan Credit Facility bears interest based upon Term SOFR, a prime rate, or alternative overnight rates, as applicable, plus agreed upon margins. The remaining terms and conditions of the 2022 Term Loan Credit Facility are substantially similar to those under the 2022 Credit Facility. The Company can use funds obtained under the 2022 Term Loan Credit Facility for general corporate purposes. As of December 31, 2022, the Company had $500 million in borrowings outstanding under the 2022 Term Loan Credit Facility which bear interest at three-month Term SOFR plus 110 basis points, payable quarterly, and mature on November 7, 2025.

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. During the nine months ended December 31, 2022, the Company borrowed $1.1 billion and repaid $483 million under the program. During the nine months ended December 31, 2021, the Company borrowed $3.6 billion and repaid $3.3 billion under the program. At December 31, 2022, there were $617 million commercial paper notes outstanding at a weighted average interest rate of 4.73%. At March 31, 2022, there were no commercial paper notes outstanding.

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Pension Benefits

9 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Pension Benefits

Pension Benefits

The net periodic expense for defined benefit pension plans was not material for each of the three and nine months ended December 31, 2022 and 2021. Cash contributions to these plans were $2 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $7 million and $35 million for the nine months ended December 31, 2022 and 2021, respectively. The cash contributions for the three and nine months ended December 31, 2021 included a $17 million payment to a U.K. pension plan. 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 estimated life expectancy.

As part of the European divestiture activities discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures,” pension liabilities of $85 million, as part of the E.U. disposal group, and pension assets of $49 million, as part of the U.K. disposal group, were included under the captions “Liabilities held for sale” and “Assets held for sale,” respectively, in the Condensed Consolidated Balance Sheet as of March 31, 2022. During the third quarter of fiscal 2023, the Company derecognized pension liabilities totaling $75 million and released $13 million of gains from accumulated other comprehensive loss related the divestiture of the E.U. disposal group. During the first quarter of fiscal 2023, the Company derecognized pension assets of $49 million and released $30 million of accumulated other comprehensive loss related to the divestiture of the U.K. disposal group.

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Hedging Activities

9 Months Ended

Dec. 31, 2022

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 as described below. In accordance with the Company’s policy, derivatives are only used for hedging purposes. It does not use derivatives for trading or speculative purposes. The Company uses different counterparties for its derivative contracts to minimize the exposure to credit risk but does not anticipate non-performance by these parties.

Foreign Currency Exchange Risk

The Company conducts its business worldwide in U.S. dollars and the functional currencies of its foreign subsidiaries, including Euro, Canadian dollars, and British pound sterling. 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. Subsequent to the completion of the U.K. divestiture in April 2022 as discussed in Financial Note 2, “Business Acquisitions and Divestitures,” the Company’s foreign currency exchange rate risk is limited to the Canadian dollar and Euro.

Non-Derivative Instruments Designated as Hedges

At March 31, 2022, the Company had €1.1 billion of Euro-denominated notes designated as non-derivative net investment hedges. These hedges were 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 were designated as net investment hedges and meet effectiveness requirements, the changes in carrying value of the notes attributable to the change in spot rates were recorded as 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 were ineffective, changes in carrying value attributable to the change in spot rates are recorded in earnings.

In connection with the sale of the E.U. disposal group in October 2022, the Company reclassified $112 million of gains from accumulated other comprehensive loss to “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022. This amount related to the €1.1 billion of Euro-denominated notes described above, along with certain other Euro-denominated notes which were previously accounted for as net investment hedges and matured in prior periods, and was included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell.

In connection with the sale of the U.K. disposal group in April 2022, the Company reclassified $26 million of gains from accumulated other comprehensive loss to “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2022. This amount related to the Company’s £450 million of British pound sterling-denominated notes, which were previously accounted for as net investment hedges until de-designated in fiscal 2020, and was included in the fiscal 2022 calculation of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell.

Foreign currency gains (losses) from non-derivative instruments included in other comprehensive income in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Non-derivatives designated as net investment hedges: (1)
Euro-denominated notes (2)	$	(132)	$	23	$	7	$	34

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)Includes amounts reclassified to earnings of $112 million for the three and nine months ended December 31, 2022.

Derivative Instruments

At December 31, 2022 and March 31, 2022, the notional amounts of the Company’s outstanding derivatives were as follows:

			December 31, 2022		March 31, 2022
(In millions)	Currency	Maturity Date	Notional
Derivatives designated as net investment hedges: (1)
Cross-currency swaps (2)	CAD	Nov-24	$	500	$	500
Derivatives designated as fair value hedges: (1)
Cross-currency swaps (3)	GBP	Feb-23	£	450	£	450
Cross-currency swaps (4)	EUR	Aug-25 to Jul-26	€	1,100	€	—
Floating interest rate swaps (5)	USD	Aug-27 to Sep-29	$	750	$	—
Derivatives designated as cash flow hedges: (1)
Cross-currency swaps (2)	CAD	Jul-22 to Jan-24	$	1,085	$	1,678
Fixed interest rate swaps (6)	USD	Nov-22	$	—	$	500

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)The Company agreed 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.

(3)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.

(4)The Company entered into cross-currency fixed-to-fixed interest rate swaps to mitigate the foreign currency exchange fluctuations on its Euro-denominated notes.

(5)The Company entered into fixed-to-floating interest rate swaps to hedge the changes in fair value caused by fluctuations in the benchmark interest rates.

(6)The Company entered into agreements with financial institutions to lock into the fixed benchmark interest rates for future bond issuance, which were terminated during the third quarter of fiscal 2023 as further discussed below.

Net Investment Hedges

The Company uses cross-currency swaps 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 and 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.

Fair Value Hedges

The Company uses cross-currency swaps to hedge the changes in the fair value of British pound sterling notes resulting from changes in benchmark interest rates and foreign exchange rates. During the third quarter of fiscal 2023, the Company entered into cross-currency fixed-to-fixed interest rate swaps with a total notional amount of €1.1 billion to hedge the changes in the fair value of its underlying Euro-denominated notes resulting from changes in benchmark interest rates and foreign currency exchange rates.

During the nine months ended December 31, 2022, the Company also entered into floating interest rate swaps to convert $750 million of its fixed rate debt to floating interest rate in order to hedge the changes in fair value caused by fluctuations in the benchmark interest rate. The changes in the fair value of these derivatives are recorded in “Interest expense” in the Condensed Consolidated Statements of Operations.

The changes in the fair value of these derivatives and the offsetting changes in the fair value of the hedged notes are recorded in earnings. Gains from the changes in the Company’s fair value hedges recorded in earnings were largely offset by the losses recorded in earnings on the hedged item.

Cash Flow Hedges

From time to time, the Company enters into cross-currency swaps to hedge intercompany loans denominated in non-functional currencies to reduce the income statement effects arising from fluctuations in foreign currency rates and also enters into forward contracts to hedge the variability future benchmark interest rates on planned bond issuances. The effective portion of changes in the fair value of these 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. Gains or losses reclassified from accumulated other comprehensive loss and recorded in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations were not material for the three and nine months ended December 31, 2022 and 2021.

During the third quarter of fiscal 2023, the Company terminated its $500 million notional fixed interest rate swaps and recognized a gain of $97 million within “Other income, net” in the Condensed Consolidated Statements of Operations.

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. From time to time, the Company has entered into forward contracts to hedge the Euro against cash flows denominated in British pound sterling and other European currencies. Changes in the fair values for contracts not designated as hedges were 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 for the three and nine months ended December 31, 2021 and the Company did not have any outstanding derivative instruments not designated as hedges during fiscal 2023. Gains or losses from these contracts were largely offset by changes in the value of the underlying intercompany obligations.

Other Information on Derivative Instruments

Gains (losses) of derivatives included in other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Derivatives designated as net investment hedges:
Cross-currency swaps	$	(7)	$	(2)	$	26	$	3
Derivatives designated as cash flow hedges:
Cross-currency swaps	$	(1)	$	(5)	$	(6)	$	(6)
Fixed interest rate swaps	(85)		(3)		(30)		9

Information regarding the fair value of derivatives on a gross basis were as follows:

	Balance Sheet Caption	December 31, 2022						March 31, 2022
		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	$	18	$	17	$	1,080	$	30	$	39	$	1,537
Cross-currency swaps (non-current)	Other non-current assets/liabilities	68		—		1,774		—		36		679
Fixed interest rate swaps (current)	Prepaid expenses and other	—		—		—		31		—		500
Floating interest rate swaps (non-current)	Other non-current liabilities	—		30		750		—		—		—
Total		$	86	$	47			$	61	$	75

Refer to Financial Note 11, "Fair Value Measurements," for more information on these recurring fair value measurements.

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Fair Value Measurements

9 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company measures certain assets and liabilities at fair value in accordance with 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 December 31, 2022 and March 31, 2022 included investments in money market funds of $696 million and $981 million, 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. The Company’s marketable securities were not material at December 31, 2022 and March 31, 2022.

Fair values of the Company’s interest rate swaps 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.

The Company holds investments in equity securities of U.S. growth stage companies that address both current and emerging business challenges in the healthcare industry and which had carrying values of $253 million and $346 million at December 31, 2022 and March 31, 2022, respectively. These investments primarily consist of equity securities without readily determinable fair values and are included in “Other non-current assets” in the Condensed Consolidated Balance Sheets. During the nine months ended December 31, 2022, the Company recognized impairment charges and realized gains on the exit of certain investments. During the nine months ended December 31, 2021, certain of the Company’s investments in equity securities without readily determinable fair values were remeasured to fair value based on transactions which resulted in changes in the observable price of those securities. The impact from the Company’s investments in these equity securities were net losses of $24 million and net gains of $104 million for the nine months ended December 31, 2022 and 2021, respectively. These amounts were recorded in “Other income, net” in the Condensed Consolidated Statements of Operations. The carrying value of publicly-traded investments, which was not material for the periods presented, was determined using quoted prices for identical investments in active markets and are considered to be Level 1 inputs.

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 or charges to remeasure assets classified as held for sale to fair value less costs to sell.

At December 31, 2022, the contingent consideration liability related to the Company’s acquisition of RxSS in November 2022 was measured at fair value on a nonrecurring basis. At March 31, 2022, the assets and liabilities associated with the disposal groups in Europe previously classified as held for sale were measured at the lower of carrying value or fair value less costs to sell. The E.U. disposal group was divested in October 2022 and the U.K. disposal group was divested in April 2022. Refer to Financial Note 2, “Business Acquisitions and Divestitures," for more information on these transactions. At March 31, 2022, assets measured at fair value on a nonrecurring basis also included certain long-lived assets within the International segment related to the Company’s previous operations in Denmark and its retail pharmacy businesses in Canada.

The aforementioned investments in equity securities of U.S. growth stage companies include the carrying value of investments without readily determinable fair values, which were determined using a measurement alternative and are recorded at cost less impairment, plus or minus any changes in observable price from orderly transactions of the same or similar security of the same issuer. The inputs related to changes in observable price 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. Inputs related to impairments of investments are generally considered Level 3 fair value measurements due to their inherently unobservable nature based on significant assumptions by management and use of company-specific information.

There were no other material assets or liabilities measured at fair value on a nonrecurring basis at December 31, 2022 and March 31, 2022.

Other Fair Value Disclosures

At December 31, 2022 and March 31, 2022, 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-term 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:

	December 31, 2022				March 31, 2022
(In millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	5,856	$	5,607	$	5,879	$	5,999

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” in the Company’s Condensed Consolidated Balance Sheet, primarily consisted of $395 million as of March 31, 2022 held in escrow related to obligations under settlement agreements for opioid-related claims of governmental entities and were released during the nine months ended December 31, 2022, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities.”

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 each 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 long-lived assets is considered a Level 3 fair value measurement.

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Commitments and Contingent Liabilities

9 Months Ended

Dec. 31, 2022

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 18 to the Company’s 2022 Annual Report, Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended June 30, 2022, and Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended September 30, 2022, 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. Amounts included within “Claims and litigation charges, net” in the Condensed Consolidated Statements of Operations consist of estimated loss contingencies related to opioid-related litigation matters.

I. Litigation and Claims Involving Distribution of Controlled Substances

The Company and its affiliates have been sued as defendants in many cases asserting claims related to distribution of controlled substances. They have been named as defendants along with other pharmaceutical wholesale distributors, pharmaceutical manufacturers, and retail pharmacy chains. The plaintiffs in these actions have included state attorneys general, county and municipal governments, school districts, 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.

The Company and two other national pharmaceutical distributors (collectively “Distributors”) settled with 46 of 49 eligible states and their participating subdivisions, as well as the District of Columbia and all eligible territories (collectively, “Settling Governmental Entities”) effective on April 2, 2022 (“Settlement”). Under the Settlement, the Distributors will pay the Settling Governmental Entities up to approximately $19.5 billion over 18 years, with up to approximately $7.4 billion to be paid by the Company for its 38.1% portion. A minimum of 85% of the Settlement 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. Under the Settlement, the Distributors will establish a clearinghouse to consolidate their controlled-substance distribution data, which will be available to the settling U.S. states to use as part of their anti-diversion efforts. The Distributors do not admit liability or wrongdoing and do not waive any defenses pursuant to the Settlement. Consent judgments have been entered in all participating states and territories, and approximately 2,300 cases have been dismissed pursuant to the Settlement.

Three eligible states, Alabama, Washington, and Oklahoma did not join the Settlement, but they have all reached agreements with the Company. With respect to the claims of the Alabama attorney general, the Company has an agreement under which the Company will pay $141 million in ten equal annual installments and an additional approximately $33 million in attorney fees and costs to resolve the opioid-related claims of the state of Alabama and its subdivisions. Under an agreement with the attorney general of Washington to settle the claims of the state of Washington and its subdivisions, the Distributors will pay up to $518 million over 18 years, of which the Company’s portion will be 38.1% (or approximately $197 million), consistent with Washington’s allocation under the comprehensive framework, as well as certain additional attorneys’ fees and costs. Under an agreement with the attorney general of Oklahoma to settle claims of the state of Oklahoma and its subdivisions, the Distributors will pay up to approximately $308 million over 18 years, of which the Company’s portion would be 38.1% (or approximately $117 million), consistent with Oklahoma’s allocation under the comprehensive framework.

The Company previously settled with the state of West Virginia, and West Virginia and its subdivisions were not eligible to participate in the comprehensive Settlement. Trial in the case of Cabell County and the City of Huntington occurred in the U.S. District Court for the Southern District of West Virginia and concluded on July 28, 2021. On July 4, 2022, the court entered judgment in defendants’ favor. On August 2, 2022, the plaintiffs filed an appeal. The claims of certain other West Virginia subdivisions were pending in the federal Multidistrict Litigation and before the state Mass Litigation Panel. On July 5, 2022, the Mass Litigation Panel entered an order noting an agreement in principle between a group of plaintiffs’ attorneys representing the municipalities and the Distributors. Under the settlement agreement with the participating West Virginia municipalities, the Distributors will pay $400 million over approximately 11 years, with the Company responsible for 38.1% of the total amount (or approximately $152 million). All participating litigating subdivisions have dismissed their claims against the Company. The agreement does not include school districts or the claims of Cabell County and the City of Huntington.

With respect to the claims of Native American tribes, on September 28, 2021, the Company announced that the Distributors reached an agreement with the Cherokee Nation to pay approximately $75 million over 6.5 years to resolve opioid-related claims, of which the Company’s portion will be 38.1% (or approximately $29 million). The Company has also negotiated an agreement to resolve opioid-related claims brought by other Native American tribes. Under that agreement, which was executed on October 26, 2022, the Distributors will pay those other Native American tribes approximately $440 million over 6 years, of which the Company’s portion will be 38.1% (or, approximately $167 million). The agreement achieves broad resolution of opioid-related claims brought against the Distributors by federally recognized Native American tribes. Under these agreements, a minimum of 85% of the settlement payments must be used by the Native American tribes to remediate the opioid epidemic.

Although the Settlement terminated the substantial majority of opioid-related suits by governmental entities pending against the Company, a small number of subdivisions have opted not to participate in the settlements described above. 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. The Company’s loss contingency accruals for these subdivisions are reflected in the estimated liability for the opioid-related claims consistent with what would be allocated under the framework of the Settlement.

The Company’s estimated accrued liability for the opioid-related claims of governmental entities was as follows:

(In millions)	December 31, 2022		March 31, 2022
Current litigation liabilities (1)	$	598	$	1,046
Long-term litigation liabilities	6,642		7,220
Total litigation liabilities	$	7,240	$	8,266

(1)These amounts as of December 31, 2022 and March 31, 2022, recorded in “Other accrued liabilities” in the Condensed Consolidated Balance Sheets, are the amounts estimated to be paid within the next twelve months following each respective period end date.

During the three and nine months ended December 31, 2022, the Company paid $106 million and $1.0 billion, respectively, associated with the Settlement and separate settlement agreements of opioid-related claims of participating states, subdivisions, and Native American tribes. In conjunction with the payments made in the nine months ended December 31, 2022, all funds have been released from escrow.

Though 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 four cases brought in Canada (three by governmental or tribal entities and one by an individual). These claims, and those of private entities generally, are not included in the Settlement 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 was brought by a group of individual plaintiffs in Glynn County, Georgia Superior Court seeking to recover for damages allegedly arising from their family members’ abuse of prescription opioids; trial began on January 30, 2023. Poppell v. Cardinal Health, Inc., CE19-00472. In another, several hospitals brought suit in the Circuit Court of Conecuh County, Alabama; trial on the claims of eight of these hospitals is currently scheduled for July 2023. Fort Payne Hospital Corporation et al. v. McKesson Corp., CV-2021-900016. The Company has not concluded a loss is probable in any of these matters; nor is any possible loss or range of loss reasonably estimable.

Because of the many uncertainties associated with the remaining opioid-related litigation matters, 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.

II. 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.

III. State Opioid Statutes

In April 2018, the State of New York Opioid Stewardship Act (“OSA”) imposed an aggregate $100 million annual surcharge for 2017 and 2018 on all manufacturers and distributors licensed to sell or distribute opioids in New York. Pending resolution of a challenge to the OSA filed by the Healthcare Distribution Alliance (“HDA”), the Company accrued its estimated OSA surcharges as a $50 million provision 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. In December 2021, after the HDA challenge was dismissed, the Company paid $26 million for the 2017 OSA surcharge assessment. On May 18, 2022, the Company filed a lawsuit in New York state court challenging the constitutionality of the OSA. In November 2022, the Company received a 2018 OSA surcharge assessment of approximately $42 million, and therefore the Company accrued an additional $18 million provision in “Selling, distribution, general, and administrative expenses” in the Condensed Consolidated Statements of Operations during the three and nine months ended December 31, 2022. On December 14, 2022, the state court ruled that the OSA is constitutional. In December 2022, the Company paid $11 million as the first installment of the 2018 OSA surcharge assessment. The Company’s OSA challenge is pending before the New York Appellate Division. The Company reserves its rights and intends to vigorously challenge the OSA and the OSA surcharge assessments.

IV. Antitrust Settlements

In October 2022, the Company received proceeds of $129 million related to its share of an antitrust settlement. A lawsuit was filed against a brand manufacturer alleging that the manufacturer, by itself or in concert with others, took improper actions to delay or prevent generic drugs from entering the market. The Company was not a named party to the litigation but was a member of the class of those who purchased directly from the pharmaceutical manufacturer. The Company recognized a gain in that amount within "Cost of sales" in the Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2022 related to the settlement.

V. Environmental MattersPrimarily as a result of the operation of the Company’s former chemical businesses, which were fully divested by 1987, the Company is involved in various matters pursuant to environmental laws and regulations. The Company has been designated as a Potentially Responsible Party (“PRP”) under the Superfund law for environmental assessment and cleanup costs as the result of its alleged disposal of hazardous substances at 14 sites. For one such site, the Company was one of multiple recipients of a New Jersey Department of Environmental Protection Agency directive and a separate U.S. Environmental Protection Agency (“EPA”) directive concerning natural resources damages to the Passaic River associated with the Company's Newark, New Jersey facility. In March 2016, the EPA selected a preferred remedy for this Lower Passaic River site with an estimated cost of approximately $1.4 billion. In December 2022, the Company entered into a Consent Decree with the EPA that is currently pending approval by the U.S. District Court for the District of New Jersey and requires the Company to pay $3 million, which had already been accrued for in the Condensed Consolidated Balance Sheets based on past estimated probable loss.

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Stockholders' Equity (Deficit)

9 Months Ended

Dec. 31, 2022

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 participate equally in any dividends declared by the Company’s Board of Directors (the “Board”).

In July 2022, the quarterly dividend was raised from $0.47 to $0.54 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

The Board has authorized the repurchase of McKesson’s common stock. 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, as amended. 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. The ASR programs discussed below were designed to comply with Rule 10b5-1(c).

In December 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $972 million of the Company’s common stock. Pursuant to the ASR agreement, the Company paid $972 million in cash to the financial institution and received an initial delivery of 2.2 million shares in December 2022. The transaction will be completed during the fourth quarter of fiscal 2023, at which point the Company expects to receive additional shares. The final number of shares repurchased and the average price per share paid will be determined based on the volume-weighted average price of the Company’s common stock during the term of the ASR program, less a pre-negotiated discount.

In May 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $1.0 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 3.1 million shares at an average price per share of $321.05. The Company received 2.6 million shares as the initial share settlement, and in August 2022, the Company received an additional 0.5 million shares upon the completion of this ASR program.

In February 2022, the Company entered into an ASR program with a third-party financial institution to repurchase $1.5 billion of the Company’s common stock. The total number of shares repurchased under this ASR program was 5.1 million shares at an average price per share of $295.16. The Company received 4.8 million shares as the initial share settlement in the fourth quarter of fiscal 2022, and in May 2022, the Company received an additional 0.3 million shares upon the completion of this ASR program.

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. The total number of shares repurchased under this ASR program was 5.2 million shares at an average price per share of $193.22. The Company received 4.3 million shares as the initial share settlement, and in August 2021, the Company received an additional 0.9 million shares upon the completion of this ASR program.

During the three months ended December 31, 2022, the Company repurchased 2.7 million of the Company’s shares of common stock for $1.0 billion through open market transactions at an average price per share of $370.13. During the three months ended September 30, 2022, the Company repurchased 1.5 million of the Company’s shares of common stock for $524 million through open market transactions at an average price per share of $355.75. There were no open market share repurchases during the three months ended June 30, 2022.

During the three months ended December 31, 2021, the Company repurchased 3.3 million of the Company’s shares of common stock for $728 million through open market transactions at an average price per share of $223.89, of which $30 million was accrued at December 31, 2021 within “Other accrued liabilities” in the Company’s Condensed Consolidated Balance Sheet for share repurchases that were executed in late December 2021 and settled in early January 2022. During the three months ended September 30, 2021, the Company repurchased 1.4 million of the Company’s shares of common stock for $280 million through open market transactions at an average price per share of $203.20. There were no open market share repurchases during the three months ended June 30, 2021.

In July 2022, the Board approved an increase of $4.0 billion in the authorization for repurchase of McKesson’s common stock. The total remaining authorization outstanding for repurchases of the Company’s common stock at December 31, 2022 was $3.8 billion.

Accumulated Other Comprehensive Loss

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests, by components for the three and nine months ended December 31, 2022 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2022	$	(1,254)	$	109		$	63	$	(32)	$	(1,114)
Other comprehensive income (loss) before reclassifications	96		(5)			8		18		117
Amounts reclassified to earnings and other (2)	280		(119)			(73)		10		98
Other comprehensive income (loss)	376		(124)		(3)	(65)		28		215
Less: amounts attributable to noncontrolling interests	—		—			—		—		—
Other comprehensive income (loss) attributable to McKesson	376		(124)			(65)		28		215
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestiture of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $22 million.

(3)Amounts recorded for the three months ended December 31, 2022 include losses of $132 million related to net investment hedges from Euro-denominated notes and losses of $7 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax benefit of $15 million.

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2022	$	(1,504)	$	10		$	27	$	(67)	$	(1,534)
Other comprehensive income (loss) before reclassifications	(360)		111			44		32		(173)
Amounts reclassified to earnings and other (2)	1,027		(136)			(73)		34		852
Other comprehensive income (loss)	667		(25)		(3)	(29)		66		679
Less: amounts attributable to noncontrolling interests	41		—			—		3		44
Other comprehensive income (loss) attributable to McKesson	626		(25)			(29)		63		635
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestitures of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, and U.K. disposal group in April 2022, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal groups to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $6 million.

(3)Amounts recorded for the nine months ended December 31, 2022 include net gains of $7 million related to net investment hedges from Euro-denominated notes and gains of $26 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $32 million and gains of $26 million reclassified to earnings related to previously de-designated British pound sterling notes.

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests and redeemable noncontrolling interests, by components for the three and nine months ended December 31, 2021 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Losses and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2021	$	(1,557)	$	(25)		$	21	$	(104)	$	(1,665)
Other comprehensive income (loss) before reclassifications	—		16			(6)		(1)		9
Amounts reclassified to earnings and other	—		—			—		(1)		(1)
Other comprehensive income (loss)	—		16		⁽²⁾	(6)		(2)		8
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	(2)		—			—		—		(2)
Other comprehensive income (loss) attributable to McKesson	2		16			(6)		(2)		10
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Amounts recorded for the three months ended December 31, 2021 include gains of $23 million related to net investment hedges from Euro-denominated notes and losses of $2 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $5 million.

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2021	$	(1,361)	$	(36)		$	13	$	(96)	$	(1,480)
Other comprehensive income (loss) before reclassifications	(47)		21			(3)		5		(24)
Amounts reclassified to earnings and other	18		—			5		(3)		20
Other comprehensive income (loss)	(29)		21		⁽²⁾	2		2		(4)
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	7		(6)			—		—		1
Other comprehensive income (loss) attributable to McKesson	(36)		27			2		2		(5)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	(158)		—			—		(12)		(170)
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Amounts recorded for the nine months ended December 31, 2021 include gains of $34 million related to net investment hedges from Euro-denominated notes and gains of $3 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $10 million.

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Segments of Business

9 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segments of Business

Segments of Business

The Company reports its financial results in four reportable segments: U.S. Pharmaceutical, RxTS, Medical-Surgical Solutions, and International. 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 include 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 (loss) 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 serves McKesson’s biopharma and life sciences partners and helps solve medication access, affordability, and adherence challenges for patients. RxTS works across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma to deliver innovative solutions that help people get the medicine they need to live healthier lives. RxTS also offers prescription price transparency, benefit insight, dispensing support services, third-party logistics, and wholesale distribution support across various therapeutic categories and temperature ranges to biopharma customers throughout the product lifecycle.

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 285,000 national brand medical-surgical products as well as McKesson’s own line of high-quality products through a network of distribution centers within the U.S.

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 remaining operations in Europe provide distribution and services to wholesale, institutional, and retail customers in Norway where it owns, partners, or franchises with retail pharmacies. The Company’s Canadian operations deliver vital medicines, supplies, and information technology solutions throughout Canada and includes Rexall Health retail pharmacies. International segment assets at December 31, 2022 were $6.2 billion, a decrease from the end of fiscal 2022 primarily due to the completed divestitures of the E.U. disposal group in October 2022 and the U.K. disposal group in April 2022, along with unfavorable effects of foreign currency exchange fluctuations. Refer to Financial Note 2, “Business Acquisitions and Divestitures,” for more information.

Financial information relating to the Company’s reportable operating segments and reconciliations to the condensed consolidated totals was as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Segment revenues (1)
U.S. Pharmaceutical	$	61,934	$	55,041	$	178,940	$	158,471
Prescription Technology Solutions	1,121		1,031		3,205		2,844
Medical-Surgical Solutions	2,986		3,082		8,421		8,734
International	4,449		9,460		17,235		27,815
Total revenues	$	70,490	$	68,614	$	207,801	$	197,864
Segment operating profit (loss) (2)
U.S. Pharmaceutical (3)	$	850	$	744	$	2,442	$	2,186
Prescription Technology Solutions	136		129		400		361
Medical-Surgical Solutions (4)	328		308		883		679
International (5)	136		(668)		93		(761)
Subtotal	1,450		513		3,818		2,465
Corporate expenses, net (6)	67		(195)		49		(858)
Loss on debt extinguishment (7)	—		—		—		(191)
Interest expense	(69)		(41)		(169)		(135)
Income from continuing operations before income taxes	$	1,448	$	277	$	3,698	$	1,281

(1)Revenues from services on a disaggregated basis represent less than 1% of the U.S. Pharmaceutical segment’s total revenues, less than 36% of the RxTS segment’s total revenues, less than 3% of the Medical-Surgical Solutions segment’s total revenues, and less than 8% of the International segment’s total revenues. The International segment reflects foreign revenues. Revenues for the remaining three reportable segments are derived in the U.S.

(2)Segment operating profit (loss) 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 includes the following:

•cash receipts for the Company’s share of antitrust legal settlements of $129 million for the three and nine months ended December 31, 2022 and $46 million for the nine months ended December 31, 2021;

•a charge of $5 million and a credit of $33 million related to the last-in, first-out (“LIFO”) method of accounting for inventories for the three months ended December 31, 2022 and 2021, respectively, and credits of $31 million and $79 million for the nine months ended December 31, 2022 and 2021, respectively; and

•a gain of $142 million for the nine months ended December 31, 2022 related to the exit of one of the Company’s investments in equity securities in July 2022 for proceeds of $179 million, which is reflected within “Other income, net” in the Company’s Condensed Consolidated Statements of Operations.

(4)The Company’s Medical-Surgical Solutions segment’s operating profit for the nine months ended December 31, 2021 includes $164 million of inventory charges on certain personal protective equipment and other related products.

(5)The Company’s International segment’s operating profit (loss) includes the following:

•charges of $3 million and $240 million for the three and nine months ended December 31, 2022, respectively, and charges of $58 million and $400 million for the three and nine months ended December 31, 2021, respectively, to remeasure the assets and liabilities of the E.U. disposal group to fair value less costs to sell and, in fiscal 2022, to impair certain assets, including internal-use software that will not be utilized in the future, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•charges of $787 million for the three and nine months ended December 31, 2021 to remeasure the assets and liabilities of the U.K. disposal group to fair value less costs to sell, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;” and

•a gain of $59 million for the nine months ended December 31, 2021 related to the sale of the Company’s Canadian health benefit claims management and plan administrative services business.

(6)Corporate expenses, net includes the following:

•credits of $34 million and $306 million for the three and nine months ended December 31, 2022, respectively, and credits of $32 million and charges of $117 million for the three and nine months ended December 31, 2021, respectively, primarily related to the effect of accumulated other comprehensive loss components from the E.U. disposal group, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•a gain of $126 million for the three and nine months ended December 31, 2022 related to a cash payment received for the early termination of a tax receivable agreement (“TRA”) exercised by Change Healthcare Inc. (“Change”) in October 2022 and was recorded within “Other income, net” in the Condensed Consolidated Statements of Operations. The Company was a party to a TRA entered into as part of the formation of the joint venture with Change, from which McKesson has since exited. The TRA generally required Change to pay McKesson 85% of the net cash tax savings realized, or deemed to be realized, by Change resulting from the amortization allocated to Change by the joint venture. In October 2022, Change exercised its right pursuant to the TRA to terminate the agreement;

•a gain of $97 million for the three and nine months ended December 31, 2022 from the termination of fixed interest rate swaps accounted for as cash flow hedges, as discussed in more detail in Financial Note 10, “Hedging Activities;”

•charges of $193 million for the nine months ended December 31, 2021, related to the Company’s estimated liability for opioid-related claims, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities;”

•charges of $9 million and $33 million for the three months ended December 31, 2022 and 2021, respectively, and charges of $37 million and $104 million for the nine months ended December 31, 2022 and 2021, respectively, of opioid-related costs, primarily litigation expenses;

•restructuring charges of $90 million for the nine months ended December 31, 2021 primarily due to the transition to a partial remote work model for certain employees; and

•net losses of $24 million and net gains of $104 million for the nine months ended December 31, 2022 and 2021, respectively, associated with certain of the Company’s equity investments.

(7)Loss on debt extinguishment for the nine months ended December 31, 2021 consists of a charge of $191 million related to the Company’s July 2021 tender offer to redeem a portion of its existing debt, as discussed in more detail in Financial Note 8, “Debt and Financing Activities.”

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Significant Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation: The condensed consolidated financial statements and accompanying notes are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“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.

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 can exercise significant influence over operating and financial policies are accounted for using the equity method.

Fiscal Period

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

Reclassifications: Certain prior period amounts have been reclassified to conform to the current year presentation.

Use of Estimates

Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires the Company to 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 could differ from those estimated amounts. The Company continues to evaluate the ongoing impacts, including the economic consequences, of the pandemic caused by the SARS-CoV-2 coronavirus (“COVID-19”), and therefore 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 results of operations, financial position, and cash flows of McKesson for the interim periods presented.

Results of Operations

The results of operations for the three and nine months ended December 31, 2022 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, 2022, previously filed with the SEC on May 9, 2022 (“2022 Annual Report”).

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

There were no adopted accounting standards during the nine months ended December 31, 2022 that had a material impact to the Company’s results of operations, financial position, cash flows, or notes to the financial statements upon their adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of the equity security, and requires additional disclosure requirements. ASU 2022-03 is effective for the Company on a prospective basis for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company does not expect that this guidance will have a material impact on its consolidated financial statements or related disclosures

Held for Sale

Assets and liabilities to be disposed of by sale (“disposal groups”) are classified as “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The classification occurs when the disposal group is available for immediate sale and the sale is 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 long-lived assets included within the disposal group 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 costs to sell is reported as an adjustment to the carrying value of the disposal group. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was classified as held for sale.

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 18 to the Company’s 2022 Annual Report, Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended June 30, 2022, and Financial Note 12 to the Company’s 10-Q filing for the quarterly period ended September 30, 2022, 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. Amounts included within “Claims and litigation charges, net” in the Condensed Consolidated Statements of Operations consist of estimated loss contingencies related to opioid-related litigation matters.

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Business Acquisitions and Divestitures (Tables)

9 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	600
Contingent consideration	92
Total purchase consideration	$	692
Identifiable assets acquired and liabilities assumed:
Current assets	$	6
Intangible assets	229
Other non-current assets	3
Current liabilities	(9)
Total identifiable net assets	229
Goodwill	463
Net assets acquired	$	692

The following table summarizes the preliminary purchase price allocation for this acquisition:

(In millions)	Amounts Recognized as of Acquisition Date
Purchase consideration:
Cash	$	173
Contribution of USOR	40
Total purchase consideration	$	213
Identifiable assets acquired and liabilities assumed:
Receivables	$	224
Property, plant, and equipment	22
Operating lease right-of-use assets	31
Intangible assets	177
Current liabilities	(42)
Long-term operating lease liabilities	(29)
Other non-current liabilities	(43)
Total identifiable net assets	340
Noncontrolling interest	(225)
Additional paid-in capital	(22)
Goodwill	120
Net assets acquired	$	213

Assets and Liabilities Held for Sale

The total assets and liabilities of the E.U. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Receivables, net	$	1,322
Inventories, net	809
Prepaid expenses and other	72
Property, plant, and equipment, net	304
Operating lease right-of-use assets	224
Intangible assets, net	267
Other non-current assets	328
Remeasurement of assets of businesses held for sale to fair value less costs to sell (1)	(302)
Total assets held for sale	$	3,024
Liabilities
Current liabilities
Drafts and accounts payable	$	1,826
Current portion of long-term debt	4
Current portion of operating lease liabilities	33
Other accrued liabilities	473
Long-term debt	11
Long-term deferred tax liabilities	55
Long-term operating lease liabilities	180
Other non-current liabilities	138
Total liabilities held for sale	$	2,720

(1)Excludes charges in fiscal 2022 related to the impairment of individual assets, including a $113 million impairment of internally developed software recorded directly against the gross value of the assets impacted.

The total assets and liabilities of the U.K. disposal group that met the classification of held for sale in the Company’s Condensed Consolidated Balance Sheet at March 31, 2022 were as follows:

(In millions)	March 31, 2022
Assets
Current assets
Cash and cash equivalents	$	531
Receivables, net	931
Inventories, net	563
Prepaid expenses and other	50
Property, plant, and equipment, net	91
Operating lease right-of-use assets	270
Intangible assets, net	117
Other non-current assets	88
Remeasurement of assets of businesses held for sale to fair value less costs to sell	(1,159)
Total assets held for sale	$	1,482
Liabilities
Current liabilities
Drafts and accounts payable	$	1,593
Current portion of operating lease liabilities	50
Other accrued liabilities	59
Long-term deferred tax liabilities	16
Long-term operating lease liabilities	262
Other non-current liabilities	38
Total liabilities held for sale	$	2,018

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Restructuring, Impairment, and Related Charges, Net (Tables)

9 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

Restructuring, Impairment, and Related Costs

Restructuring, impairment, and related charges, net, for the three months ended December 31, 2022 and 2021 consisted of the following:

	Three Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	4	$	4
Exit and other-related costs (1)	1		1		1		7		15		25
Asset impairments and accelerated depreciation	1		—		—		1		—		2
Total	$	2	$	1	$	1	$	8	$	19	$	31

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Three Months Ended December 31, 2021
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	—	$	—	$	—	$	—	$	1	$	1
Exit and other-related costs (1)	3		—		1		6		6		16
Asset impairments and accelerated depreciation	—		—		—		(1)		2		1
Total	$	3	$	—	$	1	$	5	$	9	$	18

(1)Exit and other-related costs 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, net, for the nine months ended December 31, 2022 and 2021 consisted of the following:

	Nine Months Ended December 31, 2022
(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Severance and employee-related costs, net	$	3	$	—	$	—	$	2	$	(2)	$	3
Exit and other-related costs (1)	2		4		3		15		44		68
Asset impairments and accelerated depreciation	4		11		—		2		(4)		13
Total	$	9	$	15	$	3	$	19	$	38	$	84

(1)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred. Corporate includes costs for business transformation and optimization efforts related to the Company’s technology organization. The International segment includes costs related to the Company’s European divestitures.

	Nine Months Ended December 31, 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	$	2	$	(1)	$	1	$	10	$	2	$	14
Exit and other-related costs (3)	7		2		3		21		33		66
Asset impairments and accelerated depreciation	16		17		5		35		55		128
Total	$	25	$	18	$	9	$	66	$	90	$	208

(1)Includes costs related to the transition to a partial remote work model described above.

(2)Includes costs related to the transition to a partial remote work model described above, U.K. operating model and cost optimization efforts, and costs for optimization programs in Canada.

(3)Exit and other-related costs consist of accruals for costs to be incurred without future economic benefits, project consulting fees, and other exit costs expensed as incurred.

Schedule of Restructuring and Asset Impairment Charges

The following table summarizes the activity related to the liabilities associated with the Company’s restructuring initiatives for the nine months ended December 31, 2022:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Corporate		Total
Balance, March 31, 2022 (1)	$	11	$	3	$	1	$	56	$	59	$	130
Restructuring, impairment, and related charges, net	9		15		3		19		38		84
Non-cash charges	(4)		(11)		—		(2)		4		(13)
Cash payments	(4)		(4)		(3)		(7)		(57)		(75)
Other (2)	(1)		—		—		(54)		1		(54)
Balance, December 31, 2022 (3)	$	11	$	3	$	1	$	12	$	45	$	72

(1)As of March 31, 2022, the total reserve balance was $130 million, of which $58 million was recorded in “Other accrued liabilities,” $36 million was recorded in “Liabilities held for sale,” and $36 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

(2)Other primarily includes cumulative translation adjustments and transfers to certain other liabilities. For the Company’s International segment, other also includes a reduction to the liability for the divestitures of the E.U. disposal group and the U.K. disposal group in fiscal 2023, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.”

(3)As of December 31, 2022, the total reserve balance was $72 million, of which $48 million was recorded in “Other accrued liabilities” and $24 million was recorded in “Other non-current liabilities” in the Condensed Consolidated Balance Sheet.

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Income Taxes (Tables)

9 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense related to continuing operations was as follows:

	Three Months Ended December 31,						Nine Months Ended December 31,
(Dollars in millions)	2022			2021			2022			2021
Income tax expense	$	329		$	238		$	799		$	396
Reported income tax rate	22.7		%	85.9		%	21.6		%	30.9		%

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Redeemable Noncontrolling Interests and Noncontrolling Interests (Tables)

9 Months Ended

Dec. 31, 2022

Noncontrolling Interest [Abstract]

Changes in Redeemable Noncontrolling Interests and Noncontrolling Interests

Changes in noncontrolling interests for the three and nine months ended December 31, 2022 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2022	$	518
Net income attributable to noncontrolling interests	41
Payments to noncontrolling interests	(36)
Reclassification of recurring compensation to other accrued liabilities	(1)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	1
Balance, December 31, 2022	$	366

(In millions)	Noncontrolling Interests
Balance, March 31, 2022	$	480
Net income attributable to noncontrolling interests	123
Other comprehensive income	44
Payments to noncontrolling interests	(113)
Reclassification of recurring compensation to other accrued liabilities	(5)
Formation of an oncology research business	225
Derecognition of noncontrolling interests in McKesson Europe	(382)
Other	(6)
Balance, December 31, 2022	$	366

Changes in redeemable noncontrolling interests and noncontrolling interests for the three and nine months ended December 31, 2021 were as follows:

(In millions)	Noncontrolling Interests
Balance, September 30, 2021	$	484
Net income attributable to noncontrolling interests	46
Other comprehensive loss	(2)
Payments to noncontrolling interests	(38)
Reclassification of recurring compensation to other accrued liabilities	(3)
Balance, December 31, 2021	$	487

(In millions)	Noncontrolling Interests		Redeemable Noncontrolling Interests
Balance, March 31, 2021	$	196	$	1,271
Net income attributable to noncontrolling interests	128		8
Other comprehensive income (loss)	(2)		3
Payments to noncontrolling interests	(117)		—
Reclassification of recurring compensation to other accrued liabilities	(5)		(8)
Exercises of Put Right	—		(983)
Reclassification of McKesson Europe redeemable noncontrolling interests	287		(287)
Other	—		(4)
Balance, December 31, 2021	$	487	$	—

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Earnings (Loss) Per Common Share (Tables)

9 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Schedule of computations for basic and diluted earnings per common share

The computations for basic and diluted earnings per common share were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions, except per share amounts)	2022		2021		2022		2021
Income from continuing operations	$	1,119	$	39	$	2,899	$	885
Net income attributable to noncontrolling interests	(41)		(46)		(123)		(136)
Income (loss) from continuing operations attributable to McKesson Corporation	1,078		(7)		2,776		749
Income (loss) from discontinued operations, net of tax	1		—		(3)		(3)
Net income (loss) attributable to McKesson Corporation	$	1,079	$	(7)	$	2,773	$	746
Weighted-average common shares outstanding:
Basic	139.9		151.6		142.5		154.0
Effect of dilutive securities:
Stock options	0.2		—		0.3		0.2
Restricted stock units (1)	0.9		—		0.9		1.6
Diluted	141.0		151.6		143.7		155.8
Earnings (loss) per common share attributable to McKesson Corporation: (2)
Diluted
Continuing operations	$	7.65	$	(0.04)	$	19.32	$	4.81
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.66	$	(0.04)	$	19.30	$	4.79
Basic
Continuing operations	$	7.70	$	(0.04)	$	19.48	$	4.87
Discontinued operations	0.01		—		(0.02)		(0.02)
Total	$	7.71	$	(0.04)	$	19.46	$	4.85

(1)Includes dilutive effect from 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)

9 Months Ended

Dec. 31, 2022

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:

(In millions)	U.S. Pharmaceutical		Prescription Technology Solutions		Medical-Surgical Solutions		International		Total
Balance, March 31, 2022	$	3,923	$	1,542	$	2,453	$	1,533	$	9,451
Goodwill acquired	160		463		—		2		625
Foreign currency translation adjustments, net	(21)		—		—		(109)		(130)
Other adjustments	(12)		—		—		—		(12)
Balance, December 31, 2022	$	4,050	$	2,005	$	2,453	$	1,426	$	9,934

Schedule of information regarding intangible assets

Information regarding intangible assets was as follows:

	December 31, 2022							March 31, 2022
(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	12	$	2,974	$	(1,735)	$	1,239	$	2,777	$	(1,691)	$	1,086
Service agreements	8	1,071		(608)		463		1,085		(573)		512
Trademarks and trade names	12	833		(418)		415		819		(386)		433
Technology	11	261		(124)		137		128		(116)		12
Other	9	191		(172)		19		187		(171)		16
Total		$	5,330	$	(3,057)	$	2,273	$	4,996	$	(2,937)	$	2,059

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Debt and Financing Activities (Tables)

9 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

Long-term debt consisted of the following:

(In millions)	December 31, 2022		March 31, 2022
U.S. Dollar notes (1) (2)
2.70% Notes due December 15, 2022	$	—	$	400
2.85% Notes due March 15, 2023	360		360
3.80% Notes due March 15, 2024	918		918
0.90% Notes due December 3, 2025	500		500
1.30% Notes due August 15, 2026	498		498
7.65% Debentures due March 1, 2027	150		150
3.95% Notes due February 16, 2028	343		343
4.75% Notes due May 30, 2029	196		196
6.00% Notes due March 1, 2041	218		217
4.88% Notes due March 15, 2044	255		255
Foreign currency notes (1) (3)
1.50% Euro Notes due November 17, 2025	640		662
1.63% Euro Notes due October 30, 2026	535		554
3.13% Sterling Notes due February 17, 2029	544		582
Term loan (4)	500		—
Lease and other obligations	199		244
Total debt	5,856		5,879
Less: Current portion	404		799
Total long-term debt	$	5,452	$	5,080

(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.

(4)This loan is under the 2022 Term Loan Credit Facility.

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Hedging Activities (Tables)

9 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Foreign Currency Gains and (Losses) from Non-Derivative Instruments

Foreign currency gains (losses) from non-derivative instruments included in other comprehensive income in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Non-derivatives designated as net investment hedges: (1)
Euro-denominated notes (2)	$	(132)	$	23	$	7	$	34

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)Includes amounts reclassified to earnings of $112 million for the three and nine months ended December 31, 2022.

Schedule of Notional Amounts of Outstanding Derivative Positions

At December 31, 2022 and March 31, 2022, the notional amounts of the Company’s outstanding derivatives were as follows:

			December 31, 2022		March 31, 2022
(In millions)	Currency	Maturity Date	Notional
Derivatives designated as net investment hedges: (1)
Cross-currency swaps (2)	CAD	Nov-24	$	500	$	500
Derivatives designated as fair value hedges: (1)
Cross-currency swaps (3)	GBP	Feb-23	£	450	£	450
Cross-currency swaps (4)	EUR	Aug-25 to Jul-26	€	1,100	€	—
Floating interest rate swaps (5)	USD	Aug-27 to Sep-29	$	750	$	—
Derivatives designated as cash flow hedges: (1)
Cross-currency swaps (2)	CAD	Jul-22 to Jan-24	$	1,085	$	1,678
Fixed interest rate swaps (6)	USD	Nov-22	$	—	$	500

(1)There was no ineffectiveness in these hedges for the three and nine months ended December 31, 2022 and 2021.

(2)The Company agreed 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.

(3)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.

(4)The Company entered into cross-currency fixed-to-fixed interest rate swaps to mitigate the foreign currency exchange fluctuations on its Euro-denominated notes.

(5)The Company entered into fixed-to-floating interest rate swaps to hedge the changes in fair value caused by fluctuations in the benchmark interest rates.

(6)The Company entered into agreements with financial institutions to lock into the fixed benchmark interest rates for future bond issuance, which were terminated during the third quarter of fiscal 2023 as further discussed below.

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

Gains (losses) of derivatives included in other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Derivatives designated as net investment hedges:
Cross-currency swaps	$	(7)	$	(2)	$	26	$	3
Derivatives designated as cash flow hedges:
Cross-currency swaps	$	(1)	$	(5)	$	(6)	$	(6)
Fixed interest rate swaps	(85)		(3)		(30)		9

Schedule of Fair Value of Derivatives

Information regarding the fair value of derivatives on a gross basis were as follows:

	Balance Sheet Caption	December 31, 2022						March 31, 2022
		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	$	18	$	17	$	1,080	$	30	$	39	$	1,537
Cross-currency swaps (non-current)	Other non-current assets/liabilities	68		—		1,774		—		36		679
Fixed interest rate swaps (current)	Prepaid expenses and other	—		—		—		31		—		500
Floating interest rate swaps (non-current)	Other non-current liabilities	—		30		750		—		—		—
Total		$	86	$	47			$	61	$	75

Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss)

Gains (losses) of derivatives included in other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income were as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Derivatives designated as net investment hedges:
Cross-currency swaps	$	(7)	$	(2)	$	26	$	3
Derivatives designated as cash flow hedges:
Cross-currency swaps	$	(1)	$	(5)	$	(6)	$	(6)
Fixed interest rate swaps	(85)		(3)		(30)		9

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Fair Value Measurements (Tables)

9 Months Ended

Dec. 31, 2022

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:

	December 31, 2022				March 31, 2022
(In millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including current maturities	$	5,856	$	5,607	$	5,879	$	5,999

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Commitments and Contingent Liabilities (Tables)

9 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of Estimated Accrual Liability

The Company’s estimated accrued liability for the opioid-related claims of governmental entities was as follows:

(In millions)	December 31, 2022		March 31, 2022
Current litigation liabilities (1)	$	598	$	1,046
Long-term litigation liabilities	6,642		7,220
Total litigation liabilities	$	7,240	$	8,266

(1)These amounts as of December 31, 2022 and March 31, 2022, recorded in “Other accrued liabilities” in the Condensed Consolidated Balance Sheets, are the amounts estimated to be paid within the next twelve months following each respective period end date.

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Stockholders' Equity (Deficit) (Tables)

9 Months Ended

Dec. 31, 2022

Equity [Abstract]

Schedule of information regarding changes in accumulated other comprehensive income (loss), net of tax, by component

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests, by components for the three and nine months ended December 31, 2022 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2022	$	(1,254)	$	109		$	63	$	(32)	$	(1,114)
Other comprehensive income (loss) before reclassifications	96		(5)			8		18		117
Amounts reclassified to earnings and other (2)	280		(119)			(73)		10		98
Other comprehensive income (loss)	376		(124)		(3)	(65)		28		215
Less: amounts attributable to noncontrolling interests	—		—			—		—		—
Other comprehensive income (loss) attributable to McKesson	376		(124)			(65)		28		215
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestiture of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal group to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $22 million.

(3)Amounts recorded for the three months ended December 31, 2022 include losses of $132 million related to net investment hedges from Euro-denominated notes and losses of $7 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax benefit of $15 million.

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2022	$	(1,504)	$	10		$	27	$	(67)	$	(1,534)
Other comprehensive income (loss) before reclassifications	(360)		111			44		32		(173)
Amounts reclassified to earnings and other (2)	1,027		(136)			(73)		34		852
Other comprehensive income (loss)	667		(25)		(3)	(29)		66		679
Less: amounts attributable to noncontrolling interests	41		—			—		3		44
Other comprehensive income (loss) attributable to McKesson	626		(25)			(29)		63		635
Balance at December 31, 2022	$	(878)	$	(15)		$	(2)	$	(4)	$	(899)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Primarily includes adjustments for amounts related to the divestitures of the E.U. disposal group in October 2022, including the impact of amounts previously attributed to the noncontrolling interest in McKesson Europe, and U.K. disposal group in April 2022, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures.” These amounts were included in the fiscal 2023 and fiscal 2022 calculations of charges to remeasure the assets and liabilities of the disposal groups to fair value less costs to sell recorded within “Selling, distribution, general, and administrative expenses” in the Consolidated Statements of Operations. Amounts reclassified to earnings and other includes a net income tax impact of $6 million.

(3)Amounts recorded for the nine months ended December 31, 2022 include net gains of $7 million related to net investment hedges from Euro-denominated notes and gains of $26 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $32 million and gains of $26 million reclassified to earnings related to previously de-designated British pound sterling notes.

Information regarding changes in accumulated other comprehensive loss, including noncontrolling interests and redeemable noncontrolling interests, by components for the three and nine months ended December 31, 2021 was as follows:

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Losses and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at September 30, 2021	$	(1,557)	$	(25)		$	21	$	(104)	$	(1,665)
Other comprehensive income (loss) before reclassifications	—		16			(6)		(1)		9
Amounts reclassified to earnings and other	—		—			—		(1)		(1)
Other comprehensive income (loss)	—		16		⁽²⁾	(6)		(2)		8
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	(2)		—			—		—		(2)
Other comprehensive income (loss) attributable to McKesson	2		16			(6)		(2)		10
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Amounts recorded for the three months ended December 31, 2021 include gains of $23 million related to net investment hedges from Euro-denominated notes and losses of $2 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $5 million.

	Foreign Currency Translation Adjustments
(In millions)	Foreign Currency Translation Adjustments, Net of Tax (1)		Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax			Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax		Total Accumulated Other Comprehensive Loss
Balance at March 31, 2021	$	(1,361)	$	(36)		$	13	$	(96)	$	(1,480)
Other comprehensive income (loss) before reclassifications	(47)		21			(3)		5		(24)
Amounts reclassified to earnings and other	18		—			5		(3)		20
Other comprehensive income (loss)	(29)		21		⁽²⁾	2		2		(4)
Less: amounts attributable to noncontrolling and redeemable noncontrolling interests	7		(6)			—		—		1
Other comprehensive income (loss) attributable to McKesson	(36)		27			2		2		(5)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG	(158)		—			—		(12)		(170)
Balance at December 31, 2021	$	(1,555)	$	(9)		$	15	$	(106)	$	(1,655)

(1)Primarily results from the conversion of non-U.S. dollar financial statements of the Company’s operations in Europe and Canada into the Company’s reporting currency, U.S. dollars.

(2)Amounts recorded for the nine months ended December 31, 2021 include gains of $34 million related to net investment hedges from Euro-denominated notes and gains of $3 million related to net investment hedges from cross-currency swaps. These amounts are net of income tax expense of $10 million.

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Segments of Business (Tables)

9 Months Ended

Dec. 31, 2022

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 was as follows:

	Three Months Ended December 31,				Nine Months Ended December 31,
(In millions)	2022		2021		2022		2021
Segment revenues (1)
U.S. Pharmaceutical	$	61,934	$	55,041	$	178,940	$	158,471
Prescription Technology Solutions	1,121		1,031		3,205		2,844
Medical-Surgical Solutions	2,986		3,082		8,421		8,734
International	4,449		9,460		17,235		27,815
Total revenues	$	70,490	$	68,614	$	207,801	$	197,864
Segment operating profit (loss) (2)
U.S. Pharmaceutical (3)	$	850	$	744	$	2,442	$	2,186
Prescription Technology Solutions	136		129		400		361
Medical-Surgical Solutions (4)	328		308		883		679
International (5)	136		(668)		93		(761)
Subtotal	1,450		513		3,818		2,465
Corporate expenses, net (6)	67		(195)		49		(858)
Loss on debt extinguishment (7)	—		—		—		(191)
Interest expense	(69)		(41)		(169)		(135)
Income from continuing operations before income taxes	$	1,448	$	277	$	3,698	$	1,281

(1)Revenues from services on a disaggregated basis represent less than 1% of the U.S. Pharmaceutical segment’s total revenues, less than 36% of the RxTS segment’s total revenues, less than 3% of the Medical-Surgical Solutions segment’s total revenues, and less than 8% of the International segment’s total revenues. The International segment reflects foreign revenues. Revenues for the remaining three reportable segments are derived in the U.S.

(2)Segment operating profit (loss) 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 includes the following:

•cash receipts for the Company’s share of antitrust legal settlements of $129 million for the three and nine months ended December 31, 2022 and $46 million for the nine months ended December 31, 2021;

•a charge of $5 million and a credit of $33 million related to the last-in, first-out (“LIFO”) method of accounting for inventories for the three months ended December 31, 2022 and 2021, respectively, and credits of $31 million and $79 million for the nine months ended December 31, 2022 and 2021, respectively; and

•a gain of $142 million for the nine months ended December 31, 2022 related to the exit of one of the Company’s investments in equity securities in July 2022 for proceeds of $179 million, which is reflected within “Other income, net” in the Company’s Condensed Consolidated Statements of Operations.

(4)The Company’s Medical-Surgical Solutions segment’s operating profit for the nine months ended December 31, 2021 includes $164 million of inventory charges on certain personal protective equipment and other related products.

(5)The Company’s International segment’s operating profit (loss) includes the following:

•charges of $3 million and $240 million for the three and nine months ended December 31, 2022, respectively, and charges of $58 million and $400 million for the three and nine months ended December 31, 2021, respectively, to remeasure the assets and liabilities of the E.U. disposal group to fair value less costs to sell and, in fiscal 2022, to impair certain assets, including internal-use software that will not be utilized in the future, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•charges of $787 million for the three and nine months ended December 31, 2021 to remeasure the assets and liabilities of the U.K. disposal group to fair value less costs to sell, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;” and

•a gain of $59 million for the nine months ended December 31, 2021 related to the sale of the Company’s Canadian health benefit claims management and plan administrative services business.

(6)Corporate expenses, net includes the following:

•credits of $34 million and $306 million for the three and nine months ended December 31, 2022, respectively, and credits of $32 million and charges of $117 million for the three and nine months ended December 31, 2021, respectively, primarily related to the effect of accumulated other comprehensive loss components from the E.U. disposal group, as discussed in more detail in Financial Note 2, “Business Acquisitions and Divestitures;”

•a gain of $126 million for the three and nine months ended December 31, 2022 related to a cash payment received for the early termination of a tax receivable agreement (“TRA”) exercised by Change Healthcare Inc. (“Change”) in October 2022 and was recorded within “Other income, net” in the Condensed Consolidated Statements of Operations. The Company was a party to a TRA entered into as part of the formation of the joint venture with Change, from which McKesson has since exited. The TRA generally required Change to pay McKesson 85% of the net cash tax savings realized, or deemed to be realized, by Change resulting from the amortization allocated to Change by the joint venture. In October 2022, Change exercised its right pursuant to the TRA to terminate the agreement;

•a gain of $97 million for the three and nine months ended December 31, 2022 from the termination of fixed interest rate swaps accounted for as cash flow hedges, as discussed in more detail in Financial Note 10, “Hedging Activities;”

•charges of $193 million for the nine months ended December 31, 2021, related to the Company’s estimated liability for opioid-related claims, as discussed in more detail in Financial Note 12, “Commitments and Contingent Liabilities;”

•charges of $9 million and $33 million for the three months ended December 31, 2022 and 2021, respectively, and charges of $37 million and $104 million for the nine months ended December 31, 2022 and 2021, respectively, of opioid-related costs, primarily litigation expenses;

•restructuring charges of $90 million for the nine months ended December 31, 2021 primarily due to the transition to a partial remote work model for certain employees; and

•net losses of $24 million and net gains of $104 million for the nine months ended December 31, 2022 and 2021, respectively, associated with certain of the Company’s equity investments.

(7)Loss on debt extinguishment for the nine months ended December 31, 2021 consists of a charge of $191 million related to the Company’s July 2021 tender offer to redeem a portion of its existing debt, as discussed in more detail in Financial Note 8, “Debt and Financing Activities.”

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Significant Accounting Policies - Narrative (Details)	9 Months Ended
	Dec. 31, 2022 segment
Accounting Policies [Abstract]
Number of reportable segments	4

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Business Acquisitions and Divestitures - Acquisitions (Details) - USD ($) $ in Millions	Nov. 01, 2022	Oct. 31, 2022	Dec. 31, 2022	Mar. 31, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Goodwill			$ 9,934	$ 9,451
U.S. Pharmaceutical
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Goodwill			$ 4,050	$ 3,923
McKesson and HCA Healthcare, Joint Oncology Research Business | U.S. Pharmaceutical
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Business acquisition, percentage of controlling interest in combined business		51.00%
Cash payment to acquire business		$ 173
Acquired identifiable intangible assets		$ 177
Weighted average life of intangibles		17 years
Goodwill		$ 120
Goodwill, expected tax deductible amount		49
Noncontrolling interest		225
McKesson and HCA Healthcare, Joint Oncology Research Business | U.S. Pharmaceutical | USOR
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Noncontrolling interest		20
McKesson and HCA Healthcare, Joint Oncology Research Business | U.S. Pharmaceutical | SCRI
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Noncontrolling interest		$ 205
Rx Savings Solutions, LLC | RxTs Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Business acquisition, percentage of controlling interest in combined business	100.00%
Cash payment to acquire business	$ 600
Contingent consideration	275
Other non-current liabilities	92
Acquired identifiable intangible assets	$ 229
Weighted average life of intangibles	12 years
Goodwill	$ 463

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Business Acquisitions and Divestitures - Identified Assets Acquired and Liabilities Assumed (Rx Savings Solutions) (Details) - USD ($) $ in Millions	Nov. 01, 2022	Dec. 31, 2022	Mar. 31, 2022
Business Acquisition, Contingent Consideration [Line Items]
Goodwill		$ 9,934	$ 9,451
Rx Savings Solutions, LLC | RxTs Segment
Business Acquisition, Contingent Consideration [Line Items]
Cash	$ 600
Contingent consideration	92
Total purchase consideration	692
Current assets	6
Intangible assets	229
Other non-current assets	3
Current liabilities	(9)
Total identifiable net assets	229
Goodwill	463
Net assets acquired	$ 692

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Business Acquisitions and Divestitures - Identified Assets Acquired and Liabilities Assumed (Oncology Research) (Details) - USD ($) $ in Millions	Oct. 31, 2022	Dec. 31, 2022	Mar. 31, 2022
Business Acquisition, Contingent Consideration [Line Items]
Goodwill		$ 9,934	$ 9,451
U.S. Pharmaceutical
Business Acquisition, Contingent Consideration [Line Items]
Goodwill		$ 4,050	$ 3,923
McKesson and HCA Healthcare, Joint Oncology Research Business | U.S. Pharmaceutical
Business Acquisition, Contingent Consideration [Line Items]
Cash	$ 173
Contribution of USOR	40
Total purchase consideration	213
Receivables	224
Property, plant, and equipment	22
Operating lease right-of-use assets	31
Intangible assets	177
Current liabilities	(42)
Long-term operating lease liabilities	(29)
Other non-current liabilities	(43)
Total identifiable net assets	340
Noncontrolling interest	225
Additional paid-in capital	(22)
Goodwill	120
Net assets acquired	$ 213

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Business Acquisitions and Divestitures - Divestitures and Other (Details) € in Millions, £ in Millions, $ in Millions			3 Months Ended		9 Months Ended
	Oct. 31, 2022 USD ($)	Apr. 06, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Apr. 06, 2022 GBP (£)	Mar. 31, 2022 USD ($)	Jan. 31, 2022 USD ($)	Jan. 31, 2022 EUR (€)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale			$ 14		$ 14			$ 4,516
Liabilities held for sale			2		2			4,741
Loss (gain) to remeasure disposal group to fair value					0	$ 1,271
Accumulated other comprehensive loss adjustment			22		6
Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale								4,500
Liabilities held for sale								4,700
U.K. Disposal Group (Disposal Group) | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Divested net assets								1,482
Divested cash								531
U.K. Disposal Group (Disposal Group) | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss (gain) to remeasure disposal group to fair value			823		823
Gross purchase price		$ 144					£ 110
Proceeds from collection of notes receivable		118
Accumulated other comprehensive loss in charge for remeasurement to fair value					731
E.U. Businesses (Disposal Group) | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss (gain) to remeasure disposal group to fair value				$ 879		1,400
Divested net assets								$ 3,024
E.U. Businesses (Disposal Group) | Disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss (gain) to remeasure disposal group to fair value			$ (31)	26	$ (66)	517
Cash proceeds from divestiture	$ 892
Divested net assets	1,300
Divested cash	319
Divested carrying value of noncontrolling interest held by minority shareholders	382
Accumulated other comprehensive loss adjustment	$ 153
Accumulated other comprehensive loss in charge for remeasurement to fair value						230
International Segment | Disposed of by sale | Aurelius Elephant Limited
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Divested net assets		615
Accumulated other comprehensive loss adjustment		$ 731
Austrian Business Operations | Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss (gain) to remeasure disposal group to fair value				$ 30		$ 30
Purchase price									$ 276	€ 244

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Business Acquisitions and Divestitures - Assets and Liabilities Held for Sale (Details) - Held-for-sale - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2021	Mar. 31, 2022
U.K. Disposal Group (Disposal Group)
Assets
Cash and cash equivalents		$ 531
Receivables, net		931
Inventories, net		563
Prepaid expenses and other		50
Property, plant, and equipment, net		91
Operating lease right-of-use assets		270
Intangible assets, net		117
Other non-current assets		88
Remeasurement of assets of business held for sale to fair value less costs to sell		(1,159)
Assets held for sale		1,482
Liabilities
Drafts and accounts payable		1,593
Current portion of operating lease liabilities		50
Other accrued liabilities		59
Long-term deferred tax liabilities		16
Long-term operating lease liabilities		262
Other non-current liabilities		38
Liabilities held for sale		2,018
E.U. Businesses (Disposal Group)
Assets
Receivables, net		1,322
Inventories, net		809
Prepaid expenses and other		72
Property, plant, and equipment, net		304
Operating lease right-of-use assets		224
Intangible assets, net		267
Other non-current assets		328
Remeasurement of assets of business held for sale to fair value less costs to sell		(302)
Assets held for sale		3,024
Liabilities
Drafts and accounts payable		1,826
Current portion of long-term debt		4
Current portion of operating lease liabilities		33
Other accrued liabilities		473
Long-term debt		11
Long-term deferred tax liabilities		55
Long-term operating lease liabilities		180
Other non-current liabilities		138
Liabilities held for sale		$ 2,720
Internally developed software
Liabilities
Impairment charge	$ 113

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Restructuring, Impairment, and Related Charges, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring, impairment, and related charges, net	$ 31	$ 18	$ 84	$ 208
Restructuring, impairment, and related charges	$ 31	18	$ 84	208
Restructuring Plan - Remote Work Transitioning
Restructuring Cost and Reserve [Line Items]
Restructuring, impairment, and related charges		$ 5		$ 115

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Restructuring, Impairment, and Related Charges, Net - Summary of Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	$ 4	$ 1	$ 3	$ 14
Exit and other-related costs	25	16	68	66
Asset impairments and accelerated depreciation	2	1	13	128
Total	31	18	84	208
Operating Segments | U.S. Pharmaceutical
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	0	0	3	2
Exit and other-related costs	1	3	2	7
Asset impairments and accelerated depreciation	1	0	4	16
Total	2	3	9	25
Operating Segments | Prescription Technology Solutions
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	0	0	0	(1)
Exit and other-related costs	1	0	4	2
Asset impairments and accelerated depreciation	0	0	11	17
Total	1	0	15	18
Operating Segments | Medical-Surgical Solutions
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	0	0	0	1
Exit and other-related costs	1	1	3	3
Asset impairments and accelerated depreciation	0	0	0	5
Total	1	1	3	9
Operating Segments | International
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	0	0	2	10
Exit and other-related costs	7	6	15	21
Asset impairments and accelerated depreciation	1	(1)	2	35
Total	8	5	19	66
Corporate
Restructuring Cost and Reserve [Line Items]
Severance and employee-related costs, net	4	1	(2)	2
Exit and other-related costs	15	6	44	33
Asset impairments and accelerated depreciation	0	2	(4)	55
Total	$ 19	$ 9	$ 38	$ 90

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Restructuring, Impairment, and Related Charges, Net - Summary of Restructuring Activity (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Restructuring Reserve [Roll Forward]
Beginning balance			$ 130
Restructuring, impairment, and related charges	$ 31	$ 18	84	$ 208
Non-cash charges			(13)
Cash payments			(75)
Other			(54)
Ending balance	72		72
Operating Segments | U.S. Pharmaceutical
Restructuring Reserve [Roll Forward]
Beginning balance			11
Restructuring, impairment, and related charges	2	3	9	25
Non-cash charges			(4)
Cash payments			(4)
Other			(1)
Ending balance	11		11
Operating Segments | Prescription Technology Solutions
Restructuring Reserve [Roll Forward]
Beginning balance			3
Restructuring, impairment, and related charges	1	0	15	18
Non-cash charges			(11)
Cash payments			(4)
Other			0
Ending balance	3		3
Operating Segments | Medical-Surgical Solutions
Restructuring Reserve [Roll Forward]
Beginning balance			1
Restructuring, impairment, and related charges	1	1	3	9
Non-cash charges			0
Cash payments			(3)
Other			0
Ending balance	1		1
Operating Segments | International
Restructuring Reserve [Roll Forward]
Beginning balance			56
Restructuring, impairment, and related charges	8	5	19	66
Non-cash charges			(2)
Cash payments			(7)
Other			(54)
Ending balance	12		12
Corporate
Restructuring Reserve [Roll Forward]
Beginning balance			59
Restructuring, impairment, and related charges	19	$ 9	38	$ 90
Non-cash charges			4
Cash payments			(57)
Other			1
Ending balance	45		45
Other Current Liabilities
Restructuring Reserve [Roll Forward]
Beginning balance			58
Ending balance	48		48
Liabilities Held For Sale
Restructuring Reserve [Roll Forward]
Beginning balance			36
Other Accrued Liabilities, Noncurrent
Restructuring Reserve [Roll Forward]
Beginning balance			36
Ending balance	$ 24		$ 24

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Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income tax expense (benefit) related to continuing operations	$ 329	$ 238	$ 799	$ 396
Reported income tax expense (benefit) rates (percent)	22.70%	85.90%	21.60%	30.90%

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Income Tax Contingency [Line Items]
Effective income tax rate reconciliation, tax (benefit), share-based payment arrangement, amount			$ 55
Effective income tax rate reconciliation, GILTI, amount		$ 42		$ 81
Discrete tax benefit recognized due to statute of limitation expirations				115
Loss (gain) to remeasure disposal group to fair value			0	1,271
Unrecognized tax benefits	$ 1,500		1,500
Unrecognized tax benefits that would impact effective tax rate	1,400		1,400
Held-for-sale | E.U. Businesses (Disposal Group)
Income Tax Contingency [Line Items]
Loss (gain) to remeasure disposal group to fair value		879		1,400
Held-for-sale | U.K. and Austrian Businesses (Disposal Group)
Income Tax Contingency [Line Items]
Loss (gain) to remeasure disposal group to fair value				853
Disposed of by sale | E.U. Businesses (Disposal Group)
Income Tax Contingency [Line Items]
Loss (gain) to remeasure disposal group to fair value	(31)	$ 26	(66)	$ 517
Minimum
Income Tax Contingency [Line Items]
Possible decrease in unrecognized tax benefits during the next twelve months	170		170
Maximum
Income Tax Contingency [Line Items]
Possible decrease in unrecognized tax benefits during the next twelve months	$ 195		$ 195

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Redeemable Noncontrolling Interests and Noncontrolling Interests - Narrative (Details) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) shares	Sep. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2014 € / shares
Noncontrolling Interest [Line Items]
Put right redemption price per share (in euros per share) | € / shares									€ 22.99
Put right value, interest rate spread (as a percent)									5.00%
Payments for purchase shares of McKesson Europe			$ 0	$ 1,031
Associated increase in Company's ownership interest on its equity				8
Reclassification of McKesson Europe AG redeemable noncontrolling interests				287
Noncontrolling interests	$ 366		366			$ 480
Net income attributable to noncontrolling interests	41	$ 46	123	136
Redeemable Noncontrolling Interest
Noncontrolling Interest [Line Items]
Net income attributable to noncontrolling interests				8
Decrease in noncontrolling interest				(983)
Reclassification of McKesson Europe AG redeemable noncontrolling interests				(287)
Additional Paid-in Capital
Noncontrolling Interest [Line Items]
Associated increase in Company's ownership interest on its equity				178
Noncontrolling Interests
Noncontrolling Interest [Line Items]
Decrease in noncontrolling interest				0
Reclassification of McKesson Europe AG redeemable noncontrolling interests				287
Noncontrolling interests	366	487	366	487	$ 518	$ 480	$ 484	$ 196
Net income attributable to noncontrolling interests	41	46	123	128
McKesson Europe Subsidiary
Noncontrolling Interest [Line Items]
Annual recurring dividend (in euro per share) | € / shares									€ 0.83
McKesson Europe Subsidiary
Noncontrolling Interest [Line Items]
Net income attributable to noncontrolling interests				8
Payments for purchase shares of McKesson Europe				$ 1,000
Shares purchased (in shares) | shares				34.5
Vantage, ClarusOne Sourcing Services LLC and McKesson Europe
Noncontrolling Interest [Line Items]
Net income attributable to noncontrolling interests	$ 41	$ 46	$ 123	$ 128

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Redeemable Noncontrolling Interests and Noncontrolling Interests - Schedule of Changes in Redeemable Noncontrolling Interests and Noncontrolling Interests (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Noncontrolling Interests
Beginning balance			$ 480
Net income attributable to noncontrolling interests	$ 41	$ 46	123	$ 136
Payments to noncontrolling interests	(36)	(38)	(113)	(117)
Formation of an oncology research business	247		247
Derecognition of noncontrolling interests in McKesson Europe	(382)		(382)
Ending balance	366		366
Redeemable Noncontrolling Interests
Payments to noncontrolling interests	(36)	(38)	(113)	(117)
Reclassification of McKesson Europe AG redeemable noncontrolling interests				287
Noncontrolling Interests
Noncontrolling Interests
Beginning balance	518	484	480	196
Net income attributable to noncontrolling interests	41	46	123	128
Other comprehensive income (loss)			44	(2)
Payments to noncontrolling interests	(36)	(38)	(113)	(117)
Decrease in noncontrolling interest				0
Reclassification of recurring compensation to other accrued liabilities	1	(3)	5	(5)
Formation of an oncology research business	225		225
Derecognition of noncontrolling interests in McKesson Europe	(382)		(382)
Other	1		(6)	0
Ending balance	366	487	366	487
Redeemable Noncontrolling Interests
Other comprehensive income (loss)			44	(2)
Payments to noncontrolling interests	(36)	(38)	(113)	(117)
Reclassification of McKesson Europe AG redeemable noncontrolling interests				287
Other	$ (1)		$ 6	0
Redeemable Noncontrolling Interest
Noncontrolling Interests
Other comprehensive income (loss)				3
Payments to noncontrolling interests				0
Decrease in noncontrolling interest				(983)
Reclassification of recurring compensation to other accrued liabilities				(8)
Other				(4)
Redeemable Noncontrolling Interests
Beginning balance				1,271
Net income attributable to noncontrolling interests				8
Other comprehensive income (loss)				3
Payments to noncontrolling interests				0
Reclassification of McKesson Europe AG redeemable noncontrolling interests				(287)
Other				4
Ending balance		$ 0		$ 0

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Earnings (Loss) Per Common Share - Additional Information (Details) - shares shares in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Potentially dilutive securities (shares) (less than)	1	1	1	1

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Earnings (Loss) Per Common Share - Schedule of Computations for Basic and Diluted Earnings per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Income from continuing operations	$ 1,119	$ 39	$ 2,899	$ 885
Net income attributable to noncontrolling interests	(41)	(46)	(123)	(136)
Income (loss) from continuing operations attributable to McKesson Corporation	1,078	(7)	2,776	749
Income (loss) from discontinued operations, net of tax	1	0	(3)	(3)
Net income (loss) attributable to McKesson Corporation	$ 1,079	$ (7)	$ 2,773	$ 746
Weighted-average common shares outstanding:
Basic (in shares)	139.9	151.6	142.5	154.0
Effect of dilutive securities:
Diluted (in shares)	141.0	151.6	143.7	155.8
Diluted
Continuing operations (in usd per share)	$ 7.65	$ (0.04)	$ 19.32	$ 4.81
Discontinued operations (in usd per share)	0.01	0	(0.02)	(0.02)
Total (in dollars per share)	7.66	(0.04)	19.30	4.79
Basic
Continuing operations (in usd per share)	7.70	(0.04)	19.48	4.87
Discontinued operations (in usd per share)	0.01	0	(0.02)	(0.02)
Total (in dollars per share)	$ 7.71	$ (0.04)	$ 19.46	$ 4.85
Stock options
Effect of dilutive securities:
Restricted stock units (in shares)	0.2	0.0	0.3	0.2
Restricted stock units
Effect of dilutive securities:
Restricted stock units (in shares)	0.9	0.0	0.9	1.6

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Goodwill and Intangible Assets, Net - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Millions	9 Months Ended
	Dec. 31, 2022 USD ($)
Goodwill [Roll Forward]
Beginning balance	$ 9,451
Goodwill acquired	625
Foreign currency translation adjustments, net	(130)
Other adjustments	(12)
Ending balance	9,934
U.S. Pharmaceutical
Goodwill [Roll Forward]
Beginning balance	3,923
Goodwill acquired	160
Foreign currency translation adjustments, net	(21)
Other adjustments	(12)
Ending balance	4,050
Prescription Technology Solutions
Goodwill [Roll Forward]
Beginning balance	1,542
Goodwill acquired	463
Foreign currency translation adjustments, net	0
Other adjustments	0
Ending balance	2,005
Medical-Surgical Solutions
Goodwill [Roll Forward]
Beginning balance	2,453
Goodwill acquired	0
Foreign currency translation adjustments, net	0
Other adjustments	0
Ending balance	2,453
International
Goodwill [Roll Forward]
Beginning balance	1,533
Goodwill acquired	2
Foreign currency translation adjustments, net	(109)
Other adjustments	0
Ending balance	$ 1,426

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Goodwill and Intangible Assets, Net - Schedule of Information Regarding Intangible Assets (Details) - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2022	Mar. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 5,330	$ 4,996
Accumulated Amortization	(3,057)	(2,937)
Net Carrying Amount	$ 2,273	2,059
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Remaining Amortization Period (Years)	12 years
Gross Carrying Amount	$ 2,974	2,777
Accumulated Amortization	(1,735)	(1,691)
Net Carrying Amount	$ 1,239	1,086
Service agreements
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Remaining Amortization Period (Years)	8 years
Gross Carrying Amount	$ 1,071	1,085
Accumulated Amortization	(608)	(573)
Net Carrying Amount	$ 463	512
Trademarks and trade names
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Remaining Amortization Period (Years)	12 years
Gross Carrying Amount	$ 833	819
Accumulated Amortization	(418)	(386)
Net Carrying Amount	$ 415	433
Technology
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Remaining Amortization Period (Years)	11 years
Gross Carrying Amount	$ 261	128
Accumulated Amortization	(124)	(116)
Net Carrying Amount	$ 137	12
Other
Finite-Lived Intangible Assets [Line Items]
Weighted- Average Remaining Amortization Period (Years)	9 years
Gross Carrying Amount	$ 191	187
Accumulated Amortization	(172)	(171)
Net Carrying Amount	$ 19	$ 16

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Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 57	$ 80	$ 170	$ 262
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
Estimated annual amortization expense, remainder of 2023	63		63
Estimated annual amortization expense, 2024	243		243
Estimated annual amortization expense, 2025	237		237
Estimated annual amortization expense, 2026	204		204
Estimated annual amortization expense, 2027	198		198
Estimated annual amortization expense, thereafter	$ 1,300		$ 1,300

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Debt and Financing Activities - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 15, 2022	Mar. 31, 2022	Jul. 23, 2021
Debt Instrument [Line Items]
Lease and other obligations	$ 199		$ 244
Total debt	5,856		5,879
Less: Current portion	404		799
Total long-term debt	5,452		5,080
Term Loan
Debt Instrument [Line Items]
Debt outstanding	$ 500		0
2.70% Notes due December 15, 2022 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	2.70%	2.70%
Debt outstanding	$ 0		400
2.85% Notes due March 15, 2023 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	2.85%			2.85%
Debt outstanding	$ 360		360
3.80% Notes due March 15, 2024 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	3.80%			3.80%
Debt outstanding	$ 918		918
0.90% Notes due December 3, 2025 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	0.90%
Debt outstanding	$ 500		500
1.30% Notes due August 15, 2026 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	1.30%
Debt outstanding	$ 498		498
7.65% Debentures due March 1, 2027 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	7.65%			7.65%
Debt outstanding	$ 150		150
3.95% Notes due February 16, 2028 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	3.95%			3.95%
Debt outstanding	$ 343		343
4.75% Notes due May 30, 2029 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	4.75%			4.75%
Debt outstanding	$ 196		196
6.00% Notes due March 1, 2041 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	6.00%			6.00%
Debt outstanding	$ 218		217
4.88% Notes due March 15, 2044 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	4.88%			4.88%
Debt outstanding	$ 255		255
1.50% Euro Notes due November 17, 2025 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	1.50%
Debt outstanding	$ 640		662
1.63% Euro Notes due October 30, 2026 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	1.63%
Debt outstanding	$ 535		554
3.13% Sterling Notes due February 17, 2029 | Notes payable
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	3.13%
Debt outstanding	$ 544		$ 582

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Debt and Financing Activities - Long-Term Debt Narrative (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Jul. 23, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 15, 2022	Mar. 31, 2022
Debt Instrument [Line Items]
Long-term debt		$ 5,856		$ 5,856			$ 5,879
Current portion of long-term debt		404		404			$ 799
Payments for debt extinguishments				0	$ 184
Loss on debt extinguishment		$ 0	$ 0	$ 0	$ (191)
2.70% Notes due December 15, 2022 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)		2.70%		2.70%		2.70%
Debt principal amount						$ 400
2.85% Notes due March 15, 2023 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	2.85%	2.85%		2.85%
3.80% Notes due March 15, 2024 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	3.80%	3.80%		3.80%
7.65% Debentures due March 1, 2027 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	7.65%	7.65%		7.65%
3.95% Notes due February 16, 2028 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	3.95%	3.95%		3.95%
4.75% Notes due May 30, 2029 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	4.75%	4.75%		4.75%
6.00% Notes due March 1, 2041 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	6.00%	6.00%		6.00%
4.88% Notes due March 15, 2044 | Term Loan
Debt Instrument [Line Items]
Interest rate on debt instrument (percent)	4.88%	4.88%		4.88%
Tender Offer Notes | Term Loan
Debt Instrument [Line Items]
Aggregate consideration of debt redeemed	$ 1,100
Debt principal redeemed	$ 922
Redemption price percentage of principal (percent)	100.00%
Payments for debt extinguishments	$ 182
Accrued unpaid interest	14
Loss on debt extinguishment	191
Debt premiums	182
Write-off of unamortized debt issuance costs and transaction fees	$ 9

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Debt and Financing Activities - Credit Facilities Narrative (Details) - USD ($)			3 Months Ended	9 Months Ended
	Nov. 07, 2022	Sep. 25, 2019	Dec. 31, 2022	Dec. 31, 2022	Dec. 31, 2021	Nov. 06, 2022	Mar. 31, 2022
Unsecured Debt | Revolving Credit Facility | The 2022 Credit Facility
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 4,000,000,000
Credit facility term	5 years
Unsecured Debt | Revolving Credit Facility | The 2020 Credit Facility
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity						$ 4,000,000,000
Credit facility term		5 years
Unsecured Debt | Revolving Credit Facility | Canadian Dollar, British Pound Sterling, and Euros Sublimit 2022
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 3,600,000,000
Borrowings under facility			$ 0
Amounts outstanding under facility			0	$ 0
Unsecured Debt | Revolving Credit Facility | Canadian Dollar, British Pound Sterling, and Euros Sublimit 2020
Line of Credit Facility [Line Items]
Borrowings under facility				0	$ 0
Amounts outstanding under facility	0
Line of Credit | 2022 Term Loan Credit Facility
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 500,000,000
Debt instrument, days available for borrowing	90 days
Term Loan
Line of Credit Facility [Line Items]
Credit facility term	3 months
Debt outstanding			$ 500,000,000	$ 500,000,000			$ 0
Term Loan | Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Debt instruments, basis spread on variable rate				1.10%

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Debt and Financing Activities - Commercial Paper Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2022
Debt Instrument [Line Items]
Weighted average interest rate (percent)	4.73%
Commercial Paper
Debt Instrument [Line Items]
Outstanding notes (up to)	$ 4,000
Proceeds from issuance of commercial paper	1,100	$ 3,600
Repayments of commercial paper	(483)	$ (3,300)
Commercial paper	$ 617		$ 0

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Pension Benefits - Narrative (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Oct. 31, 2022	Mar. 31, 2022
Held-for-sale | E.U. Businesses (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Assets held for sale							$ 3,024
Held-for-sale | U.K. Disposal Group (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Assets held for sale							1,482
Disposed of by sale | E.U. Businesses (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Assets held for sale						$ 1,300
Disposal Group, Including Discontinued Operation, Pension Plan Obligation Derecognized	$ 75
Accumulated other comprehensive loss derecognized	13
Disposed of by sale | U.K. Disposal Group (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Accumulated other comprehensive loss derecognized		$ 30
Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to the plans	$ 2		$ 18	$ 7	$ 35
Percentage threshold of greater of projected benefit obligation or market value of assets (percent)	10.00%			10.00%
Pension Plan | Held-for-sale | E.U. Businesses (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Reclassified pension liabilities							85
Pension Plan | Held-for-sale | U.K. Disposal Group (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Assets held for sale							$ 49
Pension Plan | Disposed of by sale | U.K. Disposal Group (Disposal Group)
Defined Benefit Plan Disclosure [Line Items]
Derecognized pension assets		$ 49
U.K. Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Cash contributions to the plans			$ 17		$ 17

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Hedging Activities - Narrative (Details) € in Millions, £ in Millions, $ in Millions	3 Months Ended	6 Months Ended	9 Months Ended
	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 EUR (€)	Dec. 31, 2022 GBP (£)	Mar. 31, 2022 USD ($)	Mar. 31, 2022 EUR (€)
Derivative [Line Items]
Gains on termination of fixed interest rate swaps	$ (97)		$ (97)
Disposed of by sale | U.K. Disposal Group (Disposal Group)
Derivative [Line Items]
Reclassification of gains from AOCI		$ 26
Disposed of by sale | European Businesses (Disposal Group)
Derivative [Line Items]
Reclassification from AOCI to earnings		112
Fair Value Hedges | USD | Interest Rate Swap Entered Into YTD | Derivatives designated for hedge accounting
Derivative [Line Items]
Derivative, notional amount	750		750
Cash Flow Hedges | USD | Fixed interest rate swaps | Derivatives designated for hedge accounting
Derivative [Line Items]
Derivative, notional amount	0	$ 500	$ 0			$ 500
Euro Denominated Notes | Net Investment Hedges | Derivatives designated for hedge accounting
Derivative [Line Items]
Reclassification from AOCI to earnings	$ 112
British Pound Sterling Denominated Notes | Term Loan
Derivative [Line Items]
Debt outstanding | £					£ 450
Derivatives designated as net investment hedges | Fair Value Hedges | Euro Member Countries, Euro | Derivatives designated for hedge accounting
Derivative [Line Items]
Derivative, notional amount | €				€ 1,100			€ 0

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Hedging Activities - Summary of Foreign Currency Gains and (Losses) from Non-Derivative Instruments (Details) - Derivatives designated for hedge accounting - Net Investment Hedges - Euro Denominated Notes - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Derivatives designated as net investment hedges:	$ (132)	$ 23	$ 7	$ 34
Reclassification from AOCI to earnings	$ 112

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Hedging Activities - Schedule of Notional Amounts of Outstanding Derivative Positions (Details) - Derivatives designated for hedge accounting € in Millions, £ in Millions, $ in Millions, $ in Millions	Dec. 31, 2022 EUR (€)	Dec. 31, 2022 CAD ($)	Dec. 31, 2022 GBP (£)	Dec. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Mar. 31, 2022 EUR (€)	Mar. 31, 2022 CAD ($)	Mar. 31, 2022 GBP (£)	Mar. 31, 2022 USD ($)
Fair Value Hedges | Derivatives designated as net investment hedges | GBP
Derivatives, Fair Value [Line Items]
Notional | £			£ 450					£ 450
Fair Value Hedges | Derivatives designated as net investment hedges | Euro Member Countries, Euro
Derivatives, Fair Value [Line Items]
Notional | €	€ 1,100					€ 0
Derivatives designated as net investment hedges | Net Investment Hedges | CAD
Derivatives, Fair Value [Line Items]
Notional		$ 500					$ 500
Derivatives designated as net investment hedges | Cash Flow Hedges | USD
Derivatives, Fair Value [Line Items]
Notional		$ 1,085					$ 1,678
Floating interest rate swaps | Fair Value Hedges | USD
Derivatives, Fair Value [Line Items]
Notional				$ 750					$ 0
Fixed interest rate swaps | Cash Flow Hedges | USD
Derivatives, Fair Value [Line Items]
Notional				$ 0	$ 500				$ 500

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Hedging Activities - Summary of Derivative Instruments Gain (Loss) (Details) - Derivatives designated for hedge accounting - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021
Cross-currency swaps
Derivatives, Fair Value [Line Items]
Derivatives designated as net investment hedges:	$ (7)	$ (2)	$ 26	$ 3
Cross-currency swaps | Cash Flow Hedges
Derivatives, Fair Value [Line Items]
Derivatives designated as cash flow hedges:	(1)	(5)	(6)	(6)
Fixed interest rate swaps | Cash Flow Hedges
Derivatives, Fair Value [Line Items]
Derivatives designated as cash flow hedges:	$ (85)	$ (3)	$ (30)	$ 9

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Hedging Activities - Schedule of Fair Value of Derivatives (Details) - Derivatives designated for hedge accounting - USD ($) $ in Millions	Dec. 31, 2022	Mar. 31, 2022
Derivatives, Fair Value [Line Items]
Fair value of derivative, asset	$ 86	$ 61
Fair value of derivative, liability	47	75
Cross-currency swaps | Prepaid expenses and other/Other accrued liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative, asset	18	30
Fair value of derivative, liability	17	39
U.S. Dollar notional amount, asset	1,080	1,537
Cross-currency swaps | Other non-current assets/liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative, asset	68	0
Fair value of derivative, liability	0	36
U.S. Dollar notional amount, asset	1,774	679
Floating interest rate swaps | Prepaid expenses and other
Derivatives, Fair Value [Line Items]
Fair value of derivative, asset	0	31
Fair value of derivative, liability	0	0
U.S. Dollar, notional amount, liability	0	500
Floating interest rate swaps | Other non-current assets/liabilities
Derivatives, Fair Value [Line Items]
Fair value of derivative, asset	0	0
Fair value of derivative, liability	30	0
U.S. Dollar, notional amount, liability	$ 750	$ 0

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Mar. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments in equity securities	$ 253		$ 346
Gains (losses) associated with equity investments	(24)	$ 104
National Prescription Opioid Litigation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted cash			395
Fair value, inputs, level 1 | Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds at carrying value	$ 696		$ 981

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Fair Value Measurements - Schedule of Long-Term Debt is Recorded at Amortized Cost (Details) - Fair Value, Recurring - Fair value, inputs, level 2 - USD ($) $ in Millions	Dec. 31, 2022	Mar. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying amount of liabilities	$ 5,856	$ 5,879
Estimated fair values of liabilities	$ 5,607	$ 5,999

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Commitments and Contingent Liabilities - Narrative (Details)							1 Months Ended				3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Oct. 26, 2022 USD ($)	Jul. 05, 2022 USD ($)	Jun. 27, 2022 USD ($)	May 03, 2022 USD ($)	Apr. 02, 2022 USD ($) state installment distributor	Sep. 28, 2021 USD ($)	Dec. 31, 2022 USD ($) case	Oct. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2022 USD ($) case	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) case site	Dec. 31, 2021 USD ($)	Mar. 31, 2021 USD ($)	Nov. 30, 2022 USD ($)	Dec. 31, 2018 USD ($)	Apr. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Loss Contingencies [Line Items]
Opioid stewardship act, new york, annual surcharge																	$ 42,000,000	$ 100,000,000	$ 100,000,000	$ 100,000,000
Proceeds from legal settlements											$ 129,000,000				$ 46,000,000
Operating Segments | U.S. Pharmaceutical
Loss Contingencies [Line Items]
Proceeds from legal settlements								$ 129,000,000
New York Opioid Tax Surcharge | U.S. Pharmaceutical
Loss Contingencies [Line Items]
Charge recorded related to Company's share of the litigation settlement											18,000,000					$ 50,000,000
Loss contingency accrual, payments							$ 11,000,000		$ 26,000,000
Environmental Litigation
Loss Contingencies [Line Items]
Hazardous substance sites | site														14
Estimated environmental assessment and cleanup costs										$ 1,400,000,000
Accrual for environmental loss contingencies							$ 3,000,000				$ 3,000,000			$ 3,000,000
National Prescription Opioid Litigation
Loss Contingencies [Line Items]
Number of other national distributors named in suit | distributor					2
Number of states in which court cases are pending | state					46
Number of eligible states | state					49
Award payable under proposed framework					$ 7,400,000,000
Portion of settlement to be paid by the Company (percent)					38.10%
Portion of settlement award to be used by state and local government for remediation (percent)					85.00%
Loss contingency, number of cases dismissed | case							2,300				2,300			2,300
National Prescription Opioid Litigation | State of West Virginia and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework		$ 152,000,000
National Prescription Opioid Litigation | Cherokee Nation
Loss Contingencies [Line Items]
Award payable under proposed framework						$ 29,000,000
Portion of settlement to be paid by the Company (percent)						38.10%
Loss contingency, settlement, installment payments, term						6 years 6 months
National Prescription Opioid Litigation | Native American Tribes Other Than Cherokee Nation
Loss Contingencies [Line Items]
Award payable under proposed framework	$ 167,000,000
Portion of settlement to be paid by the Company (percent)	38.10%
Loss contingency, settlement, installment payments, term	6 years
Litigation settlement, amount awarded to other party, percentage of total settlement to be used to remediate damages						0.85
Canada | National Prescription Opioid Litigation
Loss Contingencies [Line Items]
Complaints filed against the entity | case							4				4			4
Canada | National Prescription Opioid Litigation | Governmental entities
Loss Contingencies [Line Items]
Complaints filed against the entity | case							3				3			3
Canada | National Prescription Opioid Litigation | An individual
Loss Contingencies [Line Items]
Complaints filed against the entity | case							1				1			1
Three Largest U.S. Pharmaceutical Distributors | National Prescription Opioid Litigation
Loss Contingencies [Line Items]
Award payable under proposed framework					$ 19,500,000,000
Period over which award would be payable under proposed framework					18 years
Three National Pharmaceutical Distributors | National Prescription Opioid Litigation | State of West Virginia and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework		$ 400,000,000
Portion of settlement to be paid by the Company (percent)		38.10%
Loss contingency, settlement, installment payments, term		11 years
Three National Pharmaceutical Distributors | National Prescription Opioid Litigation | Cherokee Nation
Loss Contingencies [Line Items]
Award payable under proposed framework						$ 75,000,000
Three National Pharmaceutical Distributors | National Prescription Opioid Litigation | Native American Tribes Other Than Cherokee Nation
Loss Contingencies [Line Items]
Award payable under proposed framework	$ 440,000,000
Pending | National Prescription Opioid Litigation | State of Alabama and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework					$ 141,000,000
Loss contingency, settlement, number of installment payments | installment					10
Litigation expense					$ 33,000,000
Settled Litigation | National Prescription Opioid Litigation | State of Washington and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework				$ 197,000,000
Portion of settlement to be paid by the Company (percent)				38.10%
Settled Litigation | National Prescription Opioid Litigation | State of Oklahoma and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework			$ 117,000,000
Portion of settlement to be paid by the Company (percent)			38.10%
Settled Litigation | National Prescription Opioid Litigation | Settling Governmental Entities and Cherokee Nation
Loss Contingencies [Line Items]
Settlement payment												$ 106,000,000	$ 1,000,000,000
Settled Litigation | Distributors | National Prescription Opioid Litigation | State of Washington and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework				$ 518,000,000
Period over which award would be payable under proposed framework				18 years
Settled Litigation | Distributors | National Prescription Opioid Litigation | State of Oklahoma and Subdivisions
Loss Contingencies [Line Items]
Award payable under proposed framework			$ 308,000,000
Period over which award would be payable under proposed framework			18 years

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Commitments and Contingent Liabilities - Estimated Accrual Liability (Details) - National Prescription Opioid Litigation - USD ($) $ in Millions	Dec. 31, 2022	Mar. 31, 2022
Loss Contingencies [Line Items]
Current litigation liabilities	$ 598	$ 1,046
Long-term litigation liabilities	6,642	7,220
Total litigation liabilities	$ 7,240	$ 8,266

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Stockholders' Equity (Deficit) - Narrative (Details) $ / shares in Units, shares in Millions, $ in Millions	1 Months Ended							3 Months Ended						9 Months Ended
	Dec. 31, 2022 USD ($) vote shares	Aug. 31, 2022 shares	Jul. 31, 2022 USD ($) $ / shares	May 31, 2022 USD ($) $ / shares shares	Feb. 28, 2022 USD ($) $ / shares shares	Aug. 31, 2021 shares	May 31, 2021 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) vote $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2022 $ / shares shares	Mar. 31, 2022 shares	Dec. 31, 2021 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) vote $ / shares	Dec. 31, 2021 USD ($) $ / shares
Accelerated Share Repurchases [Line Items]
Number of votes per share of common stock permitted on proposals presented to stockholders (vote) | vote	1							1						1
Dividends declared per common share (in dollars per share) | $ / shares			$ 0.54					$ 0.54		$ 0.47		$ 0.47		$ 1.55	$ 1.36
Shares repurchased								$ 1,976				$ 728		$ 3,500	$ 2,008
Authorized repurchase amount (up to)			$ 4,000
Authorized amount available for future repurchases	$ 3,800							$ 3,800						$ 3,800
Accelerated Share Repurchase
Accelerated Share Repurchases [Line Items]
Shares repurchased	$ 972			$ 1,000	$ 1,500		$ 1,000
Share repurchases (in shares) | shares				3.1	5.1		5.2
Average price of shares repurchased (in usd per share) | $ / shares				$ 321.05	$ 295.16		$ 193.22
Common stock repurchased (in shares) | shares	2.2	0.5		0.3		0.9			2.6	4.3	4.8
Open Market Share Repurchase Transactions
Accelerated Share Repurchases [Line Items]
Average price of shares repurchased (in usd per share) | $ / shares								$ 370.13	$ 355.75			$ 223.89	$ 203.20
Common stock repurchased (in shares) | shares								2.7	1.5			3.3	1.4
Shares repurchased								$ 1,000	$ 524			$ 728	$ 280
Open Market Share Repurchase Transactions | Other Accrued Liabilities
Accelerated Share Repurchases [Line Items]
Shares repurchased												$ 30

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Stockholders' Equity (Deficit) - Schedule of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ (1,249)	$ (87)	$ (1,792)	$ (1,792)	$ 175
Other comprehensive income (loss), net of tax	215	8		679	(4)
Other comprehensive income (loss) attributable to McKesson	215	8		679	(7)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					8
Ending balance	(2,089)	(787)	(1,249)	(2,089)	(787)
Reclassified to income statement, tax	22			6
Disposed of by sale | U.K. Disposal Group (Disposal Group)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Reclassification of gains from AOCI			26
Derivatives designated for hedge accounting | Net Investment Hedging | Euro Denominated Notes
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Other comprehensive income (loss), net investment hedge, gain (loss)	(132)	23		7	34
Derivatives designated for hedge accounting | Cross-currency swaps
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Other comprehensive income (loss), net investment hedge, gain (loss)	(7)	(2)		26	3
Total Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(1,114)	(1,665)	(1,534)	(1,534)	(1,480)
Other comprehensive income (loss) before reclassifications	117	9		(173)	(24)
Amounts reclassified to earnings and other	98	(1)		852	20
Other comprehensive income (loss), net of tax	215	8		679	(4)
Less: amounts attributable to noncontrolling interests	0	(2)		44	1
Other comprehensive income (loss) attributable to McKesson	215	10		635	(5)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					(170)
Ending balance	(899)	(1,655)	(1,114)	(899)	(1,655)
Foreign Currency Translation Adjustments, Net of Tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(1,254)	(1,557)	(1,504)	(1,504)	(1,361)
Other comprehensive income (loss) before reclassifications	96	0		(360)	(47)
Amounts reclassified to earnings and other	280	0		1,027	18
Other comprehensive income (loss), net of tax	376	0		667	(29)
Less: amounts attributable to noncontrolling interests	0	(2)		41	7
Other comprehensive income (loss) attributable to McKesson	376	2		626	(36)
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					(158)
Ending balance	(878)	(1,555)	(1,254)	(878)	(1,555)
Unrealized Gains (Losses) on Net Investment Hedges, Net of Tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	109	(25)	10	10	(36)
Other comprehensive income (loss) before reclassifications	(5)	16		111	21
Amounts reclassified to earnings and other	(119)	0		(136)	0
Other comprehensive income (loss), net of tax	(124)	16		(25)	21
Less: amounts attributable to noncontrolling interests	0	0		0	(6)
Other comprehensive income (loss) attributable to McKesson	(124)	16		(25)	27
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					0
Ending balance	(15)	(9)	109	(15)	(9)
Other comprehensive income (loss) before reclassifications, tax	(15)	5		32	10
Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	63	21	27	27	13
Other comprehensive income (loss) before reclassifications	8	(6)		44	(3)
Amounts reclassified to earnings and other	(73)	0		(73)	5
Other comprehensive income (loss), net of tax	(65)	(6)		(29)	2
Less: amounts attributable to noncontrolling interests	0	0		0	0
Other comprehensive income (loss) attributable to McKesson	(65)	(6)		(29)	2
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					0
Ending balance	(2)	15	63	(2)	15
Unrealized Gains (Losses) and Other Components of Benefit Plans, Net of Tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(32)	(104)	(67)	(67)	(96)
Other comprehensive income (loss) before reclassifications	18	(1)		32	5
Amounts reclassified to earnings and other	10	(1)		34	(3)
Other comprehensive income (loss), net of tax	28	(2)		66	2
Less: amounts attributable to noncontrolling interests	0	0		3	0
Other comprehensive income (loss) attributable to McKesson	28	(2)		63	2
Exercise of put right by noncontrolling shareholders of McKesson Europe AG					(12)
Ending balance	$ (4)	$ (106)	$ (32)	$ (4)	$ (106)

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Segments of Business - Narrative (Details) $ in Millions	9 Months Ended
	Dec. 31, 2022 USD ($) product segment	Mar. 31, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment	4
Number of national brand medical-surgical products offered (more than) | product	285,000
International segment assets	$ 62,690	$ 63,298
International
Segment Reporting Information [Line Items]
International segment assets	$ 6,200

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Segments of Business - Reportable operating segment (Details) $ in Millions	1 Months Ended		3 Months Ended		9 Months Ended
	Oct. 31, 2022 USD ($)	Jul. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)
Segment revenues
Total revenues			$ 70,490	$ 68,614	$ 207,801	$ 197,864
Segment operating profit (loss)
Total operating profit (loss)			1,241	298	3,401	1,405
Corporate income (expenses), net			67	(195)	49	(858)
Interest expense			(69)	(41)	(169)	(135)
Income from continuing operations before income taxes			1,448	277	$ 3,698	1,281
Number of reportable segments | segment					4
Gain from sale of equity method investment					$ 142
Proceeds from sale of equity securities		$ 179
Pre-tax credits related to LIFO accounting					(31)	(79)
Company's shares of legal settlements			129			46
Loss (gain) to remeasure disposal group to fair value					0	1,271
Gains on termination of fixed interest rate swaps			97		97
Restructuring, impairment, and related charges			31	18	84	208
Gains associated with equity investments					24	(104)
Loss on debt extinguishment			0	0	0	191
Tax Receivable Agreement (“TRA”)
Segment operating profit (loss)
Gain on early contract termination			$ 126		$ 126
Percentage of net cash tax savings realized or deemed realized under TRA (percent)			85.00%		85.00%
United States
Segment operating profit (loss)
Number of reportable segments | segment					3
Held-for-sale | E.U. Businesses (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value				879		1,400
Disposed of by sale | E.U. Businesses (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value			$ (31)	26	$ (66)	517
Disposed of by sale | U.K. Disposal Group (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value			823		823
Operating Segments
Segment operating profit (loss)
Total operating profit (loss)			1,450	513	3,818	2,465
Corporate
Segment operating profit (loss)
Restructuring, impairment, and related charges			19	9	38	90
Corporate | National Prescription Opioid Litigation
Segment operating profit (loss)
Pre-tax expenses related to estimated litigation liability						193
Corporate | Held-for-sale | E.U. Businesses (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value			(34)	(32)	(306)	117
National Prescription Opioid Litigation | Corporate
Segment operating profit (loss)
Litigation expense			9	33	37	104
U.S. Pharmaceutical
Segment revenues
Total revenues			61,934	55,041	178,940	158,471
U.S. Pharmaceutical | Operating Segments
Segment operating profit (loss)
Total operating profit (loss)			850	744	$ 2,442	2,186
Revenue derived from services, percentage (less than)					1.00%
Pre-tax credits related to LIFO accounting			5	(33)	$ (31)	(79)
Company's shares of legal settlements	$ 129
Restructuring, impairment, and related charges			2	3	9	25
Prescription Technology Solutions
Segment revenues
Total revenues			1,121	1,031	3,205	2,844
Prescription Technology Solutions | Operating Segments
Segment operating profit (loss)
Total operating profit (loss)			136	129	$ 400	361
Revenue derived from services, percentage (less than)					36.00%
Restructuring, impairment, and related charges			1	0	$ 15	18
Medical-Surgical Solutions
Segment revenues
Total revenues			2,986	3,082	8,421	8,734
Medical-Surgical Solutions | Operating Segments
Segment operating profit (loss)
Total operating profit (loss)			328	308	$ 883	679
Revenue derived from services, percentage (less than)					3.00%
Inventory charges						164
Restructuring, impairment, and related charges			1	1	$ 3	9
International
Segment revenues
Total revenues			4,449	9,460	17,235	27,815
International | Operating Segments
Segment operating profit (loss)
Total operating profit (loss)			136	(668)	$ 93	(761)
Revenue derived from services, percentage (less than)					8.00%
Restructuring, impairment, and related charges			8	5	$ 19	66
International | Operating Segments | Held-for-sale | E.U. Businesses (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value			$ 3	58	$ 240	400
International | Operating Segments | Disposed of by sale | Canadian Health Benefit Claims Management and Plan Administrative Services Business
Segment operating profit (loss)
Pre-tax gain on sale of business						59
International | Operating Segments | Disposed of by sale | U.K. Disposal Group (Disposal Group)
Segment operating profit (loss)
Loss (gain) to remeasure disposal group to fair value				$ 787		$ 787