8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 2, 2017

McKesson Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-13252	94-3207296
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One Post Street, San Francisco, California	94104
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (415) 983-8300

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01 Regulation FD Disclosure.

On March 2, 2017, McKesson Corporation (the “Company”) and Change Healthcare Holdings, Inc. issued a press release announcing the creation of Change Healthcare, a new healthcare information technology company. In addition, McKesson issued a separate press release regarding additional information on the financial impact of the transaction. Copies of the press releases are attached hereto as Exhibits 99.1 and 99.2.

The information contained in this item, including Exhibits 99.1 and 99.2, is furnished to the Commission, but shall not be deemed “filed” with the Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release issued by the Company and Change Healthcare Holdings, Inc. dated March 2, 2017.
99.2	Press release issued by the Company dated March 2, 2017.

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 hereunto duly authorized.

Date: March 2, 2017

McKesson Corporation
By:	/s/ James A. Beer
	James A. Beer
	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by the Company and Change Healthcare Holdings, Inc. dated March 2, 2017.
99.2	Press release issued by the Company dated March 2, 2017.

EX-99.1

Exhibit 99.1

McKESSON AND CHANGE HEALTHCARE COMPLETE THE CREATION OF

NEW HEALTHCARE INFORMATION TECHNOLOGY COMPANY

New Company Is Named Change Healthcare

Company Is Positioned To Meet Mission Critical Needs In Healthcare

SAN FRANCISCO & NASHVILLE, March 2, 2017 – McKesson Corporation (NYSE:MCK), a leading global healthcare services and information technology company, and Change Healthcare Holdings, Inc. (CHC), a leading provider of software and analytics, network solutions and technology-enabled services, today announced the completion of their previously-announced agreement to create a new healthcare information technology company. The new company is named Change Healthcare and combines substantially all of CHC’s business and the majority of McKesson Technology Solutions (MTS).

By uniting the majority of MTS’ businesses with CHC, the new company will inspire a better healthcare system through a broad set of complementary capabilities that will deliver wide-ranging financial, operational and clinical benefits to payers, providers and consumers. From an interconnected and integral position at the center of healthcare, the new Change Healthcare will be a collaborative catalyst for accelerating its customers’ and partners’ paths to value-based care and better engagement with consumers.

“Over the last several years, our industry has experienced a continued shift toward value-based care, requiring an increasingly consumer-centered approach to healthcare,” said Neil de Crescenzo, Chief Executive Officer, Change Healthcare. “Change Healthcare will be distinctly positioned to leverage its data, analytics and forward-thinking insights to bring new innovative solutions to payers, providers and consumers as they strive to achieve the best healthcare outcomes as efficiently as possible in this new environment.”

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“We are thrilled to have completed this combination of two great organizations. Our nearly 15,000 team members will be working with our collective customers and partners to provide a stronger, increasingly collaborative and more efficient healthcare system that enables better healthcare outcomes,” continued de Crescenzo. “I’m confident that Change Healthcare’s expertise and comprehensive offering of solutions will not only deliver near- and long-term value for our customers and partners, but also help drive the journey toward improved lives and healthier communities.”

New Leadership Team

In addition to Neil de Crescenzo, previously announced as Chief Executive Officer of Change Healthcare, the following individuals will comprise the executive leadership team of the new company:

Randy Giles, EVP & Chief Financial Officer

Rod O’Reilly, EVP & President, Software and Analytics

Erkan Akyuz, EVP & President, Imaging, Workflow and Care Solutions

Kris Joshi, Ph.D., EVP & President, Network Solutions

Pat Leonard, EVP & President, Technology-Enabled Services

Mark Vachon, EVP, Sales and Operations

Loretta Cecil, EVP & General Counsel

Alex Choy, EVP, R&D/IT & Chief Information Officer

Linda Whitley-Taylor, EVP & Chief People Officer

W. Thomas McEnery, EVP & Chief Marketing Officer

Megan Callahan, SVP & Chief Strategy Officer

Business Integration Progress

Since the announcement of this transaction on June 28, 2016, both McKesson and CHC have engaged in measured integration planning within the appropriate parameters. Now that the transaction has closed, integration activities will accelerate with a critical focus on ensuring customer service continuity and accelerating innovation efforts to bring new solutions to address customer needs. Over the coming months, integration plans will be shared with customers and partners to ensure they realize the full value of the new organization in helping them achieve their objectives.

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Brand Strategy and Migration

As previously announced, the new organization will leverage the Change Healthcare name, but today introduces a new logo, brand positioning and visual identity to reflect the broader capabilities of the unified organization. The migration to the new brand will happen over the next year. All brand migration activities and the timing of those activities will be handled transparently with the company’s customers and partners. Information about both MTS’ and CHC’s contributed products and solutions will be available through www.changehealthcare.com.

Transaction Terms and Structure

McKesson owns approximately 70% of Change Healthcare, with the remaining equity ownership held by CHC stockholders, including Blackstone and Hellman & Friedman. The new company is jointly governed by McKesson and CHC stockholders.

In conjunction with the creation of the new company, Change Healthcare raised approximately $6.1 billion in debt, which was utilized to fund cash payments of approximately $1.25 billion to McKesson and approximately $1.75 billion to CHC stockholders, cover transaction costs and repay approximately $2.8 billion of existing CHC debt.

“Today marks an exciting step forward to achieve enhanced benefits for our customers, employees and stockholders,” said John H. Hammergren, Chairman of the Board, Change Healthcare, and Chairman and Chief Executive Officer, McKesson Corporation. “I want to thank all of the employees who made today possible and who will continue the important work of building an industry-leading company that will help make the vision of value-based care a reality for payers, providers and consumers.”

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About McKesson Corporation

McKesson Corporation, currently ranked 5th on the FORTUNE 500, is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology. McKesson partners with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare to help provide the right medicines, medical products and healthcare services to the right patients at the right time, safely and cost-effectively. United by our ICARE shared principles, our 70,000 employees across more than 16 countries work every day to innovate and deliver opportunities that make our customers and partners more successful — all for the better health of patients. McKesson has been named the “Most Admired Company” in the healthcare wholesaler category by FORTUNE, a “Best Place to Work” by the Human Rights Campaign Foundation, a top military-friendly company by Military Friendly^®, and a “Best Employer for Healthy Lifestyles” by The National Business Group on Health. For more information, visit www.mckesson.com.

About CHC

CHC is a leading provider of software and analytics, network solutions and technology-enabled services that optimize communications, payments and actionable insights designed to enable smarter healthcare. By leveraging its Intelligent Healthcare Network™, which includes the single largest financial and administrative network in the United States healthcare system, industry stakeholders are able to increase revenue, improve efficiency, reduce costs, increase cash flow and more effectively manage complex workflows. Learn more at www.changehealthcare.com.

About Blackstone

Blackstone has been a global leader in private equity since 1985, with approximately $100 billion of assets under management. Blackstone uncovers value by identifying great companies and enhancing their performance by providing strategic capital and outstanding management talent. Blackstone aims to grow stronger enterprises, create jobs, and enable its portfolio companies to build lasting value for its investors, their employees and all stakeholders.

Blackstone is one of the world’s leading investment firms. It seeks to create positive economic impact and long-term value for its investors, the companies it invests in, and the communities in which it works. This is done by using extraordinary people and flexible capital to help companies solve problems. Its asset management businesses, with over $360 billion in assets under management, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow Blackstone on Twitter @Blackstone.

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Risk Factors

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements regarding the expected benefits and costs of the transaction; any projections of earnings, revenues, synergies or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding product or service developments, extensions or integration; any statements of expectation or belief; any statements regarding general industry conditions and competition; any statements regarding economic conditions; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include risks related to the possibility that expected benefits may not materialize as expected; the ability to successfully implement an integration strategy for the new company; as well as the ability to ensure continued performance or market growth of the new company’s products and services. These risks, uncertainties and other factors, and the general risks associated with the respective businesses of McKesson and CHC described in the reports and other documents submitted by each of them to the Securities and Exchange Commission, could cause actual results to differ materially from those referred to in the forward-looking statements. All forward-looking statements are based on information currently available to McKesson and CHC and are qualified in their entirety by this cautionary statement. You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date such statements were first made. Except to the extent required by law, neither McKesson nor Change Healthcare assumes any obligation to update any such forward-looking statements or other statements included in this press release.

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McKesson Corporation Contacts:

Investors and Financial Media:

Craig Mercer

415-983-8391

Craig.Mercer@mckesson.com

General and Business Media:

Kristin Hunter

415-983-8974

Kristin.Hunter@mckesson.com

CHC Contacts:

Investors:

Tommy Lewis

615-932-3235

tlewis@changehealthcare.com

Media:

Robyn Nentwig

615-932-2731

rnentwig@changehealthcare.com

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EX-99.2

Exhibit 99.2

McKESSON PROVIDES FINANCIAL UPDATE TO REFLECT CREATION OF A

NEW HEALTHCARE INFORMATION TECHNOLOGY COMPANY

• McKesson and Change Healthcare Holdings, Inc. (CHC) announced the creation of the new Change Healthcare company in a separate press release this morning.

• Previous Fiscal 2017 guidance range updated to reflect the timing effect related to the closing of this transaction:

• $20.35 to $22.50 GAAP earnings per diluted share from continuing operations, which now includes the net gain from this transaction, from previous outlook of $9.80 to $10.30; and

• $12.45 to $12.75 per diluted share, which excludes approximately $1.28 to $1.30 in charges to Adjusted Earnings related to a goodwill impairment and the Cost Alignment Plan, from previous outlook of $12.60 to $12.90.

• McKesson has scheduled a conference call for 9:00 AM ET today, Thursday, March 2^nd, to discuss these updates.

SAN FRANCISCO, March 2, 2017 – McKesson Corporation (NYSE:MCK), a leading global healthcare services and information technology company, and Change Healthcare Holdings, Inc. (CHC), a leading provider of software and analytics, network solutions and technology-enabled services, today announced in a separate press release the creation of Change Healthcare, a new healthcare information technology company. The entity combines substantially all of CHC’s business and the majority of McKesson Technology Solutions (MTS) into a new company.

“As discussed when we first announced this transaction, Change Healthcare will work to deliver material synergies and prepare for an IPO,” said John H. Hammergren, chairman and chief executive officer, McKesson Corporation, and chairman of the board, Change Healthcare. “We believe a scaled healthcare software and analytics, and technology-enabled services company will ultimately unlock the value of our contributed MTS businesses for our shareholders, in a tax-efficient manner.”

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Completion of Financing and Transaction Overview

In conjunction with the creation of the new company, Change Healthcare raised approximately $6.1 billion in debt, which was utilized to fund cash payments of approximately $1.25 billion to McKesson and approximately $1.75 billion to CHC stockholders, cover transaction costs and repay approximately $2.8 billion of existing CHC debt.

McKesson owns approximately 70% of Change Healthcare, with the remaining equity ownership held by CHC stockholders, including Blackstone and Hellman & Friedman.

Consistent with the agreement between McKesson and CHC stockholders, which provides for joint governance over Change Healthcare, McKesson will account for its investment in Change Healthcare using the equity method of accounting.

Transaction Impact to McKesson

In its fourth quarter results, McKesson anticipates recording a pre-tax gain of approximately $2.9 billion to $3.5 billion, which includes $1.25 billion in cash receipts previously noted, and associated non-cash income tax expense of approximately $0.5 billion to $0.8 billion, both of which will be excluded from Adjusted Earnings. As a result of the net gain, McKesson will add approximately $10.70 to $12.35 in GAAP earnings per diluted share from continuing operations.

Compared to previous guidance, the company’s fourth quarter Fiscal 2017 financial results will exclude GAAP and adjusted operating income from MTS’ contributed businesses for the month of March, which is estimated to be $48 million to $61 million, or approximately 13 cents to 17 cents in GAAP and Adjusted Earnings per diluted share. This one-month exclusion is driven by the closing date of the transaction. The month of March in MTS’ fiscal year is a higher-than-average contributor to annual revenue and operating profit, as is typical in a technology business.

McKesson will account for its equity share of Change Healthcare’s earnings on a one-month lag. These earnings will be presented in “Other income, net” in the MTS segment. McKesson will record its associated income taxes on these earnings in the “Income tax expense” caption of the consolidated income statement.

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Therefore, during the month of March 2017, McKesson’s consolidated income statement will contain neither the earnings of the MTS contributed businesses due to the timing of the close, nor any equity earnings from the new company owing to the one-month lag. As a result, McKesson is updating its Fiscal 2017 GAAP outlook to $20.35 to $22.50 per diluted share from continuing operations, and $12.45 to $12.75 per diluted share, which excludes approximately $1.28 to $1.30 in charges to Adjusted Earnings related to a goodwill impairment and the Cost Alignment Plan announced in March 2016. Excluding the transaction timing effect, the underlying Fiscal 2017 key assumptions provided in conjunction with McKesson’s earnings press release on January 25, 2017 are unchanged.

Based on the recently completed debt financing, McKesson’s 70% share of Change Healthcare’s initial annual interest expense run rate is expected to be approximately $200 million, equivalent to an average interest rate of approximately 4.7%. Much of Change Healthcare’s debt is pre-payable without penalty and may be repaid ahead of the scheduled maturity under certain conditions.

As part of the transaction close process, McKesson will record its share of a one-time, non-cash reduction to the carrying value of its deferred revenue balance. This non-cash adjustment will reduce McKesson’s reported earnings in Fiscal 2018 by approximately $140 million to $170 million.

Selected MTS Financial Information

Using fiscal year-to-date December 31, 2016 results from MTS’ contributed businesses, the annualized GAAP revenues, GAAP operating income, and adjusted operating income are approximately $1.9 billion, $335 million and $425 million, respectively. Adjusted operating income excludes approximately $90 million in amortization of acquisition-related intangible assets and acquisition expenses and related adjustments.

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McKesson will continue to report its operations in two segments, McKesson Distribution Solutions (MDS) and MTS. McKesson’s equity ownership of Change Healthcare will be reflected in the MTS segment. Commencing in Fiscal 2018, McKesson will transition RelayHealth Pharmacy from MTS to the MDS segment.

“I want to thank all of the employees who made today possible and who will continue the important work ahead,” continued Hammergren. “I would also like to acknowledge the tremendous leadership demonstrated by Pat Blake, who drove the MTS results that made this transaction possible,” Hammergren concluded.

Conference Call Details

The company has scheduled a conference call for today, Thursday, March 2^nd, at 9:00 AM ET. The dial-in number for individuals wishing to participate on the call is 719-234-7317. Craig Mercer, senior vice president, Investor Relations, is the leader of the call, and the password to join the call is ‘McKesson’. The live webcast for the conference call can be accessed on the company’s Investor Relations website at http://investor.mckesson.com.

A telephonic replay of this conference call will be available for five calendar days. The dial-in number for individuals wishing to listen to the replay is 719-457-0820 and the pass code is 4550394.

About McKesson Corporation

McKesson Corporation, currently ranked 5th on the FORTUNE 500, is a global leader in healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology. McKesson partners with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare to help provide the right medicines, medical products and healthcare services to the right patients at the right time, safely and cost-effectively. United by our ICARE shared principles, our 70,000 employees across more than 16 countries work every day to innovate and deliver opportunities that make our customers and partners more successful — all for the better health of patients. McKesson has been named the “Most Admired Company” in the healthcare wholesaler category by FORTUNE, a “Best Place to Work” by the Human Rights Campaign Foundation, a top military-friendly company by Military Friendly^®, and a “Best Employer for Healthy Lifestyles” by The National Business Group on Health. For more information, visit www.mckesson.com.

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Risk Factors

Except for historical information contained in this press release, matters discussed may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These statements may be identified by their use of forward-looking terminology such as “believes”, “expects”, “anticipates”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates” or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. It is not possible to predict or identify all such risks and uncertainties; however, the most significant of these risks and uncertainties are described in the company’s Form 10-K, Form 10-Q and Form 8-K reports filed with the Securities and Exchange Commission and include, but are not limited to: changes in the U.S. healthcare industry and regulatory environment; managing foreign expansion, including the related operating, economic, political and regulatory risks; changes in the Canadian healthcare industry and regulatory environment; exposure to European economic conditions, including recent austerity measures taken by certain European governments; changes in the European regulatory environment with respect to privacy and data protection regulations; fluctuations in foreign currency exchange rates; the company’s ability to successfully identify, consummate, finance and integrate acquisitions; the company’s ability to manage and complete divestitures; material adverse resolution of pending legal proceedings; competition and industry consolidation; substantial defaults in payment or a material reduction in purchases by, or the loss of, a large customer or group purchasing organization; the loss of government contracts as a result of compliance or funding challenges; public health issues in the U.S. or abroad; cyberattack, natural disaster, or malfunction of sophisticated internal computer systems to perform as designed; the adequacy of insurance to cover property loss or liability claims; the company’s failure to attract and retain customers for its software products and solutions due to integration and implementation challenges, or due to an inability to keep pace with technological advances; the company’s proprietary products and services may not be adequately protected, and its products and solutions may be found to infringe on the rights of others; system errors or failure of our technology products or services to conform to specifications; disaster or other event causing interruption of customer access to data residing in our service centers; the delay or extension of our sales or implementation cycles for external software products; changes in circumstances that could impair our goodwill or intangible assets; new or revised tax legislation or challenges to our tax positions; general economic conditions, including changes in the financial markets that may affect the availability and cost of credit to the company, its customers or suppliers; changes in accounting principles generally accepted in the United States of America; withdrawal from participation in multiemployer pension plans or if such plans are reported to have underfunded liabilities; inability to realize the expected benefits from the company’s restructuring and business process initiatives; difficulties with outsourcing and similar third party relationships; risks associated with the company’s retail expansion; and the company’s inability to keep existing retail store locations or open new retail locations in desirable places. The reader should not place undue reliance on forward-looking statements, which speak only as of the date they are first made. Except to the extent required by law, the company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

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McKesson Corporation Contacts:

Investors and Financial Media:

Craig Mercer

415-983-8391

Craig.Mercer@mckesson.com

General and Business Media:

Kristin Hunter

415-983-8974

Kristin.Hunter@mckesson.com

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